Financial Performance - Net revenue for the three months ended September 30, 2022, was $460.3 million, a decrease of 33.2% compared to $689.4 million for the same period in 2021[23]. - Gross profit for the nine months ended September 30, 2022, was $353.8 million, down 27.1% from $485.1 million in the same period of 2021[23]. - Operating income for the three months ended September 30, 2022, was $5.7 million, a decline of 80.3% from $28.8 million in the prior year[23]. - Consolidated net loss attributable to stockholders for the three months ended September 30, 2022, was $(37.0) million, compared to net income of $30.4 million in the same period of 2021[23]. - The company reported a net loss per share of $(0.81) for the three months ended September 30, 2022, compared to earnings per share of $0.64 in the same period last year[23]. - Total operating expenses for the nine months ended September 30, 2022, were $324.1 million, a decrease of 17.6% from $393.1 million in the same period of 2021[23]. - The company reported a net loss from continuing operations of $(37.0) million for the three months ended September 30, 2022, compared to income of $30.4 million in the same period last year[23]. - Comprehensive loss attributable to stockholders for the three months ended September 30, 2022, was $(36.99) million, compared to $30.43 million in the same period of 2021[25]. - The net income from discontinued operations attributable to stockholders of Overstock.com, Inc. for the nine months ended September 30, 2022, was $217.581 million[46]. Assets and Liabilities - Total current assets decreased to $475.3 million as of September 30, 2022, down from $551.8 million at December 31, 2021, representing a decline of approximately 13.8%[18]. - Cash and cash equivalents were reported at $427.5 million, a decrease of 15.0% from $503.3 million at the end of 2021[18]. - Total liabilities decreased to $275.6 million, down from $321.6 million, reflecting a reduction of approximately 14.3%[20]. - Stockholders' equity decreased to $676.6 million from $744.4 million, indicating a decline of about 9.1%[20]. - The total assets decreased to $952.2 million from $1,066.0 million, a decline of approximately 10.7%[20]. - The company reported an accumulated deficit of $158.3 million as of September 30, 2022, compared to $136.6 million at the end of 2021[20]. - The company has a deferred tax asset of $40.7 million, slightly up from $40.0 million at the end of 2021[18]. - The total outstanding debt on loans was $38.8 million as of September 30, 2022, with a current portion of $3.5 million included in other current liabilities[64]. Cash Flow and Investments - Cash flows from operating activities for the nine months ended September 30, 2022, showed a net cash provided of $17.596 million, a significant decrease from $100.084 million in the same period of 2021[30]. - The net cash used in investing activities for the nine months ended September 30, 2022, was $28.004 million, compared to $81.764 million in the same period of 2021[30]. - The company reported a net cash used in financing activities of $65.224 million for the nine months ended September 30, 2022, compared to $7.957 million in the same period of 2021[33]. - The company completed an additional investment of $15 million in tZERO during the nine months ended September 30, 2022, through their Series B financing round[57]. Operational Challenges - The company continues to face risks related to supply chain challenges and economic conditions, which may impact future performance[13]. - The company experienced increased employee turnover and inflation in product costs, higher wages, and energy costs, impacting sales during the third quarter of 2022[108]. - The absence of pandemic-related shopping behavior and macroeconomic factors contributed to decreased order activity[105]. - The company cannot estimate the future impact of macroeconomic conditions such as inflation and supply chain challenges on its business due to their unpredictable nature[113]. Stock and Shareholder Information - The company had a total of 45.7 million shares of common stock outstanding as of September 30, 2022, an increase from 43.0 million shares in the prior year[27]. - The company reported stock-based compensation to employees and directors of $13.390 million for the nine months ended September 30, 2022, compared to $7.649 million for the same period in 2021[30]. - The stock-based compensation expense for the three months ended September 30, 2022, was $4.1 million, compared to $2.5 million for the same period in 2021[84]. - The company had $39.9 million available for future share repurchases under its current repurchase authorization through December 31, 2023[82]. Market and Economic Conditions - Consumer prices rose by 8.2% from September 2021 to September 2022, the largest increase since 1981, impacting consumer discretionary spending[167]. - Global conflicts, particularly the situation in Ukraine, could negatively impact the company's business and financial condition due to increased costs and supply chain disruptions[166]. - The company is exposed to risks from potential changes in legal, regulatory, or tax treatments that could adversely affect its operations[170]. - Further restrictions on the use of online tracking technologies could limit the company's ability to acquire new customers, adversely affecting its business[173].

Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $528 million, a decrease of 34% year-over-year but an increase of 44% compared to Q2 2019 [14][16] - Adjusted EBITDA margin was 3.9%, a decline of 165 basis points from 2021, but within the mid single-digit target range [14][18] - Adjusted diluted earnings per share (EPS) was $0.19, down $0.54 from the previous year, primarily due to lower pretax income and a higher effective tax rate [14][15] - The effective tax rate for Q2 was 26.1%, compared to a tax benefit in the same period last year [15] Business Line Data and Key Metrics Changes - The company transitioned to a 100% home and furnishings retailer, exiting non-home categories, which is expected to enhance brand association with home [12][13] - Active customer base declined to 6.5 million, influenced by weak consumer sentiment and the strategic exit from non-home products [20] - Average order value (AOV) increased by 16% year-over-year to $247, marking a record high for the company [21] Market Data and Key Metrics Changes - Online penetration in the home furnishings category is tracking at 33%, an increase of 900 basis points over 2019 [17][27] - The total addressable market for furniture and home furnishings in the U.S. is estimated at $419 billion, providing opportunities for market share growth [27] Company Strategy and Development Direction - The company aims to increase the breadth and depth of its product assortment to strengthen brand association with home [11][30] - The focus on "Smart Value" is critical, especially in a high inflation environment, to attract and retain customers [32] - The company is leveraging its mobile app to enhance customer engagement and drive sales [34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by macroeconomic factors such as inflation and geopolitical volatility affecting consumer sentiment [6][9] - The company remains committed to profitability and has a strong balance sheet, which provides stability in uncertain times [24][49] - Future marketing campaigns will focus on enhancing brand association with home, particularly now that the company is 100% home-focused [67] Other Important Information - The company repurchased approximately $35 million of equity in Q2 2022, totaling $60 million year-to-date [12][24] - The transition to a simpler equity capital structure was completed with the conversion of preferred stock into common stock [12] Q&A Session Summary Question: Sustainability of mid single-digit EBITDA margin amidst declining sales - Management confirmed the ability to manage expenses effectively and maintain mid single-digit EBITDA margins despite revenue declines [52][54] Question: Pricing trends in the industry - Management noted that while competitors are liquidating excess inventory at a loss, Overstock's asset-light model allows for competitive pricing without markdown pressures [58][60] Question: Order growth and marketing efforts - Management acknowledged the order growth metrics and indicated plans to enhance marketing efforts to better associate the brand with home [64][66] Question: Performance of the Club O loyalty program - Management reported that Club O continues to grow year-over-year and is a focus for future enhancements [78] Question: Mobile app performance and sales growth - Management highlighted that the mobile app channel is growing significantly and has the highest repeat rate and AOV, indicating strong customer loyalty [80]

Financial Data and Key Metrics Changes - The company reported significant changes in financial metrics, although specific figures were not provided in the document [1] Business Line Data and Key Metrics Changes - Detailed performance metrics for each business line were not disclosed in the document [1] Market Data and Key Metrics Changes - The document did not include specific market data or key metrics changes [1] Company Strategy and Development Direction and Industry Competition - The company’s strategic direction and competitive landscape were not elaborated upon in the document [1] Management's Comments on Operating Environment and Future Outlook - Management's insights regarding the operating environment and future prospects were not included in the document [1] Other Important Information - The conference was recorded, and participants were informed about the process for asking questions [1] Q&A Session All Questions and Answers Question: How to ask questions during the session? - Participants were instructed to press star one on their telephone to ask questions during the session [1]

Financial Position - Total current assets as of September 30, 2021, were $564,672 thousand, a decrease from $582,740 thousand as of December 31, 2020, reflecting a decline of approximately 3%[17] - Cash and cash equivalents increased to $512,188 thousand from $495,425 thousand, representing a growth of about 3%[17] - Total assets reached $1,064,917 thousand, up from $830,214 thousand, indicating an increase of approximately 28%[17] - Total liabilities decreased to $355,803 thousand from $393,888 thousand, a reduction of about 10%[17] - Stockholders' equity rose significantly to $709,114 thousand from $436,326 thousand, marking an increase of approximately 63%[20] - The company reported an accumulated deficit of $(168,803) thousand, improved from $(525,233) thousand, indicating a reduction in losses[20] - The company has a deferred tax asset of $37,955 thousand, up from $37 thousand, showing a significant increase[17] - The company’s equity