Segment and Geographic Information

3 Months Ended

Mar. 31, 2024

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. Wayfair’s CODM is its Chief Executive Officer. 

Wayfair's operating and reportable segments are the 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 net income or loss before depreciation and amortization, equity-based compensation and related taxes, interest income or expense, net, other income or expense, net, provision or benefit for income taxes, net, non-recurring items, and other items not indicative of ongoing operating performance. These charges are excluded from the evaluation of segment performance because it facilitates reportable segment performance comparisons on a period-to-period basis as these costs may vary independent of business performance. The accounting policies of the segments are the same as those described in Note 1, Summary of Significant Accounting Policies, included in Part II, Item 8, Financial Statements and Supplementary Data, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Wayfair allocates certain operating expenses to the operating and reportable segments, including customer service and merchant fees and selling, operations, technology, general and administrative expenses 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, impairment and other related net charges and restructuring charges, as

well as interest income or expense, net, other income or expense, net, gain or loss on debt extinguishment and provision or benefit for income taxes, net. There are no net revenue transactions between Wayfair's reportable segments.

U.S.

The U.S. segment primarily consists of amounts earned through product sales through Wayfair's family of sites in the U.S.

International

The International segment primarily consists of amounts earned through product sales through Wayfair's international sites.

Net 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 the U.S. provided greater than 10% of consolidated net revenue.

The following tables present net revenue and Adjusted EBITDA attributable to Wayfair’s reportable segments for the periods presented:

		Three Months Ended March 31,
		2024		2023
	(in millions)
U.S. net revenue		$	2,391	$	2,415
International net revenue		338		359
Total net revenue		$	2,729	$	2,774

	Three Months Ended March 31,
	2024		2023
	(in millions)
Adjusted EBITDA:
U.S.	$	121	$	29
International	(46)		(43)
Total reportable segments Adjusted EBITDA	75		(14)
Less: reconciling items (1)	(323)		(341)
Net loss	$	(248)	$	(355)

(1)The following adjustments are made to reconcile total reportable segments Adjusted EBITDA to consolidated net loss:

			Three Months Ended March 31,
			2024		2023
		(in millions)
Depreciation and amortization			$	104	$	104
Equity-based compensation and related taxes			127		151
Interest expense, net			6		5
Other expense, net			4		1
Provision for income taxes, net			3		2
Other:
Impairment and other related net charges (a)			—		13
Restructuring charges (b)			79		65
Total reconciling items			$	323	$	341
(a)	During the three months ended March 31, 2023, Wayfair recorded charges of $5 million related to consolidation of certain customer service centers in identified U.S. locations and $8 million related to construction in progress assets at identified U.S. locations.
(b)	During the three months ended March 31, 2024, Wayfair incurred $79 million of charges consisting primarily of one-time employee severance and benefit costs associated with the January 2024 workforce reductions. During the three months ended March 31, 2023, Wayfair incurred $65 million of charges consisting primarily of one-time employee severance and benefit costs associated with the January 2023 workforce reductions.

See “Non-GAAP Financial Measures” in Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report on Form 10-Q for more information regarding the use of Adjusted EBITDA.