Bed Bath & Beyond, Inc. Q2 FY2025 Earnings Call

Good morning, and thank you for joining us. My name is John, and I will be your conference operator today. I would like to welcome everyone to the Q2 2025 Beyond Inc. Earnings Conference Call. I will now turn the conference over to Melissa Smith, General Counsel and Corporate Secretary. Please proceed.

Thank you, operator. Good morning, and welcome to Beyond Inc.'s Second 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 Alex Thomas, Chief Operating Officer. Today's discussion and our responses to your questions reflect management's views as of today, July 29, 2025, and may include forward-looking statements, including, without limitation, statements regarding our future business strategy, goals, financial performance, outlook for the remainder of the quarter and any other period, anticipated growth, stock price, profitability, macroeconomic conditions, the value of any of our brands or investments, relationships with third parties and agreements we are entering into with them, margin improvement, expense reduction, marketing efficiencies, conversion, customer experience, changes to brand 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 risks, uncertainties and other important factors that could potentially impact our financial results is included on 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 second 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.

Thanks, Melissa. Good morning, everybody. I am joined by Alex Thomas and Adrianne Lee. Before we get into their more prepared remarks regarding our results for the quarter, we wanted to open up the call with a slightly more conversational tone regarding how we feel about our Q2. When we started in October of 2024, just as a reminder, we were very clear about outlining certain operational metrics and guidelines that were really, really important to us, eliminating non-profitable SKUs, continuing to improve the assortment, working very diligently on the site experience and how to retain customers as they come in, improving lifetime value, being clear around the guideposts of our operational metrics like a margin range of 24% to 26% on an annualized basis, looking at our selling and marketing expense, 13.5% to 14.75% on an annual basis within that range. As we ended the quarter, what started to become very clear to us is that when we have very tight guideposts and very clear direction around what our objectives are, our company is able to prioritize those and deliver on them. Our revenue for the quarter at $282 million was a nice surprise for us, as we had expected revenue increase in Q2 versus Q1 with Q1 being our base for the balance of time, but we really got focused on two principal things in a very micromanaged way. The performance of our patio business, which had long been a huge anchor for Overstock, and we had lost our way over the last several years, and we really wanted to pick one topic specifically where we could work on site experience, work on assortment, work on pricing and really prove that we can take a single item and execute. That ended up happening. While our orders for the quarter that we delivered were up over Q1, what was really up nicely was the average order, largely led by patio. Now it's true that patio leads to a slightly lower yield on margin from a product. But as everybody knows, we don't pay our bills with margin percentage. We pay our bills with gross dollars. The second thing that we were very pleased by is the continual and, quite frankly, consistent improvement of Overstock. For those of you that are new to our company, we abandoned the Overstock brand a little over two years ago and have brought it back, and we are very happy to continue to see daily, weekly, and monthly improvements at Overstock. What’s more encouraging is the type of contribution margin that that brand is able to deliver. We saw really good performance in Overstock in newly launched categories like our luxury store in selling handbags, designer handbags, and shoes, really starting to separate ourselves at Overstock from the customer that had long been both Bed Bath and a traditional Overstock customer as it relates to textiles, patio, rug, furniture. In Phase 2 of Overstock's growth, we are going to start leaning into what were big revenue drivers for Overstock in the past, so you'll start to see more in the rug business. You can visit the site today and see the launch of our semiannual rugathon. You'll start to see more on the living room side. When we think about price points, Overstock is going to traditionally lean more into a slightly higher, more affluent customer who's looking for big brands at great values as opposed to a good, better, best, proper assortment at Bed Bath & Beyond built on both life events and furniture, patio, and rug at all price points. Overstock will have a very acute focus. What we'll also be launching here in the latter part of Q3 is an expanded fine jewelry and fine watch category, selling watches ranging from Patek to Rolex to Franck Muller and a number of other products in between. Our primary reason for doing that is really