Overstock.com, Inc. (NASDAQ:OSTK) today reported financial results
for the quarter ended September 30, 2020.
Third Quarter Financial Highlights
- Total net revenue was $732 million, an
increase of 111% year over year
- Gross profit was $171 million or 23% of
total net revenue, an increase of 330 basis points year over
year
- Net income attributable to stockholders
of Overstock.com, Inc. was $23 million, an improvement of $54
million year over year
- Diluted earnings per share was $0.50,
an improvement of $1.39 year over year
- Adjusted EBITDA (non-GAAP) was $40
million, an improvement of $58 million year over year
- YTD net cash provided by operating
activities was $199 million, an improvement of $288 million year
over year
- YTD free cash flow (non-GAAP) improved
$291 million year over year
- At the end of the third quarter, cash
and cash equivalents totaled $530 million
"After a record-setting second quarter, we maintained our
momentum, continued to outperform expectations, and grew faster
than competitors in the third quarter," said Overstock CEO Jonathan
Johnson. "Our quarterly gross sales in our Retail business doubled
year over year once again and new customers grew 141%. These new
customers are making repeat purchases at an increasing rate.
Heading into the fourth quarter, I am as confident as ever in our
Retail business maintaining sustainable, profitable market share
growth."
"Our Medici Ventures blockchain-based businesses also continue
to make meaningful advancements," said Johnson. "tZERO received
FINRA approval to provide retail brokerage services for digital
securities through its subsidiary, tZERO Markets, which officially
launched last week. Several of our Medici Ventures companies are
raising capital, most are getting products into production, and
many are generating revenue. Our organization remains focused and
disciplined. We continue to execute against our strategic
initiatives that are driving growth and delivering profitability. I
look forward to providing an update on our progress and performance
during our earnings call."
Other Third Quarter Financial Highlights
- Retail income before income taxes was
$43 million, an improvement of $52 million year over year
- Retail Adjusted EBITDA (non-GAAP) was
$50 million, or 7% of Retail net revenue, an improvement of $51
million (or 720 basis points) year over year
- Consolidated G&A expenses increased
by $2 million but improved by 470 basis points as a percentage of
total net revenue year over year
- tZERO net revenue was $11 million, an
increase of 97% year over year, primarily due to SpeedRoute trading
volume
Third Quarter Operational Highlights
- Newly acquired Retail customers
increased 141% year over year
- Gross sales from orders placed on a
mobile device were 50% of Retail gross sales in the third quarter
of 2020 compared to 44% in the third quarter of 2019
- Volume on the tZERO ATS increased 856%
to a record 4 million shares (equivalent to $39 million in value of
shares traded)
Capital Raise
During the third quarter, Overstock announced and completed a
public offering of common stock. The size of the offering was
increased from its initial announcement due to increased demand,
and the underwriters fully exercised the over-allotment option. The
offering was completed on August 14, 2020, whereby we issued
2,415,000 shares of common stock at a price of $84.50 per share,
raising net proceeds of approximately $193 million. The capital
raise was opportunistic in nature, and proceeds will be used to
support our continued growth trajectory.
COVID-19 Update
Overstock has continued to respond to the challenges and
opportunities created by the COVID-19 pandemic. In our Retail
business, customer demand continued to increase significantly in
the third quarter, particularly in our key home furnishings
categories. We have seen a substantial year-over-year increase in
our website traffic and number of new customers. Our Retail gross
sales again grew more than 100% year over year in Q3. Our
online-only platform and partner network with thousands of
fulfillment centers has enabled us to meet this increase in demand.
Our three warehouses have remained operational based on our
sustained implementation of sound safety measures, including
staggered shifts and social distancing. We are also hiring in key
areas throughout the company to support our current and expected
growth. We continue to face challenges created by the sharp
increase in volume, in customer service channels and in fulfillment
and delivery, stemming from capacity issues from shipping carriers
and some suppliers, including out-of-stock positions on some of our
top performing products. Most of our Medici Ventures blockchain
companies have seen relatively little disruption, and several are
working on solutions to problems exacerbated by the global
pandemic. We have evaluated and implemented a phased re-entry plan
for our offices; most of our corporate employees continue to work
from home without incident. We cannot predict how the COVID-19
pandemic will unfold in the coming months. Nevertheless, the
challenges arising from the pandemic have not adversely affected
our liquidity, revenues, or capacity to service our debt, nor have
these conditions required us to reduce our capital
expenditures.
