Ladies and gentlemen, good morning. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Wayfair second quarter 2022 earnings conference call. Today's conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press the Star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press Star one once again. Thank you, and I will now turn the conference over to Jane Gelfand, Head of Investor Relations, Corporate Development and Capital Markets. Ms. Gelfand, you may begin your conference. Good morning, and thank you for joining us. Today, we will review our second quarter 2022 results. With me are Niraj Shah, Co-Founder, Chief Executive Officer, and Co-Chairman, Steve Conine, Co-Founder and Co-Chairman, Michael Fleisher, Chief Financial Officer, and Kate Gulliver, Incoming 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 we will make forward-looking statements during this call regarding future events and financial performance, including guidance for the third quarter of 2022. 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 2021, 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, 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 investor relations website. I would now like to turn the call over to Niraj. Thank you, Jane, and good morning, everyone. We are pleased to reconnect with you today to share the details of Wayfair's second quarter results. 2022 is proving to be a volatile year. While the Fed and other central banks work to curb inflation and stabilize the global economy, we remain squarely focused on our customers and our suppliers on making sure Wayfair is their preferred platform for the home in any environment. We're also very focused on controlling the controllables and steering Wayfair in a financially responsible manner through this period. On each of these fronts, we are seeing positive traction, and this is what I'll talk to you about today. Q2 net revenue climbed 10% quarter-over-quarter, though was still down 15% year-over-year. Though year-ago comps will begin to normalize in the back half, it is unmistakable that consumer behavior is being impacted by inflationary pressures as well as by economic and geopolitical concerns. Even so, the emotional connection to one's home means that interest in our category is ongoing, and we're seeing consumers remain engaged and responsive to the right combination of wide selection, great deals, and satisfying service. Wayfair's platform model flexes to deliver this outcome across different macro environments, and we're seeing it do so today. For the last couple of years, we have indicated that Wayfair should now be at the scale to drive both growth and consistent profitability. The first half of this year has admittedly been less robust than expected, but let me be very clear that our intention is unchanged. We are laser-focused on quickly getting back to this goal. Our priority over the coming quarters and looking into 2023 is to steer the business towards positive adjusted EBITDA and positive free cash flow. We will not stop there. We are actively navigating Wayfair towards a mid-single-digit adjusted EBITDA margin, which should allow us to consistently generate cash and put us in a position to cover our costs such as equity compensation for our employees and CapEx. At this profitability level, we will continue to invest aggressively in the future given the still large gap versus the current embedded profitability in our model. Once we get to mid-single-digit adjusted EBITDA, we intend to philosophically treat it as a lower bound for profitability, but not as the end goal. We remain committed to our long-term target of double-digit adjusted EBITDA. The COVID period showed clearly that we can operate at these levels, and we fully intend to scale beyond them over time. Even as we get sharper on our financial philosophy, our approach to the business is consistent with the last 20 years. We are building for the long term, but coming in each day, thinking about the next set of steps on the path there. With an addressable market approaching $1 trillion that remains meaningfully underpenetrated online compared to other sectors of the retail universe, we are truly excited about what the future holds for Wayfair. The pandemic changed the e-commerce landscape in many ways, but one thing that remains unchanged is the unique nature of our business, an end-to-end platform dedicated to the home category. The competitive advantage this gives us across logistics, assortment, shopping experience, brand building, and more has only strengthened our standing in the post-pandemic world. This is a category where scale begets success, and it's actually difficult periods like this that can serve as a springboard to become an even larger share of the market. Before Kate, Michael, and I detail the roadmap for a return to profitability, let me spend a few minutes walking through what we're seeing in the customer and competitive environment. Inflation continues to be a meaningful presence in customers' lives at a broad level. Our portfolio spans all income brackets, which is helpful since our professional, specialty retail, and luxury businesses are growing well and proving more resilient in this environment. Customers in the U.S. also appear relatively less impacted than our European customers, who are navigating the pressures brought on by the war in Ukraine and Brexit in tandem with inflationary pressures. Regardless of geography, it is not surprising that our mass customers are being more deliberate about where their discretionary dollars are going as prices at the gas station and grocery store eat up a greater share of wallet. For the past few months, we have also seen many of those discretionary dollars flow away from goods to services, especially travel, as a slow to start spring turned quickly into summer. Still, the home remains an important pillar in our customers' lives, and they remain in market looking for great deals. Unlike in 2020 and 2021, promotions and events are mattering more again. This is typical for our category, and we are seeing strong incremental responses to well-staged events like Way Day, Memorial Day, Fourth of July, and other special offers. Importantly, this is also translating into better everyday prices for our customers. In this environment, our suppliers are looking to move product as quickly as possible and have transitioned from having a dearth of product to having to deal with excess goods on hand. Through Wayfair, they reach an engaged and enthusiastic customer audience. When suppliers see success during key events, they're motivated to turn those promotional offers into everyday low prices by extending better wholesale terms and through taking advantage of other supplier-facing services that can help them gain prominence on our platform. All of this is happening as we speak. A wide selection of