Published:
Overstock.com Reports Financial Results for the Three- and Nine-Month Periods Ending September 30, 2007
Overstock.com (NASDAQ: OSTK)
Key metrics (Q3 2007 comparisons to Q3 2006):
-- Revenue: $161.9M vs. $156.9M (a 3% increase)
-- Gross profits: $28.3M vs. $21.4M (a 32% increase)
-- Sales and marketing expense: $8.8M vs. $17.3M (a 49% reduction)
-- Contribution profit (gross profit less marketing): $19.4M vs. $4.1M (a
376% increase)
-- G&A / Technology expense: $24.3M vs. $27.2M (an 11% reduction)
-- Net loss: $4.7M vs. $24.5M (an 81% reduction)
-- EBITDA: positive $4.1M vs. negative $14.3M (an $18.4M increase)
-- TTM Operating cash flow: positive $5.9M vs. negative $20.5M (a $26.4M
increase)
Dear Investor:
In Q3, we generated positive EBITDA for the first time in a non-Q4 quarter.
I believe this validates our view that a profitable business model is
emerging, particularly in light of our de minimus capital expenditures
($316K during Q3).
We also returned to positive (albeit modest) top-line growth despite
halving our marketing expenses. A year ago, I said that we had a laundry
list of projects we were working on to improve our marketing efforts.
Since then, our marketing dollars have become twice as efficient. We are
about one-third of the way through the list; I do not know what the
remaining two-thirds will bring.
Expenses are drum tight, product selection is strong, operations are
humming, and customer satisfaction is extraordinary. We are superbly
positioned for the holiday season.
I look forward to our call, and as always, remain,
Your humble servant,
Patrick M. Byrne
P.S. Please email Kevin Moon at kmoon@overstock.com with questions prior to
the call.
Key financial and operating metrics
Total revenue - Overstock.com reported total revenue for the three months
ended September 30, 2006 and 2007 of $156.9 million and $161.9 million,
respectively, a 3% increase. For the nine months ended September 30, 2006
and 2007, total revenue was $494.1 million and $468.8 million,
respectively, a 5% decrease.
Gross profit and gross margin - Gross profit for the three months ended
September 30, 2006 and 2007 was $21.4 million and $28.3 million,
respectively, a 32% increase, representing margins of 13.6% and 17.5% for
those respective periods. For the nine-month periods, gross profits were
$67.4 million in 2006 and $79.9 million in 2007, an 18% increase. Gross
margins were 13.6% and 17.0% for those respective nine-month periods.
Contribution and contribution margin - "Contribution" (gross profit less
sales and marketing expenses) for the three months ended September 30, 2006
and 2007 was $4.1 million (2.6% contribution margin) and $19.4 million
(12.0% contribution margin), respectively, a 376% increase. For the nine
months ended September 30, 2006 and 2007, contribution was $25.6 million
(5.2% contribution margin) and $51.8 million (11.0% contribution margin),
respectively, a 103% increase.
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2006 2007 2006 2007
--------- --------- --------- ---------
Total revenue $ 156,885 $ 161,930 $ 494,121 $ 468,827
Cost of goods sold 135,520 133,669 426,694 388,948
--------- --------- --------- ---------
Gross profit 21,365 28,261 67,427 79,879
Less: Sales and marketing
expense 17,282 8,835 41,852 28,081
--------- --------- --------- ---------
Contribution $ 4,083 $ 19,426 $ 25,575 $ 51,798
========= ========= ========= =========
Contribution margin 2.6% 12.0% 5.2% 11.0%
Operating loss - Operating losses for the three months ended September 30,
2006 and 2007 were $23.2 million and $4.9 million, respectively. For the
nine months ended September 30, 2006 and 2007, operating losses were $52.9
million and $36.1 million, respectively.
EBITDA - EBITDA (a non-GAAP measure) for the three months ended September
30, 2006 and 2007 was $(14.4) million and $4.1 million, respectively. For
the nine months ended September 30, 2006 and 2007, EBITDA was $(28.4)
million and ($8.3) million, respectively. We believe that, because our
current capital expenditures are significantly lower than our depreciation
levels, discussing EBITDA at this stage of our business is useful to us and
investors because it approximates actual cash used or cash generated by the
operations of the business.
Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------
2006 2007 2006 2007
----------- ----------- ----------- -----------
Operating loss $ (23,152) $ (4,874) $ (52,881) $ (36,113)
Add:Depreciation and
amortization 7,776 7,080 20,802 22,825
Stock-based compensation
expense 1,042 1,176 3,088 3,386
Stock-based compensation
to consultants for
service (3) 140 31 280
Stock-based compensation
relating to performance
shares -- 350 -- 350
Treasury stock issued to
employees as
compensation 67 213 679 928
----------- ----------- ----------- -----------
EBITDA $ (14,270) $ 4,085 $ (28,281) $ (8,344)
=========== =========== =========== ===========
Net loss - Net loss for the three months ended September 30, 2006, was
$24.5 million, or $1.16 loss per share, compared to $4.7 million, or $0.20
loss per share in 2007. For the nine months ended September 30, 2006 and
2007, net losses totaled $56.2 million and $39.9 million, respectively, or
$2.67 and $1.52 loss per share for those respective periods. Net loss in
2007 includes restructuring of $12.3 million and loss from discontinued
operations of $3.9 million. For the nine months ended September 30, 2006
net loss did not have any restructuring charges, but included $2.6 million
loss from discontinued operations.
Cash and working capital - At September 30, 2007, Overstock.com had cash,
cash equivalents and marketable securities of $91.0 million and working
capital of $69.0 million.
About Overstock.com
Overstock.com, Inc. is an online "closeout" retailer offering discount,
brand-name merchandise for sale over the Internet. The company offers its
customers an opportunity to shop for bargains conveniently, while offering
its suppliers an alternative inventory liquidation distribution channel.
Overstock.com, headquartered in Salt Lake City, is a publicly traded
company listed on the NASDAQ Global Market System and can be found online
at http://www.overstock.com.
Overstock.com® is a registered trademark of Overstock.com, Inc. All other
trademarks are the property of their respective owners.
This press release contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Such forward-looking statements include,
but are not limited to, statements regarding the emergence of a profitable
business model, results of marketing changes, customer satisfaction,
expense controls, amounts of future capital expenditures, and the company's
positioning for the holiday season. Our Form 10-K for the year ended
December 31, 2006, our subsequent quarterly reports on Form 10-Q, and our
other subsequent filings with the Securities and Exchange Commission
identify important factors that could cause our actual results to differ
materially from those contained in our projections, estimates or
forward-looking statements.
Overstock.com, Inc.
Consolidated Statements of Operations (unaudited)
(in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2006 2007 2006 2007
--------- --------- --------- ---------
Revenue
Direct $ 56,564 $ 39,446 $ 205,044 $ 128,725
Fulfillment partner 100,321 122,484 289,077 340,102
--------- --------- --------- ---------
Total revenue 156,885 161,930 494,121 468,827
--------- --------- --------- ---------
Cost of goods sold
Direct 51,037 33,160 183,213 108,801
Fulfillment partner 84,483 100,509 243,481 280,147
--------- --------- --------- ---------
Total cost of goods sold 135,520 133,669 426,694 388,948
--------- --------- --------- ---------
Gross profit 21,365 28,261 67,427 79,879
--------- --------- --------- ---------
Operating expenses:
Sales and marketing 17,282 8,835 41,852 28,081
Technology 16,157 14,576 44,478 44,786
General and administrative 11,078 9,724 33,978 30,842
Restructuring - - - 12,283
--------- --------- --------- ---------
Total operating expenses 44,517 33,135 120,308 115,992
--------- --------- --------- ---------
Operating loss (23,152) (4,874) (52,881) (36,113)
Interest income 459 1,291 2,989 3,359
Interest expense (1,096) (1,029) (3,638) (3,085)
Other income, net (6) (92) (7) (92)
--------- --------- --------- ---------
Loss from continuing operations (23,795) (4,704) (53,537) (35,931)
Discontinued operations:
Loss from discontinued
operations (708) - (2,615) (3,924)
--------- --------- --------- ---------
Net loss (24,503) (4,704) (56,152) (39,855)
Deemed dividend related to
redeemable common stock (33) - (99) -
--------- --------- --------- ---------
Net income (loss) attributable
to common shares $ (24,536) $ (4,704) $ (56,251) $ (39,855)
========= ========= ========= =========
Net loss per common share -
basic and diluted:
Loss from continuing
operations $ (1.16) $ (0.20) $ (2.67) $ (1.52)
Loss from discontinued
operations $ (0.03) $ - $ (0.13) $ (0.16)
Net loss per common share -
basic and diluted $ (1.19) $ (0.20) $ (2.80) $ (1.68)
Weighted average common shares
outstanding - basic and
diluted 20,600 23,726 20,052 23,671
Other data:
Shopping bookings (in 000s) $ 170,590 $ 177,226 $ 543,582 $ 513,270
Auction gross merchandise
volume (in 000s) $ 6,751 $ 2,628 $ 21,690 $ 11,076
Average customer acquisition
cost (shopping) $ 31.49 $ 18.17 $ 24.62 $ 20.76
Overstock.com, Inc.
