Q4 2022 Overstock.com Inc Earnings Call
Speaker 1: Participants are a listen only, Mo. After the speaker's presentation, there'll be a question and answer session. To ask a question, join us, and you'll need to press start 1, one on your telephan. You will then hear an automated message advising your heinous race to withdraw your question. Please firstress AR 1, one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, the vest him nani, Head of Investor Relations. Please go ahead, sirthank you. Good morning and welcome to oversto's fourth quarter and for your 2022 earnings conference call. I'm M nani joining me on the call to the R CEO . Jonathan Johnson, fefo adri and President Dave meilson will be available for Q a.
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Speaker 1: I would now like to hand the conference over to your speaker today, Lovest Himnani, Head of Investor Relations. Please go ahead, sir.
Speaker 2: Thank you. Good morning and welcome to Overstock's fourth quarter and four year 2022 earnings conference call. I'm Lavech M. Nani. Joining me on the call today are CEO Jonathan Johnson, CFO Ayrin Lee and President Dave Nielsen will be available for Q&A. A flight presentation accompanying today's webcast has been posted to our Investor Relations website and is available to download.
Speaker 1: Our slide presentation accompanying today's webcast has been posted to our Investor Relations website and is available to download. Next Slide: Please review the important forward-looking statements disclosure on Slide two of today's presentation for following discussion and our responses to your questions.
Speaker 2: Next slide please. Please review the important forward looking statement disclosure on flight 2 of today's presentation. For following discussion and our responses to your questions, reflect management's views as of today, February 22, 2023, and may include forward looking statement.
Speaker 1: Reflect management's views as of today, February 2020, February 20, second 2023, and they include forward-looking statements.
Speaker 1: Actual results could differ materially from such statements.
Speaker 2: As your results could deform materially from substatements.
Speaker 1: Additional information about factors that could potentially impact our financial results is included in our Form 10-K for the year ended December thirty-first 2021 and in our subsequent filings with the SEC.
Speaker 2: additional information about factors that could potentially impact our financial results is included in a form 10K for the year ended December 31, 2021, and in our subsequent compliance with the SEC.
Speaker 1: During this call, we discussed certain non-GAAP financial measures. The slides accompanying this webcgaap and our filings with the SEC contain important additional disclosuasures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable GAAP measures.
Speaker 2: During this call, we discussed certain non- GAAP financial measures. To slide the company into this webcast and our filings with the SEC contain important additional declosures regarding these non- GAAP measures , including the reconfiguration of these measures to the most comparable GAAP measures .
Speaker 1: Following management's prepared remarks, we will open the call for questions. To ask a question, please use the transisation link available under the event section of our Investor Relations website. Next Slide: PLE.
Speaker 2: Following management prepared to mark, we will open the call for questions. To ask questions, please use the registration link available on the event section of our Investions Relations website. Next slide please.
Speaker 1: During today's call. We will follow the agenda on Slide 3, and with that let me turn the call over to our CEO , Johnson Johnson.
Speaker 2: During today's call, we will follow the agenda on flight 3. And with that, let me turn the call over to our CEO , Jonathan Johnson.
Speaker 2: Thank you as good morning everyone.
Speaker 3: Thank you, LaVast, and good morning, everyone.
Speaker 2: I'll begin the today's call with an overview of the overstock investment story and our progress since the pandemic began.
Speaker 3: I'll begin today's call with an overview of the Overstock Investment Story and our progress since the pandemic began.
Speaker 2: Before asking Adrian to discuss our Q4 and full year financial results next slide.
Speaker 3: before asking Adrian to discuss our Q4 and fully your financial results. Next slide.
Speaker 2: Overstock has been on a three -year purpose PO strategic and transformational journey since I became CEO .
Speaker 3: Overstock has been on a three-year purposeful strategic and transformational journey since I became CEO .
Speaker 2: We refocused management on the retail business.
Speaker 3: We need focus management on the retail business.
Speaker 2: And transition overstock to a 100% home only retailer.
Speaker 3: and transitioned overstock to a 100% home-only retailer.
Speaker 2: This transformation coincided with a dynamic- a dynamic shift in consumer spending behavior within the furniture and home furnishance category.
Speaker 3: This transformation coincided with a dynamic shift in consumer spending behavior within the furniture and home furnishings category.
Speaker 2: 2023 will be overstock's first full year as a homo in retail in our 20 -plus years of being a public company.
Speaker 3: 2023 will be overstocks first full year as a homeowner in the town of our 20 plus years of being a public company.
Speaker 2: The consistent on this slide summarize under the progress we've made over the last three years.
Speaker 3: The conditions on this slide summarize some of the progress with eight over the last three years.
Speaker 2: During that period.
Speaker 3: Staying up, period.
Speaker 2: We have growth revenue by over 50%. I paced the expansion in the furniture and home furnishings' total addressable market and consumer expenditures and gained market share. Notably, our home product assortment has more than doubled since we began our exit.
Speaker 3: We have grown revenue by over 50%. I'll paste the expansion in the furniture and home furnishings total addressable market and consumer expenditures and gain market share. Notably, our home product assortment has more than doubled since we began our exit.
Speaker 2: From noton-home products in January : 22 people C.
Speaker 3: from non-home products in January 2020.
Speaker 2: From the operational standpoint, our imdhe budgets.
Speaker 3: For the four-asional standpoint, our team ran its budget.
Speaker 2: Found efficiencies and automation opportunities and took cost out of the business to ensure we achieved positivepositive adjusted EBITDA for each of the last 11 quarters.
Speaker 3: found efficiencies and automation opportunities and took costs out of the business to ensure we achieve positive adjusted eNICA for each of the last 11 quarters.
Speaker 2: We expanded gross margin nearly 300 basis points and adjusted EBITDA margin nearly 500 basis points.
Speaker 3: We expanded gross margin nearly 300 basis points and adjusted even down margin nearly 500 basis points.
Speaker 2: Let me be up front.
Speaker 3: Let me be a threat.
Speaker 2: Progress we have made over the last three years did not arerase the fact that our 2022 performance was below our own expectations.
Speaker 3: Progress we have made over the last three years does not erase the fact that our 2022 performance was below our own expectations.
Speaker 2: Revenue declined 30% year-over-year, resulting in a loss of market share.
Speaker 3: Revenue to climb 30% year over year, resulting in a loss of market share.
Speaker 2: While we delivered positive adjusted EBITDA in each quarter of the year, our weaker top line performance drove significant expense deleveraging.
Speaker 3: While we delivered positive adjustity to each quarter of the year, a weaker top line performance drove significant expense de-labourging.
Speaker 2: Even as our, even with our already lead organizational structure.
Speaker 3: Even with our already lead organizational structure.
Speaker 2: During today's call, I will share areas of opportunity that should giveget us on the path to improve our top line performance as we continue to leverage our differentiated asset-light business model.
Speaker 3: During today's call, I will share areas of opportunity that should get us on the path to improve our top-line performance as we continue to leverage our differentiated asset step-life business model.
Speaker 2: Next Slide, Please.
Speaker 3: Next slide please.
Speaker 2: We shared this flywheel each quarter.
Speaker 3: We share this flywheel each quarter.
Speaker 2: It highlights our growth drivers, those efforts critical to supporting growth in the short and long term.
Speaker 3: It highlights our growth drivers, those efforts critical to supporting growth in the short and long term.
Speaker 2: While these key growth drivers are not new, we are always evolving the underpinning of our drivers to improve performance.
Speaker 3: While these key growth drivers are not new, we are always evolving the underpinning of our drivers to improve performance.
Speaker 2: As an example from an assortment standpoint our internal data shows that more than a third of our revenue during the fourth quarter.
Speaker 3: As an example, from an assortment standpoint, our internal data shows that more than a third of our reps during the fourth quarter.
Speaker 2: Was briit by skws over the last two years.
Speaker 3: was driven by skewed added over the last two years.
Speaker 2: Our transition to our H cent home retailer is complete. We know we still have a big assortment gap relative to competition.
Speaker 3: All our transition to 100% home retailers complete. We know we still have a bigger sorbent gap relative to competition.
Speaker 2: Our merchandising team has added more than four million new on-transskus from thousands of partners since the beginning of our to homelong.
Speaker 3: A merchandising team has added more than 4 million new on-transcures from thousands of partnerships to the beginning of partners to home-allemthing.
Speaker 2: They continue.
Speaker 3: They continue.
Speaker 2: To identify new opportunities that are helping to close the gap to competition. An example gave our strategic decision to add national branded giftable during Q4, a category which outperformed in the quarter.
Speaker 3: to identify new opportunities that are helping to close the gap to competition. For example, being our strategic decision to add national branded gift of mold during Q4, the category which outperformed in the corner.
Speaker 2: noile app. Adoption has grown rapidly.
Speaker 3: Global App adoption has grown rapidly.
Speaker 2: Well we can still do better.
Speaker 3: But we can still be better.
Speaker 2: We will continue to focus efforts to accelerate its growth.
Speaker 3: We will continue to focus efforts to accelerate its growth.
Speaker 2: It is our best customer engagement platform one with better order frequency.
Speaker 3: It is our best customer engagement platform. One with better order frequency.
Speaker 2: We're always working to improve customer retention.
Speaker 3: We're always working to improve customer retention.
Speaker 2: Earlier this month, we launched an exciting new wellalthy offer.
Speaker 3: Earlier this month, we launched an exciting new Lulfioff thing.
Speaker 2: A nficco branded master card credit card.
Speaker 3: And the co-branded master card, cut a card.
Speaker 2: In partnership with sitting, the capital services.
Speaker 3: in partnership with City and BTAO Services.
Speaker 2: Come on this card lunch launch later in the call.
Speaker 3: Come on this card launch, launch later in the call.
Speaker 2: Improving product findability.
Speaker 3: improving product findability.
Speaker 2: And how customers browse and engagein with product pages on our table stakes for any e-commerce company in e-commerce retailer.
Speaker 3: and how customers browse and engage with product pages on our site is table stakes for any e-commerce company, any e-commerce retailer.
Speaker 2: Still we can improve our spur processing.
Speaker 3: Still, we can improve our search processing.
Speaker 2: And results recommendation to deliver a better customer experience, and we're working on just those things.
Speaker 3: and result recommendations to deliver a better customer experience and we're working on just those things.
Speaker 2: None of these is growth drivers. Is capital or resource intensive.
Speaker 3: None of these drugs can ever be capital or resource-intensive.
Speaker 2: All are aligned with our SMI business model.
Speaker 3: All are aligned with our Ashen Life Business Model.
Speaker 2: All will help us paying in our customers. imcreuded earth frequency.
Speaker 3: All will help to prevent and start customers increase their frequency.
Speaker 2: And market this share, while we continued disciplined managers of our balance sheet and income segment.
Speaker 3: and my pleasure. While we continue to discipline the managers of our balance sheet and income statement. We will continue to discipline the managers of our balance sheet and income statement.
