Australia markets closed
  • ALL ORDS

    6,696.50
    +29.00 (+0.43%)
     
  • AUD/USD

    0.6488
    +0.0030 (+0.46%)
     
  • ASX 200

    6,496.20
    +26.80 (+0.41%)
     
  • OIL

    77.81
    +1.10 (+1.43%)
     
  • GOLD

    1,641.70
    +8.30 (+0.51%)
     
  • BTC-AUD

    31,145.21
    +1,609.17 (+5.45%)
     
  • CMC Crypto 200

    461.21
    +28.11 (+6.49%)
     

Overstock Announces Second Quarter 2022 Financial Results

·18-min read
Overstock.com, Inc.
Overstock.com, Inc.

Navigated ongoing macroeconomic and geopolitical volatility to deliver another profitable quarter

Continued share repurchases and ended the quarter with a strong cash position

SALT LAKE CITY, July 28, 2022 (GLOBE NEWSWIRE) -- Overstock.com, Inc. (NASDAQ:OSTK) today reported financial results for the quarter ended June 30, 2022.

Second Quarter 2022 Financial Highlights, from continuing operations

Total net revenue of $528 million, a decrease of 34% year over year

Gross profit of $121 million or 22.9% of total net revenue

Income from continuing operations of $7 million

Diluted earnings per share of $0.12

Adjusted EBITDA (non-GAAP) of $21 million, which represents 3.9% of net revenue

Cash and cash equivalents totaled $443 million at the end of the second quarter

"Our disciplined execution and differentiated asset-light operating model allowed us to remain profitable for the ninth consecutive quarter, even with weak consumer sentiment, ongoing macroeconomic and geopolitical volatility, higher inflation, and significant competitive pressures including competitors liquidating their excess owned inventory," said Overstock CEO Jonathan Johnson. "While the retail environment was challenging throughout the second quarter and sales results were below my expectations, we continued to deliver smart value to our customers, make progress on our strategic initiatives, and provide our partners with an efficient and effective channel to increase their unit sales. Our continued profitability and strong balance sheet support that our business model is a winning one, able to withstand jolts in the market."

"Over a year ago, we strategically embarked on the path to become a 100% e-commerce furniture and home furnishings retailer. We accomplished this goal at the end of the second quarter, on our targeted timeframe. Overstock remains well positioned to serve the evolving home furnishings needs of our customers and capture market share in a large and growing addressable market. In these unprecedented times, we have chosen to stay the course, focusing on our strategic initiatives and operating our business under the same financial discipline as we have over the last two years," continued Johnson. "I look forward to providing a full update on our second quarter 2022 performance during our earnings call."

Second Quarter 2022 Operational Highlights*

Active customers of 6.5 million, a decrease of 29% year over year

Last Twelve Months (LTM) net revenue per active customer of $365, an increase of 18% year over year

Orders delivered of 2.1 million, a decrease of 43% year over year

Average order value of $247, an increase of 16% year over year

Orders per active customer, measured as LTM orders divided by active customers, of 1.65, a decrease of 2% year over year

Orders placed on a mobile device were 50% of gross merchandise sales

*Certain terms, such as active customers, LTM net revenue per active customer, orders delivered, average order value, and orders per active customer are defined under "Supplemental Operational Data" below.

Share Repurchases

On August 17, 2021, we announced that our Board of Directors had approved a stock repurchase program (the “Repurchase Program”), pursuant to which we may, from time to time, purchase shares of our outstanding common stock for an aggregate repurchase price not to exceed $100.0 million at any time through December 31, 2023. On March 9, 2022, we announced that our Board of Directors expanded the Repurchase Program to permit us, from time to time, to purchase outstanding shares of our Digital Voting Series A-1 Preferred Stock and/or our Voting Series B Preferred Stock in addition to outstanding shares of our common stock.

During the three months ended June 30, 2022, we repurchased $34.9 million of our common stock and $50,000 of our Series A-1 preferred stock under the Repurchase Program at an average price of $30.69 and $31.30 per share, respectively. As of June 30, 2022, we had approximately $39.9 million remaining under the current Repurchase Program authorization.

