Financial Data and Key Metrics Changes - Revenue for Q2 2023 was $422 million, a decrease of 20% year-over-year, although this represented an improvement compared to Q1 2023 [12][14] - Adjusted EBITDA was positive at $8 million, marking the 13th consecutive quarter of positive adjusted EBITDA [7][16] - Gross margin was 22.4%, a decrease of 58 basis points year-over-year, attributed to higher discounting [12][14] - The company reported a loss per share of $1.63, primarily due to non-cash non-operating expenses related to equity securities [12][13] Business Line Data and Key Metrics Changes - Home-only revenue declined by 19% year-over-year, reflecting a broader trend of reduced consumer engagement in discretionary home goods [12][14] - Active customer base decreased to 4.6 million, down 29% year-over-year, driven by a shift in consumer spending preferences [17] - Average order value (AOV) declined by 5% year-over-year to $234, although it improved compared to Q1 2023 [18] Market Data and Key Metrics Changes - The company noted a competitive environment with larger players holding key sales events, impacting overall performance [8] - The decline in orders delivered was 33% year-over-year, primarily due to weak consumer sentiment and spending priorities [19] Company Strategy and Development Direction - The acquisition of the Bed Bath & Beyond brand is seen as a transformative opportunity to reposition the company and attract new customers [5][10] - The company plans to increase its promotional and marketing budget significantly to engage and retain Bed Bath & Beyond customers [7][32] - The strategy includes leveraging the existing customer base and enhancing the product assortment, with 600,000 new products added since the acquisition [23][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing the strong brand association with home products and the potential for market share growth [22][38] - The company anticipates a challenging macroeconomic environment but expects revenue trends to improve post-launch of the Bed Bath & Beyond brand in the U.S. [41] - Management acknowledged that adjusted EBITDA margins may turn negative in the short term due to increased marketing and discounting efforts [41] Other Important Information - The company ended Q2 2023 with a cash balance of $343 million, which includes the cash outflow for the Bed Bath & Beyond acquisition [13][20] - The transition to the Bed Bath & Beyond brand is expected to be seamless, with a focus on maintaining a consistent customer experience [22] Q&A Session Summary Question: Update on couponing strategy for Bed Bath & Beyond customers - Management indicated that they will target Bed Bath & Beyond legacy customers with significant initial coupons, followed by competitive pricing strategies [43][44] Question: Drivers behind the improvement in July revenue trends - Management attributed the improvement to successful promotions, particularly around Independence Day, and noted that consumer spending remains focused on experiences [51][53] Question: Thoughts on the home e-commerce category returning to growth - Management expressed uncertainty about the timing of recovery in the home furnishings industry but believes the Bed Bath & Beyond acquisition will help outperform competitors [60][62] Question: Potential sales falloff in August and September - Management noted that August is typically slower but expects Labor Day to be a significant sales event, with plans to market aggressively [63][64] Question: Impact of trade-down behavior on average order value - Management acknowledged a trade-down trend affecting AOV but noted that their value proposition is attracting value-seeking customers [66][67] Question: Response to Overstock core categories in Canada - Management reported growth across various categories in Canada, with effective marketing primarily through search engine channels [70][72]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Overstock.com reported a Q1 2023 net loss of $10.3 million, a reversal from prior year's net income, driven by a 28.9% revenue decline [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $887.4 million, while total liabilities rose to $246.9 million, and equity slightly decreased Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $374,711 | $371,263 | | Total current assets | $421,249 | $414,509 | | Total assets | $887,389 | $878,546 | | **Liabilities & Equity** | | | | Accounts payable | $83,621 | $75,130 | | Total current liabilities | $206,119 | $191,142 | | Total liabilities | $246,884 | $232,720 | | Total stockholders' equity | $640,505 | $645,826 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Q1 2023 saw a net loss of $10.3 million and a 28.9% revenue decline to $381.1 million, reversing prior year's operating income Q1 2023 Statement of Operations (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net revenue | $381,140 | $536,037 | | Gross profit | $89,713 | $125,212 | | Operating income (loss) | $(8,364) | $12,454 | | Net income (loss) | $(10,307) | $10,123 | | Diluted EPS | $(0.23) | $0.21 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased to $20.0 million, while investing and financing cash outflows were $14.8 million and $1.7 million respectively Cash Flow Summary (in