Earnings Webcast Information
The company will hold a conference call and webcast to discuss
its Q3 2020 financial results on Thursday, October 29, 2020,
at 8:30 a.m. ET. 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 4293477 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 Thursday,
October 29, 2020, through 11:30 a.m. ET on Thursday,
November 12, 2020. 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.
Questions may be emailed in advance of the call to
ir@overstock.com.
About Overstock.com
Overstock.com, Inc. Common Shares (NASDAQ:OSTK) / Digital Voting
Series A-1 Preferred Stock (Medici Ventures' tZERO platform:OSTKO)
/ Series B Preferred (OTCQX:OSTBP) is an online retailer and
technology company based in Salt Lake City, Utah. Its leading
e-commerce website sells a broad range of new home products at low
prices, including furniture, décor, rugs, bedding, home
improvement, and more. The online shopping site, which is visited
by tens of millions of 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 dedicated to the development
and acceleration of 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, and Worldstock are
registered 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 October 29, 2020 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. These forward-looking statements are
inherently difficult to predict. Actual results could differ
materially for a variety of reasons, including but not limited to,
the duration of the COVID-19 pandemic and its ultimate impact on
our business and results of operations, adverse tax, regulatory or
legal developments, and competition. Other risks and uncertainties
include, among others, the inherent risks associated with the
businesses that Medici Ventures and tZERO are pursuing, our
continually evolving business model, and 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 are included in our Form
10-K for the year ended December 31, 2019, our Form 10-Q for the
quarter ended March 31, 2020, and our Form 10-Q for the quarter
ended June 30, 2020, which were filed with the Securities and
Exchange Commission on March 13, 2020, May 7, 2020, and August 6,
2020, respectively, and in our subsequent filings with the
Securities and Exchange Commission. The Form 10-K, 10-Q's, 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.
ContactsInvestor Relations:Alexis
Callahan801-947-5126ir@overstock.com |
Media Relations:Megan Herrick801-947-3564pr@overstock.com |
Overstock.com, Inc.Consolidated
Balance Sheets (Unaudited)(in thousands, except
per share data)
|
September 30,2020 |
|
December 31,2019 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
529,710 |
|
|
$ |
112,266 |
|
Restricted cash |
2,570 |
|
|
2,632 |
|
Marketable securities at fair value |
1,355 |
|
|
10,308 |
|
Accounts receivable, net of allowance for credit losses of $2,053
and $2,474 at September 30, 2020 and December 31, 2019,
respectively |
35,403 |
|
|
24,728 |
|
Inventories |
6,867 |
|
|
5,840 |
|
Prepaids and other current assets |
19,704 |
|
|
21,589 |
|
Total current assets |
595,609 |
|
|
177,363 |
|
Property and equipment,
net |
125,142 |
|
|
130,028 |
|
Intangible assets, net |
9,009 |
|
|
11,756 |
|
Goodwill |
27,120 |
|
|
27,120 |
|
Equity securities |
48,983 |
|
|
42,043 |
|
Operating lease right-of-use
assets |
25,402 |
|
|
25,384 |
|
Other long-term assets,
net |
11,717 |
|
|
4,033 |
|
Total assets |
$ |
842,982 |
|
|
$ |
417,727 |
|
