Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 16, 2018 | Jun. 30, 2017 | |
Entity Registrant Name | Wayfair Inc. | ||
Entity Central Index Key | 1,616,707 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 2.9 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Class A common stock | |||
Entity Common Stock, Shares Outstanding | 57,762,425 | ||
Class B common stock | |||
Entity Common Stock, Shares Outstanding | 30,741,306 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 558,960 | $ 279,840 |
Short-term investments | 61,032 | 68,743 |
Accounts receivable, net of allowance of $7,000 and $3,115 at December 31, 2017 and December 31, 2016, respectively | 37,948 | 19,113 |
Inventories | 28,042 | 18,550 |
Prepaid expenses and other current assets | 130,838 | 90,845 |
Total current assets | 816,820 | 477,091 |
Property and equipment, net | 361,141 | 239,354 |
Goodwill and intangible assets, net | 3,105 | 4,230 |
Long-term investments | 21,561 | 30,967 |
Other noncurrent assets | 10,776 | 10,041 |
Total assets | 1,213,403 | 761,683 |
Current liabilities | ||
Accounts payable | 440,366 | 379,493 |
Accrued expenses | 120,247 | 67,807 |
Deferred revenue | 94,116 | 65,892 |
Other current liabilities | 85,026 | 44,028 |
Total current liabilities | 739,755 | 557,220 |
Lease financing obligation, net of current portion | 82,580 | 28,900 |
Long-term debt | 332,905 | 0 |
Other liabilities | 106,492 | 96,179 |
Total liabilities | 1,261,732 | 682,299 |
Commitments and contingencies (Note 7) | ||
Convertible preferred stock, $0.001 par value per share: 10,000,000 shares authorized and none issued at December 31, 2017 and December 31, 2016 | 0 | 0 |
Stockholders’ equity: | ||
Additional paid-in capital | 537,212 | 409,225 |
Accumulated deficit | (583,266) | (329,940) |
Accumulated other comprehensive (loss) gain | (2,363) | 13 |
Total stockholders' (deficit) equity | (48,329) | 79,384 |
Total liabilities and stockholders' equity | 1,213,403 | 761,683 |
Class A common stock | ||
Stockholders’ equity: | ||
Common stock | 57 | 50 |
Class B common stock | ||
Stockholders’ equity: | ||
Common stock | $ 31 | $ 36 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts receivable allowance | $ 7,000 | $ 3,115 |
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 issued (in shares) | 57,398,983 | 49,945,202 |
Common stock, shares outstanding (in shares) | 57,398,983 | 49,945,202 |
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 issued (in shares) | 30,809,627 | 35,885,692 |
Common stock, shares outstanding (in shares) | 30,809,627 | 35,885,692 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | |||
Net revenue | $ 4,720,895 | $ 3,380,360 | $ 2,249,885 |
Cost of goods sold | 3,602,072 | 2,572,549 | 1,709,161 |
Gross profit | 1,118,823 | 807,811 | 540,724 |
Operating expenses: | |||
Customer service and merchant fees | 169,516 | 127,883 | 81,230 |
Advertising | 549,959 | 409,125 | 278,224 |
Selling, operations, technology, general and administrative | 634,801 | 467,020 | 262,620 |
Total operating expenses | 1,354,276 | 1,004,028 | 622,074 |
Loss from operations | (235,453) | (196,217) | (81,350) |
Interest (expense) income, net | (9,433) | 694 | 1,284 |
Other income, net | 758 | 1,756 | 2,718 |
Loss before income taxes | (244,128) | (193,767) | (77,348) |
Provision for income taxes | 486 | 608 | 95 |
Net loss | $ (244,614) | $ (194,375) | $ (77,443) |
Net loss per share, basic and diluted (in dollars per share) | $ (2.81) | $ (2.29) | $ (0.92) |
Weighted average number of common stock outstanding used in computing per share amounts, basic and diluted (in shares) | 86,983 | 84,977 | 83,726 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (244,614) | $ (194,375) | $ (77,443) |
Other comprehensive loss: | |||
Foreign currency translation adjustments | (2,196) | (102) | 532 |
Net unrealized (loss) gain on available-for-sale investments | (180) | 251 | (302) |
Comprehensive loss | $ (246,990) | $ (194,226) | $ (77,213) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Total | Class A and Class B Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive (Loss) Income |
Balance at Dec. 31, 2014 | $ 305,539 | $ 83 | $ 363,944 | $ (58,122) | $ (366) |
Balance (in shares) at Dec. 31, 2014 | 83,182,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | (77,443) | (77,443) | |||
Other comprehensive income | 230 | 230 | |||
Exercise of options to purchase common stock | 495 | 495 | |||
Exercise of options to purchase common stock (in shares) | 164,000 | ||||
Issuance of common stock upon vesting of RSUs | 1 | $ 1 | |||
Issuance of common stock upon vesting of RSUs (in shares) | 1,515,000 | ||||
Shares withheld related to net settlement of RSUs | (19,111) | (19,111) | |||
Shares withheld related to net settlement of RSUs (in shares) | (550,000) | ||||
Equity compensation expense | 32,834 | 32,834 | |||
Balance at Dec. 31, 2015 | 242,545 | $ 84 | 378,162 | (135,565) | (136) |
Balance (in shares) at Dec. 31, 2015 | 84,311,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | (194,375) | (194,375) | |||
Other comprehensive income | 149 | 149 | |||
Exercise of options to purchase common stock | 209 | $ 1 | 208 | ||
Exercise of options to purchase common stock (in shares) | 70,000 | ||||
Issuance of common stock upon vesting of RSUs | 2 | $ 2 | |||
Issuance of common stock upon vesting of RSUs (in shares) | 1,963,000 | ||||
Shares withheld related to net settlement of RSUs | (21,092) | $ (1) | (21,091) | ||
Shares withheld related to net settlement of RSUs (in shares) | (525,000) | ||||
Equity compensation expense | 51,494 | 51,494 | |||
Acquisition of a business | 452 | 452 | |||
Acquisition of a business (in shares) | 12,000 | ||||
Balance at Dec. 31, 2016 | 79,384 | $ 86 | 409,225 | (329,940) | 13 |
Balance (in shares) at Dec. 31, 2016 | 85,831,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | (244,614) | (244,614) | |||
Other comprehensive income | (2,376) | (2,376) | |||
Exercise of options to purchase common stock | 244 | 244 | |||
Exercise of options to purchase common stock (in shares) | 84,000 | ||||
Issuance of common stock upon vesting of RSUs | 2 | $ 2 | |||
Issuance of common stock upon vesting of RSUs (in shares) | 2,327,000 | ||||
Shares withheld related to net settlement of RSUs | (1,562) | (1,562) | |||
Shares withheld related to net settlement of RSUs (in shares) | (33,000) | ||||
Equity compensation expense | 71,380 | 71,380 | |||
Equity component of issuance of Notes, net (Note 14) | 49,213 | 49,213 | |||
Balance at Dec. 31, 2017 | $ (48,329) | $ 88 | 537,212 | (583,266) | $ (2,363) |
Balance (in shares) at Dec. 31, 2017 | 88,209,000 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Adoption of ASU No. 2016-09 | $ 8,712 | $ (8,712) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | |||
Net loss | $ (244,614) | $ (194,375) | $ (77,443) |
Adjustments to reconcile net loss to net cash used in operating activities | |||
Depreciation and amortization | 87,020 | 55,572 | 32,446 |
Equity based compensation | 67,840 | 49,402 | 31,015 |
Gain on sale of a business | 0 | 0 | (2,997) |
Amortization of discount and issuance costs on convertible notes | 5,830 | 0 | 0 |
Other non-cash adjustments | 1,198 | 331 | 3,027 |
Changes in operating assets and liabilities: | |||
Accounts receivable | 18,172 | 9,217 | 4,033 |
Inventories | (9,454) | 1,351 | (131) |
Prepaid expenses and other current assets | (39,124) | (16,179) | (29,513) |
Accounts payable and accrued expenses | 104,184 | 126,013 | 135,855 |
Deferred revenue and other liabilities | 81,354 | 51,914 | 47,031 |
Other assets | (2,428) | (1,998) | (136) |
Net cash provided by operating activities | 33,634 | 62,814 | 135,121 |
Cash flows from investing activities | |||
Purchase of short-term and long-term investments | (54,551) | (88,112) | (207,303) |
Sale and maturities of short-term investments | 71,095 | 119,810 | 133,596 |
Purchase of property and equipment | (100,451) | (96,707) | (44,648) |
Site and software development costs | (46,428) | (31,379) | (17,536) |
Cash received from the sale of a business (net of cash sold) | 0 | 1,508 | 2,860 |
Other investing activities, net | 0 | (1,000) | (4,697) |
Net cash used in investing activities | (130,335) | (95,880) | (137,728) |
Cash flows from financing activities | |||
Proceeds from issuance of convertible notes, net of issuance costs | 420,449 | 0 | 0 |
Premiums paid for capped call confirmations | (44,160) | 0 | 0 |
Taxes paid related to net share settlement of equity awards | (1,562) | (21,092) | (19,111) |
Net proceeds from exercise of stock options | 244 | 209 | 495 |
Net cash provided by (used in) financing activities | 374,971 | (20,883) | (18,616) |
Effect of exchange rate changes on cash and cash equivalents | 850 | (387) | (460) |
Net increase (decrease) in cash and cash equivalents | 279,120 | (54,336) | (21,683) |
Cash and cash equivalents | |||
Beginning of year | 279,840 | 334,176 | 355,859 |
End of year | 558,960 | 279,840 | 334,176 |
Supplemental disclosure of non-cash investing activities | |||
Purchase of property and equipment included in accounts payable and accrued expenses and in other liabilities | 8,533 | 1,336 | 5,258 |
Construction costs capitalized under finance lease obligation and other leases | $ 47,276 | $ 53,894 | $ 27,295 |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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 ten million products from over 10,000 suppliers. The consolidated financial statements and other disclosures contained in this Annual Report on Form 10-K are those of the Company. Prior period expenses recorded in "Merchandising, marketing and sales" and "Operations, technology, general and administrative" have been combined into " Selling, operations, technology, general and administrative " on the consolidated statements of operations to conform with current presentation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements of Wayfair Inc. include its wholly owned subsidiaries including the accounts of Wayfair LLC and its wholly owned subsidiaries (collectively the "Company" or "Wayfair"). All intercompany accounts and transactions have been eliminated. Below is a summary of the wholly-owned subsidiaries of the Company with operations: Subsidiary Location Wayfair LLC U.S. Wayfair Securities Corporation U.S. SK Retail, Inc. U.S. CastleGate Logistics Inc. U.S. Wayfair Maine LLC U.S. Wayfair Stores Limited Republic of Ireland Wayfair (UK) Limited United Kingdom Wayfair GmbH Germany Wayfair (BVI) Ltd. British Virgin Islands CastleGate Logistics Canada Inc. Canada Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. On an ongoing basis, management evaluates these estimates and judgments, including those related to revenue recognition, capitalization of site and software development costs, stock-based compensation, and inventory. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity (at the date of purchase) of three months or less to be the equivalent of cash for the purpose of consolidated balance sheets and statements of cash flows presentation. Cash equivalents, which consist primarily of money market accounts, are carried at cost, which approximates market value. Restricted Cash As of December 31, 2017 and 2016 , there was $5.0 million , of cash that was restricted from withdrawal and held by banks to guarantee the Company's letters of credit issued principally for certain vendor arrangements. Accounts Receivable Accounts receivable are stated net of an allowance for doubtful accounts, which is based on historical losses, existing economic conditions, and other information available at the consolidated balance sheets dates. Uncollectible amounts are written off against the allowance after all collection efforts have been exhausted. Short-Term Investments and Marketable Securities Short-term investments consist of certificates of deposits and marketable securities with original maturities of greater than three months and maturing in less than twelve months from the balance sheet date. The Company classifies its marketable securities as "available-for-sale" securities. Available-for-sale securities are classified as short-term investments and long-term investments on the consolidated balance sheets and are carried at fair value. Unrealized gains and losses on available-for-sale securities that are considered temporary are recorded, net of taxes, in the "Accumulated other comprehensive loss" caption of the Company’s consolidated balance sheets. Unrealized losses, excluding losses related to the credit rating of the security (credit losses), on available-for-sale securities that are considered other-than-temporary but relate to securities that the Company (i) does not intend to sell and (ii) will not be required to sell below cost are also recorded, net of taxes, in "Accumulated other comprehensive loss." Further, the Company does not believe it will be required to sell such securities below cost. Therefore, the only other-than-temporary losses the Company records in "Other income, net" in its consolidated statements of operations are related to credit losses. As of December 31, 2017 and 2016 , the Company’s available-for-sale securities consisted of investment securities. The maturities of the Company’s long-term marketable securities generally range from one to three years. As of December 31, 2017 and 2016 , the Company's available-for-sale securities primarily consisted of corporate bonds and other government obligations that are priced at fair value. The cost basis of a marketable security sold is determined by the Company using the specific identification method. Fair Value of Financial Instruments 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: • 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 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. Refer to Note 3, Fair Value Measurements , for additional detail. Concentrations of Credit Risk Financial instruments that subject the Company to credit risk consist of cash and cash equivalents, short-term and long-term investments, and accounts receivable. The risk with respect to cash and cash equivalents and short-term and long-term investments is minimized by the Company's policy of investing in financial instruments (i.e., cash equivalents) with near-term maturities issued by highly rated financial institutions. At times, these balances may exceed federally insured limits; however, to date, the Company has not incurred any losses on these investments. As of December 31, 2017 and 2016 , the Company had $63.4 million and $7.0 million , respectively, in banks located outside the U.S. The risk with respect to accounts receivable is managed by the Company through its policy of monitoring the creditworthiness of its customers to which it grants credit terms in the normal course of business. Leases The Company leases office space in several countries around the world under non-cancelable lease agreements. The Company generally leases its office facilities under operating lease agreements. Office facilities subject to an operating lease and the related lease payments are not recorded on the balance sheet. The terms of certain lease agreements provide for rental payments on a graduated basis, however, the Company recognizes rent expense on a straight-line basis over the lease period in accordance with authoritative accounting guidance. Any lease incentives are recognized as reductions of rental expense on a straight-line basis over the term of the lease. The lease term begins on the date the Company becomes legally obligated for the rent payments or when it takes possession of the office space, whichever is earlier. The Company establishes assets and liabilities for the estimated construction costs incurred under lease arrangements where the Company is considered the owner for accounting purposes only, or build-to-suit leases, to the extent the Company is involved in the construction of structural improvements or take construction risk prior to commencement of a lease. 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. Refer to Note 7, Commitments and Contingencies , for additional detail. Foreign Currency Translation The functional currency of the Company is the U.S. dollar, while the functional currency of certain wholly-owned subsidiaries outside of the U.S. is as follows: Subsidiary Currency Wayfair Stores Limited Euro Wayfair (UK) Limited Pound sterling Wayfair GmbH Euro Wayfair (BVI) Ltd. Euro CastleGate Logistics Canada Inc. Canadian dollar The financial statements of the Company are translated to U.S. dollars using year-end exchange rates as to assets and liabilities and average exchange rates as to revenue and expenses. Capital accounts are translated at their historical exchange rates when the capital transaction occurred. The effects of foreign currency translation are included in other comprehensive loss in the consolidated statements of comprehensive loss. Transaction gains and losses are included in the Company's consolidated statements of operations. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive loss within total stockholders' equity (deficit). Inventories Inventories consisting of finished goods are stated at the lower of cost or net realizable value, determined by the first-in, first-out (FIFO) method, and consist of product for resale. Inventory costs consist of cost of product and inbound shipping and handling costs. Inventory costs also include direct and indirect labor costs, rents and depreciation expenses associated with the Company's fulfillment centers. Inventory valuation requires the Company to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, liquidations, and expected recoverable values of each disposition category. Goods In-Transit Goods in-transit directly from suppliers to customers are recorded in prepaid expenses and other current assets. Risk of loss and the transfer of title from the supplier to the Company occur at freight on board shipping point. As of December 31, 2017 and 2016 , goods in-transit amounted to $54.5 million and $34.3 million , respectively. Property and Equipment Property and equipment are stated at cost, net of depreciation and amortization. Depreciation and amortization on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets as follows: Class Range of Life (In Years) Furniture and computer equipment 3 to 7 Site and software development costs 2 Leasehold improvements The lesser of useful life or lease term Building (leased - Note 7) 30 Site and Software Development Costs The Company capitalizes certain costs associated with the development of its sites and internal-use software products after the preliminary project stage is complete and until the software is ready for its intended use. The capitalized costs are amortized over a two-year period. Costs incurred in the preliminary stages of development, after the software is ready for its intended use and for maintenance of internal-use software are expensed as incurred. Upgrade and enhancements are capitalized to the extent they will result in added functionality. Total costs capitalized, net of accumulated amortization, totaled $45.4 million and $30.0 million as of December 31, 2017 and 2016 , respectively, and are included in property and equipment, net in the accompanying consolidated balance sheets. Amortization expense for the years ended December 31, 2017 , 2016 , and 2015 were $34.5 million , $21.6 million , and $15.3 million , respectively. Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances, such as service discontinuance or technological obsolescence, indicate that the carrying amount of the long-lived asset may not be recoverable. When such events occur, the Company compares the carrying amount of the asset to the undiscounted expected future cash flows related to the asset. If the comparison indicates that an impairment exists, the amount of the impairment is calculated as the difference between the excess of the carrying amount over the fair value of the asset. If a readily determinable market price does not exist, fair value is estimated using discounted expected cash flows attributable to the asset. For the years ended December 31, 2017 , 2016 and 2015 , no impairment of long-lived assets or identifiable intangibles had been indicated. Contingent Liabilities The Company has certain contingent liabilities that arise in the ordinary course of business activities. The Company accrues for loss contingencies when losses become probable and are reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability. The Company does not accrue for contingent losses that, in its judgment, are considered to be reasonably possible, but not probable; however, it discloses the range of such reasonably possible losses. Revenue Recognition The Company generates net revenue through product sales generated primarily through the Company's five distinct sites and through websites operated by third parties. The Company recognizes revenue for product sales generated through the Company's five distinct sites and through websites operated by third parties only when the following four criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed or determinable; and (4) collectability is reasonably assured. The Company recognizes net revenue from sales of its products upon delivery to the customer. As the Company ships a large volume of packages through multiple carriers, actual delivery dates may not always be available and as such the Company estimates delivery dates based on historical data. The Company records product revenue at the gross amount as the Company is the primary obligor with the customer and provides the primary customer service for all products sold, has latitude in establishing price and selecting products sold, has discretion in selecting suppliers of products sold, maintains inventory risk from shipment through delivery date and upon accepting returns, and has credit risk. Net revenue includes shipping costs charged to the customer and is recorded net of taxes collected from customers, which are remitted to governmental authorities. Cash discounts, returns and rebates are deducted from gross revenue in determining net revenue. In addition, the Company defers revenue when cash is collected from its customer prior to the satisfaction of the revenue recognition criteria. The Company maintains a membership rewards program for purchases made with the Company's private label credit card, a Wayfair-branded credit card that can only be used at the Company's five U.S. sites. Enrolled customers earn points that may be redeemed for future purchases. The Company defers a portion of its revenue associated with rewards that are ultimately expected to be redeemed. The Company also earns revenue through third-party advertisers that pay based on the number of advertisement related clicks, actions, or impressions for advertisements placed on the Company's sites. Revenue earned under these arrangements is included in net revenue and is recognized in the period in which the click, action, or impression occurs. Vendor Rebates The Company earns rebates on incentive programs with its suppliers. These rebates are earned upon shipment of goods. Amounts earned and due from suppliers under these rebate programs are included in other current assets on the consolidated balance sheets and are reflected as a reduction of cost of goods sold on the consolidated statements of operations. Vendor allowances received by the Company reduce the carrying cost of inventory and are recognized in cost of goods sold when the related inventory is sold. Costs of Goods Sold Cost of goods sold consists of the cost of product sold to customers, shipping and handling costs and shipping supplies and fulfillment costs. Fulfillment costs include costs incurred in operating and staffing the fulfillment centers, such as costs attributed to receiving, inspecting, picking, packaging and preparing customer orders for shipment. Cost of goods sold also includes direct and indirect labor costs, including equity-based compensation, for fulfillment center oversight, including payroll and related benefit costs. The Company also performs logistics services for suppliers through its CastleGate and Wayfair Delivery Network solutions, which are earned upon completion of preparing customer orders for shipment and are reflected as a reduction of cost of goods sold on the consolidated statements of operations. Advertising Costs Advertising consists of direct response performance marketing costs, such as display advertising, paid search advertising, social media advertising, search engine optimization, comparison shopping engine advertising, television advertising, direct mail, catalog and print advertising. Expenditures for advertising are expensed in the period that the advertising first takes place. Advertising expense amounted to approximately $550.0 million , $409.1 million , and $278.2 million in the years ended December 31, 2017 , 2016 , and 2015 , respectively. Included in prepaid expenses at December 31, 2017 and 2016 are approximately $0.6 million and $0.9 million , respectively, of prepaid advertising costs. Merchant Processing Fees Merchant processing fees totaling $88.7 million , $66.0 million , and $46.9 million in the years ended December 31, 2017 , 2016 , and 2015 , respectively, are included in customer service and merchant fees expense in the consolidated statements of operations. These fees are charged by third parties that provide merchant processing services for customer payments made by credit cards and debit cards. Retail Partner Fees The Company sells its products through websites owned and operated by third-party online retailers, or retail partners. The Company pays a fee for sales generated through these websites and records them as merchant processing fees and advertising costs. Retail partner fees included in merchant processing fees are $1.5 million , $1.9 million , and $3.5 million for the years ended December 31, 2017 , 2016 , and 2015 , respectively. Retail partner fees included in advertising costs are $7.0 million , $11.0 million , and $20.2 million for the years ended December 31, 2017 , 2016 , and 2015 , respectively. Equity-Based Compensation The Company accounts for its equity-based compensation awards in accordance with ASC Topic 718, Compensation—Stock Compensation ("ASC 718"). ASC 718 requires all equity-based payments to employees to be recognized as expense in the statements of operations based on their grant date fair values. The Company has granted stock options, restricted shares and restricted stock units. The Company has primarily granted restricted stock units, and to a lesser extent, restricted stock. The Company granted only restricted stock units to employees in the year ended December 31, 2017 , 2016 , and 2015 . Restricted stock values are determined based on the quoted market price of our Class A common stock on the date of grant. The Company accounts for equity awards to non-employees in accordance with FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees , which requires the fair value of an award to non-employees be remeasured at fair value as the award vests. Income Taxes Income taxes are accounted for under the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records valuation allowances to reduce deferred income tax assets to the amount that is more likely than not to be realized. At December 31, 2017, we maintain a full valuation allowance against our net U.S. deferred tax asset as well as the net deferred tax asset of our Irish subsidiary. The Company determines whether it is more likely than not that a tax position will be sustained upon examination. If it is not more likely than not that a position will be sustained, no amount of benefit attributable to the position is recognized. The tax benefit to be recognized of any tax position that meets the more likely than not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon resolution of the contingency. We evaluate at the end of each reporting period whether some or all of the undistributed earnings of our foreign subsidiaries are permanently reinvested. Our position is based upon several factors including management's evaluation of the Company and its subsidiaries' financial requirements, the short term and long term operational and fiscal objectives of the Company, and the tax consequences associated with the repatriation of earnings. Net Loss Per Share The Company follows the two-class method when computing net loss per share for its two issued classes of common stock—Class A and Class B. Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common stock outstanding for the period. For periods in which the Company has reported net losses, diluted net loss per share is the same as basic net loss per share, since dilutive common stock are not assumed to have been issued if their effect is anti-dilutive. Subsequent Events The Company considers events or transactions that have occurred after the balance sheet date of December 31, 2017 , but prior to the filing of the financial statements with the U.S. Securities and Exchange Commission, to provide additional evidence relative to certain estimates or to identify matters that require additional recognition or disclosure. Subsequent events have been evaluated through the filing of these financial statements. Refer to Note 16, Subsequent Events , for additional detail. Recent Accounting Pronouncements Stock Compensation In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, "Compensation - Stock Compensation" ("ASU 2016-09"). This ASU revises the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The Company adopted ASU 2016-09 as of January 1, 2017 using a modified retrospective approach with the option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, with a cumulative-effect adjustment to retained earnings recognized as of January 1, 2017 of $ 8.7 million . The adoption of ASU 2016-09 also requires all income tax adjustments to be recorded in the consolidated and condensed statements of operations. Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017 and early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting year. In March 2016, the FASB issued ASU No. 2016-08, "Revenue from Contracts with Customers - Principal versus Agent Considerations" ("ASU 2016-08"). This ASU clarifies the implementation guidance for principal versus agent considerations in ASU 2014-09. This ASU is effective at the same period as ASU 2014-09. The Company expects to adopt the new revenue standard as of January 1, 2018 using the modified retrospective approach, with an immaterial cumulative-effect adjustment to retained earnings recognized as of January 1, 2018. The immaterial adjustment is primarily related to recognizing gift card and store credit breakage, to the extent there is no requirement for remitting balances to governmental agencies under unclaimed property laws. Other changes identified relate to the presentation of revenue, where certain third-party advertising arrangements will be classified as net revenue rather than a reduction in cost of goods sold. Leases In February 2016, the FASB issued ASU No. 2016-02, "Leases" ("ASU 2016-02"). This ASU revises the accounting related to leases by requiring lessees to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions. This ASU is effective for annual reporting periods beginning after December 15, 2018 and early adoption is permitted. Management expects to adopt ASU 2016-02 for annual reporting periods beginning after December 15, 2018. Management is currently evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements, and expects it will have a material impact on our consolidated financial statements, primarily the consolidated balance sheets and related disclosures. |
Marketable Securities and Fair
Marketable Securities and Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Marketable Securities and Fair Value Measurements | Marketable Securities and Fair Value Measurements Marketable Securities As of December 31, 2017 and 2016 , all of the Company’s marketable securities were classified as available-for-sale and their estimated fair values were $82.6 million and $99.7 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 December 31, 2017 and 2016 , the Company’s available-for-sale securities primarily consisted of corporate bonds and other government obligations that are priced at fair value. During the years ended December 31, 2017 , 2016 , and 2015 , the Company did not recognize any other-than-temporary impairment loss. The maturities of the Company’s long-term marketable securities generally range from one to three years. The cost basis of a marketable security sold is determined by the Company using the specific identification method. During the years ended December 31, 2017 , 2016 , and 2015 , the Company did not have any realized gains or losses. The following tables present details of the Company’s marketable securities as of December 31, 2017 and 2016 (in thousands): December 31, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Short-term: Investment securities $ 61,129 $ — $ (97 ) $ 61,032 Long-term: Investment securities 21,695 — (134 ) 21,561 Total $ 82,824 $ — $ (231 ) $ 82,593 December 31, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Short-term: Investment securities $ 63,135 $ 7 $ (39 ) $ 63,103 Commercial paper 5,641 1 (2 ) 5,640 Long-term: Investment securities 30,985 16 (34 ) 30,967 Total $ 99,761 $ 24 $ (75 ) $ 99,710 Fair Value Measurements The following tables set forth the fair value of the Company's financial assets measured at fair value on a recurring basis as of December 31, 2017 and 2016 based on the three-tier value hierarchy described in Note 2, Summary of Significant Accounting Policies (in thousands): December 31, 2017 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds and other funds $ 488,029 $ — $ — $ 488,029 Short-term investments: Investment securities — 61,032 — 61,032 Restricted cash: Certificate of deposit 5,000 — — 5,000 Long-term: Investment securities — 21,561 — 21,561 Total $ 493,029 $ 82,593 $ — $ 575,622 December 31, 2016 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 200,867 $ — $ — $ 200,867 Short-term investments: Investment securities — 63,103 — 63,103 Commercial paper — 5,640 — 5,640 Restricted cash: Certificate of deposit 5,000 — — 5,000 Long-term: Investment securities — 30,967 — 30,967 Total $ 205,867 $ 99,710 $ — $ 305,577 |
Intangible assets and Goodwill
Intangible assets and Goodwill | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets and Goodwill | Intangible assets and Goodwill The following table summarizes intangible assets as of December 31, 2017 and 2016 (in thousands): Weighted-Average December 31, 2017 Amortization Period (Years) Gross Carrying Amount Accumulated Amortization Net Book Value Trademarks 5 $ 1,900 $ (1,678 ) $ 222 Technology 3 1,453 (646 ) 807 Customer relationships 5 1,300 (1,148 ) 152 Total $ 4,653 $ (3,472 ) $ 1,181 Weighted-Average December 31, 2016 Amortization Period (Years) Gross Carrying Amount Accumulated Amortization Net Book Value Trademarks 5 $ 1,900 $ (1,298 ) $ 602 Technology 3 1,453 (161 ) 1,292 Customer relationships 5 1,300 (888 ) 412 Total $ 4,653 $ (2,347 ) $ 2,306 Amortization expense related to intangible assets was $1.1 million , $0.9 million , and $0.9 million for the years ended December 31, 2017 , 2016 , and 2015 , respectively. The estimated future amortization expense of purchased intangible assets as of December 31, 2017 , is as follows (in thousands): Total 2018 $ 858 2019 323 Thereafter — Total $ 1,181 Goodwill as of December 31, 2017 was $ 1.9 million , unchanged from December 31, 2016 . |
Property and Equipment, net