thousands) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $20,007 | $33,193 | | Net cash used in investing activities | $(14,831) | $(13,795) | | Net cash used in financing activities | $(1,705) | $(29,286) | [Notes to Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Notes detail accounting policies, financial instrument valuations, legal proceedings, and the status of the stock repurchase program - The company is cooperating with an SEC investigation related to its 2019 Series A-1 Preferred stock dividend, 10b5-1 plans, and retail guidance[58](index=58&type=chunk) - No shares were repurchased in Q1 2023, while in Q1 2022, the company repurchased **$24.9 million** of common stock, with **$19.9 million** remaining available for future repurchases as of March 31, 2023[66](index=66&type=chunk) - Total equity securities were valued at **$289.1 million** as of March 31, 2023, including investments in Medici Ventures, L.P. and tZERO Group, Inc[43](index=43&type=chunk)[44](index=44&type=chunk) - As of March 31, 2023, total outstanding debt was **$37.1 million**, net of issuance costs, related to loan agreements for the corporate headquarters[49](index=49&type=chunk)[50](index=50&type=chunk) [Management's Discussion and Analysis (MD&A)](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 28.9% revenue decline to macroeconomic pressures and strategic shifts, while gross margin slightly improved [Executive Commentary](index=21&type=section&id=Executive%20Commentary) Executive commentary highlights a 28.9% revenue decrease driven by a 29% drop in customer orders amid macroeconomic challenges Q1 2023 vs Q1 2022 Performance | Metric | Change | | :--- | :--- | | Net Revenue | -28.9% | | Customer Orders | -29% | | Average Order Value | Relatively flat | - The company's strategic focus is on strengthening its brand pillars: "Product Findability," "Smart Value," and "Easy Delivery and Support"[85](index=85&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Net revenue declined 28.9% to $381.1 million, while gross margin slightly improved to 23.5%, and operating expenses shifted Operating Expenses as a Percentage of Net Revenue | Expense Category | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Sales and marketing | 12.3% | 10.9% | | Technology | 8.0% | 6.2% | | General and administrative | 5.4% | 4.0% | - Gross margin increased slightly to **23.5%** in Q1 2023 from **23.4%** in Q1 2022, attributed to merchandising actions and operational efficiencies, despite higher promotional discounting[99](index=99&type=chunk) - The company recorded a tax benefit of **$2.9 million** in Q1 2023, compared to a tax provision of **$2.1 million** in Q1 2022, primarily due to the pre-tax loss[113](index=113&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $374.7 million in cash, $20.0 million in operating cash flow, and $55.4 million in contractual obligations Contractual Cash Obligations (in thousands) | Obligation | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating leases | $7,389 | $4,203 | $2,916 | $270 | $— | | Loan agreements | $48,015 | $4,607 | $2,968 | $2,972 | $37,468 | | **Total** | **$55,404** | **$8,810** | **$5,884** | **$3,242** | **$37,468** | - Cash provided by operating activities decreased to **$20.0 million** in Q1 2023 from **$33.2 million** in Q1 2022[119](index=119&type=chunk) - The company believes existing cash and future cash flows will be sufficient for operations for at least the next twelve months[116](index=116&type=chunk) [Market Risk Disclosures](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks include inflation, interest rates, and foreign currency, with inflation being a key concern - Inflation is identified as a key risk, with rising commodity, shipping, energy, and labor costs creating pressure across the business, which the company may not be able to fully offset[133](index=133&type=chunk) - Interest rate risk is minimal as the company's loan agreements have a fixed blended annual interest rate of **4.45%**[131](index=131&type=chunk) - Foreign currency risk is not significant because the majority of sales and operating expenses are denominated in U.S. dollars[132](index=132&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period[137](index=137&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[139](index=139&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ongoing legal proceedings, including an SEC investigation and a pending securities class action appeal - The company is awaiting a ruling from the U.S. Court of Appeals for the Tenth Circuit regarding an appeal by plaintiffs in a securities class action lawsuit that was previously dismissed in the company's favor[59](index=59&type=chunk) - A shareholder derivative suit remains stayed pending the outcome of the appeal in the securities class action lawsuit[60](index=60&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported from the previous Annual Report on Form 10-K - No material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[142](index=142&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No equity securities were repurchased in Q1 2023, with $19.9 million remaining available for future repurchases - No share repurchases were made during the three months ended March 31, 2023[143](index=143&type=chunk) - As of March 31, 2023, the remaining authorized amount for the stock repurchase program is **$19.9 million**[143](index=143&type=chunk)