Liabilities and Stockholders' Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
119,663 |
|
|
$ |
75,416 |
|
Accrued liabilities |
145,668 |
|
|
88,197 |
|
Unearned revenue |
78,757 |
|
|
41,821 |
|
Operating lease liabilities, current |
5,959 |
|
|
6,603 |
|
Other current liabilities |
3,803 |
|
|
3,962 |
|
Total current liabilities |
353,850 |
|
|
215,999 |
|
Long-term debt, net |
42,148 |
|
|
— |
|
Operating lease liabilities,
non-current |
21,640 |
|
|
21,554 |
|
Other long-term
liabilities |
6,038 |
|
|
2,319 |
|
Total liabilities |
423,676 |
|
|
239,872 |
|
Commitments and
contingencies |
|
|
|
Stockholders' equity: |
|
|
|
Preferred stock, $0.0001 par value, authorized shares - 5,000 |
|
|
|
Series A-1, issued and outstanding - 4,204 and 4,210 |
— |
|
|
— |
|
Series B, issued and outstanding - 357 and 357 |
— |
|
|
— |
|
Common stock, $0.0001 par value, authorized shares - 100,000 |
|
|
|
Issued shares - 46,317 and 42,790 |
|
|
|
Outstanding shares - 42,758 and 39,464 |
4 |
|
|
4 |
|
Additional paid-in capital |
966,299 |
|
|
764,845 |
|
Accumulated deficit |
(537,089 |
) |
|
(580,390 |
) |
Accumulated other comprehensive loss |
(556 |
) |
|
(568 |
) |
Treasury stock at cost - 3,559 and 3,326 |
(71,124 |
) |
|
(68,807 |
) |
Equity attributable to stockholders of Overstock.com, Inc. |
357,534 |
|
|
115,084 |
|
Equity attributable to noncontrolling interests |
61,772 |
|
|
62,771 |
|
Total stockholders' equity |
419,306 |
|
|
177,855 |
|
Total liabilities and stockholders' equity |
$ |
842,982 |
|
|
$ |
417,727 |
|
Overstock.com, Inc.Consolidated
Statements of Operations (Unaudited)(in thousands,
except per share data) |
|
Three months ended September 30, |
|
Nine months endedSeptember
30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenue, net |
|
|
|
|
|
|
|
Retail |
$ |
717,695 |
|
|
$ |
340,798 |
|
|
$ |
1,824,249 |
|
|
$ |
1,070,898 |
|
Other |
13,956 |
|
|
6,301 |
|
|
41,519 |
|
|
17,639 |
|
Total net revenue |
731,651 |
|
|
347,099 |
|
|
1,865,768 |
|
|
1,088,537 |
|
Cost of goods sold |
|
|
|
|
|
|
|
Retail |
548,982 |
|
|
272,545 |
|
|
1,403,418 |
|
|
858,169 |
|
Other |
11,901 |
|
|
5,006 |
|
|
35,860 |
|
|
13,797 |
|
Total cost of goods sold |
560,883 |
|
|
277,551 |
|
|
1,439,278 |
|
|
871,966 |
|
Gross profit |
170,768 |
|
|
69,548 |
|
|
426,490 |
|
|
216,571 |
|
Operating expenses: |
|
|
|
|
|
|
|
Sales and marketing |
72,010 |
|
|
34,215 |
|
|
188,562 |
|
|
102,252 |
|
Technology |
34,984 |
|
|
32,782 |
|
|
101,458 |
|
|
101,368 |
|
General and administrative |
34,225 |
|
|
32,681 |
|
|
94,022 |
|
|
104,877 |
|
Total operating expenses |
141,219 |
|
|
99,678 |
|
|
384,042 |
|
|
308,497 |
|
Operating income (loss) |
29,549 |
|
|
(30,130 |
) |
|
42,448 |
|
|
(91,926 |
) |
Interest income |
402 |
|
|
449 |
|
|
1,288 |
|
|
1,482 |
|
Interest expense |
(579 |
) |
|
(57 |
) |
|
(1,367 |
) |
|
(289 |
) |
Other income (expense),
net |
(7,526 |
) |
|
(4,781 |
) |
|
(5,014 |
) |
|
(14,048 |
) |
Income (loss) before income taxes |
21,846 |
|
|
(34,519 |
) |
|
37,355 |
|
|
(104,781 |
) |
Provision for income
taxes |
620 |
|
|
23 |
|
|
1,313 |
|
|
279 |
|
Net income (loss) |
21,226 |
|
|
(34,542 |
) |
|
36,042 |
|
|
(105,060 |
) |
Less: Net loss attributable to noncontrolling interests |
(2,165 |
) |
|
(3,604 |
) |
|
(7,372 |
) |
|
(10,197 |
) |
Net income (loss) attributable
to stockholders of Overstock.com, Inc. |
$ |
23,391 |
|
|
$ |
(30,938 |
) |
|
$ |
43,414 |
|
|
$ |
(94,863 |
) |
Net income (loss) per share of
