Overstock.com, Inc. (NASDAQ:OSTK) today reported financial results
for the quarter ended September 30, 2021.
Third Quarter 2021 Financial Highlights, from continuing
operations
• |
Total net revenue was $689 million, a decrease of 4% year over
year |
• |
Gross profit was $157 million or 22.7% of total net revenue |
• |
Income from continuing operations was $30 million |
• |
Diluted earnings per share was $0.63 |
• |
Adjusted EBITDA (non-GAAP) was $36 million, which represents 5.2%
of net revenue |
• |
YTD net cash provided by operating activities was $100 million |
• |
At the end of the third quarter, cash and cash equivalents totaled
$512 million |
"As we lapped our highest sales growth quarter since 2004,
Overstock delivered another quarter of strong financial results.
The Overstock business model – with its asset-light structure and
broadly distributed supply chain – is particularly well suited for
the current high-demand and low-supply market driven by significant
industry-wide supply chain disruptions. We have been able to
navigate the current global supply chain challenges well," said
Overstock CEO Jonathan Johnson. "Our continued focus on
foundational operational improvements allowed us to execute on our
disciplined strategy of consistently fulfilling customers' needs to
create their dream home. Online penetration of the home furniture
and furnishings market remains strong and appears to be sticking as
customers recognize the broad assortment, value, and ease of
shopping for home furniture and furnishings online. We continue to
deliver sustainable, profitable market share growth and remain
committed to doing so through the remainder of 2021 and
beyond."
Third Quarter 2021 Operational Highlights*
• |
Active customers were 8.7 million, an increase of 5% year over
year |
• |
Last Twelve Months (LTM) net revenue per active customer was $325,
an increase of 23% year over year |
• |
Orders delivered were 3.2 million, a decrease of 22% year over
year |
• |
Average order value was $214, an increase of 24% year over
year |
• |
Orders per active customer, measured as LTM orders divided by
active customers, was 1.68, an increase of 3% year over year |
• |
Orders placed on a mobile device were 50.2% of gross merchandise
sales |
*Certain terms (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 Information
Overstock will hold a conference call and webcast to discuss its
third quarter 2021 financial results on Thursday, October 28,
2021, 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 7265079 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 28, 2021, through 11:30 a.m. ET on Thursday,
November 11, 2021. 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 Stock (NASDAQ:OSTK) / Series A-1
Preferred Stock (tZERO ATS:OSTKO) / Series B Preferred Stock
(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, area rugs, bedding and bath, 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. In 2014,
Overstock became the first major retailer to accept cryptocurrency
as a form of payment and continues to do so. 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 28, 2021 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, and other factors that will
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,
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, including how such factors
will be impacted at such time as the pandemic subsides throughout
