(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | ||
(Address of principal executive offices) | (Zip Code) | ||
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
☒ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | Smaller reporting company | |
Emerging growth company | |||
Class | Outstanding at October 23, 2019 | |
Class A Common Stock, $0.001 par value per share | ||
Class B Common Stock, $0.001 par value per share | ||
Page | ||
• | economic factors, such as interest rates, the housing market, currency exchange fluctuations and changes in customer spending; |
• | developments in, and the outcome of, legal and regulatory proceedings and investigations to which we are a party or are subject, and the liabilities, obligations and expenses, if any, that we may incur in connection therewith. |
September 30, 2019 | December 31, 2018 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Short-term investments | ||||||||
Accounts receivable, net of allowance of $17,849 and $9,312 at September 30, 2019 and December 31, 2018, respectively | ||||||||
Inventories | ||||||||
Prepaid expenses and other current assets | ||||||||
Total current assets | ||||||||
Operating lease right-of-use assets | — | |||||||
Property and equipment, net | ||||||||
Goodwill and intangible assets, net | ||||||||
Long-term investments | ||||||||
Other noncurrent assets | ||||||||
Total assets | $ | $ | ||||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | $ | ||||||
Accrued expenses | ||||||||
Unearned revenue | ||||||||
Other current liabilities | ||||||||
Total current liabilities | ||||||||
Lease financing obligation, net of current portion | ||||||||
Operating lease liabilities | — | |||||||
Long-term debt | ||||||||
Other liabilities | ||||||||
Total liabilities | ||||||||
Commitments and contingencies (Note 7) | ||||||||
Convertible preferred stock, $0.001 par value per share: 10,000,000 shares authorized and none issued at September 30, 2019 and December 31, 2018 | ||||||||
Stockholders’ deficit: | ||||||||
Class A common stock, par value $0.001 per share, 500,000,000 shares authorized, 65,502,165 and 62,329,701 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | ||||||||
Class B common stock, par value $0.001 per share, 164,000,000 shares authorized, 27,372,273 and 28,417,882 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | ||||||||
Additional paid-in capital | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Accumulated other comprehensive (loss) | ( | ) | ( | ) | ||||
Total stockholders’ deficit | ( | ) | ( | ) | ||||
Total liabilities and stockholders’ deficit | $ | $ | ||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net revenue | $ | $ | $ | $ | ||||||||||||
Cost of goods sold | ||||||||||||||||
Gross profit | ||||||||||||||||
Operating expenses: | ||||||||||||||||
Customer service and merchant fees | ||||||||||||||||
Advertising | ||||||||||||||||
Selling, operations, technology, general and administrative | ||||||||||||||||
Total operating expenses | ||||||||||||||||
Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Other income, net | ||||||||||||||||
Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Provision for income taxes | ||||||||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Net loss per share, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Weighted average number of common stock outstanding used in computing per share amounts, basic and diluted | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Other comprehensive loss: | ||||||||||||||||
Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||||||
Net unrealized (loss) gain on available-for-sale investments | ( | ) | ||||||||||||||
Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Three Months Ended | |||||||||||||||||||||||
Class A and Class B Common Stock | |||||||||||||||||||||||
Shares | Amount | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders' Deficit | ||||||||||||||||||
Balance at June 30, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||
Net loss | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Other comprehensive income | — | — | — | — | ( | ) | ( | ) | |||||||||||||||
Exercise of options to purchase common stock | — | — | — | ||||||||||||||||||||
Issuance of common stock upon vesting of RSUs | — | — | — | ||||||||||||||||||||
Shares withheld related to net settlement of RSUs | ( | ) | — | ( | ) | — | — | ( | ) | ||||||||||||||
Equity compensation expense | — | — | — | — | |||||||||||||||||||
Balance at September 30, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||
Balance at June 30, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||
Net loss | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Other comprehensive income | — | — | — | — | ( | ) | ( | ) | |||||||||||||||
Exercise of options to purchase common stock | — | — | — | ||||||||||||||||||||
Issuance of common stock upon vesting of RSUs | — | — | — | — | |||||||||||||||||||
Shares withheld related to net settlement of RSUs | ( | ) | — | ( | ) | — | — | ( | ) | ||||||||||||||
Equity compensation expense | — | — | — | — | |||||||||||||||||||
Equity component of issuance of convertible notes and capped calls, net (Note 14) | — | — | — | — | |||||||||||||||||||
Balance at September 30, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||
Nine Months Ended | |||||||||||||||||||||||
Class A and Class B Common Stock | |||||||||||||||||||||||
Shares | Amount | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders' Deficit | ||||||||||||||||||
Balance at December 31, 2017 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||
Net loss | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||
Exercise of options to purchase common stock | — | — | — | ||||||||||||||||||||
Issuance of common stock upon vesting of RSUs | — | — | — | ||||||||||||||||||||
Shares withheld related to net settlement of RSUs | ( | ) | — | ( | ) | — | — | ( | ) | ||||||||||||||
Equity compensation expense | — | — | — | — | |||||||||||||||||||
Adoption of ASU No. 2014-09 | — | — | — | — | |||||||||||||||||||
Balance at September 30, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||
Balance at December 31, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||
Net loss | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||
Exercise of options to purchase common stock | — | — | — | ||||||||||||||||||||
Issuance of common stock upon vesting of RSUs | — | — | — | ||||||||||||||||||||
Shares withheld related to net settlement of RSUs | ( | ) | — | ( | ) | — | — | ( | ) | ||||||||||||||
Equity compensation expense | — | — | — | — | |||||||||||||||||||
Equity component of issuance of convertible notes and capped calls, net (Note 14) | — | — | — | — | |||||||||||||||||||
Adoption of ASU No. 2016-02 | — | — | — | — | |||||||||||||||||||
Balance at September 30, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||
Nine months ended September 30, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
Depreciation and amortization | ||||||||
Equity-based compensation | ||||||||
Amortization of discount and issuance costs on convertible notes | ||||||||
Other non-cash adjustments | ( | ) | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | ( | ) | ( | ) | ||||
Inventories | ( | ) | ( | ) | ||||
Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
Accounts payable and accrued expenses | ||||||||
Unearned revenue and other liabilities | ||||||||
Other assets | ( | ) | ( | ) | ||||
Net cash (used in) provided by operating activities | ( | ) | ||||||
Cash flows from investing activities | ||||||||
Sale and maturities of short-term investments | ||||||||
Purchase of property and equipment | ( | ) | ( | ) | ||||
Site and software development costs | ( | ) | ( | ) | ||||
Other investing activities | ( | ) | ( | ) | ||||
Net cash used in investing activities | ( | ) | ( | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from issuance of convertible notes, net of issuance costs | ||||||||
Premiums paid for capped call confirmations | ( | ) | ||||||
Taxes paid related to net share settlement of equity awards | ( | ) | ( | ) | ||||
Deferred financing costs | ( | ) | ||||||
Net proceeds from exercise of stock options | ||||||||
Net cash provided by (used in) financing activities | ( | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ||||
Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
Cash and cash equivalents | ||||||||
Beginning of period | ||||||||
End of period | $ | $ | ||||||
Supplemental cash flow information | ||||||||
Cash paid for interest on long-term debt | $ | $ | ||||||
Purchase of property and equipment included in accounts payable and accrued expenses and in other liabilities | $ | $ | ||||||
Construction costs capitalized under finance lease obligation and other leases | $ | $ | ||||||
December 31, 2018 | ASU 2016-02 Adjustments | January 1, 2019 | ||||||||||
Balance sheet line item | ||||||||||||
Property and equipment, net | $ | $ | ( | ) | $ | |||||||
Operating lease right-of-use assets | $ | — | $ | $ | ||||||||
Other noncurrent assets | $ | $ | ( | ) | $ | |||||||
Other liabilities | $ | $ | ( | ) | $ | |||||||
Other current liabilities | $ | $ | ( | ) | $ | |||||||
Lease financing obligation, net of current portion | $ | $ | ( | ) | $ | |||||||
Operating lease liabilities | $ | — | $ | $ | ||||||||
Accumulated deficit | $ | ( | ) | $ | $ | ( | ) | |||||
September 30, 2019 | ||||||||||||
Amortized Cost | Gross Unrealized Losses | Estimated Fair Value | ||||||||||
Short-term: | ||||||||||||
Investment securities | $ | $ | ( | ) | $ | |||||||
Total | $ | $ | ( | ) | $ | |||||||
December 31, 2018 | ||||||||||||
Amortized Cost | Gross Unrealized Losses | Estimated Fair Value | ||||||||||
Short-term: | ||||||||||||
Investment securities | $ | $ | ( | ) | $ | |||||||
Long-term: | ||||||||||||
Investment securities | ( | ) | ||||||||||
Total | $ | $ | ( | ) | $ | |||||||
▪ | Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities |
▪ | Level 2—Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable or can be corroborated by observable market data for substantially the full-term of the asset or liability |
▪ | Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability |
September 30, 2019 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds and other funds | $ | $ | $ | $ | ||||||||||||
Short-term investments: | ||||||||||||||||
Investment securities | ||||||||||||||||
Other non-current assets: | ||||||||||||||||
Certificate of deposit | ||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||
December 31, 2018 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||
Short-term investments: | ||||||||||||||||
Investment securities | ||||||||||||||||
Other non-current assets: | ||||||||||||||||
Certificate of deposit | ||||||||||||||||
Long-term: | ||||||||||||||||
Investment securities | ||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||
September 30, 2019 | December 31, 2018 | |||||||
Furniture and computer equipment | $ | $ | ||||||
Site and software development costs | ||||||||
Leasehold improvements | ||||||||
Construction in progress | ||||||||
Buildings (leased - Note 6) | ||||||||
Less accumulated depreciation and amortization | ( | ) | ( | ) | ||||
Property and equipment, net | $ | $ | ||||||
Nine months ended September 30, 2019 | ||||
Supplemental cash flows information | ||||
Cash payments included in operating cash flows from lease arrangements | $ | |||
Right-of-use assets obtained in exchange for lease obligations | $ | |||
September 30, 2019 | ||||
Additional lease information | ||||
Weighted average remaining lease term | ||||
Weighted average discount rate | % | |||
Amount | ||||
2019 (excluding the nine months ended September 30, 2019) | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
Thereafter | ||||
Total future minimum lease payments | ||||
Less: Imputed interest | ( | ) | ||
Total | $ | |||
September 30, 2019 | ||||
Balance sheet line item | ||||
Other current liabilities | $ | |||
Operating lease liabilities | ||||
Total operating leases | $ | |||
Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (Years) | |||||||
Outstanding at December 31, 2018 | $ | ||||||||
Options exercised | ( | ) | $ | ||||||
Outstanding and exercisable at September 30, 2019 | $ | ||||||||
Shares | Weighted- Average Grant Date Fair Value | ||||||
Unvested at December 31, 2018 | $ | ||||||
Unvested as of September 30, 2019 | $ | ||||||
Shares | Weighted- Average Grant Date Fair Value | ||||||
Outstanding at December 31, 2018 | $ | ||||||
RSUs granted | $ | ||||||
RSUs vested | ( | ) | $ | ||||
RSUs forfeited/canceled | ( | ) | $ | ||||
Outstanding as of September 30, 2019 | $ | ||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
U.S. Direct Retail | $ | $ | $ | $ | ||||||||||||
U.S. Other | ||||||||||||||||
U.S. segment net revenue | ||||||||||||||||
International Direct Retail | ||||||||||||||||
International segment net revenue | ||||||||||||||||
Total net revenue | $ | $ | $ | $ | ||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Adjusted EBITDA: | ||||||||||||||||
U.S. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
International | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total reportable segments Adjusted EBITDA | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Less: reconciling items (1) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Depreciation and amortization | $ | $ | $ | $ | ||||||||||||
Equity-based compensation and related taxes | ||||||||||||||||
Interest expense, net | ||||||||||||||||
Other (income), net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Provision for income taxes | ||||||||||||||||
Total reconciling items | $ | $ | $ | $ | ||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net revenue | ||||||||||||||||
Direct Retail | $ | $ | $ | $ | ||||||||||||
Other | ||||||||||||||||
Net revenue | $ | $ | $ | $ | ||||||||||||
September 30, 2019 | December 31, 2018 | |||||||
Assets by segment | ||||||||
U.S. | $ | $ | ||||||
International | ||||||||
Total reportable segments assets | ||||||||
Plus: reconciling corporate assets | ||||||||
Total assets | $ | $ | ||||||
• | A secured revolving credit facility under which the Borrower may borrow up to $ |
• | The Borrower also has the right, subject to certain customary conditions, to increase the Revolver by $ |
• | The Revolver has the following sublimits: |
◦ | a $ |
◦ | a $ |
September 30, 2019 | December 31, 2018 | |||||||||||||||||||
2017 Notes | 2018 Notes | 2019 Notes | 2017 Notes | 2018 Notes | ||||||||||||||||
Principal amounts: | ||||||||||||||||||||
Principal | $ | $ | $ | $ | $ | |||||||||||||||
Unamortized debt discount | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
Net carrying amount | $ | $ | $ | $ | $ | |||||||||||||||
Three Months Ended September 30, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
2017 Notes | 2018 Notes | 2019 Notes | 2017 Notes | |||||||||||||
Contractual interest expense | $ | $ | $ | $ | ||||||||||||
Interest cost related to amortization of the debt discount | $ | $ | $ | $ | ||||||||||||
Nine Months Ended September 30, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
2017 Notes | 2018 Notes | 2019 Notes | 2017 Notes | |||||||||||||
Contractual interest expense | $ | $ | $ | $ | ||||||||||||
Interest cost related to amortization of the debt discount | $ | $ | $ | $ | ||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Weighted average common shares used for basic and diluted net loss per share computation | ||||||||||||||||
Net loss per common share: | ||||||||||||||||
Basic and Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
U.S. Direct Retail | $ | 1,960,847 | $ | 1,460,056 | $ | 5,593,923 | $ | 4,043,270 | ||||||||
