W earnings call for the period ending September 30, 2018.
Good morning. My name is Michelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Wayfair Q3 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session. (Operator Instructions).
I would now like to turn the call over to Mr. Joe Wilson. Please go ahead.
Good morning and thank you for joining us. Today we will review our third quarter 2018 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 Julia Donnelly, Head of Corporate Finance. 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 fourth (sic-third) quarter of 2018. 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 2017 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 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. 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, which contains descriptions of our non-GAAP financial measures and reconciliations of non-GAAP measures to the nearest comparable GAAP measures.
This call is being recorded, and a webcast will be available for replay on our IR website.
Now I would like to turn the call over to Niraj.
Thanks, Joe. And thank you all for joining us this morning. In Q3, Direct Retail net revenue grew by $511 million or 43% year-over-year and total net revenue grew by 42% year-over-year. US Direct Retail net revenue was up $426 million or 41% versus Q3 last year. And international Direct net revenue was up $85 million or 58% versus Q3 last year.
These strong results in Q3 follow the $538 million of Direct Retail net revenue we added year-over-year in Q2, which included our first Way Day, representing over $1 billion of Direct Retail net revenue growth year-over-year in the last two quarters alone. We're delighted to see our offering engage more and more people with 13.9 million shoppers buying from us over the last year and LTM net revenue per active customer continuing to grow, reaching an all-time high this quarter of $443. We've built a customer proposition that is demonstrating increasing residents with shoppers as you can see in our KPIs and we feel incredibly bullish about future growth as a result.
In Q3, when we saw attractive opportunities to leaning on ad spend while staying within our 12 month contribution margin payback threshold we did that. As we believe, it will augment our long-term growth. We also continue to benefit from the growing strength of our employer brand, which we highlighted last quarter, and we capitalized on that by adding more great people across our business than we expected. By taking a long-term view in building our business, we're able to make near term tactical and strategic decisions that will put us in the best possible position to keep winning with customers as dollars in our category shift online.
From time to time, those steps may result in reduced EBITDA flow through in a given quarter. By putting those dollars to work in a rigorous and high conviction way, we are taking steps today that will drive growth and profitability for many years ahead. Across our three investment areas, namely our proprietary logistics network, our international business and in headcount to build out our product category and service offerings. We are very pleased with how we are progressing through our investment cycle.
In the early stages of our investment across these areas, there is typically a high level of risk, but a low level of investment outlay as we tested the initial concepts. Now, as we're seeing consistently strong results across these areas, such as CastleGate penetration, attractive customer conversion and repeat rates in Germany. And several emerging product categories now having revenue run rates over $100 million, we're putting considerably greater sums of money to work to really scale all of those successes. For example, as I'll talk about later. Germany is currently running at elevated losses as we are in an inflection point in the development of our business there.
In Germany, we've built dedicated teams of category managers. We're operating a CastleGate warehouse and we recently started investing in television advertising spend. These are steps we would only take once we have robust proof points from suppliers and customers, there are business with gaining deep traction there. With the scale of our customer base in the US, we're now deepening our service offering to win further share of wallet with the launch of offerings such as design services, which I mentioned last quarter, where we added a couple of dozen of people cross functionally over the last year.
Right, across our business, we're investing heavily at present, as we feel more confident than ever that we can continue to lead the way in our category online. The success of our business in the early stage of our investment cycle is precisely why today we're investing so heavily through the middle of that cycle and position ourselves for the scale and profitability that we believe lies ahead. Today, I want to provide brief updates on two of our investment areas namely, our international business and the build out of our product categories and service offerings to increase our share of wallet.
Our international business in Canada, the UK and Germany generated Direct Retail net revenue of $232 million in Q3 and this quarter will exceed a $1 billion annual run rate in Direct Retail net revenue. To put that growth in perspective for all of 2016, we had international Direct Retail net revenue of $265 million. We're extremely happy with the momentum we have built since we started to really invest in the UK business three years ago and more recently as we've done the same in Germany. Canada has grown quickly since early 2016, when we launched Wayfair.ca enabling us to tailor our proposition much more effectively to Canadian customers meaning in on ad spend as a result year later. And year later we introduced a French language site, which further localized our offering.
As I've mentioned in prior calls, our Canadian business benefited substantially from leveraging the US catalog and logistics infrastructure and as a result is our largest single international region today accounting for approximately 60% of international revenue. Our aided brand awareness in Canada is now 80%, this is at the same levels achieved by our US business at the start of 2017, which underlines the pace at which we gained traction there. We estimate that today, we've captured a marginally greater share of the Canadian total addressable market or TAM in our category that we have in the US as a result of being able to swiftly and successfully put in place the technology, advertising spend and logistics know-how we developed in the US over many years.
We're very pleased with the success we've had in Canada and there's still tremendous growth that lies ahead. Today our UK and German businesses are growing significantly more quickly than Canada, albeit from a smaller base. We believe that we are ideally placed for future growth in Europe and are excited by the scale of the opportunity in front of us. With the $300 billion TAM in Europe being a similar size to that of the United States and Canada combined. And Germany and UK accounting for $125 billion of that.
We are more bullish on the opportunity in Europe now than we've ever been due to the responses we're seeing from customers and suppliers in the region. This traction enables us to make long-term investments in both regions much like we've done in the US with CastleGate facilities operational in both countries and our marketing team now scaling ad spend productively in Germany, as a result of the customer conversion rates our site is achieving. For example, in Q2 of this year, we started our ramp of television advertising in Germany. The step we took in the United Kingdom in 2016.
We're continuing to invest heavily in our teams in Europe with over 1,400 people based there present. In Berlin, we're over half of our European headcount is located are continuing to add great people across our teams, and functions including marketing, engineering and operations. As co-founders and significant equity holders in the company, Steve and I have always run the company with long-term value creation in mind. And that is particularly important with the business, we are building in Europe. We're in the early days of online penetration in the home category and we believe this long-term mindset will continue to serve us incredibly well.
As ever, our investment decisions will continue to be governed by what is best for customers over the longer term and by the payback criteria, we set across our business. As a result, our path to profitability won't necessarily come in a straight line, but we are thrilled with the progress we are making and scale in what we believe will be a large profitable European business over time and toward our long-term financial goals as a company.
Now turning to my second topic, I'd like to tell you more about the work we're doing to capture a higher share of wallet from our customer base. On previous earnings calls, we've spoken about the steps we're taking to increase penetration of categories within our total addressable market where we have historically under indexed, such as bathroom vanities and outdoor structures and spas. Today, I want to give you an update on the progress we are making in the mattress category and steps we're taking in a key part of our service offering namely, financing and loyalty.
Mattresses is a category that we are very well placed to win in, but were until 2016, we had underinvested. The category was not well-merchandised on our site, and our product selection was lacking, and our proprietary logistics infrastructure was in its infancy and therefore could not be leveraged to improve the customer experience. Our efforts to gain share of wallet and mattresses over the last two years have been broad based.
We've built a dedicated category inside merchandising team for mattresses, enabling us to build and offering those comprehensive across price points in mattress types, spanning house and third-party brand. As part of this, last year we launched Nora, a bed-in-a-box mattress sold exclusively on Wayfair, which targets the more premium-end of the bed-in-a-box market, strengthening our offering in this product class, which had been more focused on our affordable Wayfair sleep brand up until that point.
Alongside our own range, we've been working closely with some of the leading brands in the industry to help really bring their products to life online and equip shoppers to make their purchase in an informed and assured way. In addition to range and selection, we've been investing in the service elements, they are often key components of shopping the mattress category. For example, we offer a 100 night trial on all of our mattresses, after which customers can simply return their matters for a full refund or an alternative mattress, putting customers at ease, while making their initial purchase.
We believe the investments we've made in CastleGate and in our last-mile delivery locations have also considerably improved our customer offering. For example, half of our mattresses sold in 2018 have shipped from our CastleGate warehouse. And for the mattresses, we're able to guarantee delivery to customers in two days across the majority of the United States. The headcount investment we're making is paying off. With the mattress category today having an annualized net revenue run rate of over $240 million compared with a $100 million run rate, we highlighted in our Q4 2016 earnings call, representing a CAGR over 65% for that period.
Giving customers the best possible experience when they shop with us, is the ultimate driver of customer loyalty and lifetime value, whether that is in categories that are shopped less frequently, like mattresses or in other more regularly purchased categories. We are constantly looking for new ways to enhance the overall experience we offer, thereby driving increased loyalty. We are actively building a variety of loyalty products and program as part of that effort.
