- Published: 01 February 2017
- Written by Editor
Overstock.com Reports Profitable Q4 & 5th Profitable Year in a Row
Our calculation of our consolidated contribution and contribution margin is set forth below (in thousands):
Three months ended | |||||||||||||
December 31, | |||||||||||||
2016 | 2015 | ||||||||||||
Total net revenue | $ | 526,182 | 100.0 | % | $ | 480,270 | 100.0 | % | |||||
Cost of goods sold | 428,178 | 81.4 | % | 397,161 | 82.7 | % | |||||||
Gross profit | 98,004 | 18.6 | % | 83,109 | 17.3 | % | |||||||
Less: Sales and marketing expense | 48,380 | 9.2 | % | 38,347 | 8.0 | % | |||||||
Plus: Club O Rewards and gift card breakage (included in Other income, net) | 4,561 | 0.9 | % | 2,464 | 0.5 | % | |||||||
Contribution and contribution margin | $ | 54,185 | 10.3 | % | $ | 47,226 | 9.8 | % |
Year ended | |||||||||||||
December 31, | |||||||||||||
2016 | 2015 | ||||||||||||
Total net revenue | $ | 1,799,963 | 100.0 | % | $ | 1,657,838 | 100.0 | % | |||||
Cost of goods sold | 1,468,614 | 81.6 | % | 1,353,184 | 81.6 | % | |||||||
Gross profit | 331,349 | 18.4 | % | 304,654 | 18.4 | % | |||||||
Less: Sales and marketing expense | 147,896 | 8.2 | % | 124,468 | 7.5 | % | |||||||
Plus: Club O Rewards and gift card breakage (included in Other income, net) | 16,808 | 0.9 | % | 5,911 | 0.4 | % | |||||||
Contribution and contribution margin | $ | 200,261 | 11.1 | % | $ | 186,097 | 11.2 | % | |||||
Technology expenses - Technology expenses totaled $28.5 million and $26.3 million for Q4 2016 and 2015, respectively, an 8% increase, and representing 5.4% and 5.5% of total revenue for those respective periods. The increase was primarily due to an increase in depreciation of $1.4 million, an increase of $643,000 in technology licenses and maintenance, and an increase in staff-related costs of $503,000. Technology expenses totaled $106.8 million and $98.5 million for FY 2016 and 2015, respectively, an 8% increase, and representing 5.9% of total revenue for those respective periods. The increase was primarily due to an increase in depreciation of $5.9 million, an increase in staff-related costs of $2.5 million, and an increase of $1.6 million in technology licenses and maintenance. These increases were partially offset by a $1.3 million decrease in outside consulting services.
General and administrative ("G&A") expenses - G&A expenses totaled $21.5 million and $21.5 million for Q4 2016 and 2015, respectively, and representing 4.1% and 4.5% of total revenue for each of those respective periods. The slight decrease was primarily due to a $449,000 decrease in depreciation expense and a $358,000 decrease in consulting and outside services costs. These decreases were partially offset by a $922,000 increase in staff related costs. G&A expenses totaled $89.3 million and $82.2 million for FY 2016 and 2015, respectively, a 9% increase, and representing 5.0% of total revenue for each of those respective periods. The increase was primarily due to an increase of $7.6 million in staff related costs and $1.1 million in bad debt expense for accounts receivable due from a marketplace in which we also have a minority investment. These increases were partially offset by a $1.9 million decrease in legal fees and a $1.3 million decrease in consulting and outside services.
In Q1 2016, we entered into a settlement agreement in our prime broker litigation which concluded the litigation in its entirety and we recognized settlement proceeds of $19.5 million. Related costs associated with the litigation and settlement of approximately $1.0 million were included in G&A expenses during Q1 2016.
We continue to seek opportunities for growth, in our Retail business and through our Medici blockchain and fintech technology initiatives and other means. As a result of these initiatives, we may continue to incur additional expenses. We may also make investments in, or acquisitions of, other technologies and businesses. These expenses, acquisitions or investments may be material, and, coupled with the seasonality of our business, may lead to reduced income or to losses in some periods, and to reduced liquidity.
