Press Release
View printer-friendly version << BackDelivered Q4 and Full Year Gross Margin in line with committed target despite elevated promotions in a highly competitive landscape.
Strong sales performance during Cyber 5 in strategically positioned relevant giftable inventory.
Fourth Quarter 2022 Financial Highlights, from continuing operations
- Total net revenue was
$405 million , a decrease of 34% year over year - Gross profit of
$90 million , or 22.1% of total net revenue - Operating loss of
$3 million - Net loss of
$16 million - Diluted net loss per share of
$0.34 ; Adjusted diluted net loss per share (non-GAAP) of$0.04 - Adjusted EBITDA (non-GAAP) of
$7 million , which represents 1.6% of net revenue - Cash and cash equivalents totaled
$371 million at the end of the fourth quarter
Full Year 2022 Financial Highlights, from continuing operations
- Total net revenue of
$1.9 billion , a decrease of 30% year over year - Gross profit of
$443 million or 23.0% of total net revenue - Operating income of
$27 million - Net loss of
$35 million - Diluted net loss per share of
$0.83 ; Adjusted diluted earnings per share (non-GAAP) of$0.52 - Adjusted EBITDA (non-GAAP) of
$63 million , which represents 3.3% of net revenue
“The team maintained strong operational discipline and delivered another quarter and year of positive adjusted EBITDA while navigating shifting consumer demand and a highly promotional competitive environment,” said Overstock CEO
“2022 was a transformative year for Overstock,” continued Johnson. “We completed the removal of all non-home merchandise from our site to better align our well-recognized brand name with home and we increased our assortment of home-related products by over 50%. We now have over twice as many home-related products than we did when we began our non-home exit project two years ago. We increased mobile app penetration as it has become our strongest customer engagement platform. We embarked on a refreshed branding campaign which we expect to accrue benefits for years to come. We proved our ability to drive sales during high consumer demand periods throughout the year, including the Cyber 5 sales period. And we made operational improvements in our
“2023 will mark our first year as a 100% on-line home retailer, since going public over 20 years ago,” said Johnson. “We know we must focus our efforts on improving topline performance. While the economic environment remains uncertain, our asset-light business model and strong balance sheet position us well for success – both in the short- and long-term. I look forward to providing a full update on our fourth quarter and full year 2022 performance during our earnings call.”
Fourth Quarter 2022 Operational Highlights*
- Active customers of 5.2 million, a decrease of 36% year over year
- Last Twelve Months (LTM) net revenue per active customer of
$374 , an increase of 9% year over year - Orders delivered of 1.9 million, a decrease of 37% year over year
- Average order value of
$215 , an increase of 4% year over year - Orders per active customer, measured as LTM orders divided by active customers, of 1.60, a decrease of 4% year over year
- Orders placed on a mobile device were 52% 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
During the three months ended
Earnings Webcast and Replay Information
Overstock will hold a conference call and webcast to discuss its fourth quarter and full year 2022 financial results on
A replay of the conference call will be available at http://investors.overstock.com, starting two hours after the live call has ended.