Preferred Share Conversion

On May 12, 2022, our shareholders voted to approve the amendment of the Amended and Restated Certificate of Designation for both classes of our preferred stock to provide that each share of our Series A-1 and Series B preferred stock would be automatically converted into 0.90 of a share of our common stock (the "Conversion"). On June 10, 2022, in connection with the completion of the Conversion, we issued 4,097,697 shares of our common stock in exchange for the outstanding Series A-1 and Series B preferred stock on that date. As the fair value of our common stock issued exceeded the fair value of the Series A-1 and Series B preferred stock exchanged on Conversion date, we recognized a non-cash dividend of $1.7 million due to the excess fair value per share compared to the conversion ratio. Following the Conversion, we eliminated the Series A-1 and Series B preferred stock class by filing Certificates of Elimination with the Delaware Secretary of State.

Earnings Webcast and Replay Information

Overstock will hold a conference call and webcast to discuss its second quarter 2022 financial results on Thursday, July 28, 2022, at 8:30 a.m. ET. To access the live webcast and presentation slides, go to http://investors.overstock.com. To participate in the conference call via telephone, please register at the link available at http://investors.overstock.com/events. Registrants will receive dial-in information and a unique PIN to access the live call. Questions may be emailed in advance of the call to ir@overstock.com.

A replay of the conference call will be available at http://investors.overstock.com, starting two hours after the live call has ended.

About Overstock.com

Overstock.com, Inc. (NASDAQ:OSTK) 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 features millions of products that tens of millions of customers visit each month. Overstock regularly posts information about the Company and other related matters on the Newsroom and Investor Relations pages on its website, Overstock.com.

O, Overstock.com, O.com, and Club O 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 July 28, 2022 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 could impact our results of operations. You should not place undue reliance on any forward-looking statements, which speak only as of the date they were made. We undertake no obligation to update any forward-looking statements as a result of any new information, future developments, or otherwise. These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including but not limited to, macroeconomic changes, including higher inflation and rising interest rates, and difficulties we may have with our fulfillment partners, supply chain, access to products, shipping costs, competition, attraction/retention of employees, search engine optimization results, and/or payment processors. Other risks and uncertainties include, among others, the duration of the COVID-19 pandemic and its ultimate impact on our business and results of operations, the current conflict between Russia and Ukraine and its related geopolitical impacts, problems with our infrastructure, including cyber-attacks or data breaches affecting us, adverse tax, regulatory or legal developments, any restrictions on the use of "cookies" or other tracking technologies, any negative business impacts associated with our strategy to exit from non-home categories, and whether our partnership with Pelion Venture Partners will be able to achieve its objectives. More information about factors that could potentially affect our financial results are included in our Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 25, 2022, in our Form 10-Q for the quarter ended March 31, 2022, which was filed with the SEC on May 4, 2022, and in our subsequent filings with the SEC. The Form 10-K, 10-Q, and our subsequent filings with the SEC identify important factors that could cause our actual results to differ materially from those contained in or contemplated by our projections, estimates and other forward-looking statements.

Contacts

Investor Relations:
Lavesh Hemnani
ir@overstock.com



Media Relations:
Sarah Factor
pr@overstock.com


Overstock.com, Inc.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share data)

 

June 30,
2022

 

December 31,
2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

442,603

 

 

$

503,341

 

Restricted cash

 

184

 

 

 

25

 

Accounts receivable, net

 

23,088

 

 

 

21,190

 

Inventories

 

5,666

 

 

 

5,137

 

Prepaids and other current assets

 

20,233

 

 

 

22,097

 

Total current assets

 

491,774

 

 

 

551,790

 

Property and equipment, net

 

108,041

 

 

 

109,479

 

Deferred tax assets, net

 

37,413

 

 

 

40,035

 

Goodwill

 

6,160

 

 

 

6,160

 

Equity securities

 

350,580

 

 

 

342,682

 

Operating lease right-of-use assets

 

10,192

 

 

 

12,584

 

Other long-term assets, net

 

2,790

 

 

 

3,236

 

Total assets

$

1,006,950

 

 

$

1,065,966

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

96,232

 

 

$

102,293

 

Accrued liabilities

 

91,794

 

 

 

101,902

 

Unearned revenue

 

56,554

 

 

 

59,387

 

Operating lease liabilities, current

 

5,636

 

 

 

5,402

 

Other current liabilities

 

3,428

 

 

 

3,349

 

Total current liabilities

 

253,644

 

 

 