Property and Equipment, net | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Property and Equipment, net The following table summarizes property and equipment, net as of December 31, 2017 and 2016 (in thousands): December 31, 2017 2016 Furniture and computer equipment $ 213,790 $ 133,297 Site and software development costs 118,356 77,429 Leasehold improvements 82,614 62,090 Construction in progress 46,826 47,013 Building (leased - see Note 7) 83,681 29,856 545,267 349,685 Less accumulated depreciation and amortization (184,126 ) (110,331 ) Property and equipment, net $ 361,141 $ 239,354 Property and equipment depreciation and amortization expense was $85.9 million , $54.6 million , and $31.6 million for the years ended December 31, 2017 , 2016 and 2015 , respectively. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets, Accrued Expenses, Other Current Liabilities, and Other Liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Prepaid Expenses and Other Current Assets, Accrued Expenses, Other Current Liabilities, and Other Liabilities | Prepaid Expenses and Other Current Assets, Accrued Expenses, Other Current Liabilities, and Other Liabilities The following table presents the components of selected balance sheet items as of December 31, 2017 and 2016 (in thousands): December 31, Prepaid expenses and other current assets: 2017 2016 Deferred costs in transit $ 54,483 $ 34,325 Supplier receivable 29,941 21,828 Supplier credits receivable 12,936 13,215 Other prepaid and other current assets 33,478 21,477 Total prepaid expenses and other current assets $ 130,838 $ 90,845 December 31, Accrued expenses: 2017 2016 Employee compensation and related benefits $ 55,142 $ 37,767 Advertising 38,888 8,379 Accrued property, plant and equipment 8,592 3,630 Credit card 4,573 7,405 Audit, legal and professional fees 1,749 1,333 Other accrued expenses 11,303 9,293 Total accrued expenses $ 120,247 $ 67,807 December 31, Other current liabilities: 2017 2016 Sales tax payable $ 35,726 $ 15,731 Sales return reserve 21,243 12,384 Other current liabilities 28,057 15,913 Total current other liabilities $ 85,026 $ 44,028 December 31, Other liabilities: 2017 2016 Deferred rent $ 59,811 $ 55,267 Construction costs under build-to-suit leases 37,545 39,949 Other liabilities 9,136 963 Total other liabilities $ 106,492 $ 96,179 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Leases The Company leases office and warehouse spaces under non-cancelable leases. These leases expire at various dates through 2029 and include discounted rental periods and fixed escalation clauses, which are amortized straight-line over the terms of the lease. Future minimum rental commitments under non-cancelable leases with initial or remaining terms in excess of one year at December 31, 2017 were as follows (in thousands): Amount 2018 $ 70,800 2019 89,972 2020 86,097 2021 83,160 2022 81,544 Thereafter 372,127 Total $ 783,700 Rent expense under operating leases was $45.2 million , $33.6 million , and $16.3 million in the years ended December 31, 2017 , 2016 and 2015 , respectively. The Company has issued letters of credit for approximately $15.3 million and $10.6 million as security for these lease agreements as of December 31, 2017 and 2016 , respectively. Future lease payments have not been reduced by minimum sublease rentals of $6.5 million due to the Company in the future under non-cancelable subleases through 2020. The Company establishes assets and liabilities for the estimated construction costs incurred under lease arrangements where the Company is considered the owner for accounting purposes only, or build-to-suit leases, to the extent the Company is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease. 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. The construction of one warehouse lease arrangement was completed during the year ended December 31, 2016, and because the Company concluded it had a letter of credit of $1.2 million , the Company did not meet the sale-leaseback criteria for derecognition of the building asset and liability. The construction of two additional warehouse lease arrangements were completed in the year ended December 31, 2017 , and because the Company concluded it had letters of credit of $0.8 million and $1.0 million , 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 obligations. The financing obligations and corresponding building assets of $28.9 million , $12.6 million , and $41.2 million were recorded in " Lease financing obligation, net of current portion " and " Property and equipment, net ," respectively, in the Company’s consolidated balance sheets as of June 30, 2016, March 31, 2017, and June 30, 2017, respectively, their respective quarters of completion. The monthly rent payments made to the lessor under the lease agreement are recorded in the Company’s financial statements as land lease expense and principal and interest on the financing obligation. Interest expense on the lease financing obligation reflects the portion of the Company's monthly lease payments that is allocated to interest expense. For the years ended December 31, 2017 and 2016 , land lease expense was $0.9 million and $0.1 million , respectively, and interest expense on lease financing obligations was $6.9 million and $1.4 million , respectively. As of December 31, 2017 , future minimum commitments related to the financing obligations were $38.8 million and $7.5 million for principal and interest, respectively, through December 31, 2022 . Restricted Cash The Company has deposited $5.0 million as collateral for letters of credit and has classified these amounts as "Other noncurrent assets" on its consolidated balance sheets at December 31, 2017 and 2016 . Collection of Sales or Other Similar Taxes The Company does not collect and remit sales and use, commercial activity, VAT or similar taxes in all jurisdictions in which it has sales, based on the Company's belief that such taxes are not applicable or legally required. Several states and other taxing jurisdictions have presented or threatened the Company with assessments, alleging that the Company is required to collect and remit such taxes there. Other states, including South Dakota in a legal proceeding currently before the U.S. Supreme Court in which the Company is a defendant (South Dakota v. Wayfair Inc. , 17-494), have requested that courts validate new laws that reverse existing constitutional precedent. The Company does not believe that it is subject to such taxes, and intends to vigorously defend its position. Pursuant to the South Dakota statute, the Company would not be required to withhold and remit sales tax until there was a verdict in favor of South Dakota which was then upheld by U.S. Supreme Court. The statute also would not require the Company to pay sales tax retroactively if the Company were to lose. At this time, the Company believes any losses that may arise from these assessments and claims would be immaterial; however, no assurance can be given as to the outcomes and the Company could be subject to significant additional tax liabilities. Legal Matters In September 2016, a putative class action complaint was filed against the Company in the Superior Court of the province of Quebec (Naomi Zouzout v. Wayfair LLC, Case No. PQ 500-06-000809-166) by an individual on behalf of herself and on behalf of all other similarly situated individuals alleging violations of various Canadian consumer protection statutes. Among other remedies, this lawsuit seeks compensatory and punitive money damages, costs, and various fees. In June 2017, the Company entered into a settlement of the litigation, subject to judicial approval. The settlement was approved by the court in February 2018 and is not expected to have a material adverse effect on the Company's results of operation or financial condition. On January 12, 2018, the U.S. Supreme Court granted certiorari in South Dakota v Wayfair Inc., 17-494. See Collection of Sales or Other Similar Taxes above. 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. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans The Company has a defined-contribution, incentive savings plan pursuant to Section 401(k) of the Internal Revenue Code. The plan covers all full-time employees who have reached the age of 21 years. Employees may elect to defer compensation up to a dollar limit (as allowable by the Internal Revenue Code), of which up to 4% of an employee's salary will be matched by the Company. The amounts deferred by the employee and the matching amounts contributed by the Company both vest immediately. The amount expensed under the plan totaled approximately $9.0 million , $6.3 million , and $3.3 million in the years ended December 31, 2017 , 2016 and 2015 , respectively. |
Equity-Based Compensation
Equity-Based Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Equity-Based Compensation | 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, 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, 2018, 8,016,850 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 Company adopted ASU 2016-09 as of January 1, 2017. For additional information, refer to Note 2, Summary of Significant Accounting Policies . The following table presents activity relating to stock options for the year ended December 31, 2017 : Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Outstanding at December 31, 2016 209,759 $ 2.98 4.5 Options exercised (82,776 ) $ 2.92 Options forfeited/canceled (600 ) $ 2.89 Outstanding and exercisable at December 31, 2017 126,383 $ 3.02 3.5 Intrinsic value of stock options exercised was $4.8 million and $2.5 million for the years ended December 31, 2017 and 2016 , respectively. Aggregate intrinsic value of stock options outstanding and currently exercisable is $9.8 million as of December 31, 2017 . All stock options were fully vested at December 31, 2017 . The following table presents activity relating to restricted common stock for the year ended December 31, 2017 : Shares Weighted-Average Grant Date Fair Value Unvested at December 31, 2016 60,000 $ 44.34 Restricted stock vested (20,000 ) $ 44.34 Unvested and expected to vest in the future as of December 31, 2017 40,000 $ 44.34 The intrinsic value of restricted common stock vested and repurchased was $1.6 million and less than $0.1 million for the years ended December 31, 2017 and 2016 , respectively. Aggregate intrinsic value of restricted common stock unvested is $3.2 million as of December 31, 2017 . Unrecognized equity based compensation expense related to restricted common stock expected to vest over time is $2.8 million with a weighted average remaining vesting term of 1.5 years as of December 31, 2017 . The following table presents activity relating to RSUs for the year ended December 31, 2017 : Shares Weighted-Average Grant Date Fair Value Unvested at December 31, 2016 6,986,776 $ 34.21 RSUs granted 3,521,415 $ 57.37 RSUs vested (2,304,044 ) $ 32.47 RSUs forfeited/canceled (1,350,541 ) $ 37.84 Outstanding and expected to vest as of December 31, 2017 6,853,606 $ 46.28 The intrinsic value of RSUs vested was $137.2 million and $76.1 million for the years ended December 31, 2017 and 2016 , respectively. Aggregate intrinsic value of RSUs unvested is $550.1 million as of December 31, 2017 . Unrecognized equity based compensation expense related to RSUs expected to vest over time is $281.3 million with a weighted average remaining vesting term of 1.7 years as of December 31, 2017 . |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Stockholders' Equity (Deficit) | Stockholders' Equity (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 December 31, 2017 , 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 57,398,983 and 49,945,202 shares of Class A common stock and 30,809,627 and 35,885,692 shares of Class B common stock were outstanding as of December 31, 2017 and 2016 , 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 December 31, 2017 , 48,161,343 shares of Class B common stock were converted to Class A common stock. |
Segment and Geographic Informat
Segment and Geographic Information | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | 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 accounting policies of the segments are the same as those described in Note 2, Summary of Significant Accounting Policies. 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) income, 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): Year Ended December 31, 2017 2016 2015 U.S. Direct Retail $ 4,075,405 $ 2,993,365 $ 1,945,411 U.S. Other 77,652 117,132 190,081 U.S. segment net revenue 4,153,057 3,110,497 2,135,492 International Direct Retail 567,838 265,544 94,827 International Other — 4,319 19,566 International segment net revenue (1) 567,838 269,863 114,393 Total $ 4,720,895 $ 3,380,360 $ 2,249,885 (1) In the year ended December 31, 2015, International segment net revenue included $5.4 million from our Australian business, which we sold in July 2015. Year Ended December 31, 2017 2016 2015 Adjusted EBITDA: U.S. $ 35,888 $ 176 $ 30,985 International (102,921 ) (88,868 ) (46,914 ) Total reportable segments Adjusted EBITDA (67,033 ) (88,692 ) (15,929 ) Less: reconciling items (1) (177,581 ) (105,683 ) (61,514 ) Net loss $ (244,614 ) $ (194,375 ) $ (77,443 ) (1) Adjustments are made to reconcile total reportable segments Adjusted EBITDA to consolidated net loss including the following (in thousands): Year Ended December 31, 2017 2016 2015 Depreciation and amortization (1) $ 87,020 $ 55,572 $ 32,446 Equity based compensation and related taxes 72,626 51,953 32,975 Interest (income), net 9,433 (694 ) (1,284 ) Other (income) expense, net (758 ) (1,756 ) (2,718 ) Provision for income taxes 486 608 95 Other (1) 8,774 — — Total reconciling items $ 177,581 $ 105,683 $ 61,514 (1) The Company recorded $9.6 million of one-time charges in the year ended December 31, 2017 in " Selling, operations, technology, general and administrative " in the consolidated statements of operations related to a warehouse the Company vacated in July 2017. Of the $9.6 million charges, $8.8 million was included in "Other" and related primarily to the excess of the Company's estimated future remaining lease commitments through 2023 over its expected sublease income over the same period, and $0.8 million was included in "Depreciation and amortization" related to accelerated depreciation of leasehold improvements in the warehouse. 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 third-party advertising distribution providers (in thousands): Year Ended December 31, 2017 2016 2015 Net revenue Direct Retail $ 4,643,243 $ 3,258,909 $ 2,040,238 Other 77,652 121,451 209,647 Net revenue $ 4,720,895 $ 3,380,360 $ 2,249,885 The following table presents long-lived assets by segment (in thousands): Year Ended December 31, 2017 2016 Geographic long-lived assets: U.S. $ 353,414 $ 233,099 International 7,727 6,255 Total $ 361,141 $ 239,354 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense (benefit) from continuing operations for the years ended December 31, 2017 , 2016 and 2015 is presented below (in thousands): Year ended December 31, 2017 Current Deferred Total Federal $ — $ (31 ) $ (31 ) State 540 8 548 Foreign 942 (973 ) (31 ) $ 1,482 $ (996 ) $ 486 Year ended December 31, 2016 Current Deferred Total Federal $ — $ 32 $ 32 State 329 5 334 Foreign 285 (43 ) 242 $ 614 $ (6 ) $ 608 Year ended December 31, 2015 Current Deferred Total Federal $ — $ 54 $ 54 State (202 ) 7 (195 ) Foreign 331 (95 ) 236 129 (34 ) 95 The actual income tax expense (benefit) differs from the expected income tax expense (benefit) computed at the U.S. Federal statutory tax rate of 35% due to the following (in thousands): Year Ended December 31, 2017 2016 2015 Tax expense (benefit) at federal statutory rate $ (85,445 ) $ (67,819 ) $ (27,072 ) State income tax expense, net of federal benefit (11,432 ) (5,225 ) (1,424 ) Foreign tax rate differential 23,179 17,109 9,278 Non-deductible equity based compensation expense 1,080 2,321 1,415 Windfall benefits from equity based compensation (24,168 ) — — Change in valuation allowance 24,209 53,467 12,394 Impact of sale of Australian subsidiary — — 4,248 Change in tax rate 71,919 — — Other 1,144 755 1,256 Net income tax expense $ 486 $ 608 $ 95 We recorded an income tax expense of $0.5 million , representing an effective tax rate of zero . The effective tax rate differs from the U.S. statutory rate of 35% primarily as a result of the losses generated in the U.S. and certain foreign subsidiaries that have a valuation allowance and therefore cannot be benefited, as well as excess tax deductions related to equity-based compensation and the effects of U.S. Tax Reform. The components of income before income tax expense (benefit) determined by tax jurisdiction, are as follows (in thousands): Year Ended December 31, 2017 2016 2015 U.S. $ (143,800 ) $ (118,851 ) $ (38,963 ) Foreign (100,328 ) (74,916 ) (38,385 ) Total $ (244,128 ) $ (193,767 ) $ (77,348 ) The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities for the periods presented are as follows (in thousands): December 31 2017 2016 Deferred tax assets: Accounts receivable $ 1,814 $ 1,153 Inventories 391 543 Operating loss carry-forwards 146,666 71,558 Equity based compensation expense 9,087 10,940 Intangibles 13,862 22,466 Accrued payroll 8,582 9,379 Accrued expenses and reserves 10,933 2,840 Charitable contributions 284 331 Deferred rent 48,936 51,355 Gross deferred tax assets 240,555 170,565 Less: Valuation allowance (178,488 ) (123,293 ) Net deferred tax assets 62,067 47,272 Deferred tax liabilities: Prepaid expenses (1,825 ) (1,428 ) Capitalized technology (11,339 ) (11,151 ) Property and equipment (34,986 ) (34,420 ) Goodwill (110 ) (133 ) Convertible debt (12,580 ) — Other (12 ) (166 ) Total deferred tax liabilities (60,852 ) (47,298 ) Net deferred tax assets (liabilities) 1,215 (26 ) Non-current net deferred tax assets (liabilities) $ 1,215 $ (26 ) The valuation allowance increased by $55.2 million during 2017. The increase in valuation allowance is the result of establishing a valuation allowance against the current year operating losses of our U.S. and Irish entities, the adoption of ASU 2016-09 which resulted in an increase to the net operating loss and stock compensation deferred tax assets above, partially offset by a decrease in valuation allowance as a result of the U.S. federal tax rate reduction enacted during the fourth quarter of 2017 and a reduction in valuation allowance associated with the net deferred tax liability recorded related to the Company’s convertible debt issuance. In determining the need for a valuation allowance, the Company has given