Beyond (BYON) 27 Jul 232023 Q2 Earnings call transcript

Good day and thank you for standing by. Welcome to the Q2 2023 Overstock.com Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator instructions]. today's being that advised be conference recorded. is Please

hand call Hemnani. over would please now your conference to like Lavesh I to the speaker ahead. go Lavesh, today,

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

Investor are available today's Joining Jonathan CFO, posted webcast Nielsen be has Johnson Dave to A Q&A. our CEO, available me been President call for Lee. Relations slide and is the will on download. website today and Adrianne presentation to accompanying

statements forward-looking our important on the questions review may Please please. statements. results The today, and slide, of include X discussion reflect of Actual statements. presentation. and could responses disclosure today's XXth, as Next Slide your XXXX, differ July forward-looking such management's materially following views to from

could results and XXXX, the factors our XX-K impact Form our about with is in our the information year December financial for SEC. subsequent filings Additional that ended included in XX, potentially

we'll and the non-GAAP slides reconciliations non-GAAP GAAP call, regarding these these financial measures, this with certain important measures. disclosures comparable The contain to measures filings SEC our of measures. discuss additional During webcast most including this accompanying the

management's questions. call remarks, we for Following will the prepared open

please. slide, Next

Slide During follow today’s will agenda the call, on we X.

to let our With call Jonathan the me that, Johnson. turn CEO, over

good Thank morning, everyone. you Lavesh. And

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of QX our reported ahead slightly have we results morning, preliminary This with performance shared financial the update we revenue, month. last

EBITDA quarter the for adjusted ended XXth a strong quarter positive in We was sheet. with Our a balance row. the

and and attract as marketing rebranding the solid financial few loyal, a business. That promotional include a of Bed Beyond is & track and us will our Our budget execute offense quarters, consistent play to and customers. retain transformative Bath we larger-than-normal allowing record for next

model focus, and results. business commitment team's asset-light is delivering our Our and

execute strategic We continue drivers. growth against to our

performance Day was Our strong our Independence better, expectations. and internal

the industry. the and players June. revenue you This consider has is highly of environment in trend competitive key For sales held events the encouraging month, far, when improved relative home July, the the slightly only by month our during thus larger to

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across connected from with and each colleagues positive There the energy palpable organization was event. other. Importantly, the during

closing the property. in We completed million acquisition June announced of with assets cash more then, acquired when work that brand hand the we Canada. we have Bath at been transaction energy and and hours preparing later funded the strategies we of Bed, Since Beyond for launch formulating on later. in within for the launched Now the on this and and increased positive U.S. intellectual other $XX.X hard

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& find Our launch, ensuring expect. our base value engaging customer the Bed Overstock a priority to U.S. smart Beyond continues they includes is customer immediate base, in top retaining loyal which successful Bath the and

review to results. financial Adrian our second ask quarter XXXX I'll Now,

Thank Jonathan. you,

across the shift Furniture housing market. Furnishings Home weak preferences, engagement Well, XX% the spending be and to year impacted by a continue decline and which Revenue please. over of a is is year year results in result over improvement slide first year weakness trend industry, relative in the in in a the Next consumer this the an quarter to category, second quarter. lower

flow performance XX% period. our of $X we was during a positive driven of line with a by impact. the for cash positive expense a our quarter range non-operating a highly value of customers the a X% This non-cash first offer in solid securities value and change free margin tax the delivered half of in associated promotional quarter. was equity reported loss was A associated at and smart XXXX. for margin primarily were during gross targeted adjusted Our to $X.XX with We our of as the able million EPS result EBITDA second

in our change in tZERO of direct our investment in share bit interest in ownership of the in XX%. of the the was value bit proportionate dilution change by and in our to its securities value Ventures for The reflecting XX% of reflects of reduction from equity driven valuation valuation The Medici investment fund an updated fund.

income year. share our versus compared $X.XX decrease a the Excluding of equity the of securities, XXXX reported in impact prior $X.XX, adjusted pre-tax of losses per to diluted loss we reflecting

remains with $XXX cash We quarter the strong. sheet balance balance ended Our of a million.

