Hello, everyone. Welcome to day one of the Global Consumer and Retail Conference. I am Simeon Gutman, Morgan Stanley's hardline, broadline, and food retail analyst, and it is our pleasure to welcome Wayfair here, Niraj Shah, CEO, co-founder, co-chairman, and Kate Gulliver, CFO and CAO. I'm going to read a quick disclosure, make a quick intro, ask the first question, and sit down. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Wayfair has been one of the most successful stocks in consumer in the last 12 months. The premise of market share taking and a coiled-up P&L has paid off, and we are seeing that leverage start to come through more meaningfully. I think the premise of investing in the brand, having a scalable model, are all coming to fruition. My first question: 2025 has been a better year than 2024 for the broader home furnishing industry. Looking back at how the year has played out, can you talk about what are some of the biggest surprises versus what you expected, and what could 2026 look like? Thank you. Simeon, thanks for having us here, and everyone in the room, thank you for joining and your interest in Wayfair. What I'd say about the category is the category had three years of relatively significant declines, double-digit-type declines for three years in a row. The fact that this year is no longer declining at that rate, and say it's flattish year over year, I wouldn't say that that's really a great market, but I'd say it's sort of bottomed out. Why could that be the case? One is the housing market's been anemic since 2022, so that's sort of now that's hurt the demand in the space, but it's kind of bottomed out. I think consumers, as the years kind of post-COVID continue to move along, we're a category where people are always buying new things to freshen up their house, and they'll have needs. Maybe their child's now at an age where they need a desk or whatnot, so things continue to evolve and change. I will say the category's cyclical, and the upturn and sort of the tailwinds, that's still ahead of us, so we're not really seeing the tailwinds. What we are seeing is that it's a category where it's quite a large category. Our TAM between the four countries we're in—U.S., Canada, U.K., Ireland—is $500 billion. It's a pretty big category, and it's very fragmented. It's unusually fragmented, and that's just a historical legacy. What we're seeing is that a lot of the retailers that kind of are smaller and up through the middle, they're increasingly distressed, going out of business, recoiling, and that share comes up for grabs. There is only a small number of folks who are making the investments like we are in logistics and technology and the brand where you are actually putting forth the consumer proposition where you can take share. Really, the story of Wayfair this year is less about the category having tailwinds, and it is more about what we have been doing and what is driving it. I think the category is a cyclical category, and the tailwinds are yet to come. Yep. As you mentioned, or as I mentioned, Wayfair has experienced one of the most significant inflections in demand across the, call it, discretionary space. Your guidance for the fourth quarter suggests continued improvement. What's your view of that growth into holiday season? There's this premise that you're going to always grow. We've had it. I think you've had it, that you should grow above the industry, and now you're getting to that mid-single-digit threshold. Is that the right frame of reference that we can compound going forward? Yeah. Let me just make one comment, and I'll turn it over to Kate to answer your specific question. The Wayfair, if you look at the last few years, the Wayfair history is sort of COVID had an initial bump. That was sort of hard to handle, and as we kind of came out of that bump as a sort of discretionary spend moved to travel, entertainment, leisure, the ocean freight inflation hit, and then housing became more anemic. We basically said, "Hey, look, we need to get the company back to its roots in terms of being efficient. We'd gotten it overbuilt, and we had a big technology replatforming project underway." A lot of what we did from 2022 through 2024 was honing the cost structure, getting the execution back to the place that it historically had been, and finishing the tech replatforming. We entered this year back on the front of our feet. Those investments and that effort of what we had done, not only did the cost structure have come down, but just the execution and the operational sort of integrity of the business was back, and the technology was now modernized to the point where we could actually move back towards a lot more feature function, a lot more half of our white-collar workforce, so 2,700 or so people roughly out of the 5,500 people, are technologists, so software engineers, product managers, data scientists. This has been a big competitive advantage of ours historically. We're back to on our front feet on that. Our story is a little more about what we've been doing. In terms of your question, and that's kind of where you're seeing the momentum building, in terms of guidance, let me turn it over to Kate. Yeah. I mean, I think you sort of asked two questions, like where do we see sort of longer-term growth, and then how do we think about '25 specifically? Obviously, for the quarter, we guided mid-single digits, and I think that really contemplates a few pieces in that guidance. As we looked at sort of obviously the momentum of the last few quarters and us really taking share to what Niraj said earlier, we had not really seen a market recovery. We've seen a sort of flat line and then our share gains. If we look at it sort of on a year-over-year compared to the fourth quarter of last year, there are two pieces that influence that a bit. One, the fourth quarter last year was