Q2 2024 Beyond Inc Earnings Call

Thank you for standing by and welcome to the Beyond Inc. Second Quarter 2024 Earnings Conference Call.

Operator: Ford earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session.

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Operator: As a reminder, today's program is being recorded. And now, I'd like to introduce your host for today's program, Alexis Callahan, Vice President of Investor Relations and Public Relations. Please go ahead.

Alexis Callahan: If your question has been answered and you'd like to remove yourself from the queue, simply press star 1 1 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Alexis Callahan, Vice President of Investor Relations and Public Relations. Please go ahead.

Operator: As a reminder, today's program is being recorded.

Alexis Callahan: And now I'd like to introduce your host for today's program, Alexis Callahan, Vice President of Investor Relations and Public Relations. Please go ahead.

Alexis Callahan: Thank you, operator.

Alexis Callahan: Thank you, Operator. Good morning, and welcome to Beyond Inc.'s second quarter 2024 earnings conference call. Joining me on the call today are Executive Chairman Marcus Lemonis, Chief Financial and Administrative Officer Adrian Lee, and President Dave Nielsen. Today's discussion and our responses to your questions reflect management's views as of today, July 30, 2024, and may include forward-looking statements, including without limitation regarding our future goals, revenue, file size, financial performance, our outlook for the remainder of the year, or any other period, growth, stock price, profitability, strategy, macroeconomic conditions, customer demand, the value of any of our brands or investments, relationships with third parties, and agreements we are entering into with However, actual results could differ materially from such statements.

Alexis Callahan: Good morning. And welcome to Beyond Inx, second quarter, 2024, earnings conference call. Joining me on the call today are Executive Chairman Marcus Lemonis, Chief Financial and Administrative Officer Adrianne Lee, and President Dave Nielsen.

Alexis Callahan: Thank you, Operator. Good morning, and welcome to Beyond Inc.'s second quarter 2024 Earnings Conference Call. Joining me on the call today are Executive Chairman Marcus Lemonis, Chief Financial and Administrative Officer Adrianne Lee, and President Dave Nielsen.

Alexis Callahan: Today's discussion and our responses to your questions reflect management views as of today, July 30th, 2024, and may include forward-looking statements, including without limitation regarding our future goals, revenue, file size, financial performance, our outlook for the remainder of the year or any other period, growth, stock price, profitability, strategy, macroeconomic conditions, customer demand, the value of any of our brands or investments, relationships with third parties, and agreements we are entering into with them, margin improvement, customer experience, and related efficiencies, loyalty programs, the launch, relaunch, or other upcoming changes for any brands or about websites, and the timing of any of the foregoing.

Speaker Change: Today's discussion and our responses to your questions reflect management's views as of today, July 30, 2024, and may include forward-looking statements.

Speaker Change: Including without limitation regarding our future goals, revenue, file size, and

Speaker Change: Financial performance, our outlook for the remainder of the year or any other period, growth, stock price, profitability, strategy, macroeconomic conditions, customer demand, the value of any of our brands or investments.

Speaker Change: Relationships with Third Parties and Agreements We Are Entering Into With Them, Margin Improvement, Customer Experience and Related Efficiencies, Loyalty Programs, the Launch, Relaunch, or other Upcoming Changes for Any Brands or Websites, and the Timing of Any of the Foregoing.

Alexis Callahan: Actual results could differ materially from such statements. Additional information about risks, uncertainties, and other important factors that could potentially impact our financial results is included in our Form 10-K for the year ended December 31st, 2023, in our Form 10-K for the quarter ended March 31st, 2024, and in our subsequent filings with the SEC.

Marcus Lemonis: Additional information about risks, uncertainties, and other important factors that could potentially impact our financial results is included in our Form 10-K for the year ended December 31, 2023, in our Form 10-Q for the quarter ended March 31, 2024, and in our subsequent filings with the SEC. During this call, we'll discuss certain non-GAAP financial measures. Our filings with the SEC, including our second-quarter earnings release, which is available on our investor relations website at investors.beyond.com, contain important additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable GAAP measures.

Speaker Change: Actual results could differ materially from such statements.

Speaker Change: Additional information about risks, uncertainties, and other important factors that could potentially impact our financial results is included in our Form 10-K for the year ended December 31, 2023, in our Form 10-Q for the quarter ended March 31, 2024, and in our subsequent filings with the SEC.

Alexis Callahan: During this call, we'll discuss certain non-GAAP financial measures. Our filings with the SEC, including our second quarter earnings release, which is available on our investor relations website at investors.beyond.com, contain important additional disclosures regarding these non-GAAP measures, including reconciliation of these measures to the most comparable GAAP measures. Following management prepared remarks, we will open the call for questions. A slide presentation with supporting data is available for download on our Investor Relations website. Please review the important forward-looking statements disclosure on slide two of that presentation.

Speaker Change: During this call, we'll discuss certain non-GAAP financial measures.

Speaker Change: Our filings with the SEC, including our second quarter earnings release, which is available on our Investor Relations website at investors.beyond.com.

Speaker Change: contain important additional disclosures regarding these non- GAAP measures , including reconciliations of these measures to the most comparable GAAP measures .

Marcus Lemonis: Following management's prepared remarks, we will open the call for questions. A slide presentation with supporting data is available for download on our investor relations website. Please review the important forward-looking statements disclosure on slide 2 of that presentation. With that, let me turn the call over to you, Marcus. Good morning, and thank you.

Speaker Change: Following management's prepared remarks, we will open the call for questions. A slide presentation with supporting data is available for download on our investor relations website.

Speaker Change: Please review the important forward-looking statements disclosure on slide 2 of that presentation. With that, let me turn the call over to you, Marcus.

Marcus Lemonis: With that, let me turn the call over to you, Marcus.

Marcus Lemonis: Good morning, and thank you. As Alex Alexis mentioned, I'm joined today by Adrian Lee and Dave Nelson. This morning, we'll be summarizing our second quarter results as well as answering specific questions about our company and the meaningful progress we are making. As a refresher, there are a number of imperatives we entered this quarter with that have framed the remainder of the year. I'll start off with my reaffirmation that I not only believe, but expect this company to do great things. My conviction is around this company's ability to operate multiple brands profitably, all while growing revenue and file size.

Marcus Lemonis: As Alexis mentioned, I'm joined today by Adrianne Lee and Dave Nielsen. This morning, we'll be summarizing our second quarter results, as well as answering specific questions about our company and the meaningful progress we are making. As a refresher, there are a number of imperatives we entered this quarter with that have shaped the remainder of the year. I'll start off with my reaffirmation that I not only believe in, but expect this company to do great things.

Marcus: Good morning and thank you. As Alexis mentioned, I'm joined today by Adrianne Lee and Dave Nielsen.

Marcus: This morning, we'll be summarizing our second quarter results, as well as answering specific questions about our company and the meaningful progress we are making.

Marcus: As a refresher, there are a number of imperatives we entered this quarter with that have framed the remainder of the year.

Speaker Change: I'll start off with my reaffirmation that I not only believe, but expect this company to do great things. My conviction is around this company's ability to operate multiple brands profitably, all while growing revenue and file size.

Marcus Lemonis: My conviction is around this company's ability to operate multiple brands profitably, all while growing revenue and file size. Earlier in the second quarter, our shareholders approved a performance stock unit plan that awarded me options that vest when the stock price reaches $45, $50, and $60. I appreciate the acknowledgement, but recognize that I only make money when we all make money. I personally believe we'll get there.

Marcus Lemonis: Earlier in the second quarter, our shareholders approved a performance stock unit plan that awarded me options at vest when the stock price reaches $45.50 and $60. I appreciate the acknowledgment, but recognize that I only make money when we all make money. I personally believe we'll get there.

Speaker Change: Earlier in the second quarter, our shareholders approved a performance stock unit plan that awarded me options that vest when the stock price reaches $45, $50, and $60.

Speaker Change: I appreciate the acknowledgement, but recognize that I only make money when we all make money. I personally believe we'll get there.

Marcus Lemonis: For those invested in the company today or contemplating it, I want you to know the topics in our mind every single day, as the management team; in some cases, things that even keep us up at night. It's imperative that every decision we make is to drive towards profitability. And once there, we maintain that rigor along with holding firm to an asset-light model. Establishing a definitive strategy for Bed Bath and Beyond, not only to be a billion dollar plus e-commerce brand, but find thoughtful and creative ways to expand the brand, generate cash flow off the IP, while also expanding its brand presence even further, increasing the brand value while maintaining its position as one of the world's most well-known home brands.

Marcus Lemonis: For those invested in the company today or contemplating it, I want you to know the topics on our mind every single day, as the management team, in some cases, things that even keep us up at night. It's imperative that every decision we make is to drive towards profitability, and once there, we maintain that rigor along with holding firm to an asset-light model. Establishing a definitive strategy for Bed Bath & Beyond, not only to be a billion-dollar-plus e-commerce brand, but to find thoughtful and creative ways to expand the brand, generate cash flow off the IP, while also expanding its brand presence even further, increasing the brand value while maintaining its position as one of the world's most well-known home brands.

Speaker Change: For those invested in the company today or contemplating it, I want you to know the topics on our mind every single day, as the management team, in some cases, things that even keep us up at night.

Speaker Change: It's imperative that every decision we make is to drive towards profitability, and once there, we maintain that rigor along with holding firm to an asset-light model.

Speaker Change: Establishing a definitive strategy for Bed Bath & Beyond, not only to be a billion dollar plus e-commerce brand, but find thoughtful and creative ways to expand the brand.

Speaker Change: Generate cash flow off the IP while also expanding its brand presence even further, increasing the brand value while maintaining its position as one of the world's most well-known home brands.

Marcus Lemonis: We also want to focus on the relaunch of Overstock in a way that allows it to return to its roots of retailing furniture, patio, and rugs, but leverage its strong brand name in value shopping to more than just its historical categories. It is our vision, particularly with many off-priced retailers leaving the e-commerce space, to become the North American leader where companies big and small can utilize the platform to reduce inventory in their own businesses and improve their turns in margins. They are essentially our vendors and suppliers. In addition to our traditional vendors, we are in the early innings of entering the true liquidation, reverse logistics, and close-out business.

Marcus Lemonis: We also want to focus on the relaunch of Overstock in a way that allows it to return to its roots of retailing furniture, patio, and rugs but leverage its strong brand name in value shopping to more than just its historical category.

Speaker Change: We also want to focus on the relaunch of Overstock in a way that allows it to return to its roots of retailing furniture, patio, and rugs, but leverage its strong brand name in value shopping to more than just its historical categories.

Marcus Lemonis: It is our vision, particularly with many off-price retailers leaving the e-commerce space, to become a North American leader where companies big and small can utilize the platform to reduce inventory in their own businesses and improve their terms and markets. They are, essentially, our vendors and suppliers. In addition to our traditional vendors, we are in the early innings of entering the true liquidation, reverse logistics, and closeout business. We have formed material relationships with liquidators, jobbers, wholesalers, and reverse logistics companies and are finalizing a formal agreement with a large-scale closeout and reverse logistics company.

Speaker Change: It is our vision, particularly with many off-price retailers leaving the e-commerce space, to become the North American leader where companies big and small can utilize the platform to reduce inventory in their own businesses and improve their turns and margins.

Speaker Change: There are essentially our vendors and suppliers.

Speaker Change: In addition to our traditional vendors, we are in the early innings of entering the true liquidation, reverse logistics, and closeout business.

Marcus Lemonis: We have formed material relationships with liquidators, jobbers, wholesalers, and reverse logistics companies, and are finalizing a formal agreement with a large-scale close-out and reverse logistics company. We are working to normalize margins through proper curation with the right product listed on the appropriate brand platform at the right time, especially at the right price. The merchandising team, led by Stacey Shivley, our chief merchant, has done exceptional work to begin the curation process around key products and vendors. They have successfully re-established direct relationships with key vendors, improving both profitability and process for both sides. As we continue that work, along with entering the close-out space, we expect to continue to see continued quarterly sequential margin improvement over the next 12 to 18 months.

Speaker Change: We have formed material relationships with liquidators, jobbers, wholesalers, and reverse logistics companies, and are finalizing a formal agreement with a large-scale closeout and reverse logistics company.

Marcus Lemonis: We are working to normalize margins through proper curation with the right product listed on the appropriate brand platform at the right time, especially at the right price. The merchandising team, led by Stacy Shively, our Chief Merchant, has done exceptional work to begin the curation process around key products and vendors.

Speaker Change: We are working to normalize margins through proper curation with the right product listed on the appropriate brand platform at the right time, especially at the right price.

Speaker Change: The merchandising team, led by Stacy Shively, our Chief Merchant, has done exceptional work to begin the curation process around key products and vendors.

Speaker Change: They have successfully re-established direct relationships with key vendors, improving both profitability and process for both sides.

Marcus Lemonis: They have successfully reestablished direct relationships with key vendors, improving both profitability and process for both sides. As we continue that work, along with entering the closeout space, we expect to continue to see continued quarterly sequential margin improvement over the next 12 to 18 months. Look, we need to achieve new technology; excuse me, we need to activate new technology and innovative thinking to attract and retain our customer files. We have made significant strides in improving search functionality with a constant push to catch up and keep up with fast-moving tech all around us.

Speaker Change: As we continue that work, along with entering the closeout space, we expect to continue to see continued quarterly sequential margin improvement over the next 12 to 18 months.

Marcus Lemonis: Look, we need to achieve new technology. We need to activate new technology and innovative thinking to attract and retain our customer files. We have made significant strides in improving search functionality with a constant push to catch up and keep up with fast-moving tech all around us. Curtis. Part of attracting and retaining customers is the data management around them, building customized experiences for specific audience attributes, improving conversion, and annual spend as a solid roadmap. Our relationship with Salesforce and companies like Purcell will help us create that efficiency and experience over the next six to nine months.

Speaker Change: Look, we need to achieve new technology, excuse me, we need to activate new technology and innovative thinking to attract and retain our customer files.

Speaker Change: We have made significant strides in improving search functionality, with a constant push to catch up and keep up with fast-moving tech all around us.

Marcus Lemonis: Part of attracting and retaining customers is the data management around them; building customized experiences for specific audience attributes, improving conversion, and annual spend is a solid roadmap. Our relationship with Salesforce and companies like Purcell will help us create that efficiency and experience over the next six to nine months. Over the next 18 months, we expect to develop a world-class loyalty program, utilizing both our database as well as other companies who coexist with us but do not compete in the same sector as us. That loyalty will be rewarded with unique content, information, ideas, and inspiration delivered to them through various mediums. Most of the content will be delivered across the streaming platform, YouTube channels, social channels, and funnel marketing programs.

Speaker Change: Part of attracting and retaining customers is the data management around them, building customized experiences for specific audience attributes, improving conversion, and annual spend is a solid roadmap.

Speaker Change: Our relationship with Salesforce and companies like Purcell will help us create that efficiency and experience over the next six to nine months.

Marcus Lemonis: Over developed a world-class loyalty program, utilizing both our database, as well as other companies who coexist with us with Nandak Tumpi in the same sector as us. That loyalty shall be rewarded with unique content, information, ideas, and inspiration delivered to them through various mediums. Most of the content will be delivered across the streaming platform, YouTube channels, social channels, and funnel marketing programs. We will move slowly towards this to test and ensure that we fail; the return on investment can be realized over the lifetime value of the newly acquired customer. We have made significant progress in the past several months and will continue to execute on our plan to achieve growth and profitability.

Speaker Change: Over the next 18 months, we expect to develop a world-class loyalty program, utilizing both our database, as well as other companies who coexist with us, but do not compete in the same sector as us.

Speaker Change: That loyalty shall be rewarded with unique content, information, ideas, and inspiration delivered to them through various mediums.

Speaker Change: Most of the content will be delivered across the streaming platform, YouTube channels.

Marcus Lemonis: We will move slowly towards this to test and ensure that we feel the return on investment can be realized over the lifetime value of the newly acquired customer. We have made significant progress in the past several months and will continue to execute on our plan to achieve growth and profitability. To recap, in the second quarter, we achieved our revenue target and improved our bottom line by roughly 25%. We improved our gross margin through improved vendor relations, curation, and the launch of Overstock.

Speaker Change: Social Channels, and Funnel Marketing Programs. We will move slowly towards this to test and ensure that we feel the return on investment can be realized over the lifetime value of the newly acquired customer.

Speaker Change: We have made significant progress in the past several months and will continue to execute on our plan to achieve growth and profitability.

Marcus Lemonis: To recap in the second quarter, we achieved our revenue target and improved our bottom line by roughly 25%. We improved our growth margin through improved vendor relations, curation, and the launch of Overstock. We increased our active customer base in their average order. We established new partnerships around liquidation, close-outs in factory direct. We launched Overstock.com, our mobile app for Overstock, and launched our CRM process with Salesforce. We completed the architecture and POV on Zoolily, signed, and are trading over 100 legacy vendors with another 100 suppliers in the onboarding pipeline. And the site is now in the internal testing phase.

Speaker Change: To recap, in the second quarter, we achieved our revenue target and improved our bottom line by roughly 25%.

Speaker Change: We improved our gross margin through improved vendor relations, curation, and the launch of Overstock. We increased our active customer base and their average order. We established new partnerships around liquidation, closeouts, and factory direct.

Marcus Lemonis: We increased our active customer base and their average order. We established new partnerships around liquidation, closeouts, and factory direct. We launched Overstock.com, our mobile app for Overstock, and launched our CRM process with Salesforce. We completed the architecture and PLV on Zulily, signed, and are trading over 100 legacy vendors, with another 100 suppliers in the onboarding pipeline. And the site is now in the internal testing phase. We are targeting to launch Zulily on September 10th.

Speaker Change: We launched Overstock.com, our mobile app for Overstock, and launched our CRM process with Salesforce.

Speaker Change: We completed the architecture and POV on Zulily.

Speaker Change: Signed and are trading over 100 legacy vendors, with another 100 suppliers in the onboarding pipeline.

