Good morning. My name is Aaron, and I'll be your conference operator for today. I would like to welcome everyone to the Q1 2025 Beyond, Inc. Earnings Conference Call. I'm pleased to turn the call over to Melissa Smith, General Counsel and Corporate Secretary. Melissa, you may now begin.

Thank you, operator. Good morning, and welcome to Beyond, Inc.'s first quarter 2025 earnings conference call. Joining me on the call today are Executive Chairman and Principal Executive Officer, Marcus Lemonis; and President and Chief Financial Officer, Adrianne Lee. I'm also joined by Leah Putnam, Chief Accounting Officer; and Alex Thomas, Chief Operating Officer. Today's discussion and our responses to your questions reflect management's views as of today, April 29, 2025, and may include forward-looking statements, including, without limitation, statements relating to our future business strategies, goals, financial performance, outlook for the remainder of the quarter or any other period, anticipated growth, stock price, profitability, macroeconomic conditions and the value of our brands and investments, relationships with third parties, agreements we are entering into with them, margin improvement, expense reduction, marketing efficiencies, conversion, customer experience, changes to brands or websites, product offerings, blockchain efforts and strategies, tokenization efforts and strategies and the timing of any of the foregoing. Actual results could differ materially from such statements. Additional information about our risks, uncertainties and other important factors that could potentially impact our financial results is included in our Form 10-K for the year ended December 31, 2024 and in our subsequent filings with the SEC. During this call, we'll discuss certain non-GAAP financial measures. Our filings with the SEC, including our first quarter earnings release, which is available on our Investor Relations website at investors.beyond.com, contain important additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable GAAP measures. Following management's prepared remarks, we will open the call for questions. A slide presentation with supporting data is available for download on our Investor Relations website. Please review the important forward-looking statements disclosure on Slide 2 of that presentation. With that, let me turn the call over to you, Marcus.

Thank you. That's quite a bit of information. To clarify, we've assembled a comprehensive release on our investor website that includes financial data, as well as a detailed slide deck illustrating our business perspective. We encourage you to review that slide deck as it emphasizes the key metrics and guideposts our management team uses daily. We are excited to discuss our first quarter results today, which we believe mark the beginning of a renewed business. This restructuring process started about a year ago, and I initially viewed it as a transformation. In the first six months of my tenure, we learned a lot together. Moving into 2025, we feel we have restructured, rebuilt, and reimagined our company. Our remaining employees, approximately 65% to 70% fewer than before, hold a fresh mindset. We have created an organization focused on success, dedicated to improving our websites and enhancing customer experiences. Although we are not finished with our website transformation, our team is committed to enhancing site experiences, integrating new technologies, and sourcing new third-party vendors. The future looks promising, and we believe this first quarter represents the start of a new business for us as we possess valuable assets that previously did not exist. The Overstock.com brand is revitalized, and we invite you to visit the website to see its transformation, including the unexpected addition of luxury items like Gucci bags alongside our traditional offerings. We have significantly streamlined the Bed Bath & Beyond site, removing nearly eight million SKUs, and while we are not done, we aim to eliminate vendors that don’t align with our values or margin goals. We’re also exploring new categories and ideas. It’s surprising to see Bed Bath & Beyond evolve into a substantial player in furniture, including outdoor and decorative items, although we remain committed to our core products in kitchen, bed, and bath. In the future, we plan to enhance these categories while also encouraging customers to explore new ones. Our recent acquisition of buybuy BABY was crucial, as those two brands were once synonymous and represent various significant life events for consumers. We’re committed to re-establishing that connection. Selling online is complex, and we want to excel in this space. Our marketing costs must decrease, and we need to grow our customer base and order sizes. Our investment in Kirkland's, a home decor business, reflects our strategy of low-risk, high-margin expansion. We believe collaboration is key, and we have agreements in place to leverage our brands alongside Kirkland's. We won’t invest in opening numerous stores; instead, our focus is on technology and enhancing customer experience. We will open four Overstock stores to facilitate more efficient shipping and returns, which should improve financial performance through margin enhancement. Additionally, we’re rolling out Bed Bath & Beyond Home stores. These will differ from traditional stores and focus on small furniture and decor items that are performing well online. We see potential in reviving buybuy BABY, starting with one test store in Nashville. As we continue to navigate our core business, we see margins on products stabilizing between 24% and 26%. We need to build our customer base effectively and enhance retention, which may involve increased promotional spending and discounting, impacting margins. We are committed to being asset-light and operating smartly. We're testing how we can manage inventory effectively while eliminating unnecessary costs. Marketing expenditure has decreased year-over-year, not due to reduced spending, but because previous strategies were unsustainable. We have integrated Salesforce and developed a new direct-to-consumer marketing team aiming for better performance from our channels and partnerships. Looking ahead, April seems to be a consistent month for us. We have not noticed significant demand shifts, nor impressive increases in site traffic or average order values. While some may speculate about customer behaviors tied to tariffs, we have not observed any such trends within our company. We believe that in about 60 days, we will transition from a restructuring phase to a growth phase, marked by improved SKU management and technology implementation. We want to move beyond merely cutting costs towards driving sales and profitability. Given the current economic challenges, including high interest rates, we see staying debt-free as crucial, allowing us flexibility. We have diversified our offerings and emphasized products that are Built in the U.S.A., while acknowledging that not all categories can be sourced domestically. We continue to work with vendors who’ve adjusted their sourcing strategies due to tariff concerns. Our margin forecast reflects this realism, as we’re not immune to market dynamics. Recently, we’ve seen requests for price increases, mainly in the jewelry segment. Though we haven’t faced substantial furniture price hikes yet, we expect to manage costs responsibly. We anticipate the market remains large enough for us to maintain revenue growth, aiming for growth in Q2 and Q3 compared to previous quarters, while stabilizing other business areas. I’ll now turn it over to my partner, Adrianne Lee, for further insights.