actually relatively strong compared to the prior quarters. You all may recall that we stepped up advertising significantly in the fourth quarter last year. We are comping, and now we have brought that marketing spend level back down. That is because as we looked at where efficiency lines were and as we thought about the appropriate mix of the marketing, that was where we were testing a number of things. We think it is appropriate to have brought it back down. That has helped drive that contribution margin at that 15% level. Obviously, if you have some inefficient spend in the quarter, that may have inflated the quarter last year. It is important to know that we are comping over that right now. I do think on long-term growth, we have long talked about that getting back to double digits. That, of course, is comprised of many things, right? It's the work that we think we've done this year that is on the changes that we've made around Wayfair Verified and loyalty and the site experience, huge improvements in the site experience as Niraj has spoken about that over time should build on each other, but also some sense of a market recovery, of course, as well. The home furnishing market, it depends if you add white goods or not, could something like mid-single digit growth. You mentioned that there's always people refreshing things at given times. Is there any detection of replacement cycle beginning? How do you decode that even if it's happening? Yeah. I do not think that that is the type of thing where there is a light switch in terms of the effect you will see. I do think you said, "Okay, so the category had three years where it was declining, say, roughly 10% a year, and now we have a category that is more or less bumping along the bottom, call it flattish." It is still a big category. You have, call it, round about $500 billion or $450 billion or whatever of spend. What is that? A lot of that is just the ongoing needs customers have. Some of that is going to be project spend. It is going to be comprised of all this, but what is missing from that is a lot of project spend and a lot of moving-related spend that would normally occur if we had a million more unit sales on existing home sales. I think what you're calling the replacement cycle has to be moving along, right, for that spend level to be where it is. Again, it's not like a significant tailwind where you're saying it's taking off, right? Yeah. It's not like we look at a certain category and say, "Oh, that category's hit replacement." You don't see anything noticeable like that. No. Again, categories replacement of any given item we sell is a big bell curve distribution, right? It's not really like people replace at a specific point in time. Yeah. Tariffs, pricing, elasticity, a couple of things all in one. First, I remember when we had government data, and we'll get it again, there was a noticeable step up in home furnishing demand, right, late spring, and it was a little bit more forceful than other categories. It could have been related to pricing and consumers buying ahead. Not sure that's playing out. Again, you probably look at credit card panels. So what's happening with, I guess, industry demand? Second, as pricing comes through, and again, you're not controlling it. You're just the marketplace in theory at this point. Have we seen the worst or the peak of inflation, and what's happening with like-for-likes, and how much longer can we see that curve persist? Yeah. In terms of what we saw so far this year, we didn't see any significant pull forward of demand. What we saw were a couple of pockets of time, but the pull forward was in very specific categories and just measured in days. It didn't amount to very much at all, so very de minimis effect of that. I think tariffs in general have not driven consumer behavior to drive a lot of purchasing earlier. It sort of is what it is. I think consumers also didn't necessarily know what to do with that. "Okay, tariff, what does that mean? I don't know. In terms of the reality of what's happened, a lot of the tariff-related costing has gotten absorbed either by our suppliers because they built in a higher ocean freight price, so they used up some of that, or they're willing to take lower margins on their existing line, and they're just focusing on new product development to drive new products in at a higher price point, or the countries on the other side where maybe they've provided export incentives to help some of these companies, or the ultimate producers who have been able to eat some of this. What we've seen come through in terms of the increases that have come to us, which then have gone to the consumer, it's been relatively muted relative to the kind of spreadsheet math you would do of saying what it should be. What I think, again, it is, is that the suppliers are pretty savvy. They know that it's a lackluster demand in the market, right? I said the category's anemic. If you just kind of take that to heart and you're a supplier of these goods, you know that if you raise your prices faster than your competitors raise their prices, you already don't have a demand level you like. You're going to lose demand pretty fast to your competitors. The reality is you need some level of demand for everything to work, for you to get the costing you're getting from the factories you buy from or from the factories you operate. I would say there's a lot of wariness to be aggressive on passing through costing. As much as they can eat, they're eating. I think where you're going to see costing slowly trickling over time is as new products get introduced in the market. New products always start with higher margins. Then as the styles get more competitive with others, the margin rate suppliers get on these items reduces. That's a normal cycle. I think where generally suppliers are going to look to recoup