securities measured at fair value increased to $330,196 thousand from $1,412 thousand, a substantial rise[17] - Total stockholders' equity increased to $709.1 million as of September 30, 2021, up from $419.3 million at the end of the same period in 2020[31] - The balance of total equity attributable to stockholders of Overstock.com, Inc. was $709.1 million at the end of the period, reflecting strong financial health[31] Revenue and Profitability - Net revenue for the three months ended September 30, 2021, was $689.39 million, a decrease of 3.9% from $717.70 million in the same period of 2020[24] - Gross profit for the nine months ended September 30, 2021, was $485.06 million, compared to $420.83 million for the same period in 2020, representing a 15.3% increase[24] - Operating income for the three months ended September 30, 2021, was $28.85 million, down 26% from $38.86 million in the same period of 2020[24] - Consolidated net income attributable to stockholders for the three months ended September 30, 2021, was $30.43 million, an increase of 30.5% from $23.39 million in the same period of 2020[24] - Basic net income per share for continuing operations was $0.64 for the three months ended September 30, 2021, compared to $0.81 for the same period in 2020[24] - Comprehensive income for the three months ended September 30, 2021, was $30.43 million, compared to $21.23 million for the same period in 2020, marking a 43.3% increase[26] - Consolidated net income for the nine months ended September 30, 2021, was $356.1 million, a significant increase from $36.0 million in the same period of 2020[33] - The company reported a net loss from discontinued operations of $0 for the three months ended September 30, 2021, compared to a loss of $16.68 million in the same period of 2020[24] Expenses and Cash Flow - Total operating expenses for the nine months ended September 30, 2021, were $393.11 million, up from $346.48 million in the same period of 2020, reflecting a 13.4% increase[24] - The company reported a net cash provided by operating activities of $82.96 million for the nine months ended September 30, 2021, compared to $198.71 million for the same period in 2020[33] - The company experienced a net cash used in investing activities of $81.76 million for the nine months ended September 30, 2021, compared to $15.43 million in the same period of 2020[35] - Cash payments included in operating cash flows from lease arrangements were $5,007,000 for the nine months ended September 30, 2021[75] - Cash provided by operating activities for the nine months ended September 30, 2021, was $100.1 million, a decrease from $221.8 million in the same period of 2020[161] Stock and Shareholder Information - The weighted average shares of common stock outstanding increased to 43.01 million for the three months ended September 30, 2021, from 42.76 million in the same period of 2020[29] - The total number of Series A-1 preferred shares issued and outstanding remained at 4,204 for the three months ended September 30, 2021[29] - The Series A-1 preferred stockholders are entitled to an annual cash dividend of $0.16 per share, with no arrearages in cumulative preferred dividends[92] - The company announced a stock repurchase program on August 17, 2021, with an aggregate repurchase price not to exceed $100 million through December 31, 2023[96] - The maximum number of shares that can be issued under the 2021 ESPP is 3,000,000 shares, with $234,000 recognized in share-based compensation expense for the three and nine months ended September 30, 2021[105] Business Operations and Strategy - Overstock.com is focused on expanding its market presence and enhancing its technology offerings to drive future growth[12] - The company operates primarily in the retail segment, with substantial revenue generated from e-commerce product sales in the United States[119] - Current business strategies include improving product findability and expanding market share in Canada and government sectors[124] - The company aims to enhance customer experience through improved search and navigation on its website[124] - The company’s supply chain allows for direct shipping to customers from suppliers or warehouses, supporting its e-commerce operations[122] Market Risks and Legal Matters - The company is cooperating with SEC investigations and has provided all requested documents related to various subpoenas[83] - The company intends to vigorously defend against multiple class action lawsuits filed against it, with no estimates of possible losses available at this time[84][85] - The company is exposed to market risks including interest rate changes and foreign currency fluctuations, but most sales and operating expenses are denominated in U.S. dollars[172] - The company faces risks related to the ongoing COVID-19 pandemic, including potential impacts on technology, security, and employee productivity[187] - The company is subject to various laws and regulations that may increase expenses and impede growth, particularly as it expands its retail business outside the U.S.