adding credibility and credence to what the overall Overstock offering is. We did a lot of research in the last six months going back to the legacy Overstock customers and focus grouping them repeatedly. What we learned is that the Overstock brand was built on confidence with big brands and high value with a discerning customer looking for great brands, luxury brands, in fact, at great prices. We'll continue to lean in that and use things like Gucci bags and Rolex watches to convince consumers, both old and new, that when we put brands on the site and when we put products on the site, it's going to deliver super premium quality as we work on delivering white glove experiences with delivery and doing a variety of other things. We're not going to abandon Overstock's halo effect around how it handles liquidations for companies and how it deals with distressed inventory. That will always be a core part of the business, and you should expect partnerships to continue to develop with national liquidators as they utilize the Overstock brand. So that's kind of how we're feeling about our core business. Looking at Q3, we expect continued growth over that Q1 base. We're expecting a similar order count, potentially slightly higher in Q3. It's obvious that what you should also expect is that the AOV is going to be a little bit lower because patio mixes out. What you may have also noticed is the cash flow for the quarter was materially better than Q1. Some of that is a function of timing of payments and other things. It’s really a function of us managing inventory in and out, managing our SG&A really well. It's the best performing cash flow quarter that we've had in many years. We're not satisfied with that result because we really, really want to see cash flow being positive from operations, not just from other nuanced things, but we'll take credit for the nuances because they’re real, but we want to see cash flow positivity. As we head into the third quarter, you can expect us to continue to tighten up on SG&A. We believe there are additional opportunities in all areas of our business, not just improving on sales and marketing and not just tightening up on headcount, but really everywhere here, because for the quarter, I think the thing that the employees of this company feel very proud about is that we're getting much closer to the mandated expectation that we don't lose money. Period. End of story. So as you walk the halls of our office, the idea of just growing revenue for revenue's sake will not change. We are locked down on making sure that both products and vendors are delivering us profitability. We're going to continue with vendor consolidation when there are certain vendors that don't make that possible. That core business continues to get better. The piece that I like more about it than anything else is that, as I told people over time, it will take a while to really figure out directionally and strategically how we extract the most amount of value out of this company. What we know for sure is having the core e-commerce operations deliver positive cash flow rather than being the reason that the company is burning cash is at the top of the priority list. As we get closer to that, it doesn't go to #2, but there starts to be other things that share that same shelf at the #1 level. Throughout the quarter, we looked at unlocking value in a number of ways. We were successful at creating a long-term partnership in Canada, where we received an upfront payment of $5 million and entered into a long-term licensing agreement where this company will receive the monetization of that IP into perpetuity. It's a big swing from us operating in Canada. You will see us do things like when we're not the best-in-class at operating something, we still want to extract the value out of our assets and out of our IP, evidenced by the transaction that you see reported in our net income. We did receive the cash from that transaction the day after the quarter, so it will be reflected in our third quarter cash. We also continue to be very pleased about the strategic investment that we made in our retail partner business, Kirkland's, now known as The Brand House Collective. Our company here, Beyond, in Salt Lake City, its core competency is not to operate retail locations, not to spend our shareholders' cash on CapEx growth and things of that nature. It is our obligation to extract every single dollar of value out of the IP that our shareholders own. We are excited to announce that the first Bed Bath & Beyond home store, that's a smaller format neighborhood concept that leans into Kirkland's strong categories along with Bed Bath's strong soft categories like top of bed, bath, tabletop, but it won't have traditional low-margin, high-volume appliances; vacuums, that's not what this first model is. Both our company and Kirkland's need to be diligent with every dollar of CapEx. What I’m looking to see is how we grow revenue, how we grow profitability, and how we grow return on assets in our core company, Overstock, and in the company we own and control, Kirkland's, making sure that our management team there is thinking