Other income, net - Other income, net totaled $4.8 million and $1.1 million for Q4 2016 and 2015, respectively. The increase is primarily due to increased Club O Rewards breakage of $2.1 million due to growth in the Club O Rewards program, particularly our Club O Silver program, an $840,000 decrease in costs related to our cryptobond transactions (none incurred in Q4 2016), and a decrease in unrealized losses on our precious metals of $521,000 (no losses incurred in Q4 2016). Other income, net totaled $14.2 million and $3.6 million for FY 2016 and 2015, respectively. The increase is primarily due to increased Club O Rewards breakage of $10.9 million due to growth in the Club O Rewards program, particularly our Club O Silver program, a $1.2 million decrease in unrealized losses on our precious metals (no losses incurred in 2016), and an $840,000 decrease in costs related to our cryptobond transactions (none incurred in 2016). These increases were partially offset by an impairment charge of $2.9 million related to a company in which we hold a minority investment that has historically been recorded at cost. We discontinued Club O Silver rewards in Q4 2016 and as a result we do not expect further Club O Silver rewards breakage in the future.
During 2016, we completed the construction of our new corporate headquarters in Salt Lake City, Utah. The total project cost was approximately $99 million. We began to occupy the building in August 2016.
Net cash provided by operating activities - Net cash provided by operating activities was $39.6 million and $54.5 million for the twelve months ended December 31, 2016 and 2015, respectively. The $15.0 million decrease is primarily due to timing of payments to suppliers. In 2016, some holiday sales occurred earlier than in 2015 (including sales on Black Friday and Cyber Monday) which resulted in earlier payments to our suppliers and lower operating cash flow than in 2015.
Free cash flow (a non-GAAP financial measure) - Free cash flow totaled ($32.7) million and ($5.0) million for the twelve months ended December 31, 2016 and 2015, respectively. The $27.7 million decrease was due to a $15.0 million decrease in operating cash flow and a $12.8 million increase in capital expenditures including costs related to the development of our recently completed new corporate headquarters.
Free cash flow reflects an additional way of viewing our cash flows and liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows and liquidity. Free cash flow, which we reconcile to “net cash provided by operating activities,” is cash flow from operations, reduced by “expenditures for fixed assets, including internal-use software and website development.” We believe that cash flows from operating activities is an important measure since it includes both the cash impact of the continuing operations of the business and changes in the balance sheet that impact cash. Also, we believe free cash flow is a useful measure to evaluate our business since purchases of fixed assets are a necessary component of ongoing operations and free cash flow measures the amount of cash we have available for mandatory debt service and financing obligations, changes in our capital structure, and future investments, after we have paid our operating expenses. Therefore, we believe it is important to view free cash flow as a complement to our entire consolidated statements of cash flows.
Our calculation of free cash flow is set forth below (in thousands):
Year ended December 31, | |||||||
2016 | 2015 | ||||||
Net cash provided by operating activities | $ | 39,564 | $ | 54,516 | |||
Expenditures for fixed assets, including internal-use software and website development | (72,281 | ) | (59,513 | ) | |||
Free cash flow | $ | (32,717 | ) | $ | (4,997 | ) | |
Cash and working capital - We had cash and cash equivalents of $183.1 million and $170.3 million and working capital of $11.4 million and ($10.3) million at December 31, 2016 and December 31, 2015, respectively.
About Overstock.com
Overstock.com, Inc. (NASDAQ:OSTK) is an online retailer based in Salt Lake City, Utah that sells a broad range of products at low prices, including furniture, rugs, bedding, electronics, clothing, and jewelry. Additional stores within Overstock include Worldstock.com, dedicated to selling artisan-crafted products to help developing nations around the world and Main Street Revolution, supporting small-scale entrepreneurs in the U.S. by providing them with a national customer base. Other community-focused initiatives include Farmers Market and pet adoptions. Forbes ranked Overstock in its list of the Top 100 Most Trustworthy Companies in 2014. Overstock sells internationally under the name O.co and regularly posts information about the company and other related matters under Investor Relations on its website (http://www.overstock.com and http://www.o.co).