consideration to the cumulative book income and loss positions of each of its entities as well as its worldwide cumulative loss position. The Company has assessed, on a jurisdictional basis, the available means of recovering deferred tax assets, including the ability to carry-back net operating losses, the existence of reversing temporary differences, the availability of tax planning strategies and available sources of future taxable income. At December 31, 2017, we maintain a full valuation allowance against the net deferred tax assets of our U.S. and Irish entities. We believe we are able to support the deferred tax assets recognized as of the end of the year in other foreign jurisdictions based on all of the available evidence. As of December 31, 2017 , the Company had federal net operating loss carryforwards available to offset future federal taxable income of $420.5 million . In addition, the Company had state net operating loss carryforwards available in the amount of $397.2 million which are available to offset future state taxable income. The federal net operating loss carryforwards begin to expire in the year ending December 31, 2034. The state net operating loss carryforwards begin to expire in the year ending December 31, 2022. The Company's ability to utilize these federal and state net operating loss carry-forwards may be limited in the future if the Company experiences an ownership change pursuant to Internal Revenue Code Section 382. An ownership change occurs when the ownership percentages of 5% or greater stockholders change by more than 50% over a three-year period. The Company also had foreign net operating loss carry-forwards available to offset future foreign income of $270.3 million . The foreign net operating loss carryforwards do not expire. As of January 1, 2017 the Company adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). In accordance with ASU 2016-09, previously unrecognized excess tax benefits are recognized on a modified retrospective basis. On January 1, 2017, the Company recorded a $44.1 million deferred tax asset related to unrecognized excess tax benefits with an offsetting adjustment to valuation allowance. In addition, the Company recorded a $3.3 million increase to its equity based compensation deferred tax asset with an offsetting adjustment to valuation allowance as a result in the impact of accounting for forfeitures as incurred. As of December 31, 2017 , the Company has not provided for U.S. deferred income taxes on undistributed earnings of its foreign subsidiaries of approximately $3.3 million since these earnings are deemed to be indefinitely reinvested. Upon distribution of those earnings in the form of dividends or otherwise, the Company could be subject to income taxes as well as withholding taxes. The amount of taxes attributable to the undistributed earnings is not practicably determinable. The Company establishes reserves for uncertain tax positions based on management's assessment of exposures associated with tax positions taken on tax return filings. The tax reserves are analyzed periodically and adjustments are made as events occur to warrant adjustment to the reserve. Reserves for uncertain tax positions as of December 31, 2017 and 2016 are not material and would not impact the effective tax rate if recognized as a result of the valuation allowance maintained against our net deferred tax assets. The Company's policy is to recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. Related to the unrecognized tax benefits noted above, the Company did not accrue any penalties and interest during 2017 , 2016 , and 2015 , respectively, because it believes that such additional interest and penalties would be immaterial. The Company's tax jurisdictions include the U.S., the UK, Germany, Ireland, Canada and the British Virgin Islands. The statute of limitations with respect to the Company's U.S. federal income taxes has expired for years prior to 2014. The relevant state statutes vary. The statute of limitations with respect to the Company's foreign income taxes varies, but has expired for years prior to 2012. However, preceding years remain open to examination by U.S. federal and state and foreign taxing authorities to the extent of future utilization of net operating losses generated in each preceding year. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Act") was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative deferred foreign earnings as of December 31, 2017. On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued which directs taxpayers to consider the impact of the Act as "provisional" when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. As of December 31, 2017, the Company had not completed its accounting for the tax effects of enactment of the Act, however, as described below, the Company made provisional estimates of the effects of the Act on its existing deferred tax balances and the one-time transition tax. The Act did not have a significant impact on the Company’s consolidated financial statements for the year ended December 31, 2017 as a result of the valuation allowance maintained against the Company’s U.S. deferred tax assets. However, the Company’s provisional estimate associated with the reduction in the U.S. federal corporate tax rate from 35% to 21% impacted the change in valuation allowance and change in tax rate component of the Company’s effective tax rate reconciliation as well as its ending deferred tax assets, deferred tax liabilities and valuation allowance in the deferred tax footnote disclosure. The Company has an accumulated deficit from its foreign operations and does not have a transition tax associated with deferred foreign earnings related to the Act. The ultimate impact of the Act may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made and additional regulatory guidance that may be issued. The Company’s accounting treatment is expected to be complete in the fourth quarter of 2018. |
Credit Agreement
Credit Agreement | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Credit Agreement | Credit Agreement On February 22, 2017, the Company entered into a $40 million credit card program and a credit agreement consisting of a $100 million secured revolving credit facility (the "Revolver") with Citibank, N.A. ("Citibank"). The Citibank credit facility replaced the Company's existing credit facility with Bank of America, N.A. ("Bank of America"), which was terminated on February 22, 2017 as described below. On September 11, 2017, the Citibank credit agreement was amended with a new letter of credit sublimit ( $25 million ) and to make clarifying edits to the mandatory prepayment provisions of the credit agreement. The Citibank Revolver has a $25 million letter of credit sublimit and a $10 million swing line sublimit, and a final maturity date of February 21, 2020. Wayfair LLC is the borrower (the "Borrower") under the Citibank credit agreement. Subject to certain conditions, the Borrower has the right to increase the Revolver by $25 million . 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. From closing until September 30, 2019, the applicable margin for Eurodollar rate loans is 1.75% per annum and the applicable margin for base rate loans is 0.75% per annum. After September 30, 2019, the applicable margin is subject to specified changes depending on the applicable consolidated leverage ratio. Any amounts outstanding under the Revolver are due at maturity. In addition, subject to the terms and conditions set forth in the credit agreement, the Borrower is required to make certain mandatory prepayments prior to maturity. The Citibank 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 Company and its subsidiaries, 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. In addition, the Citibank credit agreement requires the Company to maintain certain financial ratios. As of December 31, 2017 , the Company was in compliance with its covenants under the Revolver. The Company previously had a credit agreement with Bank of America, which was replaced by the Citibank credit agreement on February 22, 2017. The Bank of America credit agreement provided the Company with a $20 million revolving line of credit to support direct borrowings and letters of credit, provided that a maximum of $5 million could be applied to direct borrowings under the revolving line of credit, plus an additional $45 million credit card program (which the Company continued to utilize on a transitional basis until September 30, 2017), for a maximum aggregate commitment of $65 million . Subject to the terms and conditions of the Bank of America credit agreement, advances under the line of credit, if any, would bear interest at the LIBOR rate, plus 1.75% . The Bank of America credit agreement also required the Company to maintain certain covenants, including debt service coverage, tangible net worth and unencumbered liquid assets. The Company did not borrow any amounts under the Revolver or the Bank of America credit agreement during the years ended December 31, 2017 and 2016 . Convertible Debt On September 15, 2017, the Company issued $431.25 million aggregate principal amount of 0.375% Convertible Senior Notes due 2022 (the "Notes"), which includes the exercise in full of the $56.25 million over-allotment option, to Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC as the initial purchasers of the Notes (the "Initial Purchasers"). The net proceeds from the sale of the Notes were approximately $420.4 million , after deducting the Initial Purchasers’ discounts and the estimated offering expenses payable by the Company. The Company used approximately $44.2 million of the net proceeds from the offering to pay the cost of the capped call transactions, as further described below, with three financial institutions (the "Option Counterparties"). The Company intends to use the remainder of the net proceeds for working capital and general corporate purposes. The Notes were issued pursuant to an indenture, dated September 15, 2017 (the "Indenture"), between the Company and U.S. Bank National Association, as trustee. The Company will pay interest on the Notes semiannually in arrears at a rate of 0.375% per annum on March 1 and September 1 of each year commencing on March 1, 2018. The 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 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 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 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 Notes only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2017 (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 "measurement period") in which the trading price per $1,000 principal amount of Notes for each trading day of the 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 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 Notes at any time, regardless of the foregoing circumstances. The Company may not redeem the Notes prior to September 8, 2020. On or after September 8, 2020, the Company may redeem for cash all or part of the 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 Notes to be redeemed, plus accrued and unpaid interest, if any. Upon the occurrence of a fundamental change (as defined in the Indenture), holders may require the Company to repurchase all or a portion of their Notes for cash at a price equal to 100% of the principal amount of the Notes to be repurchased plus any accrued but unpaid interest to, but excluding, the fundamental change repurchase date. Holders of Notes who convert their Notes in connection with a notice of a redemption or a make-whole fundamental change (each as defined in the Indenture) may be entitled to a premium in the form of an increase in the conversion rate of the Notes. The 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 Notes then outstanding may declare the entire principal amount of all the Notes plus accrued interest, if any, to be immediately due and payable. 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 equity component of the Notes of approximately $95.8 million 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. Interest expense related to the Notes for the year ended December 31, 2017 was $5.8 million , which is also comprised of the amortization of debt discount and debt issuance costs and the contractual coupon interest. The estimated fair value of the Notes was $452.5 million as of December 31, 2017 . 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 . On September 11, 2017, the Company entered into privately negotiated capped call transactions (the "Base Capped Call Transactions") with the Option Counterparties and, in connection with the exercise in full of the over-allotment option by the Initial Purchasers, on September 14, 2017 entered into additional capped call transactions (such additional capped call transactions, the "Additional Capped Call Transactions" and, together with the Base Capped Call Transactions, the "Capped Call Transactions") with the Option Counterparties. 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 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, and is subject to certain adjustments under the terms of the 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 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. |
Convertible Debt
Convertible Debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Convertible Debt | Credit Agreement On February 22, 2017, the Company entered into a $40 million credit card program and a credit agreement consisting of a $100 million secured revolving credit facility (the "Revolver") with Citibank, N.A. ("Citibank"). The Citibank credit facility replaced the Company's existing credit facility with Bank of America, N.A. ("Bank of America"), which was terminated on February 22, 2017 as described below. On September 11, 2017, the Citibank credit agreement was amended with a new letter of credit sublimit ( $25 million ) and to make clarifying edits to the mandatory prepayment provisions of the credit agreement. The Citibank Revolver has a $25 million letter of credit sublimit and a $10 million swing line sublimit, and a final maturity date of February 21, 2020. Wayfair LLC is the borrower (the "Borrower") under the Citibank credit agreement. Subject to certain conditions, the Borrower has the right to increase the Revolver by $25 million . 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. From closing until September 30, 2019, the applicable margin for Eurodollar rate loans is 1.75% per annum and the applicable margin for base rate loans is 0.75% per annum. After September 30, 2019, the applicable margin is subject to specified changes depending on the applicable consolidated leverage ratio. Any amounts outstanding under the Revolver are due at maturity. In addition, subject to the terms and conditions set forth in the credit agreement, the Borrower is required to make certain mandatory prepayments prior to maturity. The Citibank 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 Company and its subsidiaries, 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. In addition, the Citibank credit agreement requires the Company to maintain certain financial ratios. As of December 31, 2017 , the Company was in compliance with its covenants under the Revolver. The Company previously had a credit agreement with Bank of America, which was replaced by the Citibank credit agreement on February 22, 2017. The Bank of America credit agreement provided the Company with a $20 million revolving line of credit to support direct borrowings and letters of credit, provided that a maximum of $5 million could be applied to direct borrowings under the revolving line of credit, plus an additional $45 million credit card program (which the Company continued to utilize on a transitional basis until September 30, 2017), for a maximum aggregate commitment of $65 million . Subject to the terms and conditions of the Bank of America credit agreement, advances under the line of credit, if any, would bear interest at the LIBOR rate, plus 1.75% . The Bank of America credit agreement also required the Company to maintain certain covenants, including debt service coverage, tangible net worth and unencumbered liquid assets. The Company did not borrow any amounts under the Revolver or the Bank of America credit agreement during the years ended December 31, 2017 and 2016 . Convertible Debt On September 15, 2017, the Company issued $431.25 million aggregate principal amount of 0.375% Convertible Senior Notes due 2022 (the "Notes"), which includes the exercise in full of the $56.25 million over-allotment option, to Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC as the initial purchasers of the Notes (the "Initial Purchasers"). The net proceeds from the sale of the Notes were approximately $420.4 million , after deducting the Initial Purchasers’ discounts and the estimated offering expenses payable by the Company. The Company used approximately $44.2 million of the net proceeds from the offering to pay the cost of the capped call transactions, as further described below, with three financial institutions (the "Option Counterparties"). The Company intends to use the remainder of the net proceeds for working capital and general corporate purposes. The Notes were issued pursuant to an indenture, dated September 15, 2017 (the "Indenture"), between the Company and U.S. Bank National Association, as trustee. The Company will pay interest on the Notes semiannually in arrears at a rate of 0.375% per annum on March 1 and September 1 of each year commencing on March 1, 2018. The 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 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 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 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 Notes only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2017 (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 "measurement period") in which the trading price per $1,000 principal amount of Notes for each trading day of the 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 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 Notes at any time, regardless of the foregoing circumstances. The Company may not redeem the Notes prior to September 8, 2020. On or after September 8, 2020, the Company may redeem for cash all or part of the 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 Notes to be redeemed, plus accrued and unpaid interest, if any. Upon the occurrence of a fundamental change (as defined in the Indenture), holders may require the Company to repurchase all or a portion of their Notes for cash at a price equal to 100% of the principal amount of the Notes to be repurchased plus any accrued but unpaid interest to, but excluding, the fundamental change repurchase date. Holders of Notes who convert their Notes in connection with a notice of a redemption or a make-whole fundamental change (each as defined in the Indenture) may be entitled to a premium in the form of an increase in the conversion rate of the Notes. The 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 Notes then outstanding may declare the entire principal amount of all the Notes plus accrued interest, if any, to be immediately due and payable. 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 equity component of the Notes of approximately $95.8 million 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. Interest expense related to the Notes for the year ended December 31, 2017 was $5.8 million , which is also comprised of the amortization of debt discount and debt issuance costs and the contractual coupon interest. The estimated fair value of the Notes was $452.5 million as of December 31, 2017 . 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 . On September 11, 2017, the Company entered into privately negotiated capped call transactions (the "Base Capped Call Transactions") with the Option Counterparties and, in connection with the exercise in full of the over-allotment option by the Initial Purchasers, on September 14, 2017 entered into additional capped call transactions (such additional capped call transactions, the "Additional Capped Call Transactions" and, together with the Base Capped Call Transactions, the "Capped Call Transactions") with the Option Counterparties. 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 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, and is subject to certain adjustments under the terms of the 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 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. |
