Overstock Announces Second Quarter 2023 Financial Results

Completed acquisition of Bed Bath & Beyond brand and other intellectual property

Executing a transformative re-branding, supported by strong balance sheet

SALT LAKE CITY, July 27, 2023 (GLOBE NEWSWIRE) — Overstock.com, Inc. (NASDAQ:OSTK) today reported financial results for the quarter ended June 30, 2023.

Second Quarter 2023 Financial Highlights

Total net revenue was $422 million, a decrease of 20% year-over-year
Gross profit of $94 million, or 22.4% of total net revenue
Operating loss of $4 million
Net loss of $73 million
Diluted net loss per share of $1.63; Adjusted diluted net loss per share (non-GAAP) of $0.02
Adjusted EBITDA (non-GAAP) of $8 million, which represents 2.0% of net revenue
Cash and cash equivalents totaled $343 million at the end of the second quarter

“The acquisition of the Bed Bath & Beyond brand is the beginning of a new phase of growth for us,” said Overstock CEO Jonathan Johnson. “The successful launch and early performance of our Bed Bath & Beyond business in Canada has been encouraging. The Bed Bath & Beyond brand is strong. In Canada, customers want to buy – and are comfortable buying – from the new Bed Bath & Beyond website.”

“We are optimistic about our future with this new brand in the U.S.,” continued Johnson. “The combination of a highly recognized and much-loved consumer home brand and our asset-light operating model should meaningfully grow and scale our business in the U.S. and Canada. We know there is work to be done to win Bed Bath & Beyond customers and retain our existing loyal customers through this transition. We have the right strategies, the right action plan, and the right people in key positions to execute this transformation. The entire organization is focused on ensuring the success of the Bed Bath & Beyond U.S. launch, still targeted for early August.”

“The team continued to execute well during the second quarter,” Johnson stated. “As we navigated an intensely competitive environment well with our asset-light business model, we were able to provide smart value to our customers, improve our year-over-year revenue trend, and deliver another quarter of positive adjusted EBITDA. Our balance sheet remains strong with over $300 million in net cash, setting us up well to execute the transformative re-branding of our furniture and home furnishings e-commerce business. We look forward to providing an update on our re-branding efforts and our second quarter 2023 performance during our earnings call.”

Second Quarter 2023 Operational Metrics*

Active customers of 4.6 million, a decrease of 29% year-over-year
Last Twelve Months (LTM) net revenue per active customer of $361, a decrease of 1% year-over-year
Orders delivered of 1.8 million, a decrease of 16% year-over-year
Average order value of $234, a decrease of 5% year-over-year
Orders per active customer of 1.56, a decrease of 5% year-over-year
Orders placed on a mobile device were 51% of gross merchandise sales

*Certain terms, such as active customers, LTM net revenue per active customer, orders delivered, average order value, and orders per active customer are defined under “Supplemental Operational Data” below.

Earnings Webcast and Replay Information
Overstock will hold a conference call and webcast to discuss its second quarter 2023 financial results on Thursday, July 27, 2023 at 8:30 a.m. ET. To access the live webcast and presentation slides, go to http://investors.overstock.com. To participate in the conference call via telephone, please register at the link available at http://investors.overstock.com/events. Registrants will receive dial-in information and a unique PIN to access the live call. Questions may be emailed in advance of the call to [email protected].

A replay of the conference call will be available at http://investors.overstock.com starting two hours after the live call has ended.

About Overstock.com
Overstock.com, Inc. (NASDAQ:OSTK) is an online furniture and home furnishings retailer and technology-focused innovator based in Salt Lake City, Utah. Overstock.com, Inc. owns the Bed Bath & Beyond brand and other intellectual property related to the brand. Our leading e-commerce website sells a broad range of new home products at low prices, including furniture, décor, area rugs, bedding and bath, home improvement, and more. The online shopping site features millions of products that tens of millions of customers visit each month. Overstock regularly posts information about the Company and other related matters on the Newsroom and Investor Relations pages on its website, Overstock.com.