Sales and Revenue - The company reported that sales for the years ended December 31, 2022, 2021, and 2020 were almost entirely to customers located in the United States, with no single customer accounting for more than 1% of total net revenue[19]. Employee and Talent Management - As of December 31, 2022, the company had approximately 1,050 full-time employees and has never experienced a work stoppage[35]. - In 2022, the company hired a total of 208 new employees, with 180 in non-customer service roles and 28 in customer service and warehouse departments[42]. - The average employee tenure is six years, with customer service and warehouse departments having an average tenure of four and three-quarters years[42]. - The company offers a competitive compensation package, including base salary, short-term bonuses, and long-term equity incentives, to attract and retain talent[38]. - The company actively recruits talent from twenty-one states and has established relationships with universities and industry groups to enhance its talent acquisition efforts[41]. - The company has invested in employee development through online resources, mentoring programs, and subsidizing higher education opportunities[44]. - An annual training program on Diversity and Inclusion is conducted for all employees to promote a culture of inclusion[45]. - The company emphasizes a results-driven, inclusive, and collaborative corporate culture to enhance employee engagement[47]. Partnerships and Product Offering - The company maintains relationships with approximately 2,600 partners as of December 31, 2022, to ensure a continuous assortment of product offerings[17]. - The company focuses on enhancing its product assortment to meet evolving customer trends, increasing the number of items offered[18]. Marketing and Customer Service - The company utilizes a variety of sales and marketing methods, including online campaigns and brand advertising, to target its retail consumer audience[22]. - The company emphasizes superior customer service through its app, website, and customer service department, staffed with dedicated professionals[23]. Diversity and Inclusion - The company has a commitment to diversity and inclusion, aiming to improve representation at all levels and foster an inclusive culture[36]. Logistics and Operations - The company’s logistics capabilities are tailored to the furniture and home furnishings category, developed over many years of e-commerce experience[17]. Financial Performance and Market Conditions - The company recorded a value of $296.3 million in equity securities as of December 31, 2022, down from $342.7 million in 2021, indicating market volatility impacts[179]. - The company is exposed to inflationary pressures due to increases in commodity and shipping prices, which could affect financial performance if not managed effectively[178]. Employee Benefits - The company offers a comprehensive benefits package, including medical, dental, vision insurance, health savings accounts, and a 401(k) matching program[43]. - In January 2023, the company expanded its benefits to include pelvic care benefits for women and reduced copayments for mental health office visits[43]. Executive Team - As of February 24, 2023, the executive team includes key positions such as Chief Executive Officer, Chief Financial Officer, and Chief Marketing Officer, with significant experience in their respective fields[50][51][52].

Financial Data and Key Metrics Changes - Revenue declined by 34% year-over-year in Q4 2022, totaling $405 million, primarily due to competitive pressures and the strategic removal of non-home products from the site [22][24] - Gross profit was $90 million in Q4 2022, a decrease of $49 million compared to the prior year, with a gross margin of 22.1%, down 54 basis points year-over-year [25] - Adjusted EBITDA was $7 million in Q4 2022, a decrease of $21 million from the previous year, resulting in an adjusted EBITDA margin of 1.6% [27] Business Line Data and Key Metrics Changes - The transition to a 100% home retailer was completed, with home-only revenue declining by 30% in Q4 2022, consistent with the third quarter [24][31] - The active customer base decreased to 5.2 million, driven by reduced spending on home-related goods and a shift in consumer preferences [28] - Average order value (AOV) improved by 4% year-over-year to $215, although it declined slightly compared to Q3 due to a shift in product assortment [29] Market Data and Key Metrics Changes - The furniture and home furnishings market is fragmented, with a total addressable market exceeding $400 billion, presenting opportunities for market share growth [11] - The competitive landscape saw increased discounting and promotional activities, impacting gross margins and overall sales performance [22][24] Company Strategy and Development Direction - The company is focused on sustainable profitable market share growth, leveraging its asset-light business model to maintain gross margins despite competitive pressures [34][35] - New strategies include enhancing the mobile app experience, expanding loyalty offerings, and improving product findability on the website [40][42][44] - The company aims to