Speaker 2: We are confident that we have the right.
Speaker 3: We are confident that we have the right.
Speaker 2: And fite people keepy positions to read these growth initiatives.
Speaker 3: and write people, keep positions to read these growth initiatives.
Speaker 3: to read these growth initiatives. Next slide.
Speaker 2: Next Slide.
Speaker 2: oldstock is uniquely positioned, with significant whesspace available in the quadrants where home goods expertise needet smart value.
Speaker 3: Overstock is uniquely positioned with significant white space available in the quadrants where home goods expertise meet smart value.
Speaker 2: This Quadron is so attractive that last year many of our competitors that had a glut of inventory started to look a lot more like us and drifted into our Quadrant.
Speaker 3: This quadrant is so attractive that last year many of our competitors that had a glut of inventory started to look a lot more like us and drifted into our quadrant.
Speaker 2: While this increases competition for a time, I do not believe their business models and balance sheets will allow them to offer smart value pricing over a longer period.
Speaker 3: While this increases competition for a time, I do not believe their business models and balance sheets will allow them to offer smart value pricing over a longer period.
Speaker 2: The furniture and home furnishings market is fragment.
Speaker 3: The furniture at home for O'Sheets Martin is fragment.
Speaker 2: With the total addressable market of over.
Speaker 3: with the total address of the market. Over.
Speaker 2: $4 billion.
Speaker 3: $400 billion.
Speaker 2: We believe we have an opportunity to gain share by sharpening our focus on our key growth drivers.
Speaker 3: We believe we have an opportunity to gain share by sharpening our focus on our key growth drivers.
Speaker 2: Our smart value offering resonates with our customers and our pricing competency held up well during the fourth quarter.
Speaker 3: or smart value offering, resonates with our customers, and our pricing competency held up well during the fourth quarter.
Speaker 2: A quarter in which promotions started with started earlier, with competitors lying on deep discounts.
Speaker 3: The corner in which promotions started earlier with competitors relying on deep accounts.
Speaker 2: To stimuulate demand and try to sell through experts inventory.
Speaker 3: to stimulate demand and try to self-direct the mental rate.
Speaker 2: As I mentioned earlier.
Speaker 3: If I mentioned earlier.
Speaker 2: We went after giftable inventory as we look to take advantage of market share offpt by some of our competitors.
Speaker 3: We went after the giftable inventory as we looked to take advantage of market share, bought by some of our competitors.
Speaker 2: We use our strong develoility to take some inventory exposure in national brands. In categories. We have not historic the strong in.
Speaker 3: We use our strong enough to take some inventory exposure and national brands. In categories, we have not historic the strong enough.
Speaker 2: The strategy was successful over the cyber five period, as we registered year-over-year growth on this inventory.
Speaker 3: The strategy was successful over the cyber-five period as we registered year-over-year growth on this inventory.
Speaker 2: In some cases we sold through almost two -thirds of the acquired inventory during the five -day period.
Speaker 3: In some cases, we sold through almost two-thirds of the acquired inventory during the five data
Speaker 2: cally usually don't talk about performance byke category. I want to emphasize that we continue to work to grow our presence in the significant whesspace available to us.
Speaker 3: I usually don't talk about performance by category. I want to emphasize that we continue to work to grow our presence in the significant white space available to us.
Speaker 2: Our renewed home focus is enabling us to work with partners who we have not worked with in the past.
Speaker 3: Our new dawn focus is enabling us to work with partners who we have not worked with in the past.
Speaker 2: Supporting our efforts to drive market share growth.
Speaker 3: Supporting our efforts can drive market share growth.
Speaker 2: Next Slide.
Speaker 3: Next slide. An integral element of our business model will support our efforts to educate the key growth drivers is the strength of our balance sheet.
Speaker 2: Integral element of our business. vel supports our efforts to execate. The key growth dribvers is the strength of our balance sheet.
Speaker 2: We navigated a difficult fourth quarter which impacted our ability to generate cash. We managed end the year with a relatively strong balance sheet.
Speaker 3: Even if we navigate as a difficult fourth quarter, which impacts our ability to generate cash.
Speaker 3: We managed to end the year with a relatively strong balance sheet.
Speaker 2: We exited 2022 with $371 million in cash.
Speaker 3: We exit in 2022 with $371 million in cash.
Speaker 2: And just $34 million in the long-term debt, resulting in a net cash position of $337 million.
Speaker 3: and just $34 million in long-term debt. Revolving in a net cash position of $337 million.
Speaker 2: Having minimal debt. The strong cash position in this uncertain macro environment is a great tactical advantage.
Speaker 3: Having minimal debt is a strong cash position and there's some certain macro environment is a great tactical advantage.
Speaker 2: It allows us to focus on improving our core operation and pursue initiatives without relying on the capital markets.
Speaker 3: It allows us to focus on improving our core operations and pursue initiatives without relying on the capital markets.
Speaker 2: And it has been and will be a big plus for us as we continue to add new partner suppliers.
Speaker 3: and it has been and will be big plus for us as we continue to add new partner suppliers.
Speaker 2: We repurchase shares in the fourth quarter.
Speaker 3: We will re-appurchase shares in the fourth quarter.
Speaker 2: During 2022, we have returned $8 million to our shareholders via share repurchases.
Speaker 3: During 2022, we've returned $80 million to our shareholders via share of the purchases.
Speaker 2: Addition during 2022, we made a 15 million Doll direct investment in T zero.
Speaker 3: In session during 2022, we made a $15 million direct investment in T-0.
Speaker 2: Last month we directly invested $1 million in grain shain.
Speaker 3: Last month, we directly invested $10 million in grain shank.
Speaker 2: We believe that both are promising manicgy ventures: portfolio companies- more on each laterghter.
Speaker 3: We believe that both are promising managed to inventors portfolio companies more on each later.
Speaker 2: Considering these investments in share repurchases.
Speaker 3: Considering these investments and share repurchasing.
Speaker 2: We have invested over $1 million are about 20% of our cash balance sheet- since the beginning of 2022 towards value driving initiatives for our shareholders.
Speaker 3: We have invested over $100 million or about 20% of our cash balance sheet since the beginning of 2022 towards value driving initiatives for our shareholders.
Speaker 2: Next Slide. Our medicary Ventures portfolio continues to present a differentiated value opportunity for overstock.
Speaker 3: Next slide.
Speaker 3: Our Medici Ventures portfolio continues to present a differentiated value opportunity for overstocked.
Speaker 2: It is still a key element in the overstock investment story.
Speaker 3: It is still a key element in the overstock investment story.
Speaker 2: Our blockchain investments have made significant progress since we transferred active management of the portfolio of pelliot venture partners in April 2000 and twenty-oneand.
Speaker 3: A blockchain investments have made significant progress since we transferred active management of the portfolio to Pelley Adventure Partners in April 2021.
Speaker 2: pelyamo served is an excellent partner in advancing growth for our assets in the Medici ventures fund.
Speaker 3: Pellet have a serve as an excellent partner in the dancing growth for assets in the Maddachi vant Bana account.
Speaker 2: three 20, 20 two.
Speaker 3: About to tell you, sorry, my gig of this one only the
Speaker 2: three of the portfolio companies shown on the left of this slide.
Speaker 3: Three of the portfolio companies shown on the left of the slide.
Speaker 2: Raised additional financing at higher valuations.
Speaker 3: raise additional financing at higher evaluations.
Speaker 2: We believe each has potential meaningful long-term value for overstock and its shareholders.
Speaker 3: We believe each has potential meaningful long-term value for overstock and its shareholders.
Speaker 2: There were two of these companies show on the right side of this slide, in which overstack chose to make a direct investment.
Speaker 3: There were two of these companies shown on the right side of this slide in which the overstock chose to make a direct investment.
Speaker 2: Alongside medicine ventures fund andador, he ventures.
Speaker 3: one side majesty measures fund indoor valley?? v?
Speaker 2: Well we will. We are not aadventure capital fund.
Speaker 3: While we are not adventure gapples time.
Speaker 2: Given our in-depth to all of these companies and their management.
Speaker 3: given our indebted knowledge of these companies and their management.
Speaker 2: And the trust we have in pean is the general partner of the Medici und we believe that both these companies have such real potential for significant growth that we chose to double down on that.
Speaker 3: And the trust we have in Kelly on it, the general partner of the MediciPun, we believe that both these companies have such real potential for significant growth that we chose to double down on them.
Speaker 2: During 2022, we made an additional $15 million direct investment in t-zero in a round led by intercontinmental exchange.
Speaker 3: During 2022, we made an additional $15 million direct investment in T-0 in a round led by Intercontinental Exchange.
Speaker 2: This coincided with TVO's appointment of a new CEO , David good, who has experienced creating exchanges and delivering against business objectives.
Speaker 3: This coincided with two zeros appointment of a new CEO , David Good, who had experienced creating exchanges and delivering against business objectives.
Speaker 2: Key Hero continues to execute toward its goal of democratizing access to capital markets.
Speaker 3: Key hero continues to execute toward its goal of democratizing access to capital markets.
Speaker 2: Aided by the appointment of the new CTO, William goni.
Speaker 3: aided by the appointment of the new CTO William Grizoni.
Speaker 2: In early 2020 three.
Speaker 3: and in early 2023.
Speaker 2: keth narrow rebam its web infrastructure and continues to add new issuers to its full compliance securities trading platform.
Speaker 3: TNRO revamped its web infrastructure and continues to add new issuers to its four compliant securities trading platform.
Speaker 2: Earlier this month, Ty zero enabled orox, a crypto software ecosystem, to begin a crowdfunding campaign under the SEC's regulation crowdfunding which allows qualified retail investors to purchase shares of orx.
Speaker 3: Earlier this month, TZero enabled Orox, a crypto-software ecosystem to begin a crowdfunding campaign under the SDC's regulation crowdfunding, which allows qualified retail investors to purchase shares of Orox.
Speaker 2: This feels like a major step in the democracy democratization of capital raising in pre-IPO companies.
Speaker 3: This feels like a major step in the democratization of capital raising in pre-IPO companies.
Speaker 2: I know some may ask for my thoughts on T zero shuddering its crypto wallet.
Speaker 3: I know some may ask for my thoughts on T-Zero Shattering its crypto wallet.
Speaker 2: pzo was not built to beiaa. Crypto exchange and enabling customers to trade cryptocurrencies was never a core area of focus for T Z o.
Speaker 3: T-Zero was not built to be a crypto exchange and enabling customers to trade crypto currencies was never a core area of focus for T-Zero.
Speaker 2: The crypare trading business was an adjacent activity designed to augment two-zero's focus on bring unique digital and conventional securities to the market.
Speaker 3: The crypto trading business was an adjacent activity designed to augment the zero focus on bringing unique digital and conventional securities to the market.