U.S. Other | 5,807 | 13,189 | 30,947 | 42,903 | ||||||||||||
U.S. segment net revenue | 1,966,654 | 1,473,245 | 5,624,870 | 4,086,173 | ||||||||||||
International Direct Retail | 338,833 | 232,400 | 968,697 | 678,997 | ||||||||||||
International segment net revenue | 338,833 | 232,400 | 968,697 | 678,997 | ||||||||||||
Total net revenue | $ | 2,305,487 | $ | 1,705,645 | $ | 6,593,567 | $ | 4,765,170 | ||||||||
Three months ended September 30, | |||||||||||
2019 | 2018 | % Change | |||||||||
Consolidated Financial Metrics | |||||||||||
Net Revenue | $ | 2,305,487 | $ | 1,705,645 | 35.2 | % | |||||
Adjusted EBITDA | $ | (144,184 | ) | $ | (76,405 | ) | |||||
Free cash flow | $ | (180,900 | ) | $ | (58,803 | ) | |||||
Direct Retail Financial and Operating Metrics | |||||||||||
Direct Retail Net Revenue | $ | 2,299,680 | $ | 1,692,456 | 35.9 | % | |||||
Active Customers | 19,071 | 13,860 | 37.6 | % | |||||||
LTM Net Revenue per Active Customer | $ | 449 | $ | 443 | 1.4 | % | |||||
Orders Delivered | 9,121 | 6,938 | 31.5 | % | |||||||
Average Order Value | $ | 252 | $ | 244 | 3.3 | % | |||||
Nine months ended September 30, | |||||||||||
2019 | 2018 | % Change | |||||||||
Consolidated Financial Metrics | |||||||||||
Net Revenue | $ | 6,593,567 | $ | 4,765,170 | 38.4 | % | |||||
Adjusted EBITDA | $ | (316,385 | ) | $ | (161,174 | ) | |||||
Free cash flow | $ | (439,188 | ) | $ | (113,942 | ) | |||||
Direct Retail Financial and Operating Metrics | |||||||||||
Direct Retail Net Revenue | $ | 6,562,620 | $ | 4,722,267 | 39.0 | % | |||||
Active Customers | 19,071 | 13,860 | 37.6 | % | |||||||
LTM Net Revenue per Active Customer | $ | 449 | $ | 443 | 1.4 | % | |||||
Orders Delivered | 26,446 | 19,278 | 37.2 | % | |||||||
Average Order Value | $ | 248 | $ | 245 | 1.2 | % | |||||
▪ | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; |
▪ | Adjusted EBITDA does not reflect equity-based compensation and related taxes; |
▪ | Adjusted EBITDA does not reflect changes in our working capital; |
▪ | Adjusted EBITDA does not reflect income tax payments that may represent a reduction in cash available to us; |
▪ | Adjusted EBITDA does not reflect depreciation and interest expenses associated with the lease financing obligation; and |
▪ | Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure. |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Reconciliation of Adjusted EBITDA | ||||||||||||||||
Net loss | $ | (272,035 | ) | $ | (151,726 | ) | $ | (654,362 | ) | $ | (360,235 | ) | ||||
Depreciation and amortization | 50,250 | 32,544 | 134,172 | 87,426 | ||||||||||||
Equity-based compensation and related taxes | 65,275 | 36,317 | 173,963 | 95,074 | ||||||||||||
Interest expense, net | 14,432 | 7,066 | 33,922 | 18,269 | ||||||||||||
Other (income), net | (2,182 | ) | (1,054 | ) | (5,582 | ) | (2,661 | ) | ||||||||
Provision for income taxes | 76 | 448 | 1,502 | 953 | ||||||||||||
Adjusted EBITDA | $ | (144,184 | ) | $ | (76,405 | ) | $ | (316,385 | ) | $ | (161,174 | ) | ||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net cash (used in) provided by operating activities | $ | (76,441 | ) | $ | 7,804 | $ | (160,523 | ) | $ | 42,331 | ||||||
Purchase of property and equipment | (68,628 | ) | (49,411 | ) | (183,968 | ) | (110,504 | ) | ||||||||
Site and software development costs | (35,831 | ) | (17,196 | ) | (94,697 | ) | (45,769 | ) | ||||||||
Free cash flow | $ | (180,900 | ) | $ | (58,803 | ) | $ | (439,188 | ) | $ | (113,942 | ) | ||||
Three months ended September 30, | |||||||||||
2019 | 2018 | % Change | |||||||||
Direct Retail | $ | 2,299,680 | $ | 1,692,456 | 35.9 | % | |||||
Other | 5,807 | 13,189 | (56.0 | )% | |||||||
Net revenue | $ | 2,305,487 | $ | 1,705,645 | 35.2 | % | |||||
Three months ended September 30, | |||||||||||
2019 | 2018 | % Change | |||||||||
Cost of goods sold | $ | 1,765,566 | $ | 1,312,875 | 34.5 | % | |||||
As a percentage of net revenue | 76.6 | % | 77.0 | % | |||||||
Three months ended September 30, | |||||||||||
2019 | 2018 | % Change | |||||||||
Customer service and merchant fees (1) | $ | 91,255 | $ | 66,664 | 36.9 | % | |||||
Advertising | 281,846 | 202,587 | 39.1 | % | |||||||
Selling, operations, technology, general and administrative | 426,529 | 268,785 | 58.7 | % | |||||||
$ | 799,630 | $ | 538,036 | 48.6 | % | ||||||
As a percentage of net revenue: | |||||||||||
Customer service and merchant fees (1) | 4.0 | % | 3.9 | % | |||||||
Advertising | 12.2 | % | 11.9 | % | |||||||
Selling operations, technology, general and administrative (1) | 18.5 | % | 15.8 | % | |||||||
34.7 | % | 31.6 | % | ||||||||
Three months ended September 30, | ||||||||||
2019 | 2018 | |||||||||
Customer service and merchant fees | $ | 2,374 | $ | 1,549 | ||||||
Selling operations, technology, general and administrative | $ | 61,451 | $ | 34,041 | ||||||
Three months ended September 30, | ||||||||
2019 | 2018 | |||||||
Customer service and merchant fees | 3.9 | % | 3.8 | % | ||||
Selling, operations, technology, general and administrative | 15.8 | % | 13.8 | % | ||||
Nine months ended September 30, | |||||||||||
2019 | 2018 | % Change | |||||||||
Direct Retail | $ | 6,562,620 | $ | 4,722,267 | 39.0 | % | |||||
Other | 30,947 | 42,903 | (27.9 | )% | |||||||
Net revenue | $ | 6,593,567 | $ | 4,765,170 | 38.4 | % | |||||
Nine months ended September 30, | |||||||||||
2019 | 2018 | % Change | |||||||||
Cost of goods sold | $ | 5,023,590 | $ | 3,663,569 | 37.1 | % | |||||
As a percentage of net revenue | 76.2 | % | 76.9 | % | |||||||
Nine months ended September 30, | |||||||||||
2019 | 2018 | % Change | |||||||||
Customer service and merchant fees (1) | $ | 256,230 | $ | 182,340 | 40.5 | % | |||||
Advertising | 784,981 | 541,815 | 44.9 | % | |||||||
Selling, operations, technology, general and administrative (1) | 1,153,286 | 721,120 | 59.9 | % | |||||||
Total operating expenses | $ | 2,194,497 | $ | 1,445,275 | 51.8 | % | |||||
As a percentage of net revenue | |||||||||||
Customer service and merchant fees (1) | 3.9 | % | 3.8 | % | |||||||
Advertising | 11.9 | % | 11.4 | % | |||||||
Selling, operations, technology, general and administrative (1) | 17.5 | % | 15.1 | % | |||||||
33.3 | % | 30.3 | % | ||||||||
Nine months ended September 30, | ||||||||||
2019 | 2018 | |||||||||
Customer service and merchant fees | $ | 6,619 | $ | 3,652 | ||||||
Selling, operations, technology, general and administrative | $ | 163,585 | $ | 89,493 | ||||||
Nine months ended September 30, | ||||||||
2019 | 2018 | |||||||
Customer service and merchant fees | 3.8 | % | 3.7 | % | ||||
Selling, operations, technology, general and administrative | 15.0 | % | 13.3 | % | ||||
September 30, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Cash and cash equivalents | $ | 1,295,385 | $ | 849,461 | ||||
Short-term investments | $ | 6,049 | $ | 114,278 | ||||
Accounts receivable, net | $ | 75,677 | $ | 50,603 | ||||
Long-term investments | $ | — | $ | 6,526 | ||||
Working capital | $ | 237,042 | $ | 116,713 | ||||
Nine months ended September 30, | ||||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Net loss | $ | (654,362 | ) | $ | (360,235 | ) | ||
Net cash (used in) provided by operating activities | $ | (160,523 | ) | $ | 42,331 | |||
Net cash used in investing activities | $ | (179,174 | ) | $ | (110,717 | ) | ||
Net cash provided by (used in) financing activities | $ | 787,207 | $ | (993 | ) | |||
Exhibit | Incorporated by Reference | ||||||
Number | Exhibit Description | Filed Herewith | Form | File No. | Filing Date | Exhibit Number | |
4.1 | 8-K | 001-36666 | 8/19/2019 | 4.1 | |||
4.2 | 8-K | 001-36666 | 8/19/2019 | 4.2 | |||
10.1 | 8-K | 001-36666 | 8/19/2019 | 10.1 | |||
10.2 | 8-K | 001-36666 | 8/19/2019 | 10.2 | |||
10.3 | 8-K | 001-36666 | 8/19/2019 | 10.3 | |||
10.4 | 8-K | 001-36666 | 8/19/2019 | 10.4 | |||
10.5 | 8-K | 001-36666 | 8/19/2019 | 10.5 | |||
10.6 | 8-K | 001-36666 | 8/19/2019 | 10.6 | |||
10.7 | 8-K | 001-36666 | 8/19/2019 | 10.7 | |||
10.8 | X | ||||||
31.1 | X | ||||||
31.2 | X | ||||||
32.1# | X | ||||||
32.2# | X | ||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | ||||||
101.SCH | XBRL Taxonomy Extension Schema Document | X | |||||
101.CAL | XBRL Taxonomy Calculation Linkbase Document | X | |||||
101.DEF | XBRL Taxonomy Definition Linkbase Document | X | |||||
101.LAB | XBRL Taxonomy Labels Linkbase Document | X | |||||
101.PRE | XBRL Taxonomy Presentation Linkbase Document | X | |||||
104 | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*) | X | |||||
+ | Indicates a management contract or compensatory plan | |
# | This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act. | |
WAYFAIR INC. | ||
Date: October 31, 2019 | By: | /s/ NIRAJ SHAH |
Niraj Shah | ||
Chief Executive Officer and President | ||
(Principal Executive Officer) | ||
Date: October 31, 2019 | By: | /s/ MICHAEL FLEISHER |
Michael Fleisher | ||
Chief Financial Officer | ||
(Principal Financial and Accounting Officer) | ||
(a) | Section 1.12 of the Lease is amended to read in its entirety: |
1.12 Operating Expense Base Year: | As to the Premises other than the Fifth Expansion Spaces, the Calendar Year 2014. As to the Fifth Expansion Spaces, the Calendar Year 2016. As to Amendment 5 Expansion Spaces, Amendment 6 Expansion Spaces and Amendment 8 Expansion Spaces, the Calendar Year 2018. As to the Amendment 10 Expansion Space, the Calendar Year 2021. |
(b) | Section 1.14 of the Lease is amended to read in its entirety: |
1.14 Tax Base Year: | As to the Premises other than the Fifth Expansion Spaces, the Calendar Year 2014. As to the Fifth Expansion Spaces, the tax fiscal year July 1, 2016 to June 30, 2017. As to Amendment 5 Expansion Spaces, the tax fiscal year July 1, 2017 to June 30, 2018. As to Amendment 6 Expansion Spaces and Amendment 8 Expansion Spaces, the tax fiscal year July 1, 2018 to June 30, 2019. As to the Amendment 10 Expansion Space, the tax fiscal year July 1, 2020 to June 30, 2021. |
(c) | Section 1.16 of the Lease is amended to read in its entirety: |
1.16 Tenant’s Proportionate Tax Share: | 33.25 % for the Premises (computed on the basis of 95% occupancy) consisting of 278,534 rentable square feet, exclusive of the Fifth Expansion Spaces. 11.22% for the Fifth Expansion Spaces (computed on the basis of 95% occupancy). 19.52% for the Amendment 5 Expansion Spaces (computed on the basis of 95% occupancy). 13.22% for the Amendment 6 Expansion Spaces (computed on the basis of 95% occupancy). 8.13% for the Amendment 8 Expansion Spaces (computed on the basis of 95% occupancy). 2.59% for the Amendment 10 Expansion Space (computed on the basis of 95% occupancy). |
(d) | Section 1.17 of the Lease is amended to read in its entirety: |
1.17 Tenant’s Proportionate Expense Share: | 33.25% for the Premises (computed on the basis of 95% occupancy) consisting of 278,534 rentable square feet, exclusive of the Fifth Expansion Spaces. 11.22% for the Fifth Expansion Spaces Premises (computed on the basis of 95% occupancy). 19.52% for the Amendment 5 Expansion Spaces (computed on the basis of 95% occupancy). 13.22% for the Amendment 6 Expansion Spaces (computed on the basis of 95% occupancy). 8.13% for the Amendment 8 Expansion Spaces (computed on the basis of 95% occupancy). 2.59% for the Amendment 10 Expansion Space (computed on the basis of 95% occupancy). |
(a) | The Amendment 10 Expansion Space shall be delivered to Tenant as of December 1, 2020 in as-is, where-is condition, except that Landlord shall deliver the Amendment 10 Expansion Space broom-clean and free of all occupants, furniture, debris and other personal property. Subject to the foregoing, without limitation, Landlord shall have no responsibility for any condition or construction within the Amendment 10 Expansion Space or for any condition above the finished ceilings except with regard to utilities and conduits serving premises other than the Premises, except that the foregoing shall not relieve Landlord from its obligations to deliver the Premises with all base Building systems operational at the Premises and to repair and maintain the Building components described in Section 8.02 of the Original Lease (as the same may be amended from time to time) in accordance with and subject to said Section 8.02 of the Original Lease (as the same may be amended from time to time). Subject to the foregoing, the obligations of Landlord under Exhibit B-2 of the Original Lease shall not be applicable to the Amendment 10 Expansion Space nor shall Tenant have any right to any Allowance with respect to the Amendment 10 Expansion Space under Article 38 of the Original Lease. Tenant shall be responsible for the demolition of the Amendment 10 Expansion Space and for all construction therein and for installation of telecommunications, business equipment and furniture (all of which shall be subject to the terms and conditions of the Lease regarding Alterations as if the Amendment 10 Expansion Space was a part of the Premises) and all costs in connection therewith including without limitation, electricity used incident to such demolition and construction therein. Without limiting the generality of the foregoing, all work necessary to prepare the Amendment 10 Expansion Space for Tenant’s occupancy shall be performed at Tenant’s sole cost and expense, in accordance with the applicable provisions of this Lease. Furthermore, if any alterations or modifications to the Building are required under applicable Legal Requirements by reason of the density of Tenant’s usage if in excess of ordinary office-related use or the Alterations made by Tenant to the Amendment 10 Expansion Space which are not ordinary office leasehold improvements, the cost of such Building modifications (including, without limitation, to bathrooms) shall be paid by Tenant. |
(b) | Solely for the purpose of determining Tenant’s obligations with respect to restoration of the Premises at the end of the Term, all Alterations made by Tenant to initially prepare the Amendment 10 Expansion Space shall be deemed “Initial Alterations”; accordingly, Tenant shall not be required to remove or restore any of such Alterations (or Alterations that were comparable replacements thereof) whether or not the same are Specialty Alterations. Tenant shall not be required to pay Landlord for the use of |
(a) | This Tenth Amendment sets forth the entire agreement between the parties with respect to the matters set forth herein. There have been no additional oral or written representations or agreements. |
(b) | Except as herein modified or amended, the provisions, conditions and terms of the Lease shall remain unchanged and in full force and effect. |
(c) | In the case of any inconsistency between the provisions of the Lease and this Tenth Amendment, the provisions of this Tenth Amendment shall govern and control. |
(d) | Submission of this Tenth Amendment by Landlord is not an offer to enter into this Tenth Amendment, but rather is a solicitation for such an offer by Tenant. Neither party shall be bound by this Tenth Amendment until such party has executed and delivered the same to the other party. |
By: | SPG COPLEY ASSOCIATES, LLC, a Delaware limited liability company, managing member |
TOWER | FLOOR | RENTABLE SQUARE FOOTAGE | ADD TO PREMISES DATE |
Three | 1 | 21,695 | December 1, 2020 |
Period | Annual Base Rent Per Rentable Square Foot | Annual Base Rent | Monthly Installment of Annual Base Rent (proportionately for any partial month |
December 1, 2020 through May 31, 2021 | $0.00 | $0.00 | $0.00 |
June 1, 2021 through May 31, 2022 | $45.00 | $976,275.00 | $81,356.25 |
June 1, 2022 through May 31, 2023 | $46.00 | $997,970.00 | $83,164.17 |