Marcus Lemonis: We are targeting to launch Zoolily on September 10th. This effort has been led by a combination of our own and existing staff, as well as an unbelievable team of added key legacy Zoolily leaders. We also reduced fixed costs, all of which resulted in sequential improvement of more than $11 million in adjusted EBITDA.

Speaker Change: And the site is now in the internal testing phase.

Marcus Lemonis: This effort has been led by a combination of our own and existing staff, as well as an unbelievable team of added key legacy Zulily leaders. We have also reduced fixed costs. All of which resulted in sequential improvement of more than $11 million in adjusted EBITDA. Lastly, we also refined our organizational structure during the quarter, and I'm pleased to see the flatter structure working so well, with teams really starting to gel and get their sea legs. With that, I'll now turn it over to Dave Nielsen to talk more about the progress of our business. Thank you, Marcus.

Speaker Change: We are targeting to launch Zulily on September 10th.

Speaker Change: This effort has been led by a combination of our own and existing staff as well as an unbelievable team of added key legacy Zulily leaders.

Speaker Change: We also reduce fixed costs.

Speaker Change: All of which resulted in sequential improvement of more than $11 million in adjusted EBITDA.

Marcus Lemonis: Lastly, we also refined our org structure during the quarter. And I'm pleased to see the flatter structure working so well with teams really starting to gel and getting their sea legs.

Speaker Change: Lastly, we also refined our org structure during the quarter, and I'm pleased to see the flatter structure working so well, with teams really starting to gel and getting their sea legs. With that, I'll now turn it over to Dave Nielsen to talk more about the progress of our business.

David Nielsen: With that, I'll now turn it over to Dave Nielsen to talk more about the progress of our business. Thank you, Marcus. I echo that sentiment. I'm pleased with what the team achieved in the second quarter and remain committed to continuous improvement and bringing each of these brands back to the billion dollar plus brands they have the potential to be. To that end, I'd like to walk through some key operational highlights for each brand. On Bed Bath & Beyond, we saw growth in core legacy categories like bedding, bath, and decor, as well as emerging strengths in categories like patio and outdoor furniture, which are not historically endemic to the brand but are highly accretive to average order value.

David Nielsen: I echo that sentiment. I'm pleased with what the team achieved in the second quarter and remain committed to continuous improvement and bringing each of these brands back to the billion-dollar plus brands they have the potential to be.

David Nielsen: Thank you, Marcus. I echo that sentiment. I'm pleased with what the team achieved in the second quarter and remain committed to continuous improvement and bringing each of these brands back to the billion-dollar-plus brands they have the potential to be.

David Nielsen: To that end, I'd like to walk through some key operational highlights for each brand. For Bed, Bath, and Beyond, we saw growth in core legacy categories like bedding, bath, and decor, as well as emerging strengths in categories like patio and outdoor furniture. Which are not historically endemic to the brand, but are highly accretive to average order value. This is encouraging as customers are recognizing product adjacencies, for example, bedroom furniture, and feeling more comfortable shopping the entire room.

David Nielsen: To that end, I'd like to walk through some key operational highlights for each brand.

David Nielsen: On Bed, Bath, and Beyond, we saw growth in core legacy categories like bedding, bath, and decor, as well as emerging strengths in categories like patio and outdoor furniture.

David Nielsen: Which are not historically endemic to the brand, but are highly accretive to average order value. This is encouraging as customers are recognizing product adjacencies, for example, bedroom furniture, and feeling more comfortable shopping the entire room.

David Nielsen: This is encouraging as customers are recognizing product adjacencies, for example, bedroom furniture, and feeling more comfortable shopping the entire room. Well, we continue expanding our assortment within the four rooms we're exclusively focused on; we're simultaneously curating down from a marketplace-like assortment of roughly 12 million skews to one that has enough breadth and depth to be category leading, but small enough to ensure an easy and seamless customer experience. This curation also impacts our supplier base, making key suppliers more meaningful, resulting in better margins for us as their volume increases. Our merchandise team is also working hard to bring back a number of important name brands that left years ago, which we think will move the needle in reviving Bed Bath & Beyond.

David Nielsen: While we continue expanding our assortment within the four rooms we're exclusively focused on, we're simultaneously curating down from a marketplace-like assortment of roughly 12 million SKUs to one that has enough breadth and depth to be category-leading, but small enough to ensure an easy and seamless customer experience. This curation also impacts our supplier base, making key suppliers more meaningful, resulting in better margins for us as their volume increases. Our merchandise team is also working hard to bring back a number of important name brands that left years ago, which we think will move the needle on reviving Bed Bath & Beyond.

David Nielsen: Well, we continue expanding our assortment within the four rooms we're exclusively focused on.

David Nielsen: We're simultaneously curating down from a marketplace-like assortment of roughly 12 million SKUs to one that has enough breadth and depth to be category-leading, but small enough to ensure an easy and seamless customer experience.

David Nielsen: This curation also impacts our supplier base, making key suppliers more meaningful, resulting in better margins for us as their volume increases.

David Nielsen: Our merchandise team is also working hard to bring back a number of important name brands that left years ago, which we think will move the needle in reviving Bed Bath & Beyond.

David Nielsen: In addition to an uptick in average order value, it was also encouraging to see a higher proportion of cells from repeat customers during the quarter. A trend we expect to continue as we further refine our targeting and promotional models.

David Nielsen: In addition to an uptick in average order value, it was also encouraging to see a higher proportion of sales from repeat customers during the quarter, a trend we expect to continue as we further refine our targeting and promotional model. Next on Overstock.

David Nielsen: In addition to an uptick in average order value, it was also encouraging to see a higher proportion of sales from repeat customers during the quarter, a trend we expect to continue as we further refine our targeting and promotional models.

David Nielsen: Next, on Overstock, this was our first full recorder of operation since our relaunch at the end of March, and we're encouraged by the early progress we've seen. Historically dominant product categories of area rugs, furniture, and patio and outdoor furniture continue to top the list of performing categories in the relaunch, confirming the loyal Overstock customer is excited for back. As we continue to increase our assortment, which has gone from a few hundred thousand to several million skews and improve our site experience, we anticipate momentum accelerating across the balance of the year. We're also leaning heavily into the white space that exists in online liquidation, as Marcus mentioned earlier.

David Nielsen: This was our first full quarter of operation since our relaunch at the end of March, and we're encouraged by the early progress we've seen. Historically dominant product categories of area rugs, furniture, and patio and outdoor furniture continue to top the list of performing categories in the Relon.

Speaker Change: Next, on Overstock,

Speaker Change: This was our first full quarter of operation since our relaunch at the end of March, and we're encouraged by the early progress we've seen. Historically dominant product categories of area rugs, furniture, and patio and outdoor furniture continue to top the list of performing categories in the relaunch.

David Nielsen: Confirming that the loyal Overstock customer is excited we're back. As we continue to increase our assortment, which has gone from a few hundred thousand to several million SKUs and improve our site experience, we anticipate momentum accelerating across the balance of the year. We're also leaning heavily into the white space that exists in online liquidation, as Marcus mentioned earlier. Finally, we launched Google Search on the website and, in conjunction with our grand reopening, launched a new marketing campaign to re-engage with customers in a creative way, utilizing AI, which is not only bold but, more importantly, inexpensive, enabling us to offer even more crazy good deals to our customers. And lastly, Zulily.

Speaker Change: Confirming the loyal Overstock customer is excited we're back.

Speaker Change: As we continue to increase our assortment, which has gone from a few hundred thousand to several million SKUs, and improve our site experience, we anticipate momentum accelerating across the balance of the year.

Speaker Change: We're also leaning heavily into the white space that exists in online liquidation, as Marcus mentioned earlier.

David Nielsen: Finally, we launched Google Search on the website, and in conjunction with our grand reopening, launched a new marketing campaign to reengage with customers in a creative way, utilizing AI, which is not only bold, but more importantly, inexpensive, enabling us to offer even more crazy good deals to our customers.

Marcus: Finally, we launched Google Search.

Speaker Change: And in conjunction with our grand reopening, we launched a new marketing campaign to re-engage with customers in a creative way, utilizing AI, which is not only bold, but more importantly, inexpensive, enabling us to offer even more crazy good deals to our customers.

David Nielsen: And lastly, Zoolily, we hired a team of experienced merchants who were with the legacy Zoolily, know the Zoolily customer, and have established working relationships with important brand partners. Their efforts are bearing fruit as we've made great progress on onboarding key legacy vendors, while also adding some new vendors to the mix. In addition to offering exciting flash cells, we'll also be offering an evergreen assortment of must-have basics on site, which will require a member login and be additive to the PNL.

David Nielsen: We hired a team of experienced merchants who were with the legacy Zulily, know the Zulily customer, and have established working relationships with important brand partners, and their efforts are bearing fruit as we've made great progress on onboarding key Legacy vendors, while also adding some new vendors to the mix. In addition to offering exciting flash sales, we'll also be offering an evergreen assortment of must-have basics on site, which will require a member login and be additive to the P&L.

Speaker Change: And lastly, Zulily. We hired a team of experienced merchants.

Speaker Change: Who were with the Legacy Zulily, know the Zulily customer, and have established working relationships with important brand partners, and their efforts are bearing fruit, as we've made great progress on onboarding key Legacy vendors, while also adding some new vendors to the mix.

Speaker Change: In addition to offering exciting flash sales, we'll also be offering an evergreen assortment of must-have basics on site.

Speaker Change: which will require a member login and be additive to the P&L. In summary, there has been a lot accomplished during the quarter across the three brand platforms, and those efforts are clearly starting to turn our ship around. I'll now turn the call over to Adrienne.

David Nielsen: In summary, there has been a lot of accomplice during the quarter across the three brand platforms, and those efforts are clearly starting to turn our ship around.

David Nielsen: In summary, there has been a lot accomplished during the quarter across the three brand platforms, and those efforts are clearly starting to turn our ship around. I'll now turn the call over to Adrianne.

Adrianne Lee: I'll now turn the call over to Adrian. Thank you, Dave. Revenue declined 6% year-over-year in the second quarter; sequentially, revenue increased by 4% driven by an 18% AOV improvement as we mixed out of beddy and into patio furniture. As a reminder, our intent was to deliver revenue in line with the first quarter, while improving profitability, and we accomplished just that in the second quarter. Gross margin landed at 20.1% for the quarter, a 530 basis point decline compared to the same period last. Last year. Elevated discounting and higher carrier costs continue to be the main sources of margin pressure.

Adrianne Lee: Thank you, Dave. Revenue declined 6% year-over-year in the second quarter. sequentially, revenue increased by 4% driven by an 18% AOV improvement as we mixed out of bedding and into patio furniture. As a reminder, our intent was to deliver revenue in line with the first quarter while improving profitability, and we accomplished just that in the second quarter. Gross margin landed at 20.1% for the quarter, a 530 basis point decline compared to the same period last year.

Adrianne Lee: Thank you, Dave. Revenue declined 6% year-over-year in the second quarter. Sequentially, revenue increased by 4% driven by an 18% AOV improvement as we mixed out of bedding and into patio furniture.

Adrianne Lee: As a reminder, our intent was to deliver revenue in line with the first quarter while improving profitability, and we accomplished just that in the second quarter.

Adrianne Lee: Growth margin landed at 20.1% for the quarter, a 530 basis point decline compared to the same period last year.

Adrianne Lee: Elevated discounting and higher carrier costs continue to be the main sources of margin pressure. However, sequentially, we delivered a 70 basis point improvement in gross margin as we worked to optimize discounting and improve carrier costs. These were slightly improved, excuse me, these were slightly offset by our seasonal mix into patio. I want to reiterate the six-part plan we outlined in our fourth quarter earnings call that we continue to execute on to improve our gross margin profile, renegotiating freight rates with our carriers. This is now complete.

Adrianne Lee: Elevated discounting and higher carrier costs continue to be the main sources of margin pressure.

Adrianne Lee: Sequentially, however, we delivered a 70 basis point improvement in gross margin as we work to optimize discounting and improve carrier costs. These were slightly improved; excuse me, these were slightly offset by our seasonal mix into patio furniture.

Adrianne Lee: Sequentially, however, we delivered a 70 basis point improvement in gross margin as we worked to optimize discounting and improve carrier costs. These were slightly offset by our seasonal mix into patio furniture.

Adrianne Lee: I want to reiterate our six-part plan we outlined in our fourth quarter earnings call that we continue to execute on to improve our gross margin profile. Renegotiating freight rates with our carriers. This is now complete. We saw some benefit this quarter and will continue to see improvement in our run rate going forward. Improving vendor relations for more favorable product costs. This is an ongoing effort by our merchandising team in a key area of focus for our upcoming partner summit, relaunching over stock dot com. Thus far, the brand has been a creative to our overall gross margin, providing integration add-ons.

Adrianne Lee: I want to reiterate our six-part plan we outlined in our fourth quarter earnings call that we continue to execute on to improve our gross margin profile.

Adrianne Lee: We saw some benefits this quarter and will continue to see improvement in our run rates going forward. For example, improving Vendor Relations for more favorable product costs. This is an ongoing effort by our merchandising team and a key area of focus for our upcoming partner summit, relaunchingoverstock.com. Thus far, the brand has been accretive to our overall gross market, providing integration add-ons. In late June, we launched our partnership with Angie, which will provide customers with installation and assembly services.

Adrianne Lee: Renegotiating freight rates with our carriers. This is now complete. We saw some benefit this quarter and we'll continue to see improvement in our run rates going forward.

Adrianne Lee: Improving vendor relations for more favorable product costs. This is an ongoing effort by our merchandising team and a key area of focus for our upcoming partner summit.

Adrianne Lee: Relaunchingoverstock.com. Thus far the brand has been accretive to our overall gross margin.

Adrianne Lee: In late June, we launched our partnership with Angie, which will provide customers with installation and assembly services. We continue to market warranties and shipping insurance and are pleased with early performance. We're introducing own brands and embarking on licensing activity. We continue to opportunistically pursue these. And lastly, eliminating inefficient discounting. We made progress in the second quarter and expect continued improvements over time as our brands and corresponding value propositions become clearer to customers. G&A and tech expense of 46 million decreased by 3.5 million year over year, driven by execution of our commitment to reduce fixed costs by an annualized amount of 45 million.

Adrianne Lee: providing integration add-ons. In late June , we launched our partnership with Angie, which will provide customers with installation and assembly services. We continue to market warranties and shipping insurance and are pleased with early performance.

Adrianne Lee: We continue to market warranties and shipping, and are pleased with early performance. We continue to opportunistically, and lastly, eliminating inefficient discounting. We made progress in the second quarter and expect continued improvements over time as our brands and corresponding value propositions become clearer to customers. DNA and Tech Expense of $46 million decreased by $3.5 million year over year, driven by the execution of our commitment to reduce fixed costs by an annualized amount of $45 million.

Adrianne Lee: Reintroducing owned brands and embarking on licensing activity. We continue to opportunistically pursue these.

Adrianne Lee: And lastly, eliminating inefficient discounting. We made progress in the second quarter and expect continued improvements over time as our brands and corresponding value propositions become clearer to customers.

Speaker Change: DNA and Tech expense of $46 million decreased by $3.5 million year-over-year, driven by execution of our commitment to reduce fixed costs by an annualized amount of $45 million.

Adrianne Lee: Through the end of the second quarter, I am pleased to report we have now realized approximately two thirds of that commitment, allowing us to reinvest a portion of those savings to support our brand launches. All in, adjusted EBITDA came in at a loss of $36 million, an improvement of $11 million versus the first quarter of 2024. Our focus remains on managing the business to profitability and driving sequential improvements in adjusted EBITDA. Reported GAPEPS was a loss of 93 cents per share for the second quarter, excluding losses recognized from our equity method and securities. Adjusted diluted loss per share was 76 cents.

Adrianne Lee: Through the end of the second quarter, I am pleased to report we have now realized approximately two-thirds of that commitment, allowing us to reinvest a portion of those savings to support our brand launch. All in, adjusted EBITDA came in at a loss of $36 million, an improvement of $11 million versus the first quarter of 2024. Our focus remains on managing the business to profitability and driving sequential improvements and adjusted EBITDA. Reported gap EPS was a loss of $0.93 per share for the second quarter; excluding losses recognized from our equity method and securities, adjusted diluted loss per share was $0.77.

Speaker Change: Through the end of the second quarter, I am pleased to report we have now realized approximately two-thirds of that commitment, allowing us to reinvest a portion of those savings to support our brand launches.

Speaker Change: All in, Adjusted EBITDA came in at a loss of $36 million, an improvement of $11 million versus the first quarter of 2024. Our focus remains on managing the business to profitability and driving sequential improvements in Adjusted EBITDA.

Speaker Change: Reported GAP EPS was a loss of 93 cents per share for the second quarter, excluding losses recognized from our equity method and securities, adjusted diluted loss per share was 76 cents.

Adrianne Lee: Lastly, our balance sheet remains strong as we ended the quarter with a cash balance of 186 million. In addition to our efforts to improve our margin profile, we will continue to evaluate opportunities to monetize non-performing assets and create liquidity. We have made progress in our efforts to sell our headquarters building and have accelerated actions to explore ways to drive value within our investment in the Medici Fund, including more active discussions with Pelian and some of the fund's more promising companies.

Adrianne Lee: Lastly, our balance sheet remains strong as we ended the quarter with a cash balance of $186,000. In addition to our efforts to improve our margin profile, we will continue to evaluate opportunities to monetize non-performing assets and create liquidity. We have made progress in our efforts to sell our headquarters building and have accelerated actions to explore ways to drive value within our investment in the Medici Fund, including more active discussions with Pellion and some of the fund's more promising partners.

Speaker Change: Lastly, our balance sheet remained strong as we ended the quarter with a cash balance of $186 million.

Speaker Change: In addition to our efforts to improve our margin profile, we will continue to evaluate opportunities to monetize non-performing assets and create liquidity.

Speaker Change: We have made progress in our efforts to sell our headquarters building and have accelerated actions to explore ways to drive value within our investment in the Medici Fund, including more active discussions with Pellion and some of the fund's more promising companies.

