Overstock.com, Inc.

Good day and thank you for standing by. Welcome to the third quarter 2022 Overstock.com earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll press star 1-1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, LaVesh Hemnani, Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning and welcome to Overstock's third quarter 2022 earnings conference call. I'm Lavish M. Nani, head of investor relations. Joining me on the call today are CEO Jonathan Johnson and CFO Adrian Lee. President Dave Nielsen will be available for Q&A. Next slide, please. Let me remind you that the following discussion and our responses to your questions reflect management's views as of today, October 27, 2022, and may include forward-looking statements. Actual results could differ materially from such statements. Additional information about factors that could potentially impact our financial results is included in our Form 10-K for the year ended December 31st, 2021, and in our subsequent filings with the SEC. A slide presentation accompanying today's webcast has been posted to our Investor Relations website and is available to download. Please review the important forward-looking statements disclosure on slide two of today's presentation. During this call, we'll discuss certain non-GAAP financial measures. The slides accompanying this webcast and our filings with the SEC contain important additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable GAAP measures. Finally, to participate during our Q&A session, please use the registration link available under the event section of our Investor Relations website. Next slide, please. During today's call, we'll follow the agenda on slide three. With that, let me turn the call over to our CEO, Jonathan Johnson. Jonathan?

Thank you, Lavash, and good morning, everyone. Let me begin by saying up front that I'm not pleased with the top-line revenue results in any way or form. I believe we continue to spend amply on marketing and growth efforts, but this is a hard and highly promotional environment in which many of our competitors continue to liquidate products and or ignore bottom-line losses. We believe that will catch up to them. For some, perhaps sooner than later, as vendors and their financiers worry about payment risk and even longer-term viability. That is not a concern with Overstock. We are profitable for the 10th consecutive quarter, and we are here to stay. In today's environments, profits count. We believe profits are the right measure of the long-term winners versus losers in our industry. I believe that over time, we are well positioned to take market share from competitors, many of which are closing stores and or are currently struggling with liquidity and distracted by debt management obligations. In the meantime, we will continue to navigate the near term, remaining confident that our longer-term results will be better because of our efforts and our focus on profitability. Since its inception, Overstock has transformed from a small online liquidator to a general merchandiser and more recently, a 100% furniture and home furnishings retailer with a differentiated asset light model and targeted customer base. I can confidently say that our updated business model and our disciplined execution over the last three years have enabled us to navigate the choppy waters of the pandemic and the difficult current economic challenges. With the economic environment expected to remain uncertain for the foreseeable future, the natural question is, how is Overstock positioned relative to our competition? Let me share some specific thoughts on that. The U.S. economy and consumers remain unsettled. High interest rates and various other economic factors are causing considerable stress and putting pressure on the housing market, a market which influences purchase behavior among our customers. The Overstock team remains focused on controlling elements of our business that are within our control. Our business model is focused on growth. but not at the cost of profitability for us or our partners. We provide an efficient channel for our partners to drive growth even during times of significant uncertainty as we efficiently serve the evolving home-related needs of our customers. We pay on time and on better and earlier terms than our competitors. We always have and we always will. This, along with our exclusive focus on home, has allowed us to add new partners to our ranks and increase the breadth and depth of products we offer. Overstock partners and their financiers need not worry about payment risk. We have a strong net cash position with minimal debt with no meaningful payment obligations until 2030. And even that is an obligation we could easily cover right now overstock shareholders need not worry about erosion to our earnings from high interest rate debt nor about ownership dilution to pay large debt with looming maturity our shareholders also stand to benefit from value within the medici ventures fund portfolio that includes about 20 blockchain focused startups hellion venture partners continues to do an impressive job of managing this portfolio, allowing the overstock management team to focus on our retail business. Several of the Medici Venture portfolio companies have been busy this summer and early fall. I will provide a Medici update later in my prepared remarks. Our third quarter performance continues to be impacted by ongoing headwinds of high inflation, macro weakness, and a shift in consumer spending preferences. The team managed at least to carefully stabilize the top line decrease and importantly, deliver another profitable quarter. As I mentioned, our 10th in a row. With the focus