Thank you for standing by. My name is Rochelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Wayfair Q2 2024 Earnings Release and Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to James Lamb, Head of Investor Relations and Treasury. Please go ahead.

Good morning and thank you for joining us. Today, we will review our second quarter 2024 results. With me are Niraj Shah, Co-Founder, Chief Executive Officer and Co-Chairman; Steve Conine, Co-Founder and Co-Chairman; and Kate Gulliver, Chief Financial Officer and Chief Administrative Officer. We will all be available for Q&A following today's prepared remarks. I would like to remind you that our call today will consist of forward-looking statements, including but not limited to, those regarding our future prospects, business strategies, industry trends and our financial performance, including guidance for the third quarter of 2024. All forward-looking statements made on today's call are based on information available to us as of today's date. We cannot guarantee that any forward-looking statements will be accurate, although we believe that we have been reasonable in our expectations and assumptions. Our 10-K for 2023, our 10-Q for this quarter and our subsequent SEC filings identify certain factors that could cause the company's actual results to differ materially from those projected in any forward-looking statements made today. Except as required by law, we undertake no obligation to publicly update or revise any of these statements, whether as a result of any new information, future events or otherwise. Also, please note that during this call, we will discuss certain non-GAAP financial measures as we review the company's performance, including adjusted EBITDA and -- adjusted EBITDA margin and free cash flow. These non-GAAP financial measures should not be considered replacements for and should be read together with GAAP results. Please refer to the Investor Relations section of our website to obtain a copy of our earnings release and investor presentation which contain descriptions of our non-GAAP financial measures and reconciliations of non-GAAP measures to the nearest comparable GAAP measures. This call is being recorded and a webcast will be available for replay on our IR website. I would now like to turn the call over to Niraj.

Thanks, James and good morning, everyone. We're excited to discuss our second quarter results with you today. Q2 was a dynamic quarter that resulted in another period of share gain and we continue to see efforts around cost optimization pay off with our best quarter of adjusted EBITDA and free cash flow in 3 years. This was all the more impactful because it was a quarter of continued macro headwinds and -- that are pressuring the way customers shop the category. Way Day was a tremendous success, with performance up in the double digits versus our event last spring. We saw notable engagement throughout all 3 days with broad-based strength across the catalog. The Way Day results are consistent with the pattern we've observed now for over a year, where promotions continue to drive customer engagement but correspondingly, we see shoppers pulling back in the non-promo periods. The performance spread between promo and non-promo remains wide and our post Way Day results came in below expectations. This was in part due to the increasing price elasticity we've been seeing in our customers as well as a decision to intentionally pare back on marketing spend following Way Day to remain disciplined on efficiency in periods where customer engagement is later. We continue to take share in the second quarter as we proactively adjusted to the trends we were observing. A more moderate capture rate in May picked up as we got through June and entered July on the back of pricing actions in response to that changing elasticity, coupled with a normalization in marketing spend. Our market relative price index an internal measure of how Wayfair prices back up to competition, returned to showing healthy year-over-year improvement following those actions and correspondingly, we've seen our market share set further high. Q2…

Thanks, Niraj and good morning, everyone. Let's dive into our second quarter financials before turning to our outlook for Q3. Top line results for the period came in slightly below our expectations, down 1.7% compared to the second quarter of last year. The decline was driven by a few factors. First, as Niraj shared, we observed a weakening overall macro in the back half of the quarter, consistent with the trends that many other consumer companies are experiencing. Second, our Way Day results were quite strong but we saw less momentum in June when we were not running promotional events and subsequently pulled back on advertising and this weighed on our revenue performance. Consumers have remained cautious in the category for years and we've continued to see a pronounced spread in performance between promotional and non-promo days. There's an important caveat to add here, one that we've said before. Outperformance on promo days does not mean that sales strength is driven exclusively by discounted items. Less than 1/3 of our sales during promotional events come from featured items and that has been quite consistent over the past year. What this means is that consumers are willing to spend in the category once they are engaged in shopping. Promotions have been for some time and are now even more so the most potent tool to drive that engagement. One of Wayfair's core competitive advantages is the rich data-driven insight we have on customer behavior and our ability to regularly run pricing experiments, toggling prices up and down by small percentages on a portion of the catalog in order to develop a real-time view of customer spending behavior. Our data science team spend a tremendous amount of time studying the resulting demand curves and their work has painted a picture of a…

[Operator Instructions] Your first question comes from the line of Christopher Horvers with JPMorgan.

