#1ALL wayfair.com Joss MOD & Main Dwell Studio BIRCH LANE ERN wayfair Investor Presentation January, 2015#2Pending#3Pending#4A CLEAR ONLINE LEADER IN HOME GOODS wayfair MASSIVE ONLINE CATALOG with over 7,000,000 home products SUPPLIER DIRECT FULFILLMENT NETWORK connecting over 7,000 suppliers $916 MILLION of net revenue in 2013 with minimal inventory $1,206 MILLION of LTM net revenue as of September 30th, 2014 75% LTM GROWTH in direct retail, 50% total growth wayfair.com ALL MOD' ERN BIRCH LANE Joss Divell Studio & Main 4#5LARGE SCALE WITH SIGNIFICANT GROWTH . Founded as CSN STORES in 2002 . BOOTSTRAPPED for the first 9 years • FOUNDER-LED since inception . Net Revenue ($M) wayfair REBRANDED AS WAYFAIR in 2011 75% LTM DIRECT RETAIL GROWTH; 50% total LTM growth $916 $1,206 $802 LTM Q3 2013 $601 $517 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM Q3 '14 240+ Niche Websites Platform Development Brand Consolidation Brand Building Direct Retail Other 5#6FIVE DISTINCT HOME BRANDS wayfair Typical customer: 35 to 65 year old woman with an annual household income of $60,000 to $175,000 wayfair.com Est. 2011 ALL+ MOD ERN Joss & Main Dwell Studio BIRCH LANE Est. 2011 Est. 2006 Acq. 2013 Est. 2014 6#7Pending#8WELL POSITIONED RELATIVE TO OTHER RETAILERS wayfair RESTORATION POTTERY BARN ETHAN ALLEN Divell Studion High End ($175K+) Crate&Barrel Design Centers ONE KINGS LANE ALL MOD ERN BIRCH LANE Joss & Main wayfair.com Mass Market ($60K-$175K) Low End ($60K) BED BATH & BEYOND TARGET THE DEPOT HOME HomeGoods LOWE'S amazon eb Y JCPenney macy's ASHLEY FURNITURE INDUSTRIES, INC. HAVERTYS BOB'S Discount FURNITURE RAYMOUR ROOMS Flanigan TO GO▶ IKEA Walmart Save money. Live better. 8#9HOME SHOPPERS DESIRE UNIQUENESS We do not all sleep in the same style bed... wayfair ...but a lot of us own the same TV and view it as reassuring #1 in 42" LCD TVs #2 in 42" #3 in 42" #4 in 42" LCD TVs LCD TVs LCD TVs 9#10HOME IS SHOPPED VISUALLY Sunset SHOP Punch Living Moon Gata House Tour: An Open, Airy Remodel Shop This House → Recreate this spacious and functional look with our editors pics SHOW ME MORE STYLES STACKING CHAIRS, THROW PILLOWS THROW BLANKETS, VABES, WALL ART S 3 of 5 BEDROOM The make bedroom fumares a ble wooden nightstand to clevilly stabook and bedside essendas. That bed is with white, while a theo pillow with a graphic pattern adds a loathal spa of notare and fan Mola Mary Discovery & Education Inspiration wayfair IDEAS & ADVICE GET INSPIRED PHOTOS BUYING GUIDES MAGAZINE SHOPS SEARCH HOLIDAY & SEASONAL BEDROOM TAURONAL Prepping for a Holiday Guest Bedroom Create a cozy space thats both welcoming and full of festive personality with our editors helpful decorating tos and leas Bring in Festive Flair Carry the holiday split throughout your entire home and right into the quest bedroom. To update your room with a seasonal look, consider smell accessories-accent pillows, decorative throws and natural elements (pinecones, bentes, poinsettia Get the Look! A neutral bedding set will act as a blank canvas for seasonal touches. In this bedroom, we infused red and green for a classic holiday look. Plaid pattems mixed with modem mods, such as the reindeer pillow, lend a playful bouch Gut decorating by nading Holiday Season Guest Room Updates welcom Bring It Home From hoilday bedding to decorative baskets shop our favorite product picks below. Men Option Nall Button Grouple Upholstered Arch Headboard Mom Options: Color> Grace Chenille Throw Blanket by vis Mom Options Classio Hamstrich Cotton Rich 400 Thread Count Sheet Set Holiday Plaid Reindeer Reversible Throw Pillow by One BC Mom Options Colors 14 oz. Mug by El Pary fy 10#11HOME IS SHOPPED VISUALLY Shop by