Adrianne Lee: In summary, our teams are laser focused on building our three brands while we simultaneously improve our margin profile. We made progress in the second quarter and acknowledge that significant work remains. Our goal is to deliver sequential improvements on our path to profitability.

Adrianne Lee: In summary, our teams are laser focused on building our three brands while we simultaneously improve our margin profile. We made progress in the second quarter and acknowledge that significant work remains. Our goal is to deliver sequential improvements on our path to profitability. I would now like to turn the call back over to Marcus for final comments before we open up for Q&A. Thanks, Adrienne.

Speaker Change: In summary, our teams are laser-focused on building our three brands while we simultaneously improve our margin profile. We made progress in the second quarter and acknowledge that significant work remains. Our goal is to deliver sequential improvements on our path to profitability.

Marcus Lemonis: I would now like to turn the call back over to Marcus for final comments before we open up for Q&A. Thanks, Adrian. Before we move into Q&A, I want to make one final comment.

Speaker Change: I would now like to turn the call back over to Marcus for final comments before we open up for Q&A. Thanks, Adrienne. Before we move into Q&A, I want to make one final comment.

Marcus Lemonis: Before we move into Q&A, I want to make one final comment. While our company does not provide specific guidance, we feel it's very important at this time to give our investors a range of our performance expectations. If you look at the history of both Bed Bath & Beyond and Overstock separately, you'll notice that Q2 typically outperforms Q3 from a revenue standpoint by anywhere from 12 to 14 percent.

Marcus Lemonis: While our company does not provide specific guidance, we feel it's very important at this time to give our investors a range of our performance expectations. When you look at the history of both Bed Bath and Beyond and Overstock separately, you'll notice that Q2 typically outperforms Q3 from a revenue standpoint by anywhere from 12 to 14%. We'll digit percentage sequential improvement to adjust the diva. It is our belief that as we continue to curate and calibrate our business, we will set ourselves up to enjoy the tailwinds that could potentially come from improvements and interest rates, ultimately sparking home demand and demand for home products.

Marcus: While our company does not provide specific guidance, we feel it's very important at this time to give our investors a range of our performance expectations.

Speaker Change: When you look at the history of both Bed Bath & Beyond and Overstock separately, you'll notice that Q2 typically outperforms Q3 from a revenue standpoint by anywhere from 12 to 14 percent.

Operator: It is our goal to have our third quarter revenue performance be in line with that, if not better, than that historical trend. It is also our expectation that we will have sequential gross margin improvement, as well as a minimum low double-digit percentage sequential improvement to adjusted EBITDA. It is our belief that as we continue to curate and calibrate our business, we will set ourselves up to enjoy the tailwinds that could potentially come from improvements in interest rates, ultimately sparking home demand and demand for home products. With that, we'll take some questions. Certainly.

Speaker Change: It is our goal to have our third quarter revenue performance be in line with that, if not better, than that historical trend.

Speaker Change: It is also our expectation that we have sequential gross margin improvement, as well as a minimum low double-digit percentage sequential improvement to adjusted EBITDA.

Speaker Change: It is our belief that as we continue to curate and calibrate our business, that we will set ourselves up to enjoy the tailwinds that could potentially come from improvements in interest rates, ultimately sparking home demand and demand for home products. With that, we'll take some questions.

Operator: With that, we'll take some questions.

Steven Forbes: Certainly. And our first question for today comes from the line of Steven Forbes from Guggenheim Partners. Your question, please. Good morning, everybody. Marcus, it sounds like you're talking about an 18-month time frame, or I don't know if I'm overreading that, but is that how you sort of currently see the business on its path to profitability? Is that a fair sort of time frame behind the potential achievement of sort of a neutral EBITDA margin profile, or any updates on, I know you're not providing longer term guidance. Just like, how do you see the business sort of capturing that state of neutrality as it relates to cash flow dynamics and overall profit?

Stephen Forbes: And our first question for today comes from the line of Stephen Forbes from Guggenheim Partners. Your question, please. Good morning, everybody.

Speaker Change: Certainly. And our first question for today comes from the line of Stephen Forbes from Guggenheim Partners. Your question, please.

Marcus Lemonis: Marcus, it sounds like you're talking about an 18 month timeframe, or I don't know if I'm overreading that. But is that how you sort of currently see the business on its path to profitability? Like, is that is that a fair sort of timeframe behind the potential achievement of sort of a neutral EBITDA margin profile or, or any updates on that? I know you're not providing long-term guidance, just like how do you see the business sort of capturing that state of neutrality as it relates to cash flow dynamics and overall profit? Yeah, it had better be long before the 12 to 18 months.

Stephen Forbes: Good morning, everybody. Marcus.

Stephen Forbes: It sounds like you're talking about an 18-month time frame, or I don't know if I'm over-reading that, but...

Stephen Forbes: Is that how you sort of currently see the business on its path to profitability? Like, is that a fair sort of timeframe behind the potential achievement of sort of a neutral EBITDA margin profile? Or any updates on – I know you're not providing long-term guidance. Just, like, how do you see the business?

Speaker Change: Sort of capturing that state of neutrality as it relates to cash flow dynamics and overall profit

Marcus Lemonis: Yeah, it better be long before the 12 to 18 months. And the reason I identified 12 to 18 months in a few topics is because there's a maturation process, and we want to set proper expectations and not wreck the business. But it is our expectation that at some point in 2025, we are able to achieve profitability. That is how we're building our plan. That is how we're looking at our overall head count. And that's how we're looking at managing the different parts of our business.

Marcus Lemonis: And the reason I identified 12 to 18 months for a few topics is that there's a maturation process, and we want to set proper expectations and not wreck the business. But it is our expectation that at some point in 2025, we will be able to achieve profitability. That is how we're building our plan. That is how we're looking at our overall headcount, and that is how we're looking at managing the different parts of our business. I appreciate that clarity.

Speaker Change: Yeah, it better be long before the 12 to 18 months. And the reason I identified 12 to 18 months in a few topics is because there's a maturation process, and we want to set proper expectations and not wreck the business.

Speaker Change: But it is our expectation that at some point in 2025, we are able to achieve profitability. That is how we're building our plan. That is how we're looking at our overall headcount. And that's how we're looking at managing the different parts of our business.

Stephen Forbes: And then given the second quarter cash flow dynamics, is there a days payable outstanding ratio we should be modeling OWC needs around or any help sort of, as you think about the business, you know, reestablishing relationships with vendors, you have a skew sort of optimization path, how we should think about OWC needs and or usage for the remainder of the year. Hi, Steve, this is Adrianne.

Adrianne Lee: Appreciate the clarity. And then given the second quarter cash flow dynamics, is there a days payable outstanding ratio we should be modeling OWC needs around, or any help sort of as you think about the business, you know, reestablishing relationships with vendors. You have a skew sort of optimization path. How we should think about OWC needs and or usage for the remainder of the year.

Speaker Change: I appreciate that clarity. And then, given the second quarter cash flow dynamics,

Speaker Change: Is there a days payable outstanding ratio we should be modeling OWC needs around or any help sort of?

Speaker Change: As you think about the business, you know, reestablishing relationships with vendors, you know, the SKU sort of optimization path, how we should think about OWC needs and or usage for the remainder of the year.

Adrianne Lee: I see this is Adrian. And I would just say, you know, as we're working to onboard new vendors within these brands, you know, we're staying within kind of our typical guard rails of kind of payables and receivables. So I would say kind of no change in modeling as you think about onboarding Zoolole vendors or curating bedbass vendors, staying really within our guard rails of kind of what you've seen us historically have as payable.

Adrianne Lee: And I would just say, you know, as we're working to onboard new vendors within these brands, we're staying within kind of our typical guardrails of kind of payables and receivables. So I would say kind of no change in modeling as you think about onboarding Zulily vendors or curating Bed Bath & Beyond vendors, staying really within our guardrails of kind of what you've seen us historically have as payables. Let me add one thing to that.

Adrianne Lee: Hi, Steve. This is Adrianne. And I would just say, you know, as we're working to onboard new vendors within, you know, these brands, you know, we're staying within kind of our typical guardrails of kind of payables and receivables. So I would say kind of no change in modeling as you think about onboarding Zulily vendors or curating Bed Bath Vendors.

Adrianne Lee: Staying really within our guardrails of kind of what you've seen us historically have as payables.

Marcus Lemonis: Thank you. Let me add one thing to that: you know, as our performance continues to improve and vendor consolidation comes to light, and those vendors enjoy that consolidation while also appreciating our improvement and performance, it is our expectation that we'll be able to renegotiate even better terms with certain providers. In some cases, some of the terms that we have don't meet my standards, but we understand that we need to earn the right to make that request, and that is a huge focus for us as we look at growing our profitability.

Marcus Lemonis: You know, as our performance continues to improve and vendor consolidation comes to light, and those vendors enjoy that consolidation while also appreciating our improvement in performance, it is our expectation that we'll be able to renegotiate even better terms with certain providers. In some cases, some of the terms that we have don't meet my standards, but we understand that we need to earn the right to make that request. And that is a huge focus for us as we look at growing our profitability. That's great to hear.

Speaker Change: Thank you. Yeah, let me add one thing to that. You know, as our performance...

Speaker Change: continues to improve and vendor consolidation comes to light and those vendors enjoy that consolidation while also appreciating our improvement in performance. It is our expectation that we'll be able to renegotiate even better terms with certain providers.

Speaker Change: In some cases, some of the terms that we have don't meet my standards, but we understand that we need to earn the right to make that request, and that is a huge focus for us as we look at growing our profitability.

Steven Forbes: Betty. That's great to hear.

Operator: Thank you.

Speaker Change: That's great to hear. Thank you.

Thomas Forte: And our next question comes from the line of Thomas Forte from Maxim Group. Your question, please. Great. Thanks. I have one question.

Operator: Thank you. And our next question comes from... Thomas Forte from Maxim Group. Your question, please. Great, thanks.

Speaker Change: Thank you.

Speaker Change: And our next question comes to the line.

Thomas Forte: I have one question, one follow-up. And first off, congratulations on the performance in the quarter. So the first question I have is, Marcus, can you talk about your capital allocation priority, especially as it relates to potentially monetizing the non-performing assets, either selling the headquarters or anything related to Medici Ventures? Yeah, so from a capital allocation standpoint, we are laser focused today, tomorrow, and deep into the future on continuing to be an asset light business.

Speaker Change: of Thomas Forte from Maxim Group. Your question, please.

Thomas Forte: One follow-up, and first off, congrats on that performance in the quarter.

Thomas Forte: Great. Thanks. I have one question, one follow-up. And first off, congrats on the performance in the quarter. So the first question I have is, Marcus, can you talk about your capital allocation priorities this year? Thank you.

Thomas Forte: So the first question I have is, Marcus, can you talk about your capital allocation priorities, especially as it relates to potentially monetizing the non-performing assets, either selling the headquarters for anything related to Medici Ventures? Yeah, so from a capital allocation standpoint, we are laser-focused today, tomorrow, and deep into the future on continuing to be an asset-like business. And candidly, we have entered into an LOI with a party here in Salt Lake that will allow us to even be more asset-like, that will obviously reduce about $34 million of debt off our balance sheet and potentially bring in cash flow, you know, in the neighborhood of $20 million-ish, you know, after paying fees.

Speaker Change: Especially as it relates to potentially monetizing the non-performing assets either selling the headquarters or anything related to Medici Ventures.

Marcus: Yeah, so from a capital allocation standpoint, we are laser focused today, tomorrow, and deep into the future on continuing to be an asset light business.

Thomas Forte: And candidly, we have entered into an LOI with a party here in Salt Lake that will allow us to even be more asset light. That'll obviously reduce about $34 million of debt off our balance sheet and potentially bring in cash flow in the neighborhood of $20 million-ish after paying fees. As we look at the Medici assets, Adrianne and I have taken a slightly more active role, and while we appreciate the nature of the agreement between our company and Pellion, we have started to open up some dialogue and recently made the request for Pellion to put on Medici Days.

Marcus: And candidly, we have entered into an LOI with a party here in Salt Lake that will allow us to even be more asset light.

Marcus: That'll obviously reduce about $34 million of debt off our balance sheet and potentially bring in cash flow, you know, in the neighborhood of $20 million-ish, you know, after paying fees.

Marcus Lemonis: As we look at the Medici assets, Adrianne and I have, you know, taken a slightly more active role. And while we appreciate the nature of the agreement between our company and Pallion, we have started to open up some dialogue and recently made the request for Pallion to put on a Medici Days. Now, they're not obligated to do that, but we have strongly encouraged them to help our shareholders understand the value of that portfolio. Furthermore, it is our expectation, and quite frankly, our mandate for Adrianne and me, to increase the level of communication with those companies that are part of our investment portfolio.

Marcus: As we look at the Medici assets,

Marcus: Adrianne and I have, you know, taken a slightly more active role. And while we appreciate the nature of the agreement between our company and Pellion, we have started to open up some dialogue and recently made the request for Pellion to put on a Medici Days.

Marcus Lemonis: Now, they're not obligated to do that, but we have strongly encouraged them to help our shareholders understand the value of that portfolio. Furthermore, it is our expectation and, quite frankly, our mandate for Adrianne and me to increase the level of communication with those companies that are part of our investment portfolio. The money left our company, and it went in to help these other companies start or fuel their ideas. And a number of them, we have very high hopes for.

Marcus: Now, they're not obligated to do that, but we have strongly encouraged them to help our shareholders understand the value of that portfolio.

Marcus: Furthermore, it is our expectation and, quite frankly, our mandate for Adrianne and I to increase the level of communication with those companies that are part of our investment portfolio.

Marcus Lemonis: The money left our company, and it went in to help these other companies start or fuel their ideas, and the number of them we have very high hopes for. We think it's our responsibility to have a direct relationship with leadership and management in those companies, so we can understand how our company can better help them achieve their goals. And so, while we will always respect the direct relationship that Pallion has with them, because of the engagement that we put in place, we are not precluded from having our own relationship, having our own understanding, and driving results that we expect for our shareholders.

Speaker Change: The money left our company and it went in to help these other companies start or fuel their ideas, and a number of them we have very high hopes for.

Marcus Lemonis: We think it's our responsibility to have a direct relationship with leadership and management in those companies so we can understand how our company can better help them achieve their goals. And so while we will always respect the direct relationship that Pelleon has with them, because of the engagement that we put in place, we are not precluded from having our own relationship, having our own understanding, and driving results that we expect for our shareholders.

Speaker Change: We think it's our responsibility to have a direct relationship with leadership and management in those companies so we can understand how our company can better help them achieve their goals.

Speaker Change: And so while we will always respect the direct relationship that Pellion has with them because of the engagement that we put in place, we are not precluded from having our own relationship, having our own understanding, and driving results that we expect for our shareholders.

Marcus Lemonis: Now, we're always looking at exploring alternatives with the portfolio, but it is our expectation that we want to maximize the results of that investment. And there are a few companies that we believe have a real, significant opportunity. Now, we don't know what that opportunity is, and oftentimes investors ask us to quantify that. We today use an outside independent third party to establish the value of those assets as they see it.

Marcus Lemonis: Now, we're always looking at exploring alternatives with the portfolio, but it is our expectation that we want to maximize the results of that investment. And there are a few companies that we believe have a real significant opportunity. Now, we don't know what that opportunity is, and oftentimes investors ask us to quantify that. We today use an outside independent third party to establish the value of those assets as they see it. If it was up to us, we probably would put more on the balance sheet. But we really believe that an independent third party who doesn't have a dog in the fight has to really tell our investors what they believe the current value of that portfolio is.

Speaker Change: Now, we're always looking at exploring alternatives with the portfolio, but it is our expectation that we want to maximize the results of that investment.

Speaker Change: And there are a few companies that we believe have a real significant opportunity.

Speaker Change: Now, we don't know what that opportunity is, and oftentimes investors ask us to quantify that.

Speaker Change: We today use an outside, independent third party to establish the value of those assets as they see it.

Marcus Lemonis: If it was up to us, we probably would put more on the balance sheet. But we really believe that an independent third party who doesn't have a dog in the fight has to really tell our investors what they believe the current value of that portfolio is. It is our expectation that a few of those companies could exceed that, but we're realists, and the best way for us to stand behind that valuation, not just on paper, but in practicality, is for us to develop a much deeper relationship with those companies and be able to talk more freely and more intelligently about the results or lack thereof of those respective companies.

Speaker Change: If it was up to us, we probably would put more on the balance sheet, but we really believe that an independent third party, who doesn't have a dog in the fight, has to really tell our investors what they believe the current value of that portfolio is.

Marcus Lemonis: It is our expectation that a few of those companies could exceed that, but we're realists. And the best way for us to stand behind that valuation, not just on paper, but in practicality, is for us to develop a much deeper relationship with those companies and be able to talk more freely and more intelligently about the results or lack thereof with those respective companies.

Speaker Change: It is our expectation that a few of those companies could exceed that, but we're realists.

Speaker Change: And the best way for us to stand behind that valuation, not just on paper, but in practicality, is for us to develop a much deeper relationship with those companies and be able to talk more freely and more intelligently about the results or lack thereof with those respective companies.

Marcus Lemonis: When I think about the cash that can be generated from them, the one thing that I want to reiterate 10 times on this call is that we are an asset-like company and we will continue to be such. But I am of the firm belief, both through the acquisition of intellectual property like they made with Bed Bath or we did with Zoo Lily or the decades-long establishment of the Overstock brand that they are untapped. I firmly believe that both the Overstock brand and the Bed Bath & Beyond brand deserve to be in marketplaces that our company may not be in because of our asset-like nature.

Marcus Lemonis: When I think about the cash that can be generated from them, the one thing that I want to reiterate 10 times on this call is that we are an asset-light company, and we will continue to be such. But I am of the firm belief, both through the acquisition of intellectual property, like they did with Bed Bath & Beyond or we did with Zulily, or the decades-long establishment of the Overstock brand, that they are untapped.

