ostk-20220331

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 March 31, 2022


☐			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: 000-49799

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 ☒

42,720,199 shares of the registrant's common stock, par value $0.0001, are outstanding on April 29, 2022.

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OVERSTOCK.COM, INC.

TABLE OF CONTENTS TO QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended March 31, 2022


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	5
	Consolidated Balance Sheets	5
	Consolidated Statements of Income	7
	Consolidated Statements of Comprehensive Income	8
	Consolidated Statements of Changes in Stockholders' Equity	9
	Consolidated Statements of Cash Flows	11
	Notes to Unaudited Consolidated Financial Statements	13

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	35

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 3.	Defaults Upon Senior Securities	37

Item 4.	Mine Safety Disclosures	37

Item 5.	Other Information	38

Item 6.	Exhibits	38

Signature		39

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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 may be materially different from the results expressed or implied by any of our forward-looking statements.

Actual events or results may differ materially from those contemplated by our forward-looking statements for a variety of reasons, including among others:

•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 and fulfillment partners;

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

•any downturn in the U.S. housing industry or other changes in U.S. and global economic conditions or U.S. consumer spending;

•any negative business impacts associated with our strategy to exit from non-home categories;

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

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

•the impact that the ongoing COVID-19 pandemic, or other wide-spread disease or illness, may have on our business and the industries in which we operate, including the impact that a substantial portion of our workforce is working remotely, and any impacts related to the pandemic our business may experience at such time as the pandemic or impacts related thereto continue to subside;

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

•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;

•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;

•increasing inflation;

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

•any inability to convert new customers into repeat customers or maintain increased sales volumes, in particular as the pandemic continues to subside;

•negative global economic consequences of the increasing tensions between the United States and Russia, and other effects of the ongoing conflict in Ukraine;

•the impact that any government policies, mandates, or regulations, including those created in response to COVID-19, the climate, or taxes, could have on our business;

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

•the possibility that we are 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 inability of Pelion Venture Partners to successfully manage the Medici Ventures, L.P. fund or tZERO, in which we are the limited partner and have a direct minority interest, respectively;

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•any strategic transactions, restructurings or other changes that we undertake and that prove to be detrimental to our business;

•any losses or issues we may encounter as a consequence of accepting or holding bitcoin or other cryptocurrencies; 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 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)
	March 31, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	493,261	$	503,341
Restricted cash	217		25

Accounts receivable, net of allowance for credit losses of $2,772 and $2,429	23,749		21,190

Inventories	5,419		5,137
Prepaids and other current assets	21,159		22,097

Total current assets	543,805		551,790
Property and equipment, net	108,454		109,479
Deferred tax assets, net	39,076		40,035

Goodwill	6,160		6,160
Equity securities, including securities measured at fair value of $115,306 and $102,529	352,833		342,682
Operating lease right-of-use assets	11,265		12,584
Other long-term assets, net	2,852		3,236

Total assets	$	1,064,445	$	1,065,966
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	106,380	$	102,293
Accrued liabilities	107,909		101,902
Unearned revenue	61,421		59,387
Operating lease liabilities, current	5,478		5,402
Other current liabilities	3,388		3,349

Total current liabilities	284,576		272,333
Long-term debt, net	37,117		37,984
Operating lease liabilities, non-current	6,555		7,960
Other long-term liabilities	3,587		3,303

Total liabilities	331,835		321,580
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)
	March 31, 2022		December 31, 2021
Stockholders' equity:
Preferred stock, $0.0001 par value, authorized shares - 5,000

Series A-1, issued shares - 4,204 and 4,204
Series A-1, outstanding shares - 4,198 and 4,204	—		—
Series B, issued and outstanding - 357 and 357	—		—
Common stock, $0.0001 par value, authorized shares - 100,000
Issued shares - 46,910 and 46,625
Outstanding shares - 42,720 and 43,023	4		4
Additional paid-in capital	967,073		960,544
Accumulated deficit	(126,467)		(136,590)
Accumulated other comprehensive loss	(533)		(537)
Treasury stock at cost - 4,196 and 3,602	(107,467)		(79,035)


Total stockholders' equity	732,610		744,386
Total liabilities and stockholders' equity	$	1,064,445	$	1,065,966

See accompanying notes to unaudited consolidated financial statements.

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Overstock.com, Inc.

Consolidated Statements of Income (Unaudited)

(in thousands, except per share data)


	Three months ended March 31,
	2022		2021

Net revenue	$	536,037	$	659,861
Cost of goods sold	410,825		506,337
Gross profit	125,212		153,524
Operating expenses
Sales and marketing	58,513		73,538
Technology	32,989		30,523
General and administrative	21,256		22,871

Total operating expenses	112,758		126,932
Operating income	12,454		26,592
Interest expense, net	(125)		(155)
Other expense, net	(114)		(226)
Income from continuing operations before income taxes	12,215		26,211
Provision for income taxes	2,092		193
Income from continuing operations	10,123		26,018
Loss from discontinued operations, net of income taxes	—		(10,126)
Consolidated net income	$	10,123	$	15,892
Less: Net loss attributable to noncontrolling interests—discontinued operations	—		(201)
Net income attributable to stockholders of Overstock.com, Inc.	$	10,123	$	16,093
Consolidated net income per share of common stock:
Net income (loss) attributable to common shares—basic
Continuing operations	$	0.21	$	0.57
Discontinued operations	—		(0.23)
Total	$	0.21	$	0.34
Net income (loss) attributable to common shares—diluted
Continuing operations	$	0.21	$	0.56
Discontinued operations	—		(0.23)
Total	$	0.21	$	0.33
Weighted average shares of common stock outstanding:
Basic	43,052		42,885
Diluted	43,282		43,320

See accompanying notes to unaudited consolidated financial statements.

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Overstock.com, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

(in thousands)


	Three months ended March 31,
	2022		2021
Consolidated net income	$	10,123	$	15,892
Other comprehensive income
Unrealized gain on cash flow hedges, net of expense for taxes of $0 and $0	4		4
Other comprehensive income	4		4
Comprehensive income	10,127		15,896
Less: Comprehensive loss attributable to noncontrolling interests—discontinued operations	—		(201)

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