In early initiative in this space, with the launch of the Wayfair card, our private label credit card in late 2015. Today, the Wayfair card consists of over 1 million cardholders, who by the end of the year are on track to spend in excess of $900 million on an annual run rate basis on their Wayfair cards, with no credit risk borne by Wayfair. Wayfair cardholders visit Wayfair more frequently and more spend more than three times as much with us in the first two years compared with non-card holders, with a substantial portion of their spending being incremental.
We are also excited to be expanding our private label credit card business by customizing the Wayfair card for each of our lifestyle brand, which we believe will drive further penetration in those distinct brand. More recently last month, we launched MyWay, a subscription based membership program, with an annual fee of $29.99, members receive access to insider sales, discounts and installation and assembly services as well as expanded free shipping and next day delivery. We are inviting customers to enjoy an elevated level of service and value, while offering yet another reason to make Wayfair their go-to destination for the home.
We are excited to ramp this program, while continually adding new benefits to increase its value to customers. MyWay and the Wayfair card are just two examples of the investments we are making, to make creating a home as easy, fun and affordable as possible on Wayfair. More broadly, these two strategic initiatives demonstrate how we are tackling big problems by building dedicated cross functional teams and equipping them to succeed. Over the past 18 months, we've added over 30 people to our customer loyalty and financing teams, including software engineers, marketers and business development professionals. We are following a similar approach across many areas of the company.
Now before I turn the call over to Steve, I want to provide brief updates on two other areas. The expansion of our proprietary logistics network continues to progress well. In Q3, we opened a 900,000 square foot CastleGate facility in Dallas, Texas and recently launched last mile delivery facilities in the Minneapolis and Seattle. We are now operating 27 of our own last mile delivery facilities in North America, giving us coverage of 66% of our US large parcel home deliveries.
Following this expansion at the end of Q3, we had approximately a 11 million square feet of space across our CastleGate and last mile delivery networks. We expect to end 2018 with approximately 11.5 million square feet of logistic space, representing an additional 4 million square feet during the year. These long-term investments allow us to reduce our reliance on third parties and enable us over time to increase delivery speed, lower damage, and costs and improve satisfaction for more and more of our customers.
With the growth and revenue, we are seeing both in the US and internationally, we expect to invest further in our logistics infrastructure in 2019 and beyond. CastleGate is a core enabler of our business throughout the year and that's particularly the case in Q4 as we work closely with suppliers to ensure that we can bring customers the best possible selection and fast delivery for the holiday season. Currently, for example, our suppliers have forward-positioned approximately $250 million of stock at wholesale costs across our CastleGate facilities, which represents over $1 billion of annual wholesale value at current inventory turns.
The holiday season also present us with attractive opportunities to interact with customers in new ways. And this season, we are excited to be offering shoppers a new way to experience our brand with the opening of two temporary pop-up shops today in Natick, Massachusetts and Paramus, New Jersey. Online is the core of our business, but we believe that creative retail formats can be complementary to that experience and generate insights that will further enhance our overall customer proposition. In our pop-up stores, shoppers are able to get design tips from experts, receive advice on home improvement projects, and be introduced to the many innovative features we've helped build for them to shop for the home online.
Bring Wayfair to customers in this new format at a time of year, when we know that they are in market for our category, offers us a great opportunity to experiment and showcasing our brand and service team members in new way and deepen the customers' connection to our brand. Our use of retail stores like innovation in all areas across our business will be an iterative process and we'll use the learnings from visitors to our pop-up stores to determine the best format to offer shoppers in the future.
One other area that we've been experimenting with this year is sponsored products, where suppliers can invest advertising dollars to give their product, whether it is for a line of seasonal decor or the launch of a new coffee table design, greater prominence with customers on our site. With over 10 million products in our platform for more than 10,000 suppliers, making it as easy and inspirational as possible for our customer to find the products they love is incredibly important.
Over the course of this year, we've been testing different ways to allow suppliers to pay to achieve enhanced placement. Our focus in these tests was to closely measure the response from customers to ensure that including supplier promoted items would be accretive to customer experience. We were pleased with the initial results both from a supplier and customer perspective, and in September, the program move from a pilot with the close number of suppliers to job availability (ph). We are very much in the early stages of developing this area of our business but our data driven culture and partnership model with suppliers puts us in a strong position to scale this effectively over time.
Now I'll turn the call over to Steve, to talk about the long-term investments we're making to improve how shoppers can visualize products in their home in the future.
Thanks, Niraj. This morning, I would like to talk about one of the innovative technologies we have been working on that we believe will bring exciting benefits to our customers over the long-term. Technology is a core part of our DNA and has been central to our success in capturing an outsized share of consumer spending in our category, as it shifts from bricks and mortar channels to online. The decades long view we take to building our business has served us incredibly well to-date and that is particularly true in technology.
On prior calls, I have talked about the early investments we have made in our 3D and augmented reality capabilities, and the impact we expect this technology will have over time and how customers shop in Wayfair. Visualization technology continues to evolve as partnering deeply with leading companies in the space is a core element of our strategy. We were early investors in augmented reality, partnering closely with Google and Verizon in releasing Wayfair's view on the ASUS ZenFone AR in August, 2017. The first smartphone with virtual reality and augmented reality capabilities. Leveraging the same investment and technology, we were able to reach the mass market when Apple made AR widely available by launching AR support on their phones and tablets in September of 2017.
The partnership I want to highlight today is in the field of mixed reality and spatial computing. Mixed Reality couples real and virtual worlds, enabling customers to interact with both physical and digital objects in their environment in real time. Spatial computing platforms utilize user space to show them information instead of a 2D screen, such as an iPhone or a computer screen. We believe this could have a huge impact on how people shop for the home online. And last year, we became the first e-commerce business to partner with Magic Leap, which is leading the way in this field.
Magic Leap is a mixed reality in spatial computing company that is focused on wearable technologies that enables users to digitally interact with their environments. Last month, we showcased the application we developed from Magic Leap's spatial computing platform, Magic Leap One, at their inaugural conference in Los Angeles. The application Wayfair Spaces, which is now available on Magic Leap's app store, enables consumers to explore a subset of our catalog and visualize living spaces through intuitive mixed reality interactions. It's a design experience that visually layers items onto the customer's environment via a head mounted see through virtual retinal display, creating a shopping experience that is deeply immersive and engaging.
The technology will allow consumers to select a couch, for example, and see it in their own living room to give them a highly realistic sense of how it will look alongside a rug or an arm chair already in that room. Customers will be able to swap out the couch and visualize multiple options to find the perfect match for their room within seconds. Shoppers will easily be able to build entire rooms using Wayfair Spaces, visualizing how their choices will come together to create the look they love, giving them greater confidence to purchase.
Being able to create virtually finished rooms using precise dimensions and real products has many applications. Such as aiding interior designers in creating remote and design sessions for the couple that is looking to visualize furniture in a new home. We expect this technology will take time to reach the mass market. And when it does, we will be very well positioned to leverage it to deliver a rich set of features to our customers and partners, as a result of our early work in this field.
We expect that our work in Mixed Reality will provide benefits on many fronts beyond the Wayfair Spaces application. Much like our investment in augmented reality resulted in a growing 3D product image library that we have utilized to lower visual merchandising costs on our sites. Mixed Reality is just one example of the important work that our team of over 2,100 engineers and data scientists is doing to leverage technology to transform the experience we offer shoppers.
With early stage technologies, the source of future returns is often very unclear. We have seen, for example, that our early investments in augmented reality had yielded a substantial benefit to our wider business by enabling us to develop a catalog of 3D product images to use across our business. Today, our site merchandising teams increasingly create rich lifestyle images digitally for use throughout our site, without the need to ever assemble those products to be shot in a photo studio. Without our initial investment in augmented reality, we would not have developed this capability at the pace we did.
By taking a long-term view and partnering with leading technology companies, we are taking steps today that will continue to keep us at the forefront of e-commerce for the home in the years to come.
I will now turn the call over to Michael to discuss our Q3 financials in more detail.
Thanks, Steve and good morning everyone. I will now provide some highlights of the key financial information for the quarter, with more detailed information available in our earnings release and in our investor presentation on the IR site.
In Q3, our Direct Retail business increased 43% year-over-year to $1,692 million, representing year-over-year dollar growth of approximately $510 million. Our total net revenue increased 42% year-over-year to $1,706 million. Our KPIs, which we report on a consolidated global basis continued at healthy levels in Q3, with many achieving all-time highs.