Net Loss per Share
Net Loss per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss per Share | Net Loss per Share Basic and diluted net loss per share is presented using the two-class method required for participating securities: Class A and Class B common stock. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. For more information on the rights of Class A and Class B common stockholders, see Note 10, Stockholders' Equity (Deficit) . Basic net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed using the weighted-average number of shares of common stock and, if dilutive, common stock equivalents outstanding during the period. The Company's common stock equivalents consist of shares issuable upon the release of restricted stock units, and to a lesser extent, the incremental shares of common stock issuable upon the exercise of stock options and unvested restricted stock. The dilutive effect of these common stock equivalents is reflected in diluted earnings per share by application of the treasury stock method. The Company's basic and diluted net loss per share are the same because the Company has generated net loss and common stock equivalents are excluded from diluted net loss per share because they have an antidilutive impact. The Company allocates undistributed earnings between the classes on a one -to- one basis when computing net loss per share. As a result, basic and diluted net loss per Class A and Class B shares are equivalent. The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data): Year Ended December 31, 2017 2016 2015 Net loss $ (244,614 ) $ (194,375 ) $ (77,443 ) Weighted average common shares used for basic and diluted net loss per share computation 86,983 84,977 83,726 Net loss per common share: Basic and Diluted $ (2.81 ) $ (2.29 ) $ (0.92 ) Dilutive common stock equivalents, representing potentially dilutive common stock options, restricted stock and restricted stock units, of 7.0 million , 7.3 million , and 5.9 million for 2017 , 2016 , and 2015 , respectively, were excluded from diluted earnings per share calculations for these periods because of their anti-dilutive effect. Furthermore, the shares of Class A common stock that would be issuable if the Company elects to settle the Notes in shares were excluded from the diluted earnings per share calculation (using the if-converted method) for the year ended December 31, 2017 because their effect would have been anti-dilutive. The Company may settle the conversions of the Notes in cash, shares of the Company's Class A common stock or any combination thereof at its election. The number of shares of the Company's Class A common stock issuable at the conversion price of $104.06 per share is expected to be 4.1 million shares, however the Capped Call Transactions are expected generally to reduce the potential dilution of the Company's Class A common stock upon any conversion of Notes and/or offset the cash payments the Company is required to make in excess of the principal amount of the Notes. Under the Capped Call Transactions, the number of shares of Class A common stock issuable at the conversion price of $154.16 is expected to be 2.8 million shares. For more information on the Notes and the Capped Call Transactions, see Note 14, Convertible Debt . |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Stock Repurchase Program On February 22, 2018, the Company announced that the Board authorized the repurchase of up to $200 million of the Company’s Class A common stock. This repurchase program has no expiration but may be suspended or terminated by the Board at any time. Under the repurchase program, the Company is authorized to repurchase, from time to time, outstanding shares of its Class A common stock in the open market, through privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan. The actual timing, number and value of shares repurchased will be determined by the Company in its discretion and will depend on a number of factors, including market conditions, applicable legal requirements, the Company’s capital needs and whether there is a better alternative use of capital. The Company has no obligation to repurchase any amount of its Class A common stock under the program. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements of Wayfair Inc. include its wholly owned subsidiaries including the accounts of Wayfair LLC and its wholly owned subsidiaries (collectively the "Company" or "Wayfair"). All intercompany accounts and transactions have been eliminated. Below is a summary of the wholly-owned subsidiaries of the Company with operations: Subsidiary Location Wayfair LLC U.S. Wayfair Securities Corporation U.S. SK Retail, Inc. U.S. CastleGate Logistics Inc. U.S. Wayfair Maine LLC U.S. Wayfair Stores Limited Republic of Ireland Wayfair (UK) Limited United Kingdom Wayfair GmbH Germany Wayfair (BVI) Ltd. British Virgin Islands CastleGate Logistics Canada Inc. Canada |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. On an ongoing basis, management evaluates these estimates and judgments, including those related to revenue recognition, capitalization of site and software development costs, stock-based compensation, and inventory. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity (at the date of purchase) of three months or less to be the equivalent of cash for the purpose of consolidated balance sheets and statements of cash flows presentation. Cash equivalents, which consist primarily of money market accounts, are carried at cost, which approximates market value. |
Restricted Cash | Restricted Cash As of December 31, 2017 and 2016 , there was $5.0 million , of cash that was restricted from withdrawal and held by banks to guarantee the Company's letters of credit issued principally for certain vendor arrangements. |
Accounts Receivable | Accounts Receivable Accounts receivable are stated net of an allowance for doubtful accounts, which is based on historical losses, existing economic conditions, and other information available at the consolidated balance sheets dates. Uncollectible amounts are written off against the allowance after all collection efforts have been exhausted. |
Short-Term Investments and Marketable Securities | Short-Term Investments and Marketable Securities Short-term investments consist of certificates of deposits and marketable securities with original maturities of greater than three months and maturing in less than twelve months from the balance sheet date. The Company classifies its marketable securities as "available-for-sale" securities. Available-for-sale securities are classified as short-term investments and long-term investments on the consolidated balance sheets and are carried at fair value. Unrealized gains and losses on available-for-sale securities that are considered temporary are recorded, net of taxes, in the "Accumulated other comprehensive loss" caption of the Company’s consolidated balance sheets. Unrealized losses, excluding losses related to the credit rating of the security (credit losses), on available-for-sale securities that are considered other-than-temporary but relate to securities that the Company (i) does not intend to sell and (ii) will not be required to sell below cost are also recorded, net of taxes, in "Accumulated other comprehensive loss." Further, the Company does not believe it will be required to sell such securities below cost. Therefore, the only other-than-temporary losses the Company records in "Other income, net" in its consolidated statements of operations are related to credit losses. As of December 31, 2017 and 2016 , the Company’s available-for-sale securities consisted of investment securities. The maturities of the Company’s long-term marketable securities generally range from one to three years. As of December 31, 2017 and 2016 , the Company's available-for-sale securities primarily consisted of corporate bonds and other government obligations that are priced at fair value. The cost basis of a marketable security sold is determined by the Company using the specific identification method. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments 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: • 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 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. Refer to Note 3, Fair Value Measurements , for additional detail. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that subject the Company to credit risk consist of cash and cash equivalents, short-term and long-term investments, and accounts receivable. The risk with respect to cash and cash equivalents and short-term and long-term investments is minimized by the Company's policy of investing in financial instruments (i.e., cash equivalents) with near-term maturities issued by highly rated financial institutions. At times, these balances may exceed federally insured limits; however, to date, the Company has not incurred any losses on these investments. As of December 31, 2017 and 2016 , the Company had $63.4 million and $7.0 million , respectively, in banks located outside the U.S. The risk with respect to accounts receivable is managed by the Company through its policy of monitoring the creditworthiness of its customers to which it grants credit terms in the normal course of business. |
Leases | Leases The Company leases office space in several countries around the world under non-cancelable lease agreements. The Company generally leases its office facilities under operating lease agreements. Office facilities subject to an operating lease and the related lease payments are not recorded on the balance sheet. The terms of certain lease agreements provide for rental payments on a graduated basis, however, the Company recognizes rent expense on a straight-line basis over the lease period in accordance with authoritative accounting guidance. Any lease incentives are recognized as reductions of rental expense on a straight-line basis over the term of the lease. The lease term begins on the date the Company becomes legally obligated for the rent payments or when it takes possession of the office space, whichever is earlier. The Company establishes assets and liabilities for the estimated construction costs incurred under lease arrangements where the Company is considered the owner for accounting purposes only, or build-to-suit leases, to the extent the Company is involved in the construction of structural improvements or take construction risk prior to commencement of a lease. 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. |
Foreign Currency Translation | Foreign Currency Translation The functional currency of the Company is the U.S. dollar, while the functional currency of certain wholly-owned subsidiaries outside of the U.S. is as follows: Subsidiary Currency Wayfair Stores Limited Euro Wayfair (UK) Limited Pound sterling Wayfair GmbH Euro Wayfair (BVI) Ltd. Euro CastleGate Logistics Canada Inc. Canadian dollar The financial statements of the Company are translated to U.S. dollars using year-end exchange rates as to assets and liabilities and average exchange rates as to revenue and expenses. Capital accounts are translated at their historical exchange rates when the capital transaction occurred. The effects of foreign currency translation are included in other comprehensive loss in the consolidated statements of comprehensive loss. Transaction gains and losses are included in the Company's consolidated statements of operations. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive loss within total stockholders' equity (deficit). |
Inventories | Inventories Inventories consisting of finished goods are stated at the lower of cost or net realizable value, determined by the first-in, first-out (FIFO) method, and consist of product for resale. Inventory costs consist of cost of product and inbound shipping and handling costs. Inventory costs also include direct and indirect labor costs, rents and depreciation expenses associated with the Company's fulfillment centers. Inventory valuation requires the Company to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, liquidations, and expected recoverable values of each disposition category. |
Goods In-Transit | Goods In-Transit Goods in-transit directly from suppliers to customers are recorded in prepaid expenses and other current assets. Risk of loss and the transfer of title from the supplier to the Company occur at freight on board shipping point. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, net of depreciation and amortization. Depreciation and amortization on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets as follows: Class Range of Life (In Years) Furniture and computer equipment 3 to 7 Site and software development costs 2 Leasehold improvements The lesser of useful life or lease term Building (leased - Note 7) 30 |
Site and Software Development Costs | Site and Software Development Costs The Company capitalizes certain costs associated with the development of its sites and internal-use software products after the preliminary project stage is complete and until the software is ready for its intended use. The capitalized costs are amortized over a two-year period. Costs incurred in the preliminary stages of development, after the software is ready for its intended use and for maintenance of internal-use software are expensed as incurred. Upgrade and enhancements are capitalized to the extent they will result in added functionality. |
Long-Lived Assets | Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances, such as service discontinuance or technological obsolescence, indicate that the carrying amount of the long-lived asset may not be recoverable. When such events occur, the Company compares the carrying amount of the asset to the undiscounted expected future cash flows related to the asset. If the comparison indicates that an impairment exists, the amount of the impairment is calculated as the difference between the excess of the carrying amount over the fair value of the asset. If a readily determinable market price does not exist, fair value is estimated using discounted expected cash flows attributable to the asset. |
Contingent Liabilities | Contingent Liabilities The Company has certain contingent liabilities that arise in the ordinary course of business activities. The Company accrues for loss contingencies when losses become probable and are reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability. The Company does not accrue for contingent losses that, in its judgment, are considered to be reasonably possible, but not probable; however, it discloses the range of such reasonably possible losses. |