So my first question is going back to the comments on the consumer. So it's basically that the troughs are getting deeper and the consumer is becoming that much more sensitive to the promotional aspect of it. I guess from your perspective, you have the toggling of further price investment that you're putting into the gross margin but you're also dialing back the advertising. So can you talk a little bit more about how are you going to navigate against this, what seems like a much tougher environment.

Yes. Thanks, Chris. Thanks for the question. Yes. So I think here's the way to think about it. So the -- it's been a challenging environment for HomeGoods for 2 years. The first piece of it was sort of kind of the COVID pattern of binge on HomeGoods, bust on HomeGoods which was because of the binge switched to travel entertainment leisure spend. And then what that's been rolled into is now in the last 6 months, more of like what you think is a traditional recession economy, right, the economy is slowing, consumers pulling back you hear those comments from people like McDonald's, Starbucks, Pepsi now talking about how the consumers pull back. So in that environment and we've seen this before in a great financial crisis, consumers sort of because the category is not top of mind, it's out of favor, the everyday volume, the everyday business is slower but promotions are still a marketing message that piques curiosity, cause traffic to come in and customers then see something appealing and they buy it. So if you think about -- we're still spending money on advertising but we're sort of managing when we're spending to put more of the money towards the promo periods and a little less of the money towards non-promo just to maximize our return based on what customers engage with. So it's more like a marketing message that works with promo. So then that we're putting that more of the marketing spend there. And so that balance is a little bit of what we're talking about. And also in this quarter, the way that played out with June is, June was more non-promo. We pulled back on advertising a little more. That made June a little softer. As we went get into July, we're seeing our market share hitting all-time highs. We're seeing us continuing to succeed and take market share. So we're not really worried about how we can perform in this environment. We think that we can keep delivering the profitability and we think we can keep taking market share. It obviously in terms of really seeing the kind of growth we all want to see, that's not really going to be the kind of number you post when the market is negative 10%. But then as the market kind of firms up and grows, I think you're going to see the fact that we're continuing to invest in mid- and long-term initiatives will really pay off in the kind of growth numbers you'll see.

There's a lot of -- it does seem like looking across the consumer that July was a tough month, particularly the back half of the month. So I guess from what you've been able to observe, because you're speaking to sort of down low single digit for the quarter, given some timing shift would suggest your worst quarter to date, how much of that was actually the promotional shift versus some further consumer step back based on what you can observe, given the assassination attempt, the election, the Olympics and the consumer?

Yes. So if you look sequentially June to July, we actually see a better momentum in July than we saw in June. So I would just say that the way we've been executing July actually has -- momentum increased. So I think it's going to be a challenging stretch while the economy is the way it is. But I don't know -- there's always a lot going on. You mentioned the election, Olympics; there's always stuff going on. I actually think at the end of the day, while those things matter, I think what the truth is, is like we're going to be able to keep executing, taking market share. This is a big category. It is down probably 10%-ish [ph] year-over-year. but everything is not equal. So I think we can do far better than our competitors which is what we've been doing for 7 quarters now. And I think we'll be able to do it even with all these events. I think the thing that's going to really cause the category to recover and gain momentum will be as housing picks up and housing will pick up a little bit because of pent-up demand but a little bit as interest rates get cut and the mortgage rate comes down. And so I think that's really the thing that you'd kind of look to. And that's kind of -- that's the trend everyone expects that interest rates will come down, housing will pick up but that's not going to be a light switch that's going to play out over time. And -- and so in the meantime, you're going to see us keep taking market share, keep pulling on profitability and that momentum will only increase as the market gets better.

