Exhibit 99.1
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NEWS RELEASE |
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Media Contact:
Jared Matkin, Overstock.com, Inc.
+1 (801) 947-3880
jmatkin@overstock.com
Investor Contact:
Kevin Moon, Overstock.com, Inc.
+1 (801) 947-3282
kmoon@overstock.com
Overstock.com Reports Second Quarter 2007 Financial Results
SALT LAKE CITY (July 31, 2007) — Overstock.com, Inc. (NASDAQ: OSTK) today reported quarterly financial results for the period ending June 30, 2007.
Dear Investor:
During Q2 we generated $14.9 million positive operating cash flow and $2.0 million positive EBITDA, excluding restructuring costs (“EBITDA excluding restructuring costs” is a non-GAAP number: see the reconciliation to operating income in the “Key financial and operating metrics” section below). Additionally, we generated $9.4 million positive trailing 12-month (“TTM”) operating cash flow. Our Q2 gross margins of 17.7% were a historical best for us. At this year’s start I suggested keeping an eye on contribution metrics (gross profits minus sales and marketing expenses): in Q2 our contribution margin was 12.3% (another record for us), and contribution profit grew 76% versus Q2 2006.
Two years is long to hold one’s breath, but sweet indeed is the air of $14.9 million positive operating cash flow.
Some data from the quarter:
· Revenue: $149.0 million for Q2 2007, down 6% from Q2 2006
· Gross margin: 17.7%, up from 14.0% in 2006 (and 16.0% in Q1)
· Gross profits: $26.3 million, up 18% from 2006
· Contribution margin: 12.3%, up from 6.5% in 2006 (and 8.9% in Q1)
· EBITDA (non-GAAP, excludes restructuring): $2.0 million vs. $(7.5) million in 2006
· Operating loss before restructuring (non-GAAP): $7.3 million
· Cash flow from operations (TTM): $9.4 million, up from $(39.8) million in 2006
· Net loss: $13.8 million or $0.58 loss per share
I look forward to our call, and as always, remain,
Your humble servant,
Patrick M. Byrne
P.S. Please email Kevin Moon at kmoon@overstock.com with questions prior to the call.
Key financial and operating metrics
Total revenue — Overstock.com reported total revenue for the three months ended June 30, 2007 of $149.0 million, a 6% decrease from the $159.2 million reported in 2006. For the six months ended June 30, 2007, total revenue was $306.9 million, a 9% decrease from the $337.2 million reported in 2006.
Gross profit and gross margin — Gross profits for the three months ended June 30, 2007 was $26.3 million (17.7% gross margin), an 18% increase from the $22.3 million (14.0% gross margin) reported in 2006. For the six-month periods, gross profits were $51.6 million in 2007 and $46.1 million in 2006, respectively, a 12% increase. Gross margins were 16.8% and 13.7% for those respective six-month periods.
Contribution and contribution margin — “Contribution” (gross profit less sales and marketing expenses) for the three months ended June 30, 2006 and 2007 was $10.4 million (6.5% contribution margin) and $18.3 million (12.3% contribution margin), respectively, a 76% increase. For the six months ended June 30, 2006 and 2007, contribution was $21.5 million (6.4% contribution margin) and $32.4 million (10.5% contribution margin), respectively, a 51% increase.
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Three months ended |
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Six months ended |
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June 30, |
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June 30, |
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2006 |
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2007 |
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2006 |
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2007 |
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Total revenue |
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$ |
159,192 |
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$ |
148,967 |
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$ |
337,236 |
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$ |
306,897 |
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Cost of goods sold |
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136,884 |
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122,664 |
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291,194 |
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255,279 |
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Gross profit |
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22,308 |
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26,303 |
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46,042 |
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51,618 |
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Less: Sales and marketing expense |
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11,911 |
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7,962 |
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24,570 |
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19,246 |
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Contribution |
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$ |
10,397 |
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$ |
18,341 |
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$ |
21,472 |
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$ |
32,372 |
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Contribution margin |
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6.5 |
% |
12.3 |
% |
6.4 |
% |
10.5 |
% |
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Operating loss —Operating losses for the three months ended June 30, 2006 and 2007 were $15.6 million and $13.5 million, respectively. For the six months ended June 30, 2006 and 2007, operating losses were $29.7 million and $31.2 million, respectively. However, operating losses before restructuring (non-GAAP) for the three and six months ending June 30, 2007, were $7.3 million and $19.0 million, respectively. There were no restructuring costs in 2006. Restructuring costs primarily represent efforts to reduce our overall expense structure through the consolidation of our corporate office, data centers and warehouse facilities. Therefore, we believe that discussing our
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operating loss excluding restructuring costs provides useful information to investors because it is a representation of the expense structure of the company if the company had not originally incurred these costs.