margin is going to be on this new product development cycle, and that does not happen overnight. Even if they want to be more aggressive, introduce twice as many products in the next year as they would normally, they think about things like in the next year. They do not think about doing that in a month or two or whatnot. I think it's playing out, and I just don't think there's going to be a big pricing shock that will have any sort of dramatic impact. I think the big things that are really driving the behavior of the category at a macro level is going to be the issues associated with housing, the overall health of the economy, consumers' wage situation, consumer sentiment, these types of things. Again, the big price for us is while we, of course, root for the category to be healthy and have tailwinds, the big price for us is really about how we take market share. Really, the gains we've been putting up and accelerating are on the back of just taking more and more market share. We think we can, if you look at where can we be in 6, 12, 18, 24 months, we think we can really drive the growth rate through that vehicle. I want to get to AI in a second and thinking about market share, but I guess I'm fascinated given the supplier base, and there's been a lot of volatility in where they have to source and how agile moving from China, but now we're getting tariffed in Vietnam and India. Can you talk about, I guess, how they're faring? Are they prepared for a repeal? Has the supply chain shifted a lot such that there actually could be benefits in the supply chain even if there's a repeal? What could the next several months look like? Yeah. I mean, what I would say is, of course, suppliers are going to be cognizant of costs, but also where can they get the quality they need? The costs are not just the tariff-related costs. There are different production costs, different transportation costs tied to raw materials, all this. They are going to figure out what makes sense. The way we look at it is I think the thing that's important to appreciate is that we have over 20,000 suppliers on our platform. Predating this year or the year before or three years ago, five years ago, we have suppliers who make goods in China. We have suppliers who make goods in Southeast Asia. Suppliers make goods in India and Turkey, but then places also like Brazil and Europe, Eastern Europe. You have? We have a lot of, yeah, a lot of production that's domestic in the United States. We have production that's near the US and Mexico and Canada. We already had this large set of suppliers with all different types of production capacity. What happens with tariffs is that it may help one group and disadvantage another group, and then each of those groups will then figure out what they're going to do to try to become more competitive. We are already on the kind of standpoint of we're already working with both of those groups. Unlike a traditional retailer where maybe we put a sourcing office somewhere in particular and we focus on a particular region, and if that region got advantaged, it helped us, and if it got disadvantaged, it hurt us. The reality is we're already working with all these groups, and we are facilitating these groups competing with each other on our platform to gain the interest of the end customer. This type of volatility, which you don't really root for, the truth is our model is best set up for it versus one where you place discrete bets on which region is going to be better or worse. The other thing I would add on the suppliers that we've spoken about a bit before is that these are suppliers, in many cases, these suppliers have been managing some version of tariffs since 2018. These suppliers have learned to be relatively nimble. This is a category that has had tariffs for years, and I think that has helped with their sort of flexibility. We obviously then combine that with our flexibility in terms of being able to work with suppliers from all over the world. We can bring product in from all over the world. We can source it domestically, etc. I think you have a supplier base that has gotten more agile over time after tariffs, COVID, etc., a lot of disruptions that have forced them to be more nimble in how they operate. What is your vision with AI? Digitally native company, kind of a visionary company. What's the use case of it? Are you excited by it? And is there top-line applications, middle-of-the-P&L implications? First of all, super excited about it. One statement, then I'll answer your direct question. I'll just say is when we talked about what are our competitive advantages, how do we win? One big source of advantage is the supplier network I just described a second ago, right? We have this large base of suppliers. It gives us a lot of flexibility, access to great selection, and creates great price value for the customer. A second one is around the logistics network we've built, like over 20 million sq ft of logistics space. These are large fulfillment centers. We have an ocean forwarding operation. We have our own final-mile delivery for large and bulky things where we have 50-plus delivery centers. We operate our own delivery operations. Along with Wayfair, one of brand would be the fourth, and then the fifth, I would say, is the fact that we've been a technology-focused company. I mentioned the 2,700 people a minute ago. A lot of where we've gotten an advantage online is that technology has not been an afterthought, but rather been something that's kind of native to my background, the background of Steve Conine, the other co-founder of Wayfair, the other co-chairman, is as technologists, not as merchants or retailers. Now, in our company, we have folks across this whole spectrum of skills, but technology is very much at the core of how we think about things. What's exciting about the advent of GenAI is that