Overstock.com reported financial results for the quarter ended June 30, 2005. CEO Patrick Byrne spoke to shareholders in his typical down-to-earth style in a letter to shareholders released on Wednesday. Having invested heavily in infrastructure, his message was, there's no backing down now.

"The strategic implication here is that the operating and depreciation expenses associated with the systems we are adopting now are