Great. Thank you, Marcus. Just wanted to start off with, as a result of our previously disclosed decision to eliminate noncontributory SKUs and vendors and prioritize efficiencies in our marketing channel, revenue declined 39% year-over-year in the first quarter. These actions drove fewer orders and fewer new customers. However, I am very pleased that first quarter AOV increased to $194, a $21 increase year-over-year, and units per order increased as we incent a bigger basket size. Order frequency continues to hold as we reestablished spend guardrails. We made significant progress on restoring our margin profile and are imminently shifting to a growth mindset and, as Marcus outlined, aiming for sequential revenue improvement quarter-over-quarter. Growth will be driven by offering customers value on a vast array of home products, trusted brands, and deep discounts on designer items while improving our site experience, findability, storytelling, and addressing assortment gaps. The acceleration in our gross margin expansion exceeded our internal target. Gross margin landed at 25% for the quarter, a 560 basis point improvement compared to the same period last year. You may recall, we targeted a 25% gross margin at our October 2024 investor event, and we achieved that goal. Sequentially, we delivered a 210 basis point improvement as we were disciplined in our pricing and merchandising actions and improved freight costs. Important to note, and as Marcus discussed, we are testing opportunities to purchase inventory in an effort to improve SKU economics. We will be disciplined and opportunistic in these efforts. We have shown consistency in improving our margin profile over the last four quarters as we worked with the 6-part plan I outlined at the beginning of 2024. And I expect the team to maintain our margin guardrails and disciplined approach. Sales and marketing decreased by $37 million or 430 basis points as a percentage of revenue versus last year, and improved 380 basis points versus the fourth quarter of 2024. This decline was mainly driven by the intentional reduction of less efficient spend while improving channels that are more contributory. We know we need to balance our efforts between acquisition and retention. The team is committed to doing this day in and day out while improving the site experience and sharpening pricing to support conversion. G&A and tech expense of $41 million decreased by $9 million year-over-year as a result of our commitment to reduce fixed costs by an annualized amount of $80 million. I am pleased to report we have identified the entire commitment and have realized 93%, allowing us to reinvest a portion of savings to support growth initiatives and innovation. With our more focused, agile org structure, I expect us to deliver a quarterly run rate of $38 million of tech and G&A expense excluding special items going forward. All in, adjusted EBITDA came in at a loss of $13 million, a 72% or $35 million improvement versus the first quarter of 2024 and an improvement of $15 million versus Q4 of 2024. Reported GAAP EPS was a loss of $0.74 per share for the first quarter. Excluding losses recognized from our equity method securities, adjusted diluted loss per share was $0.42, an $0.80 improvement year-over-year. We ended the quarter with cash, cash equivalents, restricted cash and inventory balance of $166 million. In the quarter, we funded our $8 million commitment to Kirkland's Home and purchased buybuy BABY for $5 million, which was mostly offset by $19 million of net proceeds from the sale of common stock. Cash used in operating activities increased year-over-year by $16 million, mainly driven by a $15 million cash use for our inventory program previously discussed. As Marcus mentioned, with the majority of our restructuring behind us, our teams are organized to be agile and laser-focused on delivering on our key operational guideposts with the intensity I expect. We made progress throughout 2024 and accelerated in the first quarter of 2025, creating a foundation to deliver both profitability and growth. With that, back to you, Marcus.

