Beyond (BYON) 9 Aug 182018 Q2 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Second Quarter 2018 Overstock.com, Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the conference over to Greg Iverson, Chief Financial Officer.

You may begin.

operator. you, Thank welcome call. and second XXXX quarter Good to conference earnings afternoon our

Joining Founder, Johnson, Patrick of Dr. Senior Vice me are today J.P. and Byrne, Ventures; Moore, Noursalehi, Knab, of President, Strategy; Medici President, Retail; CEO CEO tZERO; of Jonathan Marketing. President Vice Seth Senior Saum President and

Actual reflect materially. and that of today, as you remind and may me views forward-looking following discussion differ our X, management's XXXX, results responses Let the to include statements. your may questions August

Additional that the financial XX-K in ended of factors the and information is filed results Harbor review XXXX Please release XX, Safe year X our today's about Form statement impact presentation. potentially could today. Slide XX-Q the included and Form in press December filed the for on

non-GAAP additional The on to discuss non-GAAP regarding accompanying that, over the During Patrick. slides webcast filings GAAP measures. call contain we'll posted measures, I’ll SEC, reconciliations the and these each With turn this website, disclosures call, financial the Relations measures. measures our to with of most these comparable including Investor certain our this

you, Patrick Thank to I'm be Greg. excited you with speaking here. today.

an exciting might well meeting and our within sitting I'm agenda, telling as to Board we you, for what's in you our are clear on going shareholders, be how going have it, We make company.

other business Q&A. billion post-money be ahead. in Medici or from about along interesting $X.X So some you invest be investors that group tremendous investors, the today, out the we wonderful it's news which some headlines Talking retail behind Go the prepared. about received of of and the Ventures, others has will talk and When to mentioned a we ones of obviously Letter doing with valuation. Intent think tZERO, there's Asian

Okay.

As far tZERO. as capitalization of the

you to go is We want the this? it. Seth, go do Saum take Saum, have take going ahead. Or to Seth Security Tokens. closed

is of and our the common with Overstock of August a capital also scale I future. filings both have update platform And Offering. other million raised disclosed global received to domestic that and strong That in for also $XXX to a our previously closed and tokens the across conversations our And ensure interested valuation, strategic international Jones infusion market. these for in we're had blockchain-based $XXX from to that levels, of We parallel. levels act our capital in executed of repurchase enterprise. GSR, repayment We transactions in price phase repayment. tZERO. of on and with with Security LOI with agreement STO of We in terms we to for can we to had required in they've equity OSTK debt the an to with hired vision Asia Based return in participate all billion the discount note, Token the based debt to we become we this shelf, Overstock and our markets. repurchase X intercompany closing buy share making includes agency should So to the post-money major Trading a efforts in for on in as invest capital, our in on company's work million million them other receiving at adoption as as Offering. $XXX million, GSR $X.X and agreement a all to our aggregate reached the tZERO for GSR intercompany had placement partners them all ownership partner We across a Security up $XXX Token tZERO with we them, buy creating our tokens the consideration. truly X% intend new

agreements in read can about more these of XX-Q. all You our

Thank you, Saum.

on working what capitalization Token was I Let the on everybody happened me to over think Offering. these the Asia, because last for wants I went know and months. many something Security to I mention

million will Token and did $X I'll first mean is very that we to tell Blockchain XXX consider really to there's I Asia, called whole could, $X and was it's In eventually, be crucial in And I'll people that you. – million. I'll So to The million. suppliers take different. turned we And truth get I did a you of said $X with. unless it include $X.XX opened, we that take It know the money. morning in this million. of the quite was, take a Offering I'll sense, over million. have a went I'll I out first take world's Asia. anyway, very take we ecosystem money. the – – best this worked It's Capital. we it Securities

people first take three million. said and probably two weeks there, The weeks was three million. I In Asia in pledged $XXX all met they'd $XX I over

a difficult for this of And get of is out slower. extraordinarily made to somewhat However, Asia it be that turned money out number things what reasons. to for

By what law some with and so model, that's there – Ministry This real real of some the token, men. are out and it is advantages. spent switching that firms there down security that Korean to and However, We this added and first a maybe forth. world's Korean millions complexity. lot Finance equity and of slowed much on turned in working so so things working with

