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BEYOND, INC. (BYON)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 delivered sequential improvement in gross margin to 21.2% (+110 bps q/q) and better adjusted EBITDA vs Q2, but revenue declined 16.6% y/y to $311.4M amid deliberate pullback in promotions and continued conversion headwinds .
  • Management accelerated cost actions: a 20% RIF, ~$20M annualized staff-related savings, and an expected HQ sale closing in Q4; fixed expense base reductions are targeted at ~$65M annualized heading into 2025 .
  • Strategy pivot continued: de-duplicating SKUs and shifting big-ticket categories to Overstock improved marketing efficiency (early tests showed ~90% of sales with ~50% of prior spend) and doubled conversion on Overstock since relaunch, supporting margin trajectory .
  • No formal guidance; management expects Q4 revenue and margin up vs Q3 (margin “close to 22%”), Q4 adjusted EBITDA materially better y/y, and SG&A in the low-$40Ms as RIF flows through .
  • S&P Global consensus estimates were unavailable for BYON at this time; management noted Q3 adjusted EBITDA was “right on top” of consensus while revenue was “way off,” but provided no figures .

What Went Well and What Went Wrong

  • What Went Well

    • Sequential profitability progress: gross margin improved to 21.2% (+110 bps q/q), and adjusted EBITDA loss narrowed vs Q2 in line with prior commitments. “We delivered sequential improvement in gross margin… ultimately delivering against our commitment to improve adjusted EBITDA” .
    • Marketing efficiency improving with brand-SKU realignment: shifting PLA spend and moving Overstock-native SKUs back to Overstock drove ~90% of sales on ~50% of spend in week 1; “it typically takes up to 4 weeks for Google algorithm PLA spending to burn in” suggesting further efficiency ahead .
    • Structural cost-down momentum: 20% workforce reduction, $20M annualized staff savings, HQ sale in process, and fixed expense base slated to be reduced by ~$65M annualized by 2025 .

  • What Went Wrong

    • Top-line pressure: revenue fell 16.6% y/y to $311.4M as orders delivered declined 19% and mix normalization reduced promotional volume; management cited conversion as the principal issue .
    • Profitability still negative: adjusted EBITDA loss was $(31.9)M and adjusted diluted EPS was $(0.96) despite improvements, both worse than Q3 2023’s adjusted EBITDA $(23.9)M and reflecting ongoing turnaround costs .
    • Liquidity burn YTD: operating cash flow was $(152.6)M for the first nine months, necessitating asset monetization (HQ sale), a $25M revolver as bridge liquidity, and exploration of Medici/other asset options .

Financial Results

MetricQ1 2024Q2 2024Q3 2024
Revenue ($M)$382.3 $398.1 $311.4
Gross Margin %19.5% 20.1% 21.2%
Adjusted EBITDA ($M)$(47.8) $(36.4) $(31.9)
Adj. EBITDA Margin %(12.5)% (9.1)% (10.2)%
Net Income (Loss) ($M)$(73.9) $(42.6) $(61.0)
Diluted EPS ($)$(1.62) $(0.93) $(1.33)
Adjusted Diluted EPS ($)$(1.22) $(0.76) $(0.96)
Cash & Equivalents ($M)$256.3 $186.2 $140.4

Operating expenses detail

OpEx ($M)Q1 2024Q2 2024Q3 2024
Sales & Marketing$67.9 $66.3 $51.9
Technology$29.6 $27.3 $27.7
General & Administrative$20.5 $18.5 $17.6
Customer Service & Merchant Fees$13.9 $15.0 $12.4
Total OpEx$131.9 $127.2 $109.5

Key KPIs

KPIQ1 2024Q2 2024Q3 2024
Active Customers (000s)6,041 6,221 5,961
Orders Delivered (000s)2,211 1,949 1,569
Average Order Value ($)173 204 199
LTM Revenue per Active ($)259 247 248
Orders per Active (LTM)1.41 1.39 1.39

Estimates vs Actuals

MetricQ3 2024 ActualQ3 2024 Consensus
Revenue ($M)$311.4 N/A – S&P Global consensus unavailable for BYON
Adjusted EBITDA ($M)$(31.9) N/A – S&P Global consensus unavailable for BYON
Diluted EPS ($)$(1.33) N/A – S&P Global consensus unavailable for BYON
Note: S&P Global consensus data for BYON was unavailable via our SPGI interface at this time; management stated Q3 adjusted EBITDA was “right on top” of consensus while revenue was “way off,” without disclosing figures .

