Consolidated revenue of $441 million (4% growth) and
pre-tax loss of ($49.4) million
Overstock.com, Inc. (NASDAQ:OSTK), a tech-driven online retailer
and advancer of blockchain technology, today reported financial
results for the quarter ended September 30, 2018.
Dear
Owners,
This is going to be an informative conference call in which you
will hear about numerous things:
- How we have put over $175 million of your capital to work
nurturing to life a keiretsu of blockchain enterprises, including
tZERO, which we believe is leading the pack globally in possibly
the most lucrative of all blockchain applications (i.e., security
tokens). I think the public may not understand our master plan in
Medici, how the pieces all fit together, as well as how blockchain
firms in this network are making similarly dramatic progress in
their respective fields.
- As promised in our last conference call, we have pivoted our
ecommerce business from the “accelerate at any cost and ignore the
losses” standard Internet model back to our rational economic agent
model, and in the process halved quarter-to-quarter loss (from $57
million to $29 million pre-tax operating loss before some special
legal expenses). In the slide deck to which we will speak during
our conference call, we will disclose data regarding the shifts in
our marketing efficiency that have occurred and are accelerating.
Because of these improvements, I expect similar results in our
fourth quarter.
- We are adequately capitalized (especially given the significant
contraction in retail losses) in a way that does not strangle our
ambitions in blockchain. In tZERO in particular, we know we have a
massive opportunity and have staffed up appropriately, but in this
conference call you will learn of other efforts we are staffing up
on the expectation that they represent similarly sized
opportunities.
- Strategic issues: In our last conference call, we announced we
were working on a partnership with GSR capital and our ambitions to
scale tZERO globally with GSR. We share a common strategic outlook,
and GSR is proving to be a great help in the development of
business in Asia. We also disclosed that GSR had signed an
agreement to buy $30 million in tZERO security tokens from
Overstock and would acquire stakes in tZERO and Overstock common
stock, subject to due diligence and negotiating definitive
agreements. GSR has completed its legal due diligence, and we are
actively working with GSR to finalize definitive agreements. Beyond
that, because it is the Catch-22 of strategic matters that we
really cannot report much on them until we can announce them, Seth
Moore will report (to the extent he legally can) on GSR and
progress on finding the partner for our retail firm.
Please join us on our conference call at 4:30 (ET).
Very
respectfully,
Patrick
Key Q3 2018 metrics (comparison to Q3 2017):
- Revenue: $440.6M vs. $424.0M (4% increase);
- Gross profit: $86.7M vs. $83.7M (4% increase);
- Gross margin: 19.7% vs. 19.7% (flat);
- Sales and marketing expense: $55.3M vs. $45.2M (23%
increase);
- G&A/Technology expense: $79.2M vs. $50.4M (57%
increase);
- Pre-tax loss: ($49.4M) vs. ($6.5M) ($42.9M increase);
- Pre-tax loss - Overstock retail (non-GAAP financial measure):
($40.0M)
- Pre-tax loss - Medici (non-GAAP financial measure):
($9.4M)
- Net loss*: ($47.9M) vs. ($0.8M) ($47.1M increase);
- Diluted net loss per share: ($1.55)/share vs. ($0.03)/share
($1.52/share 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 Q3
2018 financial results Thursday, November 8, 2018, at 4:30 p.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 4690549
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, or on Overstock's YouTube channel, accessible
at https://www.overstock.com/2018-Q3-earnings. An audio replay of
the webcast will be available via telephone starting at 7:30 p.m.
ET on Thursday, November 8, 2018, through 7:30 p.m. ET on Thursday,
November 22, 2018. 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 all 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 $440.6 million and
$424.0 million for Q3 2018 and 2017, respectively, a 4% increase.