Great. Well, we'll turn it over to the Q&A. And operator, we'll open it up to our first question, please.

Our first question for today is from Seth Sigman with Barclays.

Marcus, you discussed restructuring and reimagining the business over the last year. Part of that was rebasing the business. You've refocused, you rationalized the inventory and the offering. I guess I'm focused on revenue specifically. Can you talk about the confidence level that this is the bottom and you're guiding to revenue growth sequentially through this year? What gives you confidence in that?

Thank you for the question. I believe that the revenue achieved in Q1 serves as the baseline, and we are not satisfied with it. I want to emphasize that we are actively working towards profitability and understand the key factors involved. These factors are straightforward: the margin, technology and general administrative costs, and sales and marketing expenses must all be within certain ranges. However, make no mistake, revenue is the crucial factor in achieving profitability and surpassing that zero threshold we are all determined to reach. I am optimistic because we now know how to adjust these factors and comprehend how our marketing infrastructure functions. Daily, we are improving email efficiency, ad spending efficiency, and site conversion rates. The situation is quite clear; we could invest $1 and achieve a positive return on ad spend, but we have not been spending at that level as we lacked confidence in obtaining a positive return. There are still areas of our business that do not meet our expectations, and we are cautious about increasing spending there. Similarly, there are aspects of our website that need improvement before we invest more resources. We have cultivated a culture of only spending when we are certain. To establish that certainty, we require small sample sizes demonstrating effectiveness and proof points. Without that, no spending occurs. We have empowered our team to invest in areas where they've succeeded, such as retargeting emails for cart abandonment or developing targeted campaigns with effective funnels to ensure positive returns. These successes give us the confidence that, once we establish the baseline we've worked hard to achieve, it will be much easier to build from there because everyone understands that spending must be justified and yield positive returns. This is why we believe that the Q1 revenue of $232 million will see growth in Q2 and Q3. I will reserve judgment for any later quarters until we assess the overall macro environment and consumer behavior, as well as the impact of tariffs on our customers.

Our next question is from the line of Jonathan Matuszewski with Jefferies.

Marcus, the first one was just on the roadmap to breakeven EBITDA. Obviously, some drivers ahead in terms of eliminating some more vendors and rationalizing some more SKUs. You have a streamlined kind of G&A base as well. I guess when we put together all the margin drivers, is there a way to help kind of put a stake in the ground in terms of maybe a roadmap or a milestone for reaching breakeven EBITDA in which we can then sequentially grow for positive EBITDA dollars?