In addition to the growth in the size of our active customer base in Q3, we're also seeing purchase frequency as measured by LTM orders per active customer continue to increase reaching 1.84 in the quarter. Additionally, orders from repeat customers continues to grow more quickly than orders from new customers and accounted for approximately two-thirds of orders placed in the quarter.
Turning now to our US business. Direct Retail net revenue increased to $1,460 million in Q3, up 41% year-over-year, representing year-over-year dollar growth in the quarter of approximately $430 million. Direct Retail net revenue from our international businesses in Canada, the UK and Germany, collectively increased to $232 million, up 58% year-over-year. As Niraj highlighted earlier, we're thrilled to see customers increasingly shopping with us, as we invest to bring them the best possible experience in shopping the home category online both in the US and internationally.
I will share the remaining financials on a non-GAAP basis, excluding the impact of equity-based compensation and related taxes, which totaled $36 million in Q3, 2018. For reconciliation of GAAP to non-GAAP reporting, please refer to our earnings release on the IR site.
Our gross profit for the quarter, which is net of all product costs, delivery and fulfillment expenses was $393 million or 23.1% of net revenue. Consistent with our near-term expectation for gross margins in the 23% to 24% range. On the Q2 earnings call, I spoke about the attractive opportunities we're seeing to invest ad dollars in the US and internationally. As Q3 progressed, we continue to see compelling opportunities to lean in and invest further advertising spend behind the strength of our customer KPIs, while maintaining our overall one-year contribution margin payback target. This resulted in Q3 advertising spend of $203 million or 11.9% of net revenue, broadly in line with Q3 last year.
We're extremely excited to be able to invest in the analytical in aggressive manner that we are today, as a result of the customer conversion and repeat levels our sites are achieving. In any given quarter, the scale of our ad spend will vary depending on the opportunities we're able to unlock. While we therefore expect our long-term historical trend of ad spend leverage to continue, despite the negative mix shift impact of our international business. As we have said every quarter, we will not manage the business to exhibit that leverage in any given quarter. With $600 billion TAM and a proposition that is clearly winning with customers and with suppliers, we think it would be extremely shortsighted to forego the high ROI opportunities that we have put ourselves in a position to be able to capture.
Accordingly, as we look out to Q4, we remain comfortable leaning in on ad spend as we did in Q3. And therefore expect overall ad spend as a percent of net revenue to be approximately in line with the level of Q4 last year. Our non-GAAP selling, operations, technology and G&A expenses are driven primarily by compensation costs and in Q3 totaled $235 million.
In the first three quarters of this year, we have hired at pace, adding great people to teams across our business as we continue to improve our customer offering in the US and internationally and win outsized market share. Across our three main investment areas; building out our international capabilities, developing our proprietary logistics network and increasing our penetration of categories and services where we have historically under indexed, we have a large number of initiatives that are showing extremely high levels of return from incremental headcount.
As I highlighted on our last earnings call, throughout this year, we have been able to recruit high caliber people at scale, capitalizing on the strength of our employer brand in Boston and elsewhere. In the third quarter, we added 1,200 net new employees for a total of 10,908 employees as of September 30, 2018. Over 850 of those net new hires excluding the impact of summer interns and co-ops were in OpEx areas such as engineering, marketing, merchandising, products, operations including logistics leadership and technology.
We exceeded even our expected level of hiring in Q3, resulting in approximately 2,000 net new OpEx adds in the first three quarters of this year. We're thrilled to have strengthened our teams in this way and to be putting ourselves in the best possible position, to continue to scale our business successfully by investing near-term EBITDA flow through and initiatives that we firmly believe will payback in the future.
Level and timing of our investment decisions, including hiring are not determined by factors such as near-term revenue performance or by quarterly or year-end results, are purely by what it takes to serve our customers and when it makes the most sense to make that specific investment in order to best achieve our long-term ambition. We expect that our recruitment success in the first three quarters of this year will result in the sizable sequential step down in OpEx hiring in Q4, that I mentioned on our last earnings call. One point to note is that many of the Q3 hires joining the business later in the quarter, the full impact of the elevated hiring in Q3 will only be seen in Q4 OpEx spend.
Moving through 2019, we expect OpEx hiring to run more in line with lower Q4 2018 levels then with the elevated levels seen earlier this year and to run at a rate lower than our revenue growth and drive OpEx leverage over time. As we've said in recent earnings calls, the build-out of our CastleGate and WDN facilities in the US and internationally puts us in a great position for continued growth. It does mean that unutilized rent continues to weigh on our P&L in the $5 million to $8 million range per quarter in OpEx this year. We feel incredibly bullish as we look across our business and as a result of that we are making investment decisions today that are governed by our future ambitions for the business rather than the profitability achieved in any particular quarter.
Turning to profitability, adjusted EBITDA for Q3 was negative $76 million or negative 4.5% of net revenue. Adjusted EBITDA for the US business in Q3 was negative $26 million or negative 1.8% of net revenue and adjusted EBITDA for the international business was negative $50 million. Non-GAAP free cash flow for the quarter was negative $59 million based on net cash from operating activities of $8 million and capital expenditures of $67 million. CapEx spending was 3.9% of net revenue in Q3. For Q4, we expect CapEx to remain in the range of 3% to 4% of net revenue. As of September 30, 2018, we had approximately $525 million of cash, cash equivalents and short and long-term investment.
Now let me outline our thoughts on guidance for Q4. The fourth quarter is always the toughest to guide because sitting here on November 1, there is disproportionately more of the quarter in front of us than any other quarter of the year. In this quarter, that is exacerbated by clearly more volatile market environment and an increasingly opaque view of consumer sentiment. As we've outlined on previous calls, we believe that Wayfair is incredibly well positioned to continue to win and thrive in a more difficult economy. But any substantial consumer spending change would obviously have short-term impacts on our results. This backdrop makes guidance setting for Q4 this year, particularly challenging. The other challenges that entering the holidays with any uncertainty can increase the promotional intensity in the category, driven by traditional retailers who hold massive inventory.
We are protected by our business model. And as you all know, source substantial discounts from our supplier partners as we enter the holidays to be comfortably market priced. We expect gross margins consistent with 23% level of recent quarters. But we will remain market price to serve our customers and as such there is some risk across profit margins could fall below that level. For Q4, 2018, we forecast Direct Retail net revenue of $1.905 billion to $1.950 billion, a growth rate of approximately 34% to 37% year-over-year and representing year-over-year, Direct Retail dollar growth of approximately $500 million.
For transparency, quarter-to-date Direct Retail gross revenue is running at the top end of this range. Further we expect US Direct Retail year-over-year growth in the range of 32% to 35% and international Direct Retail year-over-year growth in the range of 50% to 55%. We forecast other revenue to be between $15 million and $18 million for total net revenue of $1.92 billion to $1.968 billion for the fourth quarter. As stated earlier, we anticipate ad spend as a percent of revenue this quarter to be at similar levels to Q4 last year and we also expect to have lower levels of hiring this quarter compared to Q3. However, we expect to see the full roll through of the accelerated hiring over the last few quarters, and in particularly in Q3, in the Q4 P&L, and as such, OpEx costs should continue to delever, year-over-year in Q4 but shows some modest sequential improvement.
For consolidated adjusted EBITDA, we forecast margins of negative 3.8% to negative 4.1% for Q4, 2018. We expect international adjusted EBITDA to be negative $55 million to negative $60 million in Q4, as we continue to add resources and ad spend in Canada, the UK and Germany. In the US business, we expect to deliver adjusted EBITDA of negative 1% to negative 1.5% as we continue to invest in penetrating a very large addressable market, we see in our category in our primary market. For modeling purposes for Q4 2018, please assume equity-based compensation and related tax expense of approximately $45 million to $47 million, average weighted shares outstanding of $90.4 million and depreciation and amortization of approximately $36 million to $38 million.
As the market shift to online, and our $600 billion category continues. We are extremely pleased with all our customer metrics and KPIs, with repeat rates at all time high and our continued share taking. It is on the wave of that trend and the positive response, we continue to see from our customers that we are investing across our business to further cement our brand and continued future profitable growth at scale. Volatile markets and consumer sentiment will ebb and flow but the deep repeating relationships we're building with our customers and their desire to buy online from Wayfair is the long-term asset and future profit generator we are creating.
Now, let me turn the call over to Niraj before we take your questions.
Thanks, Michael. Steve and I are very excited about the momentum in our business and our ability to capture the opportunity we see ahead of us, both in the US and internationally. We're delighted with the progress our company of almost 11,000 people is making in bringing customers the best possible experience in shopping the home category online. Customers are rewarding us with their dollars as they increasingly benefit from the investments we've been making in our logistics infrastructure and deepening the products and services we offer them and in strengthening our proposition and brand awareness internationally.
