Overstock Announces Fourth Quarter and Full Year 2021 Financial Results

Midvale, Utah, UNITED STATES


Fourth quarter net revenue of $613 million, including record "Cyber 5" execution

Full year net revenue of $2.8 billion, nearly double pre-pandemic run-rate

SALT LAKE CITY, Feb. 23, 2022 (GLOBE NEWSWIRE) -- Overstock.com, Inc. (NASDAQ:OSTK) today reported financial results for the quarter and full year ended December 31, 2021.

Fourth Quarter 2021 Financial Highlights, from continuing operations

Total net revenue was $613 million, a decrease of 9% year over year
Gross profit was $139 million or 22.7% of total net revenue
Income from continuing operations was $33 million
Diluted earnings per share was $0.68
Adjusted EBITDA (non-GAAP) was $27 million, which represents 4.5% of net revenue
At the end of the fourth quarter, cash and cash equivalents totaled $503 million

Full Year 2021 Financial Highlights, from continuing operations

Total net revenue was $2.8 billion, an increase of 11% year over year
Gross profit was $624 million or 22.6% of total net revenue
Income from continuing operations was $172 million
Diluted earnings per share was $3.57
Adjusted EBITDA (non-GAAP) was $142 million, which represents 5.1% of net revenue
Full year net cash provided by operating activities was $98 million
  

"This is our second consecutive year of profitability and market share growth," said Overstock CEO Jonathan Johnson. "For the full year 2021, net revenue increased 11% against record 2020 growth. The foundational operational improvements we have made over the past two years have stabilized the business and positioned us well to navigate through economic- and industry-specific cycles over the long term. We are proving we can adjust to, execute through, and take advantage of both positive and negative jolts in the market. It's encouraging that nearly one third of the overall home furniture and furnishings market continues to be transacted online. I believe increasing our brand association with home positions us favorably for 2022 and beyond. We remain committed to our value to 'do good' and recently launched a dedicated site outlining our ESG efforts (http://www.overstock.com/esg)."

"Navigating the operating environment in our industry during the fourth quarter was challenging," continued Johnson. "Despite challenges, we were committed to delivering on our profitability targets—and we did just that, driven in part by our largest Thanksgiving through Cyber Monday—or Cyber Five—period in the company's history. I look forward to providing additional updates on our fourth quarter and full year 2021 performance and sharing insights into our 2022 plans during our earnings call."

Fourth Quarter 2021 Operational Highlights*

Active customers were 8.1 million, a decrease of 12% year over year
Last Twelve Months (LTM) net revenue per active customer was $341, an increase of 26% year over year
Orders delivered were 3.0 million, a decrease of 25% year over year
Average order value was $206, an increase of 23% year over year
Orders per active customer, measured as LTM orders divided by active customers, was 1.67, an increase of 2% year over year
Orders placed on a mobile device were 50.7% 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 fourth quarter and full year 2021 financial results on Wednesday, February 23, 2022, 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 3659278 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 Wednesday, February 23, 2022, through 11:30 a.m. ET on Wednesday, March 2, 2022. 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, outdoor, kitchen and dining items, 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, and Club O 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 February 23, 2022 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, difficulties we may have with our fulfillment partners, supply chain, access to products, shipping costs, competition, macroeconomic changes, attraction/retention of employees, search engine optimization results, and/or payment processors. Other risks and uncertainties include, among others, the duration of the COVID-19 pandemic and its ultimate impact on our business and results of operations, problems with our infrastructure, including cyber-attacks or data breaches affecting us, adverse tax, regulatory or legal developments, 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, our Form 10-Q for the quarter ended June 30, 2021, and our Form 10-Q for the quarter ended September 30, 2021, which were filed with the Securities and Exchange Commission on February 26, 2021, May 6, 2021, August 5, 2021, and November 4, 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:
Lavesh Hemnani
ir@overstock.com