capture market share by adding national branded and giftable products, particularly targeting competitors struggling with excess inventory [12][38] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2022 performance was below expectations but expressed confidence in the company's ability to recover market share and improve top-line performance in 2023 [7][35] - The macroeconomic environment, including inflation and a weak housing market, is expected to influence performance throughout the year, with a more optimistic outlook for the second half of 2023 [36][39] Other Important Information - The company ended 2022 with a strong balance sheet, holding $371 million in cash and only $34 million in long-term debt, resulting in a net cash position of $337 million [13] - Share repurchases totaled $80 million in 2022, alongside direct investments in portfolio companies like tZERO and GrainChain [14][18] Q&A Session Summary Question: Were competitor markdowns disruptive to sales in 2022? - Management acknowledged that while some disruptions occurred, maintaining a smart value proposition was essential, and suppliers often adjusted their prices accordingly [48][49] Question: Expectations for gross margins in 2023? - Management indicated that gross margins might trend lower in the first half of 2023 due to ongoing inventory rationalization but expected recovery later in the year [51][52] Question: Comparison of today's home e-commerce market with past periods? - Management noted similarities with past downturns, suggesting that Overstock is well-positioned to benefit as consumers become more price-sensitive [54][55] Question: Insights on average order value (AOV) and Overstock Day events? - Management highlighted that AOV was impacted by promotional discounting and seasonal shifts, while Overstock Day was successful in driving mobile app adoption [57][61] Question: Plans for customer engagement and reactivation strategies? - Management emphasized the new co-branded credit card initiative aimed at enhancing customer loyalty and engagement, alongside efforts to reactivate lapsed customers [69][70]

Financial Performance - Net revenue for the three months ended September 30, 2022, was $460.3 million, a decrease of 33.2% compared to $689.4 million for the same period in 2021[23]. - Gross profit for the nine months ended September 30, 2022, was $353.8 million, down 27.1% from $485.1 million in the same period of 2021[23]. - Operating income for the three months ended September 30, 2022, was $5.7 million, a decline of 80.3% from $28.8 million in the prior year[23]. - Consolidated net loss attributable to stockholders for the three months ended September 30, 2022, was $(37.0) million, compared to net income of $30.4 million in the same period of 2021[23]. - The company reported a net loss per share of $(0.81) for the three months ended September 30, 2022, compared to earnings per share of $0.64 in the same period last year[23]. - Total operating expenses for the nine months ended September 30, 2022, were $324.1 million, a decrease of 17.6% from $393.1 million in the same period of 2021[23]. - The company reported a net loss from continuing operations of $(37.0) million for the three months ended September 30, 2022, compared to income of $30.4 million in the same period last year[23]. - Comprehensive loss attributable to stockholders for the three months ended September 30, 2022, was $(36.99) million, compared to $30.43 million in the same period of 2021[25]. - The net income from discontinued operations attributable to stockholders of Overstock.com, Inc. for the nine months ended September 30, 2022, was $217.581 million[46]. Assets and Liabilities - Total current assets decreased to $475.3 million as of September 30, 2022, down from $551.8 million at December 31, 2021, representing a decline of approximately 13.8%[18]. - Cash and cash equivalents were reported at $427.5 million, a decrease of 15.0% from $503.3 million at the end of 2021[18]. - Total liabilities decreased to $275.6 million, down from $321.6 million, reflecting a reduction of approximately 14.3%[20]. - Stockholders' equity decreased to $676.6 million from $744.4 million, indicating a decline of about 9.1%[20]. - The total assets decreased to $952.2 million from $1,066.0 million, a decline of approximately 10.7%[20]. - The company reported an accumulated deficit of $158.3 million as of September 30, 2022, compared to $136.6 million at the end of 2021[20]. - The company has a deferred tax asset of $40.7 million, slightly up from $40.0 million at the end of 2021[18]. - The total outstanding debt on loans was $38.8 million as of September 30, 2022, with a current portion of $3.5 million included in other current liabilities[64]. Cash Flow and Investments - Cash flows from operating activities for the nine months ended September 30, 2022, showed a net cash provided of $17.596 million, a significant decrease from $100.084 million in the same period of 2021[30]. - The net cash used in investing activities for the nine months ended September 30, 2022, was $28.004 million, compared to $81.764 million in the same period of 2021[30]. - The company reported a net cash used in financing activities of $65.224 million for the nine months ended September 30, 2022, compared to $7.957 million in