ostk-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-41850

OVERSTOCK.COM, INC.

(Exact name of registrant as specified in its charter)

Delaware

87-0634302

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

799 West Coliseum Way

Midvale

Utah

84047

(Address of principal executive offices)

(Zip Code)

(801) 947-3100

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value

OSTK

NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

45,304,946 shares of the registrant's common stock, par value $0.0001, are outstanding on October 27, 2023.

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OVERSTOCK.COM, INC.

TABLE OF CONTENTS TO QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended September 30, 2023


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	5
	Consolidated Balance Sheets	5
	Consolidated Statements of Operations	7
	Consolidated Statements of Comprehensive Loss	8
	Consolidated Statements of Changes in Stockholders' Equity	9
	Consolidated Statements of Cash Flows	11
	Notes to Unaudited Consolidated Financial Statements	12

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

Item 4.	Controls and Procedures	33

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	34

Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Mine Safety Disclosures	36

Item 5.	Other Information	36

Item 6.	Exhibits	36

Signature		37

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Special Cautionary Note Regarding Forward-Looking Statements

This Report on Form 10-Q and the documents incorporated herein by reference, and our other public documents and statements our officers and representatives may make from time to time, contain forward-looking statements within the meaning of the federal securities laws. These statements are therefore entitled to the protection of the safe harbor provisions of these laws. You can find many of these statements by looking for words such as "may," "would," "could," "should," "will," "expect," "anticipate," "predict," "project," "potential," "continue," "contemplate," "seek," "assume," "believe," "intend," "plan," "forecast," "goal," "estimate," or other similar expressions which identify these forward-looking statements.

These forward-looking statements involve risks and uncertainties and relate to future events or our future financial or operating performance. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry and business, and on management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, you are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to assumptions, risks and uncertainties that are difficult to predict, and that actual results and outcomes may be materially different from the results or outcomes expressed or implied by any of our forward-looking statements for a variety of reasons, including among others:

•a recession, other economic downturns, inflation, high interest rates, our increasing exposure to the U.S. housing market, or other changes in U.S. and global economic conditions or U.S. consumer spending;

•any difficulties we may encounter as a result of our reliance on third-parties that we do not control for the performance of critical functions material to our business, such as carriers, fulfillment partners, and SaaS/IaaS providers;

•any inability to compete successfully against existing or future competitors or to effectively market our business and generate customer traffic;

•any increases in the price of importing into the U.S. or transporting to our customers the types of merchandise we sell or other supply chain challenges that limit our ability to deliver merchandise to our customers in a timely manner;

•any difficulties or other negative consequences we may encounter as a result of our purchase, implementation, integration, or use of the Bed Bath & Beyond brand and intellectual property;

•any difficulties or negative consequences we may encounter as a result of changing our company name, our company stock ticker symbol, or the stock exchange on which our common stock trades;

•any negative impact we may experience as a result of shareholder activism;

•any inability to attract and/or retain key personnel;

•any inability to generate and maintain unpaid natural traffic to our Website;

•any inability to optimize and effectively operate our distribution center, warehouse, and customer service operations;

•any inability to maintain profitability and/or generate positive cash flow from operations;

•any negative impact from our workforce working on a remote, in-office, or hybrid schedule;

•any challenges that would result in the event of any loss of functionality or unavailability of our Website or reduced performance of our transaction systems;

•our exposure to cyber-security risks, risks of data loss and other security breaches;

•the risk that we may be required to recognize losses relating to our equity and debt investments;

•the impacts that we would experience if governmental entities or providers of consumer devices and internet browsers further restrict or regulate the use of "cookie" tracking technologies;

•the impact that any litigation, claims, or regulatory matters could have on our business, financial condition, results of operations, and cash flows;

•negative economic consequences of various global conflicts;

•the possibility that we may be unable to protect our proprietary technology and to obtain trademark protection for our marks;

•current and future claims of intellectual property infringement to which we are subject;

•any difficulties we may encounter as a result of our reliance on third-parties that we do not control for their representations regarding product compliance with various laws and regulations;

•any problems associated with our lack of visibility into, and our lack of influence over, our equity method investments, including our reliance on third-parties to timely and accurately report material events to us;

•any difficulties we may encounter as a result of our evolving business practices, including our exit from non-home categories and our continuing expansion into international markets;

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•any inability of Pelion Venture Partners to successfully manage the Medici Ventures, L.P. fund, in which we are the limited partner, or any other entity in which we also have a direct minority interest;

•the risk that the amount of deferred tax assets we consider realizable could be reduced if estimates of future taxable income during the carryforward period are reduced; and

•the other risks described in this report or in our other public filings.