about every dollar. In the case of the first store conversion, we expect revenue improvement right out of the gate. The cost to convert that store, separate from the change in inventory mix, is less than $100,000. If we can prove we can deploy that kind of capital, get our brand out there, and grow revenue in that business we're invested in, that will be utopia for us. We will continue to invest in that business smartly over the coming quarters, making sure our shareholders have what they need from a return on their investment, but we feel very comfortable with that. The next piece is where we believe the explosive value creation can come from. We're going to deliver on our core business, but as we unpack where we think the value is, this asset-light business known as Beyond has two significant assets that we believe need to be unlocked. Recently, we have issued strong opinion letters from myself to the Board of Directors at tZERO demanding a change in what has happened. We believe strongly in management's understanding of that business. The reason that we do is that we performed two tokenizations, both with Overstock and buybuy BABY and saw great results. The time has come, particularly with the GENIUS Act passing, particularly with value being created by other companies in this space, who do not possess the patents or special licenses, to unlock the value. My expectation is that we will come up with a way to unlock the value and either see tZERO have an initial public offering, find themselves reversing into a SPAC, or potentially utilize the Beyond platform to unlock the value. The capital structure isn't easy at tZERO. Our company owns 3 million tZERO ROP tokens, and we are the largest, most influential token holder. We understand the need for change, and whether that's on the board, with marketing, or technology, we will drive change. When you look at tZERO's ability to bring things onto its platform, particularly global real estate and real-world assets, we believe the money is ready to pour into this platform. Because we believe that, we are going to drive expeditious change. It may seem angry at times, but at the end of the day, we believe the window is clear and it's not forever. As for our GrainChain asset, we couldn't be more proud of what Luis and the team have created there. GrainChain allows agriculture worldwide to access capital markets using this technology. However, it's become clear that GrainChain is also a supply chain tool for manufacturing. The total addressable market for GrainChain is far greater than what was originally identified in agriculture. While GrainChain is a private company, we will respect that, but I can tell you that there are a number of other transactions that Luis has already signed and engaged in, which he is not yet prepared to announce, but our confidence is massive. So massive that if there's another opportunity for us to invest in that business, we would consider using our capital. We are a split personality business. We operate a core e-commerce business, but we aim to deploy capital intelligently in blockchain, Bitcoin, and the whole crypto space when we see investment opportunities that can be wildly accretive for our business. We weren't willing to risk our working capital until we stabilized our core business. Now that it's stabilized, we will opportunistically look for technology transactions and opportunistic accretive investments. Our shareholders can expect us to park a certain amount of cash in Bitcoin, creating a Bitcoin reserve, and as we generate additional capital, we will do the same. We want to ensure that every dollar that our shareholders have given us is deployed to extract value. To sum it up, we recognize that the retail business has had a rebound and is stabilizing. We hope for a housing market return and an economy to stabilize. In a proper, normal housing market where consumers feel better about spending money, Beyond will be a massive winner with revenue tailwinds, formed with a new cost structure that will generate significant incremental cash flow. One commitment we are making today is to explore something regarding the shareholder letter from Shay Capital, which discusses different ways to unlock value, including the issuance of a contingent value right. This would be a contract for the revenue that could be created in the liquidity event down to $1.01. We are committing to issue a dividend, something like a 10 for 1 or 5 for 1, meaning for every 10 shares you own, we would issue you one contingent value right contract. This is not a security, and there will be a record date issued as soon as Adrianne has confirmation from the New York Stock Exchange. All shareholders on that record date, which we expect will not take long, will receive this dividend. That contract will give you the right to net proceeds created from the entire Medici portfolio, excluding tZERO and GrainChain. As shareholders, you will enjoy the value created directly and indirectly from these two pieces. We can answer many more questions in the Q&A, but that is essentially the state of the union. I'll now turn it over to Adrianne Lee.