All of our efforts are focused on continuing to improve what we can offer shoppers over the long term, so that we can capitalize on the secular tailwind from offline to online in our category and grow substantially in excess of the online market growth rate for the home category.
And with that, I'll now ask the operator to open up the line, so we can answer a few of your question. Thank you.
(Operator Instructions) Your first question comes from Peter Keith from Piper Jaffray. Your line is open.
Hey, thanks, good morning everyone. Congrats on the continued strong revenue growth in the improving KPIs. I did want to dig into the EBITDA for the quarter whoever, it did -- your total EBITDA margin came in below your guided range, despite the sales be Michael, I know, you mentioned headcount, maybe a little bit above that. Could you dig into that a little bit for us and help us understand where some of the profitability measures missed a bit?
Hey Peter, it's Niraj. Thanks for your question. I guess, on this, why don't we start with Michael given any quick question.
Yeah. Hey, Peter. I think two key areas to look at in terms of EBITDA, both of which I mentioned in the talk track as well. One is ad spend, as we talked about at the beginning or last quarter's call, we did expect to show some ad spend leverage. But as we went through the quarter, we continue to see great opportunities within our paybacks. As everyone I think is, where we, we look for one year -- on average one-year payback, on -- new customer acquisitions on ad spend. And we've said time and time again, if in the middle of the quarter we see those opportunities and the team is finding that, we're going to go lean in and take advantage of it. And we're always going to do it from the perspective of what's the right long-term returns for the business as opposed to sort of trying to make a particular number, even if it's something that we guided. So I think, you had ad spend basically flat year-over-year as opposed to showing, 30 or 40 basis points of leverage.
And then on the other side is the OpEx headcount hiring, it came in stronger than we expected. We feel extremely good about the people we've added to the team, and how we're growing, the folks who are faced off against dozens and dozens of initiatives that are all about our future growth. And as we talked about, I think, extensively on the last call, we were excited about that team of people, we are adding, we are going to add them as we can, thus employer brand has been very strong. But at the same time, we are going to step down the rate of net new ads in OpEx in Q4. And we plan that starting a quarter ago and we're sort of in the middle of that process right now in the fourth quarter. And I think, those two key factors were really the drivers of incremental expense versus even the sort of good revenue performance that we lead to the higher EBITDA level.
I think, that base book.
Hi, Niraj, I do have a question specifically for you. On the -- so getting a lot of investor questions around, tariffs, I'm curious on what your initial supplier discussions are like. If with the 10% tariffs, if you're starting to see, any price increases on your website. I understand you guys aren't directly impacted, but could you help us understand, if there is any concern of demand destruction, if there's some general price inflation across the marketplace?
Yeah, so, obviously the 10%, it is basically by three waves right. The first wave that went into effect, earlier this summer was on raw materials. But the raw materials have some trickle through effect on steel and some of the materials. Then you have the 10% go into effect in September, and then there's 20, the 10 goes up to 25, at the turn of the year. And so, what we've been hearing from suppliers is that, it does create a period of discontinuity where they're all going back in their supply chain seeing what cost, they can take out because obviously, they would love to not raise prices.
And the dynamic, we have, which is really advantageous one for us, is that as a platform, the suppliers are effectively competing with each other to take care of the customer. And so they know that on a relative basis, even though some things happen, we don't want to do is, put yourself in a disadvantaged position relative to the other suppliers who are all trying to figure out how to contain our cost. So that gives us obviously a benefit versus if we're effectively a middleman in which case before things go against this, we're obviously hurt.
And in terms of price increases, I think the reality is that the amount of inflation in raw materials, coupled with the tariffs, it is driving price increases and I think, what we're seeing is that suppliers are all trying to fill their way through what exactly is going to happen when, how much can we take out in cost and what is going to be, then the net price increase they need to pass through to -- to kind of keep things working as well as possible. So we're definitely hearing a lot of these conversations. And I think, I've kind of liken it a little bit to what happened with Brexit where you had a -- in that case, there was no notice period, the tariffs have a notice period, but there you had the pound, the FX and currency change dramatically, and the suppliers are generally buying products denominated in dollars, or material denominated in dollars.
And there you had a fairly kind of abrupt period of mayhem where it's plus, kind for us, what to do. And then coming out of that, we are significantly advantage. But in the mayhem period, you found some suppliers sort of lose to other suppliers and some suppliers, be more aggressive on price increases quicker than others and that obviously hurts them because their retails go up. So that's kind of what we're seeing now.
Okay, that's helpful feedback. Thanks very much and good luck for this holiday season.
Your next question comes from John Blackledge from Cowen. Your line is open.
Great, Couple of questions. Niraj, you mentioned that our sponsor products became, I think, they became widely available in September. Maybe could you provide some color on the ROI for beta customers experiences with sponsored products. And then any color on the ramp of sponsored products, how it might impact 4Q'18 in longer term.
And then separately on EBITDA. So, the US, based on your guide will run about minus 1% or so for full-year EBITDA margin in 2018. Can you kind of frame this number versus 8% to 10% long-term EBITDA margin, like any color on how you get from minus 1% at $5.5 billion or so of annual US revenue to that kind of long-term bogie. Thank you.
Sure, John, Thanks. Niraj here, let me try to answer, and then Michael can maybe chime in if he has some other thoughts to add. Now first on sponsored product. So the ROAS, the return on ad spend for the suppliers in the -- kind of beta we did, and in the initial launch period since we made it generally available. It's been pretty much off the charts, a lot higher than what they're accustomed to. Elsewhere, which frankly, to us means that as more participants enter the economics, so everyone can get better because, the ROI is probably, doesn't even need to be that high for folks who want to compete because it's -- what we're hearing is it's much higher than what they see elsewhere.
So that's one of the things that make us feel good about the product, it's a combination that the suppliers are seeing great economic return, they find it easy to use and they like the reporting and we're going to a lot more on that side. And the customer experience has been protected and the customers are basically reacting very positively and lot of the things that we can do around understanding customers and personalization of the things can help make sure, the customer experience is a positive one versus, and sometimes you can have highly lucrative advertising that can create a negative customer experience that, you need to be very careful about for long-term effects. So that when we're, it's in a great spot.
In terms of your timing question on the benefits in this quarter and long term, the reality is we think, it will take a little while to ramp-up. So we obviously, there volume there and it grows, but the volume start relatively small. And I think, with the real economics for everyone involve get good as it ramps and so we're in a ramp phase. But I just think of the ramp is not in a quarter but is many quarters. And, as it plays out through next year and forward, I think, we'll start seeing it be a meaningful contributor. But I wouldn't think of this quarter, is it being a particularly large contributor.
On your EBITDA question, I think the important thing, so I'll give you a few different thoughts that together sort of my answer to your question. One of the important thing, because you kind of tied to, well, if you're minus 1% at $5.5 billion, how's that play out. And I really encourage you to think about the answer and realize that there is those two things, you need to decouple those two statements. So in other words, scale alone doesn't unlock the high EBITDA. So in other words, we could be at $5.5 billion. And today, we could be at that target range and it actually wouldn't be that difficult.
To get to that target range, all we would need to do today, is do a few things. One is we would basically take down the new customer growth. We instead of hedging, we want to 12-month payback, we could say, we want a 6-month payback. Well, if you look at the economics of how much of the ad spend is on new customers and obviously the ones that payback in six-months cost will have less than one that payback in 12 months. You could take significant portion out of the ad spend, you can take half of the dollars of the ad spend, still be growing quite nicely and you'd be running much shorter paybacks and because all that money, to advertising your expense in the current period you get payback over a longer period. All that money would accrue to basically profitability today. But now if you look out two years or three years, active customer base is smaller. So in the long run, you're just a smaller player but today's profit sheets play out.
The second is on OpEx. If you think about what we're doing with the aggressive expansion of the Castlegate facilities and all it's unutilized rent. And all the facilities that are running at basically had your cost on long-term because we've leased, we've leased the building and not just the unutilized rent, but also the team, we've put in there to run it and we're paying for the full team, but the volume is not going to the building yet. That's all costs that run through our P&L today, but we're excited about what it would look like. But the profitability comes out at a much higher level of utilization that you have today, despite the fact that it's growing quite nicely. It's because we're expanding it quite aggressively, because we know we can put a lot more volume through it, as you look out to next year and the year after.