Media Relations:
Sarah Factor
pr@overstock.com


 
Overstock.com, Inc.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share data)
 December 31,
2021
 December 31,
2020
Assets   
Current assets:   
Cash and cash equivalents$503,341  $495,425 
Restricted cash 25   1,197 
Accounts receivable, net 21,190   22,867 
Inventories 5,137   6,243 
Prepaids and other current assets 22,097   22,879 
Current assets of discontinued operations    34,129 
Total current assets 551,790   582,740 
Property and equipment, net 109,479   113,767 
Deferred tax assets, net 40,035   37 
Goodwill 6,160   6,160 
Equity securities 342,682   1,412 
Operating lease right-of-use assets 12,584   17,297 
Other long-term assets, net 3,236   2,646 
Long-term assets of discontinued operations    106,155 
Total assets$1,065,966  $830,214 
Liabilities and Stockholders' Equity   
Current liabilities:   
Accounts payable$102,293  $109,759 
Accrued liabilities 101,902   123,646 
Unearned revenue 59,387   72,165 
Operating lease liabilities, current 5,402   5,152 
Other current liabilities 3,349   2,935 
Current liabilities of discontinued operations    13,924 
Total current liabilities 272,333   327,581 
Long-term debt, net 37,984   41,334 
Operating lease liabilities, non-current 7,960   13,206 
Other long-term liabilities 3,303   4,082 
Long-term liabilities of discontinued operations    7,685 
Total liabilities 321,580   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 - 46,625 and 46,331   
Outstanding shares - 43,023 and 42,768 4   4 
Additional paid-in capital 960,544   970,873 
Accumulated deficit (136,590)  (525,233)
Accumulated other comprehensive loss (537)  (553)
Treasury stock at cost - 3,602 and 3,563 (79,035)  (71,399)
Equity attributable to stockholders of Overstock.com, Inc. 744,386   373,692 
  Equity attributable to noncontrolling interests    62,634 
    Total stockholders' equity 744,386   436,326 
      Total liabilities and stockholders' equity$1,065,966  $830,214 
 


Overstock.com, Inc.
Consolidated Statements of Income (Unaudited)
(in thousands, except per share data)
 Three months ended
December 31,
 Year ended
December 31,
  2021   2020   2021   2020 
Net revenue$612,659  $669,666  $2,756,446  $2,493,915 
Cost of goods sold 473,815   519,141   2,132,544   1,922,559 
Gross profit 138,844   150,525   623,902   571,356 
Operating expenses       
Sales and marketing 67,970   73,862   302,430   260,714 
Technology 30,917   29,970   123,001   116,248 
General and administrative 20,837   24,332   87,399   97,679 
Total operating expenses 119,724   128,164   512,830   474,641 
Operating income 19,120   22,361   111,072   96,715 
Interest expense, net (132)  (199)  (556)  (838)
Other income, net 12,507   595   12,500   613 
Income before income taxes from continuing operations 31,495   22,757   123,016   96,490 
Provision (benefit) for income taxes (1,447)  (393)  (48,775)  1,363 
Income from continuing operations 32,942   23,150   171,791   95,127 
Income (loss) from discontinued operations, net of income taxes    (13,021)  217,246   (48,956)
Consolidated net income 32,942   10,129   389,037   46,171 
Less: Net loss attributable to noncontrolling interests—discontinued operations    (2,458)  (335)  (9,830)
Net income attributable to stockholders of Overstock.com, Inc.$32,942  $12,587  $389,372  $56,001 
Consolidated net income per share of common stock:       
Net income (loss) attributable to common shares—basic       
Continuing operations$0.69  $0.48  $3.60  $2.13 
Discontinued operations    (0.22)  4.58   (0.88)
Total$0.69  $0.26  $8.18  $1.25 
Net income (loss) attributable to common shares—diluted       
Continuing operations$0.68  $0.48  $3.57  $2.12 
Discontinued operations    (0.22)  4.54   (0.88)
Total$0.68  $0.26  $8.11  $1.24 
Weighted average shares of common stock outstanding:       
Basic 43,016   42,765   42,981   41,217 
Diluted 43,370   43,326   43,332   41,607 
                