Yes. So I, like you said, like to think about the modeling around how investors should understand what the cash uses are, how we're going to get there and really build it. And we don't provide guidance and we're not going to particularly in light of this, but we are going to do a better job of giving people very specific guideposts that will help us get there. The simplest math that I can give you is that at 25% margin and 13% marketing expense, both of which are not totally locked in yet, I think the margin has that range of 24% to 26% and the sales and marketing is 13.5% to 14.75%. I think that in order for us to get to where we want to get to, which is positive, we would need to do $1.2 billion annualized at a 25% margin with 13% sales and marketing. And then once you start from there, you can toggle things up and down. You can move your margin up to 26%, you could pull your revenue down. You could take your margin down, you have to take your revenue up. You could move those numbers all around. But that's actually the abacus that we're using in our business. And as we wake up every day, if we feel like we're short contribution margin, we'll pull back spend and we'll pull back promotions. If we feel like we're not acquiring enough customers, we're going to increase spend. And we're going to continue to map out very, very scientifically on a dot plot exactly what happens when we do those things, so we can build our own mental algorithm of: when we do this, this is what happens. And we need to prove out that thesis over and over again. So I would use $1.2 billion on an annualized basis, which is what all of our goals were, we just didn't know what that was to be able to figure out, okay, when you say you want to get in the neighborhood of profitability, what does that look like? You have to do an average of $300 million a quarter, average, some quarters more, some quarters less, if your margins are going to be 25% and your sales and marketing is going to be 13%. I'm not telling you whether I think those numbers work or not. I think the margins need to strive for 27%. We're going to work hard over the next many quarters to get there. We think that the marketing expense, candidly, as Adrianne mentioned, 10%-11% with returns from optimal customer acquisition is realistic. We have to find that balance. We got to get to 13% before we think about 12%. And I think this company has to set realistic goals.

That's helpful. And then just a quick follow-up question on buybuy BABY. Maybe just some quick thoughts on brand activation strategies to kind of reestablish consumer awareness. And are those embedded in kind of the advertising spend framework that you provided?

So we are going to be very careful and very steadfast in not allowing any initiative of our company to cause us to unnecessarily lose money. The inverse of that is that we have to be very mindful that, to generate revenue and to bring that business back to life, we have to spend money. The core business in my mind has to be in that 13% to 14% and 14.75% range right now, and we have to get to 13%. But when we launch a new brand or we acquire something, there is a separate and conscious spend on what that's going to look like. And what we're going to do very well as a company is to disclose those things going forward that, when buybuy BABY launches on May 8 and has its token get launched and has its grand opening on the same day, there is money that's going to be spent to reintroduce and remind people and restart that amount. We expect that revenue to have a nice growth over time. We're starting from a $30 million most recent trailing 12 months revenue base on buybuy BABY. Over time we know we can do a lot of damage to that number. What we don't want to build is we don't want to build the model that solely relies on PLA. We want to build content. We want to find moms in communities closer to them. We want to work with organizations that really are out there doing good things for families and for children. We want to make sure that the voice of buybuy BABY is very much female-dominated and mom-dominated and community-oriented and thoughtful-oriented and, most importantly, addresses every potential mom, every expecting mom, at the income level that they're able to be at, and that the buybuy BABY offering satisfies a product and offering for everybody. That takes time. The assortment that we acquired from Dream On Me that bought it out of bankruptcy did not have that same ethos. They were focused on selling baby furniture. That's what they did. We can't do that. And together with our partners at Kirkland's and the merchant team there as we think about the store, we're going to be starting from the base. We've been working with a national firm that designs retail concepts to think about what it looks like and make sure the website works, build the assortment out so that it addresses that. And we're going to go slow, and we're going to be smart, and we're going to build the brand that can last forever. I know that was a lot around buybuy, but I want you to understand that we think about our core business and we think about initiatives, and we'll be disclosing those separately going forward.

Our next question is from the line of Thomas Forte with Maxim Group.

Great. So Marcus, just one for me. So Marcus, as a long-time follower of the company and the stock, I appreciate your efforts to position Beyond for sustainable profitable sales growth. I also appreciate your efforts to show value for the blockchain investments. So can you compare and contrast the tokenization of Overstock versus buybuy BABY? What are you trying to achieve, and what does success look like, including the valuation of those investments?