Speaker 2: From what I understand, the crypto activity ended up not being accretive to T zero's financial results or to its future direction.
Speaker 3: And what I understand, the crypto activity ended up not being created to TZRO's financial results or to its future direction.
Speaker 2: In January , overstock made a $1 million direct investment in grain chain through a convertible mode offering.
Speaker 3: In January , overstocked made a $10 million direct investment in grain chain through a convertible both office print.
Speaker 2: You provide.
Speaker 3: You provide.
Speaker 2: Rather gray chain provides a software suite to Farmer cooperatives that enables farmers to get paid 60% of the value of the commodity, count upon harvest and the balance upon successful delivery to the end customer.
Speaker 3: Rather, grain chain provides a software suite to farm the cooperatives that enables farmers to get paid 60% of the value of the commodity upon harvest and the balance upon successful delivery to the end customer.
Speaker 2: Farmers who don't use the grain chain platform usually get paid up to 180 days after product delivery. So you can see why this is. A grain chain are a game agent.
Speaker 3: Farmers who don't use the grain chain platform usually get paid up to 180 days after product delivery. So you can see why this is a grain chain or a game changer.
Speaker 2: Gray Jane has seen high levels of customer stickius once farmers try the platform.
Speaker 3: Grain Jane has seen high levels of customer stickiness once farmers try the platform.
Speaker 2: As a result, it has been able to grow relatively quickly over the last few years.
Speaker 3: As a result, it has been able to grow relatively quickly over the last few years.
Speaker 2: twoer 20 the company cases grown in an annual comp on rade 125% and revenues GRO nearately 400%.
Speaker 3: 2020 become the patient's grown and the annual income rate of 125% and revenue is grown nearly 400%.
Speaker 2: Of this differentiated technology. We expect grain chain to become a market leader and tech space.
Speaker 3: If it's differentiated technology, we expect the range to become a market leader and tech space.
Speaker 2: While I do not expect investments to be a regular occurrence.
Speaker 3: While I do not expect all of that investments to be a regular occurrence.
Speaker 2: And the bar such fall-on investments is high. Both these followall-on investments enable overstock and its shareholders participate.
Speaker 3: And the Barthes such fall on investment is high. Both these fall on investments enable over stock and its shareholders are specifically.
Speaker 2: In the future success of zero and grain shain in a greater way.
Speaker 3: in the future success of T-0 and grain chain in a greater way.
Speaker 2: nexts what?
Speaker 3: Next slide.
Speaker 2: Now for a brief update. I LL reach the corporate events.
Speaker 3: Now for a brief update on recent corporate events.
Speaker 2: Last spring we introduced our forward or future of remote work and reentry design plan. At that time, most of our employees work remotely almost all the time.
Speaker 3: Last spring, we introduced our forward or future of remote work in reentry design plan. At that time, most of our employees work remotely almost all the time.
Speaker 2: When we created this plan, we expected it to evolve biture, as the business environment and financial performance required.
Speaker 3: When we created this plan, we expected it to evolve at the chair as the business environment and financial performance required.
Speaker 2: We recently tested requiring employees to come into the office more frequently.
Speaker 3: We recently tested requiring employees to come into the office more frequently.
Speaker 2: We saw better cross-functional LL abics and efficiencies.
Speaker 3: We saw better cross functional collaboration and a 15 piece.
Speaker 2: The success of this test. We modified our interestice days and forward plan. Bring every local employee to the office weekly, most three times a week.
Speaker 3: Success of this test, we modified our in-office days on the Forward Plan to bring every local employee to the office weekly, most three times a week.
Speaker 2: The following plan has enabled us to attract top talent to the organization for an upside of utahp.
Speaker 3: The Foam Plan has enabled us to attract top town to the organization from outside of Utah.
Speaker 2: During thousand 2: the overstoack leadagership team.
Speaker 3: During 2022, the overstock leadership team
Speaker 2: The overstoack leadagership team underwin some.
Speaker 3: Under one, some.
Speaker 2: Some major changes is marketing merchandising, supply chain and product groups, where we upgrade, where we upgraded talent and identify fillielded gaps.
Speaker 3: So major changes in marketing, merchandising, supply chain and product groups where we upgraded talent and identified and filled gaps.
Speaker 2: For example, just as pass to impro.
Speaker 3: For example, just as fast as we...
Speaker 2: andworkt with proven international and supply chain logistics experience. In addition, that should help Spark our efforts to grow in Canada.
Speaker 3: and with proven international and supply chain logistics experience. In addition, that should help Spark our foods to grow in Canada.
Speaker 2: As we've progressed. Through 2023, these new teams will deploy new to and exciting strategies to drive growth.
Speaker 3: As we progressed in 2023, these new teams will deploy new and exciting strategies to drive growth.
Speaker 2: We are confident we have the right systems in place and the right people in key positions to lead these growth initiatives. We remain committed to hiring remotely.
Speaker 3: We are confident we have the right systems in place and the right people in key positions to leave these growth initiatives. We remain committed to hiring remotely.
Speaker 2: Which allows us to upgrade our talent with the best candidates from across the country, to strengthen our operations and return to top line growth.
Speaker 3: which allows us to upgrade our talent with the best candidates from across the country to strengthen our operations and return to top line growth.
Speaker 2: Now I will ask Adrian to review our fourth quarter and full year 2020 financial results.
Speaker 3: Now, I will ask Adrian to review our fourth quarter and full year 2020-2002 and future results.
Speaker 3: Thank you, Jonathan. Slide 12 Please.
Speaker 4: Thank you Jonathan. Slide 12, please.
Speaker 3: Revenue declined by 34% year-over-year in the fourth quarter, which was pressured by an intensely competitive landscape and our strategic decision to remove non-home products from our site. Our gross margin performance was impacted by elevated discounting and increased freight costs.
Speaker 4: Revenue declined by 34% year over year in the fourth quarter, which was pressured by an intensely competitive landscape and our strategic decision to remove non-home products from our site. Our growth margin performance was impacted by elevated discounting and increased freight costs.
Speaker 3: Through this challenging time frame we still managed to deliver positive adjusted EBITDA of seven million, a margin of 2%. Our reported EPS loss of 34 cents was primarily driven by a noncash nonoperating expense associated.
Speaker 4: Through this challenging timeframe, we still managed to deliver positive adjusted EBITDA of 7 million, a margin of 1.6 percent.
Speaker 4: Our reported EPS loss of 34 cents was primarily driven by a non-cash, non-operating expense associated with the change in value of our equity securities and the associated tax impact. This change primarily reflects our proportionate share of the Medici venture funds performance, including an updated valuation of the T-Zero investment.
Speaker 3: With the change in value of our equity securities and the associated tax impact. This change primarily reflects our proportionate share of the Medi venture funds performance, including an updated valuation of the T zer investment.
Speaker 3: We will provide an updated summary of our equity securities, including the medica venture fund, in our upcoming Form 10-K filing.
Speaker 4: We will provide an updated summary of our equity securities, including the Meditieve Venture Fund, in our upcoming form 10K filing.
Speaker 3: Excluding the impact of our equity securities, we reported adjusted diluted loss per share of four cents, a decrease of 40 cents versus 2021. The decline in adjusted EPS versus last year was driven by lower pretax income.
Speaker 4: Excluding the impact of our equity securities, we reported adjusted diluted loss per share of 4 cents, a decrease of 40 cents versus 2021, with a client and adjusted EPS versus last year was driven by lower pre-tax income.
Speaker 3: Our balance sheet remained strong. We ended the quarter with the quarter and year with a cash balance of $371 million. The year-over-year decline of 130. twomillion was mainly driven by 119 million of investing in financing activities and a 13 million use of cash and operations.
Speaker 4: Our balance sheet remains strong. We ended the quarter and year with a cash balance of $371 million. The over-year decline of $132 million was mainly driven by $190 million of investing and financing activities and a 13 million use of cash and operations.
Speaker 3: As Jonathan mentioned, we returned eight million to shareholders via share repurchase and invested 15 million in T zero. Next Slide, Please.
Speaker 4: As Jonathan mentioned, we returned 80 million to shareholders via Share Repurchase and invested 15 million NT-0. Next slide, please.
Speaker 3: We posted revenue of $405 million in the fourth quarter, a decrease of €34 million, exusing 34% eyear-over-year with be consumer sentiment and a pressured housing backdrop continued to impact our top line performance, while we also faced competitive pressure, mainly from increased and earlier discounting activity during the quarter.
Speaker 4: We posted revenue of $405 million in the fourth quarter, a decrease of 34 million euro, excuse me, 34% year over year. We consumer sentiment and a pressured housing backdrop continued to impact our top line performance, while we also faced competitive pressure mainly from increased and earlier discounting activity during the quarter.
Speaker 3: The absence of nonhome assortment following are: transition to home in June of 2022 impacted our year-over-year comparison adjusting for non-home revenue. Our home only revenue declined 30% in the fourth quarter, consistent with the third quarter.
Speaker 4: The absence of non-home assortment following a transition to home in June of 2022 impacted our year-over-year comparison. Adjusting for non-home revenue or home-only revenue declined 30% in the fourth quarter, consistent with the third quarter.
Speaker 3: Performance during the cyber five period was significantly better than the reported 34% decline for the quarter. Our pivot to add strategic national brands and gift both thment during the fourth quarter drove positive sales performance year-over-year within targeted categories.
Speaker 4: Performance during the cyber-fived period was significantly better than the reported 34% decline to the quarter. Our pivot to add strategic national brands and giftable thermals during the fourth quarter drove positive sales performance year over year with intanguative categories.
Speaker 3: Revenue performance was driven by fewer orders compared to last year, partially offset by a 4% increase in average order value. I will discuss our key customer metrics in further detail later. Next Slide, Please.
Speaker 4: Revenue performance was driven by fewer orders compared to last year, partially offset by a 4% increase in average order value. I will discuss our key customer metrics in further detail later. Next slide, please.
Speaker 3: Gross profit was $9 million in the fourth quarter, a decrease of $49 million versus the prior year. Gross margin came in at 22%, a 54 basis point decline versus the same period last yearthe year-over-year decrease was driven by higher discounting to support price competitiveness and elevated freight costs.
Speaker 4: Growth's profit was $90 million in the fourth quarter, a decrease of $49 million versus the prior year. Growth's margin came in at 22.1%, a 54 basis point decline versus the same period last year. The year-over-year decrease was driven by higher discounting to support price competitiveness and elevated freight costs.
Speaker 3: This increase was partially offset by merchandising actions, including negotiated product cost reductions.
Speaker 4: This increase was partially set by merchandising actions, including negotiated product cost reductions.
Speaker 3: Regarding freight costs came in higher-than-expected, impacting gross margin. We have already taken remedial actions and expect to see less freight pressure ahead from structural improvements in our carrier contracts.
Speaker 4: Regarding freight, costs came in higher than expected, impacting gross margin. We have already taken remedial actions and expect to see less freight pressure ahead from structural improvements in our carrier contracts.