This growth was primarily driven by increased marketing expenses as
we more aggressively pursued revenue growth and new customers early
in the quarter. However, we shifted our retail marketing strategy
in early August as we sought to minimize losses, which tapered our
revenue growth throughout the quarter. We also had a 6% increase in
average order size (excluding promotional activities) primarily due
to a continued sales mix shift into home and garden products. These
increases were partially offset by increased promotional
activities, including coupons and site sales (which we recognize as
a reduction of revenue) due to our driving a higher proportion of
our sales using such promotions, and an increase in marketplace
sales (for which we record only our commission as revenue). While
our marketing spend efficiency has improved significantly during
Q3, we continue to face challenges in our natural search
marketing.
Gross profit - Gross profit was $86.7 million and $83.7 million
for Q3 2018 and 2017, respectively, a 4% increase, representing
19.7% gross margin for both periods. Gross margin was negatively
impacted by increased promotional activities, but this was offset
by a continued shift in sales mix into higher margin home and
garden products and an increase in marketplace sales (for which we
record only our commission as revenue).
Sales and marketing expenses - Sales and marketing expenses
totaled $55.3 million and $45.2 million for Q3 2018 and 2017,
respectively, a 23% increase, and representing 12.6% and 10.6% of
total net revenue for those respective periods. This increase in
sales and marketing expenses was primarily due to our effort to
aggressively pursue increased revenue and new customers early in
the quarter through increased spending in the display ads on social
media, sponsored search, and direct mail marketing channels, as
well as increased staff-related costs.
Technology expenses - Technology expenses totaled
$33.9 million and $28.7 million for Q3 2018 and 2017,
respectively, an 18% increase, and representing 7.7% and 6.8% of
total revenue for those respective periods. The increase was
primarily due to an increase in staff-related costs of $3.4 million
and an increase in technology licenses and maintenance costs of
$1.6 million.
General and administrative ("G&A") expenses - G&A
expenses totaled $45.4 million and $21.7 million for Q3 2018
and 2017, respectively, a 109% increase, and representing 10.3% and
5.1% of total revenue for those respective periods. The increase
was primarily due to $10.8 million in special legal costs in Q3
2018 related to our gift card escheatment case in Delaware and
capital raising efforts, a $5.1 million increase in staff-related
costs, and a $3.2 million increase in consulting and outside
services.
Other income (expense), net - Other income (expense), net
totaled ($1.8 million) and $5.9 million for Q3 2018 and 2017,
respectively. The decrease is primarily due to $5.5 million from
gains on the sale of cryptocurrencies and precious metals in Q3
2017 that was not repeated in Q3 2018, a $1.0 million increase in
equity method loss, a $692,000 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, and a $584,000 increase in
unrealized losses, including impairments on equity securities that
were recognized in Q3 2018.
Net cash used in operating activities - Net cash used in
operating activities was $93.1 million and $7.4 million for the
twelve months ended September 30, 2018 and 2017, respectively. The
$85.6 million increase is primarily due to increased losses.
Free cash flow (a non-GAAP financial measure) - Free cash flow
totaled ($116.5) million and ($41.2) million for the twelve months
ended September 30, 2018 and 2017, respectively. The $75.2 million
decrease was due to an $85.6 million decrease in operating cash
flow, partially offset by a $10.4 million decrease in capital
expenditures including costs related to the development of our new
corporate headquarters.
Free cash flow 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 to “net cash (used in) provided by operating activities,”
is cash flow from operations, reduced by “expenditures for fixed
assets, including internal-use software and website development.”
We believe that cash flows from 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. Also, we believe free cash flow is a useful
measure to evaluate our business since purchases of fixed assets,
including internal-use software and website development, 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 we have paid our operating
expenses. Therefore, we believe it is important to view free cash
flow as a complement to our entire consolidated statements of cash
flows.