Department- Search beds 1-16 of 5535526 results for "" Show results for Home & Kitchen Beds Bedroom Furniture Mattresses Beds & Bad Frames Bed Frames & несотата Search Based Site Go Hello. Sign in Your Account- Related Searches sadame Remem Coaster Fine Furniture 300260g Bed, Queen by Coaster Home Furnishings $2900 $181.31 More Buying Choices $129.68 new (13 offers) FREE Shipping 1) Product Description Addthis stunning upholstered bed your bedroom for a one-of-a Mome & Gtzen: See at 5,440,103 ms Wish Cart - List Choose a Department to sort Sponsored See more Toys & Games F&Decor Pet Supp Dog Bed Cat Beds Sma Animal B Kitchen & Dining > Bar Coast See All 33 Departments Refine by Eligible for Free Shipping Free Shipping by Amazon Matress & Bed Frame Sie Twin Full Queen King Coming Bed Type Platform South Shore Step One Collection Storage Platform Bed, Black by South Shore Furniture 04.00 $199.00 More Buying Choices $157.98 new (10 offers) FREE Sing (280) Product Features Contemporary queen plated storage Mom & 5,449,183 ms CaPro Super Red and Fumitu $15.99 $7.95 Sharper Image Sumber Pad 5-$149.99 Sleep Master Platform Metal Bed Frame/Mattress Foundation, Queen by Sleep Master 19591.19 Dehe 22 Board g Friday, Aug Mare Buying Choices $85.00 new (10 offers)) $100.00 used (1 offer) *** .299) westselerin Beds FREE SIG Product Features Replaces bed frame and boxspring Home & Kitchen: Bee all 5,440,183 Chezmoi Collection White Goose Down Alternative Comforter, Full/Queen with Corner Tab by Cheamol Collection 44 $40.82 Drenthe 22 hour Friday, Aug More Buying Choices 1.707) Center in Bedding Comfo FREE Shipping Home Htchen: See 38 5,449, 183 nems NATURAL FOREST CAMO INFier 588-99 $34.25 sin Pot Leaf 7 Piece Bed in a Bag Black P 558.95 Akk leich $38.99 new (offers) Let Rewar Farniture Material $40.00 used (1 offer) Intex Pull-out Sofa Queen by intex (Aug 24, 2011) Wood Fabric Win Matan Polyurethane Brand Coaster Home Furnishings South Shore DB Home Life South Shore Fumiture Fashion Bed Group Sleep Master Legge & Put Fashioned Group 7499 559.80 22 hours and g Friday, Aag & More Buying C $40.44 new (43 offers $45.00 used (5 omers) Petmate DHP Signature Sleep Best Price Ma Beading Ривае Mattress Type (490) FREE Shi Home & Kitchen See as 5.444051 dema wayfair wayfair.com wayfair.com illion things home FURNITURE FREE SHIPPING Beds SEARCH▸ on orders over $49 DECOR LIGHTING KITCHEN BED & BATH OUTDOOR HOME IMPROVEMENT BABY & KIDS MORE SALES IDEAS BEDS Seach REFINE ▼ BED SIZE Twi Extra-Long Twin Full/Double (50) • Queen (телер King (1404) Caldornia King (649) ▼ BED DESIGN Panel (7) Platform (4731 Give it a REST 1842 Results 48 per page 田 Sleigh (15) Folding (30) Murphy (14) Filter By: Style ▼ PRICE $50 to $100 (2) $100 to $200 (2) $200 to $300) $300 to $400 (10) $400 to $500 (247) $600 & Above (1501) 5 Min to Max GO- Gravity Queen Platfor Sort by Recommended Price Bed Size 2 3 4 Next Bed Design Regalo My Cot Portable Bed, Royal Blue by Regalo 1500$24.88 More Buying Choices $24.88 new (21 offers) ★賣賣賣口:(066) Patelain Todder Beds FREE Shipping on orders over $35 Product Features Durable all steel constructed trame that has a inforced cam Home & Kochan See all 5.444 051 DreamFoam Bedding Ultimate Dreams Twin Crazy Quilt with 7-Inch TriZone Mattress by Dreamfoam Bedding $81.00 Ony twin stock More Buying Choices $81.00 new (7 omers) Product features Parfed matsforbundsday beds or Home&an 544 444 061 FRAME MATERIAL Wood (1172) Manufactured Wood Metal) Wood And Metal (51) Wicker/Rattan (0) FINISH Louis Philippe Queen Sleigh Bed by Castleton Home $374.98 5415-09 Free Shipping & 2-Day Delivery *****(1) More Options Wingback Bed by Skyline Furniture from $849.54 6990.00 Free