Revenue Recognition | Revenue Recognition The Company generates net revenue through product sales generated primarily through the Company's five distinct sites and through websites operated by third parties. The Company recognizes revenue for product sales generated through the Company's five distinct sites and through websites operated by third parties only when the following four criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed or determinable; and (4) collectability is reasonably assured. The Company recognizes net revenue from sales of its products upon delivery to the customer. As the Company ships a large volume of packages through multiple carriers, actual delivery dates may not always be available and as such the Company estimates delivery dates based on historical data. The Company records product revenue at the gross amount as the Company is the primary obligor with the customer and provides the primary customer service for all products sold, has latitude in establishing price and selecting products sold, has discretion in selecting suppliers of products sold, maintains inventory risk from shipment through delivery date and upon accepting returns, and has credit risk. Net revenue includes shipping costs charged to the customer and is recorded net of taxes collected from customers, which are remitted to governmental authorities. Cash discounts, returns and rebates are deducted from gross revenue in determining net revenue. In addition, the Company defers revenue when cash is collected from its customer prior to the satisfaction of the revenue recognition criteria. The Company maintains a membership rewards program for purchases made with the Company's private label credit card, a Wayfair-branded credit card that can only be used at the Company's five U.S. sites. Enrolled customers earn points that may be redeemed for future purchases. The Company defers a portion of its revenue associated with rewards that are ultimately expected to be redeemed. The Company also earns revenue through third-party advertisers that pay based on the number of advertisement related clicks, actions, or impressions for advertisements placed on the Company's sites. Revenue earned under these arrangements is included in net revenue and is recognized in the period in which the click, action, or impression occurs. |
Vendor Rebates | Vendor Rebates The Company earns rebates on incentive programs with its suppliers. These rebates are earned upon shipment of goods. Amounts earned and due from suppliers under these rebate programs are included in other current assets on the consolidated balance sheets and are reflected as a reduction of cost of goods sold on the consolidated statements of operations. Vendor allowances received by the Company reduce the carrying cost of inventory and are recognized in cost of goods sold when the related inventory is sold. |
Costs of Goods Sold | Costs of Goods Sold Cost of goods sold consists of the cost of product sold to customers, shipping and handling costs and shipping supplies and fulfillment costs. Fulfillment costs include costs incurred in operating and staffing the fulfillment centers, such as costs attributed to receiving, inspecting, picking, packaging and preparing customer orders for shipment. Cost of goods sold also includes direct and indirect labor costs, including equity-based compensation, for fulfillment center oversight, including payroll and related benefit costs. The Company also performs logistics services for suppliers through its CastleGate and Wayfair Delivery Network solutions, which are earned upon completion of preparing customer orders for shipment and are reflected as a reduction of cost of goods sold on the consolidated statements of operations. |
Advertising Costs | Advertising Costs Advertising consists of direct response performance marketing costs, such as display advertising, paid search advertising, social media advertising, search engine optimization, comparison shopping engine advertising, television advertising, direct mail, catalog and print advertising. Expenditures for advertising are expensed in the period that the advertising first takes place. |
Merchant Processing Fees | These fees are charged by third parties that provide merchant processing services for customer payments made by credit cards and debit cards. |
Retail Partner Fees | Retail Partner Fees The Company sells its products through websites owned and operated by third-party online retailers, or retail partners. The Company pays a fee for sales generated through these websites and records them as merchant processing fees and advertising costs. |
Equity-Based Compensation | Equity-Based Compensation The Company accounts for its equity-based compensation awards in accordance with ASC Topic 718, Compensation—Stock Compensation ("ASC 718"). ASC 718 requires all equity-based payments to employees to be recognized as expense in the statements of operations based on their grant date fair values. The Company has granted stock options, restricted shares and restricted stock units. The Company has primarily granted restricted stock units, and to a lesser extent, restricted stock. The Company granted only restricted stock units to employees in the year ended December 31, 2017 , 2016 , and 2015 . Restricted stock values are determined based on the quoted market price of our Class A common stock on the date of grant. The Company accounts for equity awards to non-employees in accordance with FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees , which requires the fair value of an award to non-employees be remeasured at fair value as the award vests. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records valuation allowances to reduce deferred income tax assets to the amount that is more likely than not to be realized. At December 31, 2017, we maintain a full valuation allowance against our net U.S. deferred tax asset as well as the net deferred tax asset of our Irish subsidiary. The Company determines whether it is more likely than not that a tax position will be sustained upon examination. If it is not more likely than not that a position will be sustained, no amount of benefit attributable to the position is recognized. The tax benefit to be recognized of any tax position that meets the more likely than not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon resolution of the contingency. We evaluate at the end of each reporting period whether some or all of the undistributed earnings of our foreign subsidiaries are permanently reinvested. Our position is based upon several factors including management's evaluation of the Company and its subsidiaries' financial requirements, the short term and long term operational and fiscal objectives of the Company, and the tax consequences associated with the repatriation of earnings. |
Net Loss Per Share | Net Loss Per Share The Company follows the two-class method when computing net loss per share for its two issued classes of common stock—Class A and Class B. Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common stock outstanding for the period. For periods in which the Company has reported net losses, diluted net loss per share is the same as basic net loss per share, since dilutive common stock are not assumed to have been issued if their effect is anti-dilutive. |
Subsequent Events | Subsequent Events The Company considers events or transactions that have occurred after the balance sheet date of December 31, 2017 , but prior to the filing of the financial statements with the U.S. Securities and Exchange Commission, to provide additional evidence relative to certain estimates or to identify matters that require additional recognition or disclosure. Subsequent events have been evaluated through the filing of these financial statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Stock Compensation In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, "Compensation - Stock Compensation" ("ASU 2016-09"). This ASU revises the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The Company adopted ASU 2016-09 as of January 1, 2017 using a modified retrospective approach with the option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, with a cumulative-effect adjustment to retained earnings recognized as of January 1, 2017 of $ 8.7 million . The adoption of ASU 2016-09 also requires all income tax adjustments to be recorded in the consolidated and condensed statements of operations. Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017 and early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting year. In March 2016, the FASB issued ASU No. 2016-08, "Revenue from Contracts with Customers - Principal versus Agent Considerations" ("ASU 2016-08"). This ASU clarifies the implementation guidance for principal versus agent considerations in ASU 2014-09. This ASU is effective at the same period as ASU 2014-09. The Company expects to adopt the new revenue standard as of January 1, 2018 using the modified retrospective approach, with an immaterial cumulative-effect adjustment to retained earnings recognized as of January 1, 2018. The immaterial adjustment is primarily related to recognizing gift card and store credit breakage, to the extent there is no requirement for remitting balances to governmental agencies under unclaimed property laws. Other changes identified relate to the presentation of revenue, where certain third-party advertising arrangements will be classified as net revenue rather than a reduction in cost of goods sold. Leases In February 2016, the FASB issued ASU No. 2016-02, "Leases" ("ASU 2016-02"). This ASU revises the accounting related to leases by requiring lessees to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions. This ASU is effective for annual reporting periods beginning after December 15, 2018 and early adoption is permitted. Management expects to adopt ASU 2016-02 for annual reporting periods beginning after December 15, 2018. Management is currently evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements, and expects it will have a material impact on our consolidated financial statements, primarily the consolidated balance sheets and related disclosures. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of the Wholly-Owned Subsidiaries of the Company | Below is a summary of the wholly-owned subsidiaries of the Company with operations: Subsidiary Location Wayfair LLC U.S. Wayfair Securities Corporation U.S. SK Retail, Inc. U.S. CastleGate Logistics Inc. U.S. Wayfair Maine LLC U.S. Wayfair Stores Limited Republic of Ireland Wayfair (UK) Limited United Kingdom Wayfair GmbH Germany Wayfair (BVI) Ltd. British Virgin Islands CastleGate Logistics Canada Inc. Canada |
Summary of Subsidiaries' Functional Currencies | The functional currency of the Company is the U.S. dollar, while the functional currency of certain wholly-owned subsidiaries outside of the U.S. is as follows: Subsidiary Currency Wayfair Stores Limited Euro Wayfair (UK) Limited Pound sterling Wayfair GmbH Euro Wayfair (BVI) Ltd. Euro CastleGate Logistics Canada Inc. Canadian dollar |
Schedule of Estimated Useful Lives of Plant, Property and Equipment | Depreciation and amortization on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets as follows: Class Range of Life (In Years) Furniture and computer equipment 3 to 7 Site and software development costs 2 Leasehold improvements The lesser of useful life or lease term Building (leased - Note 7) 30 |
Marketable Securities and Fai26
Marketable Securities and Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Marketable Securities | The following tables present details of the Company’s marketable securities as of December 31, 2017 and 2016 (in thousands): December 31, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Short-term: Investment securities $ 61,129 $ — $ (97 ) $ 61,032 Long-term: Investment securities 21,695 — (134 ) 21,561 Total $ 82,824 $ — $ (231 ) $ 82,593 December 31, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Short-term: Investment securities $ 63,135 $ 7 $ (39 ) $ 63,103 Commercial paper 5,641 1 (2 ) 5,640 Long-term: Investment securities 30,985 16 (34 ) 30,967 Total $ 99,761 $ 24 $ (75 ) $ 99,710 |
Schedule of the Fair Value of the Company's Financial Assets Measured at Fair Value on a Recurring Basis Based on the Three-tier Value Hierarchy | The following tables set forth the fair value of the Company's financial assets measured at fair value on a recurring basis as of December 31, 2017 and 2016 based on the three-tier value hierarchy described in Note 2, Summary of Significant Accounting Policies (in thousands): December 31, 2017 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds and other funds $ 488,029 $ — $ — $ 488,029 Short-term investments: Investment securities — 61,032 — 61,032 Restricted cash: Certificate of deposit 5,000 — — 5,000 Long-term: Investment securities — 21,561 — 21,561 Total $ 493,029 $ 82,593 $ — $ 575,622 December 31, 2016 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 200,867 $ — $ — $ 200,867 Short-term investments: Investment securities — 63,103 — 63,103 Commercial paper — 5,640 — 5,640 Restricted cash: Certificate of deposit 5,000 — — 5,000 Long-term: Investment securities — 30,967 — 30,967 Total $ 205,867 $ 99,710 $ — $ 305,577 |
Intangible assets and Goodwill
Intangible assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | The following table summarizes intangible assets as of December 31, 2017 and 2016 (in thousands): Weighted-Average December 31, 2017 Amortization Period (Years) Gross Carrying Amount Accumulated Amortization Net Book Value Trademarks 5 $ 1,900 $ (1,678 ) $ 222 Technology 3 1,453 (646 ) 807 Customer relationships 5 1,300 (1,148 ) 152 Total $ 4,653 $ (3,472 ) $ 1,181 Weighted-Average December 31, 2016 Amortization Period (Years) Gross Carrying Amount Accumulated Amortization Net Book Value Trademarks 5 $ 1,900 $ (1,298 ) $ 602 Technology 3 1,453 (161 ) 1,292 Customer relationships 5 1,300 (888 ) 412 Total $ 4,653 $ (2,347 ) $ 2,306 |
Summary of the Future Amortization Expense of Purchased Intangible Assets | The estimated future amortization expense of purchased intangible assets as of December 31, 2017 , is as follows (in thousands): Total 2018 $ 858 2019 323 Thereafter — Total $ 1,181 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | The following table summarizes property and equipment, net as of December 31, 2017 and 2016 (in thousands): December 31, 2017 2016 Furniture and computer equipment $ 213,790 $ 133,297 Site and software development costs 118,356 77,429 Leasehold improvements 82,614 62,090 Construction in progress 46,826 47,013 Building (leased - see Note 7) 83,681 29,856 545,267 349,685 Less accumulated depreciation and amortization (184,126 ) (110,331 ) Property and equipment, net $ 361,141 $ 239,354 |
Prepaid Expenses and Other Cu29
Prepaid Expenses and Other Current Assets, Accrued Expenses, Other Current Liabilities, and Other Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Payables and Accruals [Abstract] | |
Components of Prepaid Expenses and Other Current Assets | The following table presents the components of selected balance sheet items as of December 31, 2017 and 2016 (in thousands): December 31, Prepaid expenses and other current assets: 2017 2016 Deferred costs in transit $ 54,483 $ 34,325 Supplier receivable 29,941 21,828 Supplier credits receivable 12,936 13,215 Other prepaid and other current assets 33,478 21,477 Total prepaid expenses and other current assets $ 130,838 $ 90,845 |
Components of Accrued Expenses | December 31, Accrued expenses: 2017 2016 Employee compensation and related benefits $ 55,142 $ 37,767 Advertising 38,888 8,379 Accrued property, plant and equipment 8,592 3,630 Credit card 4,573 7,405 Audit, legal and professional fees 1,749 1,333 Other accrued expenses 11,303 9,293 Total accrued expenses $ 120,247 $ 67,807 |
Components of Other Liabilities | December 31, Other current liabilities: 2017 2016 Sales tax payable $ 35,726 $ 15,731 Sales return reserve 21,243 12,384 Other current liabilities 28,057 15,913 Total current other liabilities $ 85,026 $ 44,028 December 31, Other liabilities: 2017 2016 Deferred rent $ 59,811 $ 55,267 Construction costs under build-to-suit leases 37,545 39,949 Other liabilities 9,136 963 Total other liabilities $ 106,492 $ 96,179 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease commitments under non-cancelable operating leases | Future minimum rental commitments under non-cancelable leases with initial or remaining terms in excess of one year at December 31, 2017 were as follows (in thousands): Amount 2018 $ 70,800 2019 89,972 2020 86,097 2021 83,160 2022 81,544 Thereafter 372,127 Total $ 783,700 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Activity relating to stock options | The following table presents activity relating to restricted common stock for the year ended December 31, 2017 : Shares Weighted-Average Grant Date Fair Value Unvested at December 31, 2016 60,000 $ 44.34 Restricted stock vested (20,000 ) $ 44.34 Unvested and expected to vest in the future as of December 31, 2017 40,000 $ 44.34 The following table presents activity relating to stock options for the year ended December 31, 2017 : Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Outstanding at December 31, 2016 209,759 $ 2.98 4.5 Options exercised (82,776 ) $ 2.92 Options forfeited/canceled (600 ) $ 2.89 Outstanding and exercisable at December 31, 2017 126,383 $ 3.02 3.5 |
Activity relating to restricted stock units | The following table presents activity relating to RSUs for the year ended December 31, 2017 : Shares Weighted-Average Grant Date Fair Value Unvested at December 31, 2016 6,986,776 $ 34.21 RSUs granted 3,521,415 $ 57.37 RSUs vested (2,304,044 ) $ 32.47 RSUs forfeited/canceled (1,350,541 ) $ 37.84 Outstanding and expected to vest as of December 31, 2017 6,853,606 $ 46.28 |
Segment and Geographic Inform32
Segment and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Activity Related to Net Revenue and 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): Year Ended December 31, 2017 2016 2015 U.S. Direct Retail $ 4,075,405 $ 2,993,365 $ 1,945,411 U.S. Other 77,652 117,132 190,081 U.S. segment net revenue 4,153,057 3,110,497 2,135,492 International Direct Retail 567,838 265,544 94,827 International Other — 4,319 19,566 International segment net revenue (1) 567,838 269,863 114,393 Total $ 4,720,895 $ 3,380,360 $ 2,249,885 (1) In the year ended December 31, 2015, International segment net revenue included $5.4 million from our Australian business, which we sold in July 2015. Year Ended December 31, 2017 2016 2015 Adjusted EBITDA: U.S. $ 35,888 $ 176 $ 30,985 International (102,921 ) (88,868 ) (46,914 ) Total reportable segments Adjusted EBITDA (67,033 ) (88,692 ) (15,929 ) Less: reconciling items (1) (177,581 ) (105,683 ) (61,514 ) Net loss $ (244,614 ) $ (194,375 ) $ (77,443 ) (1) Adjustments are made to reconcile total reportable segments Adjusted EBITDA to consolidated net loss including the following (in thousands): Year Ended December 31, 2017 2016 2015 Depreciation and amortization (1) $ 87,020 $ 55,572 $ 32,446 Equity based compensation and related taxes 72,626 51,953 32,975 Interest (income), net 9,433 (694 ) (1,284 ) Other (income) expense, net (758 ) (1,756 ) (2,718 ) Provision for income taxes 486 608 95 Other (1) 8,774 — — Total reconciling items $ 177,581 $ 105,683 $ 61,514 (1) The Company recorded $9.6 million of one-time charges in the year ended December 31, 2017 in " Selling, operations, technology, general and administrative " in the consolidated statements of operations related to a warehouse the Company vacated in July 2017. Of the $9.6 million charges, $8.8 million was included in "Other" and related primarily to the excess of the Company's estimated future remaining lease commitments through 2023 over its expected sublease income over the same period, and $0.8 million was included in "Depreciation and amortization" related to accelerated depreciation of leasehold improvements in the warehouse. 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 third-party advertising distribution providers (in thousands): Year Ended December 31, 2017 2016 2015 Net revenue Direct Retail $ 4,643,243 $ 3,258,909 $ 2,040,238 Other 77,652 121,451 209,647 Net revenue $ 4,720,895 $ 3,380,360 $ 2,249,885 |