Great. Thank you, Marcus, for that helpful insight into our 2Q results, our company strategy, and how we intend to create shareholder value. With that, I'd like to turn to details on our second quarter financial results and the progress we continue to deliver. Revenue declined 29% year-over-year in the second quarter but improved 22% versus the first quarter of 2025 as we committed to on our last earnings call. The 22% increase was driven by a seasonal AOV improvement of $25 and an 8% increase in orders delivered. The AOV improvement of $25 was due to solid promotional execution in seasonally relevant categories. We made significant progress on stabilizing the business and getting back to our e-commerce fundamentals, providing an improved assortment, competitive and engaging promotions, all while improving our site experience, which Alex will discuss in detail later. Gross margin landed at 23.7% for the quarter, a 360 basis point improvement compared to the same period last year. Although the print was slightly below our anticipated range, it was driven by our focus to exceed our internal sales target on outdoor categories. I am pleased with this outcome and to see that our unique business model is competing again in established categories where we can win. While we have shown consistency in improving our margin profile over the last five quarters as we work the six-part plan outlined at the beginning of 2024, I expect the team to maintain our margin guardrails and disciplined approach going forward. Sales and marketing decreased by $28 million or improved efficiency by 320 basis points as a percent of revenue versus last year and was flat as a percent of revenue to the first quarter of 2025. This illustrates our ability to generate sales while maintaining necessary discipline. The decline year-over-year was mainly driven by the intentional reduction of less efficient spend while investing in channels that are more contributory. We are still finding efficiencies and productive customer journeys to help us achieve our targets. The team is committed to doing this day in and day out, while improving site experience and sharpening pricing to support conversion. G&A and tech expense of $37 million decreased by $9 million year-over-year due to our commitment to reduce fixed costs by an annualized amount of $80 million. I am pleased that we have delivered on our commitment to achieve a $150 million annual run rate. We continue to be disciplined with our capital deployment, identifying efficiencies, and restructuring to create an agile, simple way to operate. All in, adjusted EBITDA came in at a loss of $8 million, a 78% or $28 million improvement versus the second quarter of 2024 and an improvement of $5 million over the first quarter of 2025. Reported GAAP EPS was a loss of $0.34 per share. Excluding losses recognized from our equity method securities, adjusted diluted loss was $0.22, a $0.54 improvement year-over-year. We ended the quarter with cash, cash equivalents, restricted cash, and inventory at a solid balance of $156 million. Year-to-date cash used in operating activities improved year-over-year by $75 million or 68%, illustrating significant progress against our transformation initiatives and the stabilization of our core operations. With most of our restructuring behind us, our organization is lean, and we are creating simpler yet effective ways to operate, maniacally focused on our key KPIs. I believe we have now stabilized the business, have the right team in place, and are well-positioned to keep driving improved results. With that, I'd like to turn the call over to Alex Thomas to provide additional details on our fundamental operational improvements.