Consolidated Balance Sheets (unaudited)
(in thousands)
December 31, September 30,
2006 2007
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 126,965 $ 74,145
Marketable securities - 16,842
------------- -------------
Cash, cash equivalents and marketable
securities 126,965 90,987
Accounts receivable, net 11,638 7,607
Notes receivable 6,702 1,506
Inventories, net 20,274 22,400
Prepaid inventory 2,241 5,003
Prepaid expenses 7,473 10,257
Current assets of held for sale subsidiary 4,718 -
------------- -------------
Total current assets 180,011 137,760
Property and equipment, net 56,198 33,450
Goodwill 2,784 2,784
Other long-term assets, net 578 197
Note receivable - 4,045
Long-term assets of held for sale subsidiary 16,594 -
------------- -------------
Total assets $ 256,165 $ 178,236
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 66,039 $ 38,504
Accrued liabilities 40,142 26,499
Capital lease obligations, current 5,074 3,801
Current liabilities of held for sale
subsidiary 3,684 -
------------- -------------
Total current liabilities 114,939 68,804
Capital lease obligations, non-current 3,983 -
Other long-term liabilities - 3,113
Convertible senior notes 75,279 75,537
------------- -------------
Total liabilities 194,201 147,454
------------- -------------
Stockholders' equity:
Common stock 2 2
Additional paid-in capital 325,771 332,899
Accumulated deficit (198,694) (238,549)
Treasury stock (64,983) (63,435)
Accumulated other comprehensive loss (132) (135)
------------- -------------
Total stockholders' equity 61,964 30,782
------------- -------------
Total liabilities and stockholders'
equity $ 256,165 $ 178,236
============= =============
Overstock.com, Inc.
Consolidated Statements of Cash Flows (unaudited)
(in thousands)
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
2006 2007 2006 2007
--------- --------- --------- ---------
Cash flows from operating
activities of continuing
operations:
Net loss $ (24,502) $ (4,704) $ (56,151) $ (39,855)
Adjustments to reconcile net
loss to cash provided by
(used in) operating
activities of continuing
operations:
Loss from discontinued
operations 708 - 2,615 3,924
Depreciation and
amortization 7,776 7,080 20,802 22,825
Realized gain from
marketable securities - - (2,085) -
Realized loss on
disposition of property
and equipment - - 599 1
Stock-based compensation 1,042 1,176 3,088 3,386
Stock-based compensation to
consultants for services (3) 140 31 280
Stock-based compensation
relating to performance
share plan - 350 - 350
Treasury stock issued to
employees as compensation 67 213 679 928
Amortization of debt
discount and deferred
financing fees 139 86 417 258
Gain from retirement of
convertible senior notes - - - -
Restructuring - - - 12,283
Notes receivable accretion - (136) - (136)
Changes in operating assets
and liabilities, net of
effect of acquisition and
discontinued operations:
Accounts receivable, net 1,541 335 2,880 3,731
Inventories, net 6,040 (6,975) 24,487 (2,126)
Prepaid inventory (781) (2,879) 5,605 (2,762)
Prepaid expenses 455 (1,522) (716) (2,784)
Other long-term assets (123) 100 (105) 366
Accounts payable 11,745 4,960 (53,479) (27,632)
Accrued liabilities (3,340) (856) (26,909) (18,970)
Other long-term
liabilities - (114) - (114)
--------- --------- --------- ---------
Net cash provided by
(used in) operating
activities 764 (2,746) (78,242) (46,047)
--------- --------- --------- ---------
Cash flows from investing
activities of continuing
operations:
Change in restricted cash - - 253 -
Purchases of marketable
securities - (7,783) - (29,164)
Sales of marketable
securities - 8,924 56,756 12,324
Expenditures for property and
equipment (7,769) (316) (19,675) (2,232)
Proceeds from the sale of
property and equipment 1 - 1 -
Proceeds from the sale of
discontinued operations, net
of cash transferred - - - 9,892
Paydown of note receivable - 502 - 5,196
Decrease in cash resulting
from de-consolidation of
variable entity - - - -
Expenditures for other
long-term assets - - (100) -
--------- --------- --------- ---------
Net cash provided by
(used in) investing
activities (7,768) 1,327 37,235 (3,984)
--------- --------- --------- ---------
Cash flows from financing
activities of continuing
operations:
Payments on capital lease
obligations (124) (5) (2,878) (5,256)