June 1, 2023 through May 31, 2024 | $47.00 | $1,019,665.00 | $84,972.08 |
June 1, 2024 through May 31, 2025 | $48.00 | $1,041,360.00 | $86,780.00 |
June 1, 2025 through May 31, 2026 | $49.00 | $1,063,055.00 | $88,587.92 |
June 1, 2026 through May 31, 2027 | $50.00 | $1,084,750.00 | $90,395.83 |
June 1, 2027 through December 31, 2027 | $51.00 | Partial Year | $92,203.75 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Wayfair Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: October 31, 2019 | /s/ NIRAJ SHAH | |
Niraj Shah | ||
President and Chief Executive Officer | ||
1. | I have reviewed this Quarterly Report on Form 10-Q of Wayfair Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: October 31, 2019 | /s/ MICHAEL FLEISHER | |
Michael Fleisher | ||
Chief Financial Officer | ||
1) | the Report which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: October 31, 2019 | /s/ NIRAJ SHAH | |
Niraj Shah | ||
President and Chief Executive Officer | ||
1) | the Report which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: October 31, 2019 | /s/ MICHAEL FLEISHER | |
Michael Fleisher | ||
Chief Financial Officer | ||
Convertible Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Outstanding Principal Amount and Carrying Value of Notes | The following table presents the outstanding principal amount and carrying value of the Notes as of the date presented (in thousands):
|
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| Schedule Of Interest Expense Related to Notes | The following tables present total interest expense recognized related to the Notes (in thousands):
|
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Marketable Securities and Fair Value Measurements - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
| Fair Value Disclosures [Abstract] | |||||
| Estimated fair values | $ 6,049,000 | $ 6,049,000 | $ 120,804,000 | ||
| Other-than-temporary impairment loss | 0 | $ 0 | 0 | $ 0 | |
| Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
| Realized Gains or losses | $ 0 | $ 0 | $ 0 | $ 0 | |
| Other long-term investments | |||||
| Fair Value Disclosures [Abstract] | |||||
| Estimated fair values | $ 6,526,000 | ||||
| Other long-term investments | Minimum | |||||
| Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
| Marketable securities term | 1 year | ||||
| Other long-term investments | Maximum | |||||
| Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
| Marketable securities term | 2 years | ||||
Property and Equipment, net (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Jan. 01, 2019 |
Dec. 31, 2018 |
|
| Property and equipment, net | ||||||
| Property and equipment, gross | $ 949,096 | $ 949,096 | $ 897,141 | |||
| Less accumulated depreciation and amortization | (402,040) | (402,040) | (290,164) | |||
| Property and equipment, net | 547,056 | 547,056 | $ 379,268 | 606,977 | ||
| Depreciation and amortization | 50,100 | $ 32,400 | 133,800 | $ 86,600 | ||
| Furniture and computer equipment | ||||||
| Property and equipment, net | ||||||
| Property and equipment, gross | 459,896 | 459,896 | 339,761 | |||
| Site and software development costs | ||||||
| Property and equipment, net | ||||||
| Property and equipment, gross | 263,555 | 263,555 | 172,653 | |||
| Leasehold improvements | ||||||
| Property and equipment, net | ||||||
| Property and equipment, gross | 189,622 | 189,622 | 109,929 | |||
| Construction in progress | ||||||
| Property and equipment, net | ||||||
| Property and equipment, gross | 36,023 | 36,023 | 90,104 | |||
| Buildings | ||||||
| Property and equipment, net | ||||||
| Property and equipment, gross | $ 0 | $ 0 | $ 184,694 | |||
Unearned Revenue |
9 Months Ended |
|---|---|
Sep. 30, 2019 | |
| Revenue from Contract with Customer [Abstract] | |
| Unearned Revenue | 9. Unearned Revenue The Company has three types of contractual liabilities: (i) cash collections from its customers prior to delivery of products purchased, which are initially recorded in "Unearned revenue," and are recognized as net revenue when the products are delivered, (ii) unredeemed gift cards and store credits, which are initially recorded in "Unearned revenue," and are recognized in the period they are redeemed, and (iii) membership rewards redeemable for future purchases, which are earned by customers on purchases made with the Company's Wayfair branded, private label credit card, and are initially recorded in "Other current liabilities," and are recognized as net revenue when redeemed. The portion of gift cards and store credits not expected to be redeemed are recognized as net revenue based on historical redemption pattern, which is substantially within twenty-four months from the date of issuance. Contractual liabilities included in "Unearned revenue" and "Other current liabilities" in the consolidated and condensed balance sheets were $151.4 million and $1.5 million at September 30, 2019 and $148.1 million and $3.1 million at December 31, 2018, respectively. During the nine months ended September 30, 2019, the Company recognized $125.1 million and $1.6 million of net revenue included in "Unearned revenue" and "Other current liabilities," respectively, at December 31, 2018. Net revenue from contracts with customers is disaggregated by Direct Retail and Other net revenue and by geographic region because this manner of disaggregation best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Refer to Note 10, Segment and Geographic Information, for additional detail.
|
Property and Equipment, net |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment, net | 5. Property and Equipment, net The following table summarizes property and equipment, net as of September 30, 2019 and December 31, 2018 (in thousands):
Property and equipment depreciation and amortization expense was $50.1 million and $32.4 million for the three months ended September 30, 2019 and 2018, respectively, and $133.8 million and $86.6 million for the nine months ended September 30, 2019 and 2018, respectively.
|
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| Label | Element | Value |
|---|---|---|
| Accounting Standards Update 2016-02 [Member] | ||
| Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 1,850,000 |
| Accounting Standards Update 2016-02 [Member] | Retained Earnings [Member] | ||
| Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 1,850,000 |
| Accounting Standards Update 2014-09 [Member] | ||
| Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 4,657,000 |
| Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
| Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 4,657,000 |
Segment and Geographic Information - Activity Related to Net Revenue and Adjusted EBITDA (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
| Segment Reporting Information [Line Items] | ||||
| Total net revenue | $ 2,305,487 | $ 1,705,645 | $ 6,593,567 | $ 4,765,170 |
| Adjusted EBITDA: | (144,184) | (76,405) | (316,385) | (161,174) |
| Less: reconciling items | (127,851) | (75,321) | (337,977) | (199,061) |
| Net loss | (272,035) | (151,726) | (654,362) | (360,235) |
| Depreciation and amortization | 50,250 | 32,544 | 134,172 | 87,426 |
| Equity-based compensation and related taxes | 65,275 | 36,317 | 173,963 | 95,074 |
| Interest expense, net | 14,432 | 7,066 | 33,922 | 18,269 |
| Other (income), net | (2,182) | (1,054) | (5,582) | (2,661) |
| Provision for income taxes | 76 | 448 | 1,502 | 953 |
| Less: reconciling items | 127,851 | 75,321 | 337,977 | 199,061 |
| U.S. | ||||
| Segment Reporting Information [Line Items] | ||||
| Total net revenue | 1,966,654 | 1,473,245 | 5,624,870 | 4,086,173 |
| Adjusted EBITDA: | (62,878) | (26,036) | (91,002) | (26,774) |
| International | ||||
| Segment Reporting Information [Line Items] | ||||
| Total net revenue | 338,833 | 232,400 | 968,697 | 678,997 |
| Adjusted EBITDA: | (81,306) | (50,369) | (225,383) | (134,400) |
| Direct Retail | ||||
| Segment Reporting Information [Line Items] | ||||
| Total net revenue | 2,299,680 | 1,692,456 | 6,562,620 | 4,722,267 |
| Direct Retail | U.S. | ||||
| Segment Reporting Information [Line Items] | ||||
| Total net revenue | 1,960,847 | 1,460,056 | 5,593,923 | 4,043,270 |
| Direct Retail | International | ||||
| Segment Reporting Information [Line Items] | ||||
| Total net revenue | 338,833 | 232,400 | 968,697 | 678,997 |
| Other | ||||
| Segment Reporting Information [Line Items] | ||||
| Total net revenue | 5,807 | 13,189 | 30,947 | 42,903 |
| Other | U.S. | ||||
| Segment Reporting Information [Line Items] | ||||
| Total net revenue | $ 5,807 | $ 13,189 | $ 30,947 | $ 42,903 |
CONSOLIDATED AND CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Accounts receivable allowance | $ 17,849 | $ 9,312 |
| Convertible redeemable preferred units, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Convertible redeemable preferred units, shares authorized (in shares) | 10,000,000 | 10,000,000 |
| Convertible redeemable preferred units, shares issued (in shares) | 0 | 0 |
| Class A common stock | ||
| Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
| Common stock, shares outstanding (in shares) | 65,502,165 | 62,329,701 |
| Common stock, shares issued (in shares) | 65,502,165 | 62,329,701 |
| Class B common stock | ||
| Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized (in shares) | 164,000,000 | 164,000,000 |
| Common stock, shares outstanding (in shares) | 27,372,273 | 28,417,882 |
| Common stock, shares issued (in shares) | 27,372,273 | 28,417,882 |
Leases - Other Information Related to Leases (Details) $ in Thousands |
9 Months Ended |
|---|---|
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Sep. 30, 2019
USD ($)
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| Supplemental cash flows information | |
| Cash payments included in operating cash flows from lease arrangements | $ 77,687 |
| Right-of-use assets obtained in exchange for lease obligations | $ 281,006 |
| Additional lease information | |
| Weighted average remaining lease term | 10 years |
| Weighted average discount rate | 6.70% |
Segment and Geographic Information Narrative (Details) |
9 Months Ended |
|---|---|
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Sep. 30, 2019
site
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| U.S. | |
| Segment Reporting Information [Line Items] | |
| Distinct sites | 5 |
Leases (Tables) |
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| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Information Related to Leases | The following table presents other information related to leases (in thousands):
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| Future Minimum Lease Payments | Future minimum lease payments under non-cancellable leases as of September 30, 2019 were as follows (in thousands):
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| Operating Lease Balance Sheet Items | The following table presents total operating leases (in thousands):
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Summary of Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | The Company determines if an arrangement is a lease at inception. Operating leases are included in "Operating lease right-of-use assets," "Other current liabilities," and "Operating lease liabilities" on our consolidated and condensed balance sheets. As of September 30, 2019, the Company has not entered into material financing lease arrangements. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that management will exercise that option. The Company has lease arrangements with lease and non-lease components. For the Company's warehouse and fulfillment center lease arrangements, the Company accounts for lease and non-lease components separately. For all other lease arrangements, the Company accounts for lease and non-lease components as a single lease component. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The determination of the Company’s incremental borrowing rate requires judgment. The incremental borrowing rate for each lease is primarily based on publicly-available information for companies within the same industry and with similar credit profiles. The rate is then adjusted for the impact of collateralization, the lease term and other specific terms included in the Company’s lease arrangements. The incremental borrowing rate was determined at lease commencement, or as of January 1, 2019 for operating leases existing upon adoption of ASC 842. The incremental borrowing rate is subsequently reassessed upon a modification to the lease arrangement. The operating lease ROU asset also includes any lease payments made prior to commencement date and excludes lease incentives and initial direct costs incurred. ROU assets are subsequently assessed for impairment in accordance with the Company’s accounting policy for long-lived assets. Stock Compensation The Company adopted ASU No. 2018-07, Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting ("ASU 2018-07") on January 1, 2019. The ASU simplifies aspects of share-based compensation issued to non-employees by making the guidance consistent with the accounting for employee share-based compensation. The adoption of ASU 2018-07 did not have a material impact the Company’s consolidated financial position, results of operations, comprehensive loss, stockholders' deficit or cash flows. Hosting Arrangements In August 2018, the FASB issued guidance related to a customer’s accounting for implementation costs incurred in hosting arrangements. The guidance aligns the requirements for capitalizing implementation costs incurred in cloud computing arrangements with the requirements for capitalizing costs to develop or obtain internal-use software. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. This guidance may be applied either retrospectively or prospectively. The Company early adopted the guidance on a prospective basis as of January 1, 2019. The adoption of the guidance did not have a material impact on the Company's
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| Recent Accounting Pronouncement and Adoption of New Accounting Pronouncement | Leases The Company adopted ASU No. 2016-02, "Leases" ("ASU 2016-02") on January 1, 2019 using the modified retrospective approach. The Company also elected the package of practical expedients, which among other things, allowed the Company to carryforward historical lease classification. The adoption of the standard resulted in (1) the derecognition of building assets and finance lease obligations for certain leases that did not pass the sale-leaseback criteria, (2) the derecognition of construction in progress assets and other long-term liabilities for certain lease arrangements whereby the Company is no longer considered the deemed construction owner of the construction projects, and (3) the recognition of operating lease right-of-use ("ROU") assets and lease liabilities for lease arrangements with an initial term greater than twelve months. Adoption of ASU 2016-02 resulted in the following adjustments to the balance sheet (in thousands):
The adoption of the standard did not have a notable impact on the Company's liquidity or a materially adverse impact on the Company's debt covenant compliance. Credit Impairment In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). This ASU revises how entities account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. For public entities, ASU 2016-13 is required to be adopted for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Management is currently evaluating the impact of the adoption of this ASU on the Company’s consolidated financial position, results of operations, comprehensive loss, stockholders' deficit or cash flows.