Speaker Change: When I think about the cash that can be generated from them.

Speaker Change: The one thing that I want to reiterate 10 times on this call is that we are an asset-like company and we will continue to be such.

Speaker Change: But I am of the firm belief, both through the acquisition of intellectual property, like they made with Bed Bath or we did with Zulily, or the decades-long establishment of the Overstock brand, that they are untapped.

Marcus Lemonis: I firmly believe that both the Overstock brand and the Bed Bath & Beyond brand deserve to be in marketplaces that our company may not be in because of our asset-light nature. We're in the final stages of documentation on working with what we consider a very, very large player in the liquidation or reverse logistics business. We expect them to leverage the Overstock brand, the Overstock website, and the Overstock vendor relationships, and expect to be financially rewarded for our participation in that partnership.

Speaker Change: I firmly believe that both the Overstock brand and the Bed Bath & Beyond brand deserve to be in marketplaces that our company may not be in because of our asset-light nature.

Marcus Lemonis: We're in the final stages of documentation on working with a what we consider a very, very large player in the liquidation of reverse logistics business. We expect them to leverage the Overstock brand, the Overstock website, the Overstock vendor relationships, and expect to be financially rewarded for our participation in that partnership. There is a small investment that's being contemplated in the form of debt that we will be providing to that company in a secured way. And in addition to that, a very lucrative royalty that will come directly to Dave's business for all of the things that Dave brings to the table, including allowing their product to be sold directly on Overstock.com, where he will also make a fee, allowing that company to leverage Dave's multiple relationships with vendors who may need to move product or may need to handle their own returns and to help them figure out ways to optimize their performance by utilizing the Overstock.com database.

Speaker Change: We're in the final stages of documentation on working with what we consider a very, very large player in the liquidation and reverse logistics business.

Speaker Change: We expect them to leverage the Overstock brand, the Overstock website, the Overstock vendor relationships, and expect to be financially rewarded for our participation in that partnership.

Marcus Lemonis: There is a small investment that's being contemplated in the form of debt that we will be providing to that company in a secured way. And in addition to that, a very lucrative royalty that will come directly to Dave's business for all of the things that Dave brings to the table, including allowing their product to be sold directly on Overstock.com or he will also make a fee, allowing that company to leverage Dave's multiple relationships with vendors who may need to move product or may need to handle their own returns and to help them figure out ways to optimize their performance by utilizing the Overstock All of that for a very, very healthy return.

Speaker Change: There is a small investment that's being contemplated in the form of debt.

Speaker Change: That we will be providing to that company in a secured way.

Speaker Change: And in addition to that, a very lucrative royalty that will come directly to Dave's business.

Speaker Change: for all of the things that Dave brings to the table, including allowing their product to be sold directly on overstock.com, where he will also make a fee.

Speaker Change: Allowing that company to leverage Dave's multiple relationships with vendors who may need to move product or may need to handle their own returns.

Speaker Change: And to help them figure out ways to optimize their performance by utilizing the Overstock.com database. All of that for a very, very healthy return.

Marcus Lemonis: All of that for a very, very healthy return. We see that the owners of this company have historically not necessarily had investments made there in the line of sight of the business. And you could expect that going forward, anything that we do will have a very, very strong adjacency to not only one of our brands and explaining them and exploring new ideas, but will provide very healthy cash-on-cash returns in quarters, not just waiting for the air ball of opportunity.

Thomas Forte: We see that the owners of this company have historically not necessarily had investments made that are in the line of sight of the business. And you can expect that going forward, anything that we do will have a very, very strong adjacency to not only one of our brands and expanding them and exploring new ideas but will provide very healthy cash on cash returns in quarters, not just waiting for the air ball of opportunity. Thank you, Marcus.

Speaker Change: We see that the owners of this company have historically not necessarily had investments made that are in the line of sight of the business.

Speaker Change: And you could expect that going forward, anything that we do will have a very, very strong adjacency

Speaker Change: to not only one of our brands and expanding them and exploring new ideas, but we'll provide

Speaker Change: Very healthy cash-on-cash returns in quarters, not just waiting for the air ball of opportunity.

Thomas Forte: Thank you, Marcus, for my second question.

Marcus Lemonis: For my second question, I wanted to ask you about the changes you've made to management and your efforts to deepen your. You know, from my perspective, I love subject matter experts who are willing to roll up their sleeves. And as I tell them all the time, we have a body on the table, and that body requires seven days a week, 24 hours, at least availability. When you run an e-commerce business, it's open 24-7.

Marcus Lemonis: I wanted to ask you about the changes you've made in management and your efforts to deepen your bench. You know, from my perspective, I love subject matter experts who are willing to roll up their sleeves. And as I tell them all the time, we have a body on the table. And that body requires seven days a week, 24 hour, at least availability. When you run any commerce business, it's open 24 seven. And we need to have a management team and a supporting staff underneath them that understands that the customer experience can never be impaired. We were fortunate to not have any disruption in our business since the beginning of the year, in light of all of the outages that you've seen on the internet.

Marcus: Thank you, Marcus. For my second question, I wanted to ask you about the changes you've made to management and your efforts to deepen your bench.

Speaker Change: You know, from my perspective, I love subject matter experts who are willing to roll up their sleeves. And as I tell them all the time, we have a body on the table, and that body requires seven days a week, 24 hour, at least availability.

Marcus Lemonis: And we need to have a management team and a supporting staff underneath them that understands that the customer experience can never be impaired. We were fortunate to not have any disruption in our business since the beginning of the year, in light of all of the outages that you've seen on the Internet. And I attribute the strength of our team and the savviness of our team to a lot of that.

Speaker Change: When you run an e-commerce business, it's open 24-7, and we need to have a management team and a supporting staff underneath them that understands that the customer experience can never be impaired.

Speaker Change: We were fortunate to not have any disruption in our business since the beginning of the year, in light of all of the outages that you've seen on the internet. And I attribute the strength of our team and the savviness of our team to a lot of that.

Marcus Lemonis: And I attribute the strength of our team and the sadness of our team to a lot of that. But when it comes to understanding this company, there's one thing that I believe has been historically missing. And that's their love of product. And Dave has reset the expectation, along with Stacy Shively, in our company's necessity to fall in love with not only brand new product from the world's greatest vendors, but from close outs, the liquidations to reverse logistics. It is our responsibility to bring the right product to the customer at the right time. And most importantly, to be able to serve a wide swap of customers by doing it at the right price for them, which is why we have these various entry points.

Marcus Lemonis: But when it comes to understanding this company, there's one thing that I believe has been historically missing, and that's their love for product. And Dave has reset the expectation, along with Stacy Shively, for our company's necessity to fall in love with not only brand new product from the world's greatest vendors but from closeouts to liquidations to reverse logistics. It is our responsibility to bring the right product to the customer at the right time, and most importantly, to be able to serve a wide swath of customers by doing it at the right price for them, which is why we have these various entry points. From my perspective, a flatter, leaner organization is a more nimble and responsive organization.

Speaker Change: But when it comes to understanding this company, there's one thing that I believe has been historically missing, and that's their love of product.

David Nielsen: And Dave has reset the expectation along with Stacey Shively in our company's necessity to fall in love with not only brand new product from the world's greatest vendors, but from closeouts to liquidations to reverse logistics.

Speaker Change: It is our responsibility to bring the right product to the customer at the right time, and most importantly, to be able to serve a wide swath of customers by doing it at the right price for them, which is why we have these various entry points.

Marcus Lemonis: From my perspective, a flatter, leaner organization is a more nimble and responsive organization. I think the other thing we've learned, as we've added talent like Gucci and promoted people like Carlycia, is that those folks truly are subject matter experts in their respective business. And they definitively understand the sense of urgency that I demand in this business. Profitability is not an option or a casual observation. It is a mandate, and we will do everything we have to to reach that level of profitability. I do want to clarify one thing. I don't want anybody on this call to be confused with an absolute laser focus on profitability and the calibration around assortments or around revenue to think that we are not a growth company.

Speaker Change: From my perspective, a flatter, leaner organization is a more nimble and responsive organization.

Marcus Lemonis: I think the other thing we've learned as we've added talent like Gucha and promoted people like Carlisha is that those folks truly are subject matter experts in their respective businesses. And they definitively understand the sense of urgency that I demand in this business. Profitability is not an option or a casual observation.

Speaker Change: I think the other thing we've learned as we've added talent like Gucha and promoted people like Carlisha is that those folks truly are subject matter experts in their respective business.

Speaker Change: And they definitively understand the sense of urgency that I demand in this business.

Speaker Change: Profitability is not an option or a casual observation. It is a mandate and we will do everything we have to to reach that level of profitability. I do want to clarify one thing.

Marcus Lemonis: It is a mandate, and we will do everything we have to to reach that level of profitability. I do want to clarify one thing. I don't want anybody on this call to be confused by our absolute laser focus on profitability and the calibration around assortments or around revenue to think that we are not a growth company. For those that have known me for decades, growth is my middle name.

Speaker Change: I don't want anybody on this call to be confused with an absolute laser focus on profitability and the calibration around assortments or around revenue to think that we are not a growth company.

Marcus Lemonis: For those that have known me for decades, growth is my middle name. But I have never operated in the business that's starting from the hole. And until we reach out of that hole, growth will be our middle name and not our first name because profitability needs to come before growth. Once we reach that level of profitability or, more importantly, has a very clear line of sight to it, you could expect me to, as we are building the systems. But I need to be confident that the way our customers travel through our websites, the way the search functionality works, the way our vendors price their product and present it to consumers, including the information, the pictures, the videos, the how to's, until those things are right.

Speaker Change: For those that have known me for decades, growth is my middle name.

Marcus Lemonis: But I have never operated in a business that starts from the whole, and until we reach out of that whole, growth will be our middle name and not our first name, because profitability needs to come before growth. Once we reach that level of profitability, or more importantly, have a very clear line of sight to it, you could expect me to, as I have traditionally put my foot on the gas. I think we have the right team.

Speaker Change: But I have never operated in the business that's starting from the hole, and until we reach out of that hole, growth will be our middle name and not our first name, because profitability needs to come before growth.

Speaker Change: Once we reach that level of profitability, or more importantly, have a very clear line of sight to it, you can expect me to, as I have traditionally, put my foot on the gas.

Marcus Lemonis: We are building the systems, but I need to be confident that the way our customers travel through our websites, the way the search functionality works, the way our vendors price their products and present them to consumers, including the information, the pictures, the videos, the how-to's, until those things are right, and we've achieved our margins the way we need to, we will not be pressing the gas or wasting money on anything.

Speaker Change: I think we have the team.

Speaker Change: We are building the systems, but I need to be confident that the way our customers travel through our websites.

Speaker Change: The way the search functionality works.

Speaker Change: The way our vendors price their product and present it to consumers, including the information, the pictures, the videos, the how-tos, until those things are right.

Marcus Lemonis: And we've achieved our margins the way we need to. We feel that margin is the single biggest thing this company can now do to find its way to profitability. Of course, generating revenue does that, but not if the transaction isn't profitable after all the costs are accounted for, which means we need to improve our marketing costs, our row-as, our conversion on our website, our delivery expense, and all the other added items. Upon my first call of joining this company, I did tell the market one specific thing.

Speaker Change: And we've achieved our margins.

Speaker Change: The way we need to. We will not be pressing the gas or wasting money on anything.

Marcus Lemonis: Look, I feel that margin is the single biggest thing this company can do to find its way to profitability. Of course, generating revenue does that, but not if the transaction isn't profitable after all the costs are accounted for, which means we need to improve our marketing costs, our ROAS, our conversion on our website, our delivery expenses, and all the other added items. Upon my first call since joining this company, I did tell the market one specific thing. My ultimate goal is to build a global database that can be monetized in a different way. That goal has not changed.

Speaker Change: Look, I feel that margin is the single biggest thing this company can now do to find its way to profitability.

Speaker Change: Of course, generating revenue does that, but not if the transaction isn't profitable after all the costs are accounted for.

Speaker Change: Which means we need to improve our marketing costs, our ROAS, our conversion on our website, our delivery expense, and all the other added items.

Marcus Lemonis: And the focus on growing the customer file is a small piece of that. Another piece is building alliances. And so over the next three to six months, whether it's the reverse logistics or liquidation company or a variety of other partners, you can expect us to have that goal of building the database to the ultimate goal of monetizing IP and monetizing the customer file as the way this company starts to see real levels of profitability, not marginal levels of profitability. That is not a six or twelve month thing.

Speaker Change: Upon my first call of joining this company, I did tell the market one specific thing. My ultimate goal is to build a global database that can be monetized in a different way.

Marcus Lemonis: My ultimate goal is to build a global database that can be monetized in a different way. That goal has not changed, and the focus on growing the customer file is a small piece of that. Another piece is building alliances. And so, over the next three to six months, whether it's a reverse logistics or liquidation company, or a variety of other partners, you can expect us to have that goal of building the database to the ultimate goal of monetizing IP and monetizing the customer file as the way this company starts to see real levels of profitability, not marginal levels of profitability.

Marcus Lemonis: So when I say twelve to eighteen months, twenty four months, thirty six months, I'm talking about our North Star goal. And that's important for us to have that distinction. Thank you, Marcus. And our next question comes from the line of Seth Zinkman from Barclays on your question, Great. Good morning, everyone.

Marcus Lemonis: That is not a six or 12 month thing. So when I say 12 to 18 months, 24 months, 36 months, I'm talking about our North Star goal. And that's important for us to have that distinction.

Seth Sigman: Thank you. And our next question comes from the line of Seth Sigman from Barclays. Your question, please. Great. Good morning, everyone. Marcus, the philosophy going into the quarter was to use Q2 as a test period, I think. Not to chase sales, but to really try to understand the demand sensitivity to marketing and promotions and create this baseline. Can you elaborate on that and how did that play out? What did you learn? And I realize a lot of this is still ongoing, right?

Seth Zinkman: Marcus, the philosophy going into the quarter was to use Q2 as a test period, I think, not to chase sales but to really try to understand the demand sensitivity to marketing and promotions and create this baseline. Can you elaborate on that? And how did that play out?

Marcus Lemonis: As you guys figure things out, but what is the philosophy if you think about the third quarter here and maybe tie that in with the expectation for EBITDA to improve sequentially? Thanks so much. Yeah, so I think there's, you know, there's a couple of things we went into the quarter and month after month in the quarter. We saw a nice progress as it related to our fixed expenses, our gross margin improvement, and started to see that as we closed out each month, we were marching towards that. Now, the first month of the quarter, unfortunately, did not meet the same expectations as the second and third month did of the quarter.

Marcus Lemonis: What did you learn? And I realize a lot of this is still ongoing, right, as you guys, you know, figure things out. But what is the philosophy as you think about the third quarter here and maybe tie that in with the expectation for EBITDA to improve sequentially? Thanks.

Marcus Lemonis: Yeah, so I think there are a couple of things. We went into the quarter, and month after month in the quarter, we saw nice progress as it related to our fixed expenses, our gross margin improvement, and started to see that as we closed out each month, we were marching towards that. Now, the first month of the quarter, unfortunately, did not meet the same expectations as the second and third months of the quarter.

Marcus Lemonis: As we entered the third quarter, we sat down as a team and had some very candid conversations about the macro environment, about how the consumer was feeling around the noise around the geopolitical environment, the upcoming Olympics, and we looked at ourselves and said, "Listen, we need to improve profitability, and we have a choice in the first month." Do we chase revenue, overspend to try to attract new customers or hold on to them, or do we very strategically learn to find ways to use our email database more effectively, improve our PLA spend, and do things to improve contribution margin, including raising prices.

Marcus Lemonis: As we entered the third quarter, we sat down as a team and had some very candid conversations about the macro environment, about how the consumer was feeling, about the noise, about the geopolitical environment, about the upcoming Olympics, and we looked at ourselves and said, listen, we need to improve profitability, and we have a choice in the first month. Do we chase revenue, overspend to try to attract new customers or hold on to them, or do we very strategically learn to find ways to use our email database more effectively, improve our PLA spend, and do things to improve contribution margin, including raising prices?

Speaker Change: As we entered the third quarter, we sat down as a team and had some very candid conversations about the macro environment about how the consumer is feeling around the noise around the geopolitical environment. The upcoming Olympics, and we looked at ourselves and said listen we need to improve profitability and we have a choice in the <unk>.

Speaker Change: First month do we chase revenue overspend to try to attract new customers or hold on to them or do we very strategically learn to find ways to use our email database more effectively improve our pls spend and do things to improve contribution margin including raise.

Marcus Lemonis: Now, we all know that when you raise prices, you're going to get some level of resistance, and we saw it in small pockets. But I'm here to tell you that I'm happy with the profitability performance thus far in July and feel like, as we marinate towards August and September and get ready for Labor Day, we will have continued to make improvements in margin in our ad spend in our fixed costs. When you look at the third quarter in comparison to the second quarter, as I mentioned earlier, the second quarter always performed for Bed Bath and Overstock separately and now together to be about 12 to 14% lighter in the third quarter.

Marcus Lemonis: Now, we all know that when you raise prices, you're going to get some level of resistance, at least solid and small pockets. But I'm here to tell you that I'm happy with the profitability performance thus far in July and feel like as we move towards August and September and get ready for Labor Day, we will have continued to make improvements in margin, in our ad spend, and in our fixed costs. When you look at the third quarter in comparison to the second quarter, as I mentioned earlier, the second quarter always performed for Bed Bath and Overstock separately and now together to be about 12 to 14% lighter in the third quarter.

Speaker Change: Zinc prices now we all know that when you raised prices youre going to get some level of resistance and we solid in small pockets, but I'm here to tell you that I am happy with the profitability performance, thus far in July and feel like as we marinate towards August and September and get ready for <unk>.

Speaker Change: Labor day, we will have continued to make improvements in margin in our AD spend and are fixed costs. When you look at the third quarter in comparison to the second quarter as I mentioned earlier, the second quarter always perform for bed Bath and overstock separately and now together to be about 12% to 14%.