common stock: |
|
|
|
|
|
|
|
Net income (loss) attributable
to common shares—basic |
$ |
0.50 |
|
|
$ |
(0.89 |
) |
|
$ |
1.00 |
|
|
$ |
(2.74 |
) |
Net income (loss) attributable
to common shares—diluted |
$ |
0.50 |
|
|
$ |
(0.89 |
) |
|
$ |
0.99 |
|
|
$ |
(2.74 |
) |
Weighted average shares of
common stock outstanding: |
|
|
|
|
|
|
|
Basic |
41,595 |
|
|
35,241 |
|
|
40,697 |
|
|
34,289 |
|
Diluted |
42,202 |
|
|
35,241 |
|
|
41,030 |
|
|
34,289 |
|
Overstock.com, Inc.Consolidated
Statements of Cash Flows (Unaudited)(in
thousands) |
|
Nine months endedSeptember
30, |
|
2020 |
|
2019 |
Cash flows from operating activities: |
|
|
|
Consolidated net income (loss) |
$ |
36,042 |
|
|
$ |
(105,060 |
) |
Adjustments to reconcile consolidated net income (loss) to net cash
provided by (used in) operating activities: |
|
|
|
Depreciation and amortization |
22,709 |
|
|
23,033 |
|
Non-cash operating lease cost |
4,379 |
|
|
4,940 |
|
Stock-based compensation to employees and directors |
8,356 |
|
|
13,623 |
|
Impairment of equity securities |
813 |
|
|
6,964 |
|
Losses on equity method securities |
11,909 |
|
|
4,922 |
|
Gain on disposal of business |
(10,705 |
) |
|
— |
|
Impairments on intangible assets |
— |
|
|
1,406 |
|
Other non-cash adjustments |
2,587 |
|
|
1,978 |
|
Changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
Accounts receivable, net |
(15,715 |
) |
|
12,858 |
|
Inventories |
(1,027 |
) |
|
6,864 |
|
Prepaids and other current assets |
(42 |
) |
|
5,473 |
|
Other long-term assets, net |
26 |
|
|
(1,046 |
) |
Accounts payable |
44,101 |
|
|
(42,110 |
) |
Accrued liabilities |
59,657 |
|
|
(8,683 |
) |
Unearned revenue |
37,161 |
|
|
(10,066 |
) |
Operating lease liabilities |
(4,954 |
) |
|
(4,086 |
) |
Other long-term liabilities |
3,413 |
|
|
(205 |
) |
Net cash provided by (used in) operating
activities |
198,710 |
|
|
(89,195 |
) |
Cash flows from
investing activities: |
|
|
|
Purchase of equity securities |
(1,553 |
) |
|
(5,106 |
) |
Proceeds from sale of equity securities and marketable
securities |
6,306 |
|
|
7,082 |
|
Acquisitions of businesses, net of cash acquired |
— |
|
|
4,886 |
|
Expenditures for property and equipment |
(15,067 |
) |
|
(17,902 |
) |
Deconsolidation of cash of Medici Land Governance, Inc. |
(4,056 |
) |
|
— |
|
Other investing activities, net |
(1,061 |
) |
|
(3,219 |
) |
Net cash used in investing activities |
(15,431 |
) |
|
(14,259 |
) |
Cash flows from
financing activities: |
|
|
|
Payments on long-term debt |
(1,566 |
) |
|
(3,141 |
) |
Proceeds from long-term debt |
47,500 |
|
|
— |
|
Proceeds from sale of common stock, net of offering costs |
195,540 |
|
|
52,112 |
|
Payments of taxes withheld upon vesting of restricted stock |
(2,317 |
) |
|
(1,373 |
) |
Other financing activities, net |
(5,054 |
) |
|
(1,161 |
) |
Net cash provided by financing activities |
234,103 |
|
|
46,437 |
|
Net increase (decrease) in
cash, cash equivalents and restricted cash |
417,382 |
|
|
(57,017 |
) |
Cash, cash equivalents and
restricted cash, beginning of period |
114,898 |
|
|
142,814 |
|
Cash, cash equivalents and
restricted cash, end of period |
$ |
532,280 |
|
|
$ |
85,797 |
|
Segment Financial Information
The following table summarizes information about reportable
segments and includes a reconciliation to consolidated net income
(loss) (in thousands):
|
Three months ended September 30, |
|
Retail |
|
tZERO |
|
MVI |
|
Other |
|
Total |
2020 |
|
|