Asian firms under can come this in model.

just all And take. you at to going now. to comment so it's Seth, want

Yes.

token, a security. departments these as rather a with in have than of seen their security they cryptocurrency as So we exempted one is many found wanted we investors In a accounting it as registered all treat or spoke Asia. never countries, to because thing offered a

made this getting great hurdles there of time was through fully new interest to the a and concept that so to ground of deal through happen. is the there plow we over that's have from inroads various effort this make a And level cryptocurrencies. securities question there's some incredible completely saw there, lot we before of that able ownership a institutions we're where and work get be And there but said, of is just to we will of versus confidence ground. because plow those there, That Asian able the we in there, to order interest tokenized

the worried big. thinking who as a and some tremendous think at thinking partner. well, big people the of up directly GSR We really finding we another do. They're as partner very wants is in the about they're led to that to equity we a want to in big. we day, come coming and of select evolve, which know with them end really were be model, So equity going tZERO, And really think

one the much we arrived at and good really, game pretty we partners. plan, folks found feel We them. these partner Go have the Saum. about who as ahead, same We really

growth way we an expecting token And this continue to as regulated as ICOs capital, shift we're as offerings. to so a into whole raise grow market this more – security more opportunity, Market just shift efficient continues exponential to to expect nicely.

that what that Yes. the Note have this said, but months ago, Truth I Tokens, have Security ICO what few Security shouldn't think a – can security, SEC called have tokens it's Chairman been been seen SX my a that are an should things the security. the of is should Tokens percentage I've we never mention won't been should been ICOs have includes is, estimate Tokens, XXX%. and that ICOs which tell you of of I Security which

been as there that of registered number in as been filed exempt can we that XXXX, or And increasing with the have note has SEC. an registered ICOs or exempt

people securities. those so we trend offerings as that acknowledged of And are making see starting to

half ICOs of in just slowdown But a expecting started down when was growing year, Everyone this cracking it's them. on Right. the the that, been first exponentially. SEC despite

think was it $XX I ICOs. raised billion around in

trade venue water needs is on some that And is a that a SEC sprinkled means, that that is on security, it. all anything holy a as security the

a And to so Go that. it's ahead. race develop

with just bonds, shows private this IPOs, opportunity a So offerings, market loans.

are is isn't focused And on the there massive opportunities. that – offerings, and much no there on the focused private as particularly really liquidity We IPOs blue-chip which is companies issuance our private offerings, primarily, are for. both

by point The a in largest market, the private annual terms IPOs Frequently, offerings. missed Yes. issuances. percentage is is of small in private very are – that equities far, of

on considerable simplifying be that and in into that all so fees the inroads we go offerings digitizing process. those blockchain, and think there's compliance And to the the there made

I'm for a the instance what that business. U.S. day is is the can U.S. the first happy Treasuries The after issued retire the the Although government blockchain Go I really we ahead. U.S. on – first the day man.

Okay.

be tZERO with leverage next our regulatory the leading is first-mover So goal the regulatory. will go assets. for of slide. tZERO, The the to to advantages advantage, platform We some global about of talk few tokenized at and slides next technological starting our to

joint a which a exchange, did – a that about XXXX. in launched approved of We step digital deal see into buy trading our did with by And the Security went to ATSs, we'll to just the an So which live as buying last raise the in competitors more we got are OSTKP, Token which with That benefits the December retail Exchange, that, just chart talk called for we launched on national broker-dealer followed of below, did we can Boston SPO then venture which there, Offering, StockCross. slides. or you capital is for the S-X coming we trading securities. a in XXXX. starting After a

Slide. Next

SEC our the on BOX basis of So for class SEC rulebook meeting we're is to with regular next that make a this asset and Security happen. JV a leverage to up from a standpoint regular present the – regulatory to to with new Tokens

Slide. Next

us partnerships an So some and give of our that acquisitions advantage.

we So ATS. buying mentioned an

great and that which more which national leveraging retail we bought the a – did joint also ownership tZERO We later. venture is in a StockCross, gave with in the technology which exchange us partnered trading We platform. agency talk BOX. broker-dealers, I'll for about bought BD, high-speed lastly, have And we're

