Neighborhood Intelligence — Third Quarter 2026 Earnings Summary

Financial Performance

• Third quarter 2026 net revenue was $509 million, a 98% year-over-year increase; year-to-date revenue was $1.12 billion.
• Of the Q3 revenue increase, $229 million was attributable to acquired businesses (Kirkland's and The Container Store), while $23 million was driven by core online growth and assortment improvements.
• Gross profit was $173 million, representing a 34% gross margin; $97 million of the year-over-year gross profit increase was from acquired businesses.
• The quarter included a $14 million planned purchase price accounting benefit related to inventory conditions, offset by the elimination of dated and obsolete inventory.
• Sales and marketing expense was $54 million (10.7% of revenue), an improvement of 330 basis points year over year.
• Technology and general and administrative expense was $165 million, compared to $33 million in the prior-year period, primarily due to acquired entities and acquisition-related professional fees.
• Net loss was $26 million, compared to a net loss of $5 million in the prior-year period; the current period included approximately $20 million in special items (acquisition costs, restructuring, and non-cash store-closure impairments).
• Adjusted EBITDA was ($26) million, compared to ($5) million in the prior year.
• Liquidity sources included $127 million in cash, cash equivalents, and restricted cash; inventory and real estate owned free of borrowings was $228 million.
• Equity in inventory was $110 million, net of ABL borrowings of $118 million.
• Long-term debt stood at $212.8 million as of September 30, 2026, with no short-term debt.

Guidance and Future Outlook

• The Company expects consolidated revenue of $2.0 billion to $2.1 billion in 2027, inclusive of closed transactions, store rationalization, and modest organic growth.
• Gross margins for 2027 are projected to range from 33% to 34%, with a longer-term objective of 37%.
• Management targets mid-single-digit organic revenue growth and believes the company could achieve enterprise-wide positive cash flow inflection in the second half of 2027.
• The 2027 baseline assumes continued weakness in housing starts and existing-home sales, with existing-home sales near Great Recession levels.
• Management believes approximately 5% annual organic revenue growth is achievable from the 2027 base over the following three to four years without a housing recovery.
• The Company expects to generate approximately $30 million in incremental operating contribution for every additional $100 million of organic revenue.
• Full benefits of integration and merger synergies are expected to develop over approximately six to nine months.

Business Segments and Product Lines

• Core e-commerce revenue increased approximately 9% year over year, led by 75% growth at Overstock.com.
• Active customers reached 9.0 million, up 117% year over year, with orders delivered increasing to 4.0 million, up 217% year over year.
• Orders per active customer increased to 2.0 from 1.3 in the prior-year period, a 53% increase.
• Key growth drivers include the integration of Bed Bath & Beyond traditional product assortment across 75+ stores (expected complete by Q1 2027) and the restocking of Elfa Systems with a rebuilt sales funnel.
• The Company is leveraging acquired brands (Bed Bath & Beyond, Overstock, buybuy BABY, Kirkland's, The Container Store, Elfa, Closet Works) and expanding Home Services and Home Ownership businesses.

Market and Competitive Landscape

• The housing market is currently depressed, with existing-home sales in 2025 below 2009 levels and approximately 25% below the 2015–2019 average.
• Management anticipates that a modest improvement in housing activity could create meaningful upside and operating leverage.
• The Company is moving to accelerate integration of acquisitions, recalibrate inventory, and simplify its operating structure to prepare for a return to normalized housing activity.

Risks and Challenges

• Significant dependence on the housing market, including housing starts and existing-home sales, which remain below Great Recession levels.
• Integration risks associated with recent acquisitions (Kirkland's, The Container Store, TBHC, SFV Services) and the proposed merger with Fathom Holdings, Inc.
• Volatility in the Company's blockchain-related investments (tZERO, GrainChain) and other equity securities, which are excluded from adjusted EBITDA due to non-operational nature and market volatility.
• Potential impacts from macroeconomic factors such as recessions, inflation, trade policies, tariffs, and consumer spending trends.
• Operational risks including reliance on third-party fulfillment partners, cyberattacks, data security incidents, and supply chain disruptions.

Management Commentary and Tone

• Executive Chairman and CEO Marcus A. Lemonis stated the legacy e-commerce business achieved sustained revenue growth and adjusted EBITDA neutrality, shifting focus to realizing the full potential of the assembled enterprise.
• President Amy Sullivan emphasized a clear plan to drive organic growth, strengthen margins, and improve operating efficiency by leveraging acquired brands and sourcing capabilities while managing costs and capital deployment.
• Management expressed conviction that the Company can compound growth without a housing recovery, though a modest improvement could provide additional upside.
• The tone reflects a focus on cost reduction, with over $50 million in annualized SG&A costs and merger synergies eliminated year-to-date, and an additional $40 million in annualized savings identified.

Other Key Points

• The Company acquired The Brand House Collective (including Kirkland's and Kirkland's Home brands) and The Container Store during the quarter.
• A planned $14 million purchase price accounting benefit was recorded related to inventory conditions identified prior to closing.
• The Company maintains a portfolio of blockchain-related investments, including tZERO and GrainChain.
• The Company's mission is to make home ownership simpler and more affordable.
• An earnings webcast was scheduled for November 5, 2026, at 4:30 p.m. Eastern Time.
• Non-GAAP measures provided include adjusted diluted net loss per share, adjusted EBITDA, and free cash flow, with detailed reconciliations included in the release.