Q Financial Results

Transcription

1 Q Financial Results

2 Safe Harbor The information presented herein may contain forward-looking statements. Such forward-looking statements include all statements other than statements of historical fact, including forecasts of trends. These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including the amount and timing of our capital expenditures, the mix of products we sell, adverse tax, regulatory or legal developments, consumer or regulatory claims regarding the products we offer or sell, the extent to which we owe taxes or are required to collect sales or similar taxes in jurisdictions in which we do not do so, competition, fluctuations in our operating results, any inability to raise capital or borrow funds on acceptable terms, difficulties we may have with our efforts to expand both domestically and internationally, and risks of inventory management and seasonality. Other risks and uncertainties include, among others, risks related to the business our subsidiary Medici Ventures, Inc. is pursuing, our continually evolving business model, and difficulties we may have with our infrastructure, our fulfillment partners or our payment processors, including cyber-attacks or data breaches affecting us or any of them. More information about factors that could potentially affect our financial results is included in our Form 10-K for the year ended December 31, 2016 which was filed with the Securities and Exchange Commission on March 3, The Form 10-K and our subsequent filings with the Securities and Exchange Commission identify important factors that could cause our actual results to differ materially from those contained in or contemplated by our projections, estimates and other forward-looking statements.. 2

3 Q Results - OSTK Total Revenue Gross Profit Dollars Gross Margin $432.4 Million (5% increase vs. Q1 2016) $86.9 Million (12% increase vs. Q1 2016) 20.1% (vs. 18.7% in Q1 2016) Contribution Dollars * Contribution Margin * Tech and G&A Expense $50.0 Million (0% decrease vs. Q1 2016) 11.6% (vs. 12.1% in Q1 2016) $51.6 Million (9% increase vs. Q1 2016) Pre-Tax Income (Loss)*** ($6.6) Million $1.4M Retail** ($8.0M) Medici** (vs. $22.1 million in Q1 2016) $25.1M Retail** ($3.0M) Medici** Net Income (Loss) **** ($5.9) Million (vs. $13.4M in Q1 2016) TTM Operating Cash Flow $51.0 Million (vs. $63.1 million in Q1 2016) * Non-GAAP see discussion and reconciliation in our earnings press release ** Excluding intercompany transactions eliminated in consolidation *** Q pre-tax results include an impairment charge of $4.5M related to a cost method investment **** Net Income refers to Net income attributable to stockholders of Overstock.com, Inc. 3

4 Q Results - Retail Only (Direct and Partner) Revenue Gross Profit Dollars Gross Margin $428.1 Million (4% increase vs. Q1 2016) $85.8 Million (13% increase vs. Q1 2016) 20.0% (vs. 18.5% in Q1 2016) Contribution Dollars * Contribution Margin * Pre-Tax Income $49.2 Million 11.5% $1.4M (0% increase vs. Q1 2016) (vs. 11.9% in Q1 2016) (vs. $25.1M in Q1 2016)** * Non-GAAP see discussion and reconciliation in our earnings press release ** Q results include a litigation settlement received of $19.5M 4

5 Marketing Spend as a % of sales (per Internet Retailer) How digital marketing spend relates to sales for top e-retailers Internet Retailer, Stefany Zaroban, April 5, 2017 How Marketing Spend Relates to Sales for Top Web-Only Merchants Retailer Amazon.com Inc. 4.7% 4.9% 5.1% Etsy Inc. 19.2% 23.7% 20.4% Wayfair Inc. 23.7% 14.5% 17.7% Groupon Inc. 8.4% 7.8% 12.2% Overstock Inc. 7.0% 7.3% 7.8% Cimpress 19.6% 32.9% 30.3% Shutteryfly Inc. 29.4% 27.0% 23.6% Flowers.com Inc. 28.0% 31.6% 31.7% U.S. Auto Parts Network 14.7% 14.4% 14.2% PetMed Express Inc. 12.4% 9.7% 7.7% CafePress.com 26.4% 21.5% 22.8% Source: Internet Retailer analysis of retailer s public filings. 5