Our calculation of free cash flow is set forth below (in
thousands):
|
|
Nine months ended September
30, |
|
Twelve months ended September
30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net cash used in
operating activities |
|
$ |
(120,300 |
) |
|
$ |
(62,448 |
) |
|
$ |
(93,073 |
) |
|
$ |
(7,445 |
) |
Expenditures for fixed
assets, including internal-use software and website
development |
|
(20,677 |
) |
|
(20,873 |
) |
|
(23,390 |
) |
|
(33,772 |
) |
Free cash flow |
|
$ |
(140,977 |
) |
|
$ |
(83,321 |
) |
|
$ |
(116,463 |
) |
|
$ |
(41,217 |
) |
Cash - We had cash and cash equivalents of $182.0 million and
$203.2 million at September 30, 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 and 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 based in Salt Lake City, Utah that sells a broad range of
products at low prices, including furniture, décor, rugs, bedding,
and home improvement. In addition to home goods, Overstock.com
offers a variety of products including jewelry, electronics,
apparel, and more, as well as a marketplace providing customers
access to hundreds of thousands of products from third-party
sellers. Additional stores include Pet Adoptions and
Worldstock.com, dedicated to selling artisan-crafted products from
around the world. Forbes ranked Overstock in its list of the Top
100 Most Trustworthy Companies in 2014. Overstock regularly posts
information about the company and other related matters under
Investor Relations on its website.
O, Overstock.com, O.com, O.co, 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.
This press release and the November 8, 2018 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. These forward-looking statements are inherently difficult
to predict. Actual results could differ materially for a variety of
reasons, including 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, adverse tax, regulatory or legal developments,
competition, and any inability to raise capital or borrow funds on
acceptable terms. Other risks and uncertainties include, among
others, the risks of the businesses Medici Ventures and tZERO are
pursuing, including whether tZERO's joint venture with Box Digital
Markets, LLC, will be able to achieve its objectives, the effects
of key business personnel moving from our retail business to our
Medici Ventures, Inc. and tZERO businesses, 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 is included in our Form
10-K for the year ended December 31, 2017, our Form 10-Q for the
quarter ended March 31, 2018, and our Form 10-Q for the quarter
ended June 30, 2018, which were filed with the Securities and
Exchange Commission on March 15, 2018, May 8, 2018, and August 9,
2018, 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.
Average order size is measured at the time of order, before
promotional discounts and shipping revenue.
Overstock.com, Inc.Consolidated
Balance Sheets (Unaudited)(in
thousands)
|
September 30, 2018 |
|
December 31, 2017 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