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Credit Agreement |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit Agreement | 13. Credit Agreement On February 21, 2019 (the "Closing Date"), the Company, as guarantor, and Wayfair LLC, a wholly-owned subsidiary of the Company, as borrower (the “Borrower”) entered into an Amended and Restated Credit Agreement (the “Amended Credit Agreement”) with Citibank, in its capacity as administrative agent, swing line lender and letter of credit issuer, and certain other lenders party thereto. The Amended Credit Agreement replaced the Company's existing credit facility with Citibank. The Amended Credit Agreement consists of:
The Borrower’s obligations under the Amended Credit Agreement are guaranteed by the Company and certain of its subsidiaries (together, the “Guarantors”). The obligations of the Borrower and the Guarantors are secured by first-priority liens on substantially all of the assets of the Borrower and the Guarantors, including, with certain exceptions, all of the capital stock of the Company’s domestic subsidiaries and 65% of the capital stock of the Company’s first-tier foreign subsidiaries. The proceeds of the Revolver may be used to finance working capital, to refinance certain existing indebtedness and to provide funds for permitted acquisitions, repurchases of equity interests and other general corporate purposes. Borrowings under the Revolver will bear interest through maturity at a variable rate based upon, at the Borrower’s option, either the Eurodollar rate or the base rate (which is the highest of (x) Citibank’s prime rate, (y) one-half of 1.00% in excess of the federal funds effective rate, and (z) 1.00% in excess of the one-month Eurodollar rate), plus, in each case an applicable margin. As of the Closing Date, the applicable margin for Eurodollar rate loans was 1.75% per annum and the applicable margin for base rate loans was 0.75% per annum. The applicable margin is subject to specified changes depending on the Liquidity (as defined in the Amended Credit Agreement) of the Company. Any amounts outstanding under the Revolver are due at maturity. In addition, subject to the terms and conditions set forth in the Amended Credit Agreement, the Borrower is required to make certain mandatory prepayments prior to maturity. The Amended Credit Agreement contains affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants that, among other things, will limit or restrict the ability of the Borrower and the Guarantors, subject to negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of their businesses. The Amended Credit Agreement also contains customary events of default, subject to thresholds and grace periods, including, among others, payment default, covenant default, cross default to other material indebtedness, and judgment default. In addition, the Amended Credit Agreement requires the Company to maintain certain levels of Free Cash Flow (as defined in the Amended Credit Agreement). The Company did not borrow any amounts under its credit agreement during the nine months ended September 30, 2019 and the year ended December 31, 2018. 14. Convertible Debt On September 15, 2017, the Company issued $431.25 million aggregate principal amount of 0.375% Convertible Senior Notes due 2022 (the "2017 Notes"), which includes the exercise in full of a $56.25 million over-allotment option, to certain financial institutions as the initial purchasers of the 2017 Notes (the "2017 Initial Purchasers"). On September 11, 2017, in connection with the pricing of the 2017 Notes, the Company entered into privately negotiated capped call transactions (the "2017 Base Capped Call Transactions") with two of the 2017 Initial Purchasers and certain other financial institutions (the "2017 Option Counterparties") and, in connection with the exercise in full of the over-allotment option by the 2017 Initial Purchasers, on September 14, 2017, entered into additional capped call transactions (such additional capped call transactions, the "2017 Additional Capped Call Transactions” and, together with the 2017 Base Capped Call Transactions, the "2017 Capped Call Transactions") with the 2017 Option Counterparties. Collectively, the 2017 Capped Call Transactions covered, initially, the number of shares of the Company’s Class A common stock underlying the 2017 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2017 Notes. On November 15, 2018, the Company amended and restated the 2017 Capped Call Transactions (the "Restated 2017 Capped Call Transactions") with each of the 2017 Option Counterparties in order to, among other things, provide that the options underlying the Restated 2017 Capped Call Transactions can, at the Company’s option, remain outstanding until September 1, 2022, which is the maturity date for the 2017 Notes, even if all or a portion of the 2017 Notes are converted, repurchased or redeemed prior to such date. In November 2018, the Company issued $575.0 million aggregate principal amount of 1.125% Convertible Senior Notes due 2024 (the "2018 Notes"), which includes the exercise in full of a $75.0 million option granted to the initial purchasers, to certain financial institutions as the initial purchasers of the 2018 Notes (the "2018 Initial Purchasers"). The issuance of $500.0 million of 2018 Notes closed on November 19, 2018 and the additional $75.0 million of additional 2018 Notes, which were issued pursuant to the exercise of the 2018 Initial Purchasers' option to purchase such additional 2018 Notes, closed on November 29, 2018. On November 14, 2018, in connection with the pricing of the 2018 Notes, the Company entered into privately negotiated capped call transactions (the "2018 Base Capped Call Transactions") with one of the 2018 Initial Purchasers and certain other financial institutions (the "2018 Option Counterparties") and, in connection with the exercise in full of the 2018 Initial Purchasers' option to purchase such additional 2018 Notes, on November 27, 2018, entered into additional capped call transactions (such additional capped call transactions, the "2018 Additional Capped Call Transactions" and, together with the 2018 Base Capped Call Transactions, the "2018 Capped Call Transactions") with the 2018 Option Counterparties. Collectively, the 2018 Capped Call Transactions cover, initially, the number of shares of the Company’s Class A common stock underlying the 2018 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2018 Notes. On August 19, 2019, the Company issued $948.75 million aggregate principal amount of 1.00% Convertible Senior Notes due 2026 (the "2019 Notes" and together with the 2017 Notes and 2018 Notes, the "Notes"), which includes the exercise in full of a $123.75 million option granted to the initial purchasers, to certain financial institutions as the initial purchasers of the 2019 Notes (the "2019 Initial Purchasers"). On August 14, 2019, in connection with the pricing of the 2019 Notes, the Company entered into privately negotiated capped call transactions (the "2019 Base Capped Call Transactions") with certain of the 2019 Initial Purchasers or their affiliates and another financial institution (the "2019 Option Counterparties") and, in connection with the exercise in full of the 2019 Initial Purchasers' option to purchase such additional 2019 Notes, on August 16, 2019, entered into additional capped call transactions (such additional capped call transactions, the "2019 Additional Capped Call Transactions" and, together with the 2019 Base Capped Call Transactions, the "2019 Capped Call Transactions") with the 2019 Option Counterparties. Collectively, the 2019 Capped Call Transactions cover, initially, the number of shares of the Company’s Class A common stock underlying the 2019 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2019 Notes. The net proceeds from the sale of the 2017 Notes, 2018 Notes, and 2019 Notes were approximately $420.4 million, $562.0 million, and $935.1 million, respectively, after deducting the initial purchasers’ discounts and the offering expenses payable by the Company. The Company used approximately $44.2 million, $93.4 million and $145.7 million, respectively, of the net proceeds from the 2017 Notes, 2018 Notes, and 2019 Notes to pay the cost of the 2017 Capped Call Transactions, the 2018 Capped Call Transactions, and the 2019 Capped Call Transactions, respectively. The Company intends to use the remainder of the net proceeds from the Notes for working capital and general corporate purposes. The Company may also use a portion of the net proceeds to finance acquisitions, strategic transactions, investments or the repayment, purchase or exchange of indebtedness (including its existing convertible notes). The Notes are general unsecured obligations of the Company. The Notes rank senior in right of payment to any of the Company’s future indebtedness that is expressly subordinated in right of payment to the Notes; rank equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; are effectively subordinated in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and are structurally subordinated to all existing and future indebtedness and liabilities of the Company’s subsidiaries. In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, which does not meet the criteria for separate accounting as a derivative as it is indexed to the Company's own stock, was determined by deducting the fair value of the liability component from the par value of the Notes. The difference between the principal amount of the Notes and the liability component represents the debt discount, which is recorded as a direct deduction from the related debt liability in the consolidated and condensed balance sheet and amortized to interest expense using the effective interest method over the term of the Notes. The effective interest rate of the 2017 Notes, 2018 Notes, and 2019 Notes is 6.0%, 8.1%, and 6.4%, respectively. The equity component of the 2017 Notes, 2018 Notes, and 2019 Notes of approximately $95.8 million, $181.5 million, and $280.3 million, respectively, is included in additional paid-in capital in the consolidated and condensed balance sheet and is not remeasured as long as it continues to meet the conditions for equity classification. The Company allocated transaction costs related to the Notes using the same proportions as the proceeds from the Notes. Transaction costs attributable to the liability component were recorded as a direct deduction from the related debt liability in the consolidated and condensed balance sheet and amortized to interest expense over the term of the Notes, and transaction costs attributable to the equity component were netted with the equity component in shareholders’ equity. The following table presents the outstanding principal amount and carrying value of the Notes as of the date presented (in thousands):
The following tables present total interest expense recognized related to the Notes (in thousands):
The estimated fair value of the 2017 Notes, the 2018 Notes, and the 2019 Notes was $533.3 million, $694.3 million, and $973.9 million, respectively, as of September 30, 2019. The estimated fair value of the Notes was determined through consideration of quoted market prices. The fair value is classified as Level 2, as defined in Note 3, Marketable Securities and Fair Value Measurements. As of September 30, 2019, the if-converted value of the 2017 Notes exceeded the principal amount by $33.4 million. The if-converted value of both the 2018 and 2019 Notes did not exceed the principal value as of September 30, 2019. 2017 Notes The 2017 Notes were issued pursuant to an indenture, dated September 15, 2017 (the "2017 Indenture"), between the Company and U.S. Bank National Association, as trustee. The Company pays interest on the 2017 Notes semiannually in arrears at a rate of 0.375% per annum on March 1 and September 1 of each year. The 2017 Notes are convertible based upon an initial conversion rate of 9.61 shares of the Company’s Class A common stock per $1,000 principal amount of 2017 Notes (equivalent to a conversion price of approximately $104.06 per share of the Company’s Class A common stock). The conversion rate will be subject to adjustment upon the occurrence of certain specified events, including certain distributions and dividends to all or substantially all of the holders of the Company’s Class A common stock, but will not be adjusted for accrued and unpaid interest. The Company will settle any conversions of the 2017 Notes in cash, shares of the Company’s Class A common stock or a combination thereof, with the form of consideration determined at the Company’s election. The 2017 Notes will mature on September 1, 2022, unless earlier purchased, redeemed or converted. Prior to June 1, 2022, holders may convert all or a portion of their 2017 Notes only under the following circumstances: (1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the 5 business day period after any 10 consecutive trading day period (the "2017 Notes measurement period") in which the trading price per $1,000 principal amount of 2017 Notes for each trading day of the 2017 Notes measurement period was less than 98% of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate on each such trading day; (3) with respect to any 2017 Notes called for redemption by the Company, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On and after June 1, 2022 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2017 Notes at any time, regardless of the foregoing circumstances. Holders of 2017 Notes who convert their 2017 Notes in connection with a notice of a redemption or a make-whole fundamental change (each as defined in the 2017 Indenture) may be entitled to a premium in the form of an increase in the conversion rate of the 2017 Notes. The 2017 Notes are not convertible during the fourth quarter of 2019 and none of the 2017 Notes has been converted to date. The Company may not redeem the 2017 Notes prior to September 8, 2020. On or after September 8, 2020, the Company may redeem for cash all or part of the 2017 Notes if the last reported sale price of the Company’s Class A common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the five trading days immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be 100% of the principal amount of the 2017 Notes to be redeemed, plus accrued and unpaid interest, if any. Upon the occurrence of a fundamental change (as defined in the 2017 Indenture), holders may require the Company to repurchase all or a portion of their 2017 Notes for cash at a price equal to 100% of the principal amount of the 2017 Notes to be repurchased plus any accrued but unpaid interest to, but excluding, the fundamental change repurchase date. The 2017 Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the 2017 Notes then outstanding may declare the entire principal amount of all the 2017 Notes plus accrued interest, if any, to be immediately due and payable. 2018 Notes The 2018 Notes were issued pursuant to an indenture, dated November 19, 2018 (the "2018 Indenture"), between the Company and U.S. Bank National Association, as trustee. The Company will pay interest on the 2018 Notes semiannually in arrears at a rate of 1.125% per annum on May 1 and November 1 of each year commencing on May 1, 2019. The 2018 Notes are convertible based upon an initial conversion rate of 8.5910 shares of the Company’s Class A common stock per $1,000 principal amount of 2018 Notes (equivalent to a conversion price of approximately $116.40 per share of the Company’s Class A common stock). The conversion rate will be subject to adjustment upon the occurrence of certain specified events, including certain distributions and dividends to all or substantially all of the holders of the Company’s Class A common stock, but will not be adjusted for accrued and unpaid interest. The Company will settle any conversions of the 2018 Notes in cash, shares of the Company’s Class A common stock or a combination thereof, with the form of consideration determined at the Company’s election. The 2018 Notes will mature on November 1, 2024, unless earlier purchased, redeemed or converted. Prior to August 1, 2024, holders may convert all or a portion of their 2018 Notes only under the following circumstances: (1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the "2018 Notes measurement period") in which the trading price per $1,000 principal amount of 2018 Notes for each trading day of the 2018 Notes measurement period was less than 98% of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate on each such trading day; (3) with respect to any 2018 Notes called for redemption by the Company, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On and after August 1, 2024 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2018 Notes at any time, regardless of the foregoing circumstances. Holders of 2018 Notes who convert their 2018 Notes in connection with a make-whole fundamental change or a notice of redemption (each as defined in the 2018 Indenture) may be entitled to a premium in the form of an increase in the conversion rate of the 2018 Notes. The 2018 Notes are not convertible during the fourth quarter of 2019 and none of the 2018 Notes has been converted to date. The Company may not redeem the 2018 Notes prior to May 8, 2022. On or after May 8, 2022, the Company may redeem for cash all or part of the 2018 Notes if the last reported sale price of the Company’s Class A common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the five trading days immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be 100% of the principal amount of the 2018 Notes to be redeemed, plus accrued and unpaid interest, if any. Upon the occurrence of a fundamental change (as defined in the 2018 Indenture), holders may require the Company to repurchase all or a portion of their 2018 Notes for cash at a price equal to 100% of the principal amount of the 2018 Notes to be repurchased plus any accrued but unpaid interest to, but excluding, the fundamental change repurchase date. The 2018 Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the 2018 Notes then outstanding may declare the entire principal amount of all the 2018 Notes plus accrued interest, if any, to be immediately due and payable. 