& brand Our includes of and the XX.X IP. QX million of other Beyond ending cash outflows acquisition Bed balance Bath the for cash

We million in posted of quarter, slide. revenue the a second XX% Next decrease $XXX of year-over-year.

for prioritize non-home and the I need-based pressure demand adjusting consumer related for to putting As mentioned, home revenue. service spending, on discretionary goods, continues

Our discuss further home by average quarter, XX% end completed our year. lower our second we metrics key That in decline cycled of last fewer revenue only order compared products. performance June year-over-year. non-home was of orders of fully will At in exit was driven the I to later. detail and value customer Revenue the XXXX.

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a decrease was $XX last at second year. by same quarter, and actions million XX-basis versus discounting, decrease the year-over-year year. a decrease margin higher driven came period operational prior the partially the profit merchandising improvements. million point Gross The Gross was of XX.X%, by in versus $XX offset in

& promotions in expect As We on customers. a Beyond to gross plan reminder, current and we lean Bath quarters. not next few profile to offers our acquire targeted margin and do maintain to over Bed the reengage provide

Our of growth is a customer proof XX% acquisition investments. an margin the something model in to phase point of and expect our keep following initial we range ish performance asset-light

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higher expenses million our year-over-year, stock-based from automation in related savings partially tech and XXXX, $X offset and and G&A compensation. decreased includes efficiencies which review benefits organizational to by

and tech to in As a of second top-line deleverage a to weak results. the compared was quarter, XXXX the basis of quarter revenue percent due of XX.X% XXX second points expense G&A

we million Xtime expenses discreet see to -- and the spend I for indicated track related efforts, continued will our G&A brand sales our $XX volume may we expected previously, costs and investments. As near short-term around integration quarter. expenses tech increased higher fixed would incremental per tech to other G&A, note support term to in

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EBITDA In integrating and shareholder a quarter, $X within adjusted the managed customers help We that control decrease ago. we strategies Bath increased deploying active year We Beyond a value. the successfully drive offset brand pressures. delivered & million, factors and to of will focused versus competitive of second the Bed on and headwinds $XX our deliver million category remain

please. slide, Next

a slide customers order trailing active We frequency. This customers XX-month shows active measure on basis. and

is customers our shift shift the transform preferences second in X.X XXX% driven home Our million factors, active continue retailer. on key quarter. the This two and consumers customer purposeful end experiences of in or a at to decline and active online into services, base to year-over-year by spend spending as to declined a XX%

Excluding year-over-year. year, XX% second a in and a quarter, decrease customers versus customer from per last non-home declined about the decrease our of the Orders last year, active customers were X.XX active sequentially. X%

up in to decline continues relatively frequency Order better customers. hold active our compared to

brand of growing relaunch metric. enhanced that improve Beyond adoption help Bath loyalty the offerings We will time & mobile over expect app Bed the this and

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and into as order and by months. summer QX is in X% to furniture, furnishings AOV the as from compared orders typical to $XXX, improved spring Average year-over-year away value declined and shifted decor patio

seen we to pass is evidence our trade pillar customers, categories value of and and reductions of and brand receive. signs value, have product we We smart offer that compelling primary our costs. across our to down cost Since on deflation continue

of is continues delivered to period. highly align million pricing competitive to Orders year. promotional we KPIs, decrease internal This navigate the with prior $X.X compared XX-month for a trailing environment. Our as our the a were XX%, even

discussed and with cumulative in from along impact weak priorities, removals As primarily our was non-home site. the consumer the earlier, decline their sentiment driven a product by spending of I shift

balance will the shareholder robust customer to acquisition net Bed capacity to the fees and slide, my quarter financial price have transaction million strong over I Next the $XXX acquisition discussion related opportunities wrap including up growth strategic & on highlighting sheet. over we and $XX our in purchase with brand. associated we Year-to-date have Beyond capital strategies. deploy in Bath cash still We outflow the of drive invested cash, value, ended the with to million please.

to this that have has brand we iconic critical to sheet maximize synonymous enabled the consumer return us investment. balance developed Our is and strategies acquire with strong home, an on

adjusted We positive have to quarter in EBITDA. out worked positive flow remained and cash Free quarter generate diligently year-to-date.

