Overstock.com, Inc. (NASDAQ:OSTK) Q3 2023 Earnings Call Transcript

Jonathan Johnson : And Seth, I just know you asked about hiring. Yes, we’ve done some incremental hiring, particularly around standing up the registry and some other things. I don’t think of hiring is being in that bucket. When we talk about that approximately $150 million of additional investment it’s to launch the brand, it’s to reignite the customer file and it’s to expand and create new categories. So it’s more marketing. It’s not the, it’s not the kind of G&A headcount piece. We’re always careful hiring there. We hire when we need and there’s a few we need. And so, we’ve done that. And we’re moving forward.

Seth Sigmund: Okay, great. I’ll just ask a related follow-up. In the past you’ve targeted, I think that mid-single-digit type of EBITDA margin. Is that still the expectation? And then, if so, is that really a feeling that investments are going to roll off at some point? Or is it more about driving incremental sales, incremental volume to ultimately leverage the fixed cost in the business?

Jonathan Johnson : So, let me talk first to the mid-single-digits. As I’ve noted before, we are taking a – purposefully taking a pause, as we – for the next few quarters and I think as Adrianne guided to Q4, we’re going to continue to spend during this unique time to grow this customer file. Growing this customer file is really important, it will help us grow top-line. It will help us have information about the customers we can use as we think about how we live up to the promise of our new corporate name Beyond, and expand elsewhere. So, the goal is to grow the customer file. So the top-line grows and that’s how we get back to mid-single-digits after this. And that’s why we’re spending marketing this additional investment that we’re making now is really to increase the customer file.

Seth Sigmund: Okay. Great. Thanks so much. And good luck ahead.

Jonathan Johnson : Thanks Seth.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Steven Forbes from Guggenheim Partners.

Steven Forbes: Good morning, everyone. Jonathan maybe just a follow-up on the last question from Seth. Obviously, he asked that customer growth is a key focus. But I was just curious, if you could maybe expand on how you’re thinking about the importance of repeat behavior over the next 12 months? And how that sort of is part of the ROI threshold you’re spending against today?

Jonathan Johnson : Yeah, for sure. I mentioned in my in my prepared remarks, improving our CRM capabilities, I think that lets us personalize and send our messages in a meaningful way for repeat. But Dave, do you want to talk about how repeat is so important, because we acquire through a buy versus earn. It’s not what we are going to be doing.

Dave Nielsen: Yeah. The first the first step, Steve in our branding launch was acquiring mobile app customers and getting them to download that mobile app. That customer is our – one of our most valuable customers. They have highest average order size. They have by far the highest repeat rate. They are the least expensive for us to communicate with. Send offers to and drive business with. So we’ll continue staying focused on that group. Our mobile – total mobile percent of the business was the largest it’s ever been this quarter. We’re seeing real success there and we’re counting on that mobile app and experiential work that we’re doing on our website to improve that funnel shopping experience. But that mobile app is where we are placing the majority of our of our retention efforts.

Jonathan Johnson : When you’re looking at how we started our brand campaign, our start this rebranding launch. It was mobile app and welcome rewards loyalty program. Those have the highest repeat rates. That’s what we’re trying to drive the customer by showing the customer the value of those two programs.

Steven Forbes: Thank you. And then just maybe just a quick follow up. I think Adrianne mentioned $5.2 million active customers by year end. Can you guys spend some time in the call talking about the three customer groups? And any way to frame how you think those three groups are as a percentage of the customer base by year end or how you’re sort of expecting that to evolve here?