O, Overstock.com, O.com, O.co, Club O, Main Street Revolution, Worldstock and OVillage are registered trademarks of Overstock.com, Inc. O.biz and Space Shift are also trademarks of Overstock.com, Inc. Other service marks, trademarks and trade names which may be referred to herein are the property of their respective owners.
This press release and the January 31, 2017 conference call and webcast to discuss our financial results may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include all statements other than statements of historical fact, including forecasts of trends. These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including the amount and timing of our capital expenditures, the mix of products we sell, the results of legal proceedings and claims and the amounts we spend relating to them, the extent to which we owe income taxes, competition, fluctuations in operating results, any inability to raise capital if needed on acceptable terms, our efforts to expand both domestically and internationally, risks of inventory management and seasonality. Other risks and uncertainties include, among others, risks related to new products and services we may offer, and difficulties with our infrastructure, our fulfillment partners or our payment processors, including cyber-attacks or data breaches affecting us or any of them. More information about factors that could potentially affect our financial results is included in our Form 10-Q for the quarter ended September 30, 2016 which was filed with the Securities and Exchange Commission on November 3, 2016. These and our other subsequent filings with the Securities and Exchange Commission identify important factors that could cause our actual results to differ materially from those contained in our projections, estimates and other forward-looking statements.
Overstock.com, Inc. | |||||||
Consolidated Balance Sheets | |||||||
(in thousands, unaudited) | |||||||
December 31, 2016 |
December 31, 2015 |
||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 183,098 | $ | 170,262 | |||
Restricted cash | 430 | 430 | |||||
Accounts receivable, net | 28,142 | 16,128 | |||||
Inventories, net | 18,937 | 20,042 | |||||
Prepaid inventories, net | 2,112 | 1,311 | |||||
Deferred tax assets, net | 16,268 | 26,305 | |||||
Prepaids and other current assets | 11,654 | 13,890 | |||||
Total current assets | 260,641 | 248,368 | |||||
Fixed assets, net | 134,552 | 93,696 | |||||
Precious metals | 9,946 | 9,722 | |||||
Deferred tax assets, net | 39,998 | 37,891 | |||||
Intangible assets, net | 10,913 | 14,656 | |||||
Goodwill | 14,698 | 15,387 | |||||
Other long-term assets, net | 14,328 | 8,669 | |||||
Total assets | $ | 485,076 | $ | 428,389 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 106,337 | $ | 122,705 | |||
Accrued liabilities | 96,216 | 83,387 | |||||
Deferred revenue | 41,780 | 50,944 | |||||
Finance obligations, current | 3,256 | 1,059 | |||||
Other current liabilities, net | 1,627 | 581 | |||||
Total current liabilities | 249,216 | 258,676 | |||||
Long-term debt, net | 44,179 | 8,843 | |||||
Finance obligations, non-current | 11,831 | 4,535 | |||||
Other long-term liabilities | 6,890 | 6,974 | |||||
Total liabilities | 312,116 | 279,028 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.0001 par value, authorized shares - 5,000 | |||||||
Series A, issued and outstanding - 127 and 0 | — | — | |||||
Series B, issued and outstanding - 569 and 0 | — | — | |||||
Common stock, $0.0001 par value | |||||||
Authorized shares - 100,000 | |||||||
Issued shares - 27,895 and 27,634 | |||||||
Outstanding shares - 25,432 and 25,234 | 3 | 3 | |||||
Additional paid-in capital | 383,348 | 370,047 | |||||
Accumulated deficit | (153,898 | ) | (166,420 | ) | |||