Bed Bath & Beyond, Beyond, Welcome Rewards, Overstock, and Overstock.com are trademarks of Overstock.com, Inc. Other service marks, trademarks and trade names which may be referred to herein are the property of their respective owners.

Cautionary Note Regarding Forward-Looking Statements
This press release and the July 27, 2023 conference call and webcast to discuss our financial results may contain forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements include all statements other than statements of historical fact, including forecasts of trends, market conditions, the impact of our national marketing campaign, and other factors that could impact our results of operations. You should not place undue reliance on any forward-looking statements, which speak only as of the date they were made. We undertake no obligation to update any forward-looking statements as a result of any new information, future developments, or otherwise. These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including but not limited to, macroeconomic changes, including higher inflation and higher interest rates, and difficulties we may have with our fulfillment partners, supply chain, access to products, shipping costs, competition, attraction/retention of employees, search engine optimization results, and/or payment processors. Other risks and uncertainties include, among others, negative economic consequences of global conflict, problems with our infrastructure, including cyber-attacks or data breaches affecting us, adverse tax, regulatory or legal developments, any restrictions on the use of “cookies” or other tracking technologies, any negative business impacts associated with our evolving business practices including our use of our newly acquired Bed Bath & Beyond brand and other intellectual property related to the brand, our exit from non-home categories, and whether our partnership with Pelion Venture Partners will be able to achieve its objectives. More information about factors that could potentially affect our financial results are included in our Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 24, 2023, in our Form 10-Q for the quarter ended March 31, 2023, which was filed with the SEC on May 2, 2023, and in our subsequent filings with the SEC. The Forms 10-K, 10-Q, and our subsequent filings with the SEC identify important factors that could cause our actual results to differ materially from those contained in or contemplated by our projections, estimates and other forward-looking statements.

Contacts

Investor Relations:
Lavesh Hemnani
[email protected]

Media Relations:
Sarah Factor
[email protected]

Overstock.com, Inc.
Consolidated Balance Sheets (Unaudited)
(in thousands, except per share data)
  June 30,
2023
  December 31,
2022
Assets      
Current assets:      
Cash and cash equivalents $ 342,891     $ 371,263  
Restricted cash   185       194  
Accounts receivable, net   19,122       17,693  
Inventories   6,313       6,526  
Prepaids and other current assets   20,369       18,833  
Total current assets   388,880       414,509  
Property and equipment, net   109,949       109,906  
Deferred tax assets, net   52,941       41,439  
Intangible assets, net   25,583       9  
Goodwill   6,160       6,160  
Equity securities   208,476       296,317  
Operating lease right-of-use assets   4,985       7,460  
Other long-term assets, net   13,578       2,746  
Total assets $ 810,552     $ 878,546  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 86,016     $ 75,130  
Accrued liabilities   62,603       63,614  
Unearned revenue   43,379       44,480  
Operating lease liabilities, current   3,108       4,410  
Other current liabilities   2,029       3,508  
Total current liabilities   197,135       191,142  
Long-term debt, net   34,219       34,476  
Operating lease liabilities, non-current   2,319       3,626  
Other long-term liabilities   3,713       3,476  
Total liabilities   237,386       232,720  
Stockholders’ equity:      
Preferred stock, $0.0001 par value, authorized shares – 5,000, issued and outstanding – none          
Common stock, $0.0001 par value, authorized shares – 100,000      
Issued shares – 51,455 and 51,102      
Outstanding shares – 45,202 and 44,951   5       5  
Additional paid-in capital   995,904       982,718  
Accumulated deficit   (257,629 )     (173,829 )
Accumulated other comprehensive loss   (514 )     (522 )
Treasury stock at cost – 6,253 and 6,151   (164,600 )     (162,546 )
Total stockholders’ equity   573,166       645,826  
Total liabilities and stockholders’ equity $ 810,552     $ 878,546  
Overstock.com, Inc.
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
  Three months ended
June 30,
  Six months ended
June 30,
    2023       2022       2023       2022  
Net revenue $ 422,211     $ 528,122     $ 803,351     $ 1,064,159  
Cost of goods sold   327,839       407,017       619,266       817,842  
Gross profit   94,372       121,105       184,085       246,317  
Operating expenses              
Sales and marketing   49,242       57,940       96,290       116,453  
Technology   27,706       30,542       58,252       63,531  
General and administrative   21,673       21,081       42,156       42,337  
Total operating expenses   98,621       109,563       196,698       222,321  
Operating income (loss)   (4,249 )     11,542       (12,613 )     23,996  
Interest income (expense), net   3,059       115       5,618       (10 )
Other expense, net   (80,673 )     (1,981 )     (88,062 )     (2,095 )
Income (loss) before income taxes   (81,863 )     9,676       (95,057 )     21,891  
Provision (benefit) for income taxes   (8,370 )     2,529       (11,257 )     4,621  
Net income (loss) $ (73,493 )   $ 7,147     $ (83,800 )   $ 17,270  
Net income (loss) per share of common stock:              
Basic $ (1.63 )   $ 0.12     $ (1.86 )   $ 0.33  
Diluted $ (1.63 )   $ 0.12     $ (1.86 )   $ 0.33  
Weighted average shares of common stock outstanding:              
Basic   45,200       43,072       45,134       43,062  
Diluted   45,200       43,159       45,134       43,221  
Overstock.com, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
    Six months ended
June 30,
      2023       2022  