Speaker 3: Our gross margin performance continues to be a positive Proofpoint of our asset-light model. We maintained our competitive pricing KPIs despite the uniquely competitive environment and delivered ggrowross margin in line with our targeted operating model.
Speaker 4: Our growth margin performance continues to be a positive proof point of our asset light model. We maintained our competitive pricing KPIs despite the uniquely competitive environment and delivered growth margin in line with our targeted operating model.
Speaker 4: Next Slide.
Speaker 4: Next slide.
Speaker 3: gennaandtech expenses decreased $5 million year-over-year, primarily due to savings related to the organizational review we referenced last quarter and benefits from efficiencies in automation.
Speaker 4: G&A and Tech Expenses decreased $5 million year over year. Primarily due to savings related to the organizational review, we referenced last quarter, and benefits from efficiencies and automation.
Speaker 3: As a percentage of revenue. janie and tech expense was 12% in the fourth quarter, a deleverage of over 300 basis points compared to the fourth quarter of 2021, due to weak top line results.
Speaker 4: As a percentage of revenue, G&A and tech expense was 11.5% in the fourth quarter. A D leverage of over 300 basis points compared to the fourth quarter of 2021 due to weak top-line results.
Speaker 3: We continue to be disciplined in managing our expenses and finding efficiencies. We run a lean organization and we have periodically taken actions to ensure we balance our genna and tech spend with our top line performance.
Speaker 4: We continue to be disciplined in managing our expenses and finding efficiencies. We run a lean organization and we have periodically taken actions to ensure we balance our DNA and tech spend with our top line performance.
Speaker 4: Next Slide, Please.
Speaker 4: Next slide, please.
Speaker 3: In the fourth quarter we delivered adjusted EBITDA of $7 million, a decrease of $21 million versus a year ago. Adjusted EBITDA margin was 2%.
Speaker 4: In the fourth quarter, we delivered adjusted EBITDA of $7 million, a decrease of $21 million versus a year ago. Adjusted EBITDA margin was 1.6%.
Speaker 3: We are certainly not pleased with this result. However, we continue to manage factors within our control to help offset headwinds during a competitive and highly promotional quarter. We remain focused on managing our business efficiently and pursuing strategies that will drive market share gains and shareholder value.
Speaker 4: We are certainly not pleased with this result, however, we continue to manage factors within our control to help offset headwinds during a competitive and highly promotional quarter. We remain focused on managing our business efficiently and pursuing strategies that will drive market share gains and shareholder value.
Speaker 4: result, however, we continued to manage factors within our control to help offset headwinds during a competitive and highly promotional quarter. We remained focused on managing our business efficiently and pursuing strategies that will drive market share gains and shareholder value.
Speaker 4: Next Slide.
Speaker 3: This slide shows active customers and order frequency. We measure active customers on a trailing 12 -month basis. Our active customer base declined to five point two million at the end of the fourth quarterthis decline in active customers was driven by three primary key factors. First, a deceleration in spending on home-related goods.
Speaker 4: This slide shows active customers and order frequency. We measure active customers on a twirling 12 month basis. Our active customer base declined to 5.2 million at the end of the fourth quarter. This decline in active customers was driven by three primary key factors. First, a deceleration and spending on home related goods.
Speaker 3: Second shift in spending preferences: consumers continued to spend on experiences and services. And third, our purposeful shift to transition into a 100% online home retailer. As previously shared, this is the right long-term trade-off, despite some pain in the short term.
Speaker 4: Second, shift in spending preferences, consumer continued to spend on experiences and services. And third, our purposeful shift to transition into a 100% online home retailer. As previously shared, this is the right long-term trade-off despite some pain in the short term.
Speaker 3: Orders per active customer was one point six X in the fourth quarter, a decrease of about 4% versus last year and a decrease sequentially.
Speaker 4: Orders for active customer was 1.6 times in the fourth quarter. A decrease of about 4% versus last year and a decrease sequentially.
Speaker 3: Order frequency continues to hold up relatively better compared to our decline in order volume. We expect that over time, our improved association with home continued mix into mobile app, our platform, where the highest frequency and enhanced loyalty offerings will help improve this metric.
Speaker 4: Order frequency continues to hold up relatively better compared to our decline in order volume. We expect that over time our improved association with home continued mix and immobile app our platform worth the highest frequency and enhanced loyalty offerings will help improve this metric.
Speaker 3: While our pace of's new customer acquisition is lagging, in part due to navigating an intensely competitive environment. Our year-over-year change in customer retention rate is comparable to the average of other online furniture and home furnishing reittailers, as measured by third-party data.
Speaker 4: While our pace of new customer acquisition is lagging, in part, due to navigating an intensely competitive environment, our year-over-year change in customer retention rate is comparable to the average of other online furniture and home furnishing rates tailors, as measured by third-party data.
Speaker 4: us new customer acquisition is lagging in part due to navigating an intensely competitive environment. Are you over your change in customer retention rates? Is comparable to the average other online furniture and home furnishing rates tailors as measured by third-party data?
Speaker 4: Next sside, Please.
Speaker 3: Average order value improved by 4% year-over-year to $215. Our AOB was primarily driven by the mix within our home product assortment. Ao declined slightly compared to Q3 as we shifted out of seasonal oudoor furniture and into a more giftable assortment. If you reflect on our three -year Ao journey, our a has improved over 40%.
Speaker 4: Average order value improved by 4% year over year to $215. Our AOV was primarily driven by the mix within our home product disortment.
Speaker 4: AOV declines slightly compared to Q3 as we shifted out of seasonal outdoor furniture into a more giftable assortment. If you reflect on our three-year AOV journey, our AOV has improved over 40% or about $70 to a full-year average of $231. Well, this is more aligned with our home retailer peers. We still have opportunity for improvement.
Speaker 4: Orders delivered were 8.2 million to the 12-month period. This is a decrease of 39% compared to the prior year or 5.3 million orders. As I discussed earlier, the decline was primarily driven by weak consumer sentiment and a shift in their spending priorities along with the cumulative impact of non-home product removal from our site.
Speaker 3: Or five point three million orders. As I discussed earlier, the decline was primarily driven by weak consumer sentiment and a shift in their spending priorities, along with the cumulative impact of non home product removal from our site. Our a? O and revenue peractive customer metrics continue to support our future of being a home only online retailer. The customers retained in our ecosystem.
Speaker 4: Our AOV and Revenue Proactive Customer Metrics continue to support our future of being a home-only online retailer. The customers retained in our ecosystem purchase higher value items and have compelling reasons to improve our relatively stable frequency. Next slide, please.
Speaker 3: Purchase higher-value items and have compelling reasons to improve our relatively stable frequency. Next Slide, Please.
Speaker 3: The slide provides a recasted view of our business, excluding non-home revenue, which allows for a more direct comparison to our peers. As you can see on the left chart, at the end of the fourth quarter, our comparable home-related active customer base declineed 31% versus the reported 36%, and.
Speaker 4: Their slide provides a recast review of our business, excluding non-home revenue, which allows for a more direct comparison to our peers. As you can see on the left chart, at the end of the fourth quarter, our comparable home-related active customer base declined 31% versus the recorded 36%.
Speaker 3: The chart on the right illustrates our comparable home. Home only revenue declined 30% versus the reported 30. four percent on a sequential basis. The impact of the nonhome category removal increased due to the cumulative impact of nonhome customers exiting our ecosystem. Our home only revenue trends stabilized during the fourth quarter.
Speaker 4: The chart on the right illustrates our comparable home only revenue declined 30% versus the reported 34%. On a sequential basis, the impact of the nonhome category removal increased due to the cumulative impact of nonhome customers exiting our ecosystem.
Speaker 4: Our home only revenue trends stabilized during the fourth quarter, and we are focused on strategies to improve the sales performance.
Speaker 3: And we are focused on strategies to improve the sales performance. Next Slide.
Speaker 5: Next slide.
Speaker 3: I will wrap with my discussion of the financial section by providing snapshot of our full year 2022 resultswe ended 2022 with one point nine billion of revenue, a 30% decline year-over-year but a 34% increase versus 2019. As Jonathan mentioned earlier, this illustrates the iational improvements.
Speaker 4: I will wrap up my discussion of the financial section by providing snapshot of our full year 2022 results. We ended 2022 with 1.9 billion of revenue, a 30% decline year over year, but a 34% increase versus 2019. As Jonathan mentioned earlier, this illustrates the operational improvements.
Speaker 3: We have made in the business. Gross margin was in line with our financial targets, highlighting the benefits of our asset-light model.
Speaker 4: We have made in the business.
Speaker 4: Growth margin was in line with our financial targets, highlighting the benefits of our asset light model.
Speaker 3: Especially during times of demand volatility. genna and tech expense deleveragage for the year because of top line performance, despite expense declining $1 million year-over-year on an absolute basis. This is a result of our focus on expense management and delivering against our EBITDA target.
Speaker 4: especially during times of demand volatility. DNA and tech expense be leveraged for the year because of top line performance. Despite expenses declining $10 million year over year on an absolute basis, this is a result of our focus on expense management and delivering against our EBIT target.
Speaker 3: Overall EBITDA was 63.5 million for the year, or a 3% margin. This was below our mid-single digit target, but a positive result driven by a closely managed outcome.
Speaker 4: Overall, EBITDA was $63.5 million for the year or a 3.3 percent margin. This was below our mid-single-digit target, but a positive result driven by a closely-managed
Speaker 3: With that back to you, onomisthan.
Speaker 4: With that, back to you, Dhammisham.
Speaker 2: Thank you Adrian, and to our shareholders.
Speaker 3: Thank you, Adrian, and to our shareholders.
Speaker 2: Those are not the type of results we'd like to report.
Speaker 3: Those are not the type of results we like to report.
Speaker 2: Those are not the type of results we like to report. We can and will do better.
Speaker 3: We can and will do better.
Speaker 2: Next Slide.
Speaker 3: Next slide.
Speaker 2: I'd like to provide some thoughts on our outlook for 2020 per and our strategic pathformforward before 10 year.
Speaker 3: I'd like to provide some thoughts on our outlook for 2023 and our strategic path for the FIT-Tank here.
Speaker 2: Next Slide.
Speaker 3: Next slide.
Speaker 2: We continue to direct our efforts to drive sustainable, profitable market share growth within our financial recipe card targets.
Speaker 3: We continue to direct our efforts to drive sustainable, profitable market share growth within our financial recipe card targets.
Speaker 2: While we did not achieve all the elements of this targeted financial model during 2022, we continue to believe this targeted framework is the right model for our business along and even medium term.
Speaker 3: Well, we did not achieve all the elements of this targeted financial model during 2022. We continue to believe this targeted framework is the right model for our business that's along an even medium term.
Speaker 5: We have clear.
Speaker 6: We have clear.