Schedule of Long-lived Assets by Geographic Area | The following table presents long-lived assets by segment (in thousands): Year Ended December 31, 2017 2016 Geographic long-lived assets: U.S. $ 353,414 $ 233,099 International 7,727 6,255 Total $ 361,141 $ 239,354 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense (Benefit) Attributable to Income (Loss) From Operation | Income tax expense (benefit) from continuing operations for the years ended December 31, 2017 , 2016 and 2015 is presented below (in thousands): Year ended December 31, 2017 Current Deferred Total Federal $ — $ (31 ) $ (31 ) State 540 8 548 Foreign 942 (973 ) (31 ) $ 1,482 $ (996 ) $ 486 Year ended December 31, 2016 Current Deferred Total Federal $ — $ 32 $ 32 State 329 5 334 Foreign 285 (43 ) 242 $ 614 $ (6 ) $ 608 Year ended December 31, 2015 Current Deferred Total Federal $ — $ 54 $ 54 State (202 ) 7 (195 ) Foreign 331 (95 ) 236 129 (34 ) 95 |
Schedule of Difference in the Company's Expected Tax Expense (Benefit) as Computed by Applying the U.S. Federal Corporate Rate to Income Before Tax Expense (Benefit), and Actual Tax is Reconciled | The actual income tax expense (benefit) differs from the expected income tax expense (benefit) computed at the U.S. Federal statutory tax rate of 35% due to the following (in thousands): Year Ended December 31, 2017 2016 2015 Tax expense (benefit) at federal statutory rate $ (85,445 ) $ (67,819 ) $ (27,072 ) State income tax expense, net of federal benefit (11,432 ) (5,225 ) (1,424 ) Foreign tax rate differential 23,179 17,109 9,278 Non-deductible equity based compensation expense 1,080 2,321 1,415 Windfall benefits from equity based compensation (24,168 ) — — Change in valuation allowance 24,209 53,467 12,394 Impact of sale of Australian subsidiary — — 4,248 Change in tax rate 71,919 — — Other 1,144 755 1,256 Net income tax expense $ 486 $ 608 $ 95 |
Schedule of Components of Income Tax Expense (Benefit) Determined by Tax Jurisdiction | The components of income before income tax expense (benefit) determined by tax jurisdiction, are as follows (in thousands): Year Ended December 31, 2017 2016 2015 U.S. $ (143,800 ) $ (118,851 ) $ (38,963 ) Foreign (100,328 ) (74,916 ) (38,385 ) Total $ (244,128 ) $ (193,767 ) $ (77,348 ) |
Schedule of Tax Effects of Temporary Differences that Give Rise to Significant Portions of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities for the periods presented are as follows (in thousands): December 31 2017 2016 Deferred tax assets: Accounts receivable $ 1,814 $ 1,153 Inventories 391 543 Operating loss carry-forwards 146,666 71,558 Equity based compensation expense 9,087 10,940 Intangibles 13,862 22,466 Accrued payroll 8,582 9,379 Accrued expenses and reserves 10,933 2,840 Charitable contributions 284 331 Deferred rent 48,936 51,355 Gross deferred tax assets 240,555 170,565 Less: Valuation allowance (178,488 ) (123,293 ) Net deferred tax assets 62,067 47,272 Deferred tax liabilities: Prepaid expenses (1,825 ) (1,428 ) Capitalized technology (11,339 ) (11,151 ) Property and equipment (34,986 ) (34,420 ) Goodwill (110 ) (133 ) Convertible debt (12,580 ) — Other (12 ) (166 ) Total deferred tax liabilities (60,852 ) (47,298 ) Net deferred tax assets (liabilities) 1,215 (26 ) Non-current net deferred tax assets (liabilities) $ 1,215 $ (26 ) |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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): Year Ended December 31, 2017 2016 2015 Net loss $ (244,614 ) $ (194,375 ) $ (77,443 ) Weighted average common shares used for basic and diluted net loss per share computation 86,983 84,977 83,726 Net loss per common share: Basic and Diluted $ (2.81 ) $ (2.29 ) $ (0.92 ) |
Basis of Presentation (Details)
Basis of Presentation (Details) supplier in Thousands, product in Millions | 12 Months Ended |
Dec. 31, 2017productsupplier | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Minimum number of products offered | product | 10 |
Minimum number of suppliers providing products offered | supplier | 10 |
Summary of Significant Accoun36
Summary of Significant Accounting Policies (Details) | 12 Months Ended | |||
Dec. 31, 2017USD ($)sitecommon_stock_classbrand | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Jan. 01, 2017USD ($) | |
Concentrations of Credit Risk | ||||
Cash and cash equivalents and short-term investments held in banks located outside the U.S. | $ 63,400,000 | $ 7,000,000 | ||
Goods In-Transit | ||||
Goods in-transit | 54,500,000 | 34,300,000 | ||
Property, plant and equipment | ||||
Property and equipment, net | 361,141,000 | 239,354,000 | ||
Long-Lived Assets | ||||
Impairment of long-lived assets or identifiable intangibles | $ 0 | 0 | $ 0 | |
Revenue Recognition | ||||
Number of distinct brands | brand | 5 | |||
Number of U.S. sites | site | 5 | |||
Advertising Costs | ||||
Advertising expense | $ 549,959,000 | 409,125,000 | 278,224,000 | |
Prepaid advertising costs | 600,000 | 900,000 | ||
Merchant Processing Fees | ||||
Merchant processing fees | 88,700,000 | 66,000,000 | 46,900,000 | |
Retail Partner Fees | ||||
Retail partner fees included in merchant processing fees | 1,500,000 | 1,900,000 | 3,500,000 | |
Retail partner fees included in advertising costs | $ 7,000,000 | 11,000,000 | 20,200,000 | |
Earnings Per Share | ||||
Number of classes of common stock | common_stock_class | 2 | |||
Retained Earnings | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ (8,712,000) | |||
Accounting Standards Update 2016-09 | Retained Earnings | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ 8,700,000 | |||
Site and software development costs | ||||
Property, plant and equipment | ||||
Estimated useful lives | 2 years | |||
Property and equipment, net | $ 45,400,000 | 30,000,000 | ||
Amortization expense | $ 34,500,000 | 21,600,000 | $ 15,300,000 | |
Building | ||||
Property, plant and equipment | ||||
Estimated useful lives | 30 years | |||
Minimum | Furniture and computer equipment | ||||
Property, plant and equipment | ||||
Estimated useful lives | 3 years | |||
Maximum | Furniture and computer equipment | ||||
Property, plant and equipment | ||||
Estimated useful lives | 7 years | |||
Other Long-term Investments | Minimum | ||||
Marketable Securities [Abstract] | ||||
Marketable securities, term | 1 year | |||
Other Long-term Investments | Maximum | ||||
Marketable Securities [Abstract] | ||||
Marketable securities, term | 3 years | |||
Other Noncurrent Assets | ||||
Restricted Cash | ||||
Restricted cash | $ 5,000,000 | $ 5,000,000 |
Marketable Securities and Fai37
Marketable Securities and Fair Value Measurements - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |||
Available-for-sale Securities | $ 82,593,000 | $ 99,710,000 | |
Other than temporary impairment loss | 0 | 0 | $ 0 |
Realized gains or losses | 0 | 0 | $ 0 |
Other Long-term Investments | |||
Fair Value Disclosures [Abstract] | |||
Available-for-sale Securities | $ 21,561,000 | $ 30,967,000 | |
Minimum | Other Long-term Investments | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Marketable securities, term | 1 year | ||
Maximum | Other Long-term Investments | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Marketable securities, term | 3 years |
Marketable Securities and Fai38
Marketable Securities and Fair Value Measurements - Schedule of Marketable Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Fair value measurements | ||
Amortized Cost | $ 82,824 | $ 99,761 |
Gross Unrealized Gains | 0 | 24 |
Gross Unrealized Losses | (231) | (75) |
Estimated Fair Value | 82,593 | 99,710 |
Investment securities | ||
Fair value measurements | ||
Amortized Cost | 61,129 | 63,135 |
Gross Unrealized Gains | 0 | 7 |
Gross Unrealized Losses | (97) | (39) |
Estimated Fair Value | 61,032 | 63,103 |
Commercial paper | ||
Fair value measurements | ||
Amortized Cost | 5,641 | |
Gross Unrealized Gains | 1 | |
Gross Unrealized Losses | (2) | |
Estimated Fair Value | 5,640 | |
Investment securities | ||
Fair value measurements | ||
Amortized Cost | 21,695 | 30,985 |
Gross Unrealized Gains | 0 | 16 |
Gross Unrealized Losses | (134) | (34) |
Estimated Fair Value | $ 21,561 | $ 30,967 |
Marketable Securities and Fai39
Marketable Securities and Fair Value Measurements - Schedule of Financial Assets Measured at Fair Value on a Recurring Basis (Details) - Recurring basis - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Fair value measurements | ||
Total | $ 575,622 | $ 305,577 |
Cash equivalents | ||
Fair value measurements | ||
Money market funds and other funds | 488,029 | 200,867 |
Short-term investments | ||
Fair value measurements | ||
Investment securities | 61,032 | 63,103 |
Commercial paper | 5,640 | |
Restricted cash | ||
Fair value measurements | ||
Certificate of deposit | 5,000 | 5,000 |
Other Long-term Investments | ||
Fair value measurements | ||
Investment securities | 21,561 | 30,967 |
Level 1 | ||
Fair value measurements | ||
Total | 493,029 | 205,867 |
Level 1 | Cash equivalents | ||
Fair value measurements | ||
Money market funds and other funds | 488,029 | 200,867 |
Commercial paper | 0 | |
Level 1 | Short-term investments | ||
Fair value measurements | ||
Investment securities | 0 | 0 |
Level 1 | Restricted cash | ||
Fair value measurements | ||
Certificate of deposit | 5,000 | 5,000 |
Level 1 | Other Long-term Investments | ||
Fair value measurements | ||
Investment securities | 0 | 0 |
Level 2 | ||
Fair value measurements | ||
Total | 82,593 | 99,710 |
Level 2 | Cash equivalents | ||
Fair value measurements | ||
Money market funds and other funds | 0 | 0 |
Level 2 | Short-term investments | ||
Fair value measurements | ||
Investment securities | 61,032 | 63,103 |
Commercial paper | 5,640 | |
Level 2 | Restricted cash | ||
Fair value measurements | ||
Certificate of deposit | 0 | 0 |
Level 2 | Other Long-term Investments | ||
Fair value measurements | ||
Investment securities | 21,561 | 30,967 |
Level 3 | ||
Fair value measurements | ||
Total | 0 | 0 |
Level 3 | Cash equivalents | ||
Fair value measurements | ||
Money market funds and other funds | 0 | 0 |
Level 3 | Short-term investments | ||
Fair value measurements | ||
Investment securities | 0 | 0 |
Commercial paper | 0 | |
Level 3 | Restricted cash | ||
Fair value measurements | ||
Certificate of deposit | 0 | 0 |
Level 3 | Other Long-term Investments | ||
Fair value measurements | ||
Investment securities | $ 0 | $ 0 |
Intangible assets and Goodwil40
Intangible assets and Goodwill - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible assets | |||
Gross Carrying Amount | $ 4,653 | $ 4,653 | |
Accumulated Amortization | (3,472) | (2,347) | |
Net Book Value | 1,181 | 2,306 | |
Amortization expense related to intangible assets | $ 1,100 | $ 900 | $ 900 |
Trademarks | |||
Intangible assets | |||
Weighted Average Amortization Period (Years) | 5 years | 5 years | |
Gross Carrying Amount | $ 1,900 | $ 1,900 | |
Accumulated Amortization | (1,678) | (1,298) | |
Net Book Value | $ 222 | $ 602 | |
Technology | |||
Intangible assets | |||
Weighted Average Amortization Period (Years) | 3 years | 3 years | |
Gross Carrying Amount | $ 1,453 | $ 1,453 | |
Accumulated Amortization | (646) | (161) | |
Net Book Value | $ 807 | $ 1,292 | |
Customer relationships | |||
Intangible assets | |||
Weighted Average Amortization Period (Years) | 5 years | 5 years | |
Gross Carrying Amount | $ 1,300 | $ 1,300 | |
Accumulated Amortization | (1,148) | (888) | |
Net Book Value | $ 152 | $ 412 |
Intangible assets and Goodwil41
Intangible assets and Goodwill - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2,018 | $ 858 | |
2,019 | 323 | |
Thereafter | 0 | |
Net Book Value | 1,181 | $ 2,306 |
Goodwill | $ 1,900 | $ 1,900 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property and equipment, net | |||
Property and equipment, gross | $ 545,267 | $ 349,685 | |
Less accumulated depreciation and amortization | (184,126) | (110,331) | |
Property and equipment, net | 361,141 | 239,354 | |
Depreciation and amortization | 85,900 | 54,600 | $ 31,600 |
Furniture and computer equipment | |||
Property and equipment, net | |||
Property and equipment, gross | 213,790 | 133,297 | |
Site and software development costs | |||
Property and equipment, net | |||
Property and equipment, gross | 118,356 | 77,429 | |
Property and equipment, net | 45,400 | 30,000 | |
Leasehold improvements | |||
Property and equipment, net | |||
Property and equipment, gross | 82,614 | 62,090 | |
Construction in progress | |||
Property and equipment, net | |||
Property and equipment, gross | 46,826 | 47,013 | |
Building | |||
Property and equipment, net | |||
Property and equipment, gross | $ 83,681 | $ 29,856 |
Prepaid Expenses and Other Cu43
Prepaid Expenses and Other Current Assets, Accrued Expenses, Other Current Liabilities, and Other Liabilities - Components of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Prepaid expenses and other current assets: | ||
Deferred costs in transit | $ 54,483 | $ 34,325 |
Supplier receivable | 29,941 | 21,828 |
Supplier credits receivable | 12,936 | 13,215 |
Other prepaid and other current assets | 33,478 | 21,477 |
Total prepaid expenses and other current assets | $ 130,838 | $ 90,845 |
Prepaid Expenses and Other Cu44
Prepaid Expenses and Other Current Assets, Accrued Expenses, Other Current Liabilities, and Other Liabilities - Components of Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued expenses: | ||
Employee compensation and related benefits | $ 55,142 | $ 37,767 |
Advertising | 38,888 | 8,379 |
Accrued property, plant and equipment | 8,592 | 3,630 |
Credit card | 4,573 | 7,405 |
Audit, legal and professional fees | 1,749 | 1,333 |
Other accrued expenses | 11,303 | 9,293 |
Total accrued expenses | $ 120,247 | $ 67,807 |
Prepaid Expenses and Other Cu45
Prepaid Expenses and Other Current Assets, Accrued Expenses, Other Current Liabilities, and Other Liabilities - Components of Other Current Liabilities and Other Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Other current liabilities | ||
Sales tax payable | $ 35,726 | $ 15,731 |
Sales return reserve | 21,243 | 12,384 |
Other current liabilities | 28,057 | 15,913 |
Other current liabilities | 85,026 | 44,028 |
Other liabilities: | ||
Deferred rent | 59,811 | 55,267 |
Construction costs under build-to-suit leases | 37,545 | 39,949 |
Other liabilities | 9,136 | 963 |
Total other liabilities | $ 106,492 | $ 96,179 |
Commitments and Contingencies -
Commitments and Contingencies - Future Minimum Rental Commitments Under Non-cancelable Leases (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Future minimum lease commitments under non cancelable operating leases | |
2,018 | $ 70,800 |
2,019 | 89,972 |
2,020 | 86,097 |
2,021 | 83,160 |
2,022 | 81,544 |
Thereafter | 372,127 |
Total | $ 783,700 |
Commitments and Contingencies47
Commitments and Contingencies - Narrative (Details) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2017USD ($)wharehouse | Dec. 31, 2016USD ($)wharehouse | Dec. 31, 2015USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Jun. 30, 2016USD ($) | |
Other Commitments [Line Items] | ||||||
Rent expense under operating leases | $ 45,200 | $ 33,600 | $ 16,300 | |||
Letters of credit outstanding, amount | 15,300 | 10,600 | ||||
Minimum sublease rentals | 6,500 | |||||
Lease financing obligation, net of current portion | 82,580 | 28,900 | ||||
Land lease expense | 900 | 100 | ||||
Financing obligation, interest expense | 6,900 | 1,400 | ||||
Financing obligation, future minimum commitments due, principal | 38,800 | |||||
Financing obligation, future minimum commitments due, interest | 7,500 | |||||
Other noncurrent assets | ||||||
Other Commitments [Line Items] | ||||||
Restricted cash | 5,000 | 5,000 | ||||
Warehouse Lease Agreement | Warehouse Lease Arrangement, June 30, 2016 | ||||||
Other Commitments [Line Items] | ||||||
Letters of credit outstanding, amount | $ 1,200 | |||||
Warehouse lease arrangements | wharehouse | 1 | |||||
Lease financing obligation, net of current portion | $ 28,900 | |||||
Warehouse Lease Agreement | Warehouse Lease Arrangement, 2017 | ||||||
Other Commitments [Line Items] | ||||||
Letters of credit outstanding, amount | $ 800 | |||||
Warehouse lease arrangements | wharehouse | 2 | |||||
Warehouse Lease Agreement | Warehouse Lease Arrangement, March 31, 2017 | ||||||
Other Commitments [Line Items] | ||||||
Lease financing obligation, net of current portion | $ 12,600 | |||||
Warehouse Lease Agreement | Warehouse Lease Arrangement, June 30, 2017 | ||||||
Other Commitments [Line Items] | ||||||
Letters of credit outstanding, amount | $ 1,000 | |||||
Lease financing obligation, net of current portion | $ 41,200 |
Employee Benefit Plans - Employ
Employee Benefit Plans - Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Employee Benefit Plans | |||
Age of the full-time employees qualified to participate in the defined contribution plan | 21 years | ||