Yes. And Chris, just to the Q3 specifically, you mentioned that really, the Q3 guide speaks to the same seasonality that we saw last year, Q2 to Q3. So I just -- I wouldn't overly read into anything there that's just consistent with where we've been operating.

So I guess just 1 quick follow-up. So from a market perspective, based on what you observed, do you think your performance sounds better June to July but do you think the market stepped down from June to July?

The -- so we get the credit card data just like others get and then we also get a lot of feedback from suppliers. I would say -- I don't know if I can say it step down or just remain weak. It's a little hard to be too granular and specific on that. I would say, certainly, we have no one is seeing a market recovery, okay? So that's definitely the case. But I don't know if I could confirm that it stepped down because the credit card data, when you look at it just week to week, it's a little noisy, you zoom out the trends are very clear. So we're seeing that we're clearly getting to all-time highs and the market is remaining weak is the way I would phrase it.

Your next question comes from the line of Peter Keith with Piper Sandler.

So maybe just a little bit of a follow-up on there as it relates to market share. Did you feel like -- it sounds like your market share may be compressed a little bit -- market share gains compressed in Q2 versus Q1. And -- but then I thought you're saying you're back to your traditional sort of market share capture. Could you help us unpack that a little bit? And maybe strategically, what you've changed to improve that trajectory?

Okay. Yes. Thanks, Peter. So yes, so I think what we're talking about is really -- it's kind of like I think you talked about like the rate of increasing market share. So what we're really discussing is the speed at which our market share is growing. And we're saying for 7 quarters, our market share has been growing. And when we zoom out, we'd say it's kind of been growing at a relatively steady pace, I think if you zoom in on that I was just mentioning this in one of Chris' question, when you zoom in on a week, it gets a little noisy, even in a month, it's a little noisy, quarter gets a little more stable. But you got to kind of zoom out pretty far. We get data on close to 100 competitors and we look at their numbers, you see again this volatility in these numbers. So, I'd be a little careful to worry too much about the numbers as you zoom in and I would just zoom it back out. I'd say what we're consistently doing to take market share, right? And we're continuing to invest in the mid- to long-term initiatives and those play out over time. We're making sure that we've got the selection, the price, the availability and we're increasing the quality of the merchandising as we go. And then we're making sure on the advertising, we're advertising in the ways that are productive and drive the traffic at the customers into the site and sort of make sure that we can monetize that. And so I'd say that playbook of what we're doing, making sure we don't lose track of the mid- to long term while just executing very well every day is what's working. And that's continuing to work. And the reason I mentioned that July sequentially picked up momentum in June is that June was a softer month. And again, if you think promo, non-promo June was really more of a non-promo period. And then the way we flexed the ad spend caused the June marketing support that we provided to be less as well. So that's sort of kind of in our mind really clearly explains June and July is a little bit more back to normal and we're seeing the numbers reflect that. So I guess that's kind of what I was trying to describe.

Okay, that's helpful. And then Niraj [ph], we didn't run into each other in Las Vegas this week. So I know you were there. When you talk to any supplier at the Vegas conference, there's concern around factory direct product that's coming in from China and being sold on Wayfair. So the message I'm getting is that U.S. suppliers are pulling back on CastleGate and I'm wondering just how are you guys handling this evolution in your supplier base? And is there a risk of CastleGate revenue may be moderating a bit?