the country and globally. Other risks and uncertainties include,
among others, the inherent risks associated with difficulties we
may have with our fulfillment partners, supply chain, access to
products, shipping costs, attraction/retention of employees, search
engine optimization results, payment processors, infrastructure,
including cyber-attacks or data breaches affecting us or any of
them, 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, 2020, our Form 10-Q
for the quarter ended March 31, 2021, and our Form 10-Q for the
quarter ended June 30, 2021, which were filed with the Securities
and Exchange Commission on February 26, 2021, May 6, 2021, and
August 5, 2021, respectively, and in our subsequent filings with
the Securities and Exchange Commission. The Form 10-K, Form 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:ir@overstock.com |
Media Relations:pr@overstock.com |
Overstock.com, Inc.Consolidated
Balance Sheets (Unaudited)(in thousands, except
per share data) |
|
September 30,2021 |
|
December 31,2020 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
512,188 |
|
|
$ |
495,425 |
|
Restricted cash |
228 |
|
|
1,197 |
|
Accounts receivable, net |
25,172 |
|
|
22,867 |
|
Inventories |
5,782 |
|
|
6,243 |
|
Prepaids and other current assets |
21,302 |
|
|
22,879 |
|
Current assets of discontinued operations |
— |
|
|
34,129 |
|
Total current assets |
564,672 |
|
|
582,740 |
|
Property and equipment,
net |
109,784 |
|
|
113,767 |
|
Deferred tax assets, net |
37,955 |
|
|
37 |
|
Goodwill |
6,160 |
|
|
6,160 |
|
Equity securities |
330,196 |
|
|
1,412 |
|
Operating lease right-of-use
assets |
13,367 |
|
|
17,297 |
|
Other long-term assets,
net |
2,783 |
|
|
2,646 |
|
Long-term assets of
discontinued operations |
— |
|
|
106,155 |
|
Total assets |
$ |
1,064,917 |
|
|
$ |
830,214 |
|
Liabilities and Stockholders' Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
124,763 |
|
|
$ |
109,759 |
|
Accrued liabilities |
103,898 |
|
|
123,646 |
|
Unearned revenue |
65,206 |
|
|
72,165 |
|
Operating lease liabilities, current |
5,157 |
|
|
5,152 |
|
Other current liabilities |
3,454 |
|
|
2,935 |
|
Current liabilities of discontinued operations |
— |
|
|
13,924 |
|
Total current liabilities |
302,478 |
|
|
327,581 |
|
Long-term debt, net |
38,837 |
|
|
41,334 |
|
Operating lease liabilities,
non-current |
9,095 |
|
|
13,206 |
|
Other long-term
liabilities |
5,393 |
|
|
4,082 |
|
Long-term liabilities of
discontinued operations |
— |
|
|
7,685 |
|
Total liabilities |
355,803 |
|
|
393,888 |
|
Stockholders' equity: |
|
|
|
Preferred stock, $0.0001 par value, authorized shares - 5,000 |
|
|
|
Series A-1, issued and outstanding - 4,204 and 4,204 |
— |
|
|
— |
|
Series B, issued and outstanding - 357 and 357 |
— |
|
|
— |
|
Common stock, $0.0001 par value, authorized shares - 100,000 |
|
|
|
Issued shares - 46,610 and 46,331 |
|
|
|
Outstanding shares - 43,014 and 42,768 |
4 |
|
|
4 |
|
Additional paid-in capital |
957,060 |
|
|
970,873 |
|
Accumulated deficit |
(168,803 |
) |
|
(525,233 |
) |
Accumulated other comprehensive loss |
(541 |
) |
|
(553 |
) |
Treasury stock at cost - 3,596 and 3,563 |
(78,606 |
) |
|
(71,399 |
) |
Equity attributable to stockholders of Overstock.com, Inc. |
709,114 |
|
|
373,692 |
|
Equity attributable to noncontrolling interests |
— |
|
|
62,634 |
|
Total stockholders' equity |
709,114 |
|
|
436,326 |
|
Total liabilities and stockholders' equity |