In evaluating all forward-looking statements, you should specifically consider the risks outlined above and in this report, especially under the headings "Special Cautionary Note Regarding Forward-Looking Statements," "Risk Factors," "Legal Proceedings," and "Management's Discussion and Analysis of Financial Condition and Results of Operations." These factors may cause our actual results and outcomes to differ materially from those contemplated by any forward-looking statement. Although we believe that our expectations reflected in the forward-looking statements are reasonable, we cannot guarantee or offer any assurance of future results, levels of activity, performance or achievements or other future events. Our forward-looking statements contained in this report speak only as of the date of this report and, except as required by law, we undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report or any changes in our expectations or any change in any events, conditions or circumstances on which any of our forward-looking statements are based.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)


Overstock.com, Inc. Consolidated Balance Sheets (Unaudited) (in thousands, except per share data)
	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	325,435	$	371,263
Restricted cash	38		194

Accounts receivable, net of allowance for credit losses of $1,839 and $3,223	19,580		17,693

Inventories	11,519		6,526
Prepaids and other current assets	19,157		18,833
Total current assets	375,729		414,509
Property and equipment, net	109,661		109,906
Deferred tax assets, net	66,449		41,439
Intangible assets, net	25,501		9
Goodwill	6,160		6,160
Equity securities, including securities measured at fair value of $41,091 and $82,823	169,326		296,317
Operating lease right-of-use assets	4,347		7,460
Other long-term assets, net	13,611		2,746
Total assets	$	770,784	$	878,546
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	85,272	$	75,130
Accrued liabilities	72,475		63,614
Unearned revenue	47,450		44,480
Operating lease liabilities, current	3,056		4,410
Other current liabilities	1,138		3,508
Total current liabilities	209,391		191,142
Long-term debt, net	34,232		34,476
Operating lease liabilities, non-current	1,622		3,626
Other long-term liabilities	9,355		3,476
Total liabilities	254,600		232,720
Commitments and contingencies (Note 9)

Continued on the following page See accompanying notes to unaudited consolidated financial statements.

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Overstock.com, Inc. Consolidated Balance Sheets (Unaudited) (in thousands, except per share data)
	September 30, 2023		December 31, 2022
Stockholders' equity:
Preferred stock, $0.0001 par value, authorized shares - 5,000, issued and outstanding - none	—		—


Common stock, $0.0001 par value, authorized shares - 100,000
Issued shares - 51,585 and 51,102
Outstanding shares - 45,305 and 44,951	5		5
Additional paid-in capital	1,002,494		982,718
Accumulated deficit	(320,678)		(173,829)
Accumulated other comprehensive loss	(510)		(522)
Treasury stock at cost - 6,280 and 6,151	(165,127)		(162,546)


Total stockholders' equity	516,184		645,826
Total liabilities and stockholders' equity	$	770,784	$	878,546

See accompanying notes to unaudited consolidated financial statements.

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Overstock.com, Inc.

Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Net revenue	$	373,313	$	460,279	$	1,176,664	$	1,524,438
Cost of goods sold	303,353		352,807		922,619		1,170,649
Gross profit	69,960		107,472		254,045		353,789
Operating expenses
Sales and marketing	57,541		53,520		153,831		169,973
Technology	29,240		29,628		87,492		93,159
General and administrative	24,109		18,665		66,265		61,002

Total operating expenses	110,890		101,813		307,588		324,134
Operating income (loss)	(40,930)		5,659		(53,543)		29,655
Interest income, net	3,201		976		8,819		966
Other expense, net	(38,731)		(46,283)		(126,793)		(48,378)
Loss before income taxes	(76,460)		(39,648)		(171,517)		(17,757)
Provision (benefit) for income taxes	(13,411)		(2,653)		(24,668)		1,968

Net loss	$	(63,049)	$	(36,995)	$	(146,849)	$	(19,725)

Net loss per share of common stock:

Basic	$	(1.39)	$	(0.81)	$	(3.25)	$	(0.46)


Diluted	$	(1.39)	$	(0.81)	$	(3.25)	$	(0.46)

Weighted average shares of common stock outstanding:
Basic	45,225		45,708		45,164		43,954
Diluted	45,225		45,708		45,164		43,954

See accompanying notes to unaudited consolidated financial statements.

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Overstock.com, Inc.

Consolidated Statements of Comprehensive Loss (Unaudited)

(in thousands)


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Net loss	$	(63,049)	$	(36,995)	$	(146,849)	$	(19,725)
Other comprehensive income
Unrealized gain on cash flow hedges, net of expense for taxes of $0, $0, $0, and $0	4		4		12		12
Other comprehensive income	4		4		12		12
Comprehensive loss	$	(63,045)	$	(36,991)	$	(146,837)	$	(19,713)

See accompanying notes to unaudited consolidated financial statements.

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Overstock.com, Inc. Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (in thousands)
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Equity attributable to stockholders of Overstock.com, Inc.
Shares of common stock issued
Balance at beginning of period	51,455		51,026		51,102		46,625
Common stock issued upon vesting of restricted stock	80		3		365		264
Common stock issued for ESPP purchases	50		42		118		84

Conversion of preferred stock	—		—		—		4,098


Balance at end of period	51,585		51,071		51,585		51,071
Shares of treasury stock
Balance at beginning of period	6,253		5,331		6,151		3,602

Repurchases of common stock	—		—		—		1,652
Tax withholding upon vesting of employee stock awards	27		—		129		77

Balance at end of period	6,280		5,331		6,280		5,331
Total shares of common stock outstanding	45,305		45,740		45,305		45,740
Common stock
Balance at beginning of period	$	5	$	5	$	5	$	4
Conversion and elimination of preferred stock	—		—		—		1

Balance at end of period	$	5	$	5	$	5	$	5


Shares of Series A-1 preferred stock issued
Balance at beginning of period	—		—		—		4,204
Conversion and elimination of preferred stock	—		—		—		(4,204)
Balance at end of period	—		—		—		—
Shares of treasury stock
Balance at beginning of period	—		—		—		—
Repurchases of shares	—		—		—		7
Conversion and elimination of preferred stock	—		—		—		(7)
Balance at end of period	—		—		—		—

Total shares of Series A-1 preferred stock outstanding	—		—		—		—
Shares of Series B preferred stock issued and outstanding
Balance at beginning of period	—		—		—		357
Conversion and elimination of preferred stock	—		—		—		(357)
Balance at end of period	—		—		—		—
Preferred stock	$	—	$	—	$	—	$	—

Continued on the following page See accompanying notes to unaudited consolidated financial statements.

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Overstock.com, Inc. Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (in thousands)
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022

Additional paid-in capital
Balance at beginning of period	$	995,904	$	972,845	$	982,718	$	960,544
Stock-based compensation to employees and directors	5,798		4,056		17,863		13,390
Common stock issued for ESPP purchases	792		889		1,913		2,779
Conversion and elimination of preferred stock	—		—		—		1,043





Other	—		—		—		34
Balance at end of period	$	1,002,494	$	977,790	$	1,002,494	$	977,790
Accumulated deficit
Balance at beginning of period	$	(257,629)	$	(121,323)	$	(173,829)	$	(136,590)

Net loss	(63,049)		(36,995)		(146,849)		(19,725)
Dividend issued upon conversion and elimination of preferred stock	—		—		—		(1,697)
Conversion and elimination of preferred stock	—		—

SEC Form 10-Q filed by Overstock.com Inc.