Overstock is focusing on the company’s blockchain trading platform subsidiary tZERO and working with the Securities and Exchange Commission to bring blockchain into the mainstream, executives said in a freewheeling first quarter conference call on Tuesday.
Executives, which have been seeking to unload the retail e-commerce operation since December, said Tuesday they are continuing to meet with "interested acquisition candidates," without including further details due to confidentiality rules. CEO Patrick Byrne said an ideal buyer would be an established retailer whose online operations are behind the curve.
Their comments came as the company also reported first quarter net revenue rose 3% to $445.3 million, from $432.4 million in the year-ago quarter. Gross profit rose 8% to $93.9 million and gross margin expanded by 98 basis points to 21.1%. But sales and marketing expense surged 105% to $77.2 million from $37.6 million a year ago, according to a company press release.
Aside from Overstock, few retailers have participated in cryptocurrency-driven commerce. A few Etsy sellers, Newegg and others accept bitcoin, though in most cases they are likely immediately converting those payments to dollars, rendering the policy largely symbolic.
But even Overstock is distancing itself from bitcoin, throwing its weight behind blockchain instead. "We are not bitcoin ... last time I calculated there was a 92% correlation between bitcoin price movements and Overstock over the last year," Byrne said on the conference call, according to a transcript from Seeking Alpha. "That's a huge mistake, anyone's betting on us as a proxy for bitcoin, it's a big mistake. We carry a small amount of bitcoin, we liquidated every once in a while and make couple of million bucks, we don't have it."
The future for Overstock's retail side lies in developing a brick-and-mortar business, he also said, but added that he has no interest in "buying brick and mortar." Overstock executives also see enormous opportunity in Canada for retail. The company is also plotting a distribution center that will help the company fulfill 98% of of orders with two-day shipping.