[170] Deferred and Unearned Revenue - Unearned revenue at September 30, 2021, was $65.206 million, a decrease from $72.165 million at December 31, 2020, with a deferral of revenue of $55.938 million during the period[108] - Breakage income related to Club O Reward dollars was $2.5 million for the three months ended September 30, 2021, compared to $1.6 million for the same period in 2020[108]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for the period ended June 30, 2021, reflecting the deconsolidation of Medici Ventures and tZERO as discontinued operations, resulting in a significant one-time gain [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2021, the balance sheet reflects the deconsolidation of Medici/tZERO entities, showing increased equity securities and total stockholders' equity, with cash and cash equivalents rising to $536.4M - Assets and liabilities of discontinued operations, which were **$140.3M** and **$21.6M** respectively at year-end 2020, are zero as of June 30, 2021, following the deconsolidation[18](index=18&type=chunk)[64](index=64&type=chunk) Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $536.4M | $495.4M | | Equity securities | $330.8M | $1.4M | | Total assets | $1,101.7M | $830.2M | | Total liabilities | $425.5M | $393.9M | | Total stockholders' equity | $676.2M | $436.3M | [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income) For Q2 2021, net revenue from continuing operations grew 3.6% year-over-year to $794.5M, while a significant gain from discontinued operations drove consolidated net income to $309.8M Q2 2021 vs Q2 2020 Performance (in millions, except EPS) | Metric | Q2 2021 | Q2 2020 | | :--- | :--- | :--- | | Net Revenue | $794.5M | $767.0M | | Gross Profit | $174.8M | $177.9M | | Operating Income | $36.5M | $48.8M | | Income from Continuing Operations | $82.4M | $47.8M | | Income (loss) from Discontinued Operations | $227.4M | $(13.5M) | | Net Income Attributable to Stockholders | $309.9M | $36.4M | | Diluted EPS | $6.47 | $0.84 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2021, net cash provided by continuing operating activities decreased to $120.0M, with increased cash used in investing activities primarily due to capital call contributions Six Months Ended June 30 Cash Flows (in millions) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by continuing operating activities | $120.0M | $187.4M | | Net cash used in continuing investing activities | $(47.7M) | $(7.5M) | | Net cash provided by (used in) continuing financing activities | $(9.2M) | $43.8M | [Notes to Unaudited Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes detail significant accounting events, including the deconsolidation of Medici Ventures and tZERO, resulting in a $243.5M gain, and the company's shift to a single Retail reportable segment - On April 23, 2021, the company closed a transaction with Pelion MV GP, L.L.C., transferring control of Medici Ventures. Overstock deconsolidated the entities and recognized a gain of **$243.5M**[42](index=42&type=chunk)[59](index=59&type=chunk) - The company is cooperating with an ongoing SEC investigation related to tZERO, the 2019 digital dividend, and other matters[82](index=82&type=chunk)[83](index=83&type=chunk) - Following the deconsolidation, the company determined it has only one reportable segment: **Retail**[109](index=109&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2021 financial results, highlighting a 3.6% revenue increase driven by higher average order value, a slight gross margin decrease, and the release of a $47.0M deferred tax asset valuation allowance - Q2 2021 revenue growth was driven by a **33% increase in average order size**, offset by a **22% decrease in customer orders** compared to the peak of the COVID-19 pandemic in Q2 2020[117](index=117&type=chunk)[124](index=124&type=chunk) - Gross margin for Q2 2021 decreased to **22.0%** from **23.2%** in Q2 2020, primarily because 2020 benefited from a lower promotional environment and other one-time items[118](index=118&type=chunk)[130](index=130&type=chunk) - The company released approximately **$47.0M** of its valuation allowance on deferred tax assets, concluding it is more likely than not that these assets will be realizable[144](index=144&type=chunk) Key Financial Metrics (Q2 2021) | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Net Revenue | $794.5M | +3.6% | | Gross Margin | 22.0% | -120 bps | | S&M as % of Revenue | 10.7% | +40 bps | | Cash & Equivalents | $536.4M | N/A | [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks relate to its $330.8M equity securities, mainly in private companies, which are subject to valuation volatility, while interest rate and foreign currency risks are minimal - The company holds **$330.8M** in equity securities, primarily in private companies, which are subject to valuation risk due to the lack of readily available market data[172](index=172&type=chunk) - Interest rate risk is low as the company's loan agreements carry a fixed blended annual interest rate of **4.45%**[170](index=170&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with enhancements made to internal controls related to tax valuation allowance release and retained noncontrolling interests - The principal executive and financial officers concluded that disclosure controls and procedures were **effective** as of the end of the reporting period[176](index=176&type=chunk) - Internal controls were enhanced during the quarter to support the accounting for the tax valuation allowance release and the valuation of retained interests in deconsolidated subsidiaries[178](index=178&type=chunk) [PART II. OTHER INFORMATION](index=40&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, with details incorporated by reference from Note 8 of the financial statements, covering ongoing matters such as an SEC investigation and class action lawsuits - This section refers to Note 8 for details on legal proceedings, which