Marcus Lemonis: We feel confident that we can not only meet that objective or that historical trend line, but our goal is to outperform it while also sequentially improving margins and sequentially improving EBITDA. As we head into the fourth quarter, we're getting ready for what we would call our mini Super Bowl.

Marcus Lemonis: We feel confident that we can not only meet that objective or that historical trend line, but our goal is to outperform that while also sequentially improving margins and sequentially improving EBITDA.

Speaker Change: Lighter in the third quarter, we feel confident that we can not only meet that objective or that historical trend line, but our goal is to outperform that while also sequentially improving margins and sequentially improving EBITDA as we head into the fourth quarter, we're getting ready for what we would call our mini <unk>.

Seth Zinkman: And the reason I call it the mini Super Bowl is that we want to test other things. It'll be the first year where our quarter over quarter, where our Bed, Bath, and Beyond brand really drove the volume of transactions. But when we look back on Q4 of last year, none of us would accept the margin performance, the expense performance, or the EBITDA performance. So our clear goal for Q4 is to have a significant, significant year-over-year improvement on the bottom line.

Marcus Lemonis: As we head into the fourth quarter, we're getting ready for what we would call our mini Super Bowl. And the reason I call it the mini Super Bowl is that we want to test other things that will be the first year where our quarter over quarter where our Bed Bath and Beyond brand really drove the volume of transactions. But when we look back on Q4 of last year, none of us would accept the margin performance, the expense performance, or the EBITDA performance. So our clear goal in Q4 is to have a significant year-over-year improvement on the bottom line, and we believe it could be the first quarter where we start to lap and improve year-over-year results.

Speaker Change: Super Bowl and the reason I call that the mini Super Bowl and we wanted to test other things that'll be the first year, where our quarter over quarter, where our bed Bath <unk> beyond brand really drove the volume of transactions, but when we look back on Q4 of last year, none of us would accept the margin performance.

Seth Zinkman: And we believe it could be the first quarter where we start to lap and improve year-over-year results, which we're really looking forward to. As we transition into 2025, we expect that sequential margin improvement and the continual growth of overstock, which is trending very nicely, by the way. When I look at the launch of Overstock starting at the end of March, essentially April 1st, I now look at my daily dashboard, and I'm seeing average sales around $300,000 and $310,000.

Marcus Lemonis: Forbes. That we're really looking forward to. As we transition into 2025, we expect that sequential margin improvement, the continual growth of overstock, which is trending very nicely, by the way. When I look at the launch of Overstock starting at the end of March, essentially it prefers. I now look at my daily dashboard and I'm seeing average sales around $310,000. You can extrapolate out what that looks like, but we believe those daily sales will continue to grow nicely over the next several months.

Speaker Change: We're really looking forward to as we transition into 2025, we expect that sequential margin improvement the continual growth of overstock, which is trending very nicely by the way when I look at the launch of Overstock starting at the end of March essentially April one.

Speaker Change: Now look at my daily dashboard, and Im seeing average sales around 300 and $310000 you can extrapolate out what that looks like but we believe those daily sales will continue to grow nicely over the next several months and then additionally, we will be launching the zoo Lilly business right around <unk>.

Marcus Lemonis: You can extrapolate out what that looks like, but we believe those daily sales will continue to grow nicely over the next several months. And then, additionally, we'll be launching the Zulily business right around September 10th. We'll call it mid-September and expect that to contribute more in Q4 than it will in Q3. We'll have some ramp-up costs in Q3, but from a revenue standpoint, more in Q4. Super helpful; thank you for that.

Marcus Lemonis: And then additionally, we'll be launching the Zoolily business right around September 10th. We'll call it Mid-September. And expect that to contribute more in Q4 than it will in Q3. We'll have some ramp-up costs in Q3, but from a revenue standpoint, more in Q4. Okay, super helpful. Thank you for that. And then just one follow-up thinking about revenue from this past quarter came in slightly ahead of how you were forecasting it. It looks like AOV was maybe the surprise. Can you speak to that? It sounds like it was maybe some success selling bigger ticket things on Bed Bath.

Speaker Change: Timber 10th we'll call it mid September and expect that to contribute more in Q4 than it will in Q3, we will have some ramp up costs in Q3, but from a revenue standpoint more in Q4.

Seth Zinkman: And then just one follow-up question: revenue from this past quarter came in slightly ahead of how you were forecasting it. It looks like AOV was maybe the surprise. Can you speak to that? It sounds like it had maybe some success selling bigger ticket things on Bed Bath & Beyond. Also, you know, Overstock relaunching, how did that play a role in that? And how do you think about how that could play out through the rest of the company, Seth? A great question.

Speaker Change: Okay Super helpful. Thank you for that and then just one follow up thinking about revenue from this past quarter came in slightly ahead of how you were forecasting it it looks like <unk> was maybe the surprise can you speak to that it sounds like it was maybe some success selling bigger ticket things on bed Bath.

Marcus Lemonis: Also, Overstock relaunching, how did that play a role in that, and how do you think about how that could play out through the rest of the year? Thanks. That's a great question. You know, average order size, as I mentioned in my comment, it had an uptick. And the adjacencies of bedroom furniture, of patio and outdoor furniture, and those areas that, you know, we've talked about the four specific rooms the bedbath is focused on from the bedroom, bathroom, the kitchen, and patio and furniture. As the bedroom was traditionally and historically for legacy bedbath, more of the soft goods, we're seeing that migration that it's okay to shop that entire room and buy that bed and buy that mattress, buy that bedroom furniture.

Speaker Change: Also overstock Relaunching, how did that play a role in that and how do you think about how that could play out through the rest of the year.

David Nielsen: You know, on the average order side, as I mentioned in my, in my comment, they had an uptick and the adjacencies of Bedroom Furniture, Patio, and Outdoor Furniture, and those areas that, you know, we've talked about the four specific rooms that Bed Bath is focused on, from the bedroom, bathroom, the kitchen, and patio and furniture, as the bedroom was traditionally and historically for legacy Bed Bath, more of the soft goods. We're seeing that migration, that it's okay to shop for the entire room and buy that bed, buy that mattress, buy that bedroom furniture, and we're seeing that in these categories, and that's an advantage to us.

Speaker Change: So that's a great question.

Speaker Change: Average order size as I mentioned in my in my comments.

Speaker Change: <unk> had an uptick and the adjacencies of.

Speaker Change: Bedroom furniture.

Speaker Change: Patio and outdoor furniture and those areas that we've talked about the four specific rooms that bed Bath has focused on from the bedroom bathroom kitchen patio furniture.

Speaker Change: As the bedroom was traditionally and historically for legacy bed Bath more of the soft goods.

David Nielsen: Again, overstock, becoming more meaningful, as Marcus just mentioned, as we progress through the quarter, is also on a very healthy, right back to where it was before, average order value, which we expected and anticipated, and that also contributed to that uptick. One thing that everybody does have to start to think about as Zulily launches is that we'll be operating three distinct businesses with two similar portfolios, kind of, between Bed Bath & Overstock, but if you go on to overstock today, and you compare it to the overstock of, quite frankly, a year ago, where overstock was a year ago, just selling primarily furniture, patio furniture, rugs, and some other home decor, it is now an entirely different marketplace.

Speaker Change: We're seeing that migration that it's okay to shop that entire room and bye bye.

Speaker Change: And by that mattress.

Marcus Lemonis: And we're seeing that in these categories, and that's an advantage to us. Again, overstock becoming more meaningful as Marcus just mentioned, as we progressed through the quarter, is also on a very healthy right back to where it was before average order value, which we expected and anticipated. And that also contributed to that update.

Marcus: By that bedroom furniture, and we're seeing that in these categories and that's an advantage to us again overstock, becoming more meaningful as Marcus just mentioned as we progress through the quarter is also on a very healthy rate back to where it was before average order value.

Speaker Change: Which we expected and anticipated and that also contributed to that uptick you know one thing that everybody does have to start to think about as Xu Lilly launches is that we will be operating three distinct businesses with two similar portfolios kind of between bed Bath and overstock.

Marcus Lemonis: One thing that, you know, everybody does have to start to think about as Zoolily launches is that we'll be operating three distinct businesses with two similar portfolios kind of between BedBath and Overstock. But if you go on to Overstock today and you compare to the Overstock of quite frankly, a year ago, where Overstock was a year ago just selling primarily furniture, patio furniture, rugs, and some other home decor, it is now an entirely different marketplace. You can go on to the liquidation tab and see name brand apparel starting from $20. And when you start to see transactions like that, or factory direct furniture or closeouts or open boxes, it will put pressure on some of the average order.

Speaker Change: If you go onto overstock today, and you compare it to the overstock of quite frankly, a year ago, where overstock was a year ago, just selling primarily furniture patio furniture rugs and some other home decor is now an entirely different marketplace. You can go onto the liquidation tab and see named brand apparel starting from <unk>.

David Nielsen: You can go on to the liquidation tab and see name-brand apparel starting from $20, and when you start to see transactions like that, or factory direct furniture, or closeouts, or open boxes, it will put pressure on some of the average orders.

Speaker Change: $20 and when you start to see transactions like that or factory direct furniture, our closeouts or open boxes. It will put pressure on some of the average order as we as we launched <unk>, which is apparel and beauty. It will push put pressure on the average order and we will do our best going forward.

Marcus Lemonis: As we launch Zulily, which is about apparel and beauty, it will put pressure on the average order, and we will do our best going forward to try to call out the differences between the average orders, to the extent that we're permitted, the differences in the average orders between the categories. So, if we look at furniture, rugs, patio, things like that, we can show AOV, but we will break out apparel and other small items to not distort from the overall performance of the brand as we expect those transaction counts to be ultimately very meaningful. Great Thanks, guys.

Marcus Lemonis: As we launched Zoolily, which is apparel and beauty, it will put pressure on the average order. And we will do our best going forward to try to call out the differences between the average orders, to the extent that we're permitted, the differences in the average orders between the categories. So if we looked at furniture, rugs, patio, things like that, we can show AOV, but we will break out apparel and other small items to not distort from the overall performance of the brand as we expect those transaction counts to be ultimately very meaningful. Great. Thanks, guys.

Speaker Change: Try to call out the differences between the average orders to the extent that we're permitted the differences in the average orders between the categories. So if we looked at furniture rugs patio things like that we can show AOR.

Speaker Change: But we will breakout apparel and other small items to not distort from the overall performance of the brand as we expect those transaction counts to be ultimately very meaningful.

Speaker Change: Great. Thanks, guys.

Operator: Thank you.

Rick Patel: And our next question comes from the line of Rick Patel from Raymond James. Your question, please. Thank you. Good morning and nice to see you to progress. Can you provide some more color on active customers? How much of the increase versus the first quarter came from Bed Bath customers versus Overstock customers? And what's the right way to think about the shape of growth going forward? We have your expectations for revenue between 2Q and 3Q, but I'm curious if active customers follow a similar or different path since you'll be stacking cohorts from the platforms that are both ramping.

Rick Patel: And our next question comes from the line of Rick Patel from Raymond James. Your question, please. Thank you, good morning, and nice to see the progress.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Rick Patel from Raymond James Your question. Please.

Rick Patel: Thank you good morning, and nice to see the progress.

Marcus Lemonis: Can you provide some more color on active customers? How much of the increase versus the first quarter came from bed bath customers versus overstock customers? And what's the right way to think about it?

Rick Patel: Can you provide some more color on active customers how much of the increase versus the first quarter came from bed bath customers versus overstock customers and what's the right way to think about the.

Marcus Lemonis: The Shape of Growth Going Forward. We have your expectations for revenue between 2Q and 3Q, but I'm curious if active customers follow a similar or different path since you'll be stacking cohorts from the platforms that are both ranked, Yeah, I mean, listen, as we get into the third and fourth quarter, the comps are becoming far more meaningful because, in our opinion, the company significantly overspent in Q3 and Q4 last year, particularly once August hit, to acquire new customers.

Speaker Change: The shape of growth going forward, we have your expectations for revenue between <unk> and <unk>, but I am curious tobacco customers follow a similar or different path since youll be stacking cohorts from the platforms that are both ramping.

Rick Patel: Yeah, I mean, listen, we, as we get into the third and fourth quarter, the comps are becoming far more meaningful because, in our opinion, the company significantly overspent in Q3 and Q4 last year, particularly once August hit, to acquire new customers. When you look at the customer file in the second quarter, most of it was largely attributable to Bed Bath and Beyond. And as you looked at the first quarter performance of Overstock, we largely, you know, kept spend very minimal as we were testing out the algorithm and rebuilding the site and looking at the taxonomy and looking at ways to improve the customer experience.

Speaker Change: Yes, I mean listen we as we get into the third and fourth quarter. The comps are becoming far more meaningful because in our opinion the company significantly over spend in Q3 and Q4 last year, particularly once August hit to acquire new customers. When you look at the customer file in the second quarter.

Marcus Lemonis: When you look at the customer file in the second quarter, most of it was largely attributable to Bed Bath & Beyond. And as you look at the first quarter performance of Overstock, we largely kept spend very minimal. As we were testing out the algorithm and rebuilding the site and looking at the taxonomy and looking at ways to improve the customer experience, we didn't want to go out and spend a ton of money and then have conversion be unacceptable to us. So we relaunched the email. And it has not been as easy as we initially thought it would be to re-engage that Overstock customer. You know, it sat dormant for a number of months.

Speaker Change: Most of it was largely attributable to bed bath and beyond and as as you looked at the first quarter performance of Overstock, we largely kept spend very minimal as we were testing out the algorithm and rebuilding the site and looking at the taxonomy and looking at ways to improve the customer experience we didn't.

Marcus Lemonis: We didn't want to go out and spend a ton of money and have conversion be, you know, unacceptable to us. So we relaunch the email, and it has not been as easy as we initially thought it would be to re-engage that over stock customer. You know, it's that dormant for a number of months. And so we're having to be very creative about how we're doing that. We're having to incentivize customers, but we're balancing that against over promoting site sale, which is a mistake that Bed Bath is starting in Q4. And trying to have over stock have positive contribution margin to the company all while trying to reactivate the file.

Speaker Change: Want to go out and spend a ton of money and then have conversion be unacceptable to us. So we relaunched the E mail and it has not been as easy as we initially thought it would be to re engage that overstock customer.

Marcus Lemonis: And so we're having to be very creative about how we're doing that. We're having to incentivize customers. But we're balancing that against over-promoting site sales, which was a mistake that Bed Bath did starting in Q4, and trying to have Overstock have positive contribution margin to the company, all while trying to reactivate the file. As we get deeper into the third quarter and we're happier with our assortment, we'll start spending a little bit of money, and we'll start learning how it performs, and we'll start seeing how But we want to be very clear about something. This is not a quick fix where we're just going to pour a bunch of money into the market. The macro environment is already difficult.

Speaker Change: Sat dormant for a number of months and so we're having to be very creative about how we're doing that we're having to incentivize customers, but we're balancing that against over promoting site sale, which is a mistake that bed Bath did starting in Q4 and trying to have overstock have positive contribution.

Speaker Change: Margins of the company all while trying to reactivate the file as we get deeper into the third quarter and we're happier with our assortment will start spending a little bit of money and we will start learning how it performs and we'll start seeing how the conversion works, but we want to be very clear about something this is not a fast fix.

Marcus Lemonis: As we get deeper into the third quarter and we're happier with our assortment, we'll start spending a little bit of money, and we'll start learning how it performs, and we'll start seeing how the conversion works. But we want to be very clear about something. This is not a fast fix. We're just going to pour a bunch of money into the market. The macro environment is already difficult. The advertising environment, particularly right now, we hope that other companies pay attention to this, is very expensive in light of all the geopolitical spend that's happening. So we're trying to be very surgical and very thoughtful about days of the week, times of the day, products that we're picking to see how efficient we can be.

Speaker Change: Well, we're just going to pour a bunch of money into the market. The macro environment is already difficult the advertising environment, particularly the right now and we hope that other companies pay attention to this is very expensive in light of all the geo political spend that's happening. So we're trying to be very surgical and very thoughtful about the ease of the.

Marcus Lemonis: The advertising environment, particularly right now, and we hope that other companies pay attention to this, is very expensive in light of all the geopolitical spend that's happening. So we're trying to be very surgical and very thoughtful about days of the week, times of the day, and products that we pick to see how efficient we can be. Remember that as we do those things, the algorithm's learning, Google Search is learning, we're learning. And as we take those learnings and we start to forecast out three, six, nine months, we're able to extrapolate those learnings and leverage them on top of them, particularly when we see positive ROAS, and we know that we can chase that. When we try things and we try them in small doses, and we see flat to negative ROAS, we'll, of course, ask ourselves one question.

Speaker Change: Weak times of the day products that were picking to see how efficient we can be remember that as we do those things the algorithms learning Google searches learning, we're learning and as we take those learnings and we start to forecast up 369 months, we're able to extrapolate those learnings and.

Marcus Lemonis: Remember that as we do those things, the algorithms learning, Google searches learning, we're learning. And as we take those learnings and we start the forecast out, three, six, nine months, we're able to extrapolate those learnings and leverage on top of them. Particularly when we see positive roll-as and we know that we can chase that. When we try things and we try them in small doses and we see flats and negative roll-as, we'll of course ask ourselves one question. Is that negative roll-as because we're investing in a customer that we believe is going to give us lifetime value, or is that transaction with negative roll-as nothing more than a discount value transaction where they're buying one thing from us?

Speaker Change: Leverage on top of them, particularly when we see positive ROE as and we know that we can chase that when we try things and we try them in small doses and we see flat to negative ROE as we'll of course ask ourself. One question is that negative ROE as because we are investing in a customer that we believe is going to give us lifetime value.

Marcus Lemonis: Is that negative ROAS because we're investing in a customer that we believe is going to give us lifetime value? Or is that transaction with a negative ROAS nothing more than a discount value transaction where they're buying one thing from us? So we start doing a very deep dive on are they buying one item? What's the size of their basket?

