Overstock Announces Fourth Quarter and Full Year 2020 Financial Results

| Quelle: Overstock.com, Inc. Overstock.com, Inc.

Fourth quarter net revenue growth of 84% year over year to $684 million

Full year 2020 net revenue growth of 75% year over year to $2.5 billion, and a record $3.2 billion in Retail gross sales

Full year 2020 net income of $56 million, an increase of $178 million year over year

SALT LAKE CITY, Feb. 24, 2021 (GLOBE NEWSWIRE) -- Overstock.com, Inc. (NASDAQ:OSTK) today reported financial results for the quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Financial Highlights

•Total net revenue was $684 million, an increase of 84% year over year
•Gross profit was $153 million or 22.4% of total net revenue, an increase of 180 basis points year over year
•Net income attributable to stockholders was $13 million, an improvement of $40 million year over year
•Diluted earnings per share was $0.26, an improvement of $0.99 year over year
•Adjusted EBITDA (non-GAAP) was $23 million, an improvement of $42 million year over year
•YTD net cash provided by operating activities was $196 million, an improvement of $278 million year over year
•YTD free cash flow (non-GAAP) improved $281 million year over year
•At the end of the fourth quarter, cash and cash equivalents totaled $517 million

Full Year 2020 Financial Highlights

•Total net revenue was $2.5 billion, an increase of 75% year over year
•Gross profit was $580 million or 22.7% of total net revenue, an increase of 260 basis points year over year
•Net income attributable to stockholders was $56 million, an improvement of $178 million year over year
•Diluted earnings per share was $1.24, an improvement of $4.70 year over year
•Adjusted EBITDA (non-GAAP) was $88 million, an improvement of $162 million year over year

"Overstock had an incredible year in 2020," said Overstock CEO Jonathan Johnson. "The operational improvements we began making at the end of 2019 enabled us to benefit from this unprecedented environment in which we all find ourselves increasingly working, learning, and living in our homes. We accomplished what we set out to do at the beginning of the year. We delivered on our 2020 initiatives; these initiatives had a meaningful impact on our business performance and now have become part of our business as usual. We doubled new customers, driving significant revenue growth. We improved margins and delivered profitability. We significantly upgraded our leadership team. We added key independent directors to our board. We were focused, disciplined, and strategic in our decisions and actions. And we're just getting started."

"Our strong growth momentum persisted in the fourth quarter," continued Johnson. "Net revenue grew by 84%, new customer growth nearly doubled, and repeat purchase behavior trended higher year over year. And despite what many predicted to be a challenging holiday season given carrier capacity constraints, Overstock performed incredibly well due to rigorous planning and diligent communication with our partners and our customers."

"Our mantra in 2021 is sustainable, profitable, market share growth. I am confident we will achieve it," said Johnson. "I look forward to providing a full update on our fourth quarter and full year 2020 performance during our earnings call."

Fourth Quarter 2020 Retail Operational Highlights

•Retail gross merchandise sales in 2020 were $3.2 billion, an increase of 74% year over year
•Newly acquired customers in the fourth quarter increased 94% year over year
•Orders placed on a mobile device were 50% of gross merchandise sales in the fourth quarter of 2020, an increase of 630 basis points year over year

Partnership with Pelion Venture Partners

On January 25, 2021, Overstock entered into a partnership 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. "We believe this strategic partnership with Pelion will enable the Medici Ventures portfolio of companies to grow, scale, and maximize value," noted Johnson. Under the arrangement, which will close after obtaining necessary legal and regulatory approvals, Medici Ventures, Overstock's wholly owned blockchain-focused subsidiary, will be converted to a limited partnership (the "Fund"). Overstock will be a limited partner in the Fund, and Pelion will act as general partner of the Fund. After closing, Pelion will have sole authority and responsibility regarding investment decisions, appointing board members of the portfolio companies, and exercising all shareholder rights for investments Medici Ventures currently holds. The Fund will have an eight-year life and a total capital commitment of $45 million. The Fund will return invested capital to Overstock first and then split profits on successful exits as outlined in the Fund's Limited Partnership Agreement.