182,042 |
|
|
$ |
203,215 |
|
Restricted cash |
1,395 |
|
|
455 |
|
Accounts
receivable, net |
30,552 |
|
|
30,080 |
|
Inventories, net |
17,308 |
|
|
13,703 |
|
Prepaids
and other current assets |
23,863 |
|
|
17,744 |
|
Total
current assets |
255,160 |
|
|
265,197 |
|
Fixed assets, net |
133,425 |
|
|
129,343 |
|
Deferred tax assets,
net |
135 |
|
|
— |
|
Intangible assets,
net |
25,140 |
|
|
7,337 |
|
Goodwill |
22,058 |
|
|
14,698 |
|
Equity investments |
57,436 |
|
|
13,024 |
|
Other long-term assets,
net |
8,113 |
|
|
4,216 |
|
Total
assets |
$ |
501,467 |
|
|
$ |
433,815 |
|
Liabilities and Stockholders' Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
93,277 |
|
|
$ |
85,406 |
|
Accrued
liabilities |
100,753 |
|
|
82,611 |
|
Deferred
revenue |
39,917 |
|
|
46,468 |
|
Other
current liabilities, net |
472 |
|
|
178 |
|
Total
current liabilities |
234,419 |
|
|
214,663 |
|
Long-term debt,
net |
3,069 |
|
|
— |
|
Long-term debt, net -
related party |
— |
|
|
39,909 |
|
Other long-term
liabilities |
5,934 |
|
|
7,120 |
|
Total
liabilities |
243,422 |
|
|
261,692 |
|
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 - 555 and 555 |
— |
|
|
— |
|
Common
stock, $0.0001 par value |
|
|
|
Authorized shares -100,000 |
|
|
|
Issued
shares - 35,138 and 30,632 |
|
|
|
Outstanding shares - 31,941 and 27,497 |
3 |
|
|
3 |
|
Additional paid-in capital |
651,482 |
|
|
494,732 |
|
Accumulated deficit |
(413,395 |
) |
|
(254,692 |
) |
Accumulated other comprehensive loss |
(587 |
) |
|
(599 |
) |
Treasury
stock: |
|
|
|
Shares at
cost - 3,197 and 3,135 |
(66,709 |
) |
|
(63,816 |
) |
Equity
attributable to stockholders of Overstock.com, Inc. |
170,794 |
|
|
175,628 |
|
Equity
attributable to noncontrolling interests |
87,251 |
|
|
(3,505 |
) |
Total
equity |
258,045 |
|
|
172,123 |
|
Total
liabilities and stockholders' equity |
$ |
501,467 |
|
|
$ |
433,815 |
|
Overstock.com, Inc.Consolidated
Statements of Operations (Unaudited)(in thousands,
except per share data)
|
Three months ended September
30, |
|
Nine months ended September
30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenue, net |
|
|
|
|
|
|
|
Direct |
$ |
15,424 |
|
|
$ |
19,645 |
|
|
$ |
46,409 |
|
|
$ |
64,572 |
|
Partner
and other |
425,156 |
|
|
404,362 |
|
|
1,322,635 |
|
|
1,223,894 |
|
Total net
revenue |
440,580 |
|
|
424,007 |
|
|
1,369,044 |
|
|
1,288,466 |
|
Cost of goods sold |
|
|
|
|
|
|
|
Direct |
16,205 |
|
|
19,577 |
|
|
45,649 |
|
|
61,687 |
|
Partner
and other |
337,659 |
|
|
320,755 |
|
|
1,051,067 |
|
|
972,026 |
|
Total
cost of goods sold |
353,864 |
|
|
340,332 |
|
|
1,096,716 |
|
|
1,033,713 |
|
Gross
profit |
86,716 |
|
|
83,675 |
|
|
272,328 |
|
|
254,753 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Sales and
marketing |
55,312 |
|
|
45,153 |
|
|
226,942 |
|
|
126,068 |
|
Technology |
33,880 |
|
|
28,746 |
|
|
97,597 |
|
|
85,982 |
|
General
and administrative |
45,356 |
|
|
21,651 |
|
|
116,551 |
|
|
66,622 |
|
Total
operating expenses |
134,548 |
|
|
95,550 |
|
|
441,090 |
|
|
278,672 |