products is also crucially important in moments like these. We are observing some trade-down behavior within various classes of home, and the vast selection of our catalog ensures that we meet our customers' needs regardless of price point or style. Our ability to offer this broad selection has been substantially boosted by the large growth in our suppliers' inventory levels. We're seeing this play out in a couple of different ways. First, product availability is meaningfully improved versus this time last year when out-of-stocks or very long lead times on key items were a pronounced headwind. Key items are back in stock, more items are moving into our house brand collections and being extended to us with exclusivity features. In fact, roughly 40% of our unbranded U.S. sales now come from these products, nearly double versus last year. Second, we're driving more throughput through our own logistics footprint. CastleGate penetration, or the percentage of products sold that originates in a CastleGate location, is on track to recover rapidly to previous peaks and then exceed them. This is in part buoyed by our ocean freight forwarding service, where volume is slated to double from the prior ocean year. As these logistics components come together into a streamlined end-to-end infrastructure, we are able to make faster and more reliable delivery promises to our customers at a lower cost to us, which they then reward with higher conversion. All of these elements combined are already bearing fruit. For instance, our market share position recovered in 2022 relative to how it fell in the second half of 2021 when supply chain and availability issues clearly slowed us down. Customer feedback also speaks to increased satisfaction with NPS scores up meaningfully year-over-year and brand surveys highlighting our seamless experience and unparalleled selection. As I mentioned, the industry suppliers have experienced a dramatic shift in their positioning over the course of the last few quarters, from not having enough product to satisfy all of their customers to facing canceled orders from brick-and-mortar retailers and being over-inventoried. Wayfair has long prided itself in the way we build supplier relationships, and that partnership model is working to our advantage today. The team and I have met in person at various markets with close to a thousand suppliers over the last several months. It is very clear that they are leaning in with Wayfair, extending us more product and better wholesale costs, and using more of our service offerings. As they do so, we surface more of their product and pass through lower wholesales to the end customer, helping them turn inventory and maximize cash flow faster, which is especially critical to the many small businesses that make up our supplier base. However, unlike traditional retailers whose cost basis weighs on their pricing decisions and can become a liability in a softening macro. The advantage of our platform model is that by taking minimal inventory risk ourselves, our gross margin can remain resilient. We then have the ability to drive our gross margins higher through capturing incremental efficiencies, and in this environment, from some potential relief on transportation costs. We're seeing some of this begin to play out in our financials today, as was also the case in 2008 and 2009. This is critical as we think about navigating the path to profitability, which is the topic I would like to cover next. As the macro environment shifts, we know that our operating and financial plans need to evolve. Over the last few weeks, we articulated a clear set of goals to our entire organization, which include three key tenets. One, drive cost efficiency. Two, deliver best-in-class execution by nailing the basics. Three, earn customer and supplier loyalty every day. Through this lens, we are making swift decisions, prioritizing clearly, and looking to drive costs out of every pocket of the business. Some of this is already visible to you, and more will become apparent as time goes on. This is an ongoing exercise, and frankly, one that will serve us well in all sorts of environments as we evolve in the way we operate and grow Wayfair. An important advantage of our business model is that our P&L is highly variabilized. This means that gross margins, customer service, and merchant fees, and to a large degree, advertising, should be quite responsive to the trend in revenue, protecting Wayfair's unit economics and leaving room for potential upside through incremental efficiencies. In areas of more fixed spend, predominantly OpEx and CapEx, we have the ability and willingness to prioritize and sequence differently if need be. One visible example that many of you are aware of is the hiring pause that we implemented back in May. This gives us the opportunity to step back, assess how consumer demand is developing, and to react accordingly. Less visible to you are decisions such as pushing off market expansion plans in Europe in favor of reinforcing our focus on the U.K. and Germany, pausing the development of certain opportunities like registry, and flexing our planned logistics CapEx investments in response to changing revenue trajectory. As I said, we are increasing our cost efficiency focus across all facets of Wayfair in an ongoing manner. In companies of our size and scale, these opportunities take a quarter or two to begin to unlock, but we are highly confident that they will not only help us reach our financial goals, but also make Wayfair's execution even tighter. Even as we reshuffle some priorities, we are not trading off on important future growth drivers and enablers. The profitability levels we are targeting should allow us to both control our destiny and simultaneously invest for the long term, which has long been a key to Wayfair's success. While we tighten our belt in some places, our support is fully behind high ROI initiatives that will set us up for years to come. For instance, our technology organization continues to pursue the transformation agenda that our CTO, Fiona Tan, described last quarter. We are expanding our fast delivery capabilities. We are growing our flagship house brands and increasing more exclusive assortment. We're investing in top-of-funnel marketing channels and content to drive awareness and frequency among both new and loyal customers. We are also sticking to our test and scale approach in physical retail. In May, we launched our first AllModern store with a couple of additional locations under our specialty retail banners slated to open later this year. Next year, and on a limited basis, you will see us continue to experiment with new specialty retail formats to be followed by a larger Wayfair branded store concept in 2024. It is important to bear in mind that we are very much still in a learning stage here. Our goal is to