Shipping ***** (383) More Options Newport Simple Platform Bed by Modus Furniture from $239.17 5305.00 Free Shipping & 2-Day Delivery *****(553) 11#12DIFFICULT TO INVENTORY Home Category Example: Lighting 1 0000 wayfair CPG Category Example: Paper Towels Regular Roll Requior Bounty One Sheet Locks in the Mess TEMPEL HOURS DOBLES 77424ILY INDUSTRY SIZE: $7B INDUSTRY SIZE: $7B Source: Freedonia, Fisher International, Euromonitor 12#13REQUIRES CUSTOM-BUILT TECHNOLOGY AND OPERATIONAL PLATFORM Technology Platform wayfair Operational Platform • . • Proprietary and purpose built Real-time data, dynamic changes Personalization Mobile optimized Running at massive scale • 300+ engineers / data scientists Over 14 million orders since inception Q3 2014 North America average time to ship of 2.1 days • Extensive supplier integration and direct fulfillment network • Proprietary transportation network • Minimal inventory and capex 500+ customer service reps 13#14Pending#15INCREASING PERSONALIZATION DRIVES GROWTH AND REPEAT BEHAVIOR Emails from 12/2; Ability to send 1M+ variations "Prep for in-laws and overnight guests with holiday furniture for every room" "Tikes' top picks: Playroom furniture and toys by KidKraft" wayfair "Purrr-fectly affordable finds for cats (and feline fans)" 000 OVE UP TO 65% OFF ENDS 12/08 UP TO 70% OFF ENDS 12/05 Tis the Season: Tree Skirts, Throws & More SHOP NOW > UP TO 70% OFF END8 12/09 Must-Have Furniture for Holiday Hosting Top Table & Floor Lamps SHOP NOW> SHOP NOW > UP TO 70% OFF ENDS 12108 UP TO 45% OFF ENDB 12/09 KidKraft Playroom Furniture & Toys SHOP NOW > UP TO 65% OFF END8 12/03 New Arrivals: Nursery Furniture SHOP NOW > Cat Lover Blowout SHOP NOW > 2014 FRES UP TO 70% OFF END8 12/05 UNDER $399 END8 12/08 Holiday Furnishings Blowout Sofas Under $399 SHOP NOW> SHOP NOW > LE CREUSET Calphalon UNDER $150 ENDO 12/03 UP TO 70% OFF ENDO 12/09 Brand-Name Cookware Under $150 SHOP NOW> Kids' Headboard Style Guide SHOP NOW > Co UP TO 70% OFF ENDS 1205 Timeless & Traditional Rugs SHOP NOW > SHIPS FREE UP TO 65% OFF ENDS 12/04 Merry & Bright Holiday Lighting SHOP NOW > UNDER $300 ENDS 12/08 TV Stands Under $300 SHOP NOW > UNDER $300 ENDB 12/05 Kids' Bedroom Under $300 SHOP NOW> Calphal FROM $20 END8 12/03 Calphalon Cookware from $20 SHOP NOW > UNDER $250 END8 12/07 Accent Furniture Under $250 UP TO 60% OFF ENDS 12/03 Rustic Outdoor Storage Blowout SHOP NOW > G UP TO 70% OFF ENDB 1208 Designer Picks: Rustic Dining Room 15#16TECHNOLOGY AND OPERATIONS ARE RUN AT SCALE: 1 DAY OF ORDERS Bregon Nevada France Las Vegas Baja California North Dakota Montana Minnesota yoming South Dakota. Utalo Colo 00 Albuque NOV Mexico hoenix Tuon Odad Sonora Chihuahua Gulf of California Baja Sinaloa Nebraska United States Toronto Michiegg Oh India Kansas Misquri Coahuila de Zaragoza Nuevo León Monterrey Mississipp Gulf of Mavina Gorgia ginia tte Jackville 800 Lando Tamp ing wayfair Ottawa Montreal Quebec New Bruns New Jersey ware District of Columbia etts wode Island 16#17SCALE DRIVES POWERFUL NETWORKS EFFECTS Active Customers' (in thousands) 7 million+ Home Products 1,775 61% 2,858 More Customers wayfair Repeat Orders2 (as % of total orders) 49.1% More Repeat 44.5% LTM Q3 '13 LTM Q3 '14 Advertising Spend ($M) $173 $92 88% LTM Q3 '13 LTM Q3 '14 Brand Purchases wayfair Enables Awareness Fuels Strategic Investment More Revenue Ability to Invest in Merchandising, Marketing, Technology, and Operations 1 Defined as customers who have purchased at least once on our brands' sites during the preceding 12 month period. 