|
Operating loss |
(47,832 |
) |
|
(11,875 |
) |
|
(168,762 |
) |
|
(23,919 |
) |
Interest income |
383 |
|
|
189 |
|
|
1,547 |
|
|
450 |
|
Interest expense |
(101 |
) |
|
(713 |
) |
|
(1,370 |
) |
|
(2,139 |
) |
Other income (expense),
net |
(1,848 |
) |
|
5,882 |
|
|
(1,489 |
) |
|
2,751 |
|
Loss
before income taxes |
(49,398 |
) |
|
(6,517 |
) |
|
(170,074 |
) |
|
(22,857 |
) |
Benefit from income
taxes |
(141 |
) |
|
(5,412 |
) |
|
(445 |
) |
|
(7,727 |
) |
Consolidated net
loss |
$ |
(49,257 |
) |
|
$ |
(1,105 |
) |
|
$ |
(169,629 |
) |
|
$ |
(15,130 |
) |
Less: Net
loss attributable to noncontrolling interests |
(1,334 |
) |
|
(319 |
) |
|
(5,886 |
) |
|
(942 |
) |
Net loss attributable
to stockholders of Overstock.com, Inc. |
$ |
(47,923 |
) |
|
$ |
(786 |
) |
|
$ |
(163,743 |
) |
|
$ |
(14,188 |
) |
Net loss per common
share—basic: |
|
|
|
|
|
|
|
Net loss attributable
to common shares—basic |
$ |
(1.55 |
) |
|
$ |
(0.03 |
) |
|
$ |
(5.47 |
) |
|
$ |
(0.55 |
) |
Weighted average common
shares outstanding—basic |
30,279 |
|
|
25,003 |
|
|
29,256 |
|
|
25,024 |
|
Net loss per common
share—diluted: |
|
|
|
|
|
|
|
Net loss attributable
to common shares—diluted |
$ |
(1.55 |
) |
|
$ |
(0.03 |
) |
|
$ |
(5.47 |
) |
|
$ |
(0.55 |
) |
Weighted average common
shares outstanding—diluted |
30,279 |
|
|
25,003 |
|
|
29,256 |
|
|
25,024 |
|
Overstock.com, Inc.Consolidated
Statements of Cash Flows (Unaudited)(in
thousands)
|
Nine months ended September
30, |
|
Twelve months ended September
30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Cash flows from operating activities: |
|
|
|
|
|
|
|
Consolidated net
loss |
$ |
(169,629 |
) |
|
$ |
(15,130 |
) |
|
$ |
(266,421 |
) |
|
$ |
(12,369 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
Depreciation of fixed assets |
19,437 |
|
|
21,895 |
|
|
26,390 |
|
|
29,468 |
|
Amortization of intangible assets |
3,596 |
|
|
2,839 |
|
|
4,756 |
|
|
3,614 |
|
Stock-based compensation to employees and directors |
11,654 |
|
|
3,009 |
|
|
12,722 |
|
|
3,795 |
|
Deferred
income taxes, net |
(383 |
) |
|
(8,682 |
) |
|
73,498 |
|
|
(7,651 |
) |
Gain on
investment in precious metals |
— |
|
|
(1,907 |
) |
|
(64 |
) |
|
(2,108 |
) |
Impairment of cryptocurrencies |
9,641 |
|
|
— |
|
|
9,641 |
|
|
— |
|
Gain on
sale of cryptocurrencies |
(8,412 |
) |
|
(845 |
) |
|
(9,562 |
) |
|
(845 |
) |
Impairment of equity securities |
511 |
|
|
4,500 |
|
|
1,498 |
|
|
4,500 |
|
Early
extinguishment costs of long term debts |
283 |
|
|
— |
|
|
2,747 |
|
|
— |
|
Other |
741 |
|
|
420 |
|
|
1,197 |
|
|
569 |
|
Changes
in operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
Accounts
receivable, net |
(73 |
) |
|
3,814 |
|
|
(5,825 |
) |
|
(3,283 |
) |
Inventories, net |
(1,833 |
) |
|
5,375 |
|
|
(1,974 |
) |
|
2,155 |
|
Prepaids
and other current assets |
(4,806 |
) |
|
(5,950 |
) |
|
(1,655 |
) |
|
(680 |
) |
Other
long-term assets, net |
(4,120 |
) |
|
(121 |
) |
|
(6,306 |
) |
|
(551 |
) |
Accounts
payable |
7,143 |
|
|
(35,794 |
) |
|
21,942 |
|
|