Yes. So we have, obviously, a large number of suppliers. That number has kind of grown over the last few years. We did have a real big shoot up in the number of suppliers kind of in 2021 time frame which we then kind of pulled a little back on but make sure we have quality suppliers. I will say a lot of those quality suppliers are U.S.-based importers, we have some U.S.-based manufacturers but we also have some great Asian-based manufacturers and Asian-based importers. So we'll sort of work with everybody as long as it's a high-quality supplier and we care about the quality of product, the price of that product, the quality of their operations. We want to make sure customers are very satisfied. And so we work with all these folks. And we have different teams that support these folks and work with them. Those teams are spread all over the globe. And I think from a supplier standpoint. So if you're in Las Vegas and you're talking to the U.S.-based importer and manufacturers, what you're going to hear from them is the same thing here from Asia spars which is obviously it's a tough macro out there. And so on tough macro, what do you hear from pliers, -- of course, no one wants competition. They'd rather have demand come to them, right? And so I think the fact that there are factories who are building cross-border programs is kind of competitively a challenge for some U.S.-based importers. But at the same time, what we're seeing is that the U.S.-based importers who lead with design and focus on really efficient operations, we have quite a few of them that are succeeding that are doing well. And I met with dozens of suppliers over the last few…

Okay. And I would agree that everyone seeing Wayfair is their best channel. So thanks for that feedback.

Your next question comes from the line of Curtis Nagle with Bank of America.

So two questions. One, just on the pricing actions. Maybe you don't have this straight but it sounds like at the moment, you I don't know, a little out of line where you wanted to be, from what I recall in past few calls, I think the commentary was you were in a good spot. So I guess if that's correct, kind of what changed or vendors sharing any of the burden? And I guess, is this in response to any of the share gains narrowing a bit, if that's the case?

Yes. So I'd say the way we price is -- we have a relatively sophisticated data science model that's measuring elasticity and really figuring out what margin rates which should be taken on each tranche of the catalog so that we maximize profit dollars, that's the way I think. So what happens when you think about profit dollars over a period of time, not going out too far out in the future but not worry about just today. But do we want to maximize that dollars number. And so you're going to then -- the system is meant to optimize around that. Again, on the pricing actions you're talking about, remember we're talking about something in the low 10s of basis points. So we're really not talking about if you think about -- you talked about, are you lowering price to really get your be talk about lowering price 5%, 10%, 20%, meaningful changes. We're talking about 10s of basis points. It's really -- think about this optimization, something that makes sense to maximize profit. I'll just point out that this quarter, if you look at our EBITDA, 5.2%, $163 million, free cash flow of $183 million. That's quarter since 2021. And -- and so you can say, okay, well, it's taking a lot of market share while driving profitability in what's clearly a tough macroeconomic environment and thanks for Peter for that shut up. But and the suppliers are noticing, we're the best performing out there. So, I'd say that's -- those are the goals we want to hit and I think we're hitting.

Yes, Curt, you asked specifically our suppliers sharing any of the burden and we continue to see suppliers leaning in with us quite nicely. That's how we're able to offer these incredible promo events and actually still maintain gross margin nicely north of 30%, right? So, I think what we're talking about here in rotate [ph] nicely is a nuance on making sure they're at the right and optimal point of the pricing curve based on where we see the consumer today. And frankly, we're excited that we can lean into that and deliver that for the customer. We're able to do that because of the significant cost efficiency that we've driven over the past few years.

Got it. Okay. And then, just turning to the store. Great to hear after such a great start in some great potential. I guess, Niraj, could you talk a little bit more about sort of the potential ramp? Also great to hear we're not entering an investment cycle but kind of what the footprint can look like? What kind of productivity per box you're seeing -- margins [ph]? It sounds like it's really good. Any more detail there would be great.

Yes, great. So what I would say is, obviously, the store has only been open for a little over 2 months. So this is kind of the way we think about it like we're going to be really prudent and pragmatic in how we grow the store. So we've got Wilmette open. It's off to a great start. We've got a long list of things that we think can even improve its performance but it's -- it started off incredibly strong and so we're pretty excited about that. We're working on opening a second store targeting later next year for that second store. So the idea is we're going to keep moving forward but in a very methodical, pragmatic way so that we can make sure that we're optimizing performance and taking all those learnings and using them in what we do next and that we do this in a way so that a long time from now when we look back we've really built this out in a very successful way. And so that's kind of the way we think about it. So it's probably a little too early to share super detailed financial metrics given that's only been open a couple of months. But I would say we're pretty thrilled with how it's performing.