even though we've been aggressively investing in machine learning for over a decade, the breakthroughs with GenAI over the last couple of years have facilitated a whole new set of use cases that weren't plausible before. When we talk about a catalog of 20 million items, how do you make sure the descriptive quality, all the descriptors are there? How do you find dimensional inaccuracies? Are you talking about millions of customer service inquiries? How do you facilitate better, higher quality answers quicker at a lower cost? If you talk about the marketing creative, it's been over $1 billion a year on marketing. How do we go from having a finite number of creatives made by people to thousands and tens of thousands, hundreds of thousands, and have them get better and better at a fast rate? There are all these things that we've already been doing. Everything I just named are things that we've already been doing. You start looking forward and you say, "Well, what else can we do?" If you start looking from a cost focus in the operation, there is a lot of business process and a lot of work involved with running the company at the scale we have it with over 12,000 employees that you actually say, "Well, we could do it very differently at a lower cost, higher quality way." We are going to be very ambitious with that. There is a whole set of initiatives we have underway there. If you take the other side and you say, "Okay, there is the cost opportunity. Now, what about the revenue opportunity? From the customer standpoint or from the supplier standpoint, what could you do to facilitate suppliers being more engaged and doing more on the platform? Or what can you do with the customer, giving the customer an experience that's better, easier, more convenient, more engaging, more productive? That's where I think the actual bigger opportunity is. The cost is actually a pretty big opportunity, and that's still going to keep playing out. The ability to change the experience for a given customer to be seeing imagery that's really generated specifically around everything we know about them versus the product having standard imagery, or how you can actually help a customer navigate the large catalog and get an experience that's very tailored to them in a way that helps them discover new items and visualize them in a way that they couldn't before. I mean, there's a long list of use cases of what we're doing with suppliers and customers. I would say most of that is in what I would call pilot stage. We have a few of those pilots out where customers are interacting with them, and those are showing actually pretty engaging results with small amounts of traffic. I think what you're going to see is over the next stretch of time, the companies that actually have good mastery of the technology are going to be able to pull away from those who do not in the same way that that's been happening for decades. Folks say, "Well, okay, and then what about the way discovery works on these LLMs?" Whether it's Gemini or ChatGPT or whichever LLM, we think that's just another big opportunity because if you think about the way we've always historically been a great collaborator with Google and Meta and Pinterest and a number of the platforms where discovery was occurring, the reality is they need content and information. There's ways to optimize yourself on those platforms. The truth is there's a degree to which those platforms then need to pass off that traffic to really make the customer experience work well. We've always been a leader in that. We feel very good about the setup we have in today's GenAI world, and we believe that'll just be another kind of, if you say, "In that fourth or fifth bucket of differentiation," I talked about technology. Does the opportunity to differentiate with technology next year look higher or lower now that GenAI exists than you would have known two years ago? I would say higher. The one piece on the cost side, which you said is still relevant, the business has gotten a lot more efficient. Does it help bend or stymie the cost curve already into 2026? You mentioned something, this mastery of the technology where you can extend your competitive event. Is there an example that you can bring to light how that specifically can help Wayfair or home furnishing? Yeah. Do you want to talk about cost? Yeah. I mean, what we said on the last call was that that guide on the SG&A of sort of $360 million-$370 million was a pretty good place for us to operate from even as the top line has been growing, obviously. That, I think, is really driven by a few things. One, when we took out significant costs over the last two years, we had said at the time that we were leaving in teams and headcount investment in areas where we were growing. Thus, we believed that even though we were getting leaner and leaner and leaner, we'd be able to grow without adding back headcount. On top of that, you're now seeing an opportunity with AI to continue to grow maybe beyond sort of where it initially would have been on that line and be able to continue to get more efficient. You see that, I think, in areas obviously I think we're all well-versed on the tech space where you see that. On the commercial side, the example that I frequently talk to is the legal team. The legal team is a very small team within the company. We have, as you hopefully have seen, we are opening up more physical retail stores. There has been an increase in lease volume. We have one person that helps with leases across the entire network. Even though we have increased, she does industrial, retail, etc. Even though we've increased the lease volume that we're doing and the number that we're having to review because of different AI tools that that team is able to leverage, we're able to keep that headcount where it is and not add to that. I think it's a good example. The