the same period of 2021[33]. - The company completed an additional investment of $15 million in tZERO during the nine months ended September 30, 2022, through their Series B financing round[57]. Operational Challenges - The company continues to face risks related to supply chain challenges and economic conditions, which may impact future performance[13]. - The company experienced increased employee turnover and inflation in product costs, higher wages, and energy costs, impacting sales during the third quarter of 2022[108]. - The absence of pandemic-related shopping behavior and macroeconomic factors contributed to decreased order activity[105]. - The company cannot estimate the future impact of macroeconomic conditions such as inflation and supply chain challenges on its business due to their unpredictable nature[113]. Stock and Shareholder Information - The company had a total of 45.7 million shares of common stock outstanding as of September 30, 2022, an increase from 43.0 million shares in the prior year[27]. - The company reported stock-based compensation to employees and directors of $13.390 million for the nine months ended September 30, 2022, compared to $7.649 million for the same period in 2021[30]. - The stock-based compensation expense for the three months ended September 30, 2022, was $4.1 million, compared to $2.5 million for the same period in 2021[84]. - The company had $39.9 million available for future share repurchases under its current repurchase authorization through December 31, 2023[82]. Market and Economic Conditions - Consumer prices rose by 8.2% from September 2021 to September 2022, the largest increase since 1981, impacting consumer discretionary spending[167]. - Global conflicts, particularly the situation in Ukraine, could negatively impact the company's business and financial condition due to increased costs and supply chain disruptions[166]. - The company is exposed to risks from potential changes in legal, regulatory, or tax treatments that could adversely affect its operations[170]. - Further restrictions on the use of online tracking technologies could limit the company's ability to acquire new customers, adversely affecting its business[173].

Financial Performance - Net revenue for Q2 2022 was $528.1 million, a decrease of 33.6% from $794.5 million in Q2 2021[24]. - Gross profit for Q2 2022 was $121.1 million, down 30.6% from $174.8 million in Q2 2021[24]. - Operating income for Q2 2022 was $11.5 million, a decline of 68.4% compared to $36.5 million in Q2 2021[24]. - Consolidated net income for Q2 2022 was $7.1 million, significantly lower than $309.8 million in Q2 2021[24]. - Income from continuing operations for Q2 2022 was $7.1 million, compared to $82.4 million in Q2 2021[24]. - Total operating expenses for Q2 2022 were $109.6 million, down 20.8% from $138.3 million in Q2 2021[24]. - Basic net income per share for continuing operations was $0.12 in Q2 2022, down from $1.73 in Q2 2021[24]. - Consolidated net income for the six months ended June 30, 2022, was $17,270, compared to $325,669 for the same period in 2021, indicating a significant decrease[32]. - For the six months ended June 30, 2022, net revenue decreased by 26.8% to $1,064.2 million from $1,454.4 million in the same period in 2021, driven by a 38% decrease in customer orders[112]. - Gross profit for the six months ended June 30, 2022, decreased by 25.0% to $246.3 million from $328.4 million in the same period in 2021, with a gross margin of 23.1%[116]. Assets and Liabilities - As of June 30, 2022, total assets decreased to $1,006,950,000 from $1,065,966,000 as of December 31, 2021, reflecting a decline of approximately 5.5%[18]. - Total current liabilities decreased to $253,644,000 from $272,333,000, a reduction of approximately 6.8%[18]. - Stockholders' equity decreased to $708,710,000 from $744,386,000, representing a decline of about 4.8%[20]. - Long-term debt decreased to $36,248,000 from $37,984,000, a decline of approximately 4.6%[18]. - The total liabilities decreased to $298,240,000 from $321,580,000, a reduction of approximately 7.3%[18]. - The company holds equity securities valued at $350,580,000, up from $342,682,000, an increase of about 2.6%[18]. - The carrying amount of equity method securities was $350.2 million as of June 30, 2022, with $114.9 million valued under the fair value option[55]. Cash Flow and Financing Activities - Net cash provided by continuing operating activities was $21,822 for the six months ended June 30, 2022, down from $120,047 in the prior year[32]. - The company reported a net cash used in financing activities of $65,232 for the six months ended June 30, 2022, compared to a net cash used of $7,094 in the same period of 2021[34]. - Cash, cash equivalents, and restricted cash at the end of the period were $442,787, down from $537,653 at the end of June 2021[34]. - Financing activities led to a net cash outflow of $65.2 million for the six months ended June 30, 2022, mainly due to $60.1 million for stock repurchases[136]. - The company has total contractual cash obligations of $63.9 million as of June 30, 2022, including operating leases and loan agreements[139]. Stock and Shareholder Information - Total shares of common stock outstanding increased to 45.7 million by the end of Q2 2022 