About
O,
Cautionary Note Regarding Forward-Looking Statements
This press release and the
| Contacts | |
| Investor Relations: ir@overstock.com |
Media Relations: pr@overstock.com |
Consolidated Balance Sheets (Unaudited)
(in thousands, except share data)
| 2022 | 2021 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 371,263 | $ | 503,341 | ||
| Restricted cash | 194 | 25 | ||||
| Accounts receivable, net | 17,693 | 21,190 | ||||
| Inventories | 6,526 | 5,137 | ||||
| Prepaids and other current assets | 18,833 | 22,097 | ||||
| Total current assets | 414,509 | 551,790 | ||||
| Property and equipment, net | 109,906 | 109,479 | ||||
| Deferred tax assets, net | 41,439 | 40,035 | ||||
| 6,160 | 6,160 | |||||
| Equity securities | 296,317 | 342,682 | ||||
| Operating lease right-of-use assets | 7,460 | 12,584 | ||||
| Other long-term assets, net | 2,755 | 3,236 | ||||
| Total assets | $ | 878,546 | $ | 1,065,966 | ||
| Liabilities and Stockholders' Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 75,130 | $ | 102,293 | ||
| Accrued liabilities | 63,614 | 101,902 | ||||
| Unearned revenue | 44,480 | 59,387 | ||||
| Operating lease liabilities, current | 4,410 | 5,402 | ||||
| Other current liabilities | 3,508 | 3,349 | ||||
| Total current liabilities | 191,142 | 272,333 | ||||
| Long-term debt, net | 34,476 | 37,984 | ||||
| Operating lease liabilities, non-current | 3,626 | 7,960 | ||||
| Other long-term liabilities | 3,476 | 3,303 | ||||
| Total liabilities | 232,720 | 321,580 | ||||
| Stockholders' equity: | ||||||
| Preferred stock, |
||||||
| Series A-1, issued and outstanding - 0 and 4,204 | — | — | ||||
| Series B, issued and outstanding - 0 and 357 | — | — | ||||
| Common stock, |
||||||
| Issued shares - 51,102 and 46,625 | ||||||
| Outstanding shares - 44,951 and 43,023 | 5 | 4 | ||||
| Additional paid-in capital | 982,718 | 960,544 | ||||
| Accumulated deficit | (173,829 | ) | (136,590 | ) | ||
| Accumulated other comprehensive loss | (522 | ) | (537 | ) | ||
| (162,546 | ) | (79,035 | ) | |||
| Total stockholders' equity | 645,826 | 744,386 | ||||
| Total liabilities and stockholders' equity | $ | 878,546 | $ | 1,065,966 |
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
| Three months ended | Year ended | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Net revenue | $ | 404,896 | $ | 612,659 | $ | 1,929,334 | $ | 2,756,446 | ||||
| Cost of goods sold | 315,341 | 473,815 | 1,485,990 | 2,132,544 | ||||||||
| Gross profit | 89,555 | 138,844 | 443,344 | 623,902 | ||||||||
| Operating expenses | ||||||||||||
| Sales and marketing | 45,504 | 67,970 | 215,477 | 302,430 | ||||||||
| Technology | 27,999 | 30,917 | 121,158 | 123,001 | ||||||||
| General and administrative | 18,699 | 20,837 | 79,701 | 87,399 | ||||||||
| Total operating expenses | 92,202 | 119,724 | 416,336 | 512,830 | ||||||||
| Operating income (loss) | (2,647 | ) | 19,120 | 27,008 | 111,072 | |||||||
| Interest income (expense), net | 1,999 | (132 | ) | 2,965 | (556 | ) | ||||||
| Other income (expense), net | (15,447 | ) | 12,507 | (63,825 | ) | 12,500 | ||||||
| Income (loss) from continuing operations before income taxes | (16,095 | ) | 31,495 | (33,852 | ) | 123,016 | ||||||
| Provision (benefit) for income taxes | (584 | ) | (1,447 | ) | 1,384 | (48,775 | ) | |||||
| Income (loss) from continuing operations | (15,511 | ) | 32,942 | (35,236 | ) | 171,791 | ||||||
| Income from discontinued operations, net of income taxes | — | — | — | 217,246 | ||||||||
| Consolidated net income (loss) | (15,511 | ) | 32,942 | (35,236 | ) | 389,037 | ||||||
| Less: Net loss attributable to noncontrolling interests— discontinued operations | — | — | — | (335 | ) | |||||||
| Net income (loss) attributable to stockholders of |
$ | (15,511 | ) | $ | 32,942 | $ | (35,236 | ) | $ | 389,372 | ||
| Consolidated net income (loss) per share of common stock: | ||||||||||||
| Net income (loss) attributable to common shares—basic | ||||||||||||
