Consolidated revenue of $453 million (-1% growth) and pre-tax
loss of $49.9 million;CEO commits to a return to profitability for
the retail business in 2019, commits Retail will generate a minimum
positive $10 million operating cash flow for 2019
Overstock.com, Inc. (NASDAQ:OSTK), a tech-driven online retailer
and advancer of blockchain technology, today reported financial
results for the quarter ended December 31, 2018.
My fellow shareholders,
Our blockchain projects are some of the most significant and
cutting edge in the world, and we are just reaching the point where
our products are being introduced to the public. In particular,
tZERO brought live a security token trading platform. Our retail
arm lost money last year because I gunned things in an attempt to
create a conventional high-growth/money losing e-commerce business,
but the losses were nauseating and we reverted back to the
philosophy of profitability on which we built Overstock: as a
result, in 2019 Retail will return to profitability, generating a
positive operating cash flow ≥ $10M.
I encourage you to tune in to our 2018 earnings call for a more
robust discussion on all facets of Overstock.
Your humble servant,
Patrick M. ByrneCEO and Founder
Key metrics (Q4 2018 vs. Q4 2017):
- Revenue: $452.5M vs. $456.3M (1% decrease);
- Gross profit: $81.6M vs. $85.8M (5% decrease);
- Gross margin: 18.0% vs. 18.8% (78 basis point decrease);
- Sales and marketing expense: $47.5M vs. $54.5M (13%
decrease);
- Technology/G&A expense: $82.5M vs. $54.0M (53%
increase);
- Pre-tax loss: $49.9M vs. $24.9M ($25.0M increase);
- Pre-tax loss - Retail: $27.7M ($10.1M increase)
- Pre-tax loss - tZERO: $12.6M ($9.1M increase)
- Pre-tax loss - Other: $9.6M ($5.8M increase)
- Net loss*: $42.3M vs. $95.7M ($53.4M decrease);
- Diluted net loss per share: $1.39/share vs. $3.72/share
($2.33/share decrease);
- Adjusted EBITDA (non-GAAP financial measure): ($30.4M) vs.
($17.9M) ($12.5M decrease);
- Adjusted EBITDA - Retail: ($19.1M) ($8.5M decrease)
- Adjusted EBITDA - tZERO: ($7.8M) ($5.7M decrease)
- Adjusted EBITDA - Other: ($3.5M) ($1.7M increase).
*Net loss refers to Net loss attributable to stockholders of
Overstock.com, Inc.
We will hold a conference call and webcast to discuss our Q4 and
full-year 2018 financial results on Monday, March 18, 2019, at 8:30
a.m. ET.
Webcast information
To access the live webcast and presentation slides, go to
http://investors.overstock.com. To listen to the conference call
via telephone, dial (877) 673-5346 and enter conference ID 3244508
when prompted. Participants outside the U.S. or Canada who do not
have Internet access should dial +1 (724) 498-4326 then enter the
conference ID provided above.
A replay of the conference call will be available at
http://investors.overstock.com starting two hours after the
live call has ended. An audio replay of the webcast will be
available via telephone starting at 11:30 a.m. ET on Monday, March
18, 2019, through 11:30 a.m. ET on Monday, April 1, 2019. To listen
to the recorded webcast by phone, dial (855) 859-2056 then enter
the conference ID provided above. Outside the U.S. or Canada dial
+1 (404) 537-3406 and enter the conference ID provided above.
Please email questions in advance of the call to
ir@overstock.com.
Key financial and operating metrics:
Investors should review our financial statements and
publicly-filed reports in their entirety and not rely on any single
financial measure.
Total net revenue - Total net revenue was
$452.5 million and $456.3 million for Q4 2018 and 2017,
respectively, a 1% decrease. This decrease was primarily due to a
4% decrease in orders driven by a 13% reduction in sales and
marketing expenses. We also had an increase in promotional
activities, including coupons and site sales (which we recognize as
a reduction of revenue), due to our driving a higher proportion of
sales using such promotions. The decrease in orders was partially
offset by a 3% increase in average order size (excluding
promotional activities) primarily due to a continued sales mix
shift into higher-priced products.
Gross profit - Gross profit was $81.6 million
and $85.8 million for Q4 2018 and 2017, respectively, a 5%
decrease, representing 18.0% and 18.8% gross margin for those
respective periods. The decrease in gross margin was primarily due
to increased promotional activities, partially offset by a
continued shift in sales mix into higher margin products.