Accumulated other comprehensive loss | (1,540 | ) | (1,430 | ) | |||
Treasury stock: | |||||||
Shares at cost - 2,463 and 2,400 | (52,587 | ) | (51,747 | ) | |||
Equity attributable to stockholders of Overstock.com, Inc. | 175,326 | 150,453 | |||||
Equity attributable to noncontrolling interests | (2,366 | ) | (1,092 | ) | |||
Total stockholders' equity | 172,960 | 149,361 | |||||
Total liabilities and stockholders’ equity | $ | 485,076 | $ | 428,389 |
Overstock.com, Inc. | |||||||
Consolidated Statements of Operations | |||||||
(in thousands, except per share data) | |||||||
(unaudited) | |||||||
Three months ended December 31, |
|||||||
2016 | 2015 | ||||||
Revenue, net | |||||||
Direct | $ | 25,677 | $ | 33,599 | |||
Partner and other | 500,505 | 446,671 | |||||
Total net revenue | 526,182 | 480,270 | |||||
Cost of goods sold | |||||||
Direct | 23,812 | 32,326 | |||||
Partner and other | 404,366 | 364,835 | |||||
Total cost of goods sold | 428,178 | 397,161 | |||||
Gross profit | 98,004 | 83,109 | |||||
Operating expenses: | |||||||
Sales and marketing | 48,380 | 38,347 | |||||
Technology | 28,511 | 26,303 | |||||
General and administrative | 21,455 | 21,548 | |||||
Total operating expenses | 98,346 | 86,198 | |||||
Operating income (loss) | (342 | ) | (3,089 | ) | |||
Interest income | 98 | 37 | |||||
Interest expense | (658 | ) | (66 | ) | |||
Other income, net | 4,782 | 1,102 | |||||
Income (loss) before income taxes | 3,880 | (2,016 | ) | ||||
Provision (benefit) for income taxes | 1,119 | (1,879 | ) | ||||
Consolidated net income (loss) | $ | 2,761 | $ | (137 | ) | ||
Less: Net loss attributable to noncontrolling interests | (334 | ) | (247 | ) | |||
Net income attributable to stockholders of Overstock.com, Inc. | $ | 3,095 | $ | 110 | |||
Net income per common share—basic: | |||||||
Net income attributable to common shares—basic | $ | 0.12 | $ | — | |||
Weighted average common shares outstanding—basic | 25,391 | 25,234 | |||||
Net income per common share—diluted: | |||||||
Net income attributable to common shares—diluted | $ | 0.12 | $ | — | |||
Weighted average common shares outstanding—diluted | 25,540 | 25,266 |
Overstock.com, Inc. | |||||||
Consolidated Statements of Operations | |||||||
(in thousands, except per share data) | |||||||
(unaudited) | |||||||
Year ended December 31, |
|||||||
2016 | 2015 | ||||||
Revenue, net | |||||||
Direct | $ | 101,578 | $ | 137,783 | |||
Partner and other | 1,698,385 | 1,520,055 | |||||
Total net revenue | 1,799,963 | 1,657,838 | |||||
Cost of goods sold | |||||||
Direct | 96,271 | 128,077 | |||||
Partner and other | 1,372,343 | 1,225,107 | |||||
Total cost of goods sold | 1,468,614 | 1,353,184 | |||||
Gross profit | 331,349 | 304,654 | |||||
Operating expenses: | |||||||
Sales and marketing | 147,896 | 124,468 | |||||
Technology | 106,760 | 98,533 | |||||
General and administrative | 89,298 | 82,187 | |||||
Litigation settlement | (19,520 | ) | — | ||||
Total operating expenses | 324,434 | 305,188 | |||||
Operating income (loss) | 6,915 | (534 | ) | ||||
Interest income | 326 | 155 | |||||
Interest expense | (877 | ) | (140 | ) | |||
Other income, net | 14,181 | 3,634 | |||||
Income before income taxes | 20,545 | 3,115 | |||||
Provision for income taxes | 9,297 | 1,895 | |||||
Consolidated net income | $ | 11,248 | $ | 1,220 | |||
Less: Net loss attributable to noncontrolling interests | (1,274 | ) | (1,226 | ) | |||
Net income attributable to stockholders of Overstock.com, Inc. | $ | 12,522 | $ | 2,446 | |||
Net income per common share—basic: | |||||||
Net income attributable to common shares—basic | $ | 0.49 | $ | 0.10 | |||
Weighted average common shares outstanding—basic | 25,342 | 24,612 | |||||
Net income per common share—diluted: | |||||||