work is actually the volume of work has increased there, but the efficiency of the individuals has gotten quite a bit better. I do think on the commercial operation side, in addition to the tech side, we'll continue to see nice opportunity there. Second part of your question, in terms of I guess one example I would just give, there's actually quite a few that are underway, but one example is everyone's familiar with how you can use these models to generate imagery. One of the challenges inherent with these models is that if you generate imagery of a set of products, what you get is not always exactly the product specifically that you asked for. It might add an extra leg to the sofa or something that in general wouldn't matter if it's sort of like an inspirational image. If you're talking about rendering products that someone's going to buy, it could matter for sure, right? Because the customer may focus on certain aspects of it, and then it needs to be accurate. We, going back probably about nine months, got a model working well, which is a tuned version of an existing model that was out there, but very specifically modified to be able to take a set someone could specify a set of items for a catalog, and it could create photorealistic imagery of these items that were accurate. What we've been able to do over time is then figure out how to get that working at scale where instead of it creating, instead of it being a relatively expensive compute process to create these images, we were able to get the compute time down dramatically with quality very high. We're now able to do it, rendering it in a, if you just take a photograph of your room, we can now take the space and we can spatially render it in the room. We're now taking that. We have a few things running on our site, like Muse and some other things, which allow you to put in prompts and get imagery that's inspirational. We're now taking this model and we're using it for ad creative, like creating marketing creative units in a kind of high-volume, high-quality way. We're now about to roll it out in some consumer-facing use cases where it's really about them now being able to see this in their shopping journey where it's actually helping them with the actual products. What we've seen is the conversion when you do this is actually quite high because someone can actually see exactly what they're going to get. We don't have to worry about any of the issues around returns and dissatisfaction, so on and so forth. That's just like an example, but it's like the number of internal use cases we have for this is actually quite high. We believe that we're pretty far ahead in terms of getting this to work. What does Agentic mean to Wayfair? We're starting to focus on risks for other digital companies in terms of advertising income. For you, there could be some implications there, and there's also implications maybe for advertising spend potentially with an agent. How do you think about both of those dimensions? My high-level view is just that, okay, if you have places out there where folks get upper-funnel traffic, they're then going to want to monetize that a few ways. One way, of course, is if they can have the transaction monetized there, they can get some sort of take rate on that. If it's more economical and productive for the customer to pass off that traffic, they can effectively get some sort of advertising fee, cost per click or whatever it is, right? If you think about what Google and Pinterest and others have done over the years, they've ended up with a blend of the two. The more transactional the category is, the more it's basically a take rate. The more kind of complex, less transactional the category is, the more it's basically a click-through kind of charge. My guess of what you're going to see upper-funnel happen is things along those lines where it's going to be very hard, I think, for someone's not going to say, "Okay, I want a gray sofa, just have it arrive next week." That's going to be that's not going to for most customers, that's going to be an insufficient shopping experience. What you're going to even find is that the ability for something up-funneled to actually help you get to the confidence to make a purchase of a specific item without the additional content that doesn't get presented necessarily in that interface very well is going to be limited. I think you're going to get a mix, and it might be different than the mix that exists today, but we're going to optimize for both sets of that mix. What is going to happen is as you come through that funnel traffic on our site, we're increasingly building tools that basically cause you to come to us directly. If you think about what's happened to our business over time, we went from being purely transactional. When we launched Wayfair.com, one of the theses was that we can build a brand where we can create loyal users who then come directly to us. Over time, what we've done with the product catalog and with the various things we've done to improve the experience is we've gotten the kind of repeat rate to continue to climb. What has happened more recently is with the mobile app. Now if someone's loyal to us, we get them to download the app. If they download the app, the odds of them coming directly to us goes up even more dramatically. We launched last year the rewards program. The rewards program basically says, "For a nominal fee, it's $29, you get 5% back on everything you purchase, and you get early access to sales." You have a series of benefits. Some are monetary, some are non-monetary. The $29 is basically, if you think about it, you spend $600 a year being paid for. If you spend more than $600, you're making money on that. Of course, there are the non-monetary benefits that we also give you: early access to sales, a members-only support line, these things that customers