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Overstock.com (OSTK) Q3 Earnings & Revenues Beat Estimates

Aniruddha Ganguly
·4 min read

Overstock.com OSTK reported third-quarter 2020 earnings of 50 cents per share that beat the Zacks Consensus Estimate of a loss of 23 cents. Notably, the company had reported loss of 89 cents in the year-ago quarter.

Revenues of $731.7 million jumped 110.8% year over year. The figure also beat the consensus mark by 8%.

Top-Line Details

Retail revenues (98.1% of revenues) were $717.7 million, up 110.6% year over year. Home furnishings were more than 92% of third-quarter sales.

Markedly, growth in new customers was more than 141% year over year in the quarter under review. Moreover, new-customer repeat-purchase rate increased 19%.

 

Overstock.com, Inc. Price, Consensus and EPS Surprise

Overstock.com, Inc. Price, Consensus and EPS Surprise
Overstock.com, Inc. Price, Consensus and EPS Surprise

Overstock.com, Inc. price-consensus-eps-surprise-chart | Overstock.com, Inc. Quote

 

Moreover, gross sales from orders placed on a mobile device were 50% of retail gross sales in the third quarter of 2020 compared with 44% in the year-ago quarter.

Other revenues (1.9% of revenues) were $14 million in the reported quarter, up 121.5%.

tZERO revenues soared 96.9% year over year to $11.2 million. Volume on the tZERO ATS increased 856% to a record 4 million shares (equivalent to $39 million in value of shares traded).

Notably, during the reported quarter, tZERO received FINRA approval to provide retail brokerage services for digital securities through its subsidiary, tZERO Markets.

MVI revenues were $2.8 million compared with year-ago quarter’s revenues of $0.6 million.

Operating Details

Gross margin expanded 330 basis points (bps) year over year to 23.3% in the reported quarter. Retail gross margin expanded 348 bps to 23.5%.

Sales & marketing (S&M) expenses surged 110.5% year over year to $72 million. As a percentage of revenues, S&M expenses were unchanged at 9.8%.

Technology expenses were $35 million, up 6.7% year over year. As a percentage of revenues, technology expenses decreased 470 bps to 4.8%.

General & administrative (G&A) expenses increased 4.7% year over year to $34.2 million. As a percentage of revenues, G&A also decreased 470 bps on a year-over-year basis to 4.7%.

Adjusted EBITDA was $40.1 million against adjusted EBITDA loss of $18 million reported in the year-ago quarter. Retail-adjusted EBITDA was $50.2 million, an improvement of $50.8 million compared year over year. Retail-adjusted EBITDA margin expanded more than 717 bps year over year.

Operating income was $29.5 million against the year-ago quarter’s operating loss of $30.1 million.

Balance Sheet

As of Sep 30, 2020, Overstock.com had cash and cash equivalents worth $529.7 million compared with $321.2 million as of Jun 30, 2020.

Long-term debt as of Sep 30, 2020, was $42.1 million compared with $43 million as of Jun 30, 2020.

During the reported quarter, Overstock announced and completed a public offering of common stock. The offering was completed on Aug 14, 2020, whereby the company issued 2,415,000 shares of common stock at a price of $84.50 per share, raising net proceeds of approximately $193 million.

Zacks Rank & Stocks to Consider

Overstock currently carries a Zacks Rank #3 (Hold).

Chuy’s Holdings CHUY, Alibaba BABA and Herbalife HLF are some better-ranked stocks in the broader Retail-wholesale sector. While Chuy’s sports a Zacks Rank #1 (Strong Buy) both Alibaba and Herbalife carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

All three stocks are set to report their quarterly earnings on Nov 5.

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