Sales and marketing expenses - Sales and
marketing expenses totaled $47.5 million and $54.5 million for Q4
2018 and 2017, respectively, a 13% decrease, representing 10.5% and
11.9% of total net revenue for those respective periods. This
decrease in sales and marketing expenses was primarily due to
decreased spending in the sponsored search, display ads on social
media, and television marketing channels.
Technology expenses - Technology expenses
totaled $34.6 million and $29.9 million for Q4 2018 and
2017, respectively, a 16% increase, representing 7.6% and 6.6% of
total revenue for those respective periods. The increase was
primarily due to a $2.5 million increase in technology licenses and
a $2.0 million increase in staff-related costs.
General and administrative ("G&A") expenses
- G&A expenses totaled $47.9 million and $24.1 million for
Q4 2018 and 2017, respectively, a 99% increase, representing 10.6%
and 5.3% of total revenue for those respective periods. The
increase was primarily due to a $6.0 million increase in
impairments on indefinite-lived intangible assets, a $5.1 million
increase in staff-related costs, a $3.6 million increase in losses
on the disposal of various businesses and assets, a $3.5 million
increase in consulting and outside services expenses, and a $2.0
million increase in legal expenses.
Other expense, net - Other expense, net totaled
$2.0 million and $1.6 million for Q4 2018 and 2017, respectively.
The increase is primarily due to a $2.0 million increase in losses
on equity holdings and other assets, and a $0.8 million decrease in
Club O and gift card breakage which we began recognizing as a
component of revenue in 2018 following the adoption of ASC 606,
partially offset by a $2.2 million decrease in debt retirement
charges.
Provision (benefit) for income taxes -
Provision (benefit) for income taxes totaled ($1.9) million and
$71.9 million for Q4 2018 and 2017, respectively. The decrease is
due to changes related to the Tax Cuts and Jobs Act and recording a
full valuation on our deferred tax assets in Q4 2017.
Net cash used in operating activities - Net
cash used in operating activities was $138.9 million and $35.2
million for the twelve months ended December 31, 2018 and 2017,
respectively. The $103.7 million increase is primarily due to
increased consolidated net loss.
Free cash flow (a non-GAAP financial measure) -
Free cash flow totaled ($167.6) million and ($58.8) million for the
twelve months ended December 31, 2018 and 2017, respectively. The
$108.8 million decrease was due to a $103.7 million decrease in
operating cash flow and a $5.1 million increase in capital
expenditures.
Cash - We had cash and cash equivalents of
$141.5 million and $203.2 million at December 31, 2018 and December
31, 2017, respectively. The decrease is primarily due to operating
losses, cash used for acquisitions and other investments, and the
repayment of our building loan, partially offset by proceeds
received from our tZERO security token offering, the exercise of a
stock warrant in Q1 2018, and proceeds from an at-the-market
offering during Q3 2018.
About Overstock.comOverstock.com, Inc Common
Shares (NASDAQ:OSTK) / Series A Preferred (Medici Ventures’ tZERO
platform: OSTKP) / Series B Preferred (OTCQX:OSTBP) is an online
retailer and technology company based in Salt Lake City, Utah. It’s
leading e-commerce website sells a broad range of new products at
low prices, including furniture, décor, rugs, bedding, home
improvement, jewelry, and more. The online shopping site, which is
visited by nearly 40 million customers a month, also features a
marketplace providing customers access to millions of products from
third-party sellers. Overstock was the first major retailer to
accept cryptocurrency in 2014, and in the same year founded Medici
Ventures, its wholly-owned subsidiary developing and accelerating
blockchain technologies to democratize capital, eliminate
middlemen, and re-humanize commerce. Overstock regularly posts
information about the company and other related matters on the
Newsroom and Investor Relations pages on its website,
Overstock.com.
O, Overstock.com, O.com, Club O, Main Street
Revolution, and Worldstock are registered trademarks of
Overstock.com, Inc. O.biz and Space Shift are also
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.
Average order size is measured at the time of order, before
promotional discounts and shipping revenue.
This press release and the March 18, 2019 conference call and
webcast to discuss our financial results may contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Such forward-looking statements include all statements
other than statements of historical fact, including forecasts of
trends. Additionally, certain statements included herein, including
our statements regarding commitments are forward-looking statements
that do not offer any guarantees, personal or otherwise. 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.
