01-31-2008, 09:38 AM
Quote:Overstock.com, Inc. (Nasdaq: OSTK) today reported financial results for the quarterly and annual periods ending December 31, 2007.
Key FY 2007 metrics (comparison to 2006):
-- Revenue: $768.8 million vs. $788.2 million (a 2% decrease);
-- Gross profits: $128.9 million vs. $94.8 million (a 36% increase);
-- Sales and marketing expense: $55.7 million vs. $70.9 million
(a 21% reduction);
-- Contribution (gross profit less marketing): $73.3 million vs.
$23.9 million (a 206% increase);
-- G&A / Technology expense: $101.7 million vs. $112.0 million
(a 9% reduction);
-- Net loss: $44.1 million vs. $101.8 million (a 57% reduction);
-- EBITDA: $(4.0) million vs. $(55.7) million (a $51.8 million
improvement)
-- Operating cash flow: $10.1 million vs. $(26.3) million (a $36.4
million improvement); and
-- Free cash flow: $7.4 million vs. $(49.7) million (a $57.2 million
improvement)
Key Q4 metrics (comparison to Q4 2006):
-- Revenue: $300.0 million vs. $294.0 million (a 2% increase);
-- Gross profits: $49.0 million vs. $27.4 million (a 79% increase);
-- Sales and marketing expense: $27.6 million vs. $29.0 million
(a 5% reduction);
-- Contribution (gross profit less marketing): $21.5 million vs.
$(1.7) million (an increase of $23.1 million);
-- G&A / Technology expense: $26.0 million vs. $33.5 million (a 22%
reduction);
-- Net loss: $4.3 million vs. $45.6 million (a 91% reduction);
-- EBITDA: $2.2 million vs. $(27.4) million (a $29.6 million improvement)
-- Operating cash flow: $55.8 million vs. $51.9 million (a $3.9 million
improvement); and
-- Free cash flow: $55.4 million vs. $48.2 million (a $7.3 million
improvement)
Dear Investor:
Free cash flow for the year was positive $7.4 million and operating cash flow was positive $10.1 million. For the first time in our history, we were EBITDA positive for two consecutive quarters (Q3 and Q4 2007), generating positive $6.3 million of EBITDA during those six months. At December 31, 2007, we had cash and marketable securities on hand of $147.4 million, up $20.4 million from the end of last year.
While I had hoped our Q4 results would have been stronger than they were, 2007 was still a major turnaround from the setbacks of 2005 and 2006, and we truly are well-positioned for 2008. I predicted that the turnaround would look like this: first, hyper-growth in contribution dollars (at least for a while); then, growth in gross profits; and, finally, growth in revenue. To many that may have seemed optimistic, as during the second half of 2006, revenues, gross profits and contribution dollars were all shrinking sharply. In 2007 we did, in fact, return to hyper-growth in contribution dollars, and we saw strong growth in gross profits. That was the proper place in the income statement to focus. Our next focus is revenue growth, without losing the discipline that has led to the turnaround of the first two. Once we achieve that, our turnaround will be complete. However, having returned to a solid cash-generating position, and positive EBITDA position, is a great relief.
During the last few months, we earned several distinctions. We placed number one in the Q4 2007 Online Customer Respect Study issued by the Customer Respect Group. We placed number two overall, and number one among mass merchants, in Gomez, Inc.'s "Merchant Madness Holiday Tournament" -- a competition that identified websites that were consistently responsive and available to shoppers during the holiday crunch. For the second year running, the NRF Foundation/American Express Customer Service Survey -- a national survey of thousands of households that ranks both on-line and brick-and-mortar retailers for customer service -- ranked Overstock the number four retailer in the nation.
I look forward to discussing our results with you on our conference call.
In the mean time, I remain,
Your humble servant,
Patrick M. Byrne
full earnings announcement: http://investors.overstock.com/phoenix.zhtml?c=131091&p=irol-newsArticle&ID=1101837&highlight=
earnings conference call transcript: http://library.corporate-ir.net/library/...5B1%5D.pdf