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Third quarter net revenue of $689 million, surpassing $2 billion year to date

SALT LAKE CITY, Oct. 28, 2021 (GLOBE NEWSWIRE) — 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 [email protected].

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.

Contacts

Investor Relations:
[email protected]

Media Relations:
[email protected]

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 ended
September 30,
  Nine months ended
September 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 ended
September 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 ended
September 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 ended
September 30,
  Diluted EPS   Less: tax
valuation
allowance
release
  Adjusted
Diluted 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 ended
September 30,
  Nine months ended
September 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 ended
September 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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