2019 Notes The 2019 Notes were issued pursuant to an indenture, dated August 19, 2019 (the "2019 Indenture"), between the Company and U.S. Bank National Association, as trustee. The Company will pay interest on the 2019 Notes semiannually in arrears at a rate of 1.00% per annum on February 15 and August 15 of each year commencing on February 15, 2020. The 2019 Notes are convertible based upon an initial conversion rate of 6.7349 shares of the Company’s Class A common stock per $1,000 principal amount of 2019 Notes (equivalent to a conversion price of approximately $148.48 per share of the Company’s Class A common stock). The conversion rate will be subject to adjustment upon the occurrence of certain specified events, including certain distributions and dividends to all or substantially all of the holders of the Company’s Class A common stock, but will not be adjusted for accrued and unpaid interest. The Company will settle any conversions of the 2019 Notes in cash, shares of the Company’s Class A common stock or a combination thereof, with the form of consideration determined at the Company’s election. The 2019 Notes will mature on August 15, 2026, unless earlier purchased, redeemed or converted. Prior to May 15, 2026, holders may convert all or a portion of their 2019 Notes only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2019 (and only during such calendar quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “2019 Notes measurement period”) in which the trading price per $1,000 principal amount of 2019 Notes for each trading day of the 2019 Notes measurement period was less than 98% of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate on each such trading day; (3) with respect to any 2019 Notes called for redemption by the Company, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On and after May 15, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2019 Notes at any time, regardless of the foregoing circumstances. Holders of 2019 Notes who convert their 2019 Notes in connection with a make-whole fundamental change or a notice of redemption (each as defined in the 2019 Indenture) may be entitled to a premium in the form of an increase in the conversion rate of the 2019 Notes. The 2019 Notes are not convertible during the fourth quarter of 2019 and none of the 2019 Notes has been converted to date. The Company may not redeem the 2019 Notes prior to August 20, 2023. On or after August 20, 2023, the Company may redeem for cash all or part of the 2019 Notes if the last reported sale price of the Company’s Class A common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the five trading days immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be 100% of the principal amount of the 2019 Notes to be redeemed, plus accrued and unpaid interest, if any. Upon the occurrence of a fundamental change (as defined in the 2019 Indenture), holders may require the Company to repurchase all or a portion of their 2019 Notes for cash at a price equal to 100% of the principal amount of the 2019 Notes to be repurchased plus any accrued but unpaid interest to, but excluding, the fundamental change repurchase date. The 2019 Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the 2019 Notes then outstanding may declare the entire principal amount of all the 2019 Notes plus accrued interest, if any, to be immediately due and payable. Capped Call Transactions The Restated 2017 Capped Call Transactions, 2018 Capped Call Transactions, and 2019 Capped Call Transactions (collectively, the "Capped Call Transactions") are expected generally to reduce the potential dilution and/or offset the cash payments the Company is required to make in excess of the principal amount of the Notes upon conversion of the Notes in the event that the market price per share of the Company’s Class A common stock is greater than the strike price of the Capped Call Transactions (which initially corresponds to the initial conversion price of the Notes and is subject to certain adjustments under the terms of the Capped Call Transactions), with such reduction and/or offset subject to a cap based on the cap price of the Capped Call Transactions. The Restated 2017 Capped Call Transactions have an initial cap price of $154.16 per share of the Company’s Class A common stock, which represents a premium of 100% over the last reported sale price of the Company’s Class A common stock on September 11, 2017, which is the date the 2017 Notes priced, and is subject to certain adjustments under the terms of the Restated 2017 Capped Call Transactions. The 2018 Capped Call Transactions have an initial cap price of $219.63 per share of the Company’s Class A common stock, which represents a premium of 150% over the last reported sale price of the Company’s Class A common stock on November 14, 2018, which is the day the 2018 Notes priced, and is subject to certain adjustments under the terms of the 2018 Capped Call Transactions. The 2019 Capped Call Transactions have an initial cap price of $280.15 per share of the Company's Class A common stock, which represents a premium of 150% over the last reported sale price of the Company's Class A common stock on August 14, 2019, which is the day the 2019 Notes priced, and is subject to certain adjustments under the terms of the 2019 Capped Call Transactions. Collectively, the Capped Call Transactions cover, initially, the number of shares of the Company’s Class A common stock underlying the Notes, subject to anti-dilution adjustments substantially similar to those applicable to the Notes. The Capped Call Transactions are separate transactions, in each case, entered into by the Company with the 2017 Option Counterparties, the 2018 Option Counterparties, and 2019 Option Counterparties, and are not part of the terms of the Notes and will not affect any holder’s rights under the Notes. Holders of the Notes will not have any rights with respect to the Capped Call Transactions. The Capped Call Transactions do not meet the criteria for separate accounting as a derivative as they are indexed to the Company's stock. The premiums paid for the Capped Call Transactions have been included as a net reduction to additional paid-in capital within shareholders’ equity.
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Unearned Revenue (Details) - USD ($) $ in Millions |
9 Months Ended | |
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Sep. 30, 2019 |
Dec. 31, 2018 |
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| Unearned revenue | ||
| Disaggregation of Revenue [Line Items] | ||
| Contract liabilities | $ 151.4 | $ 148.1 |
| Revenue recognized that was included in deferred revenue | 125.1 | |
| Other current liabilities | ||
| Disaggregation of Revenue [Line Items] | ||
| Contract liabilities | 1.5 | $ 3.1 |
| Revenue recognized that was included in deferred revenue | $ 1.6 |
Commitments and Contingencies (Details) $ in Millions |
Jan. 16, 2019
plaintiff
officer
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Sep. 30, 2019
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Dec. 31, 2018
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| Commitments and Contingencies Disclosure [Abstract] | |||
| Letter of credit issued as security for lease agreements | $ | $ 46.4 | $ 26.8 | |
| Number of Company's officers | officer | 3 | ||
| Number of plaintiffs | plaintiff | 2 |
Summary of Significant Accounting Policies (Tables) |
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| Adoption of ASU 2016-02 | Adoption of ASU 2016-02 resulted in the following adjustments to the balance sheet (in thousands):
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Convertible Debt |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Debt | 13. Credit Agreement On February 21, 2019 (the "Closing Date"), the Company, as guarantor, and Wayfair LLC, a wholly-owned subsidiary of the Company, as borrower (the “Borrower”) entered into an Amended and Restated Credit Agreement (the “Amended Credit Agreement”) with Citibank, in its capacity as administrative agent, swing line lender and letter of credit issuer, and certain other lenders party thereto. The Amended Credit Agreement replaced the Company's existing credit facility with Citibank. The Amended Credit Agreement consists of:
The Borrower’s obligations under the Amended Credit Agreement are guaranteed by the Company and certain of its subsidiaries (together, the “Guarantors”). The obligations of the Borrower and the Guarantors are secured by first-priority liens on substantially all of the assets of the Borrower and the Guarantors, including, with certain exceptions, all of the capital stock of the Company’s domestic subsidiaries and 65% of the capital stock of the Company’s first-tier foreign subsidiaries. The proceeds of the Revolver may be used to finance working capital, to refinance certain existing indebtedness and to provide funds for permitted acquisitions, repurchases of equity interests and other general corporate purposes. Borrowings under the Revolver will bear interest through maturity at a variable rate based upon, at the Borrower’s option, either the Eurodollar rate or the base rate (which is the highest of (x) Citibank’s prime rate, (y) one-half of 1.00% in excess of the federal funds effective rate, and (z) 1.00% in excess of the one-month Eurodollar rate), plus, in each case an applicable margin. As of the Closing Date, the applicable margin for Eurodollar rate loans was 1.75% per annum and the applicable margin for base rate loans was 0.75% per annum. The applicable margin is subject to specified changes depending on the Liquidity (as defined in the Amended Credit Agreement) of the Company. Any amounts outstanding under the Revolver are due at maturity. In addition, subject to the terms and conditions set forth in the Amended Credit Agreement, the Borrower is required to make certain mandatory prepayments prior to maturity. The Amended Credit Agreement contains affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants that, among other things, will limit or restrict the ability of the Borrower and the Guarantors, subject to negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of their businesses. The Amended Credit Agreement also contains customary events of default, subject to thresholds and grace periods, including, among others, payment default, covenant default, cross default to other material indebtedness, and judgment default. In addition, the Amended Credit Agreement requires the Company to maintain certain levels of Free Cash Flow (as defined in the Amended Credit Agreement). The Company did not borrow any amounts under its credit agreement during the nine months ended September 30, 2019 and the year ended December 31, 2018. 14. Convertible Debt On September 15, 2017, the Company issued $431.25 million aggregate principal amount of 0.375% Convertible Senior Notes due 2022 (the "2017 Notes"), which includes the exercise in full of a $56.25 million over-allotment option, to certain financial institutions as the initial purchasers of the 2017 Notes (the "2017 Initial Purchasers"). On September 11, 2017, in connection with the pricing of the 2017 Notes, the Company entered into privately negotiated capped call transactions (the "2017 Base Capped Call Transactions") with two of the 2017 Initial Purchasers and certain other financial institutions (the "2017 Option Counterparties") and, in connection with the exercise in full of the over-allotment option by the 2017 Initial Purchasers, on September 14, 2017, entered into additional capped call transactions (such additional capped call transactions, the "2017 Additional Capped Call Transactions” and, together with the 2017 Base Capped Call Transactions, the "2017 Capped Call Transactions") with the 2017 Option Counterparties. Collectively, the 2017 Capped Call Transactions covered, initially, the number of shares of the Company’s Class A common stock underlying the 2017 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2017 Notes. On November 15, 2018, the Company amended and restated the 2017 Capped Call Transactions (the "Restated 2017 Capped Call Transactions") with each of the 2017 Option Counterparties in order to, among other things, provide that the options underlying the Restated 2017 Capped Call Transactions can, at the Company’s option, remain outstanding until September 1, 2022, which is the maturity date for the 2017 Notes, even if all or a portion of the 2017 Notes are converted, repurchased or redeemed prior to such date. In November 2018, the Company issued $575.0 million aggregate principal amount of 1.125% Convertible Senior Notes due 2024 (the "2018 Notes"), which includes the exercise in full of a $75.0 million option granted to the initial purchasers, to certain financial institutions as the initial purchasers of the 2018 Notes (the "2018 Initial Purchasers"). The issuance of $500.0 million of 2018 Notes closed on November 19, 2018 and the additional $75.0 million of additional 2018 Notes, which were issued pursuant to the exercise of the 2018 Initial Purchasers' option to purchase such additional 2018 Notes, closed on November 29, 2018. On November 14, 2018, in connection with the pricing of the 2018 Notes, the Company entered into privately negotiated capped call transactions (the "2018 Base Capped Call Transactions") with one of the 2018 Initial Purchasers and certain other financial institutions (the "2018 Option Counterparties") and, in connection with the exercise in full of the 2018 Initial Purchasers' option to purchase such additional 2018 Notes, on November 27, 2018, entered into additional capped call transactions (such additional capped call transactions, the "2018 Additional Capped Call Transactions" and, together with the 2018 Base Capped Call Transactions, the "2018 Capped Call Transactions") with the 2018 Option Counterparties. Collectively, the 2018 Capped Call Transactions cover, initially, the number of shares of the Company’s Class A common stock underlying the 2018 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2018 Notes. On August 19, 2019, the Company issued $948.75 million aggregate principal amount of 1.00% Convertible Senior Notes due 2026 (the "2019 Notes" and together with the 2017 Notes and 2018 Notes, the "Notes"), which includes the exercise in full of a $123.75 million option granted to the initial purchasers, to certain financial institutions as the initial purchasers of the 2019 Notes (the "2019 Initial Purchasers"). On August 14, 2019, in connection with the pricing of the 2019 Notes, the Company entered into privately negotiated capped call transactions (the "2019 Base Capped Call Transactions") with certain of the 2019 Initial Purchasers or their affiliates and another financial institution (the "2019 Option Counterparties") and, in connection with the exercise in full of the 2019 Initial Purchasers' option to purchase such additional 2019 Notes, on August 16, 2019, entered into additional capped call transactions (such additional capped call transactions, the "2019 Additional Capped Call Transactions" and, together with the 2019 Base Capped Call Transactions, the "2019 Capped Call Transactions") with the 2019 Option Counterparties. Collectively, the 2019 Capped Call Transactions cover, initially, the number of shares of the Company’s Class A common stock underlying the 2019 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2019 