$ |
1,064,917 |
|
|
$ |
830,214 |
|
Overstock.com, Inc.Consolidated
Statements of Income (Unaudited)(in thousands,
except per share data) |
|
Three months endedSeptember
30, |
|
Nine months endedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net revenue |
$ |
689,390 |
|
|
$ |
717,695 |
|
|
$ |
2,143,787 |
|
|
$ |
1,824,249 |
|
Cost of goods sold |
532,682 |
|
|
548,982 |
|
|
1,658,729 |
|
|
1,403,418 |
|
Gross profit |
156,708 |
|
|
168,713 |
|
|
485,058 |
|
|
420,831 |
|
Operating expenses |
|
|
|
|
|
|
|
Sales and marketing |
75,650 |
|
|
71,292 |
|
|
234,460 |
|
|
186,852 |
|
Technology |
31,178 |
|
|
29,934 |
|
|
92,084 |
|
|
86,278 |
|
General and administrative |
21,031 |
|
|
28,625 |
|
|
66,562 |
|
|
73,347 |
|
Total operating expenses |
127,859 |
|
|
129,851 |
|
|
393,106 |
|
|
346,477 |
|
Operating income |
28,849 |
|
|
38,862 |
|
|
91,952 |
|
|
74,354 |
|
Interest expense, net |
(139 |
) |
|
(264 |
) |
|
(424 |
) |
|
(639 |
) |
Other income (expense),
net |
(79 |
) |
|
59 |
|
|
(7 |
) |
|
18 |
|
Income from continuing
operations before income taxes |
28,631 |
|
|
38,657 |
|
|
91,521 |
|
|
73,733 |
|
Provision (benefit) for income
taxes |
(1,795 |
) |
|
753 |
|
|
(47,328 |
) |
|
1,756 |
|
Income from continuing
operations |
30,426 |
|
|
37,904 |
|
|
138,849 |
|
|
71,977 |
|
Income (loss) from
discontinued operations, net of income taxes |
— |
|
|
(16,678 |
) |
|
217,246 |
|
|
(35,935 |
) |
Consolidated net income |
30,426 |
|
|
21,226 |
|
|
356,095 |
|
|
36,042 |
|
Less: Net loss attributable to noncontrolling
interests—discontinued operations |
— |
|
|
(2,165 |
) |
|
(335 |
) |
|
(7,372 |
) |
Net income attributable to
stockholders of Overstock.com, Inc. |
$ |
30,426 |
|
|
$ |
23,391 |
|
|
$ |
356,430 |
|
|
$ |
43,414 |
|
Consolidated net income per
share of common stock: |
|
|
|
|
|
|
|
Net income (loss) attributable to common shares—basic |
|
|
|
|
|
|
|
Continuing operations |
$ |
0.64 |
|
|
$ |
0.81 |
|
|
$ |
2.91 |
|
|
$ |
1.66 |
|
Discontinued operations |
— |
|
|
(0.31 |
) |
|
4.58 |
|
|
(0.66 |
) |
Total |
$ |
0.64 |
|
|
$ |
0.50 |
|
|
$ |
7.49 |
|
|
$ |
1.00 |
|
Net income (loss) attributable to common shares—diluted |
|
|
|
|
|
|
|
Continuing operations |
$ |
0.63 |
|
|
$ |
0.81 |
|
|
$ |
2.89 |
|
|
$ |
1.65 |
|
Discontinued operations |
— |
|
|
(0.31 |
) |
|
4.54 |
|
|
(0.66 |
) |
Total |
$ |
0.63 |
|
|
$ |
0.50 |
|
|
$ |
7.43 |
|
|
$ |
0.99 |
|
Weighted average shares of
common stock outstanding: |
|
|
|
|
|
|
|
Basic |
43,014 |
|
|
41,595 |
|
|
42,970 |
|
|
40,697 |
|
Diluted |
43,324 |
|
|
42,202 |
|
|
43,320 |
|
|
41,030 |
|
Overstock.com, Inc.Consolidated
Statements of Cash Flows (Unaudited)(in
thousands) |
|
Nine months endedSeptember
30, |
|
2021 |
|
2020 |
Cash flows from operating activities: |
|
|
|
Consolidated net income |
$ |
356,095 |
|
|
$ |
36,042 |
|
(Income) loss from discontinued operations, net of income
taxes |
(217,246 |
) |
|
35,935 |
|
Adjustments to reconcile consolidated net income to net cash
provided by operating activities: |
|
|
|
Depreciation and amortization |
14,332 |
|
|
16,288 |
|
Non-cash operating lease cost |
3,758 |
|
|
3,781 |
|
Stock-based compensation to employees and directors |
7,649 |
|
|
6,201 |
|
Increase in deferred income taxes, net |
(51,749 |
) |
|
35 |
|
Other non-cash adjustments |
1,400 |
|
|
(59 |
) |
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable, net |
(2,305 |