Speaker 2: Focused strategies to deliver performance in line with these targets.
Speaker 3: Focus strategies to deliver performance in line with these targets.
Speaker 2: Our gross margin performance is a good example of this.
Speaker 3: A gross margin performance is a good example of this.
Speaker 2: Despite the hypercompetitive environment with significantly significant oversupply in the back half of 2022 we.
Speaker 3: despite the hyper-conventive competitive environment with significant over-supply in the back half of 2022.
Speaker 2: Our merchandising efforts and our asset-like business model enabled us to deliver on our gross margin target.
Speaker 3: our merchandising efforts and our asset-like business model enabled us to deliver on our gross margin target.
Speaker 2: 2022 top line performance was below expectations.
Speaker 3: 2022 top line performance was below expectations.
Speaker 2: Both TE. I know we must turn around performance.
Speaker 3: Both the team and I know we must turn around performance.
Speaker 2: I still firmly believe we can expand our presence in the significant Whit space available to us.
Speaker 3: I still firmly believe we can expand our presence in the significant white space available to us.
Speaker 2: Cake market share while running a profitable business.
Speaker 3: Take market share while running a profitable business.
Speaker 2: That is not an easy task and one that two in our industry achieved. We believe we can and will over time.
Speaker 3: That is not an easy task. And one that's two in our industry achieves. We believe we can and will over time.
Speaker 2: And one that two in our industry achieved. We believe we can and will over time. Next Slide.
Speaker 3: Next slide.
Speaker 2: Before I talk about our strategic path forward, I will share some thoughts on our outlook.
Speaker 3: Before I talk about our strategic path forward, I will share some thoughts on our outlook.
Speaker 2: Were' 2020 three.
Speaker 3: for 2023.
Speaker 2: I think 2023 will be a tale of two halves in a year of rebuilding for overstock as we get back track to recover market share.
Speaker 3: I think 2023 will be a tale of two halves in a year of rebuilding for overstock as we get back up the track to recover market year.
Speaker 2: From a broader industry perspective, we expect to see the fall.
Speaker 3: From a broader industry perspective, we expect to see this all.
Speaker 2: Macro drivers of inflation. Interest rates in the weak housing market will influence performance through the year.
Speaker 3: Macro-Dvivors of inflation by interest rates at the We Chousing Market will influence performance through the year.
Speaker 2: In twenty-point we laped the years of strong consumer purchase sentiment.
Speaker 3: In 2020, we laughed to the ears of strong consumer purchase element.
Speaker 2: Res SPO during the year.
Speaker 3: We started during the year.
Speaker 2: Acron drivers could improve as we move through 2023. predicting consumer activity is difficult.
Speaker 3: Active drivers couldn't prove as we move to 2023, predicting consumer activity is difficult.
Speaker 2: Regarding inventory.
Speaker 3: Regarding inventory.
Speaker 2: They thought our conversations with many in the industry. We don't believe the industry completed its inventory rationalization in 2020. -two and.
Speaker 3: Based on our conversations with many in the industry, we don't believe the industry completed its inventory rationalization in 2022.
Speaker 2: We expect that will continue to at least the first half of 2020. -three.
Speaker 3: We expect that will continue to at least the first half of 2023.
Speaker 2: While aggressive discounting should normalize during 2020 a.
Speaker 3: All aggressive discounting should normalize during 2020.
Speaker 2: Shape of demand will be a key to temumpet.
Speaker 3: The shape of the man will be a key discomfort.
Speaker 2: Remains a certain.
Speaker 3: for a major certain.
Speaker 2: On supply gain. Ocean freight costs have decreased significantly. However, domestic costs remain high.
Speaker 3: On supply chain, ocean freight costs have decreased significantly. However, domestic costs remain high.
Speaker 2: Due to surcharges and labor headwinds.
Speaker 3: through the search charges and labor at once.
Speaker 3: While some of the industry buyers are difficult to predict.
Speaker 2: While some of the industry facs are difficult to predict.
Speaker 2: Expect overtock's second half performance to be there than first half due to the following.
Speaker 3: to be there in the first half due to the following.
Speaker 2: We will fully wrap the headwinds from non-home products removals from our site in June .
Speaker 3: We will follow up the headwinds from non-home products, removals from our site in June .
Speaker 2: Based on conversations with partners, we expect to benefit from newness in product assortment during the second half of the year.
Speaker 3: For example, conversations with partners, we expect to benefit from newness in product and development during the second half of the year.
Speaker 2: Last year some of our partners had cash locked in expensive inventory that was not moving.
Speaker 3: Last year, some of our partners had cash locked in expensive inventory that was not moving.
Speaker 2: This limited their ability to invest cash on new product innovation.
Speaker 3: This limited their ability to invest cash on new product innovation.
Speaker 2: We are expanding our loyalty efforts.
Speaker 3: We are expanding our loyalty efforts.
Speaker 2: As I noted earlier, we launched a co-brand prag card with Mastercard earlier this month.
Speaker 3: As I noted earlier, we launched a co-brand Craig Card with MasterCard earlier this month.
Speaker 2: We expect engagement with our within our club members to grow as we market this great offering to new and existing customers.
Speaker 3: We expect engagement within our club-o members to grow as we market this great offering to new and existing customers.
Speaker 2: We are also looking at how to best renew our private label credit card offering and improve our e-mail personalization competency to drive repeat business.
Speaker 3: We are also looking at how to best renew our private label credit card offering and improve our email personalization competency to drive repeat business.
Speaker 3: and how to best renew our private label credit card offering and improve our email personalization competency to drive repeat business.
Speaker 2: During 2022, as I mentioned, the overstock leadership team underwent some majure changes, upgrading talent and identifying and filling gaps.
Speaker 3: During 2022, as I mentioned, the overstock leadership team underwent some major changes, upgrading talent and identifying and filling gaps.
Speaker 2: During 2023. We expect these new teams will deploy new and exciting strategies to drive growth.
Speaker 3: During 2023, we expect these new teams will deploy new and exciting strategies to drive growth.
Speaker 2: I think you'll particularly see this in marketing area.
Speaker 3: I think you'll particularly see this in the marketing area.
Speaker 2: As I indicated earlier, during Q4, we purposefully added national branded and giftable products to our website to capture market share, including from struggling competitors.
Speaker 3: As I indicated earlier during Q4, we purposefully added national branded and giftable products to our website, the Capture Market Share, including from struggling competitors.
Speaker 2: This was just dayshase one of our efforts.
Speaker 3: This was just phase one of our efforts.
Speaker 2: We will continue to expand our assortment wor King through with new and existing partners to deliver a fulsome product assortment for our customers.
Speaker 3: We will continue to expand our assortment working with new and existing partners to deliver a full-sum product assortment for our customers.
Speaker 2: The current external environment of fluctuations in consumer sentiment make it difficult for us to provide traditional guidance.
Speaker 3: The current external environment of fluctuations in consumer sentiment make it difficult for us to provide traditional guidance.
Speaker 2: Still I will do my best to provide some selected color.
Speaker 3: Still, I will do my best to provide some selected color.
Speaker 2: The conference will begin shortly. To raise- lower your hand during QA, you can dial Star one-one.
Speaker 2: Since our renewed focus on home three years ago.
Speaker 3: Since our renewed focus on home three years ago.
Speaker 2: Sorry since our renewed focus on home three years ago, overstock is delivered on profitability.
Speaker 3: Sorry, since our renewed focus on home three years ago, overstocked delivered on profitability.
Speaker 2: This profitability tenant and our strong balance sheet differentiates us among our peers.
Speaker 3: This profitability tenant and our strong balance she differentiates us among our peers.
Speaker 2: This will not change in 2020 three.
Speaker 3: This will not change in 2023.
Speaker 2: We expect to be profitable for the year.
Speaker 3: We expect to be profitable for the year.
Speaker 2: While we are comfortable segments on an annual basis, given seasonality and other factors, there may be a time within the year when we aren't profitable.
Speaker 3: While we are comfortable saying this on an annual basis, given seasonality and other factors, there may be a time within the year when we aren't profitable.
Speaker 2: Now for a quick update on the first quarter.
Speaker 3: Now for a quick update on the first quarter.
Speaker 2: Through the first three weeks of February , our year-over-year sales performance has remained relatively consistent with the fourth quarter.
Speaker 3: Through the first three weeks of February , our year-over-year sales performance has remained relatively consistent with the Ford Square.
Speaker 2: Based on this, even with a relatively strong President, Day weekend was just hadad.
Speaker 3: Based on this, even with a relatively strong president day weekend we just had.
Speaker 2: We currently have to ATE Q1 total revenue.
Speaker 3: We currently have to make Q1 total revenue.
Speaker 2: To decline in the 30% range year-over-year.
Speaker 3: to decline in the 30% range near over year.
Speaker 2: Regarding profitability during Q1, the current sales trajectory and our estimated Q1 sales volume.
Speaker 3: Regarding profitability to a Q1, the current sales trajectory in our estimated Q1 sales volume.
Speaker 2: We expect to see further expense deleverag it.
Speaker 3: We expect to see further expense of the leveraging.
Speaker 3: while we continuously looked to
Speaker 3: For cost savings and process efficiencies, we expect Q1 adjusted EBITDA will be below Q4 levels.
Speaker 3: Given the range of revenue guidance, we are not providing specific.
Speaker 3: Adjusted EVA dot margin guidance.
Speaker 3: Next slide.
Speaker 3: Before we open the call for questions, let me make a few comments on our strategic path forward. A path which I believe leads us to a better 2023.
Speaker 7: Next slide.
Speaker 3: Overstocks three brand pillars guide how we operate our business in the short and long term.
Speaker 3: or focus is clear and executable.
Speaker 3: In my opening remarks, I highlighted how we will continue to focus on our key growth drivers while applying new underlying tactics to improve performance.
Speaker 3: We are leveraging aspects of our business that have worked.
Speaker 3: and I throw the room to spur growth.
Speaker 3: Let me highlight four.
Speaker 3: We are improving our website experience and internal search results.
Speaker 3: I mentioned earlier, we started removing non-home products from our website in January 2021, and have more than doubled our home only assortment through the end of 2022.
Speaker 3: All assortment available on our website is increased. We have identified gaps within our search experience, which we need to fix to improve how our customers engage with us.
Speaker 3: Our goal is to provide customers an easy shopping experience on our website to deliver on our product Findability brand color.
Speaker 3: Our product and tech teams are collaborating with leaders in the space to improve our search and web experience in a way that aligns with our asset light business model.
Speaker 3: These leaders are at the forefront of technological innovation currently underway in the search environment.
Speaker 3: for teams of identified opportunities to improve our search result recommendation engine to cater to our growing home absorbent.
Speaker 3: and improve website experiences critical for us to drive repeat purchases and even more important than the merchandising organization continues to increase breadth and depth of the sort.
Speaker 3: We will leverage our loyalty offerings to increase our customer engagement.