Forward-looking statements are inherently difficult to predict.
Accordingly, actual results could differ materially for a variety
of reasons, including, but not limited to, the amount and timing of
our capital expenditures, the significant increases in our
marketing expenditures in the first half of 2018 and the subsequent
reduction of those expenditures, the results of our ongoing review
of strategic initiatives including the possible sale of our
e-commerce business, initiatives to improve the performance of our
retail business and the recent reduction in our workforce, adverse
tax, regulatory or legal developments, competition, and any
inability to achieve profitability, generate positive cash flow
from operations, raise capital, or borrow funds on acceptable
terms. Other risks and uncertainties include, among others, the
inherent risks associated with the businesses that Medici Ventures,
Inc. ("Medici Ventures") and tZERO Group, Inc. ("tZERO") are
pursuing, including whether tZERO's joint venture with Box Digital
Markets, LLC will be able to achieve its objectives, the
regulatory, technical, operational and other obstacles tZERO faces
in each of its initiatives, the effects of key business personnel
moving from our retail business to our Medici Ventures and tZERO
businesses or otherwise leaving, our continually evolving business
model, difficulties we may have with our infrastructure, our
fulfillment partners or our payment processors, including
cyber-attacks or data breaches affecting us or any of them, and
difficulties we may have with our search engine optimization
results. More information about factors that could potentially
affect our financial results is included in our Form 10-K for the
year ended December 31, 2018, which was filed with the Securities
and Exchange Commission on March 18, 2019, and in our subsequent
filings with the Securities and Exchange Commission. The Form 10-K
and our subsequent filings with the Securities and Exchange
Commission 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.
Overstock.com, Inc. |
Consolidated Balance Sheets |
(in thousands, unaudited) |
|
|
December 31, 2018 |
|
December 31, 2017 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
141,512 |
|
|
$ |
203,215 |
|
Restricted cash |
1,302 |
|
|
455 |
|
Accounts
receivable, net |
35,930 |
|
|
30,080 |
|
Inventories, net |
14,108 |
|
|
13,703 |
|
Prepaids
and other current assets |
22,415 |
|
|
17,744 |
|
Total
current assets |
215,267 |
|
|
265,197 |
|
Fixed assets, net |
134,687 |
|
|
129,343 |
|
Deferred tax assets,
net |
109 |
|
|
— |
|
Intangible assets,
net |
13,370 |
|
|
7,337 |
|
Goodwill |
22,895 |
|
|
14,698 |
|
Equity investments |
60,427 |
|
|
13,024 |
|
Other long-term assets,
net |
14,464 |
|
|
4,216 |
|
Total
assets |
$ |
461,219 |
|
|
$ |
433,815 |
|
Liabilities and Stockholders’ Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
102,574 |
|
|
$ |
85,406 |
|
Accrued
liabilities |
87,858 |
|
|
82,611 |
|
Deferred
revenue |
50,578 |
|
|
46,468 |
|
Other
current liabilities, net |
476 |
|
|
178 |
|
Total
current liabilities |
241,486 |
|
|
214,663 |
|
Long-term debt,
net |
3,069 |
|
|
— |
|
Long-term debt, net -
related party |
— |
|
|
39,909 |
|
Other long-term
liabilities |
5,958 |
|
|
7,120 |
|
Total
liabilities |
250,513 |
|
|
261,692 |
|
Commitments and
contingencies |
|
|
|
Stockholders'
equity: |
|
|
|
Preferred
stock, $0.0001 par value, authorized shares - 5,000 |
|
|
|
Series A,
issued and outstanding - 127 and 127 |
— |
|
|
— |
|
Series B,
issued and outstanding - 355 and 555 |
— |
|
|
— |
|
Common
stock, $0.0001 par value |
|
|
|
Authorized shares -100,000 |
|
|
|
Issued
shares - 35,346 and 30,632 |
|
|
|
Outstanding shares - 32,146 and 27,497 |
3 |
|
|
3 |
|
Additional paid-in capital |
657,981 |
|
|
494,732 |
|
Accumulated deficit |
(458,897 |
) |
|
(254,692 |
) |