Cash flows from operating activities:
     
Net income (loss) $ (83,800 )   $ 17,270  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Depreciation and amortization   10,501       8,350  
Non-cash operating lease cost   2,554       2,736  
Stock-based compensation to employees and directors   12,065       9,334  
(Increase) decrease in deferred tax assets, net   (11,502 )     2,622  
Loss from equity method securities   87,820       2,583  
Other non-cash adjustments   (186 )     (114 )
Changes in operating assets and liabilities:      
  Accounts receivable, net   (1,429 )     (1,504 )
  Inventories   213       (529 )
  Prepaids and other current assets   (907 )     2,318  
  Other long-term assets, net   (1,537 )     (943 )
  Accounts payable   11,992       (6,104 )
  Accrued liabilities   (3,369 )     (8,339 )
  Unearned revenue   (1,101 )     (2,833 )
  Operating lease liabilities   (2,779 )     (2,850 )
  Other long-term liabilities   237       (175 )
  Net cash provided by operating activities   18,772       21,822  
Cash flows from investing activities:      
Disbursement for notes receivable   (10,000 )      
Purchase of intangible assets   (22,832 )      
Purchase of equity securities         (11,420 )
Capital distribution from investment         1,162  
Expenditures for property and equipment   (12,048 )     (6,406 )
Other investing activities, net   445       (505 )
Net cash used in investing activities   (44,435 )     (17,169 )
Cash flows from financing activities:      
Repurchase of shares         (60,077 )
Payments of taxes withheld upon vesting of employee stock awards   (2,054 )     (3,482 )
Other financing activities, net   (664 )     (1,673 )
Net cash used in financing activities   (2,718 )     (65,232 )
Net decrease in cash, cash equivalents, and restricted cash   (28,381 )     (60,579 )
Cash, cash equivalents, and restricted cash, beginning of period   371,457       503,366  
Cash, cash equivalents, and restricted cash, end of period $ 343,076     $ 442,787  

Supplemental Operational Data
We measure our business using operational metrics, in addition to the financial metrics shown above and the non-GAAP financial measures explained below. We believe these metrics provide investors with additional information regarding our financial results and provide key performance indicators to track our progress. These indicators include changes in customer order patterns and the mix of products purchased by our customers.

Active customers represent the total number of unique customers who have made at least one purchase during the prior twelve-month period. This metric captures both the inflow of new customers and the outflow of existing customers who have not made a purchase during the prior twelve-month period.

LTM net revenue per active customer represents total net revenue in a twelve-month period divided by the total number of active customers for the same twelve-month period.

Orders delivered represents the total number of orders delivered in any given period, including orders that may eventually be returned. As we ship a large volume of packages through multiple carriers, actual delivery dates may not always be available, and in those circumstances, we estimate delivery dates based on historical data.

