Total Addressable Market and International Growth
Q: Randy Konik with Jefferies asked how to think about changes in total addressable market and serviceable addressable market numbers compared to three years ago given country and category expansion.
A: Mark Barocas, Chief Executive Officer, stated that the latest total addressable market is roughly $130 billion and growing, with the addition of water purification and microwaves adding almost $10 billion. He noted that strong consumer response and demand generation in markets like Latin America and continental Europe represent a huge change from three years ago.
Core Business Proportions and North American Growth
Q: Randy Konik with Jefferies asked about the proportion of future business coming from the core versus innovation, and whether customer cohort changes can drive medium- to long-term double-digit growth in the United States.
A: Mark Barocas, Chief Executive Officer, responded that the North American business is being driven by the core and base business through product assortment changes, AI work, and reinventing categories like upright vacuums and blenders. He highlighted that engineers are very motivated to work on reinventing the core business.
International Acceleration and Domestic Fourth Quarter Trends
Q: Brooke Ruch with Goldman Sachs asked to contextualize international acceleration in the fourth quarter against the 17% revenue guide, which implied a slower U.S. growth rate.
A: Mark Barocas, Chief Executive Officer, and Adam Quigley, Chief Financial Officer, explained that the U.S. business had an outstanding performance in the third quarter driven by sales execution and holiday sell-in, while the fourth quarter comps against massive social commerce numbers from last year. Barocas added that the domestic business remains a double-digit grower with strength across Walmart and other major brick-and-mortar and dot-com retailers, plus Canada.
Gross Margin Drivers and Tariffs
Q: Brooke Ruch with Goldman Sachs asked Adam Quigley to contextualize underlying gross margin drivers, excluding refunds and reinvestments, and the outlook for tariffs, raw materials, freight mix, and pricing entering 2027.
A: Adam Quigley, Chief Financial Officer, explained that excluding the refund, gross margin would have been down about 100 basis points due to a choice to delay price increases amidst commodity, fuel, and FX headwinds. He noted that the overall growth algorithm to grow adjusted EBITDA faster than net sales remains unchanged for 2027.
Social Commerce and Direct-to-Consumer Opportunities
Q: Bob Derbal with BTIG asked how accretive TikTok shops and social commerce across up to 14 countries can be, and about the opportunity from the single website this holiday season.
A: Mark Barocas, Chief Executive Officer, stated that social commerce generates significant off-platform halo sales, estimating that every dollar of on-platform sales generates two dollars of off-platform sales at Amazon, Walmart, Target, and the D2C site. He added that the global D2C site experienced strong growth and is set up for a great holiday season compared to 2025.
Q: Phillip Lee with William Blair asked how the category expansion opportunity changes now that the DTC channel is replatformed and social commerce is expanding internationally.
A: Mark Barocas, Chief Executive Officer, responded that DTC and social commerce break down barriers in Europe and Latin America where retailers were slower to bring on new products, noting that in Spain and Italy this holiday season, 50% of product assortment will be available exclusively on D2C, social commerce, and Amazon.