Accumulated other comprehensive loss |
(584 |
) |
|
(599 |
) |
Treasury
stock: |
|
|
|
Shares at
cost - 3,200 and 3,135 |
(66,757 |
) |
|
(63,816 |
) |
Equity
attributable to stockholders of Overstock.com, Inc. |
131,746 |
|
|
175,628 |
|
Equity
attributable to noncontrolling interests |
78,960 |
|
|
(3,505 |
) |
Total stockholders' equity |
210,706 |
|
|
172,123 |
|
Total liabilities and stockholders' equity |
$ |
461,219 |
|
|
$ |
433,815 |
|
Overstock.com, Inc. |
Consolidated Statements of
Operations |
(in thousands, except per share
data) |
(unaudited) |
|
|
|
Three months ended December
31, |
|
2018 |
|
2017 |
Revenue, net |
|
|
|
Retail |
$ |
446,733 |
|
|
$ |
451,996 |
|
Other |
5,815 |
|
|
4,294 |
|
Total net
revenue |
452,548 |
|
|
456,290 |
|
Cost of goods sold |
|
|
|
Retail |
366,712 |
|
|
367,561 |
|
Other |
4,256 |
|
|
2,931 |
|
Total
cost of goods sold |
370,968 |
|
|
370,492 |
|
Gross
profit |
81,580 |
|
|
85,798 |
|
Operating
expenses: |
|
|
|
Sales and
marketing |
47,537 |
|
|
54,521 |
|
Technology |
34,557 |
|
|
29,896 |
|
General
and administrative |
47,930 |
|
|
24,096 |
|
Total
operating expenses |
130,024 |
|
|
108,513 |
|
Operating loss |
(48,444 |
) |
|
(22,715 |
) |
Interest income |
661 |
|
|
209 |
|
Interest expense |
(98 |
) |
|
(798 |
) |
Other loss, net |
(1,999 |
) |
|
(1,573 |
) |
Loss
before income taxes |
(49,880 |
) |
|
(24,877 |
) |
Provision (benefit) for
income taxes |
(1,939 |
) |
|
71,915 |
|
Consolidated net
loss |
$ |
(47,941 |
) |
|
$ |
(96,792 |
) |
Less: Net
loss attributable to noncontrolling interests |
(5,614 |
) |
|
(1,102 |
) |
Net loss attributable
to stockholders of Overstock.com, Inc. |
$ |
(42,327 |
) |
|
$ |
(95,690 |
) |
Net loss per common
share—basic: |
|
|
|
Net loss attributable
to common shares—basic |
$ |
(1.39 |
) |
|
$ |
(3.72 |
) |
Weighted average common
shares outstanding—basic |
32,112 |
|
|
25,103 |
|
Net loss per common
share—diluted: |
|
|
|
Net loss attributable
to common shares—diluted |
$ |
(1.39 |
) |
|
$ |
(3.72 |
) |
Weighted average common
shares outstanding—diluted |
32,112 |
|
|
25,103 |
|
Overstock.com, Inc. |
Consolidated Statements of
Operations |
(in thousands, except per share
data) |
(unaudited) |
|
|
Year ended December 31, |
|
2018 |
|
2017 |
Revenue, net |
|
|
|
Retail |
$ |
1,800,187 |
|
|
$ |
1,728,104 |
|
Other |
21,405 |
|
|
16,652 |
|
Total net
revenue |
1,821,592 |
|
|
1,744,756 |
|
Cost of goods sold |
|
|
|
Retail |
1,452,195 |
|
|
1,392,558 |
|
Other |
15,489 |
|
|
11,647 |
|
Total
cost of goods sold |
1,467,684 |
|
|
1,404,205 |
|
Gross
profit |
353,908 |
|
|
340,551 |
|
Operating
expenses: |
|
|
|
Sales and
marketing |
274,479 |
|
|
180,589 |
|
Technology |
132,154 |
|
|
115,878 |
|
General
and administrative |
164,481 |
|
|
90,718 |
|
Total
operating expenses |
571,114 |
|
|
387,185 |
|
Operating loss |
(217,206 |
) |
|
(46,634 |
) |
Interest income |
2,208 |
|
|
659 |
|
Interest expense |
(1,468 |
) |
|
(2,937 |
) |
Other income (loss),
net |
(3,488 |
) |
|
1,178 |
|
Loss
before income taxes |
(219,954 |
) |
|
(47,734 |
) |
Provision (benefit) for
income taxes |
(2,384 |
) |
|
64,188 |
|
Consolidated net
loss |
$ |
(217,570 |
) |
|
$ |
(111,922 |
) |
Less: Net
loss attributable to noncontrolling interests |
(11,500 |
) |
|
(2,044 |
) |
Net income (loss)
attributable to stockholders of Overstock.com, Inc. |
$ |
(206,070 |
) |
|
$ |
(109,878 |
) |
Net loss per common
share---basic: |
|
|
|
Net loss attributable
to common shares---basic |
$ |
(6.83 |
) |
|
$ |
(4.28 |
) |
Weighted average common
shares outstanding—basic |
29,976 |
|
|
25,044 |
|
Net loss per common
share---diluted: |
|
|
|
Net loss attributable
to common shares---diluted |
$ |
(6.83 |
) |
|
$ |
(4.28 |
) |
Weighted average common
shares outstanding—diluted |
29,976 |
|
|
25,044 |
|
Overstock.com, Inc. |
Consolidated Statements of Cash
Flows |