Overstock.com, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 Year ended
December 31,
  2021   2020 
Cash flows from operating activities:   
Consolidated net income$389,037  $46,171 
(Income) loss from discontinued operations, net of income taxes (217,246)  48,956 
Adjustments to reconcile consolidated net income to net cash provided by operating activities:   
Depreciation and amortization 18,564   21,776 
Non-cash operating lease cost 5,021   4,971 
Stock-based compensation to employees and directors 11,133   7,841 
(Increase)/decrease in deferred income taxes, net (53,829)  35 
Income from equity method securities (12,585)   
Other non-cash adjustments 1,537   (542)
Changes in operating assets and liabilities:   
  Accounts receivable, net 1,677   (6,715)
  Inventories 1,106   (403)
  Prepaids and other current assets 2,958   (5,358)
  Other long-term assets, net (1,755)  (264)
  Accounts payable (7,787)  34,428 
  Accrued liabilities (21,595)  48,907 
  Unearned revenue (12,778)  31,049 
  Operating lease liabilities (5,261)  (5,995)
  Other long-term liabilities (150)  1,769 
    Net cash provided by continuing operating activities 98,047   226,626 
    Net cash used in discontinued operating activities (17,128)  (30,152)
      Net cash provided by operating activities 80,919   196,474 
Cash flows from investing activities:   
Contributions for capital calls (41,122)   
Expenditures for property and equipment (13,617)  (14,874)
Other investing activities, net (1,694)  (397)
Net cash used in continuing investing activities (56,433)  (15,271)
Net cash used in discontinued investing activities (29,703)  (8,284)
  Net cash used in investing activities (86,136)  (23,555)
Cash flows from financing activities:   
Payments on long-term debt (3,030)  (2,635)
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 (8,279)  (2,592)
Other financing activities, net (1,374)  (6,449)
Net cash provided by (used in) continuing financing activities (12,683)  231,364 
Net cash provided by discontinued financing activities 2,085    
  Net cash provided by (used in) financing activities (10,598)  231,364 
Net increase (decrease) in cash, cash equivalents, and restricted cash (15,815)  404,283 
Cash, cash equivalents, and restricted cash, beginning of year, inclusive of cash balances of discontinued operations 519,181   114,898 
Cash, cash equivalents, and restricted cash, end of year, inclusive of cash balances of discontinued operations 503,366   519,181 
Less: Cash, cash equivalents, and restricted cash of discontinued operations    22,559 
Cash, cash equivalents, and restricted cash, end of year$503,366  $496,622 

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
December 31,
 2021 2020
Active customers8,075 9,188
LTM net revenue per active customer341 271
Orders delivered2,974 3,978
Average order value206 168
Orders per active customer1.67 1.64
    

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 and income recognized from our equity method securities. We believe that this adjustment to our 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 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
December 31,
 2021
 Diluted EPS Less: tax
valuation
allowance
release
1
 Less: equity
method
income
2
 Adjusted
Diluted EPS
Numerator:       
Income from continuing operations$32,942 $2,341 $13,310 $17,291
Less: Preferred stock dividends—accumulated 182      182
Undistributed income from continuing operations 32,760  2,341  13,310  17,109
Less: Undistributed income allocated to participating securities 3,140  224  1,392  1,524
Net income from continuing operations attributable to common stockholders$29,620 $2,117 $11,918 $15,585
        
Denominator:       
Weighted average shares of common stock outstanding—diluted 43,370  43,370  43,370  43,370
        
Net income from continuing operations per share of common stock:       
Diluted$0.68 $0.05 $0.27 $0.36

1 Inclusive of deferred tax impact from equity method income
2 Inclusive of current tax impact from equity method income

 
 Year ended
December 31,
 2021
 Diluted EPS Less: tax
valuation
allowance
release
1
 Less: equity
method
income
2
 Adjusted
Diluted EPS
Numerator:       
Income from continuing operations$171,791 $53,808 $12,606 $105,377
Less: Preferred stock dividends—accumulated 729      729
Undistributed income from continuing operations 171,062  53,808  12,606  104,648
Less: Undistributed income allocated to participating securities 16,409  5,161  1,324  9,924
Net income from continuing operations attributable to common stockholders$154,653 $48,647 $11,282 $94,724
        
Denominator:       
Weighted average shares of common stock outstanding—diluted 43,332  43,332  43,332  43,332
        
Net income from continuing operations per share of common stock:       
Diluted$3.57 $1.12 $0.26 $2.19

1 Inclusive of deferred tax impact from equity method income
2 Inclusive of current tax impact from equity method income


The following table reflects the reconciliation of adjusted EBITDA to income from continuing operations (in thousands):

 Three months ended
December 31,
 Year ended
December 31,
  2021   2020   2021   2020 
        
Income from continuing operations$32,942  $23,150  $171,791  $95,127 
Depreciation and amortization 4,232   5,488   18,564   21,776 
Stock-based compensation 3,484   1,640   11,133   7,841 
Interest expense, net 132   199   556   838 
Other income, net (12,507)  (595)  (12,500)  (613)
Provision (benefit) for income taxes (1,447)  (393)  (48,775)  1,363 
Special items (see table below) 511   432   872   (8,038)
Adjusted EBITDA$27,347  $29,921  $141,641  $118,294 
        
Special items:       
Special legal charges$  $432  $(186) $(9,341)
Severance 502      755   1,303 
Transaction costs 9      303    
 $511  $432  $872  $(8,038)
 

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

 Year ended
December 31,
  2021   2020 
Net cash provided by continuing operating activities$98,047  $226,626 
Expenditures for property and equipment (13,617)  (14,874)
Free cash flow$84,430  $211,752