Overstock.com(OSTK) - 2024 Q3 - Quarterly Report

Financial Performance - Total net revenue for the three months ended September 30, 2024, was $311,428, a decrease of 16.6$373,313 for the same period in 2023[14] - Gross profit for the nine months ended September 30, 2024, was $220,502, down 24.5$292,156 in the prior year[14] - Operating loss for the three months ended September 30, 2024, was $(43,553), compared to$(40,930) for the same period in 2023, indicating a worsening of 6.5%[14] - Net loss for the nine months ended September 30, 2024, was $(177,536), an increase of 20.9$(146,849) in the same period of 2023[14] - For the three months ended September 30, 2024, the net loss was $61,030 thousand, compared to a net loss of$63,049 thousand for the same period in 2023, representing a decrease of 3.2%[19] - The net loss attributable to common shareholders for the three months ended September 30, 2024, was $61.0 million, resulting in a basic and diluted net loss per share of$1.33[74] - The nine-month net revenue decreased by 7.2% for the period ended September 30, 2024, primarily due to an 11% decrease in average order value[95] - Gross profit for the nine months ended September 30, 2024, decreased by 24.5% compared to the same period in 2023, with gross margin decreasing to 20.2% from 24.8%[100] Assets and Liabilities - Total current assets decreased to $183,082 as of September 30, 2024, from$350,073 as of December 31, 2023, reflecting a decline of 47.5%[10] - Total liabilities decreased to $232,145 as of September 30, 2024, down 16.0$276,686 as of December 31, 2023[10] - Cash and cash equivalents were $140,371 as of September 30, 2024, a significant decrease from$302,605 as of December 31, 2023[10] - Total stockholders' equity decreased to $196,193 as of September 30, 2024, down 45.4$359,132 as of December 31, 2023[12] - The total stockholders' equity at the end of the period was $196,193 thousand, a significant decrease from$516,184 thousand at the end of the same period in 2023[19] - Total assets as of December 31, 2023, amounted to $298,451 thousand, with cash equivalents at$246,425 thousand and equity securities at fair value of $41,046 thousand[31] Cash Flow and Financing - Cash used in operating activities for the nine months ended September 30, 2024, was$152,625 thousand, compared to cash provided of $9,131 thousand for the same period in 2023[21] - The company reported a net cash decrease of$161,252 thousand for the period, compared to a decrease of $45,984 thousand in the prior year[21] - As of September 30, 2024, the company had$200.0 million available under its "at the market" sales program[59] - For the nine months ended September 30, 2024, the company reported a net cash outflow of $152.6 million from operating activities, compared to a net cash inflow of$9.1 million for the same period in 2023[128] - Financing activities led to a net cash outflow of $2.1 million for the nine months ended September 30, 2024, mainly due to$3.3 million for payment of taxes withheld upon vesting of employee stock awards[130] Expenses - Operating expenses for the three months ended September 30, 2024, totaled $109,528, a decrease of 11.6$123,833 in the same period of 2023[14] - Sales and marketing expenses for the three months ended September 30, 2024, were $51,859,000, a decrease of 9.9$57,541,000 in the same period in 2023[105] - General and administrative expenses for the three months ended September 30, 2024, were $17,571,000, a decrease of 27.1$24,109,000 in the same period in 2023[109] - Technology expenses totaled $27.7 million for the three months ended September 30, 2024, a decrease of$1.6 million compared to the same period in 2023[89] - Cash payments included in operating cash flows from lease arrangements for the nine months ended September 30, 2024, were $2.628 million, down from$4.475 million in the prior year[50] Strategic Initiatives - Beyond, Inc. continues to focus on its asset-light ecommerce model, owning various retail brands including Overstock and Bed Bath & Beyond[23] - The company announced a reduction-in-force affecting approximately 20% of its workforce to strategically reduce costs[80] - The company plans to expand its global loyalty program, Beyond +, to enhance customer retention[83] - The Zulily acquisition has allowed the company to attract a younger demographic that shops more frequently[87] - The company continues to monitor macroeconomic trends, including higher interest rates and inflation, which may impact consumer confidence and spending[91] Legal and Compliance - Company involved in various legal proceedings which could materially affect business operations and financial position[144] - Potential significant damages and costs associated with ongoing litigation could divert management's focus from business operations[144] Investments and Acquisitions - The company entered into a collaboration agreement and a $40 million investment into The Container Store Group, Inc., involving the purchase of 40,000 shares of Series B Convertible Preferred Stock[76] - The company will provide$17 million in debt financing to Kirkland's Stores, Inc., including an $8.5 million convertible note with a conversion price of$1.85 per share[78] - A Loan and Security Agreement was established with BMO Bank N.A. for a $25 million revolving line of credit to support strategic ventures[79] Miscellaneous - The company has made a strategic change in the presentation of merchant fees and customer service costs, now classified under operating expenses for greater transparency[27] - The company recorded a gain on the sale of intangible assets amounting to$10,250 thousand during the nine months ended September 30, 2024[21] - The company recognized a gain of $10.3 million from the sale of intellectual property related to the Wamsutta brand, included in Other expense, net[40] - The company recorded a value of$112.5 million in equity securities of private companies as of September 30, 2024, with $21.5 million in equity securities and$10.9 million in debt securities recorded at fair value using Level 3 inputs[139] - The company's Senior Note carries a fixed annual interest rate of 4.242%, indicating no material direct financial statement risk associated with changes in interest rates[136] - Most sales and operating expenses are denominated in U.S. dollars, minimizing current exposure to foreign currency risk[137] - The company continues to monitor inflationary pressures affecting commodity and shipping prices, energy, and labor costs, which could impact financial performance[138] - No changes in internal control over financial reporting during the quarter ended September 30, 2024, that materially affected internal controls[142] - The effective tax rate for the three months ended September 30, 2024, was (0.3)%, compared to 17.5% for the same period in 2023[119]