Overstock Results: Revenue Up 3%. Reports Pre-Tax Loss of $54.7 Million

Overstock (NASDAQ:OSTK) has reported financial results for the first quarter ending March 31, 2018. According to the numbers, Overstock revenue: increased from the prior year quarter $445.3M vs. $432.4M (3% increase).

Overstock reported the following Key Q1 2018 metrics comparing numbers to Q1 of 2017:

  • Revenue: $445.3M vs. $432.4M (3% increase);
  • Gross profit: $93.9M vs. $86.9M (8% increase);
  • Gross margin: 21.1% vs. 20.1% (98 basis point increase);
  • Sales and marketing expense: $77.2M vs. $37.6M (105% increase);
  • Contribution (non-GAAP financial measure): $16.7M vs. $50.0M (67% decrease);
  • G&A/Technology expense: $71.0M vs. $51.6M (38% increase);
  • Pre-tax loss: ($54.7M) vs. ($6.6M) ($48.1M increase);
    • Pre-tax loss – Overstock retail (non-GAAP financial measure): ($33.6M)\
    • Pre-tax loss – Medici (non-GAAP financial measure): ($21.2M)
  • Net loss*: ($50.9M) vs. ($5.9M) ($45.0M increase);
  • Diluted net loss per share: ($1.74)/share vs. ($0.23)/share ($1.51/share increase);

In a note to investors, Overstock founder Patrick Byrne said they have had an exciting year. Byrne said their investment story has grown into an increasingly complex thesis alluding to their blockchain based shift.

Elaborating on the revenue growth, Overstock said this growth was primarily driven by increased marketing expenses as they have shifted their retail strategy to more aggressively pursue revenue growth and new customers. The increased marketing expenses resulted in a 6% increase in orders in Q1 2018, and a 3% increase in average order size. These increases were said to be partially offset by increased promotional activities, including coupons and site sales due to the company driving a higher proportion of sales using such promotions, and an increase in product sales for which they record only their commission as revenue.

Management  said they continue to experience difficulties which they believe are due in part to changes that Google has made in its natural search engine algorithms. Overstock said they held cash and cash equivalents of $259.6 million and $203.2 million at March 31, 2018 and December 31, 2017, respectively. The increases were primarily due to proceeds received from the tZERO initial coin offering and the exercise of a stock warrant in Q1 2018, partially offset by cash used for acquisitions and other investments.

 

 

The conference call and webcast was held at 4:30PM ET today.

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