|
|
|
|
|
|
|
Net revenue |
$ |
717,695 |
|
|
$ |
11,151 |
|
|
$ |
2,805 |
|
|
$ |
— |
|
|
$ |
731,651 |
|
Cost of goods sold |
548,982 |
|
|
9,098 |
|
|
2,803 |
|
|
— |
|
|
560,883 |
|
Gross profit |
168,713 |
|
|
2,053 |
|
|
2 |
|
|
— |
|
|
170,768 |
|
Operating expenses |
125,458 |
|
|
10,613 |
|
|
2,923 |
|
|
2,225 |
|
|
141,219 |
|
Interest and other expense,
net |
(205 |
) |
|
(3,848 |
) |
|
(3,650 |
) |
|
— |
|
|
(7,703 |
) |
Income (loss) before income
taxes |
$ |
43,050 |
|
|
$ |
(12,408 |
) |
|
$ |
(6,571 |
) |
|
$ |
(2,225 |
) |
|
21,846 |
|
Provision for income
taxes |
|
|
|
|
|
|
|
|
620 |
|
Net income |
|
|
|
|
|
|
|
|
$ |
21,226 |
|
|
|
|
|
|
|
|
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
Net revenue |
$ |
340,798 |
|
|
$ |
5,662 |
|
|
$ |
639 |
|
|
$ |
— |
|
|
$ |
347,099 |
|
Cost of goods sold |
272,545 |
|
|
4,367 |
|
|
639 |
|
|
— |
|
|
277,551 |
|
Gross profit |
68,253 |
|
|
1,295 |
|
|
— |
|
|
— |
|
|
69,548 |
|
Operating expenses |
77,641 |
|
|
14,114 |
|
|
4,427 |
|
|
3,496 |
|
|
99,678 |
|
Interest and other income
(expense), net |
137 |
|
|
(475 |
) |
|
(4,057 |
) |
|
6 |
|
|
(4,389 |
) |
Loss before income taxes |
$ |
(9,251 |
) |
|
$ |
(13,294 |
) |
|
$ |
(8,484 |
) |
|
$ |
(3,490 |
) |
|
(34,519 |
) |
Provision for income
taxes |
|
|
|
|
|
|
|
|
23 |
|
Net loss |
|
|
|
|
|
|
|
|
$ |
(34,542 |
) |
|
|
Nine months ended September 30, |
|
Retail |
|
tZERO |
|
MVI |
|
Other |
|
Total |
2020 |
|
|
|
|
|
|
|
|
|
Net revenue |
$ |
1,824,249 |
|
|
$ |
34,127 |
|
|
$ |
7,230 |
|
|
$ |
162 |
|
|
$ |
1,865,768 |
|
Cost of goods sold |
1,403,418 |
|
|
28,634 |
|
|
7,226 |
|
|
— |
|
|
1,439,278 |
|
Gross profit |
420,831 |
|
|
5,493 |
|
|
4 |
|
|
162 |
|
|
426,490 |
|
Operating expenses |
333,284 |
|
|
34,087 |
|
|
8,374 |
|
|
8,297 |
|
|
384,042 |
|
Interest and other income
(expense), net |
(621 |
) |
|
(6,898 |
) |
|
2,423 |
|
|
3 |
|
|
(5,093 |
) |
Income (loss) before income
taxes |
$ |
86,926 |
|
|
$ |
(35,492 |
) |
|
$ |
(5,947 |
) |
|
$ |
(8,132 |
) |
|
37,355 |
|
Provision for income
taxes |
|
|
|
|
|
|
|
|
1,313 |
|
Net income |
|
|
|
|
|
|
|
|
$ |
36,042 |
|
|
|
|
|
|
|
|
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
Net revenue |
$ |
1,070,898 |
|
|
$ |
15,709 |
|
|
$ |
1,930 |
|
|
$ |
— |
|
|
$ |
1,088,537 |
|
Cost of goods sold |
858,169 |
|
|
11,867 |
|
|
1,930 |
|
|
— |
|
|
871,966 |
|
Gross profit |
212,729 |
|
|
3,842 |
|
|
— |
|
|
— |
|
|
216,571 |
|
Operating expenses |
244,571 |
|
|
41,410 |
|
|
11,583 |
|
|
10,933 |
|
|
308,497 |
|
Interest and other income
(expense), net |
312 |
|
|
(1,098 |
) |
|
(12,068 |
) |
|
(1 |
) |
|
(12,855 |
) |
Loss before income taxes |
$ |
(31,530 |
) |
|
$ |
(38,666 |
) |
|
$ |
(23,651 |
) |
|
$ |
(10,934 |
) |
|
(104,781 |
) |
Provision for income
taxes |
|
|
|
|
|
|
|
|
279 |
|
Net loss |
|
|
|
|
|
|
|
|
$ |
(105,060 |
) |
Non-GAAP Financial Measures and
Reconciliations
We are providing certain non-GAAP financial measures in this
release and related earnings conference call, including Adjusted
EBITDA, Free cash flow, Retail Contribution and Retail Contribution
as a percentage of Retail net revenue ("Contribution margin"). We
use these non-GAAP measures internally in analyzing our financial
results at both the consolidated and segment level 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 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
(expense), provision (benefit) for income taxes, and special items.