Earnings Webcast Information

Overstock will hold a conference call and webcast to discuss its fourth quarter and full year 2020 financial results on Wednesday, February 24, 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 9437865 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 24, 2021, through 11:30 a.m. ET on Wednesday, March 10, 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 Shares (NASDAQ:OSTK) / Digital Voting Series A-1 Preferred Stock (Medici Ventures' tZERO platform:OSTKO) / Series B Preferred (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, rugs, bedding, 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. Overstock was the first major retailer to accept cryptocurrency in 2014, and in the same year founded Medici Ventures, its wholly-owned subsidiary dedicated to the development and acceleration of blockchain technologies to democratize capital, eliminate middlemen, and re-humanize commerce. 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 February 24, 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 the pending closing of our previously-announced arrangement with Pelion and 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, 2019, our Form 10-Q for the quarter ended March 31, 2020, our Form 10-Q for the quarter ended June 30, 2020, and our Form 10-Q for the quarter ended September 30, 2020, which were filed with the Securities and Exchange Commission on March 13, 2020, May 7, 2020, August 6, 2020, and November 5, 2020, respectively, and in our subsequent filings with the Securities and Exchange Commission. The Form 10-K, 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:
Alexis Callahan
801-947-5126
ir@overstock.com



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

Overstock.com, Inc.
Consolidated Balance Sheets
(in thousands)

 December 31,
2020		 December 31,
2019
Assets   
Current assets:   
Cash and cash equivalents$516,500    $112,266   
Restricted cash2,681    2,632   
Marketable securities at fair value1,762    10,308   
Accounts receivable, net30,125    24,728   
Inventories6,243    5,840   
Prepaids and other current assets25,429    21,589   
Total current assets582,740    177,363   
Property and equipment, net122,550    130,028   
Intangible assets, net13,997    11,756   
Goodwill34,950    27,120   
Equity securities47,290    42,043   
Operating lease right-of-use assets24,523    25,384   
Other long-term assets, net4,164    4,033   
Total assets$830,214    $417,727   
Liabilities and Stockholders' Equity   
Current liabilities:   
Accounts payable$109,749    $75,416   
Accrued liabilities135,595    88,197   
Unearned revenue72,311    41,821   
Operating lease liabilities, current6,630    6,603   
Other current liabilities3,296    3,962   
Total current liabilities327,581    215,999   
Long-term debt, net41,334    —   
Operating lease liabilities, non-current20,305    21,554   
Other long-term liabilities4,668    2,319   
Total liabilities393,888    239,872   
Commitments and contingencies   
Stockholders' equity:   
Preferred stock, $0.0001 par value, authorized shares - 5,000   
Series A-1, issued and outstanding - 4,204 and 4,210—    —   
Series B, issued and outstanding - 357 and 357—    —   
Common stock, $0.0001 par value, authorized shares - 100,000   
Issued shares - 46,331 and 42,790   
Outstanding shares - 42,768 and 39,4644    4   
Additional paid-in capital970,873    764,845   
Accumulated deficit(525,233)  (580,390) 
Accumulated other comprehensive loss(553)  (568) 
Treasury stock at cost - 3,563 and 3,326(71,399)  (68,807) 
Equity attributable to stockholders of Overstock.com, Inc.373,692    115,084   
Equity attributable to noncontrolling interests62,634    62,771   
Total stockholders' equity436,326    177,855   
Total liabilities and stockholders' equity$830,214    $417,727   