(14,370 |
) |
Accrued
liabilities |
18,044 |
|
|
(35,831 |
) |
|
41,564 |
|
|
(10,217 |
) |
Deferred
revenue |
(1,511 |
) |
|
(275 |
) |
|
3,452 |
|
|
248 |
|
Other
long-term liabilities |
(583 |
) |
|
235 |
|
|
(673 |
) |
|
280 |
|
Net cash
used in operating activities |
(120,300 |
) |
|
(62,448 |
) |
|
(93,073 |
) |
|
(7,445 |
) |
Cash flows from
investing activities: |
|
|
|
|
|
|
|
Purchases
of intangible assets |
(9,583 |
) |
|
— |
|
|
(10,006 |
) |
|
— |
|
Proceeds
from sale of precious metals |
— |
|
|
11,603 |
|
|
314 |
|
|
13,213 |
|
Investment in precious metals |
— |
|
|
— |
|
|
— |
|
|
(1,633 |
) |
Disbursement of note receivable |
(2,700 |
) |
|
(750 |
) |
|
(2,700 |
) |
|
(1,368 |
) |
Investment in equity securities |
(43,670 |
) |
|
(4,188 |
) |
|
(44,670 |
) |
|
(4,938 |
) |
Acquisitions of businesses, net of cash acquired |
(12,912 |
) |
|
— |
|
|
(12,912 |
) |
|
28 |
|
Expenditures for fixed assets, including internal-use software and
website development |
(20,677 |
) |
|
(20,873 |
) |
|
(23,390 |
) |
|
(33,772 |
) |
Other |
34 |
|
|
(160 |
) |
|
264 |
|
|
(179 |
) |
Net cash
used in investing activities |
(89,508 |
) |
|
(14,368 |
) |
|
(93,100 |
) |
|
(28,649 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
Payments
on capital lease obligations |
(372 |
) |
|
— |
|
|
(455 |
) |
|
— |
|
Payments
on interest swap |
— |
|
|
— |
|
|
(1,535 |
) |
|
— |
|
Proceeds
from finance obligations |
— |
|
|
— |
|
|
— |
|
|
5,324 |
|
Payments
on finance obligations |
— |
|
|
(2,436 |
) |
|
(12,880 |
) |
|
(2,988 |
) |
Proceeds
from long-term debt |
— |
|
|
— |
|
|
40,000 |
|
|
4,826 |
|
Payments
on long-term debt |
(40,000 |
) |
|
(750 |
) |
|
(85,016 |
) |
|
(750 |
) |
Payments
of preferred dividends |
— |
|
|
— |
|
|
(109 |
) |
|
— |
|
Proceeds
from exercise of stock options |
— |
|
|
654 |
|
|
10 |
|
|
1,473 |
|
Proceeds
from rights offering, net of offering costs |
— |
|
|
— |
|
|
— |
|
|
7,591 |
|
Proceeds
from issuance and exercise of stock warrants |
50,587 |
|
|
— |
|
|
157,046 |
|
|
— |
|
Proceeds
from security token offering, net of offering costs |
82,610 |
|
|
3 |
|
|
83,515 |
|
|
3 |
|
Proceeds
from sale of common stock, net of offering costs |
94,624 |
|
|
— |
|
|
94,624 |
|
|
— |
|
Purchase
of treasury stock |
— |
|
|
(10,000 |
) |
|
— |
|
|
(10,000 |
) |
Paid in
capital for noncontrolling interest |
6,700 |
|
|
— |
|
|
6,700 |
|
|
— |
|
Payments
of taxes withheld upon vesting of restricted stock |
(4,574 |
) |
|
(1,104 |
) |
|
(4,699 |
) |
|
(1,207 |
) |
Payment
of debt issuance costs |
— |
|
|
(251 |
) |
|
(419 |
) |
|
(251 |
) |
Net cash
provided by (used in) financing activities |
189,575 |
|
|
(13,884 |
) |
|
276,782 |
|
|
4,021 |
|
Net increase (decrease)
in cash, cash equivalents and restricted cash |
(20,233 |
) |
|
(90,700 |
) |
|
90,609 |
|
|
(32,073 |
) |
Cash, cash equivalents
and restricted cash, beginning of period |
203,670 |
|
|
183,528 |
|
|
92,828 |
|
|
124,901 |
|
Cash, cash equivalents
and restricted cash, end of period |
$ |
183,437 |
|
|