272,333

 

Long-term debt, net

 

36,248

 

 

 

37,984

 

Operating lease liabilities, non-current

 

5,220

 

 

 

7,960

 

Other long-term liabilities

 

3,128

 

 

 

3,303

 

Total liabilities

 

298,240

 

 

 

321,580

 

Stockholders' equity:

 

 

 

Preferred stock, $0.0001 par value, authorized shares - 5,000

 

 

 

Series A-1, issued and outstanding - 0 and 4,204

 

 

 

 

 

Series B, issued and outstanding - 0 and 357

 

 

 

 

 

Common stock, $0.0001 par value, authorized shares - 100,000

 

 

 

Issued shares - 51,026 and 46,625

 

 

 

Outstanding shares - 45,695 and 43,023

 

5

 

 

 

4

 

Additional paid-in capital

 

972,845

 

 

 

960,544

 

Accumulated deficit

 

(121,323

)

 

 

(136,590

)

Accumulated other comprehensive loss

 

(529

)

 

 

(537

)

Treasury stock at cost - 5,331 and 3,602

 

(142,288

)

 

 

(79,035

)

Total stockholders' equity

 

708,710

 

 

 

744,386

 

Total liabilities and stockholders' equity

$

1,006,950

 

 

$

1,065,966

 


Overstock.com, Inc.
Consolidated Statements of Income (Unaudited)
(in thousands, except per share data)

 

Three months ended
June 30,

 

Six months ended
June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net revenue

$

528,122

 

 

$

794,536

 

 

$

1,064,159

 

 

$

1,454,397

 

Cost of goods sold

 

407,017

 

 

 

619,710

 

 

 

817,842

 

 

 

1,126,047

 

Gross profit

 

121,105

 

 

 

174,826

 

 

 

246,317

 

 

 

328,350

 

Operating expenses

 

 

 

 

 

 

 

Sales and marketing

 

57,940

 

 

 

85,272

 

 

 

116,453

 

 

 

158,810

 

Technology

 

30,542

 

 

 

30,383

 

 

 

63,531

 

 

 

60,906

 

General and administrative

 

21,081

 

 

 

22,660

 

 

 

42,337

 

 

 

45,531

 

Total operating expenses

 

109,563

 

 

 

138,315

 

 

 

222,321

 

 

 

265,247

 

Operating income

 

11,542

 

 

 

36,511

 

 

 

23,996

 

 

 

63,103

 

Interest income (expense), net

 

115

 

 

 

(130

)

 

 

(10

)

 

 

(285

)

Other income (expense), net

 

(1,981

)

 

 

298

 

 

 

(2,095

)

 

 

72

 

Income before income taxes from continuing operations

 

9,676

 

 

 

36,679

 

 

 

21,891

 

 

 

62,890

 

Provision (benefit) for income taxes

 

2,529

 

 

 

(45,726

)

 

 

4,621

 

 

 

(45,533

)

Income from continuing operations

 

7,147

 

 

 

82,405

 

 

 

17,270

 

 

 

108,423

 

Income from discontinued operations, net of income taxes

 

 

 

 

227,372

 

 

 

 

 

 

217,246

 

Consolidated net income

 

7,147

 

 

 

309,777

 

 

 

17,270

 

 

 

325,669

 

Less: Net loss attributable to noncontrolling interests—discontinued operations

 

 

 

 

(134

)

 

 

 

 

 

(335

)

Net income attributable to stockholders of Overstock.com, Inc.

$

7,147

 

 

$

309,911

 

 

$

17,270

 

 

$

326,004

 

Consolidated net income per share of common stock:

 

 

 

 

 

 

 

Net income attributable to common shares—basic

 

 

 

 

 

 

 

Continuing operations

$

0.12

 

 

$

1.73

 

 

$

0.33

 

 

$

2.27

 

Discontinued operations

 

 

 

 

4.78

 

 

 

 

 

 

4.58

 

Total

$

0.12

 

 

$

6.51

 

 

$

0.33

 

 

$

6.85

 

Net income attributable to common shares—diluted

 

 

 

 

 

 

 

Continuing operations

$

0.12

 

 

$

1.72

 

 

$

0.33

 

 

$

2.26

 

Discontinued operations

 

 

 

 

4.75

 

 

 

 

 

 

4.54

 