on profitability, we ended the quarter with a healthy balance sheet and nearly $4 million in net cash. As we plan around economic uncertainty, our balance sheet is a distinct advantage and is allowing us to focus on executing toward our strategic vision. We will be opportunistic in evaluating future share repurchases, and we will diligently scrutinize M&A opportunities that might be a strategic and operational fit within our long-term business priorities and objectives. As an Overstock shareholder, I hope you will leave today's presentation feeling as confident as I am in Overstock's ability to navigate and eventually return to growth in the current business environment. Next slide, please. The Overstock team continues to make progress to deliver on our strategic vision and targets. This is evident in a 53% growth for Q3 home-only revenue compared to 2019 as shown on the left chart. This growth rate has outpaced the expansion in the total addressable market over the same period. While I am certainly not pleased with another quarter of 30% plus year-over-year revenue decline, I am encouraged to see our home-only revenue decline seems to have at least leveled off. This is a good sign when you consider, one, the pandemic drivers that were helping revenue last year, and two, the benefit we saw from the shift in our customer day event into Q3 last year. This year we held our two day customer day in October in conjunction with the launch of our new marketing campaign and rebranded it as Overstock Day. We were pleased with the results of this annual event. The chart on the right illustrates our Q3 home only revenue performance compared to the prior year. Our home only revenue trend has stabilized sequentially since July, for the quarter and for the quarter it declined just under 30%, an improvement in trend relative to Q2. Third-party data shows a sequential improvement in our retention trends. We continue to direct our focus to merchandising and marketing strategies to drive further improvement. Last quarter, I shared with you our plans to launch new brand marketing following completion of our move to 100% home-related assortment. We are excited to have launched a new brand campaign earlier this month centered around our refreshed vision of making dream homes come true. I'll discuss more on this shortly. Next slide. Now for a brief update on recent corporate events. As part of our continued efforts to identify efficiencies, we conducted a strategic review of our organizational structure and made changes that better align our teams to eliminate redundancies and fixed costs. We've strengthened our leadership team with top talent over the past several months. We've assembled a best-in-class data and tech organization to drive cross-functional synergies, operational excellence, and more automation. Each of these changes are important as they better position Overstock for short and long-term success. In October, Overstock employees came together for a semiannual event at our corporate campus in Utah. We discussed our refreshed vision and showcased our brand campaign, including for the first time ever, the use of brand ambassadors. We view this as a critical piece of our strategy to enhance Overstock's brand name association with home now that we've completed our exit from and removal of all non-home products. Next slide. As we've shared with you in the past, the Overstock name has very strong name recognition, but our association with home is low. Our major journey to become an online furniture and home furnishings retailer took six quarters. As noted, in June, we exited the last of our non-home categories and transitioned to 100% furniture and home furnishings retailer. With that transition complete, we strategically refreshed our vision from dream homes for all to making dream homes come true to emphasize our purpose and inspire our employees, partners, and customers. With our new vision in place, we created a brand campaign launching a new commercial titled Come On, Get Comfy to coincide with our two-day Overstock Day customer event on October 2nd and 3rd. The ad spots, which reinforce our vision that Overstock makes dream homes come true at any budget, can be seen on broadcast and cable TV like HGTV, streaming TV, YouTube, and social media channels. An additional element of our campaign is a brand ambassador program. We partnered with six high-profile, home-centric brand ambassadors you see on this slide. Each are experts in interior design, home decorating, and remodeling. Between them, they have approximately 12 million followers across multiple social media platforms, including Instagram, Facebook, Pinterest, YouTube, TikTok, and Twitter. These ambassadors are a diverse and talented group of home experts who host popular TV shows, own interior design firms, and create home and lifestyle content. Overstock's partnership with them will allow Overstock to reach new audiences and attract more new customers. This new campaign marks the next step in our team's journey and a vision for the future. Over the coming weeks and months, you will see exciting content and social media posts from these brand ambassadors, highlighting how Overstock can make dream homes come true. Our chief marketing officer, Angela Su, and her team deserve a special shout out for the rollout of this marketing and brand ambassador campaign. I believe I speak for everyone at Overstock when I say how excited we are with this new marketing campaign and the value it will add to the company over the long run. We are finally in the social media game in a meaningful way. And we'll now hand over the call to Adrienne Lee to review our third quarter financial results in more detail.