Overstock.com, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
 Three months ended
December 31,		 Year ended
December 31,
 2020 2019 2020 2019
Revenue, net       
Retail$669,666    $364,076    $2,493,915    $1,434,974   
Other14,349    6,805    55,868    24,444   
Total net revenue684,015    370,881    2,549,783    1,459,418   
Cost of goods sold       
Retail519,141    288,856    1,922,559    1,147,025   
Other11,831    5,503    47,691    19,300   
Total cost of goods sold530,972    294,359    1,970,250    1,166,325   
Gross profit153,043    76,522    579,533    293,093   
Operating expenses:       
Sales and marketing74,484    40,868    263,046    143,120   
Technology35,540    33,970    136,998    135,338   
General and administrative33,241    33,247    127,263    138,124   
Total operating expenses143,265    108,085    527,307    416,582   
Operating income (loss)9,778    (31,563)  52,226    (123,489) 
Interest income445    315    1,733    1,797   
Interest expense(604)  (53)  (1,971)  (342) 
Other income (expense), net186    1,547    (4,828)  (12,501) 
Income (loss) before income taxes9,805    (29,754)  47,160    (134,535) 
Provision (benefit) for income taxes(324)  (94)  989    185   
Consolidated net income (loss)10,129    (29,660)  46,171    (134,720) 
Less: Net loss attributable to noncontrolling interests(2,458)  (2,682)  (9,830)  (12,879) 
Net income (loss) attributable to stockholders of Overstock.com, Inc.$12,587    $(26,978)  $56,001    $(121,841) 
Net income (loss) per share of common stock:       
Net income (loss) attributable to common shares—basic$0.26    $(0.73)  $1.25    $(3.46) 
Net income (loss) attributable to common shares—diluted$0.26    $(0.73)  $1.24    $(3.46) 
Weighted average shares of common stock outstanding:       
Basic42,765    36,573    41,217    34,865   
Diluted43,326    36,573    41,607    34,865   


Overstock.com, Inc.
Consolidated Statements of Cash Flows
(in thousands)
 Year ended
December 31,
 2020 2019
Cash flows from operating activities:   
Consolidated net income (loss)$46,171    $(134,720) 
Adjustments to reconcile consolidated net income (loss) to net cash provided by (used in) operating activities:   
Depreciation and amortization30,816    31,031   
Non-cash operating lease cost5,774    6,676   
Stock-based compensation to employees and directors12,930    18,229   
Gain on sale of cryptocurrencies(700)  (569) 
Impairment of cryptocurrencies501    334   
Impairment of equity securities1,017    7,090   
Losses on equity method securities14,459    7,734   
(Gain) loss on disposal of business(10,705)  —   
Impairments on intangible assets—    1,406   
Other non-cash adjustments300    (2,106) 
Changes in operating assets and liabilities, net of acquisitions:   
Accounts receivable, net(11,482)  13,385   
Inventories(403)  8,268   
Prepaids and other current assets(5,320)  5,956   
Other long-term assets, net105    (660) 
Accounts payable34,327    (27,158) 
Accrued liabilities52,064    (281) 
Unearned revenue30,715    (8,757) 
Operating lease liabilities(6,134)  (8,013) 
Other long-term liabilities2,039    543   
Net cash provided by (used in) operating activities196,474    (81,612) 
Cash flows from investing activities:   
Purchase of equity securities(5,388)  (12,641) 
Proceeds from sale of equity securities and marketable securities6,306    7,339   
Disbursement for notes receivable(900)  (4,715) 
Acquisitions of businesses, net of cash acquired11    4,886   
Expenditures for property and equipment(19,132)  (21,774) 
Deconsolidation of cash of Medici Land Governance, Inc.(4,056)  —   
Other investing activities, net(396)  53   
Net cash used in investing activities(23,555)  (26,852) 
Cash flows from financing activities:   
Payments on long-term debt(2,635)  (3,141) 
Proceeds from long-term debt47,500    —   
Proceeds from sale of common stock, net of offering costs195,540    82,954   
Payments of taxes withheld upon vesting of restricted stock(2,592)  (1,407) 
Other financing activities, net(6,449)  2,142   
Net cash provided by financing activities231,364    80,548   
Net increase (decrease) in cash, cash equivalents and restricted cash404,283    (27,916) 
Cash, cash equivalents and restricted cash, beginning of period114,898    142,814   
Cash, cash equivalents and restricted cash, end of period$519,181    $114,898   

Segment Financial Information

The following table summarizes information about reportable segments and includes a reconciliation to consolidated net income (loss) (in thousands):

 Three months ended December 31,
 Retail tZERO MVI Other Total
2020         
Net revenue$669,666    $11,665    $2,434    $250    $684,015   
Cost of goods sold519,141    9,399    2,430    2    530,972   
Gross profit150,525    2,266    4    248    153,043   
Operating expenses123,826    12,997    3,166    3,276    143,265   
Interest and other income (expense), net396    550    (914)  (5)  27   
Income (loss) before income taxes$27,095    $(10,181)  $(4,076)  $(3,033)  9,805   
Benefit for income taxes        (324) 
Net income        $10,129   
          