Guidance Changes

MetricPeriodPrevious Guidance/CommentaryCurrent CommentaryChange
RevenueQ3 2024Seasonality: Q3 typically 12–14% below Q2; aim to outperform trend; no formal guide Actual $311.4M (down vs Q2 $398.1M) In line with seasonal pattern
Gross Margin %Q4 2024Sequential improvement expected from Q2; mid-20s longer-term goal discussed Expect +~50 bps q/q to “close to 22%” Raised near-term trajectory
Adjusted EBITDAQ3 2024“Low double-digit” sequential improvement goal vs Q2 Improved vs Q2; in line with consensus per mgmt Maintained/achieved
Adjusted EBITDAQ4 2024No formal guidance“Materially better” y/y vs Q4’23 and improved vs Q3 New directional positive
SG&A (Tech+G&A)Q4 2024Target low-$40Ms run-rate “$44–$45M” in Q4 given RIF timing Clarified near-term level
LiquidityQ4 2024HQ sale LOI in Q2 HQ sale expected to close in Q4; cash inflow anticipated Updated timing

Earnings Call Themes & Trends

TopicPrior Mentions (Q1 2024, Q2 2024)Current Period (Q3 2024)Trend
Gross margin trajectoryQ1: 19.5% with six-tactic plan; Q2: 20.1%, sequential +70 bps 21.2% (+110 bps q/q); expect ~+50 bps in Q4 Improving
Conversion & SKU realignmentQ1: Overstock relaunch to fix mix; Q2: test pricing/ROAS Conversion singled out as principal issue; doubling on Overstock since relaunch Early improvement, still below target
Marketing efficiencyQ2: focus on efficiency; high ad costs in election cycle PLA tests: ~90% sales on ~50% spend after reallocation Improving
Cost structure (RIF, fixed costs)Q1: $45M annualized plan; Q2: >2/3 realized 20% RIF; +$20M staff savings; ~$65M fixed base reduction into 2025 Accelerating
Omnichannel partnershipsQ1: Licensing UAE/Mexico Kirkland’s investment/royalties; potential Container Store co-branding Expanding
Liquidity/asset monetizationQ1: Wamsutta sale; HQ for sale; Medici options HQ sale expected Q4; $25M BMO revolver; review blockchain assets Ongoing
Data/CRM & retail mediaQ1: Salesforce CRM; Q2: loyalty build Data lake/affinity model; retail media via Carter Building
Zulily relaunchQ1: acquired; planning; Q2: target mid-Sep soft launch Early Nov hard launch plan; aim positive contribution Launching

Management Commentary

  • “We delivered sequential improvement in gross margin and continued to recognize the benefits of our cost reduction actions… delivering against our commitment to improve adjusted EBITDA.” – Adrianne Lee, CFO .
  • “Principally, our fundamental problem comes down to conversion… We’re expecting to get pretty close to 22% [gross margin] in Q4.” – Marcus Lemonis, Executive Chairman .
  • “In the first week of transitioning 10% of our ad spend… getting 90% of the sales and only requiring 50% of the spend… It will get better.” – David Nielsen, President .
  • “We recently announced the sale of our headquarters… and announced a $20 million annualized reduction in staff-related expenses… [total] reduced our fixed expense base by an annualized $65 million heading into 2025.” – Adrianne Lee, CFO .

Q&A Highlights

  • Profit trajectory: Management expects Q4 revenue and margin up vs Q3, with materially better adjusted EBITDA y/y and improvement vs Q3; SG&A low $40Ms despite RIF costs in-quarter .
  • Liquidity: HQ sale expected to close in Q4; $25M BMO revolver in place; exploring monetization of blockchain/Medici assets; focus on cash neutrality path .
  • Partnerships: Kirkland’s deal provides 0.25% rev share plus 3% royalty on Bed Bath stores; Container Store collaboration expected to co-brand and accelerate conversion of non-core space .
  • Marketing and conversion: Early PLA reallocation and SKU migration drove better ROAS; Overstock conversion has doubled since launch; margin expected to benefit as brand roles normalize .
  • Estimates context: “Our revenue was way off for the quarter, but our EBITDA was right on top of what the consensus was” – indicates mix-driven miss vs revenue consensus but EBITDA in line; no figures provided .

Estimates Context

  • S&P Global consensus for BYON could not be retrieved via our interface (mapping unavailable). Management indicated Q3 adjusted EBITDA aligned with consensus while revenue underperformed vs consensus; no numerical consensus or spread was disclosed on the call .
  • Implication: Street models likely need lower revenue run-rate and mix, but margin/EBITDA trajectories may hold or improve given SKU realignment and cost-downs.

Other Q3 Press Releases

  • On Oct 9, 2024, Kessler Topaz Meltzer & Check announced an investigation into Beyond, citing prior results and outlook changes; while third-party, it may weigh on sentiment until resolved .

Key Takeaways for Investors

  • Turnaround on track operationally: sequential gross margin expansion, improving ROAS, and cost-reduction execution are tangible and repeatable into Q4 .
  • Near-term revenue softness is by design: management is prioritizing profitable transactions and brand clarity over promotional volume; watch for Q4 revenue uptick with margin “close to 22%” .
  • Balance sheet actions matter: expected HQ sale in Q4 and asset monetization aim to bridge cash burn while EBITDA improves; monitor operating cash flow trajectory and non-core monetization .
  • Strategic catalysts: Kirkland’s and prospective Container Store co-branding could enhance data capture, omnichannel reach, vendor economics, and retail media monetization over 2025 .
  • Execution risks remain: conversion recovery, SEO rebuild at Overstock, and Zulily relaunch ramp are critical to sustaining margin gains while stabilizing top-line .
  • Model focus: emphasize gross margin and SG&A run-rate improvements into 2025; be conservative on revenue until conversion and traffic translate into sustained order growth .

Citations: Q3 8-K/press release ; Q3 earnings call transcript -; Q2 8-K/press release and call - -; Q1 8-K/press release and call - -; third-party press release .