Your next question comes from the line of Simeon Gutman with Morgan Stanley.

I wanted to follow up in the prepared remarks you talked about the elasticity getting a little better to when you maximize gross profit dollars in the latter part of the quarter. Can you talk about any magnitude or quantification? And then, if you're going to manage gross margin to the lower end of that 30% to 31% range, is the back half or even the third quarter run rate of sales reflective of that pickup? Or is it not reflected in that negative low single digit, I guess, quarter guide?

Yes. So I'll take a couple of this. I'm going to turn it over to Kate to really try to help with the, I guess, clarify the guidance maybe is kind of one of the questions there. What we're seeing -- and this is kind of what I've mentioned, our momentum from June into July moved in a positive direction. So we're happy with building momentum. We're seeing that in the market share, we're seeing it in our performance. Again, there's this nuance of promo and non-promo periods that can make them any given the zoom in periods harder to compare. So you also take that into account. But that's what we're saying we're seeing that what we're doing is working. Kate, do you want to try to provide [ph]?

Yes. I think, Simeon, what you're asking is, does the guide take into account the gross margin investment? Yes, it does. And what we're really doing there is in an ongoing very challenging top line, the sort of double-digit macro decline, that's how we're able to stay negative low single digits and continue to gain share. We spoke in the prepared remarks on the call that what we see as a result of investments like this is improved order capture. Right now, that's in a down market, right? So we're seeing that improve order capture in a down market. That leads to those all-time share highs and that is contemplated in what we've shared. And frankly, we're able to do that because of our ongoing success on the fixed cost base. So the improvement that you saw in SOTG&A and some of the cost take out, frankly, on CS&M, allow us to still do that, make that investment, deliver for the customer, take share capture and still drive to that mid-single-digit adjusted EBITDA.

Makes sense. The follow-up is back to the, I guess, full year EBITDA and I know you're not guiding full year but if we take the first half, I think there was $238 million of adjusted with revenues down about 2%. And -- so if we end up doing revenues down, let's say, 2% for the rest of the year, is it as simple, can we double the EBITDA in that $480 million? Or is the imputed run rate in the back half on other cost items actually gets better such that you can do better than that $480 million?

Niraj is going to pass it off to me and I appreciate. Niraj?

I thought you said I'm not allowed to give guidance.

Yes. I appreciate your attempt to get a full year guidance, Simeon but I'm just going to refer you back to the remarks that we made on the call. And what we said was we feel very confident in that earlier construct of being able to grow adjusted EBITDA more than 50% irrespective of where the top line is. And that is because of that expense control management that you've seen from us. And you're seeing that play out nicely this quarter with revenue down but we were able to hit that mid-single-digit adjusted EBITDA and you'll continue to see that throughout the rest of the year.

Your next question comes from the line of Maria Ripps with Canaccord.

First, could you maybe talk about your motivation for conducting the Black Friday sale in July. Was it mostly an opportunistic decision, also to reflect the more promotional environment? And then, sort of on the effectiveness of this event on the heel or your Way Day in Q2? And then quickly, sort of stronger July trends that you mentioned, is that taken into account sort of Black Friday?

Thanks, Maria. So the Black Friday and July sale, it was successful. What I would say is in kind of recession periods which is kind of like what we have now we definitely run a promotional cadence that's kind of the higher end of our range of promotions we would run per time. And in a normal time, you're at the lower end of that range. So we're running, I guess, promotions in line with sort of the playbook we have in the tougher economic environment. And again, it goes back to the fact that, that's the marketing message that causes customers to actually get engaged with the category and come in. And so, it's really -- I think the promotion is the right type of marketing event that is successful in this breakthrough the noise in this type of environment. And so yes, we're happy with it. Over the years, we did track different types of events in this time frame in prior years. We tried the anniversary sale concept. We tried doing a financing event. I'd say the Black Friday in July that this sale was more successful than those other formats we tried over the years. That might be a combination of the creative, the way we positioned the event, the way we marketed it but also it could reflect the macro environment. Kate, anything you want to add?