Thank you, Adrianne. Our team remains intensely focused on delivering the committed targets we laid out at the 2024 investor event, which are improved marketing efficiency, enhanced conversion rate, margin expansion, and expense discipline. Our second quarter results reinforce confidence in our road map, focus areas, and our ability to execute. Through the period, we enhanced our customer experience by making key upgrades in search and navigation, creating shopping experiences around relevant themes like flash price drops, back-to-school, and luxury home, continuing the removal of unfavorable product listings, and, importantly, executing engaging, seasonally relevant promotions across all channels. We addressed assortment gaps by delivering offerings at key price points in name state categories like Bed and Bath. Further developing incremental categories like designer jewelry and apparel on the Overstock banner, sourcing better, best branded products, which we continue to observe strong demand responses from these assortment and site enhancements across our banners and platforms. We progressed our efforts to simplify and unify our tech stack, which will drive cost efficiency and feature development speed in the back half of 2025 and 2026. We have a lot of work ahead, and we look forward to it. With that, back to you, Marcus.

Thanks, Alex. As we get into the Q&A, I just want to ensure we have a quick summary for those that may have missed it. We will continue to grow and stabilize the cash flow of our core business. We are focused on the issuance of a contingent value right here in very short order, with the record date to come. This will be a specific dividend to all shareholders on a 10-for-1 or some version of that basis. We are focused on developing a Bitcoin reserve along with getting back to taking Bitcoin and keeping it on our balance sheet as Overstock did years ago. We are committed to unlocking value out of tZERO, ensuring both the tZERO ROP holders, of which we are the largest, and the equity side, continue to be a priority. We are focused on finding ways to unlock GrainChain’s value and exploring options for shareholders. Our company continues to have about $68 million left on its repurchase program and just over $131 million left on the ATM. The ATM was not used in the second quarter, and we bought back nearly $1 million worth of shares. We will continue to play that arbitrage to ensure our stock's value represents our beliefs about our business, and now we'll turn it over for Q&A.

Your first question comes from the line of Steve Forbes with Guggenheim.

Marcus, can you provide an update on the SKU rationalization efforts across Bed Bath & Beyond? Are we nearing completion there? And then given your comments on leaning into a slightly higher, more affluent customer for the Overstock banner, would love to hear you just expand on what's driving the confidence there? And any key metrics you can provide on how the consumer is engaging with the designer shop on Overstock?

I'm going to have Alex take the first half, and I'll take the second.

SKU rationalization works, and we continue to pursue it. I would say we are through the heavy lifting of that portion; however, that job is never done. Right? We're always fine-tuning product content, looking at traffic sources, and ensuring our assortment is right there. I would say the heavy lifting is complete, but we continue to fine-tune on the Overstock side as articulated. What excites us are these incremental categories that drive visits, like designer jewelry and apparel.

Steve, if you visit the Bed Bath & Beyond website today, you're going to see a far more laser-focused assortment. My edict to the team was that I want to remind the legacy Bed Bath & Beyond customer that the same product assortment and presentation that they experienced at the store level would show up online. If you go through the site today compared to what it was 6, 8, 12 months ago, you'll find that it's far more thoughtful. It's aligning with the legacy trade dress we own with the coupon and not harming our margin. We're focusing on back-to-campus and a variety of other things. SKU rationalization will continue. In very short order, as we start to open stores again, there will be larger collaboration between the store merchants in Bed Bath Home and our True Blue stores and what we're doing online so that the customer experience when they walk through the door isn’t dislocated. Our idea is to build an endless aisle concept at each store over time, slowly and thoughtfully in a testing model to ensure that promotional cadence and pricing align. This will be first for bedbathandbeyond.com because, here in Salt Lake, they have never had to think about that omnichannel experience. We want to drive transaction count, lifetime value, and average order size, so these elements need to be more connected. Moving to Overstock, we spent about six months with a couple hundred thousand dollars doing extensive research on what drove Overstock when it was doing $1.5 billion at its peak, absent COVID. We learned that great brands at unbelievable prices were key. Our demographic analysis shows that our customer profile includes a household income of over $150,000 and a credit score over 700. This is not a younger audience; it’s a more affluent demographic. We’re beginning to see that reflected in our sales of designer handbags and shoes, and while the margin profile is 22% to 24%, it drives significant gross profit dollars.

Super helpful, Marcus. And then a quick follow-up. You mentioned being pleased with Overstock's run rate and contribution margin. I think it's been a little while since you've commented on the run rate of Overstock. So curious if you can update us there. And then as it pertains to contribution margin, can you frame that versus the company average or the guidepost you have?

We're not breaking that out at this time, but I will tell you that it is our goal, hopefully in 2026, to start breaking out the revenue by channel, so people can see it, particularly Overstock. Buybuy BABY is still too small to break out. We do want to see Overstock revenue broken out in 2026. The contribution margin is more solid because we're not chasing commoditized products the same way. It's less expensive to market that business, so the frictionals are better. The gross margin remains relatively the same, and it depends on the seasonality; the contribution margin difference between Bed Bath and Overstock reflects the sales and marketing expense, which is why we want to lean into it more, as it's obviously more profitable for us.

