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Overstock Announces First Quarter 2021 Financial Results

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First quarter net revenue growth of 94% year over year to $660 million

First quarter income from continuing operations of $26 million, an increase of $40 million year over year

SALT LAKE CITY, April 29, 2021 (GLOBE NEWSWIRE) -- Overstock.com, Inc. (NASDAQ:OSTK) today reported financial results for the quarter ended March 31, 2021.

First Quarter 2021 Financial Highlights, from continuing operations

Total net revenue was $660 million, an increase of 94% year over year

Gross profit was $154 million or 23.3% of total net revenue, an increase of 141 basis points year over year

Income from continuing operations was $26 million, an improvement of $40 million year over year

Diluted earnings per share was $0.56, an improvement of $0.90 year over year

Adjusted EBITDA (non-GAAP) was $34 million, an improvement of $40 million year over year

YTD net cash provided by operating activities was $74 million, an improvement of $76 million year over year

YTD free cash flow (non-GAAP) improved $76 million year over year

At the end of the first quarter, cash and cash equivalents totaled $535 million

"On the heels of a record 2020, Overstock continues to execute consistently and delivered strong results for the first quarter of 2021," said Overstock CEO Jonathan Johnson. "Our strong momentum reflects our purposeful and strategic focus on our home business and the operational changes we've made and continue to put in place. For the first quarter, our net revenue increased by 94%, and our active customers nearly doubled again. Our focus on improving the customer experience and making our brand vision of 'Dream Homes for All' a reality is paying off. In addition, our strategic partnership with Pelion Venture Partners for oversight of Medici Ventures' blockchain assets closed ahead of schedule and we believe it will provide the portfolio companies the opportunities they need to succeed. We have had another great quarter of profitable market share growth! We believe Overstock is well positioned to sustain this profitable path through 2021 and beyond. I look forward to providing a full update on our first quarter performance during our earnings call."

First Quarter 2021 Operational Highlights

Active customers reached 9.9 million as of March 31, 2021, an increase of 92% year over year

LTM net revenue per active customer was $283 as of March 31, 2021, an increase of 3.7% year over year

Orders delivered in the first quarter of 2021 were 3.6 million, an increase of 66% year over year

Average order value was $183 for the first quarter of 2021, an increase of 17% year over year

Orders per active customer, measured as LTM orders divided by active customers, was 1.66 for the first quarter of 2021, compared to 1.70 for the first quarter of 2020

Orders placed on a mobile device were 50.1% of gross merchandise sales in the first quarter 2021, an increase of 380 basis points year over year

Partnership with Pelion Venture Partners

On April 23, 2021, ahead of schedule, Overstock closed its blockchain fund transaction with Pelion Venture Partners, a third-party venture capital firm with a proven track record of successfully investing in early-stage companies, to oversee Medici Ventures' blockchain assets. "I expect Pelion, which will oversee the portfolio and make follow-on investment decisions, will take these companies to the next level and help guide them to economic success. Overstock will now focus on its core e-commerce business, which continues to achieve tremendous revenue, profits and market share growth," noted Johnson. In connection with the transaction, Medici Ventures, Overstock's wholly owned blockchain-focused subsidiary, was converted to a limited partnership (the "Fund"). Overstock is the sole limited partner of the Fund, and Pelion acts as the general partner of the Fund. Pelion now has sole authority and responsibility for the Fund's investment decisions and in exercising all shareholder rights the Fund holds in the portfolio companies. The Fund has an eight-year lifespan and a total capital commitment of $45 million. The Fund will return invested capital to Overstock first and then apportion profits on successful exits as outlined in the Fund's Limited Partnership Agreement.

Financial Reporting Presentation in Accordance with the Pelion Transaction

Medici Ventures' blockchain businesses met the criteria to be reported as held for sale and discontinued operations as of March 31, 2021. Accordingly, we have classified the related assets and liabilities as held for sale in our consolidated balance sheets and the related operating results as discontinued operations in our consolidated statements of operations, for all periods presented. As a result of the transaction, Overstock has reorganized its remaining businesses into a single reportable operating segment, Retail. Corporate-related overhead costs are included in Retail continuing operations.