Yes. No, I think that's fair. I just encourage us not to -- we don't typically give out sort of monthly and -- sort of monthly guidance there and I'd anchor you to the overall guidance that we gave for Q3.

Got it. That makes sense. And then secondly, just following up on margins. maybe a little bit of a follow-up on the prior question and sort of you being able to deliver on our despite softer top line. So, I guess now that you have sort of reengineered your cost structure, can you maybe talk about your ability to flex your expenses outside of marketing, flex your expenses up or down sort of in the short term to reflect volatile top line trends?

Yes. I think perhaps you're maybe speaking to the SOTG&A line, Maria and what we've done there. that's where we've seen obviously very consistent reduction for 8 quarters in a row now. That line is primarily -- or we've said the majority of that line is labor, although there's a number of other expenses in there like software costs, [indiscernible] etcetera. And we've been quite diligent focused on reducing costs across the bucket of cost in there. We've always said, or we said for the last few quarters that the labor piece does remain an ongoing lever there and you saw that play out a bit this quarter. We continue to think that the diligence and the expense management there allows us to do things like make this investment, we know that's the right thing to do for the customer at this moment. So, that's sort of how those lines play off of each other and how we're able to think about investing in some areas like price where we're able to take cost out of other areas.

The one thing I would add is when you think about -- depend on cost to the ongoing things we're doing to optimize the profitability. I mentioned best quarter of EBITDA free cash flow 2021. The other thing I'll point out though, as you actually see that, we got to breakeven on owners earnings. So that's EBITDA, less CapEx, less stock-based compensation. So if you look at the stock-based compensation line, you see that, that's actually improved significantly. That, of course, doesn't show up in EBITDA but in the owner's earnings that does show up. And so I just want to point that out as well.

Your next question comes from the line of Steven Forbes with Guggenheim.

Niraj, the comment you made about sort of the performance of the business between promotional and non-promotional days. I was hoping maybe we could revisit that and maybe just contextualize like how you would summarize the health of your consumer today? Like how big is that spread? I don't know if you can quantify it for us and/or just compare it to sort of historic spreads that you've seen maybe in the pre-COVID errors. And then what does that tell you sort of about just the state of the industry and how you're sort of thinking about how long this malaise can last for, right, or in essence, the path back to growth, right, how long it could take to get there?

Yes. So I think that I don't want to be overly dramatic because the spread, again, it widens but it's not like -- it's not a light switch goes from like this way to that way. It's just like increasingly promotional versus non-promotional periods. And part of that, again, is because that's the marketing message that causes people to shop versus the category being a little more top of mind and then just proactively shopping every day. The thing about kind of how does the category get back to growth? When does it get back to growth? I'd just get you -- just if you think about existing home sales, if you look at existing home sales and you just kind of look at that a long period chart of that, you can see how existing home sales has really dropped down. And there's a bunch of other people who do various sentiment-type indexes. And you can -- what you can see is that there's a lot of pent-up enthusiasm and desire to move. But right now, the market is a little more frozen. You have a 30-year mortgage rate that's a little over 7%. And there's like some studies that should like every percentage point move in the interest rate, lower demand was like 16% or 18%, something like that for every percentage point move. And it kind of makes intuit sense. So then you say, okay, well, do you believe at some point here, you're going to start seeing rates come down and that will take some pressure off the economy. But one of the specific things that we'll do is that 30-year mortgage rate will start to drop and it will drop at a pretty decent rate. That will start causing existing home sales to move up. The year so one moves, they spend a significant multiple of what they do in a regular year. And then it actually catalyze the broader market because our customer, maybe they're moving maybe they're not moving but they see their sister's new house. And they're talking about what the sister is doing in and then that causes the other customer to maybe do some big expression of their house. So it basically stimulates the category. And I think we're getting close to that period but we're not quite there yet.

Steve, just on the promo point, another thought I'd add there is we are cognizant of ensuring that we're not overly training the customer to shop exclusively on discounts. And so we're mindful of what promotions we offer, the types of those promotions and the cadence of those as well as we think about sort of long-term customer growth.