Total

$

0.12

 

 

$

6.47

 

 

$

0.33

 

 

$

6.80

 

Weighted average shares of common stock outstanding:

 

 

 

 

 

 

 

Basic

 

43,072

 

 

 

43,009

 

 

 

43,062

 

 

 

42,948

 

Diluted

 

43,159

 

 

 

43,314

 

 

 

43,221

 

 

 

43,317

 


Overstock.com, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

 

Six months ended
June 30,

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

Consolidated net income

$

17,270

 

 

$

325,669

 

Income from discontinued operations, net of income taxes

 

 

 

 

(217,246

)

Adjustments to reconcile consolidated net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

8,350

 

 

 

9,949

 

Non-cash operating lease cost

 

2,736

 

 

 

2,528

 

Stock-based compensation to employees and directors

 

9,334

 

 

 

5,107

 

Decrease (increase) in deferred income taxes, net

 

2,622

 

 

 

(47,046

)

Loss from equity method securities

 

2,583

 

 

 

 

Other non-cash adjustments

 

(114

)

 

 

721

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

 

(1,504

)

 

 

(10,141

)

Inventories

 

(529

)

 

 

(766

)

Prepaids and other current assets

 

2,318

 

 

 

(3,452

)

Other long-term assets, net

 

(943

)

 

 

(368

)

Accounts payable

 

(6,104

)

 

 

56,543

 

Accrued liabilities

 

(8,339

)

 

 

(10,651

)

Unearned revenue

 

(2,833

)

 

 

12,282

 

Operating lease liabilities

 

(2,850

)

 

 

(2,812

)

Other long-term liabilities

 

(175

)

 

 

(270

)

Net cash provided by continuing operating activities

 

21,822

 

 

 

120,047

 

Net cash used in discontinued operating activities

 

 

 

 

(17,128

)

Net cash provided by operating activities

 

21,822

 

 

 

102,919

 

Cash flows from investing activities:

 

 

 

Purchase of equity securities

 

(11,420

)

 

 

 

Contributions for capital calls

 

 

 

 

(41,122

)

Capital distribution from investment

 

1,162

 

 

 

 

Expenditures for property and equipment

 

(6,406

)

 

 

(5,620

)

Other investing activities, net

 

(505

)

 

 

(908

)

Net cash used in continuing investing activities

 

(17,169

)

 

 

(47,650

)

Net cash used in discontinued investing activities

 

 

 

 

(29,703

)

Net cash used in investing activities

 

(17,169

)

 

 

(77,353

)

Cash flows from financing activities:

 

 

 

Repurchase of shares

 

(60,077

)

 

 

 

Payments on long-term debt

 

(1,707

)

 

 

(1,366

)

Payments of taxes withheld upon vesting of employee stock awards

 

(3,482

)

 

 

(7,812

)

Other financing activities, net

 

34

 

 

 

(1

)

Net cash used in continuing financing activities

 

(65,232

)

 

 

(9,179

)

Net cash provided by discontinued financing activities

 

 

 

 

2,085

 

Net cash used in financing activities

 

(65,232

)

 

 

(7,094

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

(60,579

)

 

 

18,472

 

Cash, cash equivalents, and restricted cash, beginning of year, inclusive of cash balances of discontinued operations

 

503,366

 

 

 

519,181

 

Cash, cash equivalents, and restricted cash, end of year, inclusive of cash balances of discontinued operations

 

442,787

 

 

 

537,653

 

Less: Cash, cash equivalents, and restricted cash of discontinued operations

 

 

 

 

 

Cash, cash equivalents, and restricted cash, end of year

$

442,787

 

 

$

537,653

 

Financial Reporting Presentation in Accordance with the Pelion Transaction

Upon closing the Pelion transaction during the second quarter of 2021, we deconsolidated the Medici Ventures' blockchain businesses, including tZERO. The operating results for these businesses for the periods prior to deconsolidation have been reflected in our consolidated statements of income as discontinued operations. Overstock reorganized its remaining businesses, including corporate-related overhead costs, into a single reportable operating segment.

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 and provide key performance indicators to track our growth. These indicators include changes in customer order patterns and the mix of products purchased by our customers.

Active customers represent the total number of unique customers who have made at least one purchase during the prior twelve-month period. This metric captures both the inflow of new customers and the outflow of existing customers who have not made a purchase during the prior twelve-month period.