Speaker 3: Our loyalty offering primarily included our fee-based Clubbell membership program.
Speaker 3: Our co-bole members are our most loyal members who repeat most frequently and spend more than any other customer cohort on an annual basis.
Speaker 3: I'm excited about the potential growth and engagement as we add new clubbell members with the recent launch of our co-brand MasterCard credit card partnership with retail city services.
Speaker 3: with the City Retail Services.
Speaker 3: Please, current offers, formal memberships, and no fee to card holders.
Speaker 3: We expect our customers
Speaker 3: to fight in the special finance and the operatives.
Speaker 3: City is a great park among the five card issuers in the US
Speaker 3: Its VATS customer network and marketing support will aid us now and into the future.
Speaker 3: If you haven't looked at the details of the card, you should. It offers close numbers.
Speaker 3: I think you can redeem and check out on our website. Your purchase is on qualifying apparel, department store, gas, and other purchases.
Speaker 3: wish should help us drive repeat purchases.
Speaker 3: It also provides a special 60-day interest-free financing offer.
Speaker 3: which in our view can help drive customer conversion among customers that may have delayed purchases due to stretch budgets.
Speaker 3: In essence, this card is an extension of our smart value brand color and offering, enabling holders to stretch their dollars further.
Speaker 3: We are accelerating the growth.
Speaker 3: In our strongest customer experience platform, the Overstack mobile app.
Speaker 3: The overstock mobile app has been successful in driving traffic and sales.
Speaker 3: It helps our customers easily find the products they want with the convenience of their smartphone.
Speaker 3: Something that fits squarely within our product-bindability brand code.
Speaker 3: or mobile app customers, KPIs, or healthier.
Speaker 3: Then the desktop driven business.
Speaker 3: While we have not shared the actual mix of app sales, want to highlight its growth trajectory.
Speaker 3: During 2022, mobile app makes its sales grew around 500 basis points.
Speaker 3: For 2023, we expected to achieve at least the same level of growth.
Speaker 3: The mobile app helps us market more efficiently without exclusive coupons.
Speaker 3: As a result, we see better conversion and customer KPIs.
Speaker 3: This platform helps us attract a younger demographic helping to diversify our customer base.
Speaker 3: This platform helps us attract a younger demographic helping to diversify our customer base. We expect the mobile app to benefit from our increase.
Speaker 3: consumer engagement on social media through our brand ambassadors.
Speaker 3: We continue to enhance our customer experience.
Speaker 3: Under our easy delivery and support brand color, we are constantly and proactively looking for ways to enhance the customer experience. From pre-purchase browsing to our customers post-purchase engagement with us.
Speaker 3: Last quarter, we shared details about a unique partnership with UPS for handling returns.
Speaker 3: is an asset light innovative solution to improve returns handling.
Speaker 3: Returns are always a major friction point impacting customer experience.
Speaker 3: The initial results of the pilot have been good. We are expanding the pilot to learn more.
Speaker 3: There's a lot we are working on to improve our trajectory that makes me bullish about overstock situation.
Speaker 3: a lot we are working on to improve our trajectory that makes me boss how to
Speaker 3: I'll send it to the next speaker. Operator, let's take some questions.
Speaker 1: Thank you.
Speaker 1: As a reminder to ask a question, you'll need to press star 1-1 on your telephone. To withdraw your question, please press star 1-1 again. Please wait for your name to be announced. We ask that you ask one question and then go back into the queue for your follow-up. One moment for our first question, please.
Speaker 1: Our first question comes from the line of Peter Keith with Piper Sandler. Your line is now open. Good morning. This is Matt Edgar on for Peter. Thanks for taking our questions.
Speaker 8: I guess first in 2022 you highlighted how your pricing algorithms would remove items from the site if competitors took a mark down on that same item.
Speaker 8: The feedback we've received from suppliers is that that was highly disruptive to their sales through overstock So I guess maybe two quick questions Would you agree that the competitor mark downs were disruptive to your 2022 sales and then I guess secondly Are you contemplating an adjustment to your pricing? I'll go to reduce the number of items getting pulled off the site when that happens. Thanks
Speaker 3: Great question. Let me make a misresponsive and look today for any more color. It's important given our smart value proposition that we went on pricing post promotion. While suppliers may like to have little thicker margin.
Speaker 3: we need their first cost to do well. And we approach them frequently to ask them to lower prices when it's important, when they're not competitive. Most of the time they make these adjustments.
He'd back we've received from suppliers is that that was highly disruptive to their sales through overstock. So I guess, maybe two quick questions would you agree that the competitive markdowns were disruptive to your 2022 sales and then I guess secondly are you contemplating an adjustment to your pricing algo to reduce the number of items getting caught off the site on that.
Speaker 3: And so there's no disruption in sales on the site or customer experience on the site.
Speaker 3: some of the time, but she's not to make the suggestion and we move the products for the site, from the site to ensure that we have our small value proposition being met.
It happens thanks, Greg.
Great question, let me thank goodness the responses I look today for any more color.
It's important given our smart value proposition that we went on pricing post promotion.
Speaker 3: When we do this, partners frequently come back to us quickly, lowering their costs, coming back to the site.
Whoa Whoa suppliers may like to have little Packer margins.
Speaker 3: From Partners' behavior, this second way, it is slightly disrupted.
We need their first cost or below.
Speaker 3: But it's important that we do this so that we will maintain our smart value proposition. Dave, anything you want to add on that?
Speaker 3: we do this so that we will maintain our smart value proposition. Dave, anything you want to add on that? No, I think you answered that.
And we approach them.
Yeah frequently asked them to lower prices when it's important when theyre not a competitor most of the time.
Speaker 9: perfectly, Jonathan I
They make these adjustments.
Speaker 10: Thank you.
So theres no disruption.
Speaker 1: One moment for our next question.
And sales on the site or customer experience on the site.
Speaker 1: And the next question comes from Jonathan Matuzwiski with Jeffrey Jalan is open.
Some of the time they chose not to make this adjustment removes the products may decide from side to ensure that we have our smart value proposition being met.
Speaker 11: Great. Good morning and thanks for taking my question. A lot of discussions this morning around the highly competitive, highly promotional industry backdrop. Jonathan, I think you outlined an expectation for...
When we do this partner frequently come back to us quickly.
Lowering our costs coming back to the site.
When partners behave the second way.
Is wildly disrupted but it's important we do this so that we will maintain our smart value proposition, Dave anything you want to add on that.
Speaker 11: industry, inventory rationalization to continue into at least the first half of this year. So, you know, in light of this expectation, do you think it's reasonable to expect, you know, gross margins to trend? Maybe south of that, 22 percent, at least for the first six months.
No I think you answered that.
Perfectly Jonathan.
Thank you.
One moment for our next question.
Yeah.
Speaker 11: and recover thereafter any thoughts on kind of the cadence of how Grace Margin may trend this year would be helpful. Thank you. Yeah, Jonathan, great question. And I think it relates to that last question we had.
And our next question comes from Jonathan My Tooth Whiskey with Jefferies. Your line is open.
Hey, great good morning, and thanks for taking my question.
Speaker 3: our asset life business model even during a period of
A lot of discussion this morning around that the highly competitive highly.
Promotional industry backdrop.
Speaker 3: highly promotional liquidation sales by competitors, allowed us to keep our gross margins.
Jonathan I think you outlined an expectation for industry inventory rationalization to continue into at least the first half of this year. So in light of this expectation do you think it's reasonable to expect gross margin to trend maybe south of that 'twenty.
Speaker 3: at their levels in Q3 and Q4 last year.
Speaker 3: We don't own inventory. We haven't made bad buy.
Speaker 3: That's why we're always working with our partners.
2% at least for the first six months.
Speaker 3: to lower their first cost so that we can keep our inventory gross margins at the level they have. So, part of our differentiated asset like business model lets us keep gross margins more consistently at the level we shoot for.
And recover thereafter, any any thoughts on kind of the cadence of how gross margin may trend. This year would be helpful. Thank you John.
Jonathan Great question, and I think it relates to that last question we had.
Our asset light business model.
Speaker 3: and some of our competitors. You saw that in the 34th quarter last year. I think you'll continue to see it all throughout 2023. Is anyone out on that?
And even during a period of.
Uh huh.
Highly promotional liquidation sales by competitors.
Allowed us to keep our gross margins.
Their levels in Q3, and Q4 of last year.
Speaker 4: Nothing further than Ann, Jennifer. B very.
On inventory, we haven't made that buys.
Speaker 1: Thank you. One moment.
That's why we're always working with our partners.
Speaker 1: And next question comes from the line of Thomas Forte with DA Davidson. The line is open.
To lower their first call. So that we can keep our inventory.
Speaker 3: Great, thanks. One question and I'll go back to the queue. So, Jonathan, can you compare the charts today's homey commerce market with a few prior notable periods? Dot-bombs where a number of players exited the market to its significant share. In the great recession, a period of week and summer spending where you generated your first profits.
Gross margins at the level that I have so you know part of our differentiated asset light business model lets us keep gross margins more consistently at the level we shoot for.
Some of our competitors you saw that in the third and fourth quarter last year I think you'll continue to see it all throughout 2023, and then anything you want to add on that.
Speaker 3: Thanks. Yeah, I think there's a lot of similarities, Tom. I mean, it times where consumers look to stretch their...
Speaker 3: stretch their wallets and they become more thoughtful or the term I heard yesterday is more choiceful in their purchasing. Overstock is historically done well. Turn of the century dot bomb was here.
Nothing further to add Jonathan.
Okay.
Thank you one moment.
Our next question comes from the line of Thomas Forte with D. A Davidson your line is open.
Great. Thanks, One question and then I'll get back in the queue. So Jonathan how can you compare and contrast, todays home ecommerce market with a few prior notable periods Don.
Speaker 3: Word, we sort of overstocked what public and was a unique position and we were strong. During the Great Recession, we saw in home furnishing and furniture in particular strong growth in our business now. So if customers look to stretch their dollars, they're more thoughtful.
Where a number of players exiting the market.
<unk> share in the great recession, a period of weak consumer spending where you generated your first profit. Thanks.
Yeah, I think there's a lot of similarities.
Speaker 3: In purchasing smart value residents, learn more of them.
At times, where consumers look to stretch there.
Speaker 3: It becomes savage, chocolate. So off
Hum.
Stretch their wallet and they become more thoughtful or of a term I heard yesterday.
Speaker 3: It's hard to predict what the economy looks like in 2023, but I know it in my remarks, but I think we are well positioned for it. And the strategies we're employing and deep-lying, I think are good for growing an any kind of environment.
More choice full.
And they're purchasing.
Overstock has historically done well.
Turning to the century dotcom was your.
We're just gonna Overstock went public it was a unique position we were strong during the great recession.
Speaker 3: but particularly at top economic environment.
Speaker 7: at possible economic environment. Thanks, Jonathan.