2019         
Net revenue$364,076    $5,873    $819    $113    $370,881   
Cost of goods sold288,856    4,684    819    —    294,359   
Gross profit75,220    1,189    —    113    76,522   
Operating expenses87,801    13,501    3,195    3,588    108,085   
Interest and other income (expense), net247    3,540    (1,971)  (7)  1,809   
Loss before income taxes$(12,334)  $(8,772)  $(5,166)  $(3,482)  (29,754) 
Benefit for income taxes        (94) 
Net loss        $(29,660) 
 
 Year ended December 31,
 Retail tZERO MVI Other Total
2020         
Net revenue$2,493,915    $45,792    $9,664    $412    $2,549,783   
Cost of goods sold1,922,559    38,033    9,656    2    1,970,250   
Gross profit571,356    7,759    8    410    579,533   
Operating expenses457,110    47,084    11,540    11,573    527,307   
Interest and other income (expense), net(225)  (6,348)  1,509    (2)  (5,066) 
Income (loss) before income taxes$114,021    $(45,673)  $(10,023)  $(11,165)  47,160   
Provision for income taxes        989   
Net income        $46,171   
          
2019         
Net revenue$1,434,974    $21,582    $2,749    $113    $1,459,418   
Cost of goods sold1,147,025    16,551    2,749    —    1,166,325   
Gross profit287,949    5,031    —    113    293,093   
Operating expenses332,372    54,911    14,778    14,521    416,582   
Interest and other income (expense), net559    2,442    (14,039)  (8)  (11,046) 
Loss before income taxes$(43,864)  $(47,438)  $(28,817)  $(14,416)  (134,535) 
Provision for income taxes        185   
Net loss        $(134,720) 

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.

Retail gross merchandise sales (“Retail GMS” or “Retail gross sales”) is calculated as the amount paid by customers for products and shipping, measured at the time of order, before coupons and discounts, without reductions for estimated returns. We believe that GMS provides a useful measure of the overall volume of sales transactions that flow through our online platform in a given period.

The following table provides Retail gross merchandise sales (in thousands):

 Year ended
December 31,
 2020 2019
Retail gross merchandise sales3,196,226   1,832,969  

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 net income (loss) 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 net income (loss) (in thousands):

 Three months ended
December 31,		 Year ended
December 31,
 2020 2019 2020 2019
        
Net income (loss)$10,129    $(29,660)  $46,171    $(134,720) 
Depreciation and amortization8,107    7,998    30,816    29,594   
Stock-based compensation4,574    4,606    12,930    18,229   
Interest (income) expense, net159    (262)  238    (1,455) 
Other (income) expense, net(186)  (1,547)  4,828    12,501   
Provision (benefit) for income taxes(324)  (94)  989    185   
Special items (see table below)433    —    (7,654)  1,942   
Adjusted EBITDA$22,892    $(18,959)  $88,318    $(73,724) 
        
Segment Adjusted EBITDA       
Retail$34,247    $(2,194)  $135,642    $(3,648) 
tZERO(5,800)  (10,628)  (26,777)  (43,797) 
MVI(2,653)  (2,695)  (9,706)  (11,981) 
Other(2,902)  (3,442)  (10,841)  (14,298) 
Adjusted EBITDA$22,892    $(18,959)  $88,318    $(73,724) 
        
Special items:       
Special legal charges (1)$433    $—    $(9,340)  $(1,221) 
Severance—    —    1,686    1,757   
Impairments on intangible assets—    —    —    1,406   
 $433    $—    $(7,654)  $1,942   

__________________________________________
        (1) — Includes amounts associated with the resolution for and adjustments to various legal contingencies and consultations regarding the partnership with Pelion.

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

 Year ended
December 31,
 2020 2019
Net cash provided by (used in) operating activities$196,474    $(81,612) 
Expenditures for property and equipment(19,132)  (21,774) 
Free cash flow$177,342    $(103,386)