The other place in OpEx, is all these teams. When I talked, about design services, for example, I talked about, we talked about some of these different category teams and we talked this time about loyalty and we talked about the financing. And these teams, you say, well, a couple of dozen people, that's not a big deal. But the key is, a couple dozen people with super high ROI on that one thing. Now the trick is, we're doing dozens of these things. So a couple of dozen people times dozens, 40 or 50 of these teams. That's a lot of people and that's a lot of cost. And so on one hand the ramp of hiring has been significant, while the plus side, as these folks are now on these efforts. So when you roll into the future, there's huge gains, but again you pay for everyone right away.
And so there you could do, as you can say, well, I don't -- we just do half of those things. Let's just pick half, let's pick to half we're more confident on are a little bit low hanging fruit or you know what, if you can't do that on the category side, they are all big opportunity, let's just pick half of them, pick half categories, don't do other half.
And you could, and again today's EBITDA, which way up, but then what would happen is the gains you get one, two and three years out, you'd only get those in half the category. And the other half categories, you wouldn't get those in. So there's a bunch of things in our P&L, and there's a bunch things on gross margin, because gross margin gets depressed because of the mix effect of international. For example, which is a huge cost, you're talking here about just the US but gross margin has mix even within the US, where we have new things, new categories that start low gross margin, that are scaling up and with things you that are expensive there. And then on the transportation logistics depresses the gross margin. So if we did less there, the gross margin would rise there.
And frankly from a buying power standpoint, there's categories where we can just say, hey, those things we can do in the near term that basically let us say take more margin (inaudible). So those are long-winded answer. But the first thing to think about is just simply that the EBITDA today could already be there, if we just make different decisions about our time orientation about what time we want to see profitability and our view of what we'd like to do is, see that 8% to 10% be against a very large number and the large numbers because we're the big winner in this space and so we're -- we're basically getting our full margin while scaling very aggressively and continue to take share because of the moat we've built because of the experience and therefore we get the customer loyalty.
And so, if you think about what we're doing it basically does all that. So from a trajectory standpoint, if you think about 2014, the US started the year at negative 6%, negative 7% EBITDA and it's gotten up to basically, I call breakeven but just -- it's called negative one, basically because the economics of the model, drive a lot of incremental EBITDA as you scale the kind of rates we've been scaling at because the contribution margin, just under 20% of every revenue dollar keeps flowing through and it either needs to be spent on headcount or advertising. In a period of time like right now where headcount has a bit of an acute step up and advertising is not showing leverage, it shown a lot of leverage in 2014, but right now, session leverage because of the mix shift in international, mix shift of new efforts like Paragould coupled with what Michael pointed, which is that we did have a big opportunity to lean in.
You basically, for this period of time and you get less flowing down but that will revert fairly, quickly as you go through a few quarters because the OpEx hiring plans already put in place, start having this growing OpEx a lot slower. And then frankly, advertising will continue to leverage over time. So that's kind of like a long-winded answer to your question. I try to hit on a few key things, I think are important to understand also. So let me, Michael, do you have anything you want to add?
Nope. I think, you've covered it.
Thank you. That was helpful. Appreciate it.
Your next question comes from Maria Ripps from Canaccord. Your line is open.
Good morning. Thanks for taking my question. Can you refresh us on your house brands strategy. Things like house brands increased substantially in the mix, just in a couple of years. Could you talk about some of the advantages of this program, both to you, consumers and suppliers. And to what extent does it help margins and where do you see house brands revenue contribution shifting over time?
Yeah, thanks, Maria. So just to recap what house brands are for everyone and then I'll kind of give you some specific color on your question. So what we do, so we have certain categories where consumers do know the brands and so something like small electrics where they know brands of coffee makers are in plumbing word Kohler, Moen, Delta, probably these are brands they know. Well, obviously in those cases, large appliances with GE, we work with the supplier, we're promoting their brand.
The reality is those categories are very small portion of our total business. So in the vast, vast, vast majority of our business, think about the bunk bed, or lighting or pillows or decorative accents or the fact we subcategories furniture, bathroom amenities, the consumer does not know any brand names and what they really want to do is they want to navigate the selection to find some that has the right styles for them, that is good quality based on the price point that they want to be in, that the esthetic really speak to them and is the look there, they want to have in the room or in their finished space.
And so there, what we found is that, what we can do is, we can create a whole ontology of brand. So we have seven -- over 75 of these brands. And each brand can speak to a specific quality, style, price point, spot in the market, the way a good home brand would do. And what we can then do is, we can create items from our suppliers into the appropriate brand where they fit. And we can then do environmental imagery of rooms and spaces, which allow that item to come to life a lot more than a product silhouette priority item that in a space that maybe doesn't fully speak to that item.
And in our case when we create these spaces, everything is shoppable. So in a brand, it's not just the brand of sofas, it's a brand of that -- it's a lifestyle brand has sofas, it has side tables, that has rugs, it has lamps, it has decorative accents. And therefore the whole -- every item is shoppable. What happens then is, we've created brands that consumers find easier to shop, the suppliers are perfectly had because they really want to just move volume of products even in brick and mortar, they're accustomed to the brand, not being front and center, they're accustomed to really just try to have the right item with good price value.
Right. And then for the consumer who doesn't know, what they're looking for, it makes it easier for them to navigate. So the way to think about the benefit, the benefit to us, is that we help customers navigate and find an item they look, they want to find that they love. Second, we get away from direct price competition on an item, we get to take advantage of assets we have like our 3D modeling capability to render photography in order to create these merchandising benefits, which is actually kind of a competitive advantage.
And then for our suppliers, they really love it, because the less competition they have between their distribution channels the better from their perspective. So in other words, at Wayfair showcasing their items in a way that drives more sales, they are excited, because one of their goals is volume. And if we do in a way that you actually don't even know that this item is from that supplier, they actually like that as well, because they are big brick and mortar customers, where are there other customers and maybe feature an item in the catalog or what have you, those customers don't feel like Wayfair as competition.
And so it's sort of, it's something that works well for everybody and really starts with the consumer have any significant benefits around navigation and bring the item to life. But, and so the conversion goes up as well for us, so there's a lot of benefits for all three.
In terms of share, over 60%, that was the last update we gave you and it's something that continues to grow. So where can it end, well, higher than -- where expense are higher than 60. Obviously, we have some categories that are frankly branded categories, large appliances, I mentioned small clients, I mentioned, in plumbing. So they will never get to 100, but it's going to be the -- vast majority of our business.
That's, helpful. Thanks a lot.
Your next question comes from Brian Nagel from Oppenheimer. Your line is open.
Hi, good morning. Thank you for taking my questions. So two questions. First off, so I guess, first for Michael. In your prepared comments you discussed the overall macro environment, it sounds like you were indicating some concerns out there. So the question I have there is, are you seeing something now in the macro environment that is weighing upon your business or you just more or less the same simply given all that's going on in the world, there could be worries in that, you're having -- for that reason you're mentioned this we have for the holiday season.
And then my second question for Niraj, just on the MyWay subscription plan, maybe little more color on that, the program and how we should over time expect that to enhance the key metrics we watch for your business? Thank you.
Thanks, Brian. Look on the macro environment, and I think, part of it is that, it's just, there is so much volatility and noise right now, right, It's just an extremely uncertain period. And so when I sit down -- sit with the team, we try and figure out what guidance is and you're trying to look out a few months, particularly, a few months there is the holiday period and you had a lot of noise, leading up to elections all that other stuff. It just makes it harder. And so it's not a specific thing that I'm pointing to where that there's some sort of softness in our business that we've seen that we would point to.
And remember, one of the challenges or I guess the opportunities is, that the big driver in our business is the shift online. And so I think, if you're in a business that's a 3% grower, you're more likely to sort of instantly feel and understand and perceive macro environment changes, if you're in a business that's a 40% grower. And you're not -- and a big part of that growth is driven by this sort of massive shift, right this systemic movement of people from one shopping methodology to a whole another one. You're less -- you're going to feel that less and so, part of my job is a little bit of reading the TV's of what the macro environment as a whole and trying to understand how that may impact our business. But it's not tied to some specific thing and I would -- I would (inaudible) on.
And then, on the second -- Brian, on the second question, about MyWay, so -- so here's what we think about. So our whole focus on our business is to have the best customer experience, so that we basically earn loyalty from our customers and so all these different initiatives we have are basically meant to ease our customers' life and add value to their experience and make it more engaging, so that they frankly come back to us more and more, and that's what we've been seeing happen.