$ |
92,828 |
|
|
$ |
183,437 |
|
|
$ |
92,828 |
|
Overstock.com, Inc.Consolidated
Statements of Cash Flows
(Unaudited)(Continued)(in
thousands)
|
Nine months ended September
30, |
|
Twelve months ended September
30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Supplemental
disclosures of cash flow information: |
|
|
|
|
|
|
|
Cash paid
during the period: |
|
|
|
|
|
|
|
Interest paid, net of
amounts capitalized |
$ |
1,232 |
|
|
$ |
1,980 |
|
|
$ |
2,192 |
|
|
$ |
2,574 |
|
Income
taxes paid, net of refunds |
59 |
|
|
492 |
|
|
54 |
|
|
624 |
|
Non-cash
investing and financing activities: |
|
|
|
|
|
|
|
Fixed
assets, including internal-use software and website development,
costs financed through accounts payable and accrued
liabilities |
$ |
731 |
|
|
$ |
618 |
|
|
$ |
731 |
|
|
$ |
618 |
|
Equipment
acquired under capital lease obligations |
— |
|
|
— |
|
|
1,421 |
|
|
362 |
|
Capitalized interest cost |
— |
|
|
— |
|
|
— |
|
|
(12 |
) |
Change in
fair value of cash flow hedge |
— |
|
|
(180 |
) |
|
(1,558 |
) |
|
(2,619 |
) |
Note
receivable converted to equity investment |
200 |
|
|
869 |
|
|
699 |
|
|
869 |
|
Acquisition of assets through stock issuance |
4,430 |
|
|
— |
|
|
4,430 |
|
|
— |
|
Additional Non-GAAP Financial Measure
Reconciliations
Retail and Medici pre-tax income or loss (non-GAAP financial
measures - which we reconcile to Consolidated pre-tax income or
loss) consist of income or loss before taxes of our Retail and
Medici businesses, excluding intercompany transactions eliminated
in consolidation. We believe these measures provide management and
users of the financial statements useful information, because they
provide financial results for our separate businesses which are
distinct in nature. The material limitation associated with these
measures is that they are an incomplete measure of our consolidated
operations.
We determined our segments based on how we manage our business,
which, in our view, consists primarily of our Retail and Medici
businesses. Our Retail business consists of our Direct and Partner
reportable segments. We use gross profit as the measure to
determine our reportable segments because there is not discrete
financial information available below gross profit for our Direct
and Partner segments. As a result, our Medici business is not
significant as compared to our Direct and Partner segments. Our
Other segment consists of Medici. We do not allocate assets between
our segments for our internal management purposes.
Retail pre-tax income or loss and Medici pre-tax income or loss
are 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.
Our calculations of Retail Total (which consists of Direct and
Partner) and Other (which consists of Medici) pre-tax income or
loss are set forth below excluding intercompany transactions
eliminated in consolidation (in thousands):
|
Three months ended September
30, |
|
Direct |
|
Partner |
|
Retail Total |
|
Other |
|
Total |
2018 |
|
|
|
|
|
|
|
|
|
Revenue, net |
$ |
15,424 |
|
|
$ |
420,351 |
|
|
$ |