Average order value is defined as total net revenue in any given period divided by the total number of orders delivered in that period.

Orders per active customer is defined as orders delivered in a twelve-month period divided by active customers for the same twelve-month period.

The following table provides our key operating metrics:
(in thousands, except for LTM net revenue per active customer, average order value and orders per active customer)

  Three months ended
June 30,
    2023     2022
Active customers           4,621                     6,490        
LTM net revenue per active customer $         361           $         365        
Orders delivered           1,803                     2,138        
Average order value $         234           $         247        
Orders per active customer           1.56                     1.65        

Non-GAAP Financial Measures and Reconciliations
We are providing certain non-GAAP financial measures in this release and related earnings conference call, including adjusted diluted earnings (loss) per share, adjusted EBITDA, and free cash flow. We use these non-GAAP measures internally in analyzing our financial results and we believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance in the same manner as our management and board of directors. We have provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures in this earnings release. These non-GAAP financial measures should be used in addition to and in conjunction with the results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures.

Adjusted diluted earnings (loss) per share is a non-GAAP financial measure that is calculated as net income (loss) less the income or losses recognized from our equity method securities, net of related tax. We believe that this adjustment to our net income (loss) before calculating per share amounts for the current period presented provides a useful comparison between our operating results from period to period.

Adjusted EBITDA is a non-GAAP financial measure that is calculated as income (loss) before depreciation and amortization, stock-based compensation, interest and other income (expense), provision (benefit) for income taxes, and special items. We believe the exclusion of certain benefits and expenses in calculating adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis. Exclusion of items in the non-GAAP presentation should not be construed as an inference that these items are unusual, infrequent or non-recurring.

Free cash flow is a non-GAAP financial measure that is calculated as net cash provided by or used in operating activities reduced by expenditures for property and equipment. We believe free cash flow is a useful measure to evaluate the cash impact of the operations of the business including purchases of property and equipment which are a necessary component of our ongoing operations.

The following table reflects the reconciliation of adjusted diluted loss per share to diluted loss per share (in thousands, except per share data):

  Three months ended
June 30,
    2023  
  Diluted EPS   Less: equity method income (loss)1   Adjusted Diluted EPS
Numerator:          
Net loss attributable to common stockholders $ (73,493 )   $ (72,703 )   $ (790 )
           
Denominator:          
Weighted average shares of common stock outstanding—diluted   45,200       45,200       45,200  
           
Net loss per share of common stock:          
Diluted $ (1.63 )   $ (1.61 )   $ (0.02 )

1 Inclusive of estimated tax impact

The following table reflects the reconciliation of adjusted EBITDA to net income (loss) (in thousands):

  Three months ended
June 30,
  Six months ended
June 30,
    2023       2022       2023       2022
Net income (loss) $ (73,493 )   $ 7,147     $ (83,800 )   $ 17,270
Depreciation and amortization   4,516       4,043       10,501       8,350
Stock-based compensation   6,270       4,695       12,065       9,334
Interest (income) expense, net   (3,059 )     (115 )     (5,618 )     10
Other expense, net   80,673       1,981       88,062       2,095
Provision (benefit) for income taxes   (8,370 )     2,529       (11,257 )     4,621
Special items (see table below)   1,697       475       1,697       528
Adjusted EBITDA $ 8,234     $ 20,755     $ 11,650     $ 42,208
               
Special items:              
Brand integration and related costs $ 1,086     $     $ 1,086     $
Restructuring costs   611             611      
Special legal charges and other         475             528
  $ 1,697     $ 475     $ 1,697     $ 528

The following table reflects the reconciliation of free cash flow to net cash provided by operating activities (in thousands):

  Six months ended
June 30,
    2023       2022  
Net cash provided by operating activities $ 18,772     $ 21,822  
Expenditures for property and equipment   (12,048 )     (6,406 )
Free cash flow $ 6,724     $ 15,416  


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Originally published at https://www.einpresswire.com/article/646700037/overstock-announces-second-quarter-2023-financial-results