So then if you think about our loyalty program. Our loyalty program is effectively a vehicle to help further that, by effectively rewarding a customer with a bunch of benefits that make it advantageous for them to want to spend more time shopping with us and buying more from us relative to fragmenting that spend elsewhere. And so, there's a couple different kinds of membership programs out there. And the most common kind out there, it's effectively one that provides customers discounts in exchange for some sort of membership kind of either earned or paid for it. And we're not a fan of those programs because effectively any time you discount, you, of course can get a little pop in revenue, it's very hard in the long run to have that be the basis for loyalty, because as the same thing, we are trying to be a price leader, you don't really earn long term loyalty by being a price leader, unless you believe they structurally you can always be the lowest cost player.
And so what you're seeing and you're seeing this in the current environment, most of the folks who are offering discount led membership programs are challenged, because the truth is that lifted their everyday price in order to fund it. And you're seeing how they structurally get themselves a challenge when they do that. So, our view is fundamental long-term loyalty is earned because you actually are providing the customer with more value, and the value is not just price, price is one significant element and so every day we want offer, good value, but there's actually a lot of additional value around the experience, around the quality of services or access to financing or delivery experiences, or kind of unique advantages, like perhaps that you could get access to major events a little earlier, things that are maybe not financial in nature, but actually go pretty far to get the customer excited about wanting to spend more time with us and also allocate more of their spend to us.
So we're having good momentum on those and VIP has grown faster than new, every quarter that you guys have and it's up to 66% of the total is now VIP customers. And so, we think are really high quality loyalty program will view what kind of further facilitate that. And that's how we've designed it and what we plan to continue to do to kind of hone it and advance it. And those would be the metrics, we continue to expect to see climb over time.
That's very helpful. Appreciate all the detail. Good luck for the holiday.
This will conclude our Q&A question session at this time. I turn the call back over to the presenters for closing remarks.
Well, everyone, thank you for joining this morning, we're definitely very excited about the business and our future prospects and we talked a lot about the things we have under way. So anyways, have a great rest of the year and then thank you again.


The finance section plays a significant role in recognizing opportunities to grow and invest in them. The strategy in which the finance is controlled through capital and loans is key to a successful business. The finance department is the department which controls the money flow in the company, from creating money, using money, investing, etc. The selling of goods and services creates this money and the department decides how much of it can be sent to production and manufacturing departments. The rest is saved to pay off salaries, administration expenses and the rest is saved for potential investment opportunities.
When it comes to a business's finance and a country's government you need to worry about tax agents and business tax returns in Box Hill. Sometimes we need to outsource people to analyses our taxes and other financial terms. Not to forget audits that has to be conducted. This is necessary to make sure that your business is not doing any fraud or you are carrying out your business legally. The point is even if you are doing your business legitimately and without any fraud, you do not have any evidence other than what your finance department can report to translate your good business.
Investment in to a company is really important. Let's face it; we all will invest in to a company only if it is doing well. If your company is doing well and you are looking for investors, the only way in which you can attract investors is by translating the fact that business is doing well through facts and figures.
The facts and figures which are called financial analytic reports play an important role for the managers to make decisions. These reports summarize the operations and the where and how the cash is being used in the company for the mangers and top board to see. Other than understanding what is happening within a company the finance department works together with the top management to set the budgets for the company and forecast future losses. This will later be monitored and reported back at the end of each month and the year as how successfully have the goals and objectives that was set been achieved.
In short the finance departments play a huge role in the success of the business with many finance solution firms popping up many organizations now have access to a full-fledged finance department even if they are a new business due to the availability of outsourcing. As an entrepreneur it is important in knowing where your business is headed in terms of finance or the chances are you might go bankrupt.


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Four ministries under one roof create 'absolute beautiful mosaic of the gospel'
Written by Sylvia St. Cyr Friday, Mar 04 2022, 4:47 AM
Pastors Marty and Rose McLean. (Supplied)
Multiple ministries have come together in a 'Kingdom Collaboration' to serve people in downtown Winnipeg.
The four ministries serving out of the building on Furby Street are The Wave Church, Encounter Life Ministries, Adult & Teen Challenge's (ATC) Freedom Church, and Agape Table.
Pastor Marty McLean along with his wife Rose run Encounter Life Ministries and have for four years.
"We've had different locations since we started," says McLean. "We were always looking towards downtown because our focus is to reach out to the 70,000 Indigenous people living here in the city of Winnipeg. That's always been the vision of our church."
McLean is originally from a community two hours north of Winnipeg called Pinaymootang.
"One afternoon I felt led by the Spirit to call Pastor Duane Siemens of The Wave. I shared my heart with him, the vision of our church, what we've been doing, and the outreaches we've been doing over the past year. He said that he felt we needed to work together."
It only took a week before Siemens offered the space for Encounter to run their services out of the building.
"By the leading of the Lord it was just like a piece of the puzzle was being put together, and we both recognized that. We both call it a Kingdom Collaboration, and it truly has been."
While each ministry offers something to the public, they can fill gaps where another ministry is lacking or simply unable to meet a certain need. There are multiple church services at different times, they offer help for people battling addictions, and they offer services and items for people facing homelessness.
"Agape Table is there. Having them there and collaborating with them is such a wonderful thing," says McLean. "We're a small church that is growing but these ministries are willing to help right off the bat. We deal with many people facing addictions and now we're connected with Adult & Teen Challenge and Freedom Church. There's a wonderful unity happening."
ATC's Freedom Church
Terry Thiessen is the Ministry Pastor of ATC Central Canada. He helps oversee four Freedom Churches, three in Manitoba and one in Thunderbay, Ontario. Their Freedom Church in Winnipeg operates out of this building.
"ATC has a long relationship with The Wave Church, even going back to when it was called Waves of Glory," says Thiessen. "We have been partnering with them. Pastor Duane Siemens has had various coaching roles, and our men attend The Wave church many a Sunday morning. We have had a strong and affectionate relationship with this church."
Thiessen shares that much of the credit for the ministry's collaboration goes to The Wave Church and Pastor Duane.
"We want to be an absolute force for the community and Pastor Duane has had that heart for many years to make maximum impact with the real estate that you have. It was a great fit for us."
The separate ministries work together in sharing the gospel with people.
"There's not one of these [ministries] that we haven't had a direct hand with. We had an outreach team at Encounter Life and we've also had Pastor Marty and his team minister at Freedom Church on a Sunday night. With The Wave, we've done the same thing."
The unifying of forces is what makes this collaboration one that stands out, according to Thiessen.
"It's not so much identifying the different roles that we have but understanding the difference all of us offers makes for an absolute beautiful mosaic of the gospel. It helps the community to see that organizations that might function differently from each other can really symphonically create a nice musical piece together and serve the community. That's what it's all about."
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redpajama_set_name: RedPajamaCommonCrawl


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Review: I Spit on Your Grave (2011)
Cast Members of Note- Sarah Butler, Jeff Branson, Andrew Howard, Daniel Franzese and Chad Lindberg.
Jennifer is a sexy little writer who decides to rent a cabin in the woods to work on her newest book... right there you know she's destined to get raped, killed and/or terrorized in some way, right? It's so obvious. Hot chicks can not go into any backwoods locale alone, and hope to find any sort of comfort or solace. I think that's a law in most states. Especially in the South.
Yes, you should have known better. Now stop pouting.
Anywho, after spilling water on the rube at the gas n' go, and making out with the town retard, Jennifer decides to drink a few bottles of wine, smoke some marijuana cigarettes, and walk around her cabin half naked. With all of those elements aligned, it takes about 4 seconds for Jethro and his dim-witted crew of yokels to show up, and put a good rapin' on the city whore's ass.
"I should go look in there..."
Left for dead, Jennifer gets herself cleaned up, builds some crazy traps, and sets off on a mission to make the rape gang from Petticoat Junction wish they 'taint never done seen her pretty city titties... It really is your standard rape/revenge story, but I feel it appropriate to say that Jennifer doesn't play around, and she gets quite nasty in here revenge tactics. This is exactly why I don't rape people. Well, that and I'm not anywhere near that level of creepy.
I think at this point, I'd stop calling her a whore if I were you...
Well made and superbly acted by everyone involved, ISOYG 2010 is a nasty, unflinching little remake that should please even the most jaded of Horror fans. If you've seen the original, then not much here will come as a surprise to you other than the fact that the remake is a far better film than its 1978 namesake.
Rape/revenge movies are an acquired taste. They're usually stark and brutal, and on most levels, they're profoundly disturbing. Sure, the revenge aspect of things seem to make it all right in the end, but the slow and brutal build up that comes before that vindication is a tough thing to sit through for most folk. There's a reason that these movies were big in the 70's for a while and then disappeared for the most part... there's not a lot of fun involved for the audience.