(in thousands, unaudited) |
|
|
|
Year ended December 31, |
|
2018 |
|
2017 |
Cash flows from operating activities: |
|
|
|
Consolidated net
loss |
$ |
(217,570 |
) |
|
$ |
(111,922 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Depreciation of fixed assets |
26,411 |
|
|
28,848 |
|
Amortization of intangible assets |
5,286 |
|
|
3,999 |
|
Stock-based compensation to employees and directors |
14,356 |
|
|
4,077 |
|
Deferred
income taxes, net |
(2,386 |
) |
|
65,199 |
|
Gain on
investment in precious metals |
— |
|
|
(1,971 |
) |
Gain on
sale of cryptocurrencies |
(8,370 |
) |
|
(1,995 |
) |
Loss on
equity investments, net |
2,828 |
|
|
5,995 |
|
Loss on
disposal of business and other asset abandonments |
3,565 |
|
|
— |
|
Impairment on indefinite-lived intangible assets |
6,000 |
|
|
— |
|
Impairment of cryptocurrencies |
10,463 |
|
|
— |
|
Early
extinguishment costs of long-term debts |
283 |
|
|
2,464 |
|
Other |
711 |
|
|
368 |
|
Changes
in operating assets and liabilities, net of acquisitions: |
|
|
|
Accounts receivable, net |
(5,558 |
) |
|
(1,938 |
) |
Inventories, net |
628 |
|
|
5,234 |
|
Prepaids and other current assets |
(3,622 |
) |
|
(2,799 |
) |
Other long-term assets, net |
(2,870 |
) |
|
(2,307 |
) |
Accounts payable |
16,499 |
|
|
(20,995 |
) |
Accrued liabilities |
5,661 |
|
|
(12,311 |
) |
Deferred revenue |
9,150 |
|
|
4,688 |
|
Other long-term liabilities |
(399 |
) |
|
145 |
|
Net cash used in operating activities |
(138,934 |
) |
|
(35,221 |
) |
Cash flows from
investing activities: |
|
|
|
Proceeds
from sale of precious metals |
— |
|
|
11,917 |
|
Purchase
of intangible assets |
(9,597 |
) |
|
(423 |
) |
Investment in equity securities |
(48,731 |
) |
|
(5,188 |
) |
Disbursement of note receivable |
(3,059 |
) |
|
(750 |
) |
Deposit
on purchase of a business |
(8,000 |
) |
|
— |
|
Acquisitions of businesses, net of cash acquired |
(12,912 |
) |
|
— |
|
Expenditures for fixed assets, including internal-use software and
website development |
(28,680 |
) |
|
(23,586 |
) |
Other |
56 |
|
|
70 |
|
Net cash
used in investing activities |
(110,923 |
) |
|
(17,960 |
) |
Cash flows from
financing activities: |
|
|
|
Payments
on capital lease obligations |
(496 |
) |
|
(83 |
) |
Payments
on finance obligations |
— |
|
|
(15,316 |
) |
Payments
on interest swap |
— |
|
|
(1,535 |
) |
Payments
on long-term debt |
(40,000 |
) |
|
(45,766 |
) |
Proceeds
from long-term debt |
— |
|
|
40,000 |
|
Payments
of preferred dividends |
(77 |
) |
|
(109 |
) |
Proceeds
from issuance and exercise of stock warrants |
50,588 |
|
|
106,462 |
|
Proceeds
from exercise of stock options |
— |
|
|
664 |
|
Proceeds
from security token offering, net of offering costs and
withdrawals |
82,354 |
|
|
905 |
|
Proceeds
from sale of common stock, net of offering costs |
94,554 |
|
|
— |
|
Paid in
capital for noncontrolling interest |
6,700 |
|
|
— |
|
Purchase
of treasury stock |
— |
|
|
(10,000 |
) |
Payments
of taxes withheld upon vesting of restricted stock |
(4,622 |
) |
|
(1,229 |
) |
Payment
of debt issuance costs |
— |
|
|
(670 |
) |
Net cash
provided by financing activities |
189,001 |
|
|
73,323 |
|
Net increase (decrease)
in cash and cash equivalents |
(60,856 |
) |
|
20,142 |
|
Cash, cash equivalents
and restricted cash, beginning of year |
203,670 |
|
|
183,528 |
|
Cash, cash equivalents
and restricted cash, end of year |
$ |
142,814 |
|
|
$ |
203,670 |
|
Segment Financial
Information
Segment information has been prepared in accordance with ASC
Topic 280 Segment Reporting. We determined our segments based
on how we manage our business. We use pre-tax net income (loss) as
the measure to determine our reportable segments. In the fourth
quarter of 2018, we completed our review of our segment reporting
and we no longer consider the split of retail direct and retail
partner as a distinct and relevant measure of our business.