use these handful of stores as a test bed for new ideas around how and where to bring the core competencies of Wayfair to a physical shopping environment. We believe the omni-channel opportunity for Wayfair is quite meaningful, but we intend to pursue it with our usual approach of testing, iterating, and proving out success before finally scaling. Across everything I've discussed just now, our goal has been to make clear the thoughtful and considered approach we are taking to the current environment. We've always said that we run this business for the long term, and nothing about that has changed. The size of our category remains tremendous. The field is fragmented. The structural march of shopping more online will continue, and Wayfair is uniquely positioned to grow and consolidate share over many years to come. We have a management team that has seen multiple cycles in all sorts of different businesses. We all recognize that in moments of macro volatility, like we are living through today, it is just as important to focus on the here and now as we steer through this period as it is to look forward. Doing so centers around returning to and sustainably operating in a free cash generative way. The timeframe to get there will evolve with the macro environment and our response to it, but we're very focused on the variables that are in our control, driving out excess costs while being there for our customers and suppliers, and driving the tightest execution possible. We also take confidence that our platform model is designed with the flexibility to weather unpredictable moments like this and emerge stronger for it on the other side. I'm gonna hand things over to Michael for a review of our financials and outlook. Thank you, Niraj, and good morning, everyone. I'm going to start today by walking through some of our high-level planning as we look out to the remainder of 2022 and into next year. Since late 2019, we have been focusing on becoming sustainably profitable and cash flow generative. Our progress towards this goal accelerated during the pandemic, but reversed somewhat over the last several quarters. As soon as we started to see the macro environment moving away from our going in expectations for 2022, we began taking swift action to reposition the business and a return to positive free cash flow in a timely and thoughtful manner. This is a goal that the whole executive team shares, including Kate, who is closely partnered with me as we continue the CFO transition in real time. We are laser-focused on what it takes to achieve this goal, which means not just returning to profitability on the adjusted EBITDA line, but getting back to a level that covers expenses like D&A and the cost of paying our employees in equity. To do this, we have undertaken a broad prioritization exercise across the organization, including a timing shift in our semi-annual planning process and taking a microscope to each part of the business as we reassess what the appropriate cadence of investment should be across a range of macro scenarios. As you can imagine, we're quickly bucketing projects across a range of priorities, focusing on uniting the organization against the most strategic items while sequencing out other initiatives. Niraj just listed off several of these earlier, and you'll see us enact more changes in the second half of 2022 and in 2023. Turning now to the second quarter results, as you saw in our press release this morning, Q2 total net revenue was $3.3 billion, representing a 15% year-over-year decline and a 10% sequential increase from our net revenue in Q1. The second quarter fared slightly better than where we had been trending as we gave our quarter to date disclosure back in early May. As customers responded to promotional events in a positive way and our suppliers leaned in with more aggressive wholesales. On a segment basis, U.S. net revenue declined 9.7% from Q2 a year prior, while international net revenues declined 35.7% year-over-year and 34.4% on a constant currency basis. Clearly, a far stronger U.S. dollar year-over-year is a translation negative for us as it is for other multinationals. I'll now move further down the P&L. As I do, please note that I'll be referencing the remaining financials on a non-GAAP basis, which includes depreciation and amortization, but excludes stock-based compensation, related taxes, and other adjustments. I'll use the same non-GAAP basis when discussing our outlook as well. Q2 gross margin was 27.4%, which is consistent with the 27%-28% range we've targeted over the last several quarters. Customer service and merchant fees were 4.7% of net revenue for the second quarter, in line with our guided range, reflecting higher compensation costs compared to last year. Advertising as a percentage of net revenue was 11.5% in Q2, slightly higher than our guidance of 10%-11%. We continue to spend efficiently across our paid channels, but a set of mix effects drove the slightly higher outcome in advertising as a percent of net revenue this period. These included, first, a shift in the share of direct versus paid traffic towards paid in this environment. Second, our conscious choice to continue to invest in top of funnel channels to drive greater awareness, share of voice, and ultimately share of wallet. Third, brand mix with our fastest-growing brands operating at higher levels of spend, thanks to also higher gross margin profiles. Let me reassure you that we are paying close attention to the crosscurrents at play here and are continuously monitoring our efficiency parameters and the ROIs generated within them to make sure we're striking the right balance in this fluid environment. Our selling, operations, technology, and G&A or OpEx expenses totaled $567 million. As we telegraphed back in May, this was driven in large part by compensation for our existing team, as well as new employees joining Wayfair. The impact of the hiring freeze we implemented in May will be reflected more in the Q3 results, as I'll discuss in a bit. Though we always speak to these numbers on a non-GAAP adjusted basis, you might also be wondering about the $40 million one-time non-cash impairment charge this quarter. Our requirements for corporate office space have changed post-pandemic. We now have more excess space to sublet out, and since the commercial real estate market is soft, the charge reflects our reassessment of the expected income stream from this property. All combined, Q2 adjusted EBITDA was -$ 108 million or - 3.3% of net revenue in line with our guidance. In the U.S., adjusted EBITDA was - $28 million for a - 1% margin, while the international segment booked adjusted EBITDA of - $80 million for a -1 6.4% margin. Moving on to the balance sheet and cash flow, we ended the quarter with $1.7 billion of cash in highly liquid investments. In Q2, net cash from operating