435,775 |
|
|
$ |
4,805 |
|
|
$ |
440,580 |
|
Cost of goods sold |
16,205 |
|
|
334,446 |
|
|
350,651 |
|
|
3,213 |
|
|
353,864 |
|
Gross profit |
$ |
(781 |
) |
|
$ |
85,905 |
|
|
$ |
85,124 |
|
|
$ |
1,592 |
|
|
$ |
86,716 |
|
Operating expenses |
|
|
|
|
124,571 |
|
|
9,977 |
|
|
134,548 |
|
Interest and other
expense, net |
|
|
|
|
(515 |
) |
|
(1,051 |
) |
|
(1,566 |
) |
Pre-tax loss |
|
|
|
|
(39,962 |
) |
|
(9,436 |
) |
|
(49,398 |
) |
Provision for (benefit
from) income taxes |
|
|
|
|
(155 |
) |
|
14 |
|
|
(141 |
) |
Net loss |
|
|
|
|
$ |
(39,807 |
) |
|
$ |
(9,450 |
) |
|
$ |
(49,257 |
) |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
Revenue, net |
$ |
19,645 |
|
|
$ |
400,419 |
|
|
$ |
420,064 |
|
|
$ |
3,943 |
|
|
$ |
424,007 |
|
Cost of goods sold |
19,577 |
|
|
318,121 |
|
|
337,698 |
|
|
2,634 |
|
|
340,332 |
|
Gross profit |
$ |
68 |
|
|
$ |
82,298 |
|
|
$ |
82,366 |
|
|
$ |
1,309 |
|
|
$ |
83,675 |
|
Operating expenses |
|
|
|
|
90,592 |
|
|
4,958 |
|
|
95,550 |
|
Interest and other
income (expense), net |
|
|
|
|
5,375 |
|
|
(17 |
) |
|
5,358 |
|
Pre-tax loss |
|
|
|
|
(2,851 |
) |
|
(3,666 |
) |
|
(6,517 |
) |
Benefit from income
taxes |
|
|
|
|
(3,993 |
) |
|
(1,419 |
) |
|
(5,412 |
) |
Net income (loss) |
|
|
|
|
$ |
1,142 |
|
|
$ |
(2,247 |
) |
|
$ |
(1,105 |
) |
|
Nine months ended September
30, |
|
Direct |
|
Partner |
|
Retail Total |
|
Other |
|
Total |
2018 |
|
|
|
|
|
|
|
|
|
Revenue, net |
$ |
46,409 |
|
|
$ |
1,307,045 |
|
|
$ |
1,353,454 |
|
|
$ |
15,590 |
|
|
$ |
1,369,044 |
|
Cost of goods sold |
45,649 |
|
|
1,039,834 |
|
|
1,085,483 |
|
|
11,233 |
|
|
1,096,716 |
|
Gross profit |
$ |
760 |
|
|
$ |
267,211 |
|
|
$ |
267,971 |
|
|
$ |
4,357 |
|
|
$ |
272,328 |
|
Operating expenses |
|
|
|
|
399,540 |
|
|
41,550 |
|
|
441,090 |
|
Interest and other
income (expense), net |
|
|
|
|
654 |
|
|
(1,966 |
) |
|
(1,312 |
) |
Pre-tax loss |
|
|
|
|
(130,915 |
) |
|
(39,159 |
) |
|
(170,074 |
) |
Benefit from income
taxes |
|
|
|
|
(283 |
) |
|
(162 |
) |
|
(445 |
) |
Net loss |
|
|
|
|
$ |
(130,632 |
) |
|
$ |
(38,997 |
) |
|
$ |
(169,629 |
) |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
Revenue, net |
$ |
64,572 |
|
|
$ |
1,211,536 |
|
|
$ |
1,276,108 |
|
|
$ |
12,358 |
|
|
$ |
1,288,466 |
|
Cost of goods sold |
61,687 |
|
|
963,310 |
|
|
1,024,997 |
|
|
8,716 |
|
|
1,033,713 |
|
Gross profit |
$ |
2,885 |
|
|
$ |
248,226 |
|
|
$ |
251,111 |
|
|
$ |
3,642 |
|
|
$ |
254,753 |
|
Operating expenses |
|
|
|
|
264,455 |
|
|
14,217 |
|
|
278,672 |
|
Interest and other
income (expense), net |
|
|
|
|
5,490 |
|
|
(4,428 |
) |
|
1,062 |
|
Pre-tax loss |
|
|
|
|
(7,854 |
) |
|
(15,003 |
) |
|
(22,857 |
) |
Benefit from income
taxes |
|
|
|
|
(3,280 |
) |
|
(4,447 |
) |
|
(7,727 |
) |
Net loss |
|
|
|
|
$ |
(4,574 |
) |
|
$ |
(10,556 |
) |
|
$ |
(15,130 |
) |
Media Contact:Overstock.com Public Relations+1
(801) 947-3564pr@overstock.com
Investor Contact:Overstock.com Investor
Relationsir@overstock.com
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