Accordingly, Direct and Partner are no longer considered separate
reportable segments but are included under Retail in our Business
Segment disclosures. Our Medici business includes one reportable
segment, tZERO. The remainder of our Medici business is not
significant as compared to our Retail and tZERO segments. Our Other
segment consists of Medici Ventures' remaining operations.
Our Retail segment primarily consists of amounts earned through
e-commerce sales through our Website and the associated costs
incurred for our Retail business and also includes the costs of our
administrative functions such as finance, human resources, and
legal, excluding intercompany transactions eliminated in
consolidation.
Our tZERO segment primarily consists of amounts earned through
securities transactions through our broker-dealers and costs
incurred to execute our tZERO business initiatives, excluding
intercompany transactions eliminated in consolidation.
Our Other segment consists of Medici Ventures' remaining
operations, excluding tZERO and intercompany transactions
eliminated in consolidation.
The following table summarizes information about reportable
segments and includes a reconciliation to consolidated net income
(loss) (in thousands):
|
Three months ended, December 31 |
|
Retail |
|
tZERO |
|
Other |
|
Total |
2018 |
|
|
|
|
|
|
|
Total net revenue |
$ |
446,733 |
|
|
$ |
4,963 |
|
|
$ |
852 |
|
|
$ |
452,548 |
|
Cost of goods sold |
366,712 |
|
|
3,404 |
|
|
852 |
|
|
370,968 |
|
Gross profit |
80,021 |
|
|
1,559 |
|
|
— |
|
|
81,580 |
|
Operating expenses |
106,573 |
|
|
13,885 |
|
|
9,566 |
|
|
130,024 |
|
Interest and other
expense, net |
(1,130 |
) |
|
(280 |
) |
|
(26 |
) |
|
(1,436 |
) |
Pre-tax loss |
$ |
(27,682 |
) |
|
$ |
(12,606 |
) |
|
$ |
(9,592 |
) |
|
(49,880 |
) |
Benefit for income
taxes |
|
|
|
|
|
|
(1,939 |
) |
Net loss |
|
|
|
|
|
|
$ |
(47,941 |
) |
|
|
|
|
|
|
|
|
2017 |
|
|
|
|
|
|
|
Total net revenue |
$ |
451,996 |
|
|
$ |
4,159 |
|
|
$ |
135 |
|
|
$ |
456,290 |
|
Cost of goods sold |
367,561 |
|
|
2,931 |
|
|
— |
|
|
370,492 |
|
Gross profit |
84,435 |
|
|
1,228 |
|
|
135 |
|
|
85,798 |
|
Operating expenses |
101,193 |
|
|
4,701 |
|
|
2,619 |
|
|
108,513 |
|
Interest and other
expense, net |
(810 |
) |
|
— |
|
|
(1,352 |
) |
|
(2,162 |
) |
Pre-tax loss |
$ |
(17,568 |
) |
|
$ |
(3,473 |
) |
|
$ |
(3,836 |
) |
|
(24,877 |
) |
Provision for income
taxes |
|
|
|
|
|
|
71,915 |
|
Net loss |
|
|
|
|
|
|
$ |
(96,792 |
) |
|
Year ended, December 31 |
|
Retail |
|
tZERO |
|
Other |
|
Total |
2018 |
|
|
|
|
|
|
|
Total net revenue |
$ |
1,800,187 |
|
|
$ |
19,043 |
|
|
$ |
2,362 |
|
|
$ |
1,821,592 |
|
Cost of goods sold |
1,452,195 |
|
|
13,127 |
|
|
2,362 |
|
|
1,467,684 |
|
Gross profit |
347,992 |
|
|
5,916 |
|
|
— |
|
|
353,908 |
|
Operating expenses |
506,113 |
|
|
47,006 |
|
|
17,995 |
|
|
571,114 |
|
Interest and other
income (expense), net |
(476 |
) |
|
233 |
|
|
(2,505 |
) |
|
(2,748 |
) |
Pre-tax loss |
$ |
(158,597 |
) |
|
$ |
(40,857 |
) |
|
$ |
(20,500 |
) |
|
(219,954 |
) |
Benefit for income
taxes |
|
|
|
|
|
|
(2,384 |
) |
Net loss |
|
|
|
|
|
|
$ |
(217,570 |
) |
|
|
|
|
|
|
|
|
2017 |
|
|
|
|
|
|
|
Total net revenue |
$ |
1,728,104 |
|
|
$ |
16,493 |
|
|
$ |
159 |
|
|
$ |
1,744,756 |
|
Cost of goods sold |
1,392,558 |
|
|
11,647 |
|
|
— |
|
|
1,404,205 |
|
Gross profit |