| Continuing operations | $ | (0.34 | ) | $ | 0.69 | $ | (0.83 | ) | $ | 3.60 | ||
| Discontinued operations | — | — | — | 4.58 | ||||||||
| Total | $ | (0.34 | ) | $ | 0.69 | $ | (0.83 | ) | $ | 8.18 | ||
| Net income (loss) attributable to common shares—diluted | ||||||||||||
| Continuing operations | $ | (0.34 | ) | $ | 0.68 | $ | (0.83 | ) | $ | 3.57 | ||
| Discontinued operations | — | — | — | 4.54 | ||||||||
| Total | $ | (0.34 | ) | $ | 0.68 | $ | (0.83 | ) | $ | 8.11 | ||
| Weighted average shares of common stock outstanding: | ||||||||||||
| Basic | 45,420 | 43,016 | 44,323 | 42,981 | ||||||||
| Diluted | 45,420 | 43,370 | 44,323 | 43,332 | ||||||||
Consolidated Statements of Cash Flows (unaudited)
(in thousands)
| Year ended |
||||||
| 2022 | 2021 | |||||
| Cash flows from operating activities: | ||||||
| Consolidated net income (loss) | $ | (35,236 | ) | $ | 389,037 | |
| Income from discontinued operations, net of income taxes | — | (217,246 | ) | |||
| Adjustments to reconcile consolidated net income (loss) to net cash provided by (used in) operating activities: | ||||||
| Depreciation and amortization | 16,706 | 18,564 | ||||
| Non-cash operating lease cost | 5,304 | 5,021 | ||||
| Stock-based compensation to employees and directors | 18,318 | 11,133 | ||||
| Increase in deferred tax assets, net | (1,404 | ) | (53,829 | ) | ||
| (Income) loss from equity method securities | 63,923 | (12,585 | ) | |||
| Other non-cash adjustments | 185 | 1,537 | ||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable, net | 3,805 | 1,677 | ||||
| Inventories | (1,389 | ) | 1,106 | |||
| Prepaids and other current assets | 4,076 | 2,958 | ||||
| Other long-term assets, net | (1,116 | ) | (1,755 | ) | ||
| Accounts payable | (28,821 | ) | (7,787 | ) | ||
| Accrued liabilities | (36,625 | ) | (21,595 | ) | ||
| Unearned revenue | (14,907 | ) | (12,778 | ) | ||
| Operating lease liabilities | (5,527 | ) | (5,261 | ) | ||
| Other long-term liabilities | 173 | (150 | ) | |||
| Net cash provided by (used in) continuing operating activities | (12,535 | ) | 98,047 | |||
| Net cash used in discontinued operating activities | — | (17,128 | ) | |||
| Net cash provided by (used in) operating activities | (12,535 | ) | 80,919 | |||
| Cash flows from investing activities: | ||||||
| Purchase of equity securities | (18,920 | ) | — | |||
| Contributions for capital calls | — | (41,122 | ) | |||
| Capital distribution from investment | 1,224 | — | ||||
| Expenditures for property and equipment | (14,899 | ) | (13,617 | ) | ||
| Other investing activities, net | (439 | ) | (1,694 | ) | ||
| Net cash used in continuing investing activities | (33,034 | ) | (56,433 | ) | ||
| Net cash used in discontinued investing activities | — | (29,703 | ) | |||
| Net cash used in investing activities | (33,034 | ) | (86,136 | ) | ||
| Cash flows from financing activities: | ||||||
| Repurchase of shares | (80,117 | ) | — | |||
| Payments on long-term debt | (3,447 | ) | (3,030 | ) | ||
| Payments of taxes withheld upon vesting of employee stock awards | (3,700 | ) | (8,279 | ) | ||
| Proceeds from employee stock purchase plan | 924 | — | ||||
| Other financing activities, net | — | (1,374 | ) | |||
| Net cash used in continuing financing activities | (86,340 | ) | (12,683 | ) | ||
| Net cash provided by discontinued financing activities | — | 2,085 | ||||
| Net cash used in financing activities | (86,340 | ) | (10,598 | ) | ||
| Net decrease in cash, cash equivalents, and restricted cash | (131,909 | ) | (15,815 | ) | ||
| 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 period, inclusive of cash balances of discontinued operations | 371,457 | 503,366 | ||||
| Less: Cash, cash equivalents, and restricted cash of discontinued operations | — | — | ||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 371,457 | $ | 503,366 | ||
Financial Reporting Presentation in Accordance with the Pelion Transaction