Net income attributable to common shares—diluted | $ | 0.49 | $ | 0.10 | |||
Weighted average common shares outstanding—diluted | 25,426 | 24,703 |
Overstock.com, Inc. | |||||||
Consolidated Statements of Cash Flows | |||||||
(in thousands, unaudited) | |||||||
Year ended December 31, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Consolidated net income | $ | 11,248 | $ | 1,220 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation of fixed assets | 27,283 | 23,516 | |||||
Amortization of intangible assets | 4,010 | 1,581 | |||||
Stock-based compensation to employees and directors | 4,891 | 3,526 | |||||
Deferred income taxes, net | 7,719 | 1,483 | |||||
Amortization of debt issuance costs | — | 21 | |||||
(Gain) loss on investment in precious metals | (201 | ) | 1,183 | ||||
Loss on investment in cryptocurrency | — | 152 | |||||
Impairment of cost method investment | 2,850 | — | |||||
Ineffective portion of loss on cash flow hedge | — | 124 | |||||
Termination costs of cryptobond financing | — | 850 | |||||
Other | 356 | 9 | |||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable, net | (10,006 | ) | 3,463 | ||||
Inventories, net | 1,105 | 6,166 | |||||
Prepaid inventories, net | (801 | ) | 1,903 | ||||
Prepaids and other current assets | 2,389 | (1,338 | ) | ||||
Other long-term assets, net | (786 | ) | 66 | ||||
Accounts payable | (18,865 | ) | 10,482 | ||||
Accrued liabilities | 16,936 | (4,153 | ) | ||||
Deferred revenue | (9,164 | ) | 2,493 | ||||
Other long-term liabilities | 600 | 1,769 | |||||
Net cash provided by operating activities | 39,564 | 54,516 | |||||
Cash flows from investing activities: | |||||||
Proceeds from sale of precious metals | 1,610 | — | |||||
Investment in precious metals | (1,633 | ) | — | ||||
Equity method investment | — | (152 | ) | ||||
Disbursements for note receivable | (3,668 | ) | (5,000 | ) | |||
Cost method investments | (4,750 | ) | (7,000 | ) | |||
Acquisitions of businesses, net of cash acquired | 1,220 | (10,601 | ) | ||||
Expenditures for fixed assets, including internal-use software and website development | (72,281 | ) | (59,513 | ) | |||
Other | 55 | (165 | ) | ||||
Net cash used in investing activities | (79,447 | ) | (82,431 | ) | |||
Cash flows from financing activities: | |||||||
Payments on capital lease obligations | — | (362 | ) | ||||
Paydown on direct financing arrangement | (54 | ) | (309 | ) | |||
Payments on finance obligations | (1,906 | ) | (104 | ) | |||
Payments on interest swap | (563 | ) | (57 | ) | |||
Proceeds from finance obligations | 11,399 | 5,698 | |||||
Proceeds from short-term debt | — | 5,500 | |||||
Payments on short-term debt | — | (750 | ) | ||||
Proceeds from long-term debt | 36,273 | 9,488 | |||||
Change in restricted cash | — | 150 | |||||
Proceeds from exercise of stock options | 819 | 270 | |||||
Proceeds from rights offering, net of offering costs | 7,591 | — | |||||
Purchase of treasury stock | (840 | ) | (2,367 | ) | |||
Payment of debt issuance costs | — | (621 | ) | ||||
Net cash provided by financing activities | 52,719 | 16,536 | |||||
Net (decrease) increase in cash and cash equivalents | 12,836 | (11,379 | ) | ||||
Cash and cash equivalents, beginning of period | 170,262 | 181,641 | |||||
Cash and cash equivalents, end of period | $ | 183,098 | $ | 170,262 |
Additional Non-GAAP Financial Measure Reconciliations
As described in further detail above, contribution and contribution margin (non-GAAP financial measures - which we reconcile to "Gross Profit" in our consolidated statement of operations) consist of gross profit less sales and marketing expense plus Club O Rewards and gift card breakage and reflects an additional way of viewing our results. Contribution margin is contribution as a percentage of total net revenue.