Notes. The net proceeds from the sale of the 2017 Notes, 2018 Notes, and 2019 Notes were approximately $420.4 million, $562.0 million, and $935.1 million, respectively, after deducting the initial purchasers’ discounts and the offering expenses payable by the Company. The Company used approximately $44.2 million, $93.4 million and $145.7 million, respectively, of the net proceeds from the 2017 Notes, 2018 Notes, and 2019 Notes to pay the cost of the 2017 Capped Call Transactions, the 2018 Capped Call Transactions, and the 2019 Capped Call Transactions, respectively. The Company intends to use the remainder of the net proceeds from the Notes for working capital and general corporate purposes. The Company may also use a portion of the net proceeds to finance acquisitions, strategic transactions, investments or the repayment, purchase or exchange of indebtedness (including its existing convertible notes). The Notes are general unsecured obligations of the Company. The Notes rank senior in right of payment to any of the Company’s future indebtedness that is expressly subordinated in right of payment to the Notes; rank equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; are effectively subordinated in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and are structurally subordinated to all existing and future indebtedness and liabilities of the Company’s subsidiaries. In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, representing the conversion option, which does not meet the criteria for separate accounting as a derivative as it is indexed to the Company's own stock, was determined by deducting the fair value of the liability component from the par value of the Notes. The difference between the principal amount of the Notes and the liability component represents the debt discount, which is recorded as a direct deduction from the related debt liability in the consolidated and condensed balance sheet and amortized to interest expense using the effective interest method over the term of the Notes. The effective interest rate of the 2017 Notes, 2018 Notes, and 2019 Notes is 6.0%, 8.1%, and 6.4%, respectively. The equity component of the 2017 Notes, 2018 Notes, and 2019 Notes of approximately $95.8 million, $181.5 million, and $280.3 million, respectively, is included in additional paid-in capital in the consolidated and condensed balance sheet and is not remeasured as long as it continues to meet the conditions for equity classification. The Company allocated transaction costs related to the Notes using the same proportions as the proceeds from the Notes. Transaction costs attributable to the liability component were recorded as a direct deduction from the related debt liability in the consolidated and condensed balance sheet and amortized to interest expense over the term of the Notes, and transaction costs attributable to the equity component were netted with the equity component in shareholders’ equity. The following table presents the outstanding principal amount and carrying value of the Notes as of the date presented (in thousands):
The following tables present total interest expense recognized related to the Notes (in thousands):
The estimated fair value of the 2017 Notes, the 2018 Notes, and the 2019 Notes was $533.3 million, $694.3 million, and $973.9 million, respectively, as of September 30, 2019. The estimated fair value of the Notes was determined through consideration of quoted market prices. The fair value is classified as Level 2, as defined in Note 3, Marketable Securities and Fair Value Measurements. As of September 30, 2019, the if-converted value of the 2017 Notes exceeded the principal amount by $33.4 million. The if-converted value of both the 2018 and 2019 Notes did not exceed the principal value as of September 30, 2019. 2017 Notes The 2017 Notes were issued pursuant to an indenture, dated September 15, 2017 (the "2017 Indenture"), between the Company and U.S. Bank National Association, as trustee. The Company pays interest on the 2017 Notes semiannually in arrears at a rate of 0.375% per annum on March 1 and September 1 of each year. The 2017 Notes are convertible based upon an initial conversion rate of 9.61 shares of the Company’s Class A common stock per $1,000 principal amount of 2017 Notes (equivalent to a conversion price of approximately $104.06 per share of the Company’s Class A common stock). The conversion rate will be subject to adjustment upon the occurrence of certain specified events, including certain distributions and dividends to all or substantially all of the holders of the Company’s Class A common stock, but will not be adjusted for accrued and unpaid interest. The Company will settle any conversions of the 2017 Notes in cash, shares of the Company’s Class A common stock or a combination thereof, with the form of consideration determined at the Company’s election. The 2017 Notes will mature on September 1, 2022, unless earlier purchased, redeemed or converted. Prior to June 1, 2022, holders may convert all or a portion of their 2017 Notes only under the following circumstances: (1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the 5 business day period after any 10 consecutive trading day period (the "2017 Notes measurement period") in which the trading price per $1,000 principal amount of 2017 Notes for each trading day of the 2017 Notes measurement period was less than 98% of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate on each such trading day; (3) with respect to any 2017 Notes called for redemption by the Company, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On and after June 1, 2022 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2017 Notes at any time, regardless of the foregoing circumstances. Holders of 2017 Notes who convert their 2017 Notes in connection with a notice of a redemption or a make-whole fundamental change (each as defined in the 2017 Indenture) may be entitled to a premium in the form of an increase in the conversion rate of the 2017 Notes. The 2017 Notes are not convertible during the fourth quarter of 2019 and none of the 2017 Notes has been converted to date. The Company may not redeem the 2017 Notes prior to September 8, 2020. On or after September 8, 2020, the Company may redeem for cash all or part of the 2017 Notes if the last reported sale price of the Company’s Class A common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the five trading days immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be 100% of the principal amount of the 2017 Notes to be redeemed, plus accrued and unpaid interest, if any. Upon the occurrence of a fundamental change (as defined in the 2017 Indenture), holders may require the Company to repurchase all or a portion of their 2017 Notes for cash at a price equal to 100% of the principal amount of the 2017 Notes to be repurchased plus any accrued but unpaid interest to, but excluding, the fundamental change repurchase date. The 2017 Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the 2017 Notes then outstanding may declare the entire principal amount of all the 2017 Notes plus accrued interest, if any, to be immediately due and payable. 2018 Notes The 2018 Notes were issued pursuant to an indenture, dated November 19, 2018 (the "2018 Indenture"), between the Company and U.S. Bank National Association, as trustee. The Company will pay interest on the 2018 Notes semiannually in arrears at a rate of 1.125% per annum on May 1 and November 1 of each year commencing on May 1, 2019. The 2018 Notes are convertible based upon an initial conversion rate of 8.5910 shares of the Company’s Class A common stock per $1,000 principal amount of 2018 Notes (equivalent to a conversion price of approximately $116.40 per share of the Company’s Class A common stock). The conversion rate will be subject to adjustment upon the occurrence of certain specified events, including certain distributions and dividends to all or substantially all of the holders of the Company’s Class A common stock, but will not be adjusted for accrued and unpaid interest. The Company will settle any conversions of the 2018 Notes in cash, shares of the Company’s Class A common stock or a combination thereof, with the form of consideration determined at the Company’s election. The 2018 Notes will mature on November 1, 2024, unless earlier purchased, redeemed or converted. Prior to August 1, 2024, holders may convert all or a portion of their 2018 Notes only under the following circumstances: (1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the "2018 Notes measurement period") in which the trading price per $1,000 principal amount of 2018 Notes for each trading day of the 2018 Notes measurement period was less than 98% of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate on each such trading day; (3) with respect to any 2018 Notes called for redemption by the Company, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On and after August 1, 2024 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2018 Notes at any time, regardless of the foregoing circumstances. Holders of 2018 Notes who convert their 2018 Notes in connection with a make-whole fundamental change or a notice of redemption (each as defined in the 2018 Indenture) may be entitled to a premium in the form of an increase in the conversion rate of the 2018 Notes. The 2018 Notes are not convertible during the fourth quarter of 2019 and none of the 2018 Notes has been converted to date. The Company may not redeem the 2018 Notes prior to May 8, 2022. On or after May 8, 2022, the Company may redeem for cash all or part of the 2018 Notes if the last reported sale price of the Company’s Class A common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the five trading days immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be 100% of the principal amount of the 2018 Notes to be redeemed, plus accrued and unpaid interest, if any. Upon the occurrence of a fundamental change (as defined in the 2018 Indenture), holders may require the Company to repurchase all or a portion of their 2018 Notes for cash at a price equal to 100% of the principal amount of the 2018 Notes to be repurchased plus any accrued but unpaid interest to, but excluding, the fundamental change repurchase date. The 2018 Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the 2018 Notes then outstanding may declare the entire principal amount of all the 2018 Notes plus accrued interest, if any, to be immediately due and payable. 2019 Notes The 2019 Notes were issued pursuant to an indenture, dated August 19, 2019 (the "2019 Indenture"), between the Company and U.S. Bank National Association, as trustee. The Company will pay interest on the 2019 Notes semiannually in arrears at a rate of 1.00% per annum on February 15 and August 15 of each year commencing on February 15, 2020. The 2019 Notes are convertible based upon an initial conversion rate of 6.7349 shares of the Company’s Class A common stock per $1,000 principal amount of 2019 Notes (equivalent to a conversion price of approximately $148.48 per share of the Company’s Class A common stock). The conversion rate will be subject to adjustment upon the occurrence of certain specified events, including certain distributions and dividends to all or substantially all of the holders of the Company’s Class A common stock, but will not be adjusted for accrued and unpaid interest. The Company will settle any conversions of the 2019 Notes in cash, shares of the Company’s Class A common stock or a combination thereof, with the form of consideration determined at the Company’s election. The 2019 Notes will mature on August 15, 2026, unless earlier purchased, redeemed or converted. Prior to May 15, 2026, holders may convert all or a portion of their 2019 Notes only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2019 (and only during such calendar quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “2019 Notes measurement period”) in which the trading price per $1,000 principal amount of 2019 Notes for each trading day of the 2019 Notes measurement period was less than 98% of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate on each such trading day; (3) with respect to any 2019 Notes called for redemption by the Company, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On and after May 15, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2019 Notes at any time, regardless of the foregoing circumstances. Holders of 2019 Notes who convert their 2019 Notes in connection with a make-whole fundamental change or a notice of redemption (each as defined in the 2019 Indenture) may be entitled to a premium in the form of an increase in the conversion rate of the 2019 Notes. The 2019 Notes are not convertible during the fourth quarter of 2019 and none of the 2019 Notes has been converted to date. The Company may not redeem the 2019 Notes prior to August 20, 2023. On or after August 20, 2023, the Company may redeem for cash all or part of the 2019 Notes if the last reported sale price of the Company’s Class A common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the five trading days immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which the Company provides notice of the redemption. The redemption price will be 100% of the principal amount of the 2019 Notes to be redeemed, plus accrued and unpaid interest, if any. Upon the occurrence of a fundamental change (as defined in the 2019 Indenture), holders may require the Company to repurchase all or a portion of their 2019 Notes for cash at a price equal to 100% of the principal amount of the 2019 Notes to be repurchased plus any accrued but unpaid interest to, but excluding, the fundamental change repurchase date. The 2019 Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the 2019 Notes then outstanding may declare the entire principal amount of all the 2019 Notes plus accrued interest, if any, to be immediately due and payable. Capped Call Transactions The Restated 2017 Capped Call Transactions, 2018 Capped Call Transactions, and 2019 Capped Call Transactions (collectively, the "Capped Call Transactions") are expected generally to reduce the potential dilution and/or offset the cash payments the Company is required to make in excess of the principal amount of the Notes upon conversion of the Notes in the event that the market price per share of the Company’s Class A common stock is greater than the strike price of the Capped Call Transactions (which initially corresponds to the initial conversion price of the Notes and is subject to certain adjustments under the terms of the Capped Call Transactions), with such reduction and/or offset subject to a cap based on the cap price of the Capped Call Transactions. The Restated 2017 Capped Call Transactions have an initial cap price of $154.16 per share of the Company’s Class A common stock, which represents a premium of 100% over the last reported sale price of the Company’s Class A common stock on September 11, 2017, which is the date the 2017 Notes priced, and is subject to certain adjustments under the terms of the Restated 2017 Capped Call Transactions. The 2018 Capped Call Transactions have an initial cap price of $219.63 per share of the Company’s Class A common stock, which represents a premium of 150% over the last reported sale price of the Company’s Class A common stock on November 14, 2018, which is the day the 2018 Notes priced, and is subject to certain adjustments under the terms of the 2018 Capped Call Transactions. The 2019 Capped Call Transactions have an initial cap price of $280.15 per share of the Company's Class A common stock, which represents a premium of 150% over the last reported sale price of the Company's Class A common stock on August 14, 2019, which is the day the 2019 Notes priced, and is subject to certain adjustments under the terms of the 2019 Capped Call Transactions. Collectively, the Capped Call Transactions cover, initially, the number of shares of the Company’s Class A common stock underlying the Notes, subject to anti-dilution adjustments substantially similar to those applicable to the Notes. The Capped Call Transactions are separate transactions, in each case, entered into by the Company with the 2017 Option Counterparties, the 2018 Option Counterparties, and 2019 Option Counterparties, and are not part of the terms of the Notes and will not affect any holder’s rights under the Notes. Holders of the Notes will not have any rights with respect to the Capped Call Transactions. The Capped Call Transactions do not meet the criteria for separate accounting as a derivative as they are indexed to the Company's stock. The premiums paid for the Capped Call Transactions have been included as a net reduction to additional paid-in capital within shareholders’ equity.