activities was - $115 million, and free cash flow was - $244 million after factoring in $129 million of capital expenditures. Let's now turn to the outlook. I want to start, as we have in quarters past, with some details on quarter to date performance. After which I'll walk through the rest of the P&L for Q3, while adding in some qualitative color on our expectations beyond that. Across the third quarter so far, our gross revenue is down about 10% year-over-year, which would indicate a break from the typical seasonal pattern where Q2 and Q3 are typically similarly sized. Based on the current trend, we would expect Q3 net revenue to be below Q2 levels. Unsurprisingly, we see this weakness being driven by the impact of macroeconomic forces on consumers and reflected in the growth of our category overall. Moving to gross margins, we believe that we will have sequentially higher gross margin and would point you to the upper end of our 27%-28% range. We remain confident in the sustainability and upside potential of this range, even in a softer macro. Thanks to the multiple drivers we have in place and the inherent flexibility of our inventory-light platform model. We expect customer service and merchant fees as a percent of net revenue between 4.5% and 5%, and advertising as a percent of net revenue at approximately 11%. We forecast SOTG&A or OpEx dollars between $550 million and $560 million in the third quarter. We began a hiring freeze in May to slow OpEx growth, so you are just beginning to see the financial impact start to flow through. Simultaneously, we undertook a review of all the various costs driving this line and are actioning multiple work streams to drive incremental savings across the board. We will not be quantifying the expected savings and timing of these for you today, but instead will speak to what's in flight next quarter and over time. You should expect OpEx dollars to decline further period-over-period in Q4. If you follow through the guidance I outlined and assume that our quarter-to-date revenue trends persist for the remainder of Q3, that would translate to adjusted EBITDA margins in the negative low- to mid-single-digit range. To be perfectly blunt, we are not satisfied with this outcome. However, course correcting a company of Wayfair's size in an environment that is changing as rapidly as this one requires some patience. We are moving quickly to adjust our plans and would expect you to see substantially more financial progress, which will flow through in Q4. Let me quickly touch on a few housekeeping items for Q3 before moving to discussing our strategy for the quarters to come. For Q3, please assume the following: Equity-based compensation and related taxes of $127 million-$132 million. Depreciation and amortization of approximately $91 million-$96 million. Net interest expense of approximately $6 million-$7 million. Weighted average shares outstanding equal to approximately 106 million. CapEx in a $110 million-$120 million range. With that framing, let me further illuminate how we are planning to navigate Wayfair into 2023 and beyond. We're diligently moving the business to generate positive free cash flow, though this will take some time, and the path and actions required to get there will be dictated by how the macro evolves. In the near term, we're planning for Q4 revenues to build on Q3 levels consistent with a typical holiday period. Provided this occurs, we would expect our adjusted EBITDA losses to narrow considerably before the end of the year, and then to make substantially more progress towards our ultimate goal from there. It is true that our timeline to get there will vary depending on how the top line fares in the macro environment. We're committed to moving steadfastly in this direction, and our liquidity position enables us to proceed responsibly down this path. With no meaningful maturities until late 2024, we have sufficient time to ensure multiple options are at our disposal for how to manage our capital structure. I want to wrap up by underscoring yet again how dynamic and tricky a period this is for any company to navigate. It's also at moments like this where you must acknowledge that our internal confidence is bound to build before yours on Wall Street. Let me be very clear. We are highly confident that our consumer and supplier focused platform model, coupled with our team's clear-eyed assessment of the challenges and opportunities before us, and our willingness to take action, will only make Wayfair operationally and financially stronger as we proceed over the coming quarters. As I approach my retirement and as a shareholder myself, what reinforces this view for me is the talented leadership team fully behind our goals. Key among this group is Kate Gulliver, who is actively architecting and underwriting these plans with me and the team, and who will be speaking to you next quarter about the progress we're making in her new capacity as CFO and Chief Administrative Officer. Next, we're going to break from tradition slightly. Rather than having a deep dive on a single part of the business, we thought we'd speak to some of the key questions we've heard from investors over the last few months. Before proceeding to the live Q&A, Niraj and Kate are going to address these upfront so that we can get into other details later. Let me hand it back to Niraj first. Thanks, Michael. Over the past several months, many of you have asked about the path to profitability and how long it will take us to reach our goals. Let me first be clear about our financial priorities. We are steering Wayfair to be cash generative. We are also establishing a lower bound on profitability that we will stick to all while working to drive margins even higher. Why is this lower bound important? At a mid-single digit adjusted EBITDA margin, higher in the U.S. as international continues to mature, we should be able to cover expenses like depreciation and amortization associated with CapEx and begin to mitigate the dilution associated with equity compensation, all while continuing to invest in future growth initiatives. While we are perhaps being more pointed about how we're talking about this practice is not new to us. Steve and I operated this business in a cash generative way for more than a decade when we started, and starting in 2019, we have been moving Wayfair back in this direction, admittedly with a lot of volatility in between. Which brings us to how and when we will get there. You should expect to begin to see progress starting in Q4. The reality is that this is an iterative exercise. We are philosophically committed to this set of financial goals, which means that we are constantly evaluating what's happening to the customer and the economy, the timeframe over which we can responsibly get to these levels, and adjusting as needed. The macro can help or