value in different ways. We've seen really good uptake on this program. If they sign up for that program, and then if they don't have the app, we say, "Oh, you should download the app." The odds that they'd download the app actually jump up dramatically because you'd say, "Well, hey, I already paid $29. I might as well get the app." Now if they get the app and they're in the program, the experiences we can put through the phone because the phone has a camera in it, the phone has a microphone in it. You think about what you can do with AI, Agentic AI, and you now have a state where the customer's logged in much more often than they're logged in on the dead. What happens is the lower-funnel use cases of where we're keeping the direct interaction where we can make the experience better and better, and we do it where the traffic is like native traffic to us where we're not paying for the traffic to come in, that's getting dramatically better. The way we think about it, it's an and. There's no one strategy. It's like a multifold strategy because there'll always be traffic that's economic for us to pay to get that traffic from folks who are starting upper-funnel. Ultimately, for someone who's engaged with us and excited, we want to create a direct relationship, right? If you think about the different programs we have and how they fit together, you can kind of see the picture. How about retail media? I forget. I'm not trying to have you tell us, but where you sit as a percentage of revenue. We roughly know where that is. How does this all get worked out? Because if you have agents directing traffic, maybe you don't capture that revenue. The last time we talked about retail media was, I think, in December or the November call of last year, so 2024, and it was under 2% still. To keep it in context, compared to other players, it is a much smaller piece for us. The other thing that we've been saying is rather than pocket that, right, we've been largely reinvesting in the customer experience with that. We've been improving price, delivery speed, etc. We think that's been the right trade-off. We talk about sort of optimizing this multi-quarter contribution margin dollars, EBITDA dollars. That has been the right investment there. We have in the past spoken about that growing to say 3-4%. Again, that is a much smaller piece for us because of the nature of the goods. These are unbranded goods. The experience is a little bit different. This is not a grocery category, right, where it's a significant chunk of the piece. I do think it's important just to put that in context a little bit. What I was saying, if you're selling things that are more transactional, say like a three-pack of iPhone cables, that both is a transaction that could take place upper-funnel, not even on your own site because someone may not care as much about that. Just under $10, have it arrive by Friday, highly rated, and it might be good enough, right? Second, if it comes to your site, effectively, you're typically using advertising and making it a reverse auction because you'll show items in more or less whatever order. The suppliers are bidding on that. That's where the sites where you find have a much higher percentage of retail media. It's where it's more of a commodity because in that sense, you really can effectively use almost all the slots or virtually all the slots on the page. In a category where there's a lot more nuance and kind of customer curiosity engagement around it, what happens is that traffic either originates with us or gets to us earlier in the funnel, and then the customer's still not sold on just buying that item. There's a lot of product discovery that still happens. The opportunity for us to continue to deploy retail media in the way we are, which allows suppliers to have their items be seen by customers when there's a propensity that this customer might be interested in it, that's still very, very much there because customers, they want to really make sure that they understand their options before they make a purchase because we're not really, very little of our business are commodity items. We don't really sell a lot of commodity items. Customers put more care into the thought process of the purchases that they make with us. I think the category we're in is set up well, and I think the approach we're taking is still set up well. I think the retail media growth we can have continues to be there. A lot of the growth is not necessarily like the existing types of media units getting more value and volume, which is certainly a piece of it, but it's also us adding additional types of ad units, which we're working on. We have a good product roadmap there. Those types of ad units, we believe, when we think about how we think things are likely to evolve, are still very much there. You're gradually opening stores. How's retail? How is it in Chicagoland, where it's probably your most representative foot forward? It's probably in the comp base by now. I'm intrigued by Perigold and what it's doing to the market. Is there any AI piece where people want to actually come in and physically touch and feel market effect? Yeah. So for Wayfair, we have one store open. It's in Wilmette outside of Chicago. It's 150,000 sq ft, and it opened in May of 2024. We announced three stores will open next year. Early in the year, there's one in Atlanta. Mid-year, there's one in Columbus, Ohio. Late in the year, there's one in Denver, Colorado. We're pretty excited about what's happening with the Wayfair store in Chicago, and we're excited to start replicating that success and driving that forward. For Perigold, we opened the first two stores this year. One in Houston in Highland Village, Highland Park, Highland Village, I think it is, and one in West Palm Beach, Florida, just about two months ago, the one in West Palm Beach. They're off to a