include an **SEC investigation** and a **securities class action lawsuit**[180](index=180&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk) [Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section highlights new material risk factors, including potential losses from equity interests in startup businesses and the risk of not realizing recently reversed deferred tax assets - A new risk factor highlights the potential for **material losses** related to the company's direct and indirect noncontrolling interests in startup businesses[183](index=183&type=chunk) - A new risk factor was added concerning the potential inability to realize its **deferred tax assets** if future taxable income is lower than estimated, which could lead to re-establishing a valuation allowance[184](index=184&type=chunk)[185](index=185&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or issuer purchases of equity securities during the period - There were no unregistered sales of equity securities or issuer purchases of equity securities in the quarter[186](index=186&type=chunk) [Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Medici Ventures, L.P. Limited Partnership Agreement, CEO and CFO certifications, and the financial statements formatted in Inline XBRL - Key exhibits filed include the Limited Partnership Agreement for Medici Ventures, L.P. and certifications by the **CEO** and **CFO**[188](index=188&type=chunk)

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited financial statements, management's analysis, market risk disclosures, and internal controls [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited Q1 2021 financials show significant revenue growth, profitability, and a strategic shift to focus on retail [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $534,776 | $495,425 | | Total current assets | $604,256 | $582,740 | | Long-term assets held for sale | $153,362 | $106,155 | | **Total assets** | **$893,724** | **$830,214** | | **Liabilities & Equity** | | | | Accounts payable | $135,383 | $109,759 | | Unearned revenue | $96,308 | $72,165 | | Total current liabilities | $369,993 | $327,581 | | **Total liabilities** | **$444,784** | **$393,888** | | **Total stockholders' equity** | **$448,940** | **$436,326** | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations (Unaudited, in thousands) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net revenue | $659,861 | $339,598 | | Gross profit | $153,524 | $74,206 | | Operating income (loss) | $26,592 | $(13,305) | | Income (loss) from continuing operations | $26,018 | $(13,766) | | Loss from discontinued operations, net of tax | $(10,126) | $(5,799) | | **Consolidated net income (loss)** | **$15,892** | **$(19,565)** | Net Income (Loss) Per Share (Diluted) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Continuing operations | $0.56 | $(0.34) | | Discontinued operations | $(0.23) | $(0.06) | | **Total** | **$0.33** | **$(0.40)** | [Consolidated Statements of Comprehensive Income (Loss)](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive Income (Loss) (Unaudited, in thousands) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Consolidated net income (loss) | $15,892 | $(19,565) | | Other comprehensive income | $4 | $4 | | **Comprehensive income (loss)** | **$15,896** | **$(19,561)** | [Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) - Total stockholders' equity increased from **$161.7 million** at the end of Q1 2020 to **$448.9 million** at the end of Q1 2021 This was driven by net income and changes in noncontrolling interest ownership[31](index=31&type=chunk) - The accumulated deficit improved, decreasing from **$(596.7) million** in Q1 2020 to **$(509.1) million** in Q1 2021, reflecting the recent profitability[29](index=29&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (Unaudited, in thousands) | Cash Flow Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $61,731 | $(12,227) | | Net cash provided by (used in) investing activities | $2,975 | $(5,999) | | Net cash provided by (used in) financing activities | $(5,759) | $47,249 | | **Net increase in cash** | **$58,947** | **$29,023** | - Cash from continuing operating activities was **$74.1 million** in Q1 2021, a significant turnaround from a use of **$1.6 million** in Q1 2020, primarily due to higher net income and favorable changes in working capital like accounts payable and unearned revenue[33](index=33&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) - Overstock.com, Inc. is an online retailer focused on home products Its e-commerce site features both first-party sales and a third-party marketplace[39](index=39&type=chunk) - Effective Q1 2021, the company has one reportable segment: Retail This follows the classification of Medici Ventures and tZERO as discontinued operations[42](index=42&type=chunk)[105](index=105&type=chunk) - On April 23, 2021, Overstock closed a transaction with Pelion MV GP, L.L.C., transferring control of Medici Ventures and its blockchain assets As a result, the Medici Ventures and tZERO businesses (the "Disposal Group") were classified as held for sale and discontinued operations as of March 31, 2021[42](index=42&type=chunk)[50](index=50&type=chunk)[52](index=52&type=chunk) Net Loss from Discontinued Operations (in thousands) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Revenue, net | $15,592 | $11,975 | | Operating loss | $(14,780) | $(12,839) | | **Net loss from discontinued operations** | **$(10,126)** | **$(5,799)** | - The company is involved