The blockchain assets have become quite clear to me. In my first seven months here, I struggled to see why a company like this would invest hundreds of millions of dollars in areas unrelated to its core business. However, our shareholders and major investors have made it clear that they expect us to fully monetize these blockchain assets. During the holidays, we worked extensively to determine our action plan, and it became evident that we needed to focus on one major task first. We have two key investments in our blockchain assets that we believe hold significant value. The first is GrainChain, which I see as perhaps the most underrated and undervalued asset out there. I think part of the issue lies in the founder's and leader's ability to effectively communicate the value of the business he has built. He's likely too busy growing the business, which is why they've seen consistent revenue growth. Most people view GrainChain as an agriculture supply chain business, but I often joke with Luis that it should be called SupplyChain because their technology can be applied more broadly beyond agriculture. I believe we are about to witness some exciting developments and major announcements from GrainChain that I’m aware of, but I don’t want to spoil those surprises. As we continue to develop our direct interests in GrainChain and tZERO, we aim to build value and establish benchmarks. Part of that involves demonstrating that these assets are functional. Many, myself included, have criticized tZERO for its revenue shortcomings and minimal offerings. Consequently, we took the initiative to manage the asset directly, given our disappointment in the portfolio management, and have been closely collaborating with Alan, an exceptional leader in our daily operations. We aim to leverage the intellectual property of Overstock to create a small token. This token's purpose isn't to raise $100 million; we didn't need additional capital. Its objective is to validate three key factors: verify that the platform functions, understand what challenges it faces, and track velocity on that platform. Regulators mandated a minimum 21-day offering period for the Overstock token, which we aim to close once we meet our minimum requirement, already achieved at $250,000. For those interested in participating, this serves as your notice that the offering will close within 21 days of launch. We'll also be launching the buybuy BABY token on May 8, with a different approach and audience. In the Overstock token offering, we capped investments at $4,000 with a minimum of $100. The primary feedback I received was a consistent request to raise that cap, with many wanting to invest more. Therefore, in the BABY offering, we will adjust based on our learnings. Moving forward, we plan to scrutinize every asset in our portfolio, whether direct or indirect, and continue proving the value of the tZERO platform, which I believe holds substantial worth. Our intention is to showcase the platform's capabilities through various opportunities, making it easier to demonstrate rather than just explain our value. Regarding GrainChain, we hope to see the tokenization process help us establish a valuation for the business, which I estimate to be six to eight times its revenue based on the growth and value it can provide to banks and other companies. In our recent communications, we’ve included our blockchain asset portfolio in our company descriptor for the first time, and this will be a permanent inclusion. We believe the combination of our market cap, available cash, and owned brands, alongside our blockchain assets, indicates that the company is significantly undervalued. We did utilize an ATM for cash flow assurance during this transitional phase, which I know some might not favor, but we ended the quarter with $166 million in cash and inventory, an improvement from $66 million. Our results are getting better, and we have an authorized buyback program worth $69 million that we can use to enhance shareholder value. Our priority is to leverage our cash, brands, intellectual property, and other assets to demonstrate that the company's true worth far exceeds its current valuation. Ultimately, what truly matters are our results.

Our next question is from the line of Steven Forbes with Guggenheim.

Marcus, maybe transitioning back to the growth playbook here, can you help us better understand the contribution margin mix and maybe spread of contribution margin between the brands today? And then on that point, has the assortment been tailored within all the brands to a point where you sort of expect all transactions on a go-forward basis to carry a positive contribution margin? Or is there still a subset of transactions and/or brand itself, right, that you expect to remain dilutive as we return to this growth platform?

Steve, it's Adrianne. How are you? To provide clarity on the brand mix, most of our transactions continue to occur on the Bed Bath & Beyond site. We launched Overstock last year, and we're still working on strengthening that brand, adding categories, and improving our merchandising and product selection. Thus, the majority of our transactions are still happening on Bed Bath. This platform has been essential for our SKU management efforts, as we have significantly reduced our SKUs, following Marcus's earlier remarks about lowering the count from approximately 12 million to over six million. So, again, most of our transactions remain on Bed Bath. This site is where we are actively refining our SKUs and vendor partnerships to enhance contributing transactions, and I believe we are close to realizing the benefits of these efforts. Alex, do you have any comments?

Yes. The only thing I'd add is, on the brands, right, we're really focused on where the product offering is really competitive and where we can acquire new customers. So I think balancing those transactions was a key piece of the first quarter. And we'll continue to focus on that through the rest of the year.