Borrowings on line of credit 5,245 - 78,503 1,169
Payments on line of credit (5,245) - (78,503) (1,169)
Payments to retire
convertible senior notes - - - -
Proceeds from the issuance of
common stock - - 25,000 -
Exercise of stock options 806 551 2,267 2,472
--------- --------- --------- ---------
Net cash provided by
(used in) financing
activities 682 546 24,389 (2,784)
--------- --------- --------- ---------
Effect of exchange rate
changes on cash 40 (26) 11 (5)
Cash provided by (used in)
operating activities of
discontinued operations 42 - 112 (204)
Cash used in investing
activities of discontinued
operations (39) - (343) (53)
--------- --------- --------- ---------
Net increase (decrease) in
cash and cash equivalents (6,279) (899) (16,838) (53,077)
Change in cash and cash
equivalents from
discontinued operations (3) - 231 257
Cash and cash equivalents,
beginning of period 45,550 75,044 55,875 126,965
--------- --------- --------- ---------
Cash and cash equivalents,
end of period $ 39,268 $ 74,145 $ 39,268 $ 74,145
========= ========= ========= =========
Twelve months ended
September 30,
--------------------
2006 2007
--------- ---------
Cash flows from operating
activities of continuing
operations:
Net loss $ (62,434) $ (85,470)
Adjustments to reconcile net
loss to cash provided by
(used in) operating
activities of continuing
operations:
Loss from discontinued
operations 3,830 8,191
Depreciation and
amortization 25,447 34,350
Realized gain from
marketable securities (1,095) -
Realized loss on
disposition of property
and equipment 2,056 1
Stock-based compensation 3,095 4,418
Stock-based compensation to
consultants for services (20) 272
Stock-based compensation
relating to performance
share plan - 350
Treasury stock issued to
employees as compensation 720 1,036
Amortization of debt
discount and deferred
financing fees 435 258
Gain from retirement of
convertible senior notes (1,988) -
Restructuring - 17,957
Notes receivable accretion - (136)
Changes in operating assets
and liabilities, net of
effect of acquisition and
discontinued operations:
Accounts receivable, net (461) (1,201)
Inventories, net 29,352 40,396
Prepaid inventory 8,578 (979)
Prepaid expenses 22 (1,064)
Other long-term assets (1,821) 967
Accounts payable (358) (9,353)
Accrued liabilities (25,838) (3,978)
Other long-term
liabilities - (114)
--------- ---------
Net cash provided by
(used in) operating
activities (20,480) 5,901
--------- ---------
Cash flows from investing
activities of continuing
operations:
Change in restricted cash 633 -
Purchases of marketable
securities (2,000) (29,164)
Sales of marketable
securities 76,280 12,324
Expenditures for property and
equipment (27,851) (5,998)
Proceeds from the sale of
property and equipment 1 -
Proceeds from the sale of
discontinued operations, net
of cash transferred - 9,892
Paydown of note receivable - 5,196
Decrease in cash resulting
from de-consolidation of
variable entity - (102)
Expenditures for other
long-term assets (100) -
--------- ---------
Net cash provided by
(used in) investing
activities 46,963 (7,852)
--------- ---------
Cash flows from financing
activities of continuing
operations:
Payments on capital lease
obligations (6,730) (5,335)
Borrowings on line of credit 86,003 9,347
Payments on line of credit (90,371) (9,347)
Payments to retire
convertible senior notes (7,735) -
Proceeds from the issuance of
common stock 25,000 39,406
Exercise of stock options 2,701 2,739
--------- ---------
Net cash provided by
(used in) financing
activities 8,868 36,810
--------- ---------
Effect of exchange rate
changes on cash (14) 18
Cash provided by (used in)
operating activities of
discontinued operations 67 1,265
Cash used in investing
activities of discontinued
operations (441) (276)
--------- ---------
Net increase (decrease) in
cash and cash equivalents 34,963 35,866
Change in cash and cash
equivalents from
discontinued operations 374 (989)
Cash and cash equivalents,
beginning of period 3,931 39,268
--------- ---------
Cash and cash equivalents,
end of period $39,268 $74,145
========= =========
Copyright © 2009, MarketWire
Copyright © 2009, NewsBlaze,
Daily NewsTags: ,Computers and Software:Internet, Retail:E-Commerce, ,NASDAQ01,NASDAQ01,UT,SALT LAKE CITY, UT
Search News
Daily News