from 43.0 million at the end of Q2 2021[29]. - The stock repurchase program allows for an aggregate repurchase price not to exceed $100.0 million through December 31, 2023[79]. - During the three months ended June 30, 2022, the company repurchased $34.9 million of common stock at an average price of $30.69 per share[80]. - For the six months ended June 30, 2022, the company repurchased $59.8 million of common stock at an average price of $36.16 per share[80]. - A total of 1,136,926 common shares were purchased under the stock repurchase program during the quarter ended June 30, 2022[173]. Operational Insights - The company operates as a single segment primarily consisting of e-commerce product sales through its website[39]. - The company experienced a heightened inflationary environment impacting consumer confidence and spending, negatively affecting sales during the second quarter of 2022[105]. - Employee turnover and inflation in product costs have increased, impacting operational costs significantly[105]. - The company continues to work with partners to limit price increases in response to higher costs while improving gross margins year over year[105]. - The average order value increased by 16%, driven by a continued product mix shift into furniture and home furnishings categories[102]. Economic and Market Conditions - The company anticipates continued challenges from macroeconomic conditions, including inflation and geopolitical factors, which may impact future performance[113]. - Economic factors such as inflation and recession could adversely affect consumer discretionary spending, impacting financial performance[164]. - Global conflicts and sanctions could increase costs and disrupt supply chains, negatively impacting business operations[163]. - Inflationary pressures have impacted the supply chain, with increased costs in commodities, shipping, energy, and labor[151]. Regulatory and Compliance Issues - New regulations could increase the cost of doing business and expose the company to compliance risks, impacting financial results[167]. - Restrictions on cookie tracking technologies could limit the accuracy of online user information collected, adversely affecting customer acquisition[170]. - The company is involved in litigation that could result in significant damages or costs, potentially impacting financial position and cash flows[160].

Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $528 million, a decrease of 34% year-over-year but an increase of 44% compared to Q2 2019 [14][16] - Adjusted EBITDA margin was 3.9%, a decline of 165 basis points from 2021, but within the mid single-digit target range [14][18] - Adjusted diluted earnings per share (EPS) was $0.19, down $0.54 from the previous year, primarily due to lower pretax income and a higher effective tax rate [14][15] - The effective tax rate for Q2 was 26.1%, compared to a tax benefit in the same period last year [15] Business Line Data and Key Metrics Changes - The company transitioned to a 100% home and furnishings retailer, exiting non-home categories, which is expected to enhance brand association with home [12][13] - Active customer base declined to 6.5 million, influenced by weak consumer sentiment and the strategic exit from non-home products [20] - Average order value (AOV) increased by 16% year-over-year to $247, marking a record high for the company [21] Market Data and Key Metrics Changes - Online penetration in the home furnishings category is tracking at 33%, an increase of 900 basis points over 2019 [17][27] - The total addressable market for furniture and home furnishings in the U.S. is estimated at $419 billion, providing opportunities for market share growth [27] Company Strategy and Development Direction - The company aims to increase the breadth and depth of its product assortment to strengthen brand association with home [11][30] - The focus on "Smart Value" is critical, especially in a high inflation environment, to attract and retain customers [32] - The company is leveraging its mobile app to enhance customer engagement and drive sales [34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by macroeconomic factors such as inflation and geopolitical volatility affecting consumer sentiment [6][9] - The company remains committed to profitability and has a strong balance sheet, which provides stability in uncertain times [24][49] - Future marketing campaigns will focus on enhancing brand association with home, particularly now that the company is 100% home-focused [67] Other Important Information - The company repurchased approximately $35 million of equity in Q2 2022, totaling $60 million year-to-date [12][24] - The transition to a simpler equity capital structure was completed with the conversion of preferred stock into common stock [12] Q&A Session Summary Question: Sustainability of mid single-digit EBITDA margin amidst declining sales - Management confirmed the ability to manage expenses effectively and maintain mid single-digit EBITDA margins despite revenue declines [52][54] Question: Pricing trends in the industry - Management noted that while competitors are liquidating excess inventory at a loss, Overstock's asset-light model allows for competitive pricing without markdown pressures [58][60] Question: Order growth and marketing efforts - Management acknowledged the order growth metrics and indicated plans to enhance marketing efforts to better associate the brand with home [64][66] Question: Performance of the Club O loyalty program - Management reported that Club O continues to grow year-over-year and is a focus for future enhancements [78] Question: Mobile app performance and sales growth - Management highlighted that the mobile app channel is growing significantly and has the highest repeat rate and AOV, indicating strong customer loyalty [80]