335,546 |
|
|
4,846 |
|
|
159 |
|
|
340,551 |
|
Operating expenses |
365,648 |
|
|
17,101 |
|
|
4,436 |
|
|
387,185 |
|
Interest and other
income (expense), net |
4,680 |
|
|
— |
|
|
(5,780 |
) |
|
(1,100 |
) |
Pre-tax loss |
$ |
(25,422 |
) |
|
$ |
(12,255 |
) |
|
$ |
(10,057 |
) |
|
(47,734 |
) |
Provision for income
taxes |
|
|
|
|
|
|
64,188 |
|
Net loss |
|
|
|
|
|
|
$ |
(111,922 |
) |
Non-GAAP Financial Measure
Reconciliations
Free Cash Flow
Free cash flow (a non-GAAP financial measure) reflects an
additional way of viewing our cash flows and liquidity that, when
viewed with our GAAP results, provides a more complete
understanding of factors and trends affecting our cash flows and
liquidity. Free cash flow, which we reconcile below to "Net cash
provided by (used in) operating activities," the nearest GAAP
financial measure, is net cash provided by (used in) operating
activities reduced by "Expenditures for fixed assets, including
internal-use software and website development." We believe that net
cash provided by (used in) operating activities is an important
measure, since it includes both the cash impact of the continuing
operations of the business and changes in the balance sheet that
impact cash. We believe free cash flow is a useful measure to
evaluate our business since purchases of fixed assets are a
necessary component of ongoing operations and free cash flow
measures the amount of cash we have available for mandatory debt
service and financing obligations, changes in our capital
structure, and future investments after purchases of fixed assets.
Free cash flow measures have limitations as they omit certain
components of the overall consolidated statement of cash flows and
do not represent the residual cash flow available for discretionary
expenditures. Free cash flow should not be considered a
substitute for net income or cash flow data prepared in accordance
with GAAP and may not be comparable to similarly titled measures
used by other companies. Therefore, we believe it is important to
view free cash flow as a complement to our entire consolidated
statements of cash flows as reconciled below (in thousands):
|
Year ended December 31, |
|
2018 |
|
2017 |
Net cash provided by
(used in) operating activities |
$ |
(138,934 |
) |
|
$ |
(35,221 |
) |
Expenditures for fixed
assets, including internal-use software and website
development |
(28,680 |
) |
|
(23,586 |
) |
Free cash flow |
$ |
(167,614 |
) |
|
$ |
(58,807 |
) |
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that is
calculated as net income (loss) before depreciation and
amortization, stock-based compensation, interest and other income
and (expense), provision (benefit) for income taxes, and special
items. We have included Adjusted EBITDA in this earnings release
because it reflects an additional way of viewing the operating
performance at both the consolidated and segment level that is used
internally in analyzing our financial results and we believe it is
useful to investors, as a supplement to GAAP measures, in
evaluating our ongoing operational performance. In particular, the
exclusion of certain 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. We have provided a reconciliation
below of our segment and consolidated Adjusted EBITDA to net income
(loss), the most directly comparable GAAP financial measure.