We as we saw in the home furnishings and furniture in particular.
Speaker 1: Thank you. One moment for our next question.
Speaker 1: The next question comes from the line of Anna Andriva with...
Strong growth in our business now so as customers look to stretch their dollars they're more thoughtful.
And purchasing smart value resonates more and more of them become savvy shoppers. So.
Speaker 1: The lawn is now open.
Speaker 12: Great. Thank you so much and good morning, guys. You guys have been helpful in the past in providing KPIs for the business. And AOV slowed a bit this past quarter. Just any color you could provide on how we should think about that as we go through 23. Should AOV be still positive?
Uh huh.
It's hard to predict what the economy looks like and climbed 23 as I noted in my remarks.
Think we are well positioned for it.
And.
The strategies, we're employing in deep line I think are good for growing in any kind of environment.
Speaker 12: for the year. And secondly, I was just curious performance of over-study events that you ran in October . Any learning from that that could be applied to events going forward and anything to call out about the new customer demo from this event. Thank you so much.
Particularly a tough economic environment.
Thanks, Jonathan.
Thank you one moment for our next question.
Speaker 3: Adrian, why don't you talk to AOV and what we saw in Q4 like we usually do. In the day maybe you could talk to customer Dan and also have some color at the end.
The next question comes from the line of Ana <unk> with <unk>.
Your line is now open.
Speaker 4: Great. So, Arna, as we mentioned, not giving top line guidance. I'll share a little bit about AOV. You mentioned it didn't grow as much as we have seen that 4%. Again, mainly driven by MIX, but I would say as I talked about growth margins, highly promotional discounting environment, clearly that had an impacture AOV.
Great. Thank you very much and good morning, guys.
You guys have been helpful. In the past and are providing kpis for the business than a L. D slowed a bit this past quarter just any color you could provide on how we should think about that as we go through 'twenty three ship ANV, but still positive for the year and secondly, I was just curious performance of <unk>.
Speaker 4: So we have a pretty asizable impact to that. I would also say that as Jonathan mentioned, we increase our assortment and different offerings. We should see potentially some differences in reality of items of which we sell and then consumer sentiment. What people are buying. You know, if they're buying the actual patio furniture or kind of, you know, patio refresh items.
First of all the day event that you ran in October any learnings from that that could be applied to that going forward and anything to call out about the new customer demo from Mr. Lim. Thank you so much.
Andrew why don't you talk to <unk>, what we saw in Q4 like we usually do and then Dave maybe you could talk to customer day in and also had some color on that.
Speaker 4: So I think those are some things that we will expect to still see some potential variances and AOV pending those type of items.
Great. So on a you know as we mentioned not giving kind of topline guidance I'll share a little bit about <unk>. You mentioned you know it didn't grow as much as we have seen that 4% again, mainly driven by mix, but I would say as I talked about gross margins highly promotional discounting environment clearly that impacts your E. L. V. So we are pretty S.
Speaker 9: And I would just add, regarding oversaw day or customer day as you referred to it, Anna, we continue to lean into...
Speaker 9: being a mobile first retailer.
Speaker 9: And our mobile app was...
Speaker 9: was where we leaned in heavily here. As you heard in the remarks, Jonathan mentioned, we had an increase of 500 basis points in the percentage of our 2022 mobile app purchases to our sales. That was directly influenced by the ambassador campaign, brand ambassadors.
Visible impact to that I would also say that as Jonathan mentioned, we increased our assortment.
And Ah different offerings, we should see potentially some different seasonality of items of which we sell and then consumer sentiment what people are buying they're buying the actual patio furniture or kind of you know patio refresh items. So I think those are some things that we will expect to still.
Speaker 9: as we continue to push on our social media front, an area where we know we have opportunity to grow.
See some potential big variances in <unk> pending those type of items.
Speaker 7: Jonathan
Speaker 3: Yes, thank you, Bob Adrian, Dave.
Speaker 3: But fourth car A of these usually lower than the rest of the year because of giftables. People tend to spend more on themselves than they do on others. Fourth quarter is a 15-period. A customer day was a win for us. You know, we saw nice sales. We saw great mobile app adoption.
And let me just add regarding overstock gay or customer days, you referred to at Ana.
We continue to lean into.
Being a mobile first retailer.
And our mobile App was.
We're relieved in February here as you heard in the remarks, Jonathan mentioned, we had an increase of 500 basis points and the percentage of our <unk>.
Speaker 3: I do think we'll see people...
Speaker 3: I do think we'll see people in the good, better, best category.
2022, mobile app purchases to tour sales.
Speaker 3: We've seen it already in the first quarter and some of our presidents they sell.
That was that was directly influenced by the ambassador campaign brand ambassadors.
Speaker 3: looking out for that best product, but for the product that they can afford for the money they're willing to spend a day, which appears to be a little bit less than they were going to spend in the past.
We continue to push on our social media front in area, where we know we have opportunity to grow genre.
Jonathan.
Yes, Thank you both Adrian day.
But fourth quarter L. A is usually lower than the rest of the year because of a giftable people tend to spend more on themselves than they do on others fourth quarter is a gifting period.
Speaker 10: Thank you.
Speaker 1: Thank you. One moment for our next question.
Yeah customer day, where the wind for US you know we saw a nice sales with.
Speaker 1: And our next question comes from Seth Sigmund with Barkley. Your line is now open.
Great mobile App adoption.
Speaker 13: Hey everybody, thanks for taking the question. My main question is around profitability. I'm just wondering how you think about this. In potentially a scenario where sales are down again this year, how do we think about the De-leveraging the model given that a lot of tech and DNA expense?
I do think we'll see people.
Uh huh.
And the good better best category.
Trading down this year.
We've seen it already in the first quarter and some of our president of sales.
Ah <unk>.
Looking up for that best product before the product is the best product. They can afford for the money, they're willing to spend a day, which appears to be an open less than they were going to spend in the past.
Speaker 13: has been fixed in the past. Obviously Q4 is really well managed, but just trying to understand the break-even points and how to think about that. Thanks.
Speaker 3: Yes, I appreciate the question. You know, as I noted in my prepared remarks.
Speaker 3: I appreciate the question. You know, as I noted in my prepared remarks,
Thank you.
One moment for our next question.
Speaker 3: We are committed to and think we can be profitable for the year.
And our next question comes from Seth Sigman with Barclays. Your line is now open.
Speaker 3: given season now I know the thing there may be a time during the year when we're not but we are always looking.
Hey, everybody. Thanks for taking the question.
Speaker 3: at our
My main question is around profitability I'm, just wondering how you think about this in potentially a scenario where sales are down again. This year, how do we think about the deleverage in the model given that a lot of tech and G&A expense has been fixed in the past. Obviously Q4 is really well managed but just trying to understand.
Speaker 3: expense or GNA and tech expenses and how we spend marketing. We did some
Speaker 3: right sizing in late Q3 that I think helped us and have us in a better place today. We're maniacal about expense control and that's why I think that we...
You know sort of the breakeven points and how to think about that thanks.
Speaker 3: can be confident and they will be profitable in the year. But you're right, you can't be leveraged to zero and we've got to get sales back to growth. And that's why we have this go-forward strategy we talked about with size of that. And we.
Yes as I appreciate the question.
Noted in my prepared remarks.
Yeah.
We are committed to and think we can be profitable for the year.
Given seasonality and other things there may be a time during the year when we're not.
But we are always looking.
Speaker 3: we think it will make a difference. And while the first quarter sales are still shrinking, we're confident by the end of the year we can get back to a place where it all makes sense. Adrian, anything you want to talk about, keep everything as always that...
And our.
Spence, our G&A and tech expenses, and how we spend marketing.
We did some.
Right sizing.
In late Q3, I think helped us and have us in a better place today.
Speaker 3: Well, we'll talk about… Who won't work discussing?
Speaker 4: No, Jonathan. I think that was well said. Thank you.
We are maniacal about expense control.
And that's why I think that we can.
Speaker 1: Thank you.
Speaker 1: One moment for our next question.
Can be confident in that.
They will.
We will be profitable in the year, but youre right you can't deleverage to zero, we gotta get sales back.
Speaker 1: And our next question comes from the line that's Stephen Forbes with Guggenheim Partners. Your line is now open.
To grow and that's why we have this go forward strategy, we talked about we're excited about that.
Speaker 6: Good morning.
Speaker 14: I wanted to focus on the active customer base given the first quarter to date net sales trend.
<unk>.
We think it will make a difference.
Speaker 14: It appears Jonathan, you correct me from wrong here, that the expected quarter of a quarter net customer loss remains elevated. So I would love if you could sort of take a step back and maybe talk again about the initiatives that you have planned here to drive engagement and loyalty among the current base.
And while the first quarter sales are still shrinking we're confident that by the end of the year, we can get back to a place where it all makes sense Adrian anything you want to talk about it give everything is always there.
Comparable topic.
Worth discussing.
Speaker 14: And then also comment on your reactivation strategy, right? When you think about just how many labs, customers there are over the past, you know, a couple of years here, any comment on how you're thinking about reactivation opportunity in 2023.
No Jonathan I think that was well said thank you.
Thank you.
One moment for our next question.
And our next question comes from the line of Steven Forbes with Guggenheim Partners. Your line is now open.
Speaker 3: Yes, give a good question. Let me make an initial comment then I'll stay up to add some more color.
Speaker 3: I'm really excited about our new co-branded crack card with City. It allows us to treat more customers like club-o customers and really super club-o customers because they earn.
Good morning.
I wanted to focus on the active customer base, given the first quarter to date net sales trend.
Jonathan you can correct me, if I'm wrong here that the expected quarter over quarter net customer loss remains elevated.
I would love if you could sort of take a step back and maybe talk again about the initiatives that you have planned here to drive engagement and loyalty among the current base and then also comment on your reactivation strategy right. When you think about just how many lapsed customers there are.
Speaker 3: points they can spend on overstock purchases, lots of places, not just overstock. So I think that's going to create a more loyal customer that will repeat rates. It will also let us go out and engage with new customers who haven't been with us before.
Over the past couple of years here any comment on how youre thinking about reactivation opportunity in 2023.
Speaker 3: A lot of efforts for making on retention and reactivation Dave, you are providing more color.
Yes, David Good question, let me make an additional comment.
Speaker 9: Sure Jonathan. You know, Jonathan mentioned earlier in his remarks to a pair of remarks.
To add some more color.
Im really excited about our new co branded credit card with Citi.
Speaker 9: The excitement over some of the level enough we've done with our management team and our marketing team in particular, I am really excited about.
It allows us to create more customers like club O customers and really Super club, our customers because they earn.
Speaker 9: We brought in some industry experts from several areas and we're really looking forward to as you think about some of those key growth drivers. You know, increasing our brand association with the home is really critical to getting that message out there and doing it through our brand ambassador program to some of our new television commercials.