Earnings Webcast Information

Overstock will hold a conference call and webcast to discuss its first quarter 2021 financial results on Thursday, April 29, 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 5898642 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, April 29, 2021, through 11:30 a.m. ET on Thursday, May 13, 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 from third-party sellers. In 2014, Overstock was 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 April 29, 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, statements regarding expectations with respect to the performance of Pelion in managing the Fund. 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 the businesses that Medici Ventures and tZERO are pursuing, our continually evolving business model, and difficulties we may have with our infrastructure, our fulfillment partners or our payment processors, including cyber-attacks or data breaches affecting us or any of them, and difficulties we may have with our search engine optimization results. More information about factors that could potentially affect our financial results are included in our Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission on February 26, 2021, and in our subsequent filings with the Securities and Exchange Commission. The Form 10-K 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:
Alexis Callahan
801-947-5126
ir@overstock.com



Media Relations:
Megan Herrick
801-947-3564
pr@overstock.com


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

March 31,
2021

December 31,
2020

Assets

Current assets:

Cash and cash equivalents

$

534,776

$

495,425

Restricted cash

1,232

1,197

Accounts receivable, net

38,518

22,867

Inventories

6,711

6,243

Prepaids and other current assets

23,019

22,879

Current assets held for sale

34,129

Total current assets

604,256

582,740

Property and equipment, net

110,804

113,767

Goodwill

6,160

6,160

Operating lease right-of-use assets

15,450

17,297

Other long-term assets, net

3,692

4,095

Long-term assets held for sale

153,362

106,155

Total assets

$

893,724

$

830,214

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

135,383

$

109,759

Accrued liabilities

130,093

123,646

Unearned revenue

96,308

72,165

Operating lease liabilities, current

4,837

5,152

Other current liabilities

3,372

2,935

Current liabilities held for sale

13,924

Total current liabilities

369,993

327,581

Long-term debt, net

40,505

41,334

Operating lease liabilities, non-current

11,572

13,206

Other long-term liabilities

3,680

4,082

Long-term liabilities held for sale

19,034

7,685

Total liabilities

444,784

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 - 46,589 and 46,331

Outstanding shares - 43,000 and 42,768

4

4

Additional paid-in capital

951,615

970,873

Accumulated deficit

(509,140

)

(525,233

)

Accumulated other comprehensive loss

(549

)

(553

)

Treasury stock at cost - 3,589 and 3,563

(78,048

)

(71,399

)

Equity attributable to stockholders of Overstock.com, Inc.

363,882

373,692

Equity attributable to noncontrolling interests

85,058

62,634

Total stockholders' equity

448,940

436,326

Total liabilities and stockholders' equity

$

893,724

$

830,214


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

Three months ended
March 31,

2021

2020

Net revenue

$

659,861

$

339,598

Cost of goods sold

506,337

265,392

Gross profit

153,524

74,206

Operating expenses

Sales and marketing

73,538

36,345

Technology

30,523

27,281

General and administrative

22,871

23,885

Total operating expenses

126,932

87,511

Operating income (loss)

26,592

(13,305

)

Interest expense, net

(155

)

(11

)

Other expense, net

(226

)

(287

)

Income (loss) from continuing operations before income taxes

26,211

(13,603

)

Provision for income taxes

193

163

Income (loss) from continuing operations

26,018

(13,766

)

Loss from discontinued operations, net of tax

(10,126

)

(5,799

)

Net income (loss)

15,892

(19,565

)

Less: Net loss attributable to noncontrolling interests—discontinued operations

(201

)

(3,232

)

Net income (loss) attributable to stockholders of Overstock.com, Inc.