in several legal proceedings, including a securities class action lawsuit and ongoing investigations by the SEC related to tZERO, a 2019 preferred stock dividend, and other matters The company has accrued **$1.6 million** for contingencies as of March 31, 2021[73](index=73&type=chunk)[75](index=75&type=chunk)[78](index=78&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong Q1 2021 performance, highlighting revenue growth, improved margins, and a strategic shift to core retail [Business Overview and Strategy](index=27&type=section&id=Business%20Overview%20and%20Strategy) - The company's retail business focuses on providing furniture and home furnishings for "Dream Homes for All," targeting consumers seeking smart value on stylish merchandise[109](index=109&type=chunk) - Key strategic initiatives include improving product findability, growing market share in Canada and with government customers, and enhancing the enterprise data platform[110](index=110&type=chunk)[111](index=111&type=chunk) - The financial reporting presentation has been updated to reflect the Medici Ventures/tZERO Disposal Group as discontinued operations, with management now focused on the core e-commerce business[112](index=112&type=chunk)[114](index=114&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q1 2021 vs Q1 2020 Performance (Continuing Operations, in thousands) | Metric | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Net Revenue | $659,861 | $339,598 | 94.3% | | Gross Profit | $153,524 | $74,206 | 106.9% | | Gross Margin | 23.3% | 21.9% | +140 bps | - Revenue growth was driven by a **66% increase** in customer orders and a **17% increase** in average order size, fueled by new customer growth and strong repeat behavior[115](index=115&type=chunk)[122](index=122&type=chunk) - Sales and marketing expenses increased to **11.1% of revenue** from **10.7%** in Q1 2020, due to higher spending on paid advertising to support customer acquisition[116](index=116&type=chunk)[130](index=130&type=chunk) - Technology expenses increased by **$3.2 million** to **$30.5 million**, while General and Administrative expenses decreased by **$1.0 million** to **$22.9 million** year-over-year[117](index=117&type=chunk)[133](index=133&type=chunk)[136](index=136&type=chunk) - The effective tax rate for Q1 2021 was **0.7%**, primarily due to the valuation allowance maintained on the company's net deferred tax assets related to U.S. operations[138](index=138&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's principal sources of liquidity are its cash and cash equivalents, which stood at **$534.8 million** as of March 31, 2021[117](index=117&type=chunk)[144](index=144&type=chunk) Cash Flow from Continuing Operations (in thousands) | Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Operating | $74,084 | $(1,647) | | Investing | $(2,762) | $(2,737) | | Financing | $(7,844) | $46,337 | - As of March 31, 2021, the company had **$150.0 million** available under its "at the market" sales program for common stock[144](index=144&type=chunk) - Total contractual cash obligations as of March 31, 2021, were **$77.0 million**, primarily consisting of operating leases and loan agreements[150](index=150&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risks include interest rate, foreign currency, and investment value changes, with low exposure in most areas - Interest rate risk is minimal as loan agreements carry a fixed blended annual rate of **4.45%** and cash equivalents are short-term[164](index=164&type=chunk) - Foreign currency risk is not significant because the majority of sales and operating expenses are denominated in U.S. dollars[165](index=165&type=chunk) - The company holds **$935,000** in equity securities of public companies, which are subject to market price volatility[166](index=166&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal controls - An evaluation led by the principal executive and financial officers concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[170](index=170&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended March 31, 2021, that have materially affected, or are reasonably likely to materially affect, these controls[172](index=172&type=chunk) [PART II. OTHER INFORMATION](index=41&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and a list of exhibits filed with the report [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, with details cross-referenced to Note 7 of the financial statements - The company is periodically involved in litigation concerning consumer protection, employment, intellectual property, and securities laws For details, the report refers to Note 7—Commitments and Contingencies[174](index=174&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for 2020 were reported - No material changes from the risk factors disclosed in the Form 10-K for the year ended December 31, 2020, were reported[175](index=175&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales or issuer purchases of equity securities, nor new dividend limitations during the period - The company reported no unregistered sales of equity securities or issuer purchases of its equity securities for the period[175](index=175&type=chunk) [Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including transaction agreements, CEO/CFO certifications, and financial statements - Exhibits filed with the report include CEO/CFO certifications (31.1, 31.2, 32.1, 32.2) and financial statements in Inline XBRL format (101)[176](index=176&type=chunk)