Your next question comes from the line of Thomas Forte with Maxim Group.

One question, one follow-up. And first off, Marcus and Adrianne, congratulations on all the very significant progress. On the tZERO front, I was trying to figure out a way to ask this as simply as possible. So with crypto treasuries and stablecoins, it seems like now is the perfect time for tZERO to go public. You're the largest shareholder. Simply put, can you compel them to go public?

We can compel them in a variety of ways, but we think it's better for everybody to have mutual alignment on value creation. We know our partners at ICE are equally motivated to monetize their $50 million investment, and management is equally motivated. Without the tZERO ROP unlock and without some liquidity event, either in backing into Beyond or using it as a public vehicle, we want shelf registration done. For tZERO to grow, both the management and our other partners need to enjoy the value, and the tZERO ROP tokens need to be converted, which won’t happen until we're satisfied with the changes being made. We don’t want to be in conflict with the business of which we are the largest shareholder, but we want to be clear that the time has come. Hundreds of millions of dollars have been deployed into that asset, and we’ve spent too much time waiting for a return. The potential market cap of tZERO is more significant than our business in total. Everyone is going to have to convince us that now isn't the time. I don’t think that's going to happen, and we reserve all legal rights on that matter.

For my follow-up, we'll go with two first, so I apologize. So on the contingent value rights issuance, it sounds like a brilliant idea. Could that trade on the tZERO platform? And then, this is probably premature, and I apologize, but how should investors think about, at a high level, a potential timeline for a GrainChain IPO?

Our goal is to have the contingent value right trade on the New York Stock Exchange, where there’s visibility for our large institutional investors. Overstock may have miscalculated how they issued dividends before, and we want to ensure transparency and tradability. The key is to have it trade properly and establish value. We know there’s a massive short position out in our company, and it's important that everyone understands that this is to provide value for shareholders. Regarding GrainChain, we’ve discussed taking a small portion of our direct interest, allowing GrainChain to establish value or go public. If they want to raise money or go public, we want to support that process. We have a more optimistic view on value than maybe the founder does because he is a conservative operator. We want to communicate the value of his business, but we want to do so when he is ready to announce it.

The next question comes from the line of Seth Sigman with Barclays.

I actually wanted to follow up on that last point on the opportunity to extract value. We will look for the disclosure on the website, but we are getting some questions from investors. Is there anything else you can share on this call about Beyond's ownership of some of the larger assets besides tZERO? And then I have a follow-up.

It's up there now, but let me walk through it because it's a question that deserves to be answered. Our total equity in tZERO is 53%. It’s 6% in preferred from a direct ownership standpoint, 23% in common. In indirect, it’s 2% preferred, 23% common. On the tZERO ROP, we own 14% of all those tokens. On GrainChain, we have 9% direct, which is in a convertible note of $10 million. People have asked if the note is converted. No, I'm not going to convert it because I continue to accrue interest, and the conversion is already set. We can convert at any time but don’t want to give up our security. We have 14% in our indirect interest. As for Ripio, we own 2%, Voatz, we own 17%, both indirect. The dividend we’re exploring issuing would include companies from that list.

Okay, perfect. Very helpful. Back on the retail business, if we focus on patio, using that as a case study this quarter, what did you guys learn about what worked, what you were able to prove through the work there? Any data points you can share on how that gets you excited about the opportunity as you manage this from a bottoms-up perspective across the assortment?

Yes. SKU curation works, and we were proud of the assortment we had and how we brought it to market. Simply put, it’s creating engaging promos with the right assortment at the right price point and putting that puzzle together correctly. We’re proud of that effort in Q2, and we look forward to implementing similar measures in upcoming quarters.

Your next question comes from the line of Jonathan Matuszewski with Jefferies.

The first question was just on pricing. You guys obviously have a unique inventory model. What are you hearing from vendors on your marketplace regarding their current approach to offsetting tariff headwinds? I think weeks ago, we were hearing from industry peers that suppliers were generally competing more for unit share and generally abstaining from price hikes. What are you guys seeing today?