) |
|
(12,368 |
) |
Inventories |
461 |
|
|
(1,027 |
) |
Prepaids and other current assets |
3,259 |
|
|
(85 |
) |
Other long-term assets, net |
(1,050 |
) |
|
(137 |
) |
Accounts payable |
14,831 |
|
|
44,011 |
|
Accrued liabilities |
(19,945 |
) |
|
57,619 |
|
Unearned revenue |
(6,959 |
) |
|
37,403 |
|
Operating lease liabilities |
(3,891 |
) |
|
(4,756 |
) |
Other long-term liabilities |
1,444 |
|
|
2,941 |
|
Net cash provided by continuing operating activities |
100,084 |
|
|
221,824 |
|
Net cash used in discontinued operating activities |
(17,128 |
) |
|
(23,114 |
) |
Net cash provided by operating activities |
82,956 |
|
|
198,710 |
|
Cash flows from investing activities: |
|
|
|
Contributions for capital calls |
(41,122 |
) |
|
— |
|
Expenditures for property and equipment |
(9,658 |
) |
|
(12,008 |
) |
Other investing activities, net |
(1,281 |
) |
|
(161 |
) |
Net cash used in continuing investing activities |
(52,061 |
) |
|
(12,169 |
) |
Net cash used in discontinued investing activities |
(29,703 |
) |
|
(3,262 |
) |
Net cash used in investing activities |
(81,764 |
) |
|
(15,431 |
) |
Cash flows from financing activities: |
|
|
|
Payments on long-term debt |
(2,191 |
) |
|
(1,566 |
) |
Proceeds from long-term debt |
— |
|
|
47,500 |
|
Proceeds from sale of common stock, net of offering costs |
— |
|
|
195,540 |
|
Payments of taxes withheld upon vesting of restricted stock |
(7,850 |
) |
|
(2,317 |
) |
Other financing activities, net |
(1 |
) |
|
(5,054 |
) |
Net cash provided by (used in) continuing financing activities |
(10,042 |
) |
|
234,103 |
|
Net cash provided by discontinued financing activities |
2,085 |
|
|
— |
|
Net cash provided by (used in) financing activities |
(7,957 |
) |
|
234,103 |
|
Net
increase (decrease) in cash, cash equivalents, and restricted
cash |
(6,765 |
) |
|
417,382 |
|
Cash,
cash equivalents, and restricted cash, beginning of period,
inclusive of cash balances of discontinued operations |
519,181 |
|
|
114,898 |
|
Cash,
cash equivalents, and restricted cash, end of period, inclusive of
cash balances of discontinued operations |
512,416 |
|
|
532,280 |
|
Less: Cash, cash equivalents, and restricted cash of discontinued
operations |
— |
|
|
17,113 |
|
Cash,
cash equivalents, and restricted cash, end of period |
$ |
512,416 |
|
|
$ |
515,167 |
|
Financial Reporting Presentation in Accordance with the
Pelion Transaction
Medici Ventures' blockchain businesses, including tZERO, met the
criteria to be reported as held for sale and discontinued
operations as of March 31, 2021, due to their anticipated
deconsolidation. As a result of closing the Pelion transaction
during the second quarter of 2021, these businesses' operating
results for the periods prior to deconsolidation have been
reflected in our consolidated statements of income as discontinued
operations. Additionally, the related assets and liabilities of
these businesses associated with the prior periods are classified
as discontinued operations in our consolidated balance sheets. As a
result of closing this transaction, Overstock has reorganized its
remaining businesses into a single reportable operating segment,
Retail. Corporate-related overhead costs are included in Retail
continuing operations.
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, including indicators of our growth, customer purchasing
patterns, and the mix of products purchased by our customers.