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Three months ended |
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Six months ended |
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June 30, |
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June 30, |
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2006 |
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2007 |
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2006 |
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2007 |
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Operating loss |
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$ |
(15,550 |
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$ |
(13,519 |
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$ |
(29,729 |
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$ |
(31,239 |
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Add back: restructuring |
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— |
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6,194 |
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— |
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12,283 |
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Operating loss before restructuring |
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$ |
(15,550 |
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$ |
(7,325 |
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$ |
(29,729 |
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$ |
(18,956 |
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EBITDA excluding restructuring costs (non-GAAP) — EBITDA excluding restructuring costs for the three months ended June 30, 2006 and 2007 was $(7.5) million and $2.0 million, respectively. For the six months ended June 30, 2006 and 2007, EBITDA excluding restructuring costs was $(14.0) million and $(146K), respectively. Restructuring costs primarily represent efforts to reduce our overall expense structure through the consolidation of our corporate office, data centers and warehouse facilities. Therefore, we believe that discussing EBITDA excluding restructuring costs provides useful information to investors because it is a representation of cash generated from the operations of the business if the company had not originally incurred these costs.
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Three months ended |
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Six months ended |
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June 30, |
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June 30, |
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2006 |
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2007 |
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2006 |
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2007 |
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Operating loss |
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$ |
(15,550 |
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$ |
(13,519 |
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$ |
(29,742 |
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$ |
(31,239 |
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Add:Depreciation and amortization |
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6,876 |
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7,974 |
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13,026 |
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15,745 |
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Stock-based compensation expense |
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1,088 |
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1,137 |
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2,046 |
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2,210 |
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Stock-based compensation to consultants for service |
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(9 |
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135 |
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34 |
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140 |
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Treasury stock issued to employees as compensation |
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105 |
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113 |
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612 |
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715 |
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EBITDA |
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(7,490 |
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(4,160 |
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(14,024 |
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(12,429 |
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Add: Restructuring |
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— |
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6,194 |
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— |
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12,283 |
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EBITDA excluding restructuring |
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$ |
(7,490 |
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$ |
2,034 |
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$ |
(14,024 |
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$ |
(146 |
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Net loss — Net loss for the three months ended June 30, 2006, was $15.8 million, or $0.78 loss per share, compared to $13.8 million, or $0.58 loss per share in 2007. Net loss in Q2 includes $6.2 million of restructuring charges and loss from discontinued operations of $300K. For the six months ended June 30, 2006 and 2007, net losses totaled $31.7 million and $35.2 million, respectively, or $1.60 and $1.49 loss per share for those respective periods. Net loss in 2007 includes restructuring of $12.3 million and loss from discontinued operations of $3.9 million. The 2006 net loss did not have any restructuring charges, but included $1.9 million from discontinued operations.
Cash and working capital — At June 30, 2007, Overstock.com had cash, cash equivalents and marketable securities of $93.0 million and working capital of $63.3 million.
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About Overstock.com
Overstock.com, Inc. is an online “closeout” retailer offering discount, brand-name merchandise for sale over the Internet. The company offers its customers an opportunity to shop for bargains conveniently, while offering its suppliers an alternative inventory liquidation distribution channel. Overstock.com, headquartered in Salt Lake City, is a publicly traded company listed on the NASDAQ Global Market System and can be found online at http://www.overstock.com.
Overstock.com® is a registered trademark of Overstock.com, Inc. All other trademarks are the property of their respective owners.
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, statements regarding the outlook of the company, as well as all such other risks as identified in our Form 10-K for the year ended December 31, 2006, and all our subsequent filings with the Securities and Exchange Commission, which contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements.
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