slow us down some, but we are not relying on solely the top line to get us there. As I mentioned earlier, we're in the fortunate position where large parts of our platform business are variable, designed to move more or less in tandem with revenue. On other fronts, you're seeing us adjusting in real time, and we will continue to do so. In thinking through our options, we're balancing moving quickly with doing so responsibly for the company with nothing sacrosanct, but also a strong awareness of the elements that make us unique today and will set us up for success in the years to come. Next, let's tackle a slightly different question having to do with how customer acquisition costs are trending. As many of you know, when we study CAC, we are looking at whether we are staying efficient in paid advertising channels, both more transactional ones like search and PLAs and upper funnel channels such as TV. Our approach to deploying advertising spend is based on efficiency targets. We are orienting around an effective payback target in each channel. If we can't deploy dollars within that payback envelope, we won't spend them. This means that we're constantly controlling for CAC by channel. That said, there are mix effects that layer on top of this that happen to be headwinds to overall CAC in this moment. Michael spoke about a few of these mix elements earlier, but let me expand. First, upper funnel channels like TV, online video, and catalog are scaling. Though they can have longer lead times, these channels are important vehicles to drive brand and category awareness. As a category leader, we have a unique opportunity during this time to be visible to new and repeat customers, which should translate into a higher share of voice as others pull back and ultimately to market share gains. Secondly, in softer macro periods, we unsurprisingly see the volume of free and direct traffic to site decrease. This will optically make advertising grow as a percentage of net revenue, though we are still deploying dollars against paid channels efficiently. This is also a temporary phenomenon. When category demand recovers, direct traffic trends will reverse and drive incremental leverage in advertising. Third, our fast-growing brands are those that operate at higher levels of advertising. For example, Perigold, which grew net revenue at approximately 30% year-over-year in Q2 and is scaling quickly in general, operates at a higher advertising level in percentage terms than does Wayfair. Part of that is due to its smaller repeat base and its higher cost of brand marketing as a percentage of revenue. It is also because of its higher level of profitability, which justifies our ability to pay more to acquire customers while remaining well within our efficiency parameters. Overall, our unit economics remain very sound and well above pre-pandemic levels, even after accounting for these moving parts to the near-term cost of customer acquisition. Our variable contribution margins are substantially higher, driven by gross margins, which means we can spend more to acquire and stay well within our payback parameters. We think we are striking the right balance between the elements that we explicitly control, like efficiency targets, and some of the outputs that are less controllable, like mix. We're also continuously monitoring and adjusting from a top-down perspective if necessary. For instance, we are sharpening our efficiency targets in areas like top of funnel to account for lower predictability in this environment. Rest assured, we will always closely monitor and react to trends across all of our channels. Now I'll hand it over to Kate to discuss our latest thinking on liquidity. Thanks, Niraj, and good morning, everyone. I'm excited to meet some of you and to reconnect with others over the coming months as I step into the CFO role. One question we know is top of mind for many investors right now is our liquidity profile and capital structure. As we sit here today, we see our liquidity position as healthy. We ended the quarter with north of $1.7 billion of cash and short-term investments on our balance sheet. Don't forget that we also have a revolving credit line of an additional $500 million available to us. Where we are right now at $2.2 billion-$2.3 billion in total liquidity and with no meaningful near-term maturities is a relatively comfortable place to be. As you also heard us say, we're very focused on getting to a state of positive cash flow as quickly as practicable so that total liquidity grows. We have the benefit of a cost structure that is highly variable, options on how to control elements like OpEx and CapEx, and also the benefit of a net working capital flow that typically works in our favor. Getting to a position where we are sustainably generating cash is very important to us, but it is not an overnight thing for a business of our size. However, we are aiming to make steady progress over the coming quarters, which will begin to show up in the financials in Q4. We hope this is helpful additional color to frame our thinking. Let's now move to the open Q&A. Please feel free to direct your questions to Niraj, Steve, Michael, and to me. At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We ask that you please limit yourself to one question and one follow-up question, and we will pause for just a moment to compile the Q&A roster. We will take our first question, pardon me, from Steve Forbes with Guggenheim Securities. Your line is open. Good morning, and thank you all for the call today. Niraj, I wanted to start with the supplier base, right? You mentioned how the suppliers are using more of Wayfair's services offering, but maybe if you just expand on how they are engaging, and what's different today than last year, whether they're competing for certain services via lower wholesale cost, just any additional color that helps us better understand how the supplier community is viewing Wayfair today. Yeah. Great. Thanks, Steve. Yeah. What I would say is if you think about our platform business model, one of the things we mentioned a couple quarters ago is it generally is an advantage model. The only time it's disadvantaged would've been the example in the back half of last year when there's too little inventory relative to demand, which basically almost never happens. What's common is that there's roughly a balance of the two or in these kind of tougher macro scenarios where there's far more inventory than demand. Well, that's actually the scenario we're in now. Suppliers basically have too much inventory, and so what we're seeing happen is our inventory availability levels have gone up. Suppliers have too much, and they want to sell that inventory. What do we see them do? We see them using some of the pricing tools we have on our platform to basically allow them to control their price to