That being said, these types of movies do have a strong and necessary message in them that begs to be heard, and it's basically "do unto others..." Sadly, in real life, these types of crimes go mostly unpunished for the most part, if they're even reported in the first place, and therein lies the beauty of a movie like this; the sick fucks of the world whom prey upon the innocent and chaste get what they deserve and more, even if it's only on film. It's almost like our own personal revenge, and damn if it doesn't feel good to see, even if it's incredibly tough to watch.
Sarah Butler will make you like her, feel for her, feel her pain, and cheer her on through all of the unspeakable acts that she partakes in, because she deserves her revenge. She's also a cutie, which never hurts things. Conversely, the villains of the film will make you seethe with anger, especially Johnny and the Sheriff; they're played to evil perfection by Jeff Branson and Andrew Howard. You will hate them, and I'm talking an extra special kind of hate here. The bottom line is that the cast did their jobs admirably, and pulled exactly what they were supposed to out of us, emotionally.
He got punched so hard his eyes are red!
The one criticism I have is this: how does a sweet, innocent type like Jennifer turn into a vicious, death-dealing angel of no mercy so quickly? I get it, but I mean she concocts some pretty elaborate "traps" if you will, and dishes out some really rough, slow torture to her victims. It felt a tiny bit odd to me. It really is a small issue, as the movie worked well overall, but I felt it worth a mention.
That smile is a trap!
When are city folk going to learn that you do not head off for an idyllic weekend in the country, unless you're armed for bear and willing to kill? You're just asking for trouble if you don't.
The worst kind of trouble.
Rape, torture, rape, anal shotgun violence, rape, eye torture, rape, hedge clipper to the groin, rape, face melting and rape. There's so much rape in this movie, that even one of the bad guys get raped... albeit by a shotgun, but it still counts. This is a tough one to sit through, and will most likely make you flinch and squirm throughout.
Personally, I'd take the fishhooks in the eyes, if I got a choice.
We do get to see the nice little body of Sarah Butler in various stages of undress, but considering the subject matter, it's not very enjoyable. She's very nice too look at before the nastiness starts though.
Sassy.
If you're going to rape someone, you should really be prepared to have your dick cut off. I mean, you pretty much have it coming, so, just prepare for that.
She is vengeance.
As remakes go, this one managed to improve on the original in most ways, and add enough flair of its own to make it more than just a simple retelling. You have to like the whole rape/revenge, female empowerment sub-genre to truly appreciate this one, because its a tough watch, but don't discount it as mere Torture Porn or blatant exploitation. It's more than that.
Bottom line is, this flick delivers the uncomfortable, messy goods.
Sarah Butler is destined to be a genre great, if she's so inclined. First though, she's intent on finishing this puzzle...
I know where one piece will fit...
Posted by Unknown at January 31, 2011 4 comments :
Labels: 2010's , 2011 , Country- U.S.A. Horror , Genre- Backwoods , Genre- Exploitation , Genre- Survival/Revenge , Grade- A , Remake , Review
January in Review
So what exactly did the first month of the new year give to we, the horror faithful? Well, Theatrically we got a Nicholas Cage clunker about some knights and a witch, with Season of the Witch. Not a great way to start the year off. We also got a pretty good possession flick in The Rite, though it had some issues and could have been perfect had they gone a different way with it. The annual After Dark Horror Festival only went theatrical in 10 theaters this year, so it looks like most will have to wait for DVD if they want to catch them. That's probably not the worst decision that After Dark has ever made... On the DVD front, we got a mixed bag... We got some good ones- The Last Exorcism *, Machete *, Pirhanha 3-D *, Buried * Some average ones-Bitter Feast, Case 39 *, Dark Skies: The Complete Series, Death Race 2, The Traveler * And some just plain bad ones- Saw 3D: The Final Chapter **, Let Me Die Quietly, The Shadows, Wolvesbayne, Halloween Night, Psychosis. So overall, it looks like a slow, uneventful month for the most part. February already looks more promising, so let's keep our fingers crossed, shall we? January was a C, at best.
Posted by Unknown at January 31, 2011 No comments :
Labels: 2010's , 2011 , Review
Quick review: Vanishing on 7th Street (2011)
Here's what amazes me: some of the "big" Horror Sites, which considered 2010's A Nightmare on Elm Street an abomination of epic proportions beyond any and all comprehension, oddly found some way to gush over this movie, which was honestly a mess from the get go. Why is that? This movie was every bit the mess that ANOES 2010 was, and in our opinion, even more so.
I'm not looking to start a debate here, but it just makes me wonder about a lot of things that some sites print.
Let me back up for a second here.
I'm a Metro Detroiter. Go ahead and make your Detroit jokes, I get it. I can't argue with most of them. The city itself, is pretty much a joke. Still, being born there, and living in its suburbs, I have a sense of pride about the place, kinda, and it tickles me to no end to see how many movies are being made here in the area of late.
SE Lower Michigan has some great locales, great culture, and a ton of untapped potential. Plus I'm here, so it's obviously an awesome place.
Rush hour in Detroit.
Add to that the fact that I love Brad Anderson's work -from The Machinist and Session 9, to most of his great TV series work- and this movie had me all sorts of giddy from the get go. Brad Anderson is shooting a Horror flick in my own backyard.. hells yes! No, make that fucks yes! Awesome stuff, right? Well, after seeing the movie, I have to say not so awesome.
While not an abomination, this movie certainly makes its fair share of missteps, and feels haphazard. Lazy even.
Are those Christmas lights?
Basically, the story starts with Hayden Christensen waking up to find that pretty much everyone in the city (Detroit) has vanished, leaving piles of clothing behind as the only sign that they had been there at all. He comes to discover that he's safe when it's light out, but once it gets dark and the light fades, shadow people pop up out of nowhere and turn you into another pile of clothes. Fine. Interesting enough premise.
John Leguizamo, Thandie Newton, and some cute little black kid pretty much round out the cast as the other survivors. They all meet up, freak out together, and fight like hell to keep a light on while they figure out what's happening. Still interesting, still a ton of possibility...
We get some flashbacks of the characters before everything "went dark." We get plenty of moments showing the light juuuust about to wink out with the shadow people closing in to make the kill, only to be foiled by a last minute light display of some sort. We get some cheesy, cliche' moments involving both dialogue, and poor decisions that seem to be there only to give the movie another chance to scare us. And we for sure get a shitty ending that resolves nothing save for the fact that we should have seen another movie.
What we don't get is any sort of resolution, any strong hints towards whats going on, what caused it, what the shadow people are, why our main characters didn't die immediately like everyone else seemed to... Croatoan you say? I guess so, though it still explains nothing. And no, I don't need to be spoon fed, and actually prefer ambiguity in movies like these, but there's so little here to chew on and digest, that drawing my own conclusions just seemed pointless.
It had its moments, don't get me wrong, but there were just not enough of them. Also, there's no 7th Street in Detroit. That's downriver a bit in Ecorse. I'm just sayin'. Night of the Comet meets Pulse, but far less satisfying. that's pretty much the story here.
No, Hayden. Just stop.
Not the Brad Anderson movie I'd have someone unfamiliar with the man's work start with, Vanishing on 7th Street needed to be tighter and a little bit more substantial. I'm not saying don't watch it, I'm just saying don't expect anything remotely close to the quality of Session 9 if you do.
Oh, and back to the point I opened with... politics. I blame politics.
I ain't even mad at Thandie Newton. Or that other chick.
Labels: 2010's , 2011 , Country- U.S.A. Horror , Genre- Post Apocalyptic , Genre- Supernatural , Genre- Survival/Revenge , Grade- C- , Review
Review: Season of the Witch (2011)
"This movie is a perfect example of why studios dump certain movies in the theatrical wasteland that is the month of January..."
Cast Members of Note- Nicolas Cage, Ron Perlman, Stephen Graham, Claire Foy and Christopher Lee!
*Warning: Religious jokes ahead (because Religion is usually pretty funny)* Behmen and Felsen are fierce warriors of The Crusades, carving their way through the innocent and guilty alike in the name of Jebus. When they decide that killing women and kids is just too much, they renounce their quest for Jebus, and run away. I think it's all a cop-out, because if you can't slaughter innocents and non-believers (or touch young boys in the pants) in the name of God, who can you slaughter? Or touch. The Catholics have been doing it forever, and they grew into pretty much the biggest company of all time.
Praise him indeed, Homer. Praise him indeed.