LTM net revenue per active customer represents total net revenue in a twelve-month period divided by the total number of active customers for the same twelve-month period.

Orders delivered represents the total number of orders delivered in any given period, including orders that may eventually be returned. As we ship a large volume of packages through multiple carriers, actual delivery dates may not always be available, and in those circumstances, we estimate delivery dates based on historical data.

Average order value is defined as total net revenue in any given period divided by the total number of orders delivered in that period.

Orders per active customer is defined as orders delivered in a twelve-month period divided by active customers for the same twelve-month period.

The following table provides 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 ended
June 30,

 

2022

 

2021

Active customers

6,490

 

9,165

LTM net revenue per active customer

365

 

310

Orders delivered

2,138

 

3,736

Average order value

247

 

213

Orders per active customer

1.65

 

1.69

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 income recognized from our equity method securities, net of related tax and the non-cash preferred stock conversion dividend. We believe that this adjustment to our 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 benefits and expenses in calculating adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis. Exclusion of items in the non-GAAP presentation should not be construed as an inference that these items are unusual, infrequent or non-recurring.

Free cash flow is a non-GAAP financial measure that is calculated as net cash provided by or used in 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 ended
June 30,

 

2022

 

Diluted EPS

 

Less: non-cash
preferred stock dividend
1

 

Less: equity method
income (loss)
2

 

Adjusted
Diluted EPS

Numerator:

 

 

 

 

 

 

 

Income from continuing operations

$

7,147

 

$

 

 

$

(1,793

)

 

$

8,940

Less: Preferred stock dividends—issued

 

1,697

 

 

1,697

 

 

 

 

 

 

Undistributed income from continuing operations

 

5,450

 

 

(1,697

)

 

 

(1,793

)

 

 

8,940

Less: Undistributed income allocated to participating securities

 

410

 

 

(128

)

 

 

(135

)

 

 

673

Net income from continuing operations attributable to common stockholders

$

5,040

 

$

(1,569

)

 

$

(1,658

)

 

$

8,267

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding—diluted

 

43,159

 

 

43,159

 

 

 

43,159

 

 

 

43,159

 

 

 

 

 

 

 

 

Net income from continuing operations per share of common stock:

 

 

 

 

 

 

 

Diluted

$

0.12

 

$

(0.03

)

 

$

(0.04

)

 

$

0.19

1 Non-cash dividend as a result of preferred stock conversion
2 Inclusive of estimated tax impact from equity method activity

The following table reflects the reconciliation of adjusted EBITDA to income from continuing operations (in thousands):

 

Three months ended
June 30,

 

Six months ended
June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

Income from continuing operations

$

7,147

 

 

$

82,405

 

 

$

17,270

 

$

108,423

 

Depreciation and amortization

 

4,043

 

 

 

4,803

 

 

 

8,350

 

 

9,949

 

Stock-based compensation

 

4,695

 

 

 

2,802

 

 

 

9,334

 

 

5,107

 

Interest (income) expense, net

 

(115

)

 

 

130

 

 

 

10

 

 

285

 

Other (income) expense, net

 

1,981

 

 

 

(298

)

 

 

2,095

 

 

(72

)

Provision (benefit) for income taxes

 

2,529

 

 

 

(45,726

)

 

 

4,621

 

 

(45,533

)

Special items (see table below)

 

475

 

 

 

243

 

 

 

528

 

 

56

 

Adjusted EBITDA

$

20,755

 

 

$

44,359

 

 

$

42,208

 

$

78,215

 

 

 

 

 

 

 

 

 

Special items:

 

 

 

 

 

 

 

Special legal charges and other

$

471

 

 

$

 

 

$

471

 

$

(187

)

Transaction costs

 

4

 

 

 

243

 

 

 

57

 

 

243

 

 

$

475

 

 

$

243

 

 

$

528

 

$

56

 

The following table reflects the reconciliation of free cash flow to net cash provided by continuing operating activities (in thousands):

 

Six months ended
June 30,

 

 

2022

 

 

 

2021

 

Net cash provided by continuing operating activities

$

21,822

 

 

$

120,047

 

Expenditures for property and equipment

 

(6,406

)

 

 

(5,620

)

Free cash flow

$

15,416

 

 

$

114,427