be aggressive where they wanna move inventory. That creates value for the end customer, drives up conversion. We're seeing them become increasingly large adopters of CastleGate. CastleGate basically facilitates them getting high speed badging, which drives up conversion and also facilitates lower retail prices because the outbound ship cost drops, which also drives up our conversion. As an example, there are two-day speed badging is up about 10 percentage points. We're seeing them lean in on aspects of the model. Another piece of the model that's still pretty small for us relative to others is advertising, and that's something that has been growing over time. Frankly, we're seeing a lot of growth and interest there too, as we're adding sophistication to the product, but frankly, as suppliers are in a position where they wanna sell more goods. These are kind of the types of things that are happening. They're advantages we have relative to others, and frankly, you know, it's kind of the inherent strength of the business model. Helpful. Then just a quick follow-up, really about international, right? Given the comments about balancing the long-term investment and the path of achieving a mid-single digit EBITDA margin. Curious, Niraj, just additional high-level comments on how you're thinking about the broader international opportunity. Has it changed? You know, should we expect you to sort of pause expansion for you know a multi-year period of time into new markets and really just focus on the core that you're in? I mean, are you seeing anything that deters the opportunity that you see in the U.K. or Germany? Any higher level color as you're thinking about the broader international opportunity. Yeah. Thanks, Steve. Yeah. Right now, there's no question that the macro environment and the international markets we're in is tougher than even the macro environment in the United States, and then that's certainly not great for that segment of our business. That said, one of the things I did mention in the prepared remarks is we have been very thoughtful about in this period of time, what do we focus on, and what does that mean we need to pause or where do we narrow our focus? Frankly, in the European market, we said, let's focus on the U.K. and Germany. We built a leadership position in the U.K. We're on the road to that. We're not there in Germany. Well, let's pause moving to other international markets in Europe. Let's pause our expansionary focus in Europe. Let's focus on our core. That's what we're doing there. The way we think about it is, you know, there's nothing that we decided yesterday that we'll automatically remain committed to today. We're gonna constantly reassess what we're doing, but we feel very good about the strategic long-term focus bets that we have in the company. We're also very cautious given the macro of making sure that we're not expanding them, and in fact, anything we're gonna continue to do that we think makes sense in light of how we're thinking about the P&L, how we wanna drive the EBITDA profitability, how we wanna drive the free cash flow, and we wanna show that steady progress there and get there, frankly, in a timeframe that's, you know, we think quite, you know, fast. This is the balance that we're taking. Thank you. We will take our next question from Peter Keith with Piper Sandler. Your line is open. Hey, thanks. Good morning, everyone. Appreciate all the extra commentary. On the mid-single digit low threshold EBITDA margin target, obviously putting a timeframe on that's gonna be impossible. What are the thoughts on the revenue growth needed to achieve it? Could you show significant progress over the coming year if revenues were to remain flat year-over-year to reach that goal? Yeah, Peter. I think on one hand, you're absolutely right, the macro does affect it. However, I will say our plan on making progress to get to EBITDA profitability and positive free cash flow is not contingent on expecting the overall revenue to expand. Does the shape of the curve get affected by the macro? Absolutely. Is our plan hinging on revenue growth? It, it's not. Why do we say it that way? Well, do we expect to see us take share and get revenue growth? We do. However, the macro is very murky, so to bet on a plan that requires a certain amount of revenue growth, we would view as risky. When we say you're gonna see steady progress, that does not assume that the market turns right around. Okay, that's helpful. A follow-up question maybe to what Steve asked, just around the supplier services. I wonder if there's any quantification you could provide just to show us some progress that you're making. The CastleGate revenues have come down to about 20% of total, at least that was as of Q4. Maybe update us on where you stand today, and any quantification too on that, the spend on advertising, and maybe how that's increasing as a% of revenue would be very helpful. Sure. On CastleGate, what I'll say is, you know, CastleGate penetration is ramping, and it's been all year increasing at a nice pace. When we said that it's on track to hit record highs, to meet old record highs and then exceed them, we see that happening not over the long term, but rather over the near term. We're seeing very good adoption there. Frankly, that adoption was taking place even before the, you know, demand really started to turn down, and then it's only accelerated since then. Suppliers are very interested in benefiting from the speed badging, benefiting from the lower retails, the lower outbound ship costs, the customer conversion. That CastleGate penetration is, you know, I'd say meaningfully higher than where it was at the beginning of the year, and it's on track for these types of records that I mentioned. On advertising, we haven't given out an exact number on that. You know, this is not super helpful for you to quantify, but I'll just say it's certainly growing faster than the overall business is growing at a, you know, very, very fast rate relative to the overall business. It's still small, quite small relative to what we think the potential is. It's still very much in its early days. Yeah. Said another way. Okay. on advertising. There's still a huge upside on gross margin in it, in that product. Okay. Thanks so much. Very helpful. We will take our next question from John Blackledge with Cowen. Your line is open. Great. Thank you. Two questions. First on just the revenue trends thus far. Could you just discuss the drivers of the current revenue pacing in 3Q? If I heard it correctly, Michael, I think you referenced that 4Q net revenue would likely be up quarter-over-quarter. I'm just wanting to check on that. On the 3Q gross margin, what are the kind of drivers that provide confidence that gross margin will come in, you know, kind of at the high end of the 27%-28% range? Thank you. Great. So let's