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
InformationOverstock 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
ir@overstock.com.
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.comOverstock.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
StatementsThis 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.
ContactsInvestor Relations:Lavesh
Hemnaniir@overstock.com |
Media Relations:Sarah Factorpr@overstock.com |
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 endedJune 30, |
|
Six months endedJune 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 endedJune 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 DataWe 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 endedJune 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
ReconciliationsWe 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 endedJune 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 endedJune 30, |
|
Six months endedJune 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 endedJune 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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