6 Wayfair Comparison Total Visits Visit data source: Hitwise, a division of Connexity 6

7 Wayfair Comparison - Visits and Ad Spend Ad Spend data source: Overstock and Wayfair 10-Ks and 10-Qs Visit data source: Hitwise, a division of Connexity 7

8 Wayfair Comparison - Ad Spend / Visit Ad Spend data source: Overstock and Wayfair 10-Ks and 10-Qs Visit data source: Hitwise, a division of Connexity 8

9 Wayfair Comparison - Brand Awareness Brand Awareness 100% 90% 80% 93% 79% 70% 60% 50% 40% 30% 20% 10% 0% Overstock Wayfair 30% more shoppers associate Overstock with lower prices Equal or better perceptions of quality for the price U.S. Aided Awareness Source: Overstock brand tracker- LRW (Lieberman Research Worldwide), Dec

10 Wayfair Comparison - Customer Acquisition Cost $80 $70 $68 $60 $50 $40 $38 $30 $20 Overstock Wayfair $10 $ Customer Acquisition Cost = Total Advertising Spend divided by Implied New Customers ((1-% of orders from Repeat Customers) * Total Orders) Source: Overstock and Wayfair Ks and Investor Presentations 10

11 Wayfair Comparison - Customer Loyalty 80.0% 70.0% 62.8% 63.3% 63.1% 63.0% 64.0% 65.0% 64.8% 65.3% 67.2% 68.4% 68.1% 68.8% 69.3% 70.0% 69.7% 71.0% 60.0% 50.0% 47.3% 48.0% 47.1% 46.8% 50.7% 51.6% 49.8% 50.3% 53.9% 56.6% 55.2% 54.3% 55.4% 57.6% 56.9% 58.0% 40.0% 30.0% 20.0% 2013-Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q4 Overstock % of Orders from Repeat Customers (Home & Garden) Wayfair % of Orders from Repeat Customers Sources: Wayfair Q4 16 Investor Presentation and Overstock internal data (Home & Garden only) 11

12 Wayfair Revenue & Advertising Growth 90% 80% 77% 81% 76% 70% 66% 60% 50% 48% 52% 61% 68% 60% 53% 45% 40% 30% 38% 31% 45% 42% 43% 33% 32% 20% 10% 0% Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Wayfair Revenue Growth Wayfair Advertising Growth Source: Wayfair 10-Ks and 10-Qs 12

13 Wayfair Comparison - Contribution Margin 14.0% 12.0% 10.0% 10.5% 12.1% 12.1% 11.2% 9.8% 12.1% 11.2% 11.1% 10.3% 8.0% 6.0% 4.0% 2.0% 0.0% 1.3% 3.5% 3.8% 4.0% 2.2% 2.6% 2.1% 3.9% -2.0% -4.0% -3.2% Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Overstock contribution margin Wayfair contribution margin Non-GAAP Overstock Contribution Margin = Gross profit less Sales & Marketing plus Club O Rewards and gift card breakage, divided by Total net revenue Wayfair Contribution Margin = Gross profit less Customer service and merchant fees, Advertising, and Merchandising, marketing and sales, divided by Total net revenue Source: Overstock and Wayfair 10-Ks and 10-Qs 13

14 Wayfair Comparison - Net Revenue per Employee ($,000) $350 $300 $250 $271 $251 $232 $216 $248 $228 $239 $261 $298 $200 $150 $174 $167 $172 $183 $194 $162 $146 $154 $175 $100 $50 $- Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Overstock Net Revenue per Employee Wayfair Net Revenue per Employee Net Revenue divided by total number of employees (as of period end) Source: Overstock and Wayfair 10-Ks, 10-Qs, and Earnings Conference Calls 14

15 Wayfair Comparison - Net Revenue per Employee ($,000) $1,200 $1,000 $869 $881 $873 $1,000 $800 $600 $588 $561 $591 $600 $400 $200 $ Overstock Net Revenue per Employee Wayfair Net Revenue per Employee Net Revenue divided by total number of employees (as of period end) Source: Overstock and Wayfair 10-Ks 15