Active customers represents 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 key operating metrics for the
Retail business:(in thousands, except for LTM net revenue per
active customer, average order value and orders per active
customer)
|
Three months endedSeptember
30, |
|
2021 |
|
2020 |
Active customers |
8,657 |
|
|
8,243 |
|
LTM net revenue per active
customer |
325 |
|
|
265 |
|
Orders delivered |
3,217 |
|
|
4,146 |
|
Average order value |
214 |
|
|
173 |
|
Orders per active
customer |
1.68 |
|
|
1.63 |
|
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 per share from continuing operations, 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 per share for continuing operations is
a non-GAAP financial measure that we calculate as net income from
continuing operations less the benefit for income taxes associated
with our tax valuation allowance release. We believe that this
adjustment to our adjusted diluted net income 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 from continuing operations 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 continuing 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.
The following table reflects the reconciliation of adjusted
diluted earnings per share from continuing operations to diluted
earnings per share from continuing operations (in thousands, except
per share data):
|
Three months endedSeptember
30, |
|
Diluted EPS |
|
Less: taxvaluationallowancerelease |
|
AdjustedDiluted EPS |
Numerator: |
|
|
|
|
|
Income from continuing operations |
$ |
30,426 |
|
|
$ |
4,420 |
|
|
$ |
26,006 |
|
Less: Preferred stock dividends—accumulated |
182 |
|
|
— |
|
|
182 |
|
Undistributed income from continuing operations |
30,244 |
|
|
4,420 |
|
|
25,824 |
|
Less: Undistributed income allocated to participating
securities |
2,899 |
|
|
424 |
|
|
2,475 |
|
Net
income from continuing operations attributable to common
stockholders |
$ |
27,345 |
|
|
$ |
3,996 |
|
|
$ |
23,349 |
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
Weighted
average shares of common stock outstanding—diluted |
43,324 |
|
|
43,324 |
|
|
43,324 |
|
|
|
|
|
|
|
Net income from continuing operations per share of common
stock: |
|
|
|
|
|
Diluted |
$ |
0.63 |
|
|
$ |
0.09 |
|
|
$ |
0.54 |
|
The following table reflects the reconciliation of adjusted
EBITDA to income from continuing operations (in thousands):
|
Three months endedSeptember
30, |
|
Nine months endedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
Income from continuing operations |
$ |
30,426 |
|
|
$ |
37,904 |
|
|
$ |
138,849 |
|
|
$ |
71,977 |
|
Depreciation and amortization |
4,383 |
|
|
5,310 |
|
|
14,332 |
|
|
16,288 |
|
Stock-based compensation |
2,542 |
|
|
1,568 |
|
|
7,649 |
|
|
6,201 |
|
Interest expense, net |
139 |
|
|
264 |
|
|
424 |
|
|
639 |
|
Other (income) expense, net |
79 |
|
|
(59 |
) |
|
7 |
|
|
(18 |
) |
Provision (benefit) for income taxes |
(1,795 |
) |
|
753 |
|
|
(47,328 |
) |
|
1,756 |
|
Special items (see table below) |
305 |
|
|
288 |
|
|
361 |
|
|
(8,470 |
) |
Adjusted
EBITDA |
$ |
36,079 |
|
|
$ |
46,028 |
|
|
$ |
114,294 |
|
|
$ |
88,373 |
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
Special legal charges |
$ |
1 |
|
|
$ |
— |
|
|
$ |
(186 |
) |
|
$ |
(9,773 |
) |
Severance |
253 |
|
|
288 |
|
|
253 |
|
|
1,303 |
|
Transaction costs |
51 |
|
|
— |
|
|
294 |
|
|
— |
|
|
$ |
305 |
|
|
$ |
288 |
|
|
$ |
361 |
|
|
$ |
(8,470 |
) |
The following table reflects the reconciliation of free cash
flow to net cash provided by continuing operating activities (in
thousands):
|
Nine months endedSeptember
30, |
|
2021 |
|
2020 |
Net cash provided by continuing operating activities |
$ |
100,084 |
|
|
$ |
221,824 |
|
Expenditures for property and
equipment |
(9,658 |
) |
|
(12,008 |
) |
Free cash flow |
$ |
90,426 |
|
|
$ |
209,816 |
|
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