After a lame sword fight that really doesn't prove them to be fierce warriors at all, Behmen and Felsen are captured and forced to tend the weeping wounds of a plague-stricken king. The two are then forced to choose between escorting an imprisoned Witch to her "fair trial" or say 42,000 Hail Marys as penance for their cowardly desertion. Behmen then lets it be known, about 52 times, that he will do it, only so that the Witch girl can receive a "fair trial." He is so pious.
In search of the ever-elusive "fair trial."
So Behmen, Al Capone and a priest named Ballsack ride around in the forest, cross a bridge, talk, fight some wolves, ride around in the forest, fight amongst each other, talk, build a leaf fort, brood, snap off some witty one liners, play tag/hide and seek with the Witch, and ride around in the forest. It's all very compelling stuff. There's also something about a book, and then everything turns into The Exorcist. Kinda.
"Are you familiar with the book of Enoch?"
Will Behmen and Ballsack ever figure out the mystery of the Witch? Will she receive the "fair trial" that she's been promised over, and over, and over, and over again? Will January ever be a month in which we can expect decent, let alone good movies, to be released in Theaters? Yes, no and probably not. There's always February though...
She's even cute when she's all dirty and creepy.
If this movie were an episode of some syndicated fantasy show on the CW or Spike TV, it wouldn't have been so bad. It didn't make for a strong movie, but it works perfectly well for the Zena or Legend of the Seeker fans of the world, I'm sure. I don't like those types of shows, but hey, they serve a purpose, and obviously plenty of folks love them.
Had they stuck by the original premise of the movie, you know, which involves an evil Witch, this could have been fun. But once the dreaded and obligatory "Twist" arrives, there's no more fun to be found in this movie. It had it's fun moments, but those were interspersed with slow, non-exciting moments that either induced laughter or a roll of the eyes. Or a quick nap. It just gets so lost in direction, and becomes so dull and pointless, that there's nothing to really care about. I'd like to know how this movie ended up such a mess since they re-shot and re-tooled it, and worked on it for so long...
Ron Perlman, who is pretty much the B-movie version of Michael Caine, is always fun to watch, even when the material he has to work with is sub-par. Same goes for Nicolas Cage; he's in his share of shitty movies, but they guy has a likable quality that usually sucks us in, level of shit be damned. They both deserve better material to work with that they had here though. We hope to hear more from Claire Foy as well, as she's a cutie who pulled her weight in this one, though the weight they gave her wasn't much to write home about. And it's always great to see Christopher Lee still going at age 89. That makes us truly happy.
I'd trust her.
The CGI was pretty shabby in this one. The green screen battle scenes were bad enough, but the way they went with the Demon... that just ruined it all for me. It's bad enough that the story became about a Demon to begin with, but to have it look and act so cheesy just felt wrong. If you're expecting something akin to the look and feel of lets say an Army of Darkness (sans humor, of course), you're not going to get that here. Not even close.
So deep.
What kind of movie was this supposed to be? For a minute, it was a Medieval battle movie (though a poorly-rendered one at that), then it became a movie about the evils of the Church and Religion. It was a movie about a battle-hardened warrior who finally decides he has morals and refuses to kill unjustly, and then it became a movie about "let's kill that bitch!" It jumped around so much and left so little impression on any of the themes it was trying to maintain, that in the end it really felt like it was about time to leave the Theater. See what I did there? I'm clever.
"Just keep staring at the screen and pretend you're not on a sound stage... Aaaaaand action!"
There's violence to be had here, but nothing all that good or graphic.
January is Hollywood's dumping ground/graveyard for mediocre, embarrassing films that they have absolutely no faith in. In most cases, they're right to think that way. Also, if you aren't familiar with The Book of Enoch, then you need to check out Fulci's The Gates of Hell. It's good stuff.
Also, Nic Cage is a mystery.
It's not hard to see why this movie was pushed back from a summer 2010 release date, all the way to January: it's a shoddy little mess of a flick that doesn't look or feel truly complete or coherent. We didn't hate it, though it feels like we should, but it certainly isn't a very good start to a new Horror year. We love Nic Cage, love Ron Perlman, and we love good stories about Witches, but this movie is really, really hard to love. Or even like. See it at your own risk if you like it cheesy and aren't much on quality.
Aw, she's a sexy bitch Witch.
Labels: 2010's , 2011 , Country- U.S.A. Horror , Genre- Dark Fantasy , Genre- Supernatural , Genre- Witches , Grade- D+ , Review
Quick Review: The Traveler (2011)
Attention sheeple: a new image from Breaking Dawn ...
Upcoming Movie Spotlight- Rubber (2011)
Review: My Soul to Take 3D (2010)
A running tally of the years movies so far...
Quick Review: The Possession of David O'Reilly (20...
Review: In Their Sleep (2011)
Review: I Saw the Devil (2011)
Quick Review: The Horseman (2010)
It's time for 10 Posters again...
Review: Hatchet 2 (2011)
Quick Review: Rammbock (2011)
Quick Reviw: Someone's Knocking at the Door (2010)...
Release Date List Updated....
THC's 2010 Year in Review
The Best Horror Movies of 2010
The Worst Horror Movies of 2010
The First 10 Horror Eyes of 2011!
The 2010 Review Archive


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My good friend and fellow writer T.G. Arsenault (Tim-ay!) tagged me in his The Next Big Thing blog, a kind of viral round robin thingy where we get to talk about a current work in progress. I, in turn, was to tag another five writers to keep it going next Wednesday. I was only able to dig up three who were interested, had a blog, and haven't already participated. Seems this thing is a bit like the flu, it's making the rounds very quickly, and it seems everyone already got it.
The three suckers who allowed me to tag them are listed below, so be sure to check them out!
Here are my answers to the ten questions.
I have a few irons on the fire right now, but the one that's closest to being finished is the second book in my new YA Fantasy series, The Phoenix Girls, Book 2 – The Crimson Brand. That is only a working title. As I get through the second draft a better one might occur to me.
This book is only a smaller part of a larger idea which came to me about half-formed in a moment of epiphany so strong it almost stunned me. I remember exactly where I was when I had it, a passenger in my wife's suv, instead of a driver which was usually the case. Probably a good thing too. I might have driven us straight off the road.
Where it came from … that's a question I can't really answer. I have no idea where it came from. I had toyed with the idea of writing something I could let my daughters read, they were younger back then, 14 and 11, and thought YA Fantasy would be a lot of fun. I wasn't looking for that kind of story idea though. It found me, and I was happy to take ownership when it did, but that moment of epiphany wasn't where the idea was born, just when it presented itself. I think ideas like that one either come from a lifetime of accumulated experiences, from everything that made me who I am and how I am, or from nowhere at all.
Young Adult Fantasy, though it has hints of other genres in the story to spice it up. There's mystery, adventure, and just a dash of horror. I also want to point out that I don't think a good YA story needs to be written down to a certain level or age group. I certainly wrote it with younger readers in mind, but I won't insult them by suggesting in either word or deed that a story has to be simplistic or unchallenging for young readers to grasp it. A good YA story, and I do think my Phoenix Girls stories are good or I wouldn't be writing them, and certainly not committing myself to an entire series, is just as complex and challenging as its adult oriented counterpart. Good YA stories are certainly capable of supporting complex characters, relationships, emotions, and ideas, and very capable of engaging adult readers.
Unfortunately all of the actors and actresses I can see playing the lead rolls are already too old. If I could go back a few years and recruit some of my favorites … Bonnie Write as Penny, Saoirse Ronan or Dakota Fanning as Katie, and well, can't really think of anyone for Zoe.
A young orphaned girls loses everything she has, family, friends, home, and finds them all again in a most extraordinary, and magical, way.
I will not self publish. I flatly refuse to self publish. I wouldn't be able to do it properly for one, and more importantly, if no one is willing to take a chance on it, then maybe it's not worth taking a chance on. Luckily that is not the case with The Phoenix Girls.
No agency though. Agents … just don't get me started.
Around a year, though a majority of the 90,000 words were done in a few month of marathon writing. It was simply the most fun I've ever had. Ever!
The Harry Potter books (yeah, I flatter myself) and the Narnia books (more flattery) come first to mind. It's really not like either of them. I think The Phoenix Girls is pretty unique. Or I like to think it is. You read it and let me know.
My daughters, and the idea itself. Once the idea hit me, it was too good not to write.
Magic, monsters, bullies and bad guys, and most importantly, I think anyway, sympathetic young protagonists who any young reader, or every reader who remembers some of the difficulties of being young, can relate to and love.
Well, that's it I suppose. There's a lot more I'd like to say about this book, and series, but if I ramble too long I'm likely to start throwing out spoilers.
Here are the writerly people I suckered into participating.