great start. We now have stores open for all five of our brands. We think we're proving out what the right size store, what the model is. The Perigold stores are not 150,000 sq ft, but they're large. They're 20,000 in Houston, 30,000 sq ft in West Palm Beach. The early numbers and reception is great. We're going to continue to prove it out and then continue to scale it up. I think there's a very big opportunity where customers, it's a category where customers don't necessarily feel fully fulfilled just interacting online. Depending on the use case, online might be preferable. In-store might be preferable. Ideal is the ability to go back and forth in whatever way they see fit. If you think about what we've built, where we have a household brand, we have a big customer file, we have a great product assortment, we have good availability of inventory, we have a delivery and fulfillment network. Stores are effectively the front end of all that, but we don't need to build all these other pieces you would need to build if you were going to build a brick-and-mortar retailer. We already have all those pieces. We are in quite a good position to actually kind of round out the customer experience by adding physical stores. Close out on incremental margins. There was a profound inflection a couple of years ago with how you restructured costs. We were of the mindset that mid to high teens, incremental EBITDA margin is the right way to think about the business until you blew past that this year. Thinking about investments that you need to make or scalability of the business going forward, does that framework still apply? Yeah. I think that is overall a good way to look at it. I want to talk through a few pieces. One, we've tried to articulate the contribution margin concept because that is very much how we think about it, which is the gross margin less the CS&M, less the marketing spend, right? The ad cost is a% of net revenue. You've seen a really big step up this year on that contribution margin. Now, some of those year-over-year compares are unique. I want to make sure that folks are not orienting around some of the year-over-year compares for next year because we did step up marketing spend in 2024. We stepped up marketing spend Q3 and Q4 in 2024 and actually in Q1 of 2025, and then that pulled back, right? I think it's important to be clear that we're sort of comping a unique period there. The other piece, but we do think that can sort of stay at this 15%-ish level. The other piece is obviously to the point that you made, Simeon, around the cost structure on the team, on the SG&A. Again, we have been comping some of those improvements. As I said, we think that can hold in. If you're growing, if you keep that sort of flat and you have your contribution margin at 15% and your top line is continuing to grow, then you're obviously growing your EBITDA dollars faster than that rate. You're seeing a really nice flow through to EBITDA, and that is what you saw the last few quarters. We think that that construct remains. Does that support feed into, I think, what's the last time you published the long-term margins of getting to? North of 10%, adjusted down. Low double-digit EBITDA margins. Yes. That would continue to drive that towards the north of 10%. Sneak in one last one on advertising spend because there were moments in the last 12 to 18 months where it looked like there was some deleverage picking up. It's hard for us to say, "Oh, which period did we get the payback?" Now it's slowing down, leveraging again, and it looks like you're getting the payback. Is there an unlock, or this is just the back-and-forth ebb and flow of managing this business? I mean, I think it's important to not look at advertising costs solely in isolation. This is why we talk about contribution margin a lot. You have gross margin, you have ad cost, and there's different things you might do. In other words, like rewards. When you join the rewards program. That's a great example. You get 5% back. If you think about what we just did, we hurt our gross margin because what we know is that you're actually going to buy more than the $600 that's break-even. We actually see you significantly step up. We actually hurt the gross margin percentage, but you come back direct. The ad cost efficiency is dramatically higher. I mentioned you download the app, you come directly, right? If you look at it from a profit standpoint, it's an incredibly profitable deal. You'd be happy to do this all day long, but you'd say, "Oh, your gross margin isn't going up, but your ad cost is going down." That's really good. At the same time, there's things like TikTok as an advertising channel is one that we arguably were late to, but as we figured out a set of things there, it's growing nicely. That's a good place to spend advertising. We're keeping it on a very tight payback constraint, but we're happy to scale that. You say, "Oh, that's causing your advertising to go up." It'd be like, "Well, but when I look at it over a multi-quarter basis, it's a highly profitable thing to do." Each of these things add up to different puts and takes. I think the way you need to think about it is, again, to really look at the contribution margin and to say, "Hey, I want to know what your revenue growth rate is. I want to know what your contribution margin is, and I want to know what your EBITDA dollars are growing at. Because if you're doing those things, should I really care about the trades you're making in each one of these many use cases that then you add together and give me the P&L? Because I kind of want you to make each individual trade as smart as you can, right? That's what we're focused on. On that note, congratulations on a great 2025. Good luck, holiday season, and into 2026. Thanks for being here. Thank you for having us. Thank you, Simeon. Thank you. Thank you.