That's helpful. And then, Kate, given the change here, I mean, it's great to see the free cash flow performance. I mean obviously, I think all of us are probably thinking about the debt maturity schedule and revisiting Niraj's comment that he made at the within the 2023 shareholder letter, right about sort of being in a solid financial position to settle debts with cash as they come due. Any chance you guys can just revisit that statement for us? And maybe just give us a sense of reassurance as we sort of rejigger or revise our free cash flow assumptions here?

Yes. So, thank you for mentioning the free cash flow this quarter. We're quite pleased with where we landed our highest free cash flow quarter since 2021. And -- and I think that shows, again, the underlying strength of the cost takeouts and the efficiency there and our management on other areas like CapEx as well. What we've said about the capital structure for the last few quarters is we're trying to drive optionality and I think you've seen that play out again this quarter, right? So optionality comes in the form of improving our financial profile and our free cash flow such that cash becomes an opportunity to use to pay down debt. The other way that optionality plays out and we've said this before, too, is that, that opens up alternative venues to financing for us beyond the convertible market such as regular weight debt through an ongoing improvement in the maturity of the business and our adjusted EBITDA profile. And again, you saw that play out this quarter with our strongest adjusted EBITDA since 2021. And -- so we feel very good about the ongoing levers available to us on capital structure management and we'll continue to be prudent and thoughtful and look at what makes sense in the market and what makes sense based on what we see internally as well.

Your next question comes from the line of Oliver Wintermantel with Evercore ISI.

Niraj, looking at the direct active customers are up, slightly; average order per active customers was up and then the repeat customers were up as well. So, can you maybe talk a little bit about where the weakness in revenues comes from? Is that just -- basically new customers or other cohorts? That would be helpful.

Yes, Oliver, if we look at the KPIs, what we saw this quarter, remember that active customer number that's an LTM number that continued to be up a little bit. And obviously, that's been going in the right direction over the last few quarters. Disaggregating sort of orders in AOV though, you saw orders down will AOV was slightly up. And the combo of those 2 things will lead you to that revenue softness of negative 2%; so negative 1.7%. So that's really what you're seeing playing out there. It's just a little bit of order softness offset by some AOV. Again, it's the AOV isn't anything unusual and you spoke to that earlier on. We're back to a point of seeing normal movements in AOV. And obviously, what we're focused on is continuing to drive customer acquisition, order capture and pairing that with wherever the AOV is to help drive revenue overall.

And what I would say because there's so much more granular repeat metrics. We actually use to operate the business and so these higher-level numbers aren't the ones I'm most familiar with. But what you actually see is you see good customer engagement and the metrics that we track. But again, the category is out of the engagement is in the context of the environment. So that's where you can see us outperform on market share. But that's in the context of the market, right and the market is down. So I think it's just us being down 1.7% in the context of a market that's down, we think roughly 10% is us taking share. But obviously, the total pie got a little smaller. And so that -- I think that's really the punchline.

Got it. And as a follow-up, how do you think about active customer accounts going into the third quarter and maybe by year-end?

Yes, sure. Again, so that number, the active customer account is a 12-month number. And so again, that's a little bit of a tricky number. And again, not one that we managed during the recent is like that number changes, not just by what you do in this quarter but what happened a year ago in the quarter that falls out. And so I think that makes that number a challenge. But what you actually see in that number is that we're gaining momentum and the way we're gaining momentum is we're taking market share to a degree that lets us offset the weakness of the market and stimulate our own business. And that's what's continuing to happen. So we feel pretty good about the momentum we had.

I will now turn the conference back over to Wayfair team for the closing remarks.

Well, I just want to thank everybody for joining the call and we appreciate your time. We're excited about the position we're in and the things that we're doing and the way it will play out. So thanks for your interest in Wayfair.

Ladies and gentlemen, that concludes today's call. Thank you all for joining and you may now disconnect.