Points vegan promoters.
Overstock purchases.
Lots of places not just overstocked, so I think that's going to create a more loyal customer repeat rates.
It will also let us go out and engage with new customers.
Speaker 9: We're investing heavily there. That marketing team has yet to lap a year and will do so this year. It's a little bit of time for them to get up to speed and get a feel for all of the levers and opportunities and where they go with that. But we're seeing good adoption.
Having been with us before.
Lot of efforts, we're making on retention and reactivation, Dave do you want to provide any more color.
Yeah.
Sure Jonathan.
Jonathan mentioned earlier in his remarks in his prepared remarks.
Speaker 9: into our mobile app and with the younger demographic and we're excited about that and think that that is going to also pay us dividends as we move throughout this year and continue to drive a mobile first presence. Great day. You know, on that market game, I love what they've done with our come on get comfy ad that said, that said really nice. Nice.
The excitement over.
Some of the leveling up we've done with our management team and our marketing team in particular I am really excited about.
We brought in some industry experts from several areas.
And we're really looking forward to as you as you think about some of those key growth drivers increasing our brand association with the home is really critical to getting that message out there and doing it through our brand Ambassador program through some of our new television commercials.
Speaker 3: residents and I think as they roll out more on our brand transition to associate the other stock name with home that will play David Edson of Syria Tuesday.
Speaker 3: And I think as they roll out more on our brand transition to associate the other stock name with home, that will play David Edson of this area Tuesday. Thank you.
We're investing heavily there that marketing team has yet to lap a year and will do so this year gets a little bit of time for them to get up to speed and get a.
Speaker 1: Thank you. One moment for our next question. Yes.
Feel for all of the levers and opportunities and where they go with that but.
We're seeing good adoption into our mobile app and with a younger demographic and we're excited about that and think that that is going to also pay us dividends as we move throughout this year and continue to drive a mobile first presence.
Speaker 1: comes from the line of Curtis Nagel with Bank of America. Your line is now open.
Speaker 3: Great, thanks for your question. Just for the first one, John , I need to describe this year's a pill that you have.
Speaker 3: What do you think is likely that you think you can return to a revenue growth in the second part of the year or no?
Thanks Ted.
On that marketing team I love, what they've done with our commodity company.
Speaker 3: infrastructure today. Thank you. So that's also the first. High your population because the echo. As you see a sort of continue to grow.
That's a really nice.
Residents.
And I think as they rollout.
More on our.
Kind of brand transition to associate the overstock name with home.
That will pay dividends in this area too.
Thank you.
Speaker 3: with a larger and larger offering a product. More new product is many of our folks, partner suppliers get through their old inventory, can invest in new product. It's gonna be an exciting time. So...
Thank you.
One moment for our next question.
Comes from the line of Curtis Nagle with Bank of America. Your line is now open.
Oh, great. Thanks for the question.
Just in the first one Jonathan you described.
Speaker 3: want to be a little squishy. Curtis, I might answer to that because
Speaker 3: Curtis on my answer to that because we're
Here is a challenge your house.
I guess, what do you think likelihood or do you think you can return to revenue growth in the second part of the year or no.
Speaker 3: It's uncertain time and giving traditional guidance as well.
Okay.
Speaker 3: We're doing everything we can and we plan to get back to growth in the second half, but not going to give guidance say for sure on that yet.
Because I think the macro economy is tough, but where are the efforts.
First that we're taking internally.
That's our expectation.
Speaker 3: Okay, sure enough. Interesting to follow up. So I mean, in terms of thinking about marketing spend, you know, that's been very disciplined. I guess would there be any willingness to take that up? Maybe just trying to customer acquisition going in or, you know, I guess in the context of.
Do you see assortment continue to grow.
With a larger and larger offering a product.
More new product as many of our books partner suppliers.
Get through their old inventory can invest in new product.
It's going to be an exciting time so.
Speaker 3: you know, still pretty promotional competitive environment, you know, meeting that doesn't make sense. How do you think it through that? Well, we think you're that every day. I mean, that's kind of top of mind all the time. All right, and you'll note.
Want to be a little squishy Curtis on my answer to that because.
Sure.
It is an uncertain time and giving traditional guidance.
Speaker 3: that, you know, on our financial recipe card, we try them ahead. We like marketing spend to be somewhere between 9% and 10% of revenue. We have picked that up. And, you know, we will continue to...
But.
We're doing everything we can and we plan.
To get back to growth in the second half, but not not not going to give guidance say for sure on that yet.
Okay fair enough.
And just as a follow up.
Speaker 3: Look at that to try and reignite growth while maintaining.
So I mean in terms of thinking about marketing spend has been very very disciplined.
Speaker 3: profitability. But you know, you can see as we picked it up, even as we manage expenses well, that impacted where we came in with adjusted evit-percentage at the end of the year. A little bit outside of our mid-single busy growth that we like to have on a adjusted evit- evit-up percent salt.
I guess would there be any willingness to pick that up.
They've been trying to customer acquisition going down or I guess in the context of still.
Still pretty promotional and competitive environment, maybe that doesn't make sense. How are you thinking through that.
Well, we think through it every day.
It's kind of top of mind, all the time.
You'll note.
Speaker 3: We look at it. We'll continue to look at it. Dave, I know you're...
You know.
On our financial recipe card and we're trying to head.
Marketing spend to be somewhere between nine and 10%.
Speaker 3: or the angel all of the 13 all the time, anything else you'll comment on there?
Revenue.
We have picked that up.
Speaker 9: I couldn't emphasize enough what Jonathan just said. It is a daily activity and discussion at Overseuch. We understand, geleveraging the top line is problematic, and we are working.
And we will continue to look at that to try and reignite growth.
Well maintaining.
Profitability.
Speaker 9: feverishly to prevent that.
You can see is we picked it up even as we manage expense as well.
Speaker 10: Thank you.
Impacted where we came in with adjusted EBITDA percentage.
Speaker 1: Our last question comes from the line of Rick Patel with Raymond James. Your line is now open. We know you are our clue.
At the end of the year little bit outside of our.
Mid single digit growth.
Speaker 13: Thank you for taking my question and squeezing me in here.
I like to have on our adjusted.
Adjusted EBIT EBITDA percent so.
Speaker 13: In terms of expanding the assortment in the home category, you test on better performance of newer areas like giftables and national brands. Can you talk about the opportunity to lean into categories that are working well, intra-quarter? So, giftables may not be strong, get around, but given high inventories in the industry, I'm assuming product is available. So how quickly...
We look at it we'll continue to look at it Dave I know you're.
Angela and her team all the time anything else will comment on there.
I Couldnt emphasized enough what Jonathan just said it is a daily activity and discussion at Overstock, we understand deleveraging the topline is problematic and we are working.
Feverishly.
To prevent that.
Thank you.
Our last question comes from the line of Rick Patel with Raymond James Your line is now open.
great ability to add quickly, inventory quickly. We did it in the fourth quarter. We actually took some inventory. And like I mentioned, sold through it quickly. Abbal? means that partners, suppliers are sure they're going to be paid and paid on time.
Thank you for taking my question and squeezing me in here.
In terms of expanding the assortment in the home category you touched on better performance of newer areas like giftable in National brands can you talk about the opportunity to lean into categories that are working well intra quarter. So difficult giftable. It may not be as strong year round, but given high inventories in the industry I'm assuming product is available.
And that's been helpful as we've added new home partners and we've done well at a new home partner.
So those are important things. Dave, what would you have to ask?
So how quickly can you chase into some of the stuff that's working and on the flip side with such a broad assortment how do you ensure that.
Yeah, I would say that that additional inventory we took on in the fourth quarter was a strategic move for us as we've transitioned to a home and home furnishings retailer.
Consumers don't get overwhelmed by all the options they have.
Alright crude comments, and then turn to Dave.
One I think our balance sheet gives us great ability to add quickly.
Some of those brands that were seen during the fourth quarter on Overstock ignited a whole group.
Inventory quickly we did it in the fourth quarter, we actually took some inventory and like I mentioned sold through it quickly.
of small appliances, national brands who haven't necessarily been interested in doing business with Overstock that now are. As we mentioned with a computer, a formidable competitor that is struggling considerably, there's an interest in replacing those cells. And we've had that.
Balance sheet.
It means that partners suppliers.
Our assured theyre going to be paid in paid on time.
And Thats been helpful. As we've added.
New home partners, and we've done well at a new mall partners.
several national brands and retailers in the hundreds that are very interested in joining overstock. So that's one component of it. The other component I would add is the findability of that product. And Jonathan mentioned in the paper in the prepared remarks.
So.
Those are important things, Dave what would you add to this.
Yes, I would say that that additional inventory we took on in the fourth quarter was a strategic move for us as we've transitioned to a home and home furnishings retailer.
our improvements in search that are undergoing. We think that gives us the opportunity for customers to find that incremental additional assortment that we're adding easier, quicker.
Some of those brands that were seen during the fourth quarter on overstock ignited a whole group.
For an overall better customer experience. Jonathan.
Small appliances national brands, who haven't necessarily been interested in doing business with overstock veteran now are as we mentioned with a competitor a formidable competitor that is struggling considerably.
Yeah, I've been, and I'm glad you mentioned that I could tell you I definitely wanted to make a product fundability. I have some gaps and we're working on it. I think when we do that, it's going to be a much better side experience and shopping experience for our customers. So I appreciate the question. Yeah.
There is an interest in replacing ourselves and we've had several national brands and retailers in the hundreds that are very interested in joining.
Look, I'm playing 2022's in the region there. Here we will not forget nor repeat. The projects that this management team is diligently working on to improve overstocks trajectory are exciting. I believe they have their fruits. I believe they will.
Joining overstocked. So that's one component of it the other component I would add is defined ability of that product and Jonathan mentioned in the paper.
Prepared remarks.
Our improvements in search that are undergoing we think that gives us the opportunity for customers to find that incremental additional assortment that we're adding easier quicker.
So I continue to be bullish about overstocks, thank you everyone for participating on today's call. We appreciate your interest in an overstock. And mind you, we are working the best we can to be good stewards of your capital. Thanks everybody.
For an overall better customer experience Jonathan yes.
Yes.
Yeah, I'm glad you mentioned that because one of the better product fungibility.
It has some gaps.
This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.
We're working through it we think when we do that it's going to be a much better site experience and shopping experience.
Our customers. So I appreciate the question.
<unk>.
Look on 2020 twos in the rear view mirror.
This year, we will not forget nor repeats.
The projects that this management team is diligently working on to improve oversize trajectory are excited.
I believe they will bear fruits I believe very well so I continue to be bullish about overstock future. Thank you everyone for participating on today's call.
Thanks for your interest in an ownership and overstock and.
Mind, you we are working as best we can to be good stewards of your capital. Thanks, everybody.
This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.
The conference will begin shortly.
Lower Johan during Q&A, you can dial star one.
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