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Equity-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Activity Relating to Stock Options | The following table presents activity relating to stock options for the nine months ended September 30, 2019:
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| Summary of Activity Relating to Restricted Stock | The following table presents activity relating to restricted common stock for the nine months ended September 30, 2019:
The following table presents activity relating to RSUs for the nine months ended September 30, 2019:
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Intangible Assets and Goodwill (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||
| Intangible assets | $ 18.8 | $ 18.8 | $ 0.5 | ||
| Amortization expense related to intangibles | 0.1 | $ 0.2 | 0.4 | $ 0.8 | |
| Goodwill | $ 0.4 | $ 0.4 | $ 2.1 | ||
Segment and Geographic Information (Tables) |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Activity Related to Net Revenue, Adjusted EBITDA by Segment | The following tables present Direct Retail and Other net revenues and Adjusted EBITDA attributable to the Company's reportable segments for the periods presented (in thousands):
(1) Adjustments are made to reconcile total reportable segments Adjusted EBITDA to consolidated net loss including the following (in thousands):
The following table presents the activity related to the Company’s net revenue from Direct Retail sales derived through the Company’s sites and Other sales derived through websites operated by third parties and fees from our media solutions business (in thousands):
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| Schedule of Segment Assets | The following table presents total assets attributable to the Company's reportable segments reconciled to consolidated amounts (in thousands):
U.S. and International segment assets consist primarily of "Accounts receivable," "Inventories," "Prepaid expenses and other current assets," "Property and equipment, net" and "Operating lease right-of-use assets." Corporate assets include "Cash and cash equivalents," marketable securities, "Long-term investments," corporate facilities, "Goodwill and intangible assets, net," and capitalized internal-use software and website development costs.
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Segment and Geographic Information |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment and Geographic Information | 10. Segment and Geographic Information Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated on a regular basis by the Chief Operating Decision Maker ("CODM") in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company's operating and reportable segments are U.S. and International. These segments reflect the way the CODM allocates resources and evaluates financial performance, which is based upon each segment's Adjusted EBITDA. Adjusted EBITDA is defined as loss before depreciation and amortization, equity-based compensation and related taxes, interest and other income and expense, provision for income taxes, and non-recurring items. These charges are excluded from evaluation of segment performance because it facilitates reportable segment performance comparisons on a period-to-period basis. The Company allocates certain operating expenses to the operating and reportable segments, including "Customer service and merchant fees" and "Selling, operations, technology, general and administrative" based on the usage and relative contribution provided to the segments. It excludes from the allocations certain operating expense lines, including "Depreciation and amortization," "Equity-based compensation and related taxes," "Interest expense, net," "Other (income), net," and "Provision for income taxes." There are no revenue transactions between the Company's reportable segments. U.S. The U.S. segment primarily consists of amounts earned through product sales through the Company's five distinct sites in the U.S. and through websites operated by third parties in the U.S. International The International segment primarily consists of amounts earned through product sales through the Company's international sites. Revenue from external customers for each group of similar products and services are not reported to the CODM. Separate identification of this information for purposes of segment disclosure is impractical, as it is not readily available and the cost to develop it would be excessive. No individual country outside of the U.S. provided greater than 10% of total revenue. The following tables present Direct Retail and Other net revenues and Adjusted EBITDA attributable to the Company's reportable segments for the periods presented (in thousands):
(1) Adjustments are made to reconcile total reportable segments Adjusted EBITDA to consolidated net loss including the following (in thousands):
The following table presents the activity related to the Company’s net revenue from Direct Retail sales derived through the Company’s sites and Other sales derived through websites operated by third parties and fees from our media solutions business (in thousands):
The following table presents total assets attributable to the Company's reportable segments reconciled to consolidated amounts (in thousands):
U.S. and International segment assets consist primarily of "Accounts receivable," "Inventories," "Prepaid expenses and other current assets," "Property and equipment, net" and "Operating lease right-of-use assets." Corporate assets include "Cash and cash equivalents," marketable securities, "Long-term investments," corporate facilities, "Goodwill and intangible assets, net," and capitalized internal-use software and website development costs.
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Leases |
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| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | 6. Leases After Adoption of ASU 2016-02 The Company has lease arrangements for warehouse, fulfillment center, office, and data center spaces. These leases expire at various dates through 2035. Operating lease expense was $31.8 million and $17.5 million in the three months ended September 30, 2019 and 2018, respectively, and $86.8 million and $48.1 million in the nine months ended September 30, 2019 and 2018, respectively. The following table presents other information related to leases (in thousands):
Future minimum lease payments under non-cancellable leases as of September 30, 2019 were as follows (in thousands):
The following table presents total operating leases (in thousands):
As of September 30, 2019, the Company has entered into $332.6 million of additional operating leases, primarily related to build-to-suit warehouse leases that have not yet commenced. As the Company does not control the underlying assets during the construction period, the Company is not considered the owner of the construction projects for accounting purposes. These operating leases will commence between 2019 and 2021 with lease terms of 2 to 15 years. Before Adoption of ASU 2016-02 The Company established assets and liabilities for the estimated construction costs incurred under lease arrangements where the Company is considered the owner for accounting purposes only to the extent the Company is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease. These are referred to as "build-to-suit leases". Upon occupancy of facilities under build-to-suit leases, the Company assesses whether these arrangements qualify for sales recognition under the sale-leaseback accounting guidance. If the Company continues to be the deemed owner, the facilities are accounted for as financing leases. In the year ended December 31, 2018, the construction efforts related to three warehouse lease arrangements were completed. In the first warehouse lease arrangement, the Company concluded it had a letter of credit of $2.5 million and as a result the Company did not meet the sale-leaseback criteria for derecognition of the building assets and liabilities. In both the second and third warehouse lease arrangements, the Company provided non-recourse financing to the lessor and as a result the Company did not meet the sale-leaseback criteria for derecognition of the building assets and liabilities. Accordingly, these leases were accounted for as financing leases and $101.0 million was recorded in "Lease financing obligation, net of current portion" and "Property and equipment, net," respectively, in the Company’s consolidated and condensed balance sheet as of December 31, 2018.
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| Leases | 6. Leases After Adoption of ASU 2016-02 The Company has lease arrangements for warehouse, fulfillment center, office, and data center spaces. These leases expire at various dates through 2035. Operating lease expense was $31.8 million and $17.5 million in the three months ended September 30, 2019 and 2018, respectively, and $86.8 million and $48.1 million in the nine months ended September 30, 2019 and 2018, respectively. The following table presents other information related to leases (in thousands):
Future minimum lease payments under non-cancellable leases as of September 30, 2019 were as follows (in thousands):
The following table presents total operating leases (in thousands):
As of September 30, 2019, the Company has entered into $332.6 million of additional operating leases, primarily related to build-to-suit warehouse leases that have not yet commenced. As the Company does not control the underlying assets during the construction period, the Company is not considered the owner of the construction projects for accounting purposes. These operating leases will commence between 2019 and 2021 with lease terms of 2 to 15 years. Before Adoption of ASU 2016-02 The Company established assets and liabilities for the estimated construction costs incurred under lease arrangements where the Company is considered the owner for accounting purposes only to the extent the Company is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease. These are referred to as "build-to-suit leases". Upon occupancy of facilities under build-to-suit leases, the Company assesses whether these arrangements qualify for sales recognition under the sale-leaseback accounting guidance. If the Company continues to be the deemed owner, the facilities are accounted for as financing leases. In the year ended December 31, 2018, the construction efforts related to three warehouse lease arrangements were completed. In the first warehouse lease arrangement, the Company concluded it had a letter of credit of $2.5 million and as a result the Company did not meet the sale-leaseback criteria for derecognition of the building assets and liabilities. In both the second and third warehouse lease arrangements, the Company provided non-recourse financing to the lessor and as a result the Company did not meet the sale-leaseback criteria for derecognition of the building assets and liabilities. Accordingly, these leases were accounted for as financing leases and $101.0 million was recorded in "Lease financing obligation, net of current portion" and "Property and equipment, net," respectively, in the Company’s consolidated and condensed balance sheet as of December 31, 2018.
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Segment and Geographic Information - Schedule of Segment Reconciled to Consolidated Amounts (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Segment Reporting Information [Line Items] | ||
| Assets by segment | $ 3,007,635 | $ 1,890,850 |
| U.S. | ||
| Segment Reporting Information [Line Items] | ||
| Assets by segment | 1,482,542 | 670,344 |
| International | ||
| Segment Reporting Information [Line Items] | ||
| Assets by segment | 190,498 | 56,177 |
| Total reportable segments assets | ||
| Segment Reporting Information [Line Items] | ||
| Assets by segment | 1,673,040 | 726,521 |
| Plus: reconciling corporate assets | ||
| Segment Reporting Information [Line Items] | ||
| Assets by segment | $ 1,334,595 | $ 1,164,329 |
Net Loss per Share - Calculation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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| Earnings Per Share [Abstract] | ||||
| Net loss | $ (272,035) | $ (151,726) | $ (654,362) | $ (360,235) |
| Weighted average common shares used for basic and diluted net loss per share computation (in shares) | 92,540 | 89,792 | 91,820 | 89,144 |
| Net loss per common share: | ||||
| Basic and Diluted (in usd per share) | $ (2.94) | $ (1.69) | $ (7.13) | $ (4.04) |
Leases - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Jan. 01, 2019 |
|---|---|---|
| Leases [Abstract] | ||
| 2019 (excluding the nine months ended September 30, 2019) | $ 30,078 | |
| 2020 | 138,735 | |
| 2021 | 143,833 | |
| 2022 | 137,419 | |
| 2023 | 132,865 | |
| Thereafter | 634,742 | |
| Total future minimum lease payments | 1,217,672 | |
| Less: Imputed interest | (317,805) | |
| Operating lease liabilities | $ 899,867 | $ 636,385 |
Equity-Based Compensation - Summary of Activity Relating to Stock Options (Details) - Stock options - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2019 |
Dec. 31, 2018 |
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| Options | ||
| Outstanding at the beginning of the period (in shares) | 79,802 | |
| Options exercised (in shares) | (28,624) | |
| Outstanding and exercisable at the end of the period (in shares) | 51,178 | 79,802 |
| Weighted-Average Exercise Price | ||
| Outstanding at the beginning of the period (in dollars per share) | $ 3.05 | |
| Options exercised (in dollars per share) | 3.14 | |
| Outstanding and exercisable at the end of the period (in dollars per share) | $ 3.00 | $ 3.05 |
| Weighted-Average Remaining Contractual Term (Years) | ||
| Outstanding | 1 year 8 months 12 days | 2 years 6 months |
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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| Income Statement [Abstract] | ||||
| Net revenue | $ 2,305,487 | $ 1,705,645 | $ 6,593,567 | $ 4,765,170 |
| Cost of goods sold | 1,765,566 | 1,312,875 | 5,023,590 | 3,663,569 |
| Gross profit | 539,921 | 392,770 | 1,569,977 | 1,101,601 |
| Operating expenses: | ||||
| Customer service and merchant fees | 91,255 | 66,664 | 256,230 | 182,340 |
| Advertising | 281,846 | 202,587 | 784,981 | 541,815 |
| Selling, operations, technology, general and administrative | 426,529 | 268,785 | 1,153,286 | 721,120 |
| Total operating expenses | 799,630 | 538,036 | 2,194,497 | 1,445,275 |
| Loss from operations | (259,709) | (145,266) | (624,520) | (343,674) |
| Interest expense, net | (14,432) | (7,066) | (33,922) | (18,269) |
| Other income, net | 2,182 | 1,054 | 5,582 | 2,661 |
| Loss before income taxes | (271,959) | (151,278) | (652,860) | (359,282) |
| Provision for income taxes | 76 | 448 | 1,502 | 953 |
| Net loss | $ (272,035) | $ (151,726) | $ (654,362) | $ (360,235) |
| Net loss per share, basic and diluted (in dollars per share) | $ (2.94) | $ (1.69) | $ (7.13) | $ (4.04) |
| Weighted average number of common stock outstanding used in computing per share amounts, basic and diluted (in shares) | 92,540 | 89,792 | 91,820 | 89,144 |
Basis of Presentation |
9 Months Ended |
|---|---|
Sep. 30, 2019 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Basis of Presentation | 1. Basis of Presentation Wayfair Inc. (the "Company") is one of the world's largest online destinations for the home. Through its e-commerce business model, the Company offers visually inspired browsing, compelling merchandising, easy product discovery and attractive prices for over fourteen million products from over 11,000 suppliers. The consolidated and condensed financial statements and other disclosures contained in this Quarterly Report on Form 10-Q are those of the Company. The consolidated and condensed balance sheet data as of December 31, 2018 was derived from audited financial statements. The accompanying consolidated and condensed balance sheet as of September 30, 2019, the consolidated and condensed statements of operations, consolidated and condensed statements of comprehensive loss, consolidated and condensed statements of stockholders' deficit, and consolidated and condensed statements of cash flows for the periods ended September 30, 2019 and 2018 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited consolidated financial statements and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2019 and statements of operations, comprehensive loss, statements of stockholders' deficit, and cash flows for the periods ended September 30, 2019 and 2018. The financial data and the other information disclosed in these notes to the consolidated and condensed financial statements related to these periods are unaudited. The consolidated and condensed statements of operations, comprehensive loss, stockholders' deficit, and cash flows for the period ended September 30, 2019 are not necessarily indicative of the results of operations and cash flows that may be expected for the year ending December 31, 2019, or for any other period.