Speaker Change: Or is that transaction with negative ROE as nothing more than a discount value transaction, where they're buying one thing from us. So we start doing a very deep dive on are they buying one item and what's the size of their basket. How many items do they have how do they engage with us on their customer service emails how do they engage with us on other offers immediately.

Marcus Lemonis: So we start doing a very deep dive on are they buying one item? What's the size of their basket? How many items do they have? How do they engage with us on their customer service emails? How do they engage with us on other offers immediately following? And we use that information to create a bit of a prospect model to understand who we should chase and who we shouldn't chase.

Marcus Lemonis: How many items do they have? How do they engage with us in their customer service emails? How do they engage with us on other offers immediately following? And we use that information to create a bit of a prospect model to understand who we should chase and who we shouldn't chase. Now, that may seem far more scientific than people want us to be, but that is how we find our path to profitability.

Speaker Change: Following and we use that information to create a bit of a prospect model to understand who we should chase and who we shouldnt Chase now that may seem far more scientific than people want us to be but that is how we find our path to profitability that is how we create a true customer attribution.

Marcus Lemonis: Now that may seem far more scientific than people want us to be, but that is how we find our path to profitability. That is how we create a true customer attribution model where we understand their behavior and how it's going to perform.

Marcus Lemonis: That is how we create a true customer attribution model where we understand their behavior and how it's going to perform. Now, one thing that we are going to be testing here over the next three months is a new technology concept called Vercel, which takes those learnings and takes that information and creates a layer on top of the Shopify site. That layer allows us to customize the offering and customize the communication with each specific customer in milliseconds. We know that price matters for conversion. We know that the site experience matters with conversion, but we also know that speed matters.

Speaker Change: Model, where we understand their behavior and how it is going to perform now one thing that we are going to be testing here over the next three months is a new technology concept called <unk>, which takes those learnings and take that information and creates a layer on top of the shopify site.

Marcus Lemonis: Now one thing that we are going to be testing here over the next three months is a new technology concept called Versel, which takes those learnings and takes that information and creates a layer on top of the Shopify site. That layer allows us to customize the offering and customize the communication with each specific customer in milliseconds. We know that price matters with conversion. We know that fight experience matters with conversion, but we also know that speed matters. And we believe there is a tremendous amount of room for opportunity when we start to think about ways to get very granular on how we communicate with each specific customer.

Speaker Change: That layer allows us to customize the offering and customize the communication with each specific customer in milliseconds, we know that price matters with conversion, we know thats site experience matters with conversion, but we also know that speed.

Marcus Lemonis: And we believe there is a tremendous amount of room for opportunity when we start to think about ways to get very granular in how we communicate with each specific customer. Can you also unpack the potential to cross-pollinate customers between the banners? I know the platforms are being run independently, but when a new customer or relapsed one comes on board, what are you doing to entice them to shop on the other banners?

Speaker Change: <unk> matters and we believe there is a tremendous amount of room for opportunity. When we start to think about ways to get very granular on how we communicate with each specific customer.

Marcus Lemonis: Can you also impact the potential to cross-pollinate customers between the banners? I know the platforms are being run independently, but when a new customer or a relapse one comes on board, what are you doing to entice them to shop the other banners? Look, I think that there was a lot of early hope that there would be this pool of a database and that that pool of a database would transfer across each brand. We want to be very careful as we establish very specific points of view and brand attributes to each one of the brands to not confuse the customer.

Speaker Change: And can you also untapped potential to cross pollinate customers between the banners I know the platforms are being run independently, but when a new customer or relapsed <unk>.

Speaker Change: It comes on board what are you doing to entice them to shop the other banner.

Marcus Lemonis: Look, I think that there was a lot of early hope that there would be this pool of data and that that pool of data would transfer across each brand. However, we want to be very careful as we establish very specific points of view and brand attributes for each one of the brands to not confuse the customer. The one way that we believe will ultimately solve that is by creating a global loyalty program.

Speaker Change: Look I think that there was a lot of early hope that there would be this pool of a database and that that pool of the database would transfer across each brand we want to be very careful as we establish very specific point of views and brand attributes to each one of the brands to not confuse the customer.

Marcus Lemonis: The one way that we believe that we'll ultimately solve that is by creating a global loyalty program. And that loyalty program allows them to understand how they can use their reward points, their club owe points, or any other loyalty program that may exist to be specific to that brand to transfer up to this. Think about it like a Bonvoy at Marriott or a Star Alliance in the airlines. The reason I mentioned Star Alliance is that one thing you could expect from me and our company in the next several months, as we have this North Star goal of a trap about creating this overall global loyalty program, is that we believe there's parts of the home and family type industry that we may never specifically play in because of our asset-light model.

Speaker Change: The one way that we believe that will ultimately solve that is by creating a global loyalty program and that loyalty program allows them to understand how they can use their reward points Theyre club O points or any other loyalty program that may exist to be specific to <unk>.

Marcus Lemonis: And that loyalty program allows them to understand how they can use their reward points, their club O points, or any other loyalty program that may exist to be specific to that brand to transfer up to this. Think about it like a Bonvoy at Marriott or a Star Alliance with the airline.

Speaker Change: <unk> brand to transfer up to this think about it like a bond voya at Marriott or a star Alliance and the Airlines. The reason I mentioned Star Alliance is the one thing you could expect from me and our company in the next several months as we have this north star goal of a trap.

Marcus Lemonis: The reason I mentioned Star Alliance is that one thing you could expect from me and our company in the next several months, as we have this North Star goal of creating this overall global loyalty program, is that we believe there are parts of the home and family type industry that we may never specifically play in because of our asset light model. But we want to bring those particular companies who don't compete with us but complement us, whether they're another CPG company or whether they're a services business, to participate in our alliance. It's a very difficult proposition for companies of our size to make it on their own.

Speaker Change: It's about creating this overall global loyalty program is that we believe there is part of the home and family type industry that we may never specifically plan.

Marcus Lemonis: But we want to bring those particular companies who don't compete with us but complement us, whether there are another CPG company or whether there are services business, to participate in our alliance. It's a very difficult proposition for companies of our size to make it on their own. And what we're finding and what you'll find with me is that I believe in creating a community, a cooperative that allows whether it's a finance company, a services company, a pool service company, a retail company that sees customers all playing in that same space to be able to live in that global database.

Speaker Change: Cuz of our asset light model, but we want to bring those particular companies, who don't compete with us but complement us whether there are another CPG company or whether there are services business to participate in our alliance it's a V.

Speaker Change: Very difficult proposition for companies of our size to make it on their own and what we're finding and what you'll find with me is that I believe in creating a community of cooperative that allows whether it's a finance company a services company up full service company, a retail company that <unk> customers all.

Marcus Lemonis: And what we're finding and what you'll find with me is that I believe in creating a community, a cooperative that allows, whether it's a finance company, a services company, a pool service company, a retail company that sees customers all playing in that same space, to be able to live in that global database. That global database will have a global loyalty program, and ultimately, once that customer is in that system, we'll then start to do what I mentioned six months ago, which is to sell them other high-margin recurring revenue products once we build their trust and their loyalty. Thanks very much.

Speaker Change: Playing in that same space to be able to live in that global database that global database will have a global loyalty program and ultimately once that customer is in that system. We will then start to do what I mentioned six months ago, which is to sell them other high margin recurring revenue products.

Rick Patel: That global database will have a global loyalty program, and ultimately, once that customer is in that system, will then start to do what I mentioned six months ago, which is to sell them other high-margin recurring revenue products once we build their trust and their loyalty. Thanks very much.

Speaker Change: Once we build their trust and their loyalty.

Speaker Change: Thanks very much.

Operator: Thank you.

Curtis Nagel: And our next question should be in the line of Curtis Nagel from B of A. Your question, please. Good morning. Thanks very much for taking it.

Curtis Nagle: And our next question will show the line of Curtis Nagle from Beavary. Your question, please. Good morning. Thanks very much for taking it. Just quickly going back to 3Q. One, just, I mean, if you're able to comment on. Quality trends, and then I just want to make sure I understand, I guess, the mechanics of, I guess, what I'll call the guide. So 10 to 12% below 2Q on basic seasonality. Doesn't sound like your factor many sort of basic. Martin, I guess, brand being from the brand, but not quite sure. And I think also we're factoring kind of for contrast from the overspending on customer acquisition last year.

Curtis Nagle: Thank you and our next question Shouldnt the line of Curtis Nagle from Bofa. Your question. Please.

Marcus Lemonis: Just quickly going back to 3Q1, just if you have a comment on Coordinate Trends. And then I just want to make sure I understand, I guess, the mechanics of, I guess, what I'll call the guide. Right, so 10 to 12% below 2Q on basic seasonality. Doesn't sound like you're factoring any sort of basic seasonality.

Curtis Nagle: Good morning, Thanks, very much for taking it.

Speaker Change: So just quickly going back to three Q1, just a few of them.

Speaker Change: Ill comment on.

Speaker Change: Quarterly trends and then I just want to make sure I understand I guess the mechanics of what.

Speaker Change: I will call the guard.

Speaker Change: Right, so 10% to 12% below <unk> on basic seasonality it doesn't sound like you're factoring any sort of basic I guess ramping from the brands, but I'm not quite sure and I think also.

Marcus Lemonis: Ramping from the brands, but not quite sure. And I think also we're factoring for comps right from the overspending on customer acquisition last year, but just kind of could we just walk through kind of how all that balances out and sort of what's incorporated in terms of, you know, that, Yeah, yeah. So, just as a reminder, we don't provide guidance as a company, but I felt obligated, felt obligated to provide our investors, particularly until we reach a level of profitability, with a lot more insight into all the parts of our business, transparency, you know, how we want to operate.

Speaker Change: We're factoring kind of a contract for Neil for spending on customer acquisition last year, but just kind of could we just walk through kind of how all that balances out and sort of what.

Curtis Nagle: But just can we just walk through kind of how all that bounces out and sort of what's incorporated in terms of, you know, that's down 10 to 12. Yeah, as you said. Yeah, yeah.

Speaker Change: Incorporated in terms of.

Speaker Change: That's down 10 to 12.

Marcus Lemonis: So just as a reminder, we don't provide guidance as a company, but I felt obligated, feel obligated to provide our investors, particularly until we reach a level of profitability with a lot more insight on all the parts of our business, transparencies, you know, how we want to operate. Just looking back, and I actually went back and looked at even historical Bed Bath & Beyond financials when it was a public company, and I looked at Overstock as well. The third quarter always was a little softer, and it's a terrible word to use, but it sequentially steps down by 12 to 14 percent.

Speaker Change: Yes, yes.

Speaker Change: Yes, so just as a reminder, we don't provide guidance as a company, but I felt obligated feel obligated to provide our investors, particularly until we reach a level of profitability with a lot more insight on all the parts of our business transparencies, how we want to operate.

Marcus Lemonis: Just looking back, and I actually went back and looked at even historical Bed Bath & Beyond Financials when it was a public company, and I looked at Overstock as well, the third quarter always was a little softer, and that's a terrible word to use, but it sequentially steps down by 12 to 14%. Ironically enough, both businesses look the same, which probably means that the overall home space steps down when it's coming out of big patio furniture and things like that out of the summer and cleaning things for spring and getting organized.

Speaker Change: Just looking back and I actually went back and looked at even historical bed Bath <unk> beyond financials. When it was a public company and I looked at overstock as well the third quarter always was a little softer and I. It's a terrible word to use but it's sequentially steps down by 12% to 14% Ironically enough both businesses look the same.

Marcus Lemonis: And what we always call it is like a transition quarter in preparation for Q4. We're also spending a lot of time and a lot of energy learning how to calibrate our business and being very specific about how we're going to approach each specific day inside of the 90 days of the quarter. It's a Monday. What's the holiday?

Marcus Lemonis: Ironically enough, both businesses look the same, which means that probably that overall home space steps down when it's coming out of big patio furniture and things like that out of the summer and cleaning things for spring and getting organized. And what we always have called it is like a transition quarter in preparation for Q4. We're also spending a lot of time and a lot of energy learning how to calibrate our business and being very specific about how we're going to approach each specific day inside of the 90 days of the quarter. It's a Monday. What's the holiday?

Speaker Change: It means that probably that overall home space steps down when it's coming out of big patio furniture, and things like that out of the summer and cleaning things for spring and getting organized and what we always have called it as like a transition quarter in preparation for Q4. We're also spending a lot of time and a lot of energy learning how to calibrate our.

Speaker Change: <unk> and being very specific about how we're going to approach each specific day inside of the 90 days of the quarter. It's a Monday, what's the holiday, it's a Tuesday, what's coming up that weekend when is the big Sporting event when the Olympics winter the primaries, and we're doing a much better job of over analyzing.

Marcus Lemonis: It's a Tuesday. What's coming up that weekend? When is the big sporting event? When are the Olympics?

Marcus Lemonis: It's a Tuesday. What's coming up that weekend? When is a big sporting event? When are the Olympics? When are the primaries? And we're doing a much better job of over-analyzing behavior patterns and weather patterns and trying to lean on other companies and other expert advice to help us think about that. In using just the historical facts, I wanted to set an expectation just based on historical information. And if 12 to 14 percent is the walk down from Q2 to Q3, then people can do the math. It's 12 to 14 percent of $398 million. We feel confident that we could achieve, but candidly, our most more focused on bucking that trend.

Marcus Lemonis: When are the primaries? And we're doing a much better job of over-analyzing behavior patterns and weather patterns and trying to lean on other companies and other expert advice to help us think about that. In using just the historical facts, I wanted to set an expectation just based on historical information. And if 12 to 14 percent is the walk down from Q2 to Q3, then people can do the math; it's 12 to 14 percent of $398 million.

Speaker Change: Behavior patterns and weather patterns and trying to lean on other companies and other expert advice to help us think about that.

Speaker Change: In using just the historical facts I wanted to set an expectation just based on historical information and a 12% to 14% is the walk down from Q2 to Q3 than people can do the math, it's 12% to 14% of $398 million, we feel confident.

Speaker Change: That we could achieve but candidly our most more focus on bucking that trend and that even though the companies have both historically done that we're looking at ways of outperforming that now we're not going to overspend or be reckless with how we do that because we also want to have margin improvement and EBITDA improvement.

Marcus Lemonis: We feel confident that we could achieve that, but we're more focused on bucking that trend, that even though the companies have both historically done that, we're looking at ways of outperforming that. But we're not going to overspend or be reckless with how we do that, because we also want to have margin improvement and EBITDA improvement at the same time. So our goal for the quarter is to outperform the historical step down, to improve margins sequentially from the previous quarter, and to improve EBITDA no less than low double digits in the third quarter on a percentage basis. We think we can do better than that, but we are doing, we hope, a much better job of setting the proper expectations. Just a quick follow up, if I can, just what to think about.

Marcus Lemonis: That even though the companies have both historically done that, we're looking at ways of outperforming that. Now, we're not going to overspend or be reckless with how we do that because we also want to have margin improvement and EBITDA improvement at the same time. So our goal for the quarter is to outperform the historical step down to improve margins sequentially from the previous quarter and to improve EBITDA, no less than low double digits in the third quarter on a percentage basis. We think we can do better than that, but we are doing, we hope, a much better job of setting the proper expectations.

Speaker Change: At the same time, so our goal for the quarter is to outperform the historical stepped out to improve margins sequentially from the previous quarter and to improve EBITDA no less than low double digits in the third quarter on a percentage basis, we think we can do better than that.

Speaker Change: But we are doing we hope a much better job of setting the proper expectations.

Curtis Nagle: And then just a quick follow-up if I can just how to think about the sales marketing spend as a percentage of total revenues in the back after the year, right? How dependent is that on total revenue? The markets you mentioned, obviously, customer acquisition costs are up given in the election, all sorts of other things. So if you just frame out kind of how what you're thinking about that for the remainder of the year, that'd be helpful. Yeah, we are not satisfied by any stretch of the imagination at our ad spend as a percentage of our revenue.

Speaker Change: Got it and then just a quick follow up if I can.

Speaker Change: Just how to think about.

Speaker Change: Sales and marketing spend as a percentage of total revenues in the back half of the year right. How dependent is that on total revenue Markus you mentioned obviously.

Curtis Nagel: Sales and Marketing Span. Total revenues in the back half of the year, right? How dependent is that on total revenue? Marcus, you mentioned, you know, Transition costs are up, given an election, all sorts of other things. So if you just frame it out kind of how at least you're thinking about that. Yeah. We are not satisfied by any stretch of the imagination with our ad spend as a percentage of our revenue. It doesn't even come close to meeting our standards.

Markus: Customer acquisition costs are up given the election, all sorts of other things so.

Speaker Change: Could you just frame out kind of how.

What's your thinking about that for the remainder of the year that'd be helpful. Yeah. We are not satisfied by any stretch of the imagination at our AD spend as a percentage of our revenue it doesn't even come close to meeting our standards and we know we have to improve that but when we say that in one breath at the same time, we need to keep growing our file and finding new.

Marcus Lemonis: It doesn't even come close to meeting our standards, and we know we have to improve that. But when we save that in one breath, at the same time, we need to keep growing our file and finding new customers, particularly ones that have an affinity to our company. We need to continue to engage with the customers we have now. As Dave mentioned, he was very happy with the level of repeat buyers that we have seen. We also need to do a good job of re-engaging those legacy Bed Bath & Beyond customers that have still not come back.

Marcus Lemonis: And we know we have to improve that. But when we say that in one breath, at the same time, we need to keep growing our database and finding new customers, particularly ones that have an affinity to our company. We need to continue to engage with the customers we have now. As Dave mentioned, he was very happy with the level of repeat buyers that we have seen. We also need to do a good job of reengaging those legacy Bed Bath & Beyond customers that have still not come back, and we want to find the balance of inducing them at our peril and inducing them to our benefit.

Speaker Change: Customers, particularly ones that have an affinity to our company we need to continue to engage with the customers. We have now as Dave mentioned he was very happy with the level of repeat buyers that we have seen we also need to do a good job of re engaging those legacy bed Bath <unk> beyond customers that have still not come back.