It’s feasible to believe that we won’t have transactions that result in losses, not due to customer service issues, but because we are a marketplace where vendors can sometimes exploit the system. We are working towards establishing both a closed and an open marketplace to avoid selling unrelated items like water filters, which requires some effort on our part. Understanding how to capture growth is also crucial. I bring a unique perspective to this company concerning affordability across various customer bases and how to attract them. We often implement eye-catching promotions, such as flash price drops, which are becoming a standard for our brand. These price drops are designed to draw customers in, encouraging them to make a purchase in hopes they will explore further on our site. Although there may be instances where one item among multiple in a shopping cart could lead to a loss, our main aim is to ensure profitable transactions with customers. Occasionally, Alex and other merchants remind me that we need some bait in our fishing business. You will see such strategies evolve over time, but fundamentally, we do not intentionally sell items at a loss. If I discover that occurring, it could lead to job loss for those responsible. We have demonstrated this by parting ways with individuals who didn't grasp that we don’t sell things that incur losses; those who fail to understand this cannot remain with us.

Maybe just a quick follow-up on the answer, because as I think back to the investor event last year, I believe there was a comment, right, made about sort of 1,000 or so basis point spread in contribution margin around selling furniture on Overstock, right, versus the Bed Bath & Beyond website. And so is the message today that that sort of has been resolved and the learnings around assortment and maybe the learnings around conversion and acquisition have really allowed you to tighten that spread in contribution margin on selling like-for-like SKUs between the two different websites to the point that sort of solidifies your confidence that you're relaying today?

Two things. I think there are two very specific things. One is we have to deliver an assortment that speaks to the brand that people expect. And so whether there are great contributions to margin or not, when you go to Bed Bath & Beyond, that assortment, which is not even coming close yet to meeting my standards, we have another 60 days to go there, really needs to address what all of us knew that I would get when I went there. And then it has to balance out the endless aisle that it's created and the brand extensions that it's created through patio, rugs, furniture, lighting, all of those things. But what I want to be sure of is that, as we get into the endless aisle model, the things that are not historically native to Bed Bath, I don't want to see any experimenting when it's reckless. If you want to test out fitness equipment, you better bring me the business case on why fitness equipment, what the TAM is going to be, what the effort is going to be, how much time it's going to take, what the margins are going to be, what the contribution is going to be and what it's going to do to confuse people. So Bed Bath & Beyond has to be locked and loaded. When we get to Overstock, that is a place that we are going to test different categories. And when I look at what we did with a designer shop that's really like 60 days old, and we're not going to disclose the revenue that it does, but it's shocking how much revenue people want to spend on getting 40% off Gucci bags or watches. And you can expect that category to expand materially, and we have a trip scheduled to New York where we're going to be selling very, very high-luxury, top-name brand watches, top jewelry. The key for Overstock for me is that brand is all about what you want at a value you can afford. And it has to feel aspirational. But again, we're not going to put things on there that do that. Now in that particular model, you will see us curate a little bit more when we know the margins are good. So jewelry is a great example. This company, when it had 28% margins, had a lot of jewelry in its heyday going through it, selling $100,000 rings. That may sound crazy. We know it's possible. We're seeing people start to look at those things, and we're going to lean into that. But at the same time, we want to be smart about it. And we had to clean up that assortment, continuing to do that as well.

Our next question is from the line of Peter Keith with Piper Sandler.

This is Alexia Morgan on for Peter Keith. We are wondering how you think about the ending of the de minimis exemption which will make retailers like Temu and Shein more expensive. Do you think that this will have any positive impact on your business? And then second, with Overstock focused on closeouts, could growth be hindered in 2025 as suppliers try to maximize margin on non-tariffed inventory? Or how do you think about that?

Yes. I'll address your second question first. I believe we will see more opportunities rather than fewer. Big retailers are likely to continue facing challenges, and we've had increased communication from banks examining constrained asset-based loans and other factors. Supply chains are expected to remain tight. However, the vendors we partner with are skilled capitalists who understand the importance of turning their inventory into cash. While they are adjusting certain features and benefits for newer items, they still need to move older inventory, as demonstrated by significant price drops. Therefore, I don't foresee any major concerns. Adrianne, would you like to respond to the first question?

I sure will. And I think how we're thinking about it, obviously, landscape is ever-evolving with tariffs and competition. But as far as your first question with the Temus of the world and de minimis, what we're seeing right now is they're not doing as much performance marketing as they have historically. So there's kind of a spot for us to play there and really try to capture some eyeballs.

Our next question is from the line of Rick Patel with Raymond James.