Expense related to savings plan recognized | $ 9 | $ 6.3 | $ 3.3 |
Maximum | |||
Employee Benefit Plans | |||
Matching contribution by employer as a percentage of employee's considered compensation | 4.00% |
Equity-Based Compensation - Nar
Equity-Based Compensation - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2018 | |
Stock options | |||
Equity based compensation | |||
Aggregate intrinsic value of stock options exercised | $ 4.8 | $ 2.5 | |
Aggregate intrinsic value of stock options exercisable | 9.8 | ||
Aggregate intrinsic value of stock options outstanding | 9.8 | ||
Restricted stock | |||
Equity based compensation | |||
Intrinsic value of stock vested and repurchased (less than $0.1 million) | 1.6 | 0.1 | |
Aggregate intrinsic value of nonvested restricted common stock | $ 3.2 | ||
Weighted average remaining vesting term for options expected to vest | 1 year 6 months | ||
Restricted stock | Maximum | |||
Equity based compensation | |||
Unrecognized share-based compensation | $ 2.8 | ||
Restricted stock units | |||
Equity based compensation | |||
Aggregate intrinsic value of nonvested restricted common stock | 550.1 | ||
Unrecognized share-based compensation | $ 281.3 | ||
Weighted average remaining vesting term for options expected to vest | 1 year 8 months 20 days | ||
Intrinsic value, of stock vested | $ 137.2 | $ 76.1 | |
2014 Plan | |||
Equity based compensation | |||
Number of shares authorized | 8,603,066 | ||
Number of shares available for future grant | 8,016,850 |
Equity-Based Compensation - Sum
Equity-Based Compensation - Summary of Activity Related to Stock Options (Details ) - Stock options - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Shares | ||
Outstanding at the beginning of the period (in shares) | 209,759 | |
Options exercised (in shares) | (82,776) | |
Options forfeited/cancelled (in shares) | (600) | |
Outstanding and exercisable at the end of the period (in shares) | 126,383 | 209,759 |
Weighted-Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 2.98 | |
Options exercised (in dollars per share) | 2.92 | |
Options forfeited/canceled (in dollars per share) | 2.89 | |
Outstanding and exercisable at the end of the period (in dollars per share) | $ 3.02 | $ 2.98 |
Weighted-Average Remaining Contractual Term (Years) | ||
Outstanding | 4 years 5 months 20 days | |
Exercisable at the end of the period | 3 years 5 months 20 days |
Equity-Based Compensation - S51
Equity-Based Compensation - Summary of Activity Related to Restricted Common Stock (Details) - Restricted stock | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Restricted common stock | |
Unvested at the beginning of the period (in shares) | shares | 60,000 |
Restricted stock vested (in shares) | shares | (20,000) |
Unvested at the end of the period (in shares) | shares | 40,000 |
Weighted-Average Grant Date Fair Value | |
Unvested at the beginning of the period (in dollars per share) | $ / shares | $ 44.34 |
Restricted stock vested (in dollars per share) | $ / shares | 44.34 |
Unvested at the end of the period (in dollars per share) | $ / shares | $ 44.34 |
Equity-Based Compensation - S52
Equity-Based Compensation - Summary of Activity Relating to RSU's (Details) - Restricted stock units - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Equity based compensation | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Vested | $ 137.2 | $ 76.1 |
Shares | ||
Unvested at the beginning of the period (in shares) | 6,986,776 | |
RSU's granted (in shares) | 3,521,415 | |
RSUs vested (in shares) | (2,304,044) | |
RSUs forfeited/cancelled (in shares) | (1,350,541) | |
Unvested at the end of the period (in shares) | 6,853,606 | 6,986,776 |
Weighted-Average Grant Date Fair Value | ||
Unvested at the beginning of the period (in dollars per share) | $ 34.21 | |
RSUs granted (in dollars per share) | 57.37 | |
RSUs vested (in dollars per share) | 32.47 | |
RSUs forfeited/cancelled (in dollars per share) | 37.84 | |
Unvested at the end of the period (in dollars per share) | $ 46.28 | $ 34.21 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) (Details) | 12 Months Ended | 39 Months Ended | ||
Dec. 31, 2017vote$ / sharesshares | Dec. 31, 2017$ / sharesshares | Dec. 31, 2016$ / sharesshares | Oct. 31, 2014$ / sharesshares | |
Stockholders' Equity | ||||
Preferred stock, shares authorized | 10,000,000 | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | |||
Preferred stock, shares issued | 0 | 0 | ||
Preferred stock, shares outstanding | 0 | 0 | ||
Class A common stock | ||||
Common stock | ||||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 | 500,000,000 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |
Common stock, shares outstanding (in shares) | 57,398,983 | 57,398,983 | 49,945,202 | |
Number of votes each holder is entitled | vote | 1 | |||
Class B common stock | ||||
Common stock | ||||
Common stock, shares authorized (in shares) | 164,000,000 | 164,000,000 | 164,000,000 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |
Common stock, shares outstanding (in shares) | 30,809,627 | 30,809,627 | 35,885,692 | |
Number of votes each holder is entitled | vote | 10 | |||
Conversion ratio | 1 | |||
Conversion ratio upon transfer | 1 | |||
Number of shares converted into Class A shares | 48,161,343 | |||
Class B common stock | Minimum | ||||
Common stock | ||||
Percentage of outstanding shares of class B common stock that shall convert automatically in event of affirmative vote or written consent of holders for automatic conversion | 66.67% | |||
Class B common stock | Maximum | ||||
Common stock | ||||
Aggregate number of shares outstanding Class A common stock and Class B common stock that will automatically convert (less than) | 10.00% |
Segment and Geographic Inform54
Segment and Geographic Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||
Direct Retail | $ 4,643,243 | $ 3,258,909 | $ 2,040,238 |
Other | 77,652 | 121,451 | 209,647 |
Total net revenue | 4,720,895 | 3,380,360 | 2,249,885 |
Adjusted EBITDA | (67,033) | (88,692) | (15,929) |
Less: reconciling items | (177,581) | (105,683) | (61,514) |
Net loss | (244,614) | (194,375) | (77,443) |
Depreciation and amortization | 87,020 | 55,572 | 32,446 |
Equity based compensation and related taxes | 72,626 | 51,953 | 32,975 |
Interest (income), net | 9,433 | (694) | (1,284) |
Other (income) expense, net | (758) | (1,756) | (2,718) |
Provision for income taxes | 486 | 608 | 95 |
Other | 8,774 | 0 | 0 |
Total reconciling items | 177,581 | 105,683 | 61,514 |
Selling, operations, technology, general and administrative | 634,801 | 467,020 | 262,620 |
Leasehold improvements | |||
Segment Reporting Information [Line Items] | |||
Depreciation and amortization | 800 | ||
Warehouse Lease Arrangement, July 2017 | Warehouse Lease Agreement | |||
Segment Reporting Information [Line Items] | |||
Other | 8,800 | ||
Warehouse vacated | |||
Segment Reporting Information [Line Items] | |||
Selling, operations, technology, general and administrative | 9,600 | ||
U.S. | |||
Segment Reporting Information [Line Items] | |||
Direct Retail | 4,075,405 | 2,993,365 | 1,945,411 |
Other | 77,652 | 117,132 | 190,081 |
Total net revenue | 4,153,057 | 3,110,497 | 2,135,492 |
Adjusted EBITDA | 35,888 | 176 | 30,985 |
International | |||
Segment Reporting Information [Line Items] | |||
Direct Retail | 567,838 | 265,544 | 94,827 |
Other | 0 | 4,319 | 19,566 |
Total net revenue | 567,838 | 269,863 | 114,393 |
Adjusted EBITDA | $ (102,921) | $ (88,868) | (46,914) |
International | Australia | |||
Segment Reporting Information [Line Items] | |||
Total net revenue | $ 5,400 |
Segment and Geographic Inform55
Segment and Geographic Information - Long Lived Assets by Segment (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Geographic analysis, revenue and long-lived assets | ||
Geographic long-lived assets | $ 361,141 | $ 239,354 |
U.S. | ||
Geographic analysis, revenue and long-lived assets | ||
Geographic long-lived assets | 353,414 | 233,099 |
International | ||
Geographic analysis, revenue and long-lived assets | ||
Geographic long-lived assets | $ 7,727 | $ 6,255 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Jan. 01, 2017 | |
Current income tax expense (benefit) | ||||
Current federal tax expense (benefit) | $ 0 | $ 0 | $ 0 | |
Current state income tax expense (benefit) | 540 | 329 | (202) | |
Current foreign income tax expense (benefit) | 942 | 285 | 331 | |
Current income tax expense (benefit) | 1,482 | 614 | 129 | |
Deferred income tax expense (benefit) | ||||
Deferred federal income tax expense (benefit) | (31) | 32 | 54 | |
Deferred state income tax expense (benefit) | 8 | 5 | 7 | |
Deferred foreign income tax expense (benefit) | (973) | (43) | (95) | |
Deferred income tax expense (benefit) | (996) | (6) | (34) | |
Income tax expense (benefit) | ||||
Federal income tax expense (benefit), Total | (31) | 32 | 54 | |
State income tax expense (benefit), Total | 548 | 334 | (195) | |
Foreign income tax expense (benefit), Total | (31) | 242 | 236 | |
Net income tax expense | $ 486 | $ 608 | $ 95 | |
Reconciliation of the U.S. federal corporate rate to to income before tax expense (benefit), and actual tax | ||||
U.S. federal corporate rate | 35.00% | 35.00% | 35.00% | |
Tax expense (benefit) at federal statutory rate | $ (85,445) | $ (67,819) | $ (27,072) | |
Decrease in income taxes resulting from: | ||||
State income tax expense, net of federal benefit | (11,432) | (5,225) | (1,424) | |
Foreign tax rate differential | 23,179 | 17,109 | 9,278 | |
Non-deductible equity based compensation expense | 1,080 | 2,321 | 1,415 | |
Windfall benefits from equity based compensation | (24,168) | 0 | 0 | |
Change in valuation allowance | 24,209 | 53,467 | 12,394 | |
Impact of sale of Australian subsidiary | 0 | 0 | 4,248 | |
Change in tax rate | 71,919 | 0 | 0 | |
Other | 1,144 | 755 | 1,256 | |
Net income tax expense | 486 | 608 | 95 | |
Income (loss) from continuing operations: | ||||
U.S. | (143,800) | (118,851) | (38,963) | |
Foreign | (100,328) | (74,916) | (38,385) | |
Loss before income taxes | $ (244,128) | (193,767) | $ (77,348) | |
Effective tax rate, percent | 0.00% | |||
Deferred tax assets: | ||||
Accounts receivable | $ 1,814 | 1,153 | ||
Inventories | 391 | 543 | ||
Operating loss carry-forwards | 146,666 | 71,558 | ||
Equity based compensation expense | 9,087 | 10,940 | ||
Intangibles | 13,862 | 22,466 | ||
Accrued payroll | 8,582 | 9,379 | ||
Accrued expenses | 10,933 | 2,840 | ||
Charitable contributions | 284 | 331 | ||
Deferred rent | 48,936 | 51,355 | ||
Gross deferred tax asset | 240,555 | 170,565 | ||
Less: Valuation allowance | (178,488) | (123,293) | ||
Net deferred tax assets | 62,067 | 47,272 | ||
Deferred tax liabilities: | ||||
Prepaid expenses | (1,825) | (1,428) | ||
Capitalized technology | (11,339) | (11,151) | ||
Property and equipment | (34,986) | (34,420) | ||
Goodwill | (110) | (133) | ||
Convertible debt | (12,580) | 0 | ||
Other | (12) | (166) | ||
Total deferred tax liabilities | (60,852) | (47,298) | ||
Deferred tax assets | 1,215 | |||
Deferred tax (liabilities) | (26) | |||
Increase in valuation allowance | 55,200 | |||
Federal net operating loss carryforwards | 420,500 | |||
State net operating loss carryforwards | 397,200 | |||
Foreign operating loss carryforwards | 270,300 | |||
Undistributed earnings of the entity's foreign subsidiaries | 3,300 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Deferred tax assets | 1,215 | |||
Increase, deferred tax assets, equity based compensation | 9,087 | 10,940 | ||
Valuation allowance | $ 178,488 | $ 123,293 | ||
Accounting Standards Update 2016-09, Excess Tax Benefit Component | ||||
Deferred tax assets: | ||||
Less: Valuation allowance | $ (44,100) | |||
Deferred tax liabilities: | ||||
Deferred tax assets | 44,100 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Deferred tax assets | 44,100 | |||
Valuation allowance | 44,100 | |||
Accounting Standards Update 2016-09, Forfeiture Rate Component | ||||
Deferred tax assets: | ||||
Equity based compensation expense | 3,300 | |||
Less: Valuation allowance | (3,300) | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Increase, deferred tax assets, equity based compensation | 3,300 | |||
Valuation allowance | $ 3,300 |
Credit Agreement (Details)
Credit Agreement (Details) - USD ($) | Feb. 22, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Sep. 11, 2017 | Dec. 31, 2015 |
Credit agreement | |||||
Borrowing under credit agreement | $ 0 | $ 0 | $ 0 | ||
Line of Credit | Bank of America | |||||
Credit agreement | |||||
Maximum borrowing capacity | $ 65,000,000 | ||||
Line of Credit | Bank of America | LIBOR | |||||
Credit agreement | |||||
Basis spread | 1.75% | ||||
Credit Card Program | |||||
Credit agreement | |||||
Maximum borrowing capacity | $ 40,000,000 | ||||
Credit Card Program | Line of Credit | Bank of America | |||||
Credit agreement | |||||
Maximum borrowing capacity | $ 45,000,000 | ||||
Revolving Credit Facility | |||||
Credit agreement | |||||
Maximum borrowing capacity | 100,000,000 | ||||
Right to increase | $ 25,000,000 | ||||
Revolving Credit Facility | Eurodollar | |||||
Credit agreement | |||||
Basis spread | 1.00% | ||||
Applicable margin | 0.0175 | ||||
Revolving Credit Facility | Base Rate | |||||
Credit agreement | |||||
Applicable margin | 0.0075 | ||||
Revolving Credit Facility | Federal Funds Effective Swap Rate | |||||
Credit agreement | |||||
Basis spread | 0.50% | ||||
Revolving Credit Facility | Line of Credit | Bank of America | |||||
Credit agreement | |||||
Maximum borrowing capacity | 20,000,000 | ||||
Revolving Credit Facility | Letter of Credit Sublimit | |||||
Credit agreement | |||||
Maximum borrowing capacity | $ 25,000,000 | $ 25,000,000 | |||
Revolving Credit Facility | Revolver Swing Line Supplement | |||||
Credit agreement | |||||
Maximum borrowing capacity | $ 10,000,000 | ||||
Revolving Credit Facility | Revolving credit facility - direct borrowings | Line of Credit | Bank of America | |||||
Credit agreement | |||||
Maximum borrowing capacity | $ 5,000,000 |
Convertible Debt (Details)
Convertible Debt (Details) | Sep. 15, 2017USD ($)dayinstitution$ / shares | Sep. 11, 2017$ / shares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Debt Instrument [Line Items] | |||||
Proceeds from issuance of convertible notes, net of issuance costs | $ 420,449,000 | $ 0 | $ 0 | ||
Capped call transactions paid from net proceeds | 44,160,000 | $ 0 | $ 0 | ||
Convertible Debt | Three Point Seven Five Percent Senior Note Due 2022 | |||||
Debt Instrument [Line Items] | |||||
Debt, face amount | $ 431,250,000 | ||||
Interest rate, stated percentage | 0.375% | ||||
Proceeds from issuance of convertible notes, net of issuance costs | $ 420,400,000 | ||||
Capped call transactions paid from net proceeds | $ 44,200,000 | ||||
Number of financial institutions | institution | 3 | ||||
Conversion ratio | 0.00961 | ||||
Conversion price (in dollars per share) | $ / shares | $ 104.06 | ||||
Trading days (weather or not consecutively) | day | 20 | ||||
Trading days (consecutive) | day | 30 | ||||
Percentage of conversion stock price | 130.00% | ||||
During number of business day period | 5 days | ||||
Consecutive trading day period (after any) | 10 days | ||||
Principal amount of Notes | $ 1,000 | ||||
Measurement period percentage (less than) | 98.00% | ||||
Minimum number of trading days immediately preceding the date on which notice or redemption provided | day | 1 | ||||
Trading days immediately preceding date on which notice of redemption provided | day | 5 | ||||
Redemption price, percentage of principal amount to be redeemed | 100.00% | ||||
Default percentage of aggregate principal amount, of notes outstanding (not less than) | 25.00% | ||||
Equity component of Notes | 95,800,000 | ||||
Interest expense | 5,800,000 | ||||
Fair value of Notes | $ 452,500,000 | ||||
Convertible Debt | Over-Allotment Option | Three Point Seven Five Percent Senior Note Due 2022 | |||||
Debt Instrument [Line Items] | |||||
Over-allotment option included in issuance of notes | $ 56,250,000 | ||||
Convertible Debt | Class A common stock | Three Point Seven Five Percent Senior Note Due 2022 | |||||
Debt Instrument [Line Items] | |||||
Cap price per share (in usd per share) | $ / shares | $ 154.16 | ||||
Premium over last reported sale price, percentage | 100.00% |
Net Loss per Share (Details)
Net Loss per Share (Details) $ / shares in Units, shares in Thousands, $ in Thousands | Sep. 15, 2017$ / sharesshares | Sep. 11, 2017$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares |
Anti-dilutive securities | |||||
Allocation of undistributed earnings between stock classes, conversion ratio | 1 | ||||
Numerator: | |||||
Net loss | $ | $ (244,614) | $ (194,375) | $ (77,443) | ||
Denominator: | |||||
Weighted average units used for basic and diluted net loss per unit computation (in units) | 86,983 | 84,977 | 83,726 | ||
Net loss per common unit attributable to common unit holders: | |||||
Basic and Diluted (in dollars per unit) | $ / shares | $ (2.81) | $ (2.29) | $ (0.92) | ||
Common Stock Options, Restricted Stock Options And Restricted Stock Units [Member] | |||||
Net loss per common unit attributable to common unit holders: | |||||
Common stock outstanding that have been excluded from the computation of diluted net loss per share | 7,000 | 7,300 | 5,900 | ||
Three Point Seven Five Percent Senior Note Due 2022 | Convertible Debt | |||||
Net loss per common unit attributable to common unit holders: | |||||
Conversion price (in dollars per share) | $ / shares | $ 104.06 | ||||
Class A common stock | Three Point Seven Five Percent Senior Note Due 2022 | Convertible Debt | |||||
Net loss per common unit attributable to common unit holders: | |||||
Conversion of stock, shares Issued (in shares) | 4,100 | ||||
Cap price per share (in usd per share) | $ / shares | $ 154.16 | ||||
Capped Call Transaction, shares issued (in shares) | 2,800 |
Subsequent Events (Details)
Subsequent Events (Details) | Feb. 22, 2018USD ($) |
Class A common stock | Subsequent Event | |
Subsequent Event [Line Items] | |
Stock Repurchase Program, authorized repurchased amount, up to | $ 200,000,000 |