Next tZERO digital. Slide. BOX

some this. time want about talking just I spend to So

that, So options partner some exchange spend one. $XX million license really, into And and to not two an actually could out there and were million, $XX with just either guaranteed years or buy here. exchange even or an to with facts. We be two lay

there or of XX CBOE. NASDAQ, exchanges, XX NYSE for there's So them by owned licenses out

really one that means there which there exchanges, of really with. Digital, BOX that So partnered out own players we being is those four

the credibility, to speed that importantly, chose a We about and that. one JV, expertise could for and, market. talked filed allow we we – their get BOX that So us primarily would to most for regulatory did

the exchange lets an listing to looks at. SEC It and It allow some bring us in draw ATS advantages are an to look has and publish set the market data. of at lastly, which in versus just us investors, you issuers. they institutional of premium standards, And lets

I'm want just I comment? about really I Exchange. to say, Boston excited Can the

I they're and Exchange I the kind and group And believe very importantly, more we're owned think, people, a and very I them. Boston digital. with. is XX% going business a something, Englander, the the I great so it's do any fine of for Seth? well by, And to that New be And Canadian, people it's – to perfect be like people. just of As would to or way, frankly, just regarded partners understand regulators with them

important broker-dealer quickly testing standing things an Saum made middleman And an That's there's it Yes. things your means challenge The a through Trading certain new it works broker-dealer. investment. always particularly up, point Alternative is a for ATS, bringing there. for useful System products, for to With in market. with a enterprises

access intermediary have issuers premium a the another ATS rather our investors ecosystem. because often highest-quality middleman. want best to institutional as ATS, and Token allow the the through list And to best institutional market very through to the gives relationship so will they without as us this investors broker-dealer issuers would direct trade very to Security us a don't an the as don't an premium and coming into think track in We issuances well want

hard working hard as And and It's now, year, exchange. three was very There’s turned I this, a them let an there and – small. very mention, are – a called said. this XX me as we've and we're few one long people in They've into think owned, Well been guess, really on acquire trying live U.S. we're the oligopoly. to bloppers. I – of real exchanges, XX this on anyway, they'll considered all this we the been but an

Next technological is advantage. our

have of talent bringing we And is mobile retail best for has some won tZERO. many that's awards side thing app. one retail So the that we're unique into year-after-year

enterprise Medici been well also out which form talent team and systems. as at from experience – of I've so talent will us issuer so as to – is experience our mobile investors been our some user like to expertise scalable as take to bring broker-dealers well in had unique for in lucky building we've from And skilled the our some the Ventures side, the we've hired, for dream in general be and Group able as able platform. retail

to I'm glad you say hear that.

incredible a talent I blockchain Saum but been that it's here, to pick think advantage teams from it a has is can years. and huge away team that is Not the demonstrate talent to we within from life, Medici. an to anything Medici such tZERO going have four that acquiring huge and take tremendous of and advantage. Overstock for out he talent bring

in Yes. latest high-throughput then us I've resource software help And and jump Silicon Medici practices, and needed. engineers had as mentioned, are development. development both experts these we've from lean the software And Valley OSTK to in pool, approaches can this basically, that as

doubled officially, May So we on. the touching team are in size. started I Since we've

accelerate combined have, dramatically talent that's we the blockchain and we've roadmap that the So both to enterprise we've team and grown engineers.

of we're building. platform is So layout this the the

are a frictionless, investors that and really network liquid. and together that's brings issuers market a two-sided the We creating transparent in

four which lets and product trade; expansion, and is really are then And great building the experience applying being broker-dealer efficiently; the So to companies and it, of a three our consumers trade. assets where exchange and platforms knowledge four, this our capital so then mobile web actually these the for of issuance, and side raise roadmap. two, more

non-U.S. world. So our international in tradable we'll shows we're the own QX. have an QX on later to tokens in mid- publishing and to be late this issuing exchange or those for It that traders

footnote a may. I if put Let that, on me

So out committing as serves this roadmap? when And the as system telling we're there roadmap, product in a four who products Saum our that and be go. main updated we We're introduced. will first, described publishes keep product we they'll this the

two and we'll Yes. investors. launch be And on-boarding things, we new shortly after those issuers

business. it of some tZERO. as That's ongoing on grow those and And we this so Medici? just activities are scale

okay. Medici,

Let's go to Jonathan.