We a operational have expense on laser-focused efficiencies. have realized management maintained and

us differentiator significant of this ability for a to allowed our uncertain solid is market in conditions, business and weather has the resulted of sheet, market invest advantageous All This to model. growth. balance the share

back to Jonathan. that, you, With

Adrianne. you, Thank

Bed Bath Canada, some our to Beyond progress look the U.S. slide. our into on integration launch reads next I'll we performance & to timeline, the and provide making been in Let's the next the update an in early have

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customer & Beyond We Bath expect for transition and customer this base. to a Bed the base be seamless the Overstock

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home onboarding new partners, significant assortment our and of making are quality progress in growing We products.

we continued have and early our name product new XXX,XXX many we well-known the products offerings. sustained of to brands. a depth as them Since our site, will This breadth and effort, of home June, be expand added

as developed of also rebranding the Bed to most I Bath in our Overstock shortly. Club Beyond rewards. loyal customers will target Program share databases welcome customer the O the have more and that on strategies Loyalty with We &

is Phase are at As we focus our of now July, the X. end on

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company. success and are will confident we XX days critical for exciting that We be the our U.S. next with replicate will launch. The

our a execute the in right action have the rebranding people of and We business. right key positions strategies, plan, transformational to right the

Next slide.

how Bed job Canada in launching Beyond XX. technology Bath did product a Our this intellectual property & have finalized an setbacks June many in The encountered not real execute well is and over any we to that hours of and the the outstanding They of within planned This completion launch of thus was and knows executed of our digital Canada. teams far, weeks. team on acquisition assets.

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home. Bath their We site expect meaning, association substantially. given type direct Direct new strong to bedbathandbeyond.ca have Bed with increase brand who bedbathandbeyond.ca traffic increased visits traffic, & the customers into Beyond browser to

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eager materialized, see. pronounced results of I not am launch as and the quick in may as So, to but the our U.S. be or

remain track U.S. to early We the in slide. in August. Next on launch

We targets. are pre-launch all meeting our

lot I'll provide section a business progress made have details some segment. teams ensure of Our to success. by --

in much tailwind seeing brands, our to and an XX% business categories overlap First, attaching merchandising with product ranks Beyond well-known home. and brand most & its -- & the much meaning clearly the vendor is historical that Within addressable Bath Overstock the Bed association model the merchandising in in across supply offer. Beyond's Bed categories, represent of than revenue chain. name brand its we have base, Bath we The team love, which from higher name the

number some us That catalog already brands, past, of many so changing our relationship now their products. the entire not partners add of partners catalogs branded in these of However, of the able with meaningful been some us. to Since now acquisition have we early added SKUs have have their we've quickly media from when to of these these we new SKUs of in news products is as they since offered existing way. total is the partners, a home an The XXX,XXX. open July reported first our

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time delivery well. & parcel Bath historically is than quick more to full small a Bed Our day Beyond faster than

faster. are We

is keenly product on quickly customers to and our to on team chain deliver focused continue time. supply Our ensuring we

now work with to more willing partners are us. Prospective

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app acquire We hugely will retain our leverage popular to and mobile customers.