Adjusted EBITDA is used in addition to and in conjunction with
results presented in accordance with GAAP and should not be relied
upon to the exclusion of GAAP financial measures. You should review
our financial statements and publicly-filed reports in their
entirety and not rely on any single financial measure. Adjusted
EBITDA has limitations such as:
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized may have to be replaced
in the future, and Adjusted EBITDA does not reflect cash capital
expenditure requirements for such replacements or for new capital
expenditure requirements;
- Adjusted EBITDA does not reflect stock-based compensation and
related taxes;
- Adjusted EBITDA does not reflect adjustments related to the
carrying values of our equity interests in unconsolidated
entities;
- Adjusted EBITDA does not reflect interest expenses associated
with our borrowings;
- Adjusted EBITDA does not reflect income tax payments that may
represent a reduction in cash available to us;
- Adjusted EBITDA does not reflect changes in our working
capital; and
- Other companies, including companies in our industry, may
calculate Adjusted EBITDA differently, which reduces its usefulness
as a comparative measure.
The following table reflects the reconciliation of Adjusted
EBITDA to net income (loss) for each of the periods indicated (in
thousands):
|
Three months ended December 31, |
|
2018 |
|
2017 |
Adjusted
EBITDA |
|
|
|
Retail |
$ |
(19,116 |
) |
|
$ |
(10,608 |
) |
tZERO |
(7,816 |
) |
|
(2,077 |
) |
Other |
(3,453 |
) |
|
(5,173 |
) |
Adjusted
EBITDA |
(30,385 |
) |
|
(17,858 |
) |
Less:
Special items (see table below) |
9,565 |
|
|
— |
|
Less:
Depreciation and amortization |
8,664 |
|
|
8,113 |
|
Less:
Stock-based compensation |
2,702 |
|
|
1,068 |
|
Less:
Interest and other income (expense), net |
(1,436 |
) |
|
(2,162 |
) |
Less:
Provision (benefit) for income taxes |
(1,939 |
) |
|
71,915 |
|
Net
loss |
$ |
(47,941 |
) |
|
$ |
(96,792 |
) |
|
|
|
|
Special items: |
|
|
|
Impairments on intangible assets |
$ |
6,000 |
|
|
$ |
— |
|
Losses on
the disposal of various businesses and assets |
3,565 |
|
|
— |
|
|
$ |
9,565 |
|
|
$ |
— |
|
|
Year ended December 31, |
|
2018 |
|
2017 |
Adjusted
EBITDA |
|
|
|
Retail |
$ |
(112,489 |
) |
|
$ |
11,155 |
|
tZERO |
(24,805 |
) |
|
(7,252 |
) |
Other |
(15,953 |
) |
|
(15,813 |
) |
Adjusted
EBITDA |
(153,247 |
) |
|
(11,910 |
) |
Less:
Special items (see table below) |
23,402 |
|
|
— |
|
Less:
Depreciation and amortization |
31,697 |
|
|
32,847 |
|
Less:
Stock-based compensation |
14,356 |
|
|
4,077 |
|
Less:
Interest and other income (expense), net |
(2,748 |
) |
|
(1,100 |
) |
Less:
Provision (benefit) for income taxes |
(2,384 |
) |
|
64,188 |
|
Net
loss |
$ |
(217,570 |
) |
|
$ |
(111,922 |
) |
|
|
|
|
Special items: |
|
|
|
Impairments on intangible assets |
$ |
6,000 |
|
|
$ |
— |
|
Losses on
the disposal of various businesses |
3,565 |
|
|
— |
|
Cryptocurrency impairments and gains on sale, net |
443 |
|
|
— |
|
Severance |
1,600 |
|
|
— |
|
Special
legal expenses (1) |
11,794 |
|
|
— |
|
|
$ |
23,402 |
|
|
$ |
— |
|
___________________________________________
(1) Special legal expenses include charges associated with our
Delaware gift card escheatment matter and legal fees associated
with pursuing our strategic alternatives.
Public Relations:pr@overstock.com
Investor Relations:ir@overstock.com
Overstock com (NASDAQ:OSTK)
Historical Stock Chart
From Aug 2024 to Sep 2024
Overstock com (NASDAQ:OSTK)
Historical Stock Chart
From Sep 2023 to Sep 2024