GlobeNewswire Inc | Oct 28, 2021 06:00AM EDT

October 28, 2021

SALT LAKE CITY, Oct. 28, 2021 (GLOBE NEWSWIRE) -- Overstock.com, Inc. (NASDAQ:OSTK) today reported financial results for the quarter ended September30, 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, October28, 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, October28, 2021, through 11:30 a.m. ET on Thursday, November11, 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, dcor, 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 trademarksof Overstock.com, Inc.Other service marks, trademarks and trade names which may be referred to hereinare 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: Media Relations:ir@overstock.com pr@overstock.com

Overstock.com,Inc.Consolidated Balance Sheets (Unaudited)(in thousands, except per share data) September 30, December 2021 31, 2020Assets 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 - 5,000Series 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 - 100,000Issued 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 709,114 373,692 Overstock.com, Inc.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 Nine months ended September 30, September 30, 2021 2020 2021 2020Net 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 21,031 28,625 66,562 73,347 administrativeTotal operating 127,859 129,851 393,106 346,477 expensesOperating income 28,849 38,862 91,952 74,354 Interest expense, net (139 ) (264 ) (424 ) (639 )Other income (79 ) 59 (7 ) 18 (expense), netIncome from continuingoperations before 28,631 38,657 91,521 73,733 income taxesProvision (benefit) (1,795 ) 753 (47,328 ) 1,756 for income taxesIncome from continuing 30,426 37,904 138,849 71,977 operationsIncome (loss) fromdiscontinued ? (16,678 ) 217,246 (35,935 )operations, net ofincome taxesConsolidated net 30,426 21,226 356,095 36,042 incomeLess: Net lossattributable tononcontrolling ? (2,165 ) (335 ) (7,372 )interests?discontinuedoperationsNet incomeattributable to $ 30,426 $ 23,391 $ 356,430 $ 43,414 stockholders ofOverstock.com, Inc.Consolidated netincome per share of common stock:Net income (loss)attributable to common shares?basicContinuing operations $ 0.64 $ 0.81 $ 2.91 $ 1.66 Discontinued ? (0.31 ) 4.58 (0.66 )operationsTotal $ 0.64 $ 0.50 $ 7.49 $ 1.00 Net income (loss)attributable to common shares?dilutedContinuing operations $ 0.63 $ 0.81 $ 2.89 $ 1.65 Discontinued ? (0.31 ) 4.54 (0.66 )operationsTotal $ 0.63 $ 0.50 $ 7.43 $ 0.99 Weighted averageshares 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 2020Cashflowsfromoperatingactivities: Consolidated net income $ 356,095 $ 36,042 (Income) loss from discontinued operations, net of (217,246 ) 35,935 income taxesAdjustments 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 ? 195,540 costsPayments of taxes withheld upon vesting of restricted (7,850 ) (2,317 )stockOther financing activities, net (1 ) (5,054 )Net cash provided by (used in) continuing financing (10,042 ) 234,103 activitiesNet cash provided by discontinued financing 2,085 ? activitiesNet cash provided by (used in) financing activities (7,957 ) 234,103 Net increase (decrease) in cash, cash equivalents, (6,765 ) 417,382 and restricted cashCash, cash equivalents, and restricted cash,beginning of period, inclusive of cash balances of 519,181 114,898 discontinued operationsCash, cash equivalents, and restricted cash, end ofperiod, inclusive of cash balances of discontinued 512,416 532,280 operationsLess: Cash, cash equivalents, and restricted cash of ? 17,113 discontinued operationsCash, cash equivalents, and restricted cash, end of $ 512,416 $ 515,167 period

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 2020Active 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, Less: tax Adjusted Diluted valuation Diluted EPS allowance EPS releaseNumerator: Income from continuing operations $ 30,426 $ 4,420 $ 26,006 Less: Preferred stock dividends?accumulated 182 ? 182 Undistributed income from continuing 30,244 4,420 25,824 operationsLess: Undistributed income allocated to 2,899 424 2,475 participating securitiesNet income from continuing operations $ 27,345 $ 3,996 $ 23,349 attributable to common stockholders Denominator: Weighted average shares of common stock 43,324 43,324 43,324 outstanding?diluted 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 Nine months ended September 30, September 30, 2021 2020 2021 2020 Income from continuing $ 30,426 $ 37,904 $ 138,849 $ 71,977 operationsDepreciation 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 (1,795 ) 753 (47,328 ) 1,756 taxesSpecial items (see table 305 288 361 (8,470 )below)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 2020Net cash provided by continuing operating $ 100,084 $ 221,824 activitiesExpenditures for property and equipment (9,658 ) (12,008 )Free cash flow $ 90,426 $ 209,816