We believe 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.
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
continuing operations of the business including purchases of
property and equipment which are a necessary component of our
ongoing operations.
Retail Contribution and Retail Contribution margin are non-GAAP
financial measures that are calculated as gross profit less sales
and marketing expense. We believe contribution and contribution
margin provide information relevant to our Retail business about
our ability to cover our Retail operating costs, such as technology
and general and administrative expenses, while reflecting the
selling costs we incurred to generate our Retail revenues.
The following table reflects the reconciliation of Adjusted
EBITDA to net income (loss) (in thousands):
|
Three months endedSeptember
30, |
|
Nine months endedSeptember
30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
Net income
(loss) |
$ |
21,226 |
|
|
$ |
(34,542 |
) |
|
$ |
36,042 |
|
|
$ |
(105,060 |
) |
Depreciation and amortization (1) |
7,592 |
|
|
7,518 |
|
|
22,709 |
|
|
21,596 |
|
Stock-based compensation |
2,623 |
|
|
4,467 |
|
|
8,356 |
|
|
13,623 |
|
Interest (income) expense, net |
177 |
|
|
(392 |
) |
|
79 |
|
|
(1,193 |
) |
Other expense, net |
7,526 |
|
|
4,781 |
|
|
5,014 |
|
|
14,048 |
|
Provision for income taxes |
620 |
|
|
23 |
|
|
1,313 |
|
|
279 |
|
Special items (see table below) |
288 |
|
|
185 |
|
|
(8,087 |
) |
|
1,942 |
|
Adjusted
EBITDA |
$ |
40,052 |
|
|
$ |
(17,960 |
) |
|
$ |
65,426 |
|
|
$ |
(54,765 |
) |
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA |
|
|
|
|
|
|
|
Retail |
$ |
50,249 |
|
|
$ |
(575 |
) |
|
$ |
101,395 |
|
|
$ |
(1,452 |
) |
tZERO |
(5,675 |
) |
|
(11,233 |
) |
|
(20,977 |
) |
|
(33,169 |
) |
MVI |
(2,470 |
) |
|
(2,691 |
) |
|
(7,053 |
) |
|
(9,285 |
) |
Other |
(2,052 |
) |
|
(3,461 |
) |
|
(7,939 |
) |
|
(10,859 |
) |
Adjusted
EBITDA |
$ |
40,052 |
|
|
$ |
(17,960 |
) |
|
$ |
65,426 |
|
|
$ |
(54,765 |
) |
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
Special legal charges (2) |
$ |
— |
|
|
$ |
(1,221 |
) |
|
$ |
(9,773 |
) |
|
$ |
(1,221 |
) |
Severance |
288 |
|
|
— |
|
|
1,686 |
|
|
1,757 |
|
Impairment on Intangible Assets |
— |
|
|
1,406 |
|
|
— |
|
|
1,406 |
|
|
$ |
288 |
|
|
$ |
185 |
|
|
$ |
(8,087 |
) |
|
$ |
1,942 |
|
__________________________________________ (1)
— Depreciation and amortization for the nine months ended September
30, 2019 includes a $1.4 million adjustment related to finalizing
our preliminary purchase price accounting for Mac
Warehouse. (2) —
Includes amounts associated with the resolution for and adjustments
to various legal contingencies.
The following table reflects the reconciliation of Free cash
flow to Net cash provided by or used in operating activities (in
thousands):
|
Nine months endedSeptember
30, |
|
2020 |
|
2019 |
Net cash provided by (used in) operating activities |
$ |
198,710 |
|
|
$ |
(89,195 |
) |
Expenditures for property and
equipment |
(15,067 |
) |
|
(17,902 |
) |
Free cash flow |
$ |
183,643 |
|
|
$ |
(107,097 |
) |
The following table reflects the reconciliation of Retail
Contribution to Retail Gross profit (in thousands):
|
Three months endedSeptember
30, |
|
2020 |
|
2019 |
Retail: |
|
|
|
Net revenue |
$ |
717,695 |
|
|
$ |
340,798 |
|
Cost of goods sold |
548,982 |
|
|
272,545 |
|
Gross profit |
168,713 |
|
|
68,253 |
|
Less: Sales and marketing
expense |
71,231 |
|
|
33,551 |
|
Contribution |
$ |
97,482 |
|
|
$ |
34,702 |
|
Contribution margin |
13.6 |
% |
|
10.2 |
% |
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