do revenue trends first. Let me say some thoughts and Michael can comment on his quote. I think everything you said is correct. Revenue trends. You know, we said in the script the quarter to date is down roughly 10%. The revenue trends, you know, frankly, we're seeing good traction on revenue, meaning we're seeing customers being engaged. The macro is clearly softening. You know, there's been a shift from goods to services. You know, things like, for example, the percentage of revenue coming through the app is, you know, it's at an all-time high except for the first two COVID quarters. There's things like that that are happening that we think are positive things that we're seeing with our customer base that is engaged, but engaged within the context that home goods is not top of the agenda right now. We're also seeing that as suppliers are leaning in on the platform to sell goods, as I mentioned, they're over inventoried, they're lowering retails. What we're finding is that that creates an opportunity for customers to get more value. The speed of delivery of these items is up, which is a great customer kind of a experience driver. We're then, you know, creating these sale events and these promotional events. For example, we launched one a couple weeks ago called Flash Deal Fridays. It's only two weeks old. You know, it'll build up over time, but it's off to a very good start. What we're doing is we're showcasing that value to customers. Customers are then quite curious. We're getting good reaction from customers coming in, browsing and buying. This is a playbook that we've used in the past, and it works very well because customers, it's not that they don't have money, but they sort of need an excuse to spend it. When they see value, when they see something interesting, they don't want to pass it up, that's when they buy. We're seeing positive momentum on revenue based on that. We expect, of course, fourth quarter to be bigger. Michael, anything? No. I would just confirm what I said in the prepared remarks, John, that we do expect that the fourth quarter. The fourth quarter is always a better quarter, bigger quarter for us. It's the biggest share quarter. Obviously, the macro environment is super uncertain. But we feel pretty bullish about when we look out from Q3 to Q4. As Niraj just sort of talked about a couple times now, I think the underlying business model that we have and how that performs in this kind of environment sets us up extremely well, both to serve our suppliers but also serve our customers, right? When they are looking for the best deal on something that they need. I think that's the other sort of to your other question about, like, why do we feel confident sort of talking about the upper end of our 27%-28% gross margin range. It's really because this is sort of where our business model can shine when there's sort of an oversupply in the marketplace. We're the best place for suppliers to sort of move that product, and we are the best place for customers to come find deals on the things that they want to buy. On the second part of your question, John, about gross margin. You know, we talked about, you know, starting years ago, we talked about this, there being, like, a 1,000 basis points runway that we could quantify between four big levers. One being as we grow in volume, the efficiency associated with growing in volume. The second pillar was around as items become increasingly exclusive and we lean on red carpet merchandising, the demand response curves there and the price elasticity. Third was a pillar around logistics, and the fourth was the pillar around supplier services, of which, you know, CastleGate Advertising would be supplier services. You know, back then, I think our gross margin was more like, you know, 25%. So obviously, where we are today is higher than that, but there's still a lot of runway left. What you're gonna see happen, like, when we talk about being at the high end of the range, well, some of these pillars, like I talked a little bit about how supplier service adoption is growing, earlier in the call. Another example is in logistics. You know, logistics expense had grown. Something like over-the-road trucking, you could see with the, you know, there's an index of dry van rates. You could see how that grew and how that's falling now at a fairly fast pace as some of the congestion is behind us and is so pricing is loosening. There's a bunch of drivers around efficiency, around transportation that will accrue to our gross margin. I think it's important to just remind people that in our platform model, unlike a retailer who bought inventory X months ago to sell it today, and so they're locked in at some price, and they're locked in with a certain set of goods, and so if they want to discount it then comes out of their margin. Of course, it helps them in supply-constrained environments like the end of last year, but those are pretty rare. Generally, it hurts you. Well, this is an example where it hurts you. They need to choose between discounting and taking it out of their margin or trying to sell it based on the price they bought it at and the price they expected prior to sell it at. What happens in our model is, you know, we don't own the inventory, so of course, that hurt us last year, but it helps us this year. Our gross margin has this inherent stability of the platform model, but then it adds these benefits that we can take advantage of. I just want to remind you, there's still a long runway past that. Thank you. Thanks so much. Thanks, John. We will take our next question from Oliver Wintermantel with Evercore ISI. Your line is open. Thank you. Yeah. Michael, thanks very much for all the help over the years. Kate, looking forward to working with you again. My question was just a clarification question from the guidance for next year when you said EBITDA positive. Do I hear that right that most of that should probably come just from reduced costs and most of that from the OpEx line? Is that correct? Let me just make a couple comments, and then I'm gonna turn it over to Kate or Michael to maybe specifically answer your question on what they said for the guidance. What I would say is the way to think about it is we have a plan to get to EBITDA positive and then to free cash flow positive that really is not counting on, you know, revenue growth being the reason and the way we get there. In that sense, you would say, you know, that there are internal drivers past revenue growth. Now, I will highlight cost is one element of it, and cost can manifest as lower OpEx, for example. It can manifest also, for example, as higher gross margin, and we just talked a little bit about gross margin. Think about all the different aspects, adding together to why we can get there without, you know, revenue perhaps growing dramatically. Obviously, we do