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promotional We have download who love calls strategic & Beyond plans to those Bed app with incentivize action. the specific to Bath mobile our brand to

will files customer Bed exceeds our the loving base. customer coupon Beyond acquired customer XX Bed mobile Beyond & app Bath substantially & a million promotions. Bath that The love active We

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the earlier is the company within repositioning everyone mentioned category brand this capture iconic share. the market with the at I on As focused company home consumer call, on to

Next slide.

the U.S. happening. Beyond before Bath Even of property our work. growth already brand and & intellectual acquisition our the expected flywheel the accelerate of We positively some influence is Bed this and help launch, to to

iconic you opportunity that total our the and with all our billion. can of benefiting our fragmented and This presence As shaded share acquisition a see directly $XXX elements nearly on market us from brand. the are greater items an grow addressable growth association flywheel from to within this gives line, market exceeds over gain large consumer

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you which be U.S. love new with Bed launch. our engaging mobile logged you will app, the to available coupons, If will download mailed Beyond & Bath with the

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launch engine to improved the we search before launch experience more Even search as an in U.S. an we sorry, internal spend -- search improved plan We launch to inter, plan on I'm marketing.

customer enhance this the and expect will experience increase We conversion. overall

noted, product to as I've findability more site. As add to paramount our is we continue SKUs

Next slide.

on we and Before beyond. for I'll take quarter some QX our your trends questions, color provide expectations and date

U.S. date, is August. we've slight year-over-year previously, revenue Bath on improvement a teens improved to trend in The seen Bed has high net our to early As the in range. of to track slightly June. launch Quarter I July indicated for Beyond negative & revenue compared

revenue make and We industry, in do improvement weak environment in our consumer both or expect which expectations of our are any improve trends post-launch. difficult uncertain These poor spending to to not in predict. the macroeconomic

Bath home U.S. benefit to from the operating advantageous encouraging We Canada space. business is furniture name to the love and model expect Early and Beyond in & eager performance see like happens model our asset the much what furnishing in Bed with in

to Moving territory margins acquisition, assumptions our see quarters. for a expect negative we on Based for to few EBITDA moving adjusted adjusted into customer EBITDA.

and window, we unique & Beyond on marketing to large We customers Bath those will more during including list win customer spend in discounting acquired. the this Bed

the profit We not at specific range this provide scenarios planning of a more we targets. and have for a or top will as guidance margin line, time, result, on

As a this take opportunity management grow to we intend advantage of base. to our team, unique customer

our few and purposeful discounting and a be attract agile encourage plans to will We higher customers expenditures for for marketing incurring quarters. in -- for

of As growth the active I've measure number this mentioned in success previously, our customers. transaction for of is

are customer. number We our significantly increasing on active of focused the

Now operator, questions. take some let's

you. Thank

The the of Patel Raymond go first James. Rick from comes question please Rick ahead. of line

an for I the & of update Like Hey bit bit, of to taking is Bath Filling it's provide question. on Josh us up Beyond for for I Thanks just guys, you a mentioned I important it couponing. know Rick and Bed that. the know, if brands curious was this the apply coupons I here. know a could in you that

to margin & we aiming Bed customers? think are implications the how I'm should target specifically of this? So, you And legacy curious, the Beyond also, Bath about

customer loves let talk know been So, and to Bath Adrianne Beyond & has low high maybe & retailer. Bed then talk to add, coupons. about Bath historically briefly, the bit. Dave a can a me margin that Bed implications Beyond We turn

we coupons. and have promotions, have So, great always offered

that Beyond seen Bath Bed than historically is they've I Beyond. think and pricing sharper better customer & our find will at Bed the & Bath

Bed big they Bath work. continue won't the we used promotion in to as while the & as intend So, be past, strategies we Beyond have

with to people, initial said, customers, shopped can & Beyond attract who've to think site. Bed the coupons to during significant launch Bath people Overstock customers, expect never the that to Overstock see I great attract some either, Now them

will be there with strategies. followed initial, Overstocks So, usual than great bigger kind I by push of think, traditional with promotional an coupons, prices

maybe there? Hi want to you should Dave, add I've more strategically said a than lot, Anything have I said.

