[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)