You're phone. on the

Ventures technology. Okay, on I'm the on phone. is blockchain focused Patrick. Thank Medici advancing you,

So tZERO, identity. property and We're in today in stocks call. we on the two to that banking, capital on and portfolio doing have the are voting XX markets, money conference other going companies registry focus

about wallet necessary. is July the anything interface. from better The think, a Patrick, keys help have a going third its Medici Bitsy access private great you up interest it's that XX%. increased should recovery to a to to way has and it. and excited about better will about is in their we Coinbase beta designed than We're first ownership user will people The manage to do in that, key be It's better and It Bitsy Bitsy. compete be creating Bitsy? say launch that more give a September. late want wallet.

actually. would, I

behind Let bit. a me this this thinking explain

them market felt with a years For looked current pay to people four is, wallet years the buy not the We truth own products, what money. It's the having process problem and/or not as It's we’ve bank at allowing with with been people give your field. a in X.X Bitcoin. that a wanted having think way to Bitcoin. – account. We like you really is don't wallet the wallet. efficient we a most in about at was I And all are cases

that you name you're else we bank don't account, that can and best your with field, keys means opening open crypto has crypto the the the have when Someone you're wallet What the you folks that to a money. to in – up say have buying.

You from company. obligation really contractual have the

mute wallet. those true own your keys – remarkable second, are – we this stuff. the means You’ve Jonathan, not account. wallet, that wallet could And what's please? you which yours. don't created a just don't a that money, You those It's you for bank own But truth in

you your the remember problem question your a currency. keys doesn't cryptocurrency. with keys the situation when in or that general you up The hold to You hold end is the to currency, the password that could XX-word grandma where

keys that people recovery to we you So unique recoverability. for but be industry, be whole going method to We've think be key your there's your currency so it really to to have developed money method in allows have can a to for be both both way a some serve even friendly, the could true, considered it their there wallet. that actual to

you you with your this if so lake, if money, you, around the but wallet it to wallet carry metaphorically, is crypto the it you lake, in speaking drop drop be in speak, if You wallet, but the your your can still lose recovered.

market the we And best this is intend in the to So Overstock. of be it's power the product. be to Well, marketing and beta, groundbreaking be year, within over September, a we'll give we jamming in It's we'll in worlds. the it. increase, really but going this both

Okay, Jonathan, next Actually, Seth? slide, slide? next

deals you're The Land Medici talk probably best one. slide think with about I Governance. to this next Patrick, positioned

you. bring There mobile Thank in media to the social a Okay. a AI, Land way blockchain, entire and to app, that's is to use these going technologies, world. way us let Governance

with I event dollars of will land. this remarkable put People the think to historical, gone a successfully it Bank. used have release to World wealth can title, in and live biblical whole land this. of who it's We've gets on really of world people the partnership trillions this be the possibility. that together It's hundreds that into maybe do technology if

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on, We've However, will may it project. hope Land and and be and Medici new Governance. back this back now that pleased out reengage to why Governance. with there not the ways. will be But Land and as we actually, is a to you started just well see the parted that's see I on turn he of come scene, on comes Medici – Jonathan? case. part But company after – the will gone you going Hernando that we've case that's of I'm hope formed question us that it the say is this

comment Governance. Patrick, Medici if make Land I just on could one

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in partnerships these very the Medici so with Land on World bullish shows place Governance. that, Bank getting Okay,

Jonathan. very much you Thank

Thanks.

Okay.

it really on to going to see let's bury upfront, to are Unlike now put to do the message. you Directors. financial Board analysis – really I'm It's happened. turn what's and retail. right of I'm going the are treating you to all simply want. People So they I'm like the going not

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So Seth.

Great.

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ahead. Go Okay.

All right.

significant the the of key One our in cycle the during testing in in home shopper was targeting quarter cycles. buying improvement learnings second

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go anything ahead. So else? Seth,

Let's take another if there's more questions.

tZERO Additionally, can acquisitions other for you some tZERO's provide like on an of let's the see, plans, advisors? smaller update

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checking of messages Seth the All telephone coming in. kinds at and Are good? is e-mail time. same we are

I think good. we’re

managed. job. Nicely Nice

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So it's work an for to honor you.

Thank you very much