expect revenue to grow as well. You know, frankly, there's more gross margin and more things over time that we expect to get also. There's a number of pieces that add together to this trajectory that we say you'll see steady and continued progress. We talked about a level obviously much higher than EBITDA zero that we're working towards. Michael or Kate, I don't know if you want to add anything. Yeah. First of all, Oli, thanks for the nice comment. I do think that as I mentioned in the prepared remarks, we think there's a lot of opportunity to really examine everything in our cost structure and understand where we can run in a more efficient way. At the same time, still protecting the investments we're making that are really critical to sort of the long-term growth and the long-term success of the business and the opportunity. I want to be careful not to sort of say it's, like, in this one line, right? It's, like, not just OpEx or not just CapEx, but rather this is a more holistic view looking at everything we're doing, understand what the most important priorities are, making sure that we've got all of our people and teams and resources focused on those. On the things that we can either push off to the future or cut out completely, how do we do that and do that in a pretty thoughtful way? You can't do all of that instantly, which is why you're not seeing, you know, the change in the results in the Q3 guide. When we look out over the back half of 2022 into 2023, I think that's when you'll start to see some of that performance flow through. Yeah. Great. Thank you. The only one follow-up quickly is on customer retention. Looking at the active customer trends and how you try to reverse that and what you've seen in retention rates. Thank you. Yep. There, what I would say is, you know, there's definitely. When we say the macro is soft in home goods, you know, that then has an effect to our customer base, the degree to which they're proactively engage in searching. But what I would say is we're seeing, you know, there's kind of a. The active customer trend requires them to buy within 12 months. There's predecessor trends around, like, are they still engaged? Meaning are they opening, you know, are they opening the email? Do they have the app? Are they engaging in the app? Are they visiting the site? Are they clicking on the emails or clicking on app notifications? And like, for example, we have 60 million people who downloaded the app, and so we kind of can measure these things. We have numbers that make us feel good about how we're doing relative to the macro demand. The truth is, the macro demand is soft as well. You know, I think that's what you're seeing in that number, is the net of the two. Got it. Thanks very much and good luck. Thanks, Oli. We will take our next question from Anna Andreeva with Needham. Your line is open. Great. Thank you so much, and thank you for all the color this morning. We had two quick questions. Just on quarter to date, as a follow-up. Curious, what kind of trend are you seeing in Wayfair.com in the U.S.? You guys had previously provided that color. And then secondly, you mentioned that you're seeing some trade down in the portfolio. Can you talk specifically what categories that's being seen in? And are you adjusting prices lower as a result? Thank you so much. Yeah. Thanks, Anna. On quarter to date, I mean, one thing I'd say, you know, Wayfair.com is a particularly large piece of our business, and so it's very hard for the total business to move super far away from Wayfair.com. Like, for example, last quarter, you know, the U.S. segment I think was down like 9.7%. Wayfair.com was down just a tick higher than that, right? Even though we have other pieces growing in the U.S., and so Wayfair.com obviously is a piece that's shrinking, it can't be far from the total U.S. number. Well, international is still performing far worse than the U.S. is. When you take the quarter to date number, you can kind of use the kind of international U.S. splits that you've been seeing and kind of think about it that way. That U.S. number is basically gonna tell you a Wayfair.com number. I think that's the way you should think about that. You know, we're obviously paying keen attention to that. On the trade down, the way to think about that is when we talk about trade down, what we do is we don't look at total AOV, we look within a class of goods. In other words, the average price of a bed or the average price of a rug, or is that moving down. We, you know, what you see is like, generally you're looking for kind of a pattern across the board, which is what we see in times like this. It's not that specific types of goods are getting traded down, other types of goods aren't. It's more a little bit across the board. Now, in terms of pricing, this is again the benefit of our platform model. The way pricing gets reacted to is that suppliers decide what they wanna do on their wholesale price. We're seeing suppliers basically leaning in and discounting their wholesale price because they have too much in the way of goods and they wanna sell those goods. We then pass that along to the customers. The customer gets that benefit. When suppliers adopt something like CastleGate, which increases speed to the customer but also lowers the outbound ship cost, that manifests also as a lower retail to the customer. That growing CastleGate penetration helps drive down retails. This can all be consistent with our gross margin rising, which is the other thing I was talking about. That's the key thing that kind of linked together. Customers are getting better value for sure, and at the same time our gross margin is rising. The only other thing I'd add there is that I do think that in a trade down moment is where you really see the benefit of our model of having extraordinarily broad assortment, right? Letting suppliers effectively compete in the marketplace, right? That you can offer the customer who wants the trade down both the lower priced version of that product. Also for the supplier who might have the over inventory to the higher priced version of that product. If they wanna push the wholesales lower and compete at that trade down level, they have the ability to do that across the platform. I think that's part of what we're seeing as well. All right. Thanks so much. Makes sense, guys. Thank you. Ladies and gentlemen, that concludes our question and answer session for today. At this time, I would like to turn the call back over to management for any additional or closing remarks. Well, great. Well, thank you everybody for joining us today. We are, you know, happy to spend the time with you and excited about your continued interest in Wayfair. Thank you very much. Ladies and gentlemen, this concludes today's conference call and we thank you for your participation. You may now disconnect.