16 Wayfair Comparison Contribution vs. Breakeven ($,000) ($,000) $300,000 $300,000 $250,000 $250,000 $200,000 $200,000 $150,000 $150,000 $100,000 $100,000 $50,000 $50,000 $- $- $(50,000) $(50,000) Overstock Retail Contribution $ Contribution $ needed to breakeven (pre-tax) Wayfair Contribution $ Contribution $ needed to breakeven (pre-tax) Non-GAAP Overstock Retail Contribution = Gross profit less Sales & Marketing plus Club O Rewards and gift card breakage (retail only) Wayfair Contribution = Gross profit less Customer service and merchant fees, Advertising, and Merchandising, marketing and sales Source: Overstock and Wayfair 10-Ks and 10-Qs 16

17 Wayfair Comparison - Days Payable Outstanding (DPO) Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Overstock DPO Wayfair DPO TTM Avg. Accounts Payable divided by TTM Cost of Goods Sold/360 Source: Overstock and Wayfair 10-Ks and 10-Qs 17

18 Wayfair Comparison - Accounts Payable % of Cash 120% 107% 109% 100% 88% 80% 80% 72% 81% 60% 62% 54% 65% 59% 70% 62% 64% 68% 58% 40% 44% 52% 36% 20% 0% Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Overstock Accounts Payable % of Cash Overstock - Accounts Payable divided by Cash & Cash Equivalents Wayfair - Accounts Payable divided by Cash & Cash Equivalents plus Short Term Investments Source: Overstock and Wayfair 10-Ks and 10-Qs Wayfair Accounts Payable % of Cash 18

19 Wayfair Comparison - Change in Working Capital ($,000) $350,000 $250,000 Oct Wayfair IPO $236,158 $150,000 $50,000 $21,733 $(50,000) $(10,165) $(25,568) $(150,000) $(158,979) $(175,426) $(250,000) Overstock Change in Working Capital Wayfair Change in Working Capital Working Capital = Current Assets less Current Liabilities Source: Overstock and Wayfair 10-Ks 19

20 Wayfair Comparison - Working Capital ($,000) $300,000 $250,000 $254,276 Oct Wayfair IPO $200,000 $150,000 $100,000 $95,297 $50,000 $- $(50,000) $15,260 $(10,308) $11,425 $(100,000) $(80,129) $(150,000) Overstock Working Capital Wayfair Working Capital Working Capital = Current Assets less Current Liabilities Source: Overstock and Wayfair 10-Ks 20

21 Wayfair Comparison Gross Margin 25.0% 20.0% 20.3% 20.1% 19.5% 20.5% 18.7% 18.2% 18.1% 18.6% 15.0% 10.0% 5.0% 0.0% Q1-16 Q2-16 Q3-16 Q4-16 Overstock Gross Margin Wayfair Gross Margin Non-GAAP Overstock Gross Margin = Gross profit divided by Total net revenue Wayfair Gross Margin = Gross profit less Customer service and merchant fees, divided by Total net revenue Source: Overstock and Wayfair 10-Ks and 10-Qs 21

22 Wayfair Comparison Pricing Strategy Source: Overstock and Wayfair website screenshots 22

23 Wayfair Comparison Price Paid by Consumer 0.0% Difference in average price per item paid by consumers (net of discounts) for products sold by both Overstock and Wayfair weighted by Overstock units sold -5.0% -10.0% -15.0% -20.0% -18.4% -19.8% -21.0% -23.8% -25.0% -30.0% Q1-16 Q2-16 Q3-16 Q4-16 % Difference in Average Price Paid by Consumer Source: Overstock internal sales data and price scrapes from a 3 rd party pricing intelligence tool. 23

24 Wayfair Comparison Price Paid by Consumer 0.0% Difference in average price per item paid by consumers (net of discounts) for products sold by both Overstock and Wayfair weighted by Wayfair review counts -5.0% -7.5% -10.0% -9.8% -10.5% -12.4% -15.0% -20.0% -25.0% -30.0% Q1-16 Q2-16 Q3-16 Q4-16 % Difference in Average Price Paid by Consumer Source: Overstock internal sales data and review scrapes from a 3 rd party pricing intelligence tool. 24