you think I leave perfectly, exciting answered a question launch. to and I going couple it's as that think at now. it be really that I'll months, we of for

margins, Now to said, I on and Adrianne before that. let talk I'd

a We lot margin is guidance because, of are out. not figured there providing a lot to be still

a we part place have our test Now which is small had for month great because in us a it's business. of Canada,

adjusted to about to a unique going to guiding few margins? opportunity are say. But would lot important. lot. what We add customers, A of and acquire negative were because said Adrianne, probably a I EBITDA a you what is for that's quarters, this you very

be I scripted expect adjusted Jonathan, negative just will range. We is And to see don't I XX% as mentioned, reiterate, EBITDA that. add targeted as wouldn't on I margin. gross remarks, margins. said in pressure in you my we

just those reiterating So two comments.

Yeah.

So, Josh, great question.

to are very We be here. strategic going

know Overstock. You

mantra Our share been market sustainable, has growth. profitable

could, back get getting rebrand. customers will it and in these expect acquiring should there, will, But We that. it it as we take to take, to and it

mantra. back there'll from a so, that few a for a to our departing to be And mantra get purposeful low a quarters, departing

the all there. for Thanks Yes, Best of luck. color

Thanks.

go next ahead. for the Seth, from standby next Barclays. the question question. Seth line comes Sigmund please Please The of of

business everybody. on of to morning, wanted currently. the I just follow-up state Good thanks. Great, the

drivers down-high any the into Teens. the you you. context some saw to think you of frequency, signs that Thank maybe behind improvement drive is there Maybe the specific from that, just to just Just June between some So, of do great. July, stabilization? be would did or see starting that, you that market customer growth, Anything discuss AOV. the

every building launched So, running are to and get turn first well, macro a thing next. we while proud that, don't the in new even experience. the of I I of business Consumers to feel and the But macros after really taken The it not would team our what's their in excitement are went of say, still a in Canada, on still spending running hard. say ball ton with There eye launch up prepared of the work I'll U.S. is doing again lot very business see for I has team running Dave the yesterday. be off day. Interest is, rates for I'm our to change.

concerts know, lot home for are is going focused country. That to the Swift aren't spending think well. the the like around said, doing the did People team on You a I they during on buying pandemic.

to want about you Dave, particulars? talk

Yeah, I would Independence Day. items just a couple add

primary received app. was of we with July Xth promotion by in really success well our was a record That breaking Our customers. fact, and success the driver, mobile had of lot our

had JJ? we more we've one We have our for percentage best, the best us. our customer, as drives the a far. of mobile continue had promotion It out And value. so is app working major mobile order a a really sales to lean of The into promotions. loyal higher frequency, and higher a nicely order app average

talked little about seeing lower also we're AOV some we Yeah, trade down, this quarter. being and a

are It is The answers better, the hope patio I buy because a people little a best point, a question, well that's Even typically that as in basket. trading people price Seth. larger patio higher are their does in then quarter. second products, even wallet. and furniture quarter they the a watching they're so good, there's, down

Bed, customer incrementality. Thank customer right? you. banners, customer Maybe the a is visits. just current far back? seeing just wider improved the that's for Canada one an seeing to in that trend in that the experience whether follow-up an Bath I'm trying both a Do assortment to sense Overstock or about a think coming positive Is new as maybe you or have what thus just maybe about you're

Yeah.

it through it's that us think coming I is those. all search three a And what's marketing. lot telling think of engine really I of is

everyone product a analogy, name earlier engine it's I for the at was conversion a Beyond, they're in find is sold yet. Bed this how another not through I'm Bath Overstock just But the being search as kind engine looking better the and type knew elbow & people and in it rate or when Google anchor And we but so more and on the So, Canada using they anchor. usually, not of and me loves really ad search at higher. sure boat is was. and much, better, how an mentioned spend company it's marketing on conversion that as we I we heavy haven't even return spend curve found mentioned, we as see, of it and

sense that was think through gives search liquidations in comfortable on this Is making had may year's purchase. Bath, have past Bed with that a I But product a us that questions, Overstock, the they're a good? the these found is they goods? people last when

been skew it's a great business anchor, how that is going with boat anchor our model, so, to boat anchor that's suppliers clearly as with sail. dropping with see picked to a said, boat I this up. We and is growth It's So, sleek a boat been adding it customers. it

Great Good thank much. you so luck.