We've seen some modest price hikes. As I walked the Furniture Show in Las Vegas and talked to a number of vendors about how they're handling it, they're acknowledging the necessity for them to absorb a big chunk of the tariff increase. I think we have everyone believing that, as the marketplace shows, there’s little elasticity with the consumer on goods we sell. We will be fighting to keep every last percentage point. We're working on finding unique products with vendors and stocking unique items. Just a reminder that we don’t carry inventory in a big way, but we do keep 10 to 15 units at any time just to leverage opportunities. Jonathan, we don't expect much pressure on our margins from tariffs as manufacturers will absorb most of it. If there are small things to pass on, it may be short-term until new sources come in. We see a significant shift away from China, and our reliance on it has decreased considerably compared to last year.

Very helpful. And then a quick follow-up. Obviously, some good EBITDA momentum this quarter. How does that influence your timeline for breakeven?

One of the things that I wanted to see was a specific month where we could do it. I've been waiting for that inflection point, and there were moments inside the second quarter where I got really excited when a month closed. I won’t be setting ourselves up for failure anymore. I'm focused on just getting there and growing the business simultaneously. We have managed the cash burn down. As you can see from the cash flow statements, we were cash flow positive for the quarter based on timing. We are getting very close to not worrying about it anymore; I’m now focused on looking for growth. Losing $8 million in EBITDA isn’t a big deal but isn’t great. I won’t continue to cut as we did before. Our mindset of cut until we get there has left the building. We need to generate revenue, improve margin, and reduce variable expenses. There are little things to cut, of course. We’ve shifted toward investing in new vendors, products, and technology. If there's a cost associated, we’ll disclose that. About $1 million of the burn in Q2 came from working on our unified code structure, about $1 million from testing in new categories, and about $1 million from new marketing techniques. Had we not invested, our loss might have been $11 million or $12 million. We’re focused on strong fundamentals to drive revenue growth, margin improvement, and to start selling things. That’s how we make money.

Your next question comes from the line of Bernard McTernan with Needham.

To start, apologies if I missed it, but was patio up year-over-year given the changes you were making? My reason for the question is to consider getting the whole company back to positive revenue growth as you add more categories to that focus list. So, do you think positive revenue growth is a reasonable objective for next year?

I believe our material improvement in EBITDA was a function of mixing more into patio and more profitable patio transactions. Our revenue year-over-year in patio was down. Our contribution margin on patio was materially up. For the entire quarter of patio last year, we lost money on the contribution margin side. With this growth year-over-year, it's not positive; rather, we saw positive growth in revenue from the first quarter to the second quarter, with material positive contribution growth and gross margin growth year-over-year.

Understood. I also wanted to ask about the Bitcoin reserve. High level, why is this the right thing for the company? How should we think about that reserve getting built up? Would you trade your own equity for Bitcoin? Will cash from ops turning positive be a use for cash?

Cash from ops turning positive is our first priority. If we feel good about our cash position, we may allocate some of our existing cash into that reserve. We are a technology blockchain company. This isn’t just a fun initiative; the company used to hold Bitcoin but had to sell it to generate cash to maintain operations. Now we are no longer in that fight and want to explore ways to profit. We believe that accepting Bitcoin as commerce and keeping it on our balance sheet aligns with who we are. We’re not going to bet the farm, nor raise extensive funds to purchase it. However, as our business stabilizes, we will lean into the idea because that’s who we are.

That's all the time we have left for Q&A. I would now like to turn the call over to Marcus for closing remarks. Please go ahead.

Great. Thank you so much. We're looking forward to our call backs and will answer questions as we deliver Q3. Thanks so much.

Ladies and gentlemen, that concludes today's conference call. We thank you for your participation. You may now disconnect your lines. Have a pleasant day, everyone.