Beyond, Inc.

Thank you for standing by and welcome to Q4 2023 Beyond, Inc. Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentations, there'll be a question and answer session. To ask a question at that time, please press star 11 on your telephone. Please be advised that today's call is being recorded. I will now turn the conference over to Adrienne Lee, Beyond's Chief Financial and Administrative Officer. Adrienne?

Thank you, operator. Good morning, and welcome to Beyond's fourth quarter and full year 2023 earnings conference call. Joining me today on the call are Executive Chairman Marcus Limones, CEO of Bed Bath & Beyond, Chandra Holt, and CEO of Overstock, Dave Nielsen. Today's discussion and our responses to your questions reflect management's view as of today, February 21st, 2024, and may include forward-looking statements, including, without limitation, regarding our future goals, performance, profitability, and financial results. Actual results could differ materially from such statements. Additional information about risks, uncertainties, and other important factors that could potentially impact our financial results is included in our Form 10-K for the year ended December 31, 2022, and in our subsequent filings with the SEC. During this call, we'll discuss certain non-GAAP financial measures. Our filings with the SEC, including our fourth quarter earnings release available on our investor relations website at investors.beyond.com, contain important additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable GAAP measures. Following management's prepared remarks, we will open the call up for questions. With that, let me turn the call over to our Executive Chairman, Marcus Limones.

Well, good morning and welcome to the first Beyond Earnings call into 2024. I am really honored to be here and I understand the gravity of this opportunity. Over the last 75 days, we have made substantial progress laying the foundation for material growth, a differentiated business model, and improved customer retention and an affinity focus with our customer. Our goal is to take a simple commodity transaction and turn it into a trust transaction. We realize that's going to take time, but we are going to lay the foundation for it. Positive transactions with frequency, with our Bed Bath & Beyond brands, will create trust. And trust will create our ability to sell the bigger ticket items from Overstock to more complex products and services from Beyond+. As many of you know, we've gone through both a management and company restructure in the last 75 days. Yesterday, we announced management changes which provide clear direction on the two brands and position us with a leadership team that is now aligned with shareholders on incentives and driving value. Adrian, Chandra, and Dave are the three leaders whom I trust to lead the day-to-day operations, with full P&L authority and responsibility. They bring expertise, vision, and the change management skills that this company needs to drive results and evolve this business. You'll be hearing from each of them today in both prepared remarks and the Q&A. One thing you can count on going forward is better communication, especially related to our vision. Better results and a clear path forward. That vision lands squarely on providing our customers ideas, inspiration and information in addition to the products and services they need to unlock the value of their household. That focus is centered around the four walls of their home, extending to the four corners of their property. To begin this transformation, we feel like we have an unbelievable amount of low hanging fruit at this company. As an example, we know the most valuable tangible asset we own is our database of consumers. We know that improving the quality of that database drives up conversion and brings variable costs down. Much to my delight, our database is massive with over 150 million records. However, to improve efficiency and profitability, we're going to invest in cleansing, deduping it by household, and instituting a more efficient segmentation strategy. We have brought in both external leading firms and subject matter experts to create our gold standard of that database now. The implementation of that database across a modern day CRM will improve conversion and materially reduce inefficient marketing spend. I believe this simple strategy will reduce the company's marketing expense as a percentage of revenue by anywhere from a half a percent to 1% annually, better than last year, a number that we know we have to reduce materially over the next 24 months. Beyond will have one purpose, to unlock the home's potential for both homeowners and renters, giving us a chance to expand the lifetime value of each customer we establish as a relationship. We believe this will drive growth and profitability. While a utopian state would be to create the AAA of the home, a true affinity model, providing both products and services that grow the lifetime value Expanding and growing our core business is where our laser focus is. That starts with generating core revenue and delivering better margins. Our primary focus this year is to achieve $2 billion in sales, a material increase from 2023. and follow that up with achieving a run rate of 3 billion by the end of 2025, all while sequentially improving margins over that period back to the 20% margin plus level. Those two factors coupled with material SG&A reductions will result in a profitable run rate by year end 2024. We believe the bridge and building blocks to achieve that are clear, and the team is going to walk you through that bridge shortly. Before I turn the call over to the team, I wanted to provide a short summary on our 16-company Medici portfolio, a non-core asset that many holders have requested an update on. As a reminder, in April of 2021, our company entered into a limited partnership agreement with Pellion Ventures in Draper, Utah, to manage the Medici portfolio. This partnership came with an annual management fee in addition to upside deal economics in exchange for them nurturing these companies and building value. While we are wildly excited by the prospects of a few of them, The overall performance has not been as good as we think it could be. We intend to increase our communication with these respective companies and work closer with Pellion to modify the relationship in a way that singularly unlocks value and hold parties accountable. We do believe there are a few companies that could surprise and delight all of us. We're firmly committed to delivering updates quarterly. I'll now turn the call over to Dave.