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Property and Equipment, net (Tables) |
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| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property and Equipment, net | The following table summarizes property and equipment, net as of September 30, 2019 and December 31, 2018 (in thousands):
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Recent Accounting Pronouncements |
9 Months Ended |
|---|---|
Sep. 30, 2019 | |
| Accounting Policies [Abstract] | |
| Recent Accounting Pronouncements | 16. Recent Accounting Pronouncements Credit Impairment In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). This ASU revises how entities account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. For public entities, ASU 2016-13 is required to be adopted for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Management is currently evaluating the impact of the adoption of this ASU on the Company’s consolidated financial position, results of operations, comprehensive loss, stockholders' deficit or cash flows.
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Stockholders' Deficit |
9 Months Ended |
|---|---|
Sep. 30, 2019 | |
| Equity [Abstract] | |
| Stockholders' Deficit | 12. Stockholders’ Deficit Preferred Stock The Company authorized 10,000,000 shares of undesignated preferred stock, $0.001 par value per share, for future issuance. As of September 30, 2019, the Company had no shares of undesignated preferred stock issued or outstanding. Common Stock The Company authorized 500,000,000 shares of Class A common stock, $0.001 par value per share, and 164,000,000 shares of Class B common stock, $0.001 par value per share, of which 65,502,165 and 62,329,701 shares of Class A common stock and 27,372,273 and 28,417,882 shares of Class B common stock were outstanding as of September 30, 2019 and December 31, 2018, respectively. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. Each share of Class B common stock may be converted into one share of Class A common stock at the option of its holder and will be automatically converted into one share of Class A common stock upon transfer thereof, subject to certain exceptions. In addition, upon the date on which the outstanding shares of Class B common stock represent less than 10% of the aggregate number of shares of the then outstanding Class A common stock and Class B common stock, or in the event of the affirmative vote or written consent of holders of at least 66 2/3% of the outstanding shares of Class B common stock, all outstanding shares of Class B common stock shall convert automatically into Class A common stock. Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of common stock are entitled to receive dividends out of funds legally available if the Board, in its discretion, determines to issue dividends and then only at the times and in the amounts that the Board may determine. Since the Company's initial public offering through September 30, 2019, 54,667,389 shares of Class B common stock were converted to Class A common stock.
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Equity-Based Compensation |
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| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity-Based Compensation | 8. Equity-Based Compensation The board of directors of the Company (the "Board") adopted the 2014 Incentive Award Plan ("2014 Plan") to grant cash and equity incentive awards to eligible participants in order to attract, motivate and retain talent. The 2014 Plan is administered by the Board with respect to awards to non-employee directors and by the compensation committee of the Board with respect to other participants and provides for the issuance of stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units ("RSUs"), performance shares, stock payments, cash payments, dividend awards and other incentives. Prior to the adoption of the 2014 Plan, Wayfair LLC issued certain equity awards pursuant to the Wayfair LLC Amended and Restated Common Unit Plan (the "2010 Plan"), which was administered by the board of directors of Wayfair LLC. Awards issued under the 2010 Plan that remain outstanding currently represent Class A or Class B common stock of the Company. 8,603,066 shares of Class A common stock were initially available for issuance under awards granted pursuant to the 2014 Plan. The 2014 Plan also contains an evergreen provision whereby the shares available for future grant are increased on the first day of each calendar year beginning January 1, 2016 and ending on and including January 1, 2024. As of January 1, 2019, 6,202,378 shares of Class A common stock were available for future grant under the 2014 Plan. Shares or RSUs forfeited, withheld for minimum statutory tax obligations, and unexercised stock option lapses from the 2010 and 2014 Plans are available for future grant under the 2014 Plan. The following table presents activity relating to stock options for the nine months ended September 30, 2019:
Intrinsic value of stock options exercised was $4.2 million for the nine months ended September 30, 2019. Aggregate intrinsic value of stock options outstanding and currently exercisable is $5.6 million. All stock options were fully vested at September 30, 2019. The following table presents activity relating to restricted common stock for the nine months ended September 30, 2019:
Aggregate intrinsic value of unvested restricted common stock is $2.2 million as of September 30, 2019. Unrecognized equity-based compensation expense related to unvested restricted common stock is $0.5 million with a weighted average remaining vesting term of 0.3 years as of September 30, 2019. The following table presents activity relating to RSUs for the nine months ended September 30, 2019:
The intrinsic value of RSUs vested was $290.5 million for the nine months ended September 30, 2019. Aggregate intrinsic value of RSUs unvested is $877.1 million as of September 30, 2019. Unrecognized equity-based compensation expense related to outstanding RSUs is $686.2 million with a weighted average remaining vesting term of 1.4 years at September 30, 2019.
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Intangible Assets and Goodwill |
9 Months Ended |
|---|---|
Sep. 30, 2019 | |
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| Intangible Assets and Goodwill | 4. Intangible Assets and Goodwill As of September 30, 2019 and December 31, 2018, the Company had $18.8 million and $0.5 million of intangible assets, respectively. Amortization expense related to intangible assets was $0.1 million and $0.2 million for the three months ended September 30, 2019 and 2018, respectively, and $0.4 million and $0.8 million for the nine months ended September 30, 2019 and September 30, 2018, respectively. Goodwill was $0.4 million and $2.1 million as of September 30, 2019 and December 31, 2018, respectively.
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Net Loss per Share (Tables) |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Calculation of Basic and Diluted Net Loss Per Share | The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):
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Marketable Securities and Fair Value Measurements - Schedule of Marketable Securities (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Marketable securities and fair value measurements | ||
| Amortized Cost | $ 6,055 | $ 121,005 |
| Gross Unrealized Losses | (6) | (201) |
| Estimated Fair Value | 6,049 | 120,804 |
| Investment securities | ||
| Marketable securities and fair value measurements | ||
| Amortized Cost | 6,055 | 114,402 |
| Gross Unrealized Losses | (6) | (124) |
| Estimated Fair Value | $ 6,049 | 114,278 |
| Investment securities | ||
| Marketable securities and fair value measurements | ||
| Amortized Cost | 6,603 | |
| Gross Unrealized Losses | (77) | |
| Estimated Fair Value | $ 6,526 |
Convertible Debt - Schedule of Interest Expense Related to Notes (Details) - Convertible Debt - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
| 2017 Notes | ||||
| Debt Instrument [Line Items] | ||||
| Contractual interest expense | $ 404 | $ 404 | $ 1,213 | $ 1,213 |
| Interest cost related to amortization of the debt discount | 5,058 | $ 4,764 | 14,948 | $ 14,077 |
| 2018 Notes | ||||
| Debt Instrument [Line Items] | ||||
| Contractual interest expense | 1,617 | 4,852 | ||
| Interest cost related to amortization of the debt discount | 6,613 | 19,423 | ||
| 2019 Notes | ||||
| Debt Instrument [Line Items] | ||||
| Contractual interest expense | 1,031 | 1,031 | ||
| Interest cost related to amortization of the debt discount | $ 3,799 | $ 3,799 | ||
Commitments and Contingencies |
9 Months Ended |
|---|---|
Sep. 30, 2019 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | 7. Commitments and Contingencies Letters of Credit The Company has issued letters of credit for approximately $46.4 million and $26.8 million, primarily as security for certain lease agreements as of September 30, 2019 and December 31, 2018, respectively. Legal Matters On January 10, 2019 and January 16, 2019, putative securities class action complaints were filed against the Company and three of its officers in the U.S. District Court for the District of Massachusetts. The two complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, relating to certain prior disclosures of the Company. Each plaintiff seeks to represent a class of shareholders who purchased or acquired stock of the Company between August 2, 2018 and October 31, 2018 and seeks damages and other relief based on allegations that the defendants' conduct affected the value of such stock. The Company intends to defend these lawsuits vigorously. On August 30, 2019 the Company filed a motion to dismiss the complaint with prejudice. At this time, based on available information regarding this litigation, the Company is unable to reasonably assess the ultimate outcome of these cases or determine an estimate, or a range of estimates, of potential losses. From time to time the Company is involved in claims that arise during the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company does not currently believe that the outcome of any of these other legal matters will have a material adverse effect on the Company's results of operation or financial condition. Regardless of the outcome, litigation can be costly and time consuming, as it can divert management's attention from important business matters and initiatives, negatively impacting the Company's overall operations. In addition, the Company may also find itself at greater risk to outside party claims as it increases its operations in jurisdictions where the laws with respect to the potential liability of online retailers are uncertain, unfavorable, or unclear.
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Marketable Securities and Fair Value Measurements |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Marketable Securities and Fair Value Measurements | 3. Marketable Securities and Fair Value Measurements Marketable Securities As of September 30, 2019 and December 31, 2018, all of the Company’s marketable securities were classified as available-for-sale and their estimated fair values were $6.0 million and $120.8 million, respectively. The Company periodically reviews its available-for-sale securities for other-than-temporary impairment. The Company considers factors such as the duration, severity and the reason for the decline in value, the potential recovery period, and its intent to sell. As of September 30, 2019, the Company’s available-for-sale securities primarily consisted of corporate bonds and other government obligations that are priced at fair value. During the three and nine months ended September 30, 2019 and 2018, the Company did not recognize any other-than-temporary impairment losses. The maturities of the Company’s long-term marketable securities generally range from one to two years. The cost basis of a marketable security sold is determined by the Company using the specific identification method. During the three and nine months ended September 30, 2019 and 2018, the Company did not have any realized gains or losses. The following tables present details of the Company’s marketable securities as of September 30, 2019 and December 31, 2018 (in thousands):
Fair Value Measurements The Company's financial assets and liabilities are measured at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The three levels of inputs used to measure fair value are as follows:
This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The Company measures its cash equivalents and short-term and long-term investments at fair value. The Company classifies its cash equivalents and restricted cash within Level 1 because the Company values these investments using quoted market prices. The fair value of the Company's Level 1 financial assets is based on quoted market prices of the identical underlying security. The Company classifies short-term and long-term investments within Level 2 because unadjusted quoted prices for identical or similar assets in markets are not active. The Company does not have any assets or liabilities classified as Level 3 financial assets. The following tables set forth the fair value of the Company’s financial assets measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018 based on the three-tier value hierarchy (in thousands):
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Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2019 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | 11. Income Taxes Income tax expense was $0.1 million and $0.4 million for the three months ended September 30, 2019 and 2018, respectively, and $1.5 million and $1.0 million for the nine months ended September 30, 2019 and 2018, respectively. The income tax expense recorded in the three and nine months ended September 30, 2019 and 2018 is primarily related to income earned in certain foreign jurisdictions and U.S. state income taxes. Deferred income taxes reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws. The Company has deferred tax assets related to its net operating loss carryforwards accumulated since the fourth quarter of 2014 and related to net operating loss carryforwards of certain of its foreign subsidiaries. A valuation allowance against net deferred tax assets is required if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company reassesses the valuation allowance on a quarterly basis and has provided a valuation allowance on substantially all of its worldwide net deferred tax assets. The Company had no material unrecognized tax benefits as of September 30, 2019 and December 31, 2018. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense.
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Basis of Presentation (Details) supplier in Thousands, product in Millions |
9 Months Ended |
|---|---|
|
Sep. 30, 2019
product
supplier
| |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Number of products offered | product | 14,000,000 |
| Number of suppliers providing products offered | supplier | 11 |
Convertible Debt - Schedule of Outstanding Principal Amount and Carrying Value of Notes (Details) - USD ($) |
Sep. 30, 2019 |
Aug. 19, 2019 |
Dec. 31, 2018 |
Nov. 30, 2018 |
Nov. 19, 2018 |
Sep. 15, 2017 |
|---|---|---|---|---|---|---|
| Debt Instrument [Line Items] | ||||||
| Net carrying amount | $ 1,435,927,000 | $ 738,904,000 | ||||
| Convertible Debt | 2017 Notes | ||||||
| Debt Instrument [Line Items] | ||||||
| Principal | 431,250,000 | 431,250,000 | $ 431,250,000 | |||
| Unamortized debt discount | (64,963,000) | (79,911,000) | ||||
| Net carrying amount | 366,287,000 | 351,339,000 | ||||
| Convertible Debt | 2018 Notes | ||||||
| Debt Instrument [Line Items] | ||||||
| Principal | 575,000,000 | 575,000,000 | $ 575,000,000.0 | $ 500,000,000.0 | ||
| Unamortized debt discount | (168,012,000) | (187,435,000) | ||||
| Net carrying amount | 406,988,000 | $ 387,565,000 | ||||
| Convertible Debt | 2019 Notes | ||||||
| Debt Instrument [Line Items] | ||||||
| Principal | 948,750,000 | $ 948,750,000 | ||||
| Unamortized debt discount | (286,098,000) | |||||
| Net carrying amount | $ 662,652,000 |
Income Taxes (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
| Income Tax Disclosure [Abstract] | |||||
| Income tax expense | $ 76,000 | $ 448,000 | $ 1,502,000 | $ 953,000 | |
| Unrecognized tax benefits | $ 0 | $ 0 | $ 0 | ||
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