Upon closing the Pelion transaction during the second quarter of 2021, we deconsolidated the
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 progress. 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 our key operating metrics:
(in thousands, except for LTM net revenue per active customer, average order value and orders per active customer)
| Three months ended |
||||
| 2022 | 2021 | |||
| Active customers | 5,162 | 8,075 | ||
| LTM net revenue per active customer | 374 | 341 | ||
| Orders delivered | 1,882 | 2,974 | ||
| Average order value | 215 | 206 | ||
| Orders per active customer | 1.60 | 1.67 | ||
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 is calculated as net income (loss) from continuing operations less the income or losses 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 (loss) 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 (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 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 |
|||||||||
| 2022 | |||||||||
| Diluted EPS | Less: equity method income (loss)1 |
Adjusted Diluted EPS |
|||||||
| Numerator: | |||||||||
| Net income (loss) from continuing operations attributable to common stockholders | $ | (15,511 | ) | $ | (13,559 | ) | $ | (1,952 | ) |
| Denominator: | |||||||||
| Weighted average shares of common stock outstanding—diluted | 45,420 | 45,420 | 45,420 | ||||||
| Net income (loss) from continuing operations per share of common stock: | |||||||||
| Diluted | $ | (0.34 | ) | $ | (0.30 | ) | $ | (0.04 | ) |
1 Inclusive of estimated tax impact from equity method activity
| Year ended |
||||||||||||
| 2022 | ||||||||||||
| Diluted EPS | Less: non-cash preferred stock dividend1 |
Less: equity method income (loss)2 |
Adjusted Diluted EPS |
|||||||||
| Numerator: | ||||||||||||
| Income (loss) from continuing operations | $ | (35,236 | ) | $ | — | $ | (58,179 | ) | $ | 22,943 | ||
| Less: Preferred stock dividends—issued | 1,697 | 1,697 | — | — | ||||||||
| Net income (loss) from continuing operations attributable to common stockholders | $ | (36,933 | ) | $ | (1,697 | ) | $ | (58,179 | ) | $ | 22,943 | |
| Denominator: | ||||||||||||
| Weighted average shares of common stock outstanding—diluted | 44,323 | 44,323 | 44,323 | 44,323 | ||||||||
| Net income (loss) from continuing operations per share of common stock: | ||||||||||||
| Diluted | $ | (0.83 | ) | $ | (0.04 | ) | $ | (1.31 | ) | $ | 0.52 | |
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 (loss) from continuing operations (in thousands):
| Three months ended |
Year ended |
||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||
| Income (loss) from continuing operations | $ | (15,511 | ) | $ | 32,942 | $ | (35,236 | ) | $ | 171,791 | |||
| Depreciation and amortization | 4,226 | 4,232 | 16,706 | 18,564 | |||||||||
| Stock-based compensation | 4,928 | 3,484 | 18,318 | 11,133 | |||||||||
| Interest (income) expense, net | (1,999 | ) | 132 | (2,965 | ) | 556 | |||||||
| Other (income) expense, net | 15,447 | (12,507 | ) | 63,825 | (12,500 | ) | |||||||
| Provision (benefit) for income taxes | (584 | ) | (1,447 | ) | 1,384 | (48,775 | ) | ||||||
| Special items (see table below) | — | 511 | 1,451 | 872 | |||||||||
| Adjusted EBITDA | $ | 6,507 | $ | 27,347 | $ | 63,483 | $ | 141,641 | |||||
| Special items: | |||||||||||||
| Special legal charges and other | $ | — | $ | — | $ | 498 | $ | (186 | ) | ||||
| Severance | — | 502 | 878 | 755 | |||||||||
| Transaction costs | — | 9 | 75 | 303 | |||||||||
| $ | — | $ | 511 | $ | 1,451 | $ | 872 | ||||||
The following table reflects the reconciliation of free cash flow to net cash provided by (used in) continuing operating activities (in thousands):
| Year ended |
||||||
| 2022 | 2021 | |||||
| Net cash provided by (used in) continuing operating activities | $ | (12,535 | ) | $ | 98,047 | |
| Expenditures for property and equipment | (14,899 | ) | (13,617 | ) | ||
| Free cash flow | $ | (27,434 | ) | $ | 84,430 | |
Source: Overstock.com, Inc.