Question on the trend lines as we look ahead. What do you see as the primary drivers of sequential revenue growth as we consider customers, orders and AOV? And is it safe to assume that gross profit improvement is going to follow a similar path as revenue? And how do you think about the potential for gross profit to even achieve overdrive given it sounds like you still have some runway left for better margin expansion?

I will break down the margin into two components. I do not anticipate the gross margin percentage to keep increasing, which is why I have set the range between 24% and 26% for the time being. I want to avoid affecting elasticity too much and deterring customers from our business, especially when others might be trying to liquidate their inventory. We are uncertain about the current market landscape. Ultimately, we aim to be very strategic about our spending. When discussing revenue growth, we are consciously deciding to invest with the expectation of positive return on ad spend because our system is effective. As we gain confidence and learn more about customization, segmentation, audience building, journey mapping, and the Vercel implementation, we will start to invest more heavily in those areas. So when I mention that in 60 days we will adopt a greater growth mindset, it is primarily driven by our growing confidence in our data lake, audience segmentation, journey mapping, funnel creation, and the Vercel customization stack. Once we execute this journey effectively, customers will connect with our offerings. As these elements align, we will increase our spending, as we expect conversions to improve and return on ad spend to be favorable. We previously reduced spending due to poor conversions and negative returns. With quality products in our inventory, strong vendor relationships—favoring fewer vendors to enhance our importance to them—an effective email strategy, a solid PLA strategy, and a robust customer data lake and funnel strategy, our growth potential is vast, limited only by how much the market allows us to spend each day. Even if we aim to invest significantly to grow, market conditions may restrict us. We will only reach our spending goals if we maintain a favorable return on ad spend. We remain disciplined in our approach, and anyone deviating from that standard will not continue with the company until management decides such measures are acceptable. We will build our company for the future with clear guidelines and structure.

We have time, it looks like, for one final question. This is from the line of Bernie McTernan with Needham & Company.

Great. Just wanted to talk about the path to $1.2 billion of run rate revenue. And just any discussion in terms of how much of that is just continued marketing efficiency and better ROAS versus adding new inventory in channels like buybuy BABY, omnichannel, continuing to build out Overstock? And then the second part of the question is the guidance for 13.5% to 14.5% sales and marketing as a percentage of revenue over the next couple of quarters. So we're at the low end of that right now, so implying some incremental investment. But then longer term getting to 12% or even lower, really like how does that play out in the real world? And what's the timeframe to maybe achieving those lower targets?

Well, the good news is I live in the real world, which is why I took the range higher than we are today because I didn't like the customer count and the transaction count that we had in the quarter. And we need to transition to a growth mode, which means build the file, learn how to retain them, get more lifetime value out of them, and we can't keep contracting and contracting and contracting. Ultimately, the way that we see revenue growth going, it comes from two very specific areas. One is the continued curation and assortment around the specific brands, including adding products to buybuy BABY. Those things are contributory to the growth. But the more important thing to balance with that is the science and the art around how we spend money and how we create marketing efficiency. The marketing efficiency is not where we want it to be today, and the customer file is not where we want it to be today. So what I told the team from this day forward is that we're going to have a band of flexibility that they're going to be able to play in. The sandbox is going to be here. And over time, as the emails get better, as the marketing efficiency gets better, as the funnels get better, as the categories get better, that sandbox is going to close and the range is going to go from 12.5% to 13.5%, and it's going to go from 12% to 13%. But what I don't want to do is stop the growth. I don't want to decline the company anymore. I don't want to have revenue go backwards anymore. That doesn't serve our vendors right. That doesn't serve our business right. That's not good for morale inside of our company. And we have reached that point where it's now time to really think about it another way. And I've given the team the flexibility to play in the sandbox because I don't want them to be scared of me or you or anything else while they're trying to build the business back to $1.2 billion, $1.5 billion, $2 billion, whatever the number is, smartly, intelligently and profitably.

Thank you for your question. And that will conclude our Q&A for today. Marcus, I'll turn it back over to you for any closing comments.

Thank you very much. We look forward to the one-on-one calls with our analysts, and talk to you then. Thank you.

Thank you. And ladies and gentlemen, this does conclude Q1 2025 Beyond, Inc. earnings conference call. Have a great day. We'll see you next time.