OSTK Retail and Medici pre-tax income or loss (non-GAAP financial measures - which we reconcile to Consolidated pre-tax income or loss) consist of income or loss before taxes of our Retail and Medici businesses, excluding intercompany transactions eliminated in consolidation. We believe these measures provide management and users of the financial statements useful information about the results of our separate businesses. The material limitation associated with these measures is that they are an incomplete measure of our consolidated operations.
We determined our segments based on how we manage our business, which, in our view, consists primarily of our Retail and Medici businesses. Our Retail business consists of our Direct and Partner reportable segments. We use gross profit as the measure to determine our reportable segments because there is not discrete financial information available below gross profit for our Direct and Partner segments. As a result, our Medici business is not significant as compared to our Direct and Partner segments. Our other segment consists of Medici. We do not allocate assets between our segments for our internal management purposes.
Contribution, contribution margin, OSTK Retail pre-tax income or loss and Medici pre-tax income or loss are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. You should review our financial statements and publicly-filed reports in their entirety and not rely on any single financial measure.
Our calculations of our contribution and contribution margin by Retail Total (which consists of Direct and Partner) and Other (which consists of Medici) are set forth below (in thousands):
Three months ended, December 31 | |||||||||||||||||
Direct | Partner |
Retail Total (Direct and Partner) |
Other | Consolidated | |||||||||||||
2016 | |||||||||||||||||
Total net revenue | $ | 25,677 | $ | 495,836 | $ | 521,513 | $ | 4,669 | $ | 526,182 | |||||||
Cost of goods sold | 23,812 | 400,913 | 424,725 | 3,453 | 428,178 | ||||||||||||
Gross profit | $ | 1,865 | $ | 94,923 | $ | 96,788 | $ | 1,216 | $ | 98,004 | |||||||
Less: Sales and marketing expense | 48,271 | 109 | 48,380 | ||||||||||||||
Plus: Club O Rewards and gift card breakage (included in Other income, net) | 4,561 | — | 4,561 | ||||||||||||||
Contribution | $ | 53,078 | $ | 1,107 | $ | 54,185 | |||||||||||
Contribution margin | 10.2 | % | 23.7 | % | 10.3 | % | |||||||||||
2015 | |||||||||||||||||
Total net revenue | $ | 33,599 | $ | 445,232 | $ | 478,831 | $ | 1,439 | $ | 480,270 | |||||||
Cost of goods sold | 32,326 | 364,835 | 397,161 | — | 397,161 | ||||||||||||
Gross profit | $ | 1,273 | $ | 80,397 | $ | 81,670 | $ | 1,439 | $ | 83,109 | |||||||
Less: Sales and marketing expense | 38,347 | — | 38,347 | ||||||||||||||
Plus: Club O Rewards and gift card breakage (included in Other income, net) | 2,464 | — | 2,464 | ||||||||||||||
Contribution | $ | 45,787 | $ | 1,439 | $ | 47,226 | |||||||||||
Contribution margin | 9.6 | % | 100.0 | % | 9.8 | % |
Year ended, December 31 | |||||||||||||||||
Direct | Partner |
Retail Total (Direct and Partner) |
Other | Consolidated | |||||||||||||
2016 | |||||||||||||||||
Total net revenue | $ | 101,578 | $ | 1,683,204 | $ | 1,784,782 | $ | 15,181 | $ | 1,799,963 | |||||||
Cost of goods sold | 96,271 | 1,362,140 | 1,458,411 | 10,203 | 1,468,614 | ||||||||||||
Gross profit | $ | 5,307 | $ | 321,064 | $ | 326,371 | $ | 4,978 | $ | 331,349 | |||||||