Financial Performance - Net revenue for the quarter ended March 31, 2022, was $536,037, a decrease of 19% compared to $659,861 for the same period in 2021[22] - Gross profit for the quarter was $125,212, down from $153,524 in the prior year, reflecting a gross margin decline[22] - Operating income decreased to $12,454, compared to $26,592 in the same quarter last year, indicating a significant reduction in profitability[22] - Consolidated net income for the quarter was $10,123, down from $15,892 in the previous year, representing a decline of approximately 36%[23] - The company reported a basic net income per share of $0.21 for the quarter, down from $0.34 in the same quarter of the previous year[22] - Net income attributable to stockholders for the three months ended March 31, 2022, was $10.123 million, compared to $16.093 million for the same period in 2021, representing a decrease of 37.5%[32] - The net income from continuing operations attributable to common stockholders for the three months ended March 31, 2022, was $8.989 million, compared to $24.307 million for the same period in 2021[98] - Basic net income per share of common stock for the three months ended March 31, 2022, was $0.21, down from $0.57 for the same period in 2021[98] Assets and Liabilities - Total current assets as of March 31, 2022, were $543,805, a slight decrease from $551,790 at the end of 2021[18] - Total liabilities increased to $331,835 from $321,580 at the end of the previous year, indicating a rise in financial obligations[20] - Cash and cash equivalents were $493,261, down from $503,341 at the end of 2021, reflecting a decrease in liquidity[18] - The accumulated deficit decreased to $(126.467) million as of March 31, 2022, from $(509.140) million at the end of the same period in 2021, showing an improvement of 75.2%[28] - Cash, cash equivalents, and restricted cash at the end of the period were $493.478 million, down from $578.128 million at the end of the same period in 2021, a decrease of 14.7%[34] - Total outstanding debt was $40.5 million, net of $478,000 in capitalized debt issuance costs[62] Cash Flow and Investments - Cash flows from operating activities provided $33.193 million for the three months ended March 31, 2022, compared to $61.731 million for the same period in 2021, indicating a decrease of 46.3%[34] - The company reported a net cash used in investing activities of $(13.795) million for the three months ended March 31, 2022, compared to a net cash provided of $2.975 million for the same period in 2021[34] - Financing activities led to a net cash outflow of $29.3 million in Q1 2022, primarily due to stock repurchases of $25.2 million[138] Operational Changes and Strategy - Overstock.com continues to focus on its core home category, exiting non-home categories to streamline operations and improve financial performance[13] - The company is focusing on growing its Canadian customer base and market share by enhancing product findability and improving delivery support[104] - The company is exiting non-home categories to strengthen its brand association with home expertise, which has resulted in reduced revenues that may not be fully offset in the future[167] Expenses and Cost Management - Operating expenses totaled $112,758, a decrease from $126,932 in the prior year, showing cost management efforts[22] - Sales and marketing expenses decreased by 20.4% year-over-year for the three months ended March 31, 2022, representing 10.9% of net revenues compared to 11.1% in the same period in 2021[121] - General and administrative expenses decreased to $21.26 million in Q1 2022 from $22.87 million in Q1 2021, a year-over-year change of -7.1%, accounting for 4.0% of net revenues versus 3.5% previously[131] - Technology expenses totaled $33.0 million for the three months ended March 31, 2022, a $2.5 million increase compared to the same period in 2021, driven by staff-related costs[108] Stock and Shareholder Information - The company repurchased $25.165 million worth of shares during the three months ended March 31, 2022, compared to no repurchases in the same period of 2021[34] - The company announced a stock repurchase program with an aggregate repurchase price not to exceed $100.0 million, effective through December 31, 2023, and repurchased $24.9 million of common stock and $256,000 of Series A-1 preferred stock during the three months ended March 31, 2022[82] - Total shares of common stock outstanding as of March 31, 2022, were 42.720 million, a decrease from 43.000 million at the end of the same period in 2021, representing a reduction of 0.65%[28] Market and Economic Conditions - The company continues to monitor macroeconomic trends, including inflation and geopolitical tensions, which have negatively impacted