25 Wayfair Comparison - Pre-Tax Income (Loss) ($,000) $50,000 $- $15,154 $16,344 $13,205 $10,092 $32,332 $(50,000) $(21,005) $(15,480) $(100,000) $(77,348) $(150,000) $(147,923) $(200,000) $(193,767) $(250,000) Overstock Retail Pre-Tax Income Wayfair Pre-Tax Income Source: Overstock and Wayfair 10-Ks and 10-Qs 25

26 Wayfair Summary 26

27 Quarterly Revenue and Growth ($,000) 600,000 40% 500,000 35% 400, , , ,435 30% 25% 300,000 17% 20% 200,000 15% 10% 100,000 4% 5% 5% 0 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Revenue ($) Revenue growth (yoy) 0% 27

28 Quarterly Gross Profit and Growth ($,000) 110,000 55% 100,000 90,000 86,907 50% 45% 80,000 75,437 77,307 40% 70,000 35% 60,000 30% 50,000 25% 40,000 18% 20% 30,000 20,000 12% 15% 10% 10,000 2% 5% 0 0% (10,000) Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Gross profit ($) Gross profit growth (yoy) -5% 28

29 Quarterly Contribution* and Growth ($,000) 60,000 60% 50,000 48,169 50,020 49,960 50% 40,000 40% 30,000 30% 20,000 17% 20% 10,000 4% 10% 0 0% 0% (10,000) Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Contribution ($) Contribution growth (yoy) -10% * Non-GAAP see discussion and reconciliation in our earnings press release Contribution dollars = Gross profit less Sales & Marketing expense plus Club O Rewards and Gift Card breakage. 29

30 Quarterly Gross Margin and Contribution Margin* 25.0% 20.0% 18.9% 18.7% 20.1% 15.0% 10.0% 12.1% 12.1% 11.6% 5.0% 0.0% Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Gross margin Contribution margin * Non-GAAP see discussion and reconciliation in our earnings press release Contribution margin = Gross profit less Sales & Marketing expense plus Club O Rewards and Gift Card breakage as a percentage of revenue. 30

31 Technology and G&A Expenses $s and % of Revenue ($,000) 80,000 70, % 11.5% 11.9% 12.0% 60, % 51,602 50,000 40,000 43, % 47, % 6.7% 8.0% 6.0% 30, % 5.3% 5.2% 4.0% 20,000 10, % - Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q % G&A Technology G&A and Tech (% of revenue) G&A (% of revenue) Technology (% of revenue) 31

32 Corporate Employees 1,400 1,200 1,143 1,152 1,000 1, Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Non-Tech Tech * Corporate employees excludes customer service and warehouse staff. 32

33 Operating and Free Cash Flow * (TTM) ($,000) 100,000 80,000 60,000 67,424 63,102 47,580 50,970 40,000 20,000 25,661 20,988 31,022 0 (20,000) (9,391) (13,063) (40,000) Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Cash flow from operations (TTM) Free cash flow* (TTM) Cash paid for new headquarters construction (TTM) * Non-GAAP see discussion and reconciliation in our earnings press release Free Cash Flow = Cash Flow from Operations less Expenditures for Fixed Assets. 33

34 GAAP TTM Inventory Turns and GMROI % 1800% % 1659% 1600% 1400% 1200% % 1000% % 600% % % 0.0 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 0% TTM Inventory turns TTM GMROI TTM Inventory Turns = TTM COGS / Average Inventory TTM GMROI = TTM Gross Margin % * TTM Revenue / Average Inventory 34

35 Customer Orders and Average Order Size* (#,000) 4,000 $300 3,500 $250 3,000 2,500 2,000 2,630 2,675 2,606 $174 $177 $195 $200 $150 1,500 $100 1, $50 0 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Customer orders Average order size* $0 * Average Order Size is measured at the time of order, before promotional discounts and shipping revenue. 35

36 Unique Customers and Cost Per Customer (#,000) 3,000 $ ,500 $35.00 $ ,000 1,901 1,894 1,811 $ ,500 $20.78 $ ,000 $14.72 $16.61 $15.00 $ $ Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 $- Unique customers Marketing $ / unique customers (cost per customer) 36

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38 Overstock.com Ticker Symbols Common Shares - NASDAQ: OSTK Series A Preferred - Medici Ventures t0 platform: OSTKP Series B Preferred - OTCQB: OSTBP 38

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