Less: Sales and marketing expense | 147,368 | 528 | 147,896 | ||||||||||||||
Plus: Club O Rewards and gift card breakage (included in Other income, net) | 16,808 | — | 16,808 | ||||||||||||||
Contribution | $ | 195,811 | $ | 4,450 | $ | 200,261 | |||||||||||
Contribution margin | 11.0 | % | 29.3 | % | 11.1 | % | |||||||||||
2015 | |||||||||||||||||
Total net revenue | $ | 137,783 | $ | 1,518,125 | $ | 1,655,908 | $ | 1,930 | $ | 1,657,838 | |||||||
Cost of goods sold | 128,077 | 1,225,107 | 1,353,184 | — | 1,353,184 | ||||||||||||
Gross profit | $ | 9,706 | $ | 293,018 | $ | 302,724 | $ | 1,930 | $ | 304,654 | |||||||
Less: Sales and marketing expense | 124,218 | 250 | 124,468 | ||||||||||||||
Plus: Club O Rewards and gift card breakage (included in Other income, net) | 5,911 | — | 5,911 | ||||||||||||||
Contribution | $ | 184,417 | $ | 1,680 | $ | 186,097 | |||||||||||
Contribution margin | 11.1 | % | 87.0 | % | 11.2 | % |
Our calculations of OSTK Retail Total (which consists of Direct and Partner) and Other (which consists of Medici) pre-tax income or loss are set forth below excluding intercompany transactions eliminated in consolidation (in thousands):
Three months ended, December 31 | |||||||||||||||||
Direct | Partner |
Retail Total (Direct and Partner) |
Other | Consolidated | |||||||||||||
2016 | |||||||||||||||||
Total net revenue | $ | 25,677 | $ | 495,836 | $ | 521,513 | $ | 4,669 | $ | 526,182 | |||||||
Cost of goods sold | 23,812 | 400,913 | 424,725 | 3,453 | 428,178 | ||||||||||||
Gross profit | $ | 1,865 | $ | 94,923 | $ | 96,788 | $ | 1,216 | $ | 98,004 | |||||||
Operating expenses | 94,167 | 4,179 | 98,346 | ||||||||||||||
Interest and other income, net | 4,222 | — | 4,222 | ||||||||||||||
Pre-tax income (loss) | $ | 6,843 | $ | (2,963 | ) | $ | 3,880 | ||||||||||
2015 | |||||||||||||||||
Total net revenue | $ | 33,599 | $ | 445,232 | $ | 478,831 | $ | 1,439 | $ | 480,270 | |||||||
Cost of goods sold | 32,326 | 364,835 | 397,161 | — | 397,161 | ||||||||||||
Gross profit | $ | 1,273 | $ | 80,397 | $ | 81,670 | $ | 1,439 | $ | 83,109 | |||||||
Operating expenses | 82,475 | 3,723 | 86,198 | ||||||||||||||
Interest and other income, net | 1,073 | — | 1,073 | ||||||||||||||
Pre-tax income (loss) | $ | 268 | $ | (2,284 | ) | $ | (2,016 | ) |
Year ended, December 31 | |||||||||||||||||
Direct | Partner |
Retail Total (Direct and Partner) |
Other | Consolidated | |||||||||||||
2016 | |||||||||||||||||
Total net revenue | $ | 101,578 | $ | 1,683,204 | $ | 1,784,782 | $ | 15,181 | $ | 1,799,963 | |||||||
Cost of goods sold | 96,271 | 1,362,140 | 1,458,411 | 10,203 | 1,468,614 | ||||||||||||
Gross profit | $ | 5,307 | $ | 321,064 | $ | 326,371 | $ | 4,978 | $ | 331,349 | |||||||
Operating expenses | 307,669 | 16,765 | 324,434 | ||||||||||||||
Interest and other income, net | 13,630 | — | 13,630 | ||||||||||||||
Pre-tax income (loss) | $ | 32,332 | $ | (11,787 | ) | $ | 20,545 | ||||||||||
2015 | |||||||||||||||||
Total net revenue | $ | 137,783 | $ | 1,518,125 | $ | 1,655,908 | $ | 1,930 | $ | 1,657,838 | |||||||
Cost of goods sold | 128,077 | 1,225,107 | 1,353,184 | — | 1,353,184 | ||||||||||||
Gross profit | $ | 9,706 | $ | 293,018 | $ | 302,724 | $ | 1,930 | $ | 304,654 | |||||||
Operating expenses | 296,281 | 8,907 | 305,188 | ||||||||||||||
Interest and other income, net | 3,649 | — | 3,649 | ||||||||||||||
Pre-tax income (loss) | $ | 10,092 | $ | (6,977 | ) | $ | 3,115 |
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