consumer confidence and spending[109] - Consumer prices rose by 7% from December 2020 to December 2021, the largest increase since 1981, which could adversely affect consumer discretionary spending[164] - The ongoing conflict in Ukraine and related sanctions could lead to increased costs and disruptions in the supply chain, negatively impacting the company's financial condition[162] Legal and Compliance - The company has accrued $63,000 in liabilities related to legal contingencies as of March 31, 2022[76] - The company is in compliance with its debt covenants and continues to monitor ongoing compliance[66] - There were no changes in disclosure controls and procedures or internal control over financial reporting during the quarter ended March 31, 2022, that materially affected the company's operations[157] - The evaluation of disclosure controls concluded that they were effective in ensuring timely and accurate reporting as required by the SEC[155]

Business Operations - The company offers a broad range of price-competitive products, including furniture, décor, and home improvement items, through its websites and mobile app[14]. - The company reported that its sales were almost entirely to customers located in the United States, with no single customer accounting for more than 1% of total net revenue during the years ended December 31, 2021, 2020, and 2019[17]. - The company’s business segments are primarily focused on e-commerce product sales through its website, with pre-tax net income as the measure for reportable segments[28]. - The company’s supply chain allows for direct shipping to customers from suppliers or warehouses, enhancing order fulfillment efficiency[17]. - The company is subject to various laws and regulations that may impact its operations, including those related to e-commerce and consumer protection[33]. Workforce and Employment - The company had approximately 1,350 full-time employees as of December 31, 2021, and has never experienced a work stoppage[35]. - The company hired a total of 232 new employees in 2021, with 177 in non-customer service roles and 55 in customer service and warehouse positions[43]. - The average tenure of employees is five years, with customer service and warehouse departments averaging three and three-quarters years[43]. - The company emphasizes employee development through various resources, including online courses and leadership development programs[46]. - The company actively manages its human capital, with quarterly reviews of its 401(k) plan and discussions on hiring trends in board meetings[50]. Diversity and Inclusion - The company emphasizes a commitment to diversity and inclusion, aiming to increase team diversity and foster an inclusive culture[36]. - The company has taken the ParityPledge to support the advancement of women and people of color into leadership positions[42]. Financial Performance - The company recorded a value of $342.7 million in equity securities as of December 31, 2021, a significant increase from $1.4 million at the end of 2020[213]. - The company's loan agreements carry a fixed blended annual interest rate of 4.45%, mitigating direct financial statement risk associated with interest rate changes[211]. Marketing and Technology - The company utilizes a variety of online and offline marketing methods, including social media campaigns and traditional advertising[20]. - The company maintains proprietary technologies to enhance the customer shopping experience and logistics capabilities tailored to the furniture and home furnishings category[16]. Employee Benefits - The company offers a comprehensive benefits package, including medical, dental, vision, and various insurance options, along with a generous 401(k) matching program[44]. - The company has implemented a formalized remote working policy and added fertility coverage to its medical plans starting January 2022[45]. Talent Acquisition - As of December 31, 2021, the company had approximately 3,000 partners, which contributed to nearly all retail sales through its website[17]. - The company has established relationships with universities and professional associations to enhance talent acquisition efforts[42].

Financial Data and Key Metrics Changes - The company reported significant changes in financial metrics, although specific figures were not provided in the document [1] Business Line Data and Key Metrics Changes - Detailed performance metrics for each business line were not disclosed in the document [1] Market Data and Key Metrics Changes - The document did not include specific market data or key metrics changes [1] Company Strategy and Development Direction and Industry Competition - The company’s strategic direction and competitive landscape were not elaborated upon in the document [1] Management's Comments on Operating Environment and Future Outlook - Management's insights regarding the operating environment and future prospects were not included in the document [1] Other Important Information - The conference was recorded, and participants were informed about the process for asking questions [1] Q&A Session All Questions and Answers Question: How to ask questions during the session? - Participants were instructed to press star one on their telephone to ask questions during the session [1]