The next Thomas D.A. go Thomas ahead. please of question comes from Davidson. Forte

Alright.

again Jonathan the congratulations once Bed, on Bath transaction. and and quarter, first So the congratulations off, on team,

a So, Jonathan, just slightly differently. I'm of this you've question it lot going times. been asked to ask

a things pressures spending ahead, at nature. of category, near-term longtime level, Swift, the the that looking Taylor consumer as out, events. e-commerce what travel thoughts recognizing on pointed high your to revenue participant category the revenge the growth, of positive you a are So, returning in live timing and from on home

return it company optimistic overly from that category? faster Bath growth revenue a at at level you to to brands could a think to transition level Bed, And high Overstock, that then than as is the the also you

hard. So, first that part the is of question

furniture about that industry home reading there's think, say talk and recession. I recession. furnishings I a had would U.S. a has the the avoided the economy papers,

Our there, there's is. still can't glut some of recession I industry get normal. in liquidation get There's out on. predict, in out been the and quarter-over-quarter we back I inventory quickly, has we've still to will trend. and is how the still seen normalization going this it's say going we're of to

to to. So, uptick while the normal, in see We comeback spending patio. quarter, like we an expected saw the is a not did second second the back in we quarter yet

normal. more feel normal. trends are the So, volume It's to yet to the back just quarter-to-quarter I total is not think starting not

Bath for at Bed the emphatic, second I do & think for outperform looking so. Bed, mean, question, been time. think Beyond quite the did We've in I we helps some us this really of An I a industry. rebrand folks Bath purpose. the The acquisition part yes.

its loved brand, its We we base. its customer loved like didn't We business model.

it going boat felt as but just a came it it the we without to of true. buying it good going this opportunity So, something looking wanted, concern, get like, concern, as dream its anchor not a at a parts parts, come when

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Thanks, Johnson.

Thank you, Thomas.

Nagle The Bank line Curtis of America. next of question comes please Curtis ahead. the from go of

a like an falloff better improvement, of through holiday Day all July the was on a XQ, August, is Labor I it So I versus support of without guess, did can sales possible, terms the just, period is about But sounded I see generation? or could in thinking period? big it we like see if a September a a the right? fourth It quick big big in the fourth. How -- see due event to comparisons guess one

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think we to third means, the quarter that there around will a tailwind back-to-college. some acquisition have The year, going not particularly this good still timing I think I with this come, more to in get back-to-dorm, So, of we missed year, third up. Labor in next but is quarter lot of the are I note, Day.

the has done of this We opportunity historically even that Bath Beyond have missed in won well, year. But & Bed past. we most know segment that and in

that marketing of every group year. next have hard to We intention

quarterly the relevant XX relevant really think to not would in about Curtis, So, the us next you the days, add anything you to as but trends future. Dave, to that?

Hope.

You covered it.

Okay. our up thumbs here. screen Adrianne Adrianne, any, on okay, see the I can from

well. So, hope Curtis, the I question addressed that

No.

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down So, as little and we a see better, best. trade good,

hard the for probably I they a shop benefit value, from think people we're across as getting looking also some industry. just

Thanks Okay. appreciate Got much. it. it. very I

Curtis. you, Thank

Anna go line the The ahead. from next from please question of Andreeva Anna comes Needham.

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back speakers it any the turn to to comments. like would over I time, further for this At

for thank I'm on the closing, hard its that's rebranding. need call, our it been to confident Operator, I work thank everyone team pay for you. entire will And the focused you. In thank on off.

by Our supplier deal. motivated this partners are

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This today's participation the conference. Thank you your does for program. in conclude

disconnect. now may You