Marcus Lemonis: And we want to find the balance of inducing them at our peril and inducing them to our benefit. As we launch and continue to grow the overstock business, we are going to have to spend money to go find new customers who really believe that there is a tremendous amount of rights space in this liquidation closeout business that Overstock is leaning towards.

Speaker Change: And we want to find the balance of inducing them at our peril and inducing them to our benefit as we launch and continue to grow the overstock business. We are going to have to spend money to go find new customers, who really believe that there is a tremendous amount of REIT space in this liquidation closeout busy.

Marcus Lemonis: As we launch and continue to grow the overstock business, we are going to have to spend money to go find new customers who really believe that there is a tremendous amount of right space in this liquidation closeout business that Overstock is leaning towards. And then lastly, we are planning on launching Zulily at the end of Q3. So when you see all those things happening, launching Zulily, throttling up Overstock, and reengaging Old Bed Bath, you'd probably be surprised that at the same time we're telling you that we're going to have margin improvement and EBITDA improvement.

Speaker Change: That overstock is leaning towards and then lastly, we are planning on launching Xu Lilly in at the end of Q3. So when you see all of those things happening largely Missoula Lilly throttling up overstock re engaging all bed Bath, you would probably be surprised that at the same time, we're telling you that we're going to have margin improvement.

Marcus Lemonis: And then lastly, we are planning on launching Zoolily in at the end of Q3. So when you see all those things happening, lodging Zoolily, throttling up Overstock, re-engaging old Bed Bath, you would probably be surprised that at the same time we're telling you that we're going to have margin improvement and evadont improvement. But that's largely part of what we think we're going to do to continue to tighten down on fixed costs in other areas. We can't afford to just start cutting marketing spend to find our way to a profit. I'm not going to do that, as addicted to growth as I am normally and historically. I still want to find a balance of getting to where I ultimately believe he can get to, but doing it with temperance and rationalization.

Speaker Change: Movement, and EBITDA improvement, but that's largely part of what we think we're going to do to continue to tighten down on fixed costs in other areas. We can't afford to just start cutting marketing spend to find our way to a profit I'm not going to do that as that as addicted to growth as I am normally a historic.

Marcus Lemonis: But that's largely part of what we think we're going to do to continue to tighten down on fixed costs in other areas. We can't afford to just start cutting marketing spend to find our way to a profit, so I'm not going to do that.

Marcus Lemonis: As addicted to growth as I normally and historically am, I still want to find the balance of getting to where I ultimately believe we can get to but doing it with temperance and rationalization. Thank you.

Speaker Change: <unk> I still want to find the bounds of getting to where I. Ultimately believe you can get to but doing it with temperatures and rationalization.

Speaker Change: Okay. Thank you I appreciate it.

Operator: Thank you, and as a reminder, if you have a question, please press Star 11 on your telephone.

Operator: And as a reminder, if you have a question, please press star 11 on your telephone. Our next question comes from the line of Marvin Fong from BTIG. Your question, please. Hi, good morning. Thanks for taking my questions. A lot of them have been answered already, but maybe two if I could.

Speaker Change: Thank you and as a reminder, if you have a question. Please press star one on your telephone. Our next question comes from the line of Marvin Fong from <unk>. Your question. Please.

Marvin Fong: Our next question comes to the line of Marvin Fong from BTIG. Your question, please. You know, a goal for that business.

Marvin Fong: Hi, good morning, Thanks for taking my questions a lot of them have been answered, but maybe two if I could so.

Marvin Fong: So this first one, basically, the time a year ago, just for Bed Bath & Beyond, we were kind of talking about 22% gross margin as sort of, you know, a goal for that business. I mean, is that still sort of a guiding light for what you'd like gross margin in that business to be? Or should we just kind of tear that up, and you've entirely rethought it? And then I have a follow-up. Good. Marvin, this is Adrienne.

Marvin Fong: Just first one.

Speaker Change: Basically the time a year ago, just for bed Bath, we were kind of talking about 22% gross margin sort of.

Adrianne Lee: I mean, is that still sort of a guiding light for ways like growth margin in that business to be, or should we just kind of tear that up and you can entirely rethought the growth margin target for the core Bed Bath business. And then I have a follow up. Oh, good, Marvin and Adrianne. And I think the 22, so if we were talking last year, just one reminder: we did change our presentation of growth. We, you know, to be kind of more similar to our peer sets. There's about four points that we moved out of growth margin into Op-ex.

Speaker Change: Our goal for that business I mean is that still sort of a guiding light for or what you'd like gross margin in that business to be or should we just kind of tear that up and you're entirely rethought.

Speaker Change: The gross margin target for the for the core bed Bath business.

Speaker Change: And then I have a follow up.

Adrianne Lee: And I think the 22, so if we were talking last year, just one reminder, we did change our presentation of gross market call, to be kind of more similar to our peer set. There are about four points that we moved out of gross margin into OPEX. So if you did that apples to apples today, that number would be something like 26%.

Marvin Fong: Okay, Marvin the Daydream and I think the <unk> stuff, we were talking last year. Just one reminder, we did change our presentation of gross margin.

Speaker Change: In order to be kind of more similar to our peer set theres about four points that we moved out of gross margin and the Opex. So if you did that apples to apples today that number would be something like 26%.

Adrianne Lee: So if you did that apples to apples today, that number would be something like 26%. And I think, you know, as we talked about, our goal is to continue to improve growth margin. And we know that somewhere, if you look at each of these brands and their historic operating performance, they've been in those zip codes and/or better. So I think, you know, on our path across the globe, we will continue to kind of chip away at that growth margin and get closer and closer to that mid 20 number. Okay. And Marvin, Marvin, go ahead.

Adrianne Lee: And I think, as we talked about, our goal is to continue to improve gross margin. And we know that somewhere, if you look at each of these brands and their historic operating performance, they've been in those zip codes and, or better. So I think, you know, on our path to profitability, we'll continue to kind of chip away at that gross margin and get closer and closer to that mid-29. And Marvin, this is Dave.

Speaker Change: And I think as we talked about our goal is to continue to improve gross margin and we know that somewhere if you look at each of these brands in their historic operating performance they've been in those Zip codes and are better.

Speaker Change: On our path to profitability will continue to kind of chip away at that gross margin and get closer and closer to that mid 20 number.

David Nielsen: Before your second question, I'd just like to add to that a couple of ways in which we're going about that as a leadership team, and we'll be talking about this at our upcoming partner summit. As we think about curation and making.

Speaker Change: Okay and more right.

Adrianne Lee: Before your second question, I just like to add on to that couple of ways in which we're going about that as a leadership team. And we'll be talking about this at our upcoming Partner Summit. As we think about curation and making assortments more meaningful for our customers and the customer experience, there is a lot. That has a lot to do with as well, our supplier base. And as our supplier base narrows and deepens in the amount of volume pulling through them, that is a real opportunity for us and our partner base to renegotiate and to get more entrenched together in this business, giving better margins to us with more volume and more scale to those partners.

Speaker Change: Go ahead, David for your second question I, just like to add on to that a couple of ways in which we're going about that as a leadership team and we will be talking about this at our upcoming partner summit.

Speaker Change: As we think about curation.

Speaker Change: And making.

David Nielsen: Assortment's more meaningful for our customers and the customer experience. There is a lot that has a lot to do with, as well, our supplier base. And as our supplier base narrows and deepens in the amount of volume flowing through them, that is a real opportunity for us and our partner base to renegotiate and to get more entrenched together in this business, giving better margins to us with more volume and more scale to those partners. And again, it aligns us with the customer experience and the shopping experience, which are needed. I think there are two other, you know, a couple other points, Marvin, and then we'll wrap up that point.

Speaker Change: Assortments more meaningful.

Speaker Change: For our customers and the customer experience.

Speaker Change: There is a lot that has a lot to do with as well our supplier base and as our supplier base narrows.

Speaker Change: And deepens and the amount of volume flowing through them that as a real opportunity for us and our partner base to renegotiate and to get.

Speaker Change: More entrants together in this business, giving better margins to us with more volume and more scale to those partners.

Marcus Lemonis: And again, it aligns us with the customer experience and the shopping experience, which are needed. I think there's two other, you know, a couple other points, Marvin, then we'll wrap up that point. You know, you're seeing a lot of focus for the company to explore this. What I believe is uncharted white space in e-commerce and liquidation closeouts, factory direct and things of that nature. And I have seen a number of comments around about the fact that, you know, off price and closeouts have never been successful in liquidation. And I will tell you that they haven't done business with us.

Speaker Change: And again, it aligns us with the customer experience and the shopping experience which are needed.

Speaker Change: I think theres two other a couple other points Marvin and then we'll wrap up that point.

Marcus Lemonis: You know, you're seeing a lot of focus for the company to explore this, what I believe is an uncharted white space in e-commerce and liquidation, closeouts, factory direct, and things of that nature. And I have seen a number of comments around about the fact that, you know, off-price and closeouts have never been successful in liquidation, and I will tell you that they haven't done business with us

Speaker Change: Youre seeing a lot of focus for the company to explore this what I believe is unchartered white space in E Commerce, and liquidation Closeouts factory direct and things of that nature and I have seen a number of comments around about the fact that off price and close outs have never been a success.

Speaker Change: Well in liquidation and I will tell you that they haven't done business with US overstock is principally an off price closeout business and prior to it being.

Marcus Lemonis: Overstock is principally an off-price closeout business. And prior to it being, you know, transferred over to Bed Bath & Beyond, it was a billion and a half dollar business. If Dave had been in charge of the business years ago, it would never have left jewelry. It would never have left apparel and footwear.

Marcus Lemonis: Overstock is principally an off-price closeout business. And prior to it being, you know, transferred over to Bed Bath, it was a billion and a half dollar business. If Dave had been in charge of the business years ago, it would have never left jewelry. It would have never left a parallel and footwear. And so what we're doing is not only going back to those things that Dave wanted to do because he's truly a merchant and understands it. But we are going to become the leader in the closeout liquidation for closure space. We believe, and we've seen early doses of that, that people are now starting to come to us.

Speaker Change: Transferred over to bed Bath. It was $1 billion five dollar business, if Dave had been in charge of the business years ago. It would have nevertheless, jewelry and would have nevertheless, apparel and footwear and so what we're doing is not only going back to those things that Dave wanted to do because he is truly a merchant and understands it but we are going to become.

Marcus Lemonis: And so what we're doing is not only going back to those things that Dave wanted to do because he's truly a merchant and understands them, but we are going to become the leader in the closeout liquidation foreclosure space. We believe, and we've seen early doses of that, that people are now starting to come to us. Two more points is that we have also eliminated a number of distributor relationships that our company was required to go through, both when it was overstock and Bed Bath & Beyond went through bankruptcy.

Speaker Change: <unk> the leader in the closeout liquidation foreclosure space, we believe and we've seen early doses of that that people are now starting to come to us to more other points is that we have also eliminated a number of distributor relationships that our company was required to go through.

Marcus Lemonis: Two more other points is that we have also eliminated a number of distributor relationships that our company was required to go through, both when it was overstock and bad back and beyond went through bankruptcy. We sat down, all three of us sat down with dozens of vendors who are a little unsure, historically about Overstock and the brand sort of cast on it, or they were unsure about Bed Bath and Beyond because they had been burned by a vendor, and we're requiring that everybody buys through a distributor. We have mitigated a number of those relationships and will enjoy margin just from those direct relationships alone with big, big global brands that, in some cases, didn't even sell to the company.

Speaker Change: Through both when it was overstock and bed Bath <unk> beyond went through bankruptcy, we sat down all three of us sat down with dozens of vendors who are a little unsure historically about overstock and the brand sort of cast on it or they were unsure about bed bath and beyond because they had been burned by a vendor and were requiring.

Marcus Lemonis: We sat down, all three of us sat down with dozens of vendors who were a little unsure historically about overstock and the brand sort of cast on it, or they were unsure about Bed Bath & Beyond because they had been burned by a vendor and were requiring that everybody buy through a distributor. We have mitigated a number of those relationships and will enjoy margin just from those direct relationships alone with big, big global brands that, in some cases, didn't even sell to the company. And lastly, you can expect that over the next six to 12 months, we'll be rolling out a private label program, a private label program that will be sold in multiple channels.

Speaker Change: Everybody buys through a distributor we have mitigated a number of those relationships and we will enjoy margin just from those direct relationships alone with big Big Global brands that in some cases didn't even sell to the company and lastly, you can expect over the next six to 12 months, we'll be rolling out a private.

Marcus Lemonis: And lastly, you could expect over the next six to 12 months, we'll be rolling out a private label program, a private label program that will be sold in multiple channels. And when I say multiple channels, that means we are going to make margin in every marketplace that we can, both in our own marketplaces. But when we build the brand, we think there's other places we can make money as well. And so we're looking for every way that we can love on product, source it, improve our first cost, or buy it at close-out and bring it to the consumer in different ways.

Speaker Change: Label program, our private label program that will be sold in multiple channels and when I say multiple channels that means we are going to make margin in every marketplace that we can both in our own marketplaces, but when we build the brand. We think there's other places we can make money as well and so we're looking for every way.

Marcus Lemonis: And when I say multiple channels, that means we are going to make margin in every marketplace that we can, both in our own marketplaces, but when we build the brand, we think there's other places we can make money as well. And so we're looking for every way that we can love on the product. Source it, improve our first cost, or buy it at closeout and bring it to the consumer in different ways.

David Nielsen: Dave that we can love on product.

Source it improve our first cost or buyer to closeout and bring it to the consumer in different ways.

Marvin Fong: Got it, thanks for that. And my follow-up, just hearing good to hear that patio and outdoor did well in the Bed Bath channel. As I sort of think about how you guys were kind of talking about that last quarter, it seemed like maybe you guys thought that maybe those types of products were better suited to Overstock and there might be some transition there. So should we kind of take what we learned or saw in the second quarter as, you know, you'll be kind of keeping those products, that product on Bed Bath and you'll continue to grow those categories?

Marvin Fong: Thanks for that. And my follow up, I just, hearing, good to hear that, you know, patio and outdoor did well on the bed bath channel. You know, as I sort of think about how you guys were kind of talking about that last quarter, it seemed like maybe you guys thought that maybe those types of products were better suited to overstock, and there might be some transition there. So should we kind of take what we learned or saw in the second quarter as, you know, you'll be kind of keeping that product on Bed Bath & Beyond, and you'll continue to grow those categories? Yeah, before Dave, you know, takes a deep dive on patio, I will tell you that I was not satisfied with how it performed.

David Nielsen: Got it thanks for that and.

David Nielsen: And my follow up I just.

Hearing good to hear that.

Speaker Change: Patio and outdoor did well.

David Nielsen: Right.

David Nielsen: Channel.

David Nielsen: And as I sort of think about how you guys were kind of talking about that last quarter. It seemed like maybe you guys.

Speaker Change: I thought that maybe those types of products better suited to overstock and there might be some transition there. So should we kind of take what we've learned or saw in the second quarter as.

Speaker Change: Youll be kind of keeping those products that product on bed Bath and you will continue to grow those categories.

Marcus Lemonis: Yeah, before Dave, you know, it takes a deep dive on patio, I will say that I was not satisfied with how patio performed. And so while it performed better and while Bed Bath and Beyond is actually getting more comfortable selling that and the consumer is more comfortable buying it from it, I wanted to see better performance out of that category. And we know where we slipped up, and we are documenting day by day, week by week, what our missteps were so that we built a playbook for 2025 in that area. Marvin, there are opportunities, as we mentioned, this theme of curation and calibration as we move forward.

David Nielsen: Before Dave It takes a deep dive on patio I will tell you that I was not satisfied with how patio performed.

Marcus Lemonis: And so while it performed better, and while Bed Bath & Beyond is actually getting more comfortable selling that, and the consumers are more comfortable buying it from it, I wanted to see better performance out of that category. And we know where we slipped up, and we are documenting day by day, week by week, what our missteps were so that we build the playbook for 2025 in that area. Marvin, there are opportunities, as we mentioned, this theme of curation and calibration. As we move forward, the curation component of our One of the four rooms that we're really focused on with Bed Bath and Beyond is that patio and outdoor, but it's not going to be.

Speaker Change: And so while it performed better and while bed Bath and beyond is actually getting more comfortable selling that in the consumers more comfortable buying it from it I wanted to see better performance out of that category and we know where we flipped up and we are documenting day by day week by week. What are missteps were so that we build the playbook.

Speaker Change: Look for 2025 in that area.

Marvin Fong: Marvin there are opportunities as we've mentioned this theme of curation and calibration as we move forward. The curation component of our one of the four rooms that we're really focused on with bed Bath <unk> beyond is that patio and outdoor but it's not going to be.

David Nielsen: The curation component of our one of the four rooms that we're really focused on with Bed Bath and Beyond is that patio and outdoor. But it's not going to be everything to everybody. Over the last few years, we have seen so many pop-up suppliers of outdoor and patio furniture. They don't provide a good customer experience; they don't understand packaging. But we have a very deep and solid relationship with several of the top providers in these product categories. And working with Stacy and the merchandising team and really curating down that assortment, there are margin opportunities and there are, as Marcus mentioned, private label opportunities, branding opportunities there that we believe for Bed Bath and Beyond can really...

David Nielsen: Everything to everybody. Over the last few years, we have seen so many pop-up suppliers of outdoor and patio furniture. But they don't provide a good customer experience.

Speaker Change: Everything to everybody over the.

Speaker Change: Over the last few years, we have seen so many pop up suppliers of outdoor and patio furniture. They don't provide a good customer experience they don't understand packaging.

David Nielsen: They don't understand packaging, but we have a very deep and solid relationship with several of the top providers in these product categories. And working with Stacy and the merchandising team and really curating down that assortment, there are margin opportunities. And there are, as Marcus mentioned, private label opportunities, branding opportunities there that we believe for Bed Bath & Beyond can really create another opportunity for this business on the overstock side of things.