2 Defined as total orders delivered from repeat customers. LTM Q2 '13 LTM Q2 '14 Net Revenue ($M) Direct Retail Other 50% Total $1,206 $802 75% $978 $559 $243 $227 LTM Q3 '13 LTM Q3 '14 17#18叟 Revenue/ omer/Month e/Custom 31-60 Days 61-90 Days 91-120 Days 121-150 Days INVESTMENT IN ADVERTISTING SPEND RESULTS IN HIGHER REVENUE/CUSTOMER... Wayfair.com Gross Revenue Per Customer Over Time wayfair 18x$ 16x$ 14x$ 12x$ 10x$ 8x$ 6x$ 4x$ 2x$ • Customers acquired in more recent periods consistently spend more over time than customers acquired in older periods For example in the 6th month post their initial order 2014 customers spent >2x 2011 customers 151-180 Days 181-210 Days 211-240 Days 241-270 Days 271-300 Days 301-330 Days 331-360 Days 391-420 Days 361-390 Days 421-450 Days 451-480 Days 481-510 Days Time Since Initial Purchase 511-540 Days 541-570 Days 571-600 Days 601-630 Days 631-660 Days 661-690 Days -2013 691-720 Days 721-750 Days 751-780 Days 7781-810 Days 811-840 Days 841-870 Days 871-900 Days 18#19..AND GROWING AWARENESS Google Trends - Interest in "Wayfair" over time Grew to 52% brand awareness since Wayfair launch in 20111 wayfair.com adrything bus your base... PUNNITURE DECOR LONTING KITCHEN BEDAH OUTDOOR FREE SHIPPING HOME IMPROVEMENT BALES BABY&ND MORE rank SET INSPIRED SHOP THE 100K BUYING GUNDES MAGAZINE SHOPS STAVER 103DVICS D HGTV.COM SHOP BY ROOM Overete > Batnios x Ding Floors a Lunity & Song SHOP BY COLLECTION age Collection Cava Colegi Malen berlag Colection Colectiv Mudd Colle BROWSE BY TOPIC Orga Trend Der States w SHOP LOCALLY Ehan your toe SHOP BY ROOM Shop Bedrooms w HOME SHOP BY COL 2006 SPOTENT COLLECTION VOYAGE LLECTION wayfair.com a zillion things home Source: Hanover Research 1 Aided Brand Awareness as of August 2014. A new headboard is an easy instant upgrade! BROTHER VS BROTHER Shop our exclusive collection of looks from this week's episode of the smash HGTV Mit SHOP NOW National TV Campaign HGTV Sundays at 9/8c wayfair ww 2008 2010 2012 2014 19#20Pending#21CAPITAL EFFICIENT WITH MINIMAL INVENTORY wayfair $601 2012 Minimal Inventory $916 $1,206 Capital Efficient 34.7 1.6 $8 2013 $15 $21 LTM Days Receivable Days Payable ($M) ■Net Revenue Inventory FCF Performance Consistently Better than Adjusted EBITDA 21#22Primarily headcount LONG TERM TARGET MODEL Net Revenue Gross Margin wayfair Long-Term Target 2012 2013 Q3 2014 100% 100% 100% 100% 24.2% 24.5% 23.3% 25-27% Merchant Fees + Customer 4.3% 3.9% 4.2% 4.2% Service Advertising 10.5% 11.8% 14.8% 6-8% Other Sales and Marketing 4.0% 3.7% 4.0% 2-3% General & Administrative 7.3% 5.4% 5.9% 3-4% Total Operating Expenses 26.1% 24.8% 28.8% 15 - 19% Adjusted EBITDA (2.0)% (0.3)% (5.5)% 8 - 10% Note: Other Sales and Marketing and General & Administrative have been adjusted to exclude equity based compensation expenses and depreciation and amortization expense. See GAAP to Non-GAAP Reconciliation" Appendix. 22#23Pending#24ALL wayfair.com Joss & Main MOD ERN Dwell Studio BIRCH LANE wayfair#25RECONCILIATION OF ADJUSTED EBITDA ($ in millions) Net Loss wayfair 2012 2013 YTD Q3'13 YTD Q3'14 ($21.055) ($15.526) ($11.369) ($75.544) Depreciation and Amortization $9.335 $13.091 $9.352 $14.438 Equity-Based Compensation $5.528 Interest Income, net ($0.234) ($0.245) ($0.185) ($0.222) Other (Expense) Income, net ($0.155) ($0.294) ($0.075) $0.400 Taxes $0.050 $0.046 ($0.004) $0.066 Adjusted EBITDA ($12.059) ($2.928) ($2.281) ($55.334) 25#26RECONCILIATION OF FREE CASH FLOW ($ in millions) wayfair 2012 2013 YTD Q3'13 YTD Q3'14 Net Cash Provided by Operating Activities, Net of Acquisition $3.945 $34.413 ($6.425) ($50.837) Purchase of Property, Equipment and ($8.031) ($6.739) ($4.421) ($31.168) Leasehold Improvements Site and Software Development Costs ($6.949) ($9.040) ($6.412) ($10.643) Free Cash Flow ($11.035) $18.634 ($17.258) ($92.648) 26