$

16,093

$

(16,333

)

Net income (loss) per share of common stock:

Net income (loss) attributable to common shares—basic

Continuing operations

$

0.57

$

(0.34

)

Discontinued operations

(0.23

)

(0.06

)

Total

$

0.34

$

(0.40

)

Net income (loss) attributable to common shares—diluted

Continuing operations

$

0.56

$

(0.34

)

Discontinued operations

(0.23

)

(0.06

)

Total

$

0.33

$

(0.40

)

Weighted average shares of common stock outstanding:

Basic

42,885

40,158

Diluted

43,320

40,158


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

Three months ended
March 31,

2021

2020

Cash flows from operating activities:

Consolidated net income (loss)

$

15,892

$

(19,565

)

Loss from discontinued operations, net of income taxes

10,126

5,799

Adjustments to reconcile consolidated net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

5,146

5,569

Non-cash operating lease cost

1,320

1,431

Stock-based compensation to employees and directors

2,305

2,681

Other non-cash adjustments

638

429

Changes in operating assets and liabilities:

Accounts receivable, net

(15,651

)

(6,902

)

Inventories

(468

)

1,162

Prepaids and other current assets

447

1,566

Other long-term assets, net

(448

)

457

Accounts payable

25,589

(1,708

)

Accrued liabilities

6,693

(3,663

)

Unearned revenue

24,143

12,903

Operating lease liabilities

(1,379

)

(1,626

)

Other long-term liabilities

(269

)

(180

)

Net cash provided by (used in) continuing operating activities

74,084

(1,647

)

Net cash used in discontinued operating activities

(12,353

)

(10,580

)

Net cash provided by (used in) operating activities

61,731

(12,227

)

Cash flows from investing activities:

Expenditures for property and equipment

(2,395

)

(2,638

)

Other investing activities, net

(367

)

(99

)

Net cash used in continuing investing activities

(2,762

)

(2,737

)

Net cash provided by (used in) discontinued investing activities

5,737

(3,262

)

Net cash provided by (used in) investing activities

2,975

(5,999

)

Cash flows from financing activities:

Payments on long-term debt

(551

)

Proceeds from long-term debt

47,500

Proceeds from sale of common stock, net of offering costs

2,848

Payments of taxes withheld upon vesting of restricted stock

(7,292

)

(1,686

)

Other financing activities, net

(1

)

(2,325

)

Net cash provided by (used in) continuing financing activities

(7,844

)

46,337

Net cash provided by discontinued financing activities

2,085

912

Net cash provided by (used in) financing activities

(5,759

)

47,249

Net increase in cash, cash equivalents, and restricted cash

58,947

29,023

Cash, cash equivalents, and restricted cash, beginning of period, inclusive of cash balances classified as held for sale

519,181

114,898

Cash, cash equivalents, and restricted cash, end of period, inclusive of cash balances classified as held for sale

578,128

143,921

Less: Cash, cash equivalents, and restricted cash held for sale

42,120

15,440

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

$

536,008

$

128,481

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, customers' 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
March 31,

2021

2020

Active customers

9,938

5,170

LTM net revenue per active customer

283

273

Orders delivered

3,608

2,174

Average order value

183

156

Orders per active customer

1.66

1.70

Non-GAAP Financial Measures and Reconciliations

We are providing certain non-GAAP financial measures in this release and related earnings conference call, including Adjusted EBITDA and Free cash flow. We use these non-GAAP measures internally in analyzing our financial results at both the consolidated and segment level and we believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance in the same manner as our management and board of directors. We have provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures in this earnings release. These Non-GAAP financial measures should be used in addition to and in conjunction with the results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures.

Adjusted EBITDA is a non-GAAP financial measure that is calculated as income (loss) 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 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 EBITDA to income (loss) from continuing operations (in thousands):

Three months ended
March 31,

2021

2020

Income (loss) from continuing operations

$

26,018

$

(13,766

)

Depreciation and amortization

5,146

5,569

Stock-based compensation

2,305

2,681

Interest expense, net

155

11

Other expense, net

226

287

Provision for income taxes

193

163

Special items (see table below)

(187

)

(1,486

)

Adjusted EBITDA

$

33,856

$

(6,541

)

Special items:

Special legal charges (1)

$

(187

)

$

(2,501

)

Severance

1,015

$

(187

)

$

(1,486

)


(1) — Includes amounts associated with the resolution for and adjustments to various legal contingencies.

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

Three months ended
March 31,

2021

2020

Net cash provided by (used in) continuing operating activities

$

74,084

$

(1,647

)

Expenditures for property and equipment

(2,395

)

(2,638

)

Free cash flow

$

71,689

$

(4,285

)