Speaker Change: We have a very deep.

Stacey: And solid relationship with several of the top providers in these product categories and working with Stacey and the merchandising team and really curating down that assortment. There are margin opportunities and there are as Mark has mentioned private label opportunities branding opportunities there that we believe for bed Bath <unk> <unk>.

David Nielsen: We create another opportunity for this business.

Speaker Change: Beyond can really.

Speaker Change #100: Create another opportunity for this business on the overstock side of things and I just wanted to touch again, just a little bit on the advantages of this liquidation piece of the business.

Marcus Lemonis: On the overstock side of things, and I just want to touch again, just a little bit on the advantages of this liquidation piece of the business. Liquidation historically for Overstock, when we would buy physically millions of dollars of cheats of the stress merchandise, those were incredible to drive traffic to our website. They were what we considered many times marketing spent. With these partnerships and these alliances that we're making with liquidators, with reverse logistics companies, where we don't have to invest in the assets, and we can remain in our asset-light model. We can provide access to products through our partner base that are incredible for these individuals.

David Nielsen: And I just want to touch again just a little bit on the advantages of this liquidation piece of the business, liquidation historically for overstock when we would buy physically. Millions of dollars of sheets of distressed merchandise. Those were incredible for driving traffic to our website.

Speaker Change #101: Liquidation historically for overstock, when we would buy physically.

Speaker Change #102: Millions of dollars of sheets of distressed merchandise those were incredible.

Speaker Change #102: To drive traffic to our website. They were what we considered many times of marketing spend.

David Nielsen: They were what we considered many times marketing spend. With these partnerships, and these alliances that we're making with liquidators and reverse logistics companies where we don't have to invest in the assets, and we can remain in our asset light model, we can provide access to products through our partner base that are incredible for these individuals. I mean, we have thousands of partners who have distressed merchandise, at the same time, getting access to a model of distressed merchandise in a local area where we have built the technology to be able to drop ship out of some of those locations.

Speaker Change #102: With these partnerships and these alliances that we're making with liquidators with reverse logistics companies, where we don't have to invest.

Speaker Change #102: In the assets and we can remain in our asset light model, we can provide access to products through our partner base that are incredible for these individuals and we weird.

David Nielsen: And we have thousands of partners who have the stress merchandise. At the same time, getting access to a model of the stress merchandise in the local area, where we have built the technology to be able to drop shift out of some of those locations, that when you don't have to move the merchandise is where margin is very accreted for all of us. Yeah, look, there's, there is, you know, thousands, if not tens of thousands of companies of all sizes, from the small business on Main Street to a Fortune 500 company that needs to be able to deal with excess inventory, mistakes in their inventory.

Speaker Change #102: Thousands of partners, who have distressed merchandise at the same time getting access to a model of distressed merchandise in the local area, where we have built with technology to be able to drop ship out of some of those locations.

David Nielsen: That, when you don't have to move the merchandise, is where margin is very attractive for all of us. Yeah, look, there are thousands, if not tens of thousands, of companies of all sizes, from the small business on Main Street to a Fortune 500 company that needs to be able to deal with excess inventory, mistakes in their inventory, and particularly for a medium to small business that has cash trapped in its inventory and not in its bank account, we will become the solution for those folks to plug right in.

Speaker Change #103: That when you don't have to move the merchandise is where margin is very accretive for all of US yes. There is.

Speaker Change #103: Thousands if not tens of thousands of companies of all sizes from the small business on main street to a fortune 500 company that needs to be able to deal with excess inventory mistakes in their inventory and particularly for our medium to small business that has cash trapped in their inventory and not in there.

Marcus Lemonis: And particularly for a medium to small business that has cash trapped in their inventory and not in their bank account, we will become the solution for those folks to plug right in. And we have started to onboard small businesses, medium and large businesses today through our supplier oasis, through a platform with Shopify, through a number of different plugins that will give people that ability. The reason that that's so important is that there are a lot of brands out there who don't want to necessarily have to open their kimono and air their dirty laundry out about any inventory mistake.

David Nielsen: And we have started to onboard small businesses, medium, and large businesses today through our supplier Oasis, through a platform with Shopify, through a number of different plug-ins that will give people that ability. The reason that that's so important is that there are a lot of brands out there who don't necessarily want to open their kimono and air their dirty laundry out about any inventory mistake. Even myself, as a multiple business owner, I'm not proud of inventory mistakes.

Speaker Change #103: Bank account.

Speaker Change #103: We'll become the solution for those folks to plug right in and we have started to onboard small businesses medium and large businesses today through our supplier oasis through a platform with shopify through a number of different plug ins that will give people that ability. The reason that that's so important is that there are a lot of brands out there who don't want to.

Speaker Change #104: <unk> necessarily have to open their kimono and air their dirty laundry out about any inventory mistake, even myself as a multiple business owner I'm not proud of inventory mistakes and if I could find a place to monetize my inventory and do it in a marketplace, where everybody doesn't have to see it in my brand is and Dan.

Marcus Lemonis: Even myself as a multiple business owner, I'm not proud of inventory mistakes. And if I could find a place to monetize my inventory and do it in a marketplace where everybody doesn't have to see it and my brand isn't damaged, that's really where things excel. And when you look at Overstock and Zoolily together, that marketplace provides that safe place for big companies to find that, and whether that's in the pet space, and whether that's in the outdoor space, patio space, the jewelry space, the collectible space, the reverse logistic space, and the list goes on and on.

Marcus Lemonis: And if I could find a place to monetize my inventory and do it in a marketplace where everybody doesn't have to see it, and my brand isn't damaged, that's really where things excel. And when you look at Overstock and Zulily together, that marketplace provides that safe place for big companies to find it. And whether that's in the pet space or whether that's in the outdoor space, the patio space, the jewelry space, the collectible space, the reverse logistics space, and the list goes on and on, we don't see any borders or barriers to Overstock's ability to dominate in that space. I joke with Dave all the time, I'll let you know when we're done when we're selling chickens and cars.

Speaker Change #105: <unk>, that's really where things excel and when you look at Overstock and zoo Lilly together that marketplace provides that safe place for big companies define that and whether thats in the pet space and whether thats in the outdoor space the patio space the jewelry space the collectibles space the reverse logistics.

David Nielsen: Space and the list goes on and on we don't see any borders or barriers to overstock <unk> ability to dominate in that space I joke with Dave all the time I'll, let you know when we're done when we're selling chickens in cars and I know that seems extreme but that shows the with and which we believe overstock can ultimately.

Marcus Lemonis: We don't see any borders or barriers to Overstock's ability to dominate in that space. I joke with Dave all the time. I'll let you know when we're done when we're selling chickens and cars. And I know that seems extreme, but that shows the width in which we believe Overstock can ultimately play. We will be visiting trade shows, and we'll be doing a lot of other things to sort of expand on that.

Marvin Fong: And I know that seems extreme, but that shows the width in which we believe Overstock can ultimately play. We will be visiting trade shows, and we'll be doing a lot of other things to sort of expand on that. Oh, that's a great color, everyone.

David Nielsen: Play, we will be visiting trade shows and we will be doing a lot of other things to sort of expand on that.

Operator: Oh, that's Greg Pellar. Everyone, thank you so much. Thank you.

Speaker Change #108: That's great color everyone. Thanks, so much.

Jonathan Matuszewski: Thanks so much. Thank you. And our final question for today comes from the line of Jonathan Matuszewski from Jefferies. Your question, please. Good morning, Marcus, Dave, and Adrianne.

Jonathan Machiteski: And our final question for today comes from the line of Jonathan Machiteski from Jeffrey. It's your question, please. Great. Good morning, Marcus. Dave and Adrian, thanks for taking my question. You know, the first one is just on your vendor conversations and vendor strategy. I think the prepared remarks reference the upcoming Partner Summit. So just wanted to get some perspective on your goals for that event in terms of conversations with suppliers and efforts to re-engage them. I think you mentioned a strategy of, you know, narrowing the supplier base, which sounds encouraging from a unit economic perspective.

Speaker Change #109: Thank you and our final question for today comes from the line of.

David Nielsen: Jonathan Cheskey from Jefferies. Your question. Please.

Jonathan Matuszewski: Thanks for taking my question. You know, the first one is just about your vendor conversations and vendor strategies. I think the prepared remarks reference the upcoming partner summit, so just wanted to get some perspective on your goals for that event in terms of conversation. Suppliers and efforts to re-engage them. I think you mentioned a strategy of, you know, narrowing the supplier base, which sounds encouraging from a unit economics perspective. But is there any risk there from a consumer choice angle? Yeah, a great, great question, Jonathan.

Jonathan Matuszewski: Great Good morning markets, Dave and Adrian Thanks for taking my question.

Speaker Change #111: The first one is just on your vendor conversations and vendor strategy.

Jonathan Matuszewski: I think the prepared remarks referenced the upcoming partner summit. So just wanted to get some perspective on your goals for that event in terms of conversations with suppliers then effort to reengage them.

Speaker Change #107: I think you mentioned this strategy of narrowing the supplier base, which sounds encouraging from that.

Speaker Change #110: Unit economic perspective is there any risk there from a consumer choice angle.

Marcus Lemonis: You know, is there any risk there from a consumer choice angle? Thanks.

Marcus Lemonis: Yeah, great, great question, Jonathan. We're really excited about this upcoming summit. And I was just in Vegas, actually, on Sunday, spending time with many of these partners, giving them a little prelude into some of the thinking that we'll be working on and presenting and talking to them about. There is always risk to any transition, but we are confident in the work that we've done with these partners and what these partners have to offer. Many of these partners can scale so much larger than they are and have additional assortment. Our strategy a few years back of just bringing on everybody and everybody jumping in to the patio furniture business, to the furniture business, basically to furniture and home furnishing businesses since COVID.

David Nielsen: We're really excited about this upcoming summit. And I was just in Vegas, actually, on Sunday, spending time with many of these partners, giving them a little prelude into some of the thinking that we'll be working on and presenting and talking to them about. There is always risk in any transition, but we are confident in the work that we've done with these partners and what these partners have to offer. Many of these partners can scale so much larger than they are and have an additional assortment.

Speaker Change #110: Yes, great Great question, Jonathan we're really excited about this upcoming summit.

Speaker Change #110: And I was just in Vegas actually on Sunday spending time with many of these partners, giving them a little prelude into some of the thinking that that will be working on in presenting and talking to them about.

Speaker Change #110: There is always risk any transition, but we are confident in the work that we've done with these partners.

Speaker Change #110: And what these partners have to offer many of these partners can scale so much larger than they are and have additional assortments.

Speaker Change #110: Our strategy a few years back of just bringing on everybody and everybody jumping into the patio furniture business to the furniture business basically to furniture and home furnishing businesses since the since Covid.

David Nielsen: Our strategy a few years ago of just bringing everybody on board and everybody jumping into the patio furniture business into the furniture business, basically into the furniture and home furnishings businesses since COVID. It is very important from a margin accretive perspective that we do this; we see it as low risk on the sales side and the selection side. There's only so much you can process as a human as you're processing and going down through search pages.

Marcus Lemonis: It is very important from a margin accretive perspective that we do this. We see it as low risk on the sales side and the selection side. There's only so much you can process as a human as you're processing and going down through search pages. But it's more than that. It's about the customer experience, the shopping experience, and providing that customer with a look and a feel that makes sense, that makes them excited to shop, that doesn't confuse them, that doesn't disappoint them with poor packaging or poor ship confirmation timing. So there are so many elements that eliminate cost in our ecosystem by taking this approach of making our relationships with our key partners more strategic, more aligned.

Speaker Change #110: It is very important from a margin accretive perspective that we do this we see it as low risk on the sales side and the selection side Theres only so much you can process as the human as youre processing and going down through search pages.

David Nielsen: But it's more than that. It's about the customer experience, the shopping experience, and providing that customer with a look and a feel that makes sense, that makes them excited to shop, that doesn't confuse them, that doesn't disappoint them with poor packaging or poor ship confirmation timing.

Speaker Change #110: But it's more than that it's about the customer experience the shopping experience.

And providing that customer with a look and a feel that makes sense that makes them excited the shop that doesn't confuse them.

Speaker Change #110: It doesn't disappoint them with poor packaging or poor ship confirmation timing. So there is there are so many elements that eliminate cost in our ecosystem by taking this approach of making our relationships with our key partners.

David Nielsen: So there are so many elements that eliminate cost in our ecosystem by taking this approach of making our relationships with our key partners more strategic and more aligned. That's really helpful. Thanks for the color.

Speaker Change #110: More strategic more aligned.

Speaker Change #110: Okay.

Jonathan Machiteski: That's really helpful.

Jonathan Matuszewski: And then just a quick follow-up, you know, in the press release, there was a reference to kind of strategic partnerships and joint ventures ahead. And I think you guys did a nice job of talking about the opportunity there. Working with reverse logistics companies and closeouts and whatnot, how do your aspirations for a physical presence for your product, you know, play into this and and kind of how should we think about the opportunity, you know, if Bed Bath were to get product in four walls? Financially, in a creative way without obviously kind of building stores, leveraging someone else's network, potentially, you know, how, how, how does that fit into your approach going forward?

Marcus Lemonis: Thanks for the color, and then just a quick follow-up. In the press release, there was a reference to the strategic partnerships and joint centers ahead. I think you guys did a nice job talking about the opportunity there in terms of working with reverse logistics companies and close-outs and whatnot. How do your aspirations for a physical presence for your product play into this? How should we think about the opportunity, if Bed Bath were to get product in four walls in a financially accretive way without obviously building stores and just leveraging someone else's network potentially? How did that fit into your approach going forward, and what's the opportunity there?

Speaker Change #112: That's really helpful. Thanks for the color and then just a quick follow up.

Speaker Change #113: In the press release, there was a reference to the kind of strategic partnerships and joint ventures. They had and I think you guys did a nice job of talking about the opportunity there in terms of working with reverse logistics company and closed out and whatnot.

Speaker Change #114: How do your aspiration for a physical presence for your product play into this and kind of how should we think about the opportunity.

Speaker Change #115: Bed Bath word to get product in four walls in a financially accretive way without obviously kind of building stores and just leveraging someone else's network potentially.

Speaker Change #116: How how does that fit into your approach going forward and what's the opportunity there.

Marcus Lemonis: I just want to first and foremost clarify, we are and we'll continue to be an asset-like company. Taking on any contingent liabilities, leases, putting up distribution centers, taking on massive loads of inventory are not in any future that we're a part of. Forbes. However, you can expect, in short order, that it is our mission to put Overstock and Bed Bath & Beyond back in the marketplace. We believe that an omnichannel, at least from a perception standpoint for the consumer, is quintessential to our growth. That doesn't mean that we have to do it. There are plenty of other subject matter experts who do quite well at this, as their core competency.

Marcus Lemonis: And what's the opportunity there? I just want to first and foremost clarify, we are, and we'll continue to be an asset-light company; taking on any contingent liabilities, leases, putting up distribution centers, taking on massive, you know, loads of inventory is not in any future that we're a part of. However, you can expect in short order that it will be our mission to put Overstock and Bed Bath & Beyond back in the marketplace.

Speaker Change #117: I just wanted to first and foremost clarify.

Speaker Change #118: And we'll continue to be an asset light company, taking on any contingent liabilities leases, putting up distribution centers taking on massive.

Speaker Change #119: Loads of inventory are not in any future that were a part of.

Speaker Change #120: However, you can expect in short order that it is our mission to put overstock and bed Bath <unk> beyond back in the marketplace. We believe that an omnichannel at least from a perception standpoint for the consumer is quintessential to our growth that doesn't mean that we have.

Marcus Lemonis: We believe that an omni-channel, at least from a perception standpoint for the consumer, is crucial to our growth. But that doesn't mean that we have to do it. There are plenty of other subject matter experts who do quite well at this as their core competency, and we believe that there are multiple opportunities and are in discussions with multiple parties to execute that strategy in short order. Remember that it also has to be part of a larger alliance around the database and monetizing the file and monetizing the intellectual property.

Speaker Change #120: Do it there are plenty of other subject matter experts, who do quite well at this as their core competency and we believe that there are multiple opportunities and are in discussions with multiple parties to execute that strategy in short order.

Jonathan Machiteski: And we believe that there are multiple opportunities and are in discussions with multiple parties to execute that strategy in short order. Remember that it also has to be part of a larger alliance around database and monetizing the file and monetizing the intellectual property. So, as we start to disclose and roll out and finally negotiate certain transactions, all of the investors should rest assured that, in every single case, any partnership will be materially accretive to the company and will still be in an asset-light environment. Very helpful. Thanks.

Speaker Change #120: Remember that it also has to be part of a larger alliance around database and monetizing the file and monetizing the intellectual property. So as we start to disclose and rollout and finally negotiate certain transactions all of the investors should rest assured that in.

Marcus Lemonis: So as we start to disclose and roll out and finally negotiate certain transactions, all of the investors should rest assured that in every single case, any partnership will be materially accretive to the company and will still be in an asset-light environment. Very helpful. Thanks. Thank you. This does conclude the question and answer session for today's program. I'd like to hand the program back to Marcus Lemonis for any further remarks. Great. Thank you for joining us on today's call. We look forward to seeing you next quarter. Take care. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Speaker Change #120: Every single case any partnership will be materially accretive to the company and we will still be in an asset light environment.

Speaker Change #121: Very helpful. Thanks.

Operator: Thank you.

Marcus Lemonis: This does conclude the question-and-answer session of today's program. I'd like to hear the program back to markets. Lamont is running further remarks. Great.

Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to Markus <unk> for any further remarks.

Operator: Thank you for joining us on today's call. We look forward to seeing you next quarter. Take care.

Markus: Great. Thank you for joining us on today's call. We look forward to seeing your next quarter take care.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference.

Speaker Change #122: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

Operator: This does conclude the program. You may now disconnect. Good day.

Speaker Change #122: Okay.

Speaker Change #122: [music].

Speaker Change #122: Okay.

Speaker Change #122: Yes.