Wayfair Inc(NYSE: W) stock lost over 22% post their weak fourth quarter of 2017 update (As of 12:40PM EST on Feb 22nd, 2018; Source: Google finance). The Average order value was $229, which was lower as compared to the third quarter of 2018, which is in line with the seasonal trend of lower ticket holiday items being purchased in Q4.
Moreover, the other business, which primarily includes revenue from retail partners as well as revenue from small media business, fell year-over-year as expected to $20 million as the group is scaling down their retail partner business.
Adjusted EBITDA for the fourth quarter was negative $21 million or negative 1.5% of net revenue during the quarter. Adjusted EBITDA for the US business in Q4 was positive $7 million in line with their expectations for the quarter. As per their international business, the adjusted EBITDA in Q4 was negative $28 million, as the group continues to make investments behind the strength they are seeing in Canada, the UK and Germany.
The group continues to make a prudent revenue guidance as they are increasing comp versus last year, when their business accelerated in the end of the quarter in part driven by the timing of delayed tax refund payments last year. The increasing scale, macro factors could hurt their results and the group is in a period of market volatility that might impact consumer confidence. Despite direct retail gross revenue quarter to date rise above 45% yoy, the increasing comp towards the end of the quarter are guiding to a lower level for the fourth quarter. The group expects their consolidated adjusted EBITDA margins of negative 3.9% to negative 4.2% for Q1, 2018.
On the brighter side, for the full year, the group generated $4.7 billion of total net revenue which is a year-over-year dollar growth of $1.3 billion and growth of 40% on 2016. The group continues to win with customers with several active customers at the end of 2017 growing to over 11 million. They are also capturing a higher share of the customer spend with Q4 LTM revenue per active customer growing by over 7% on a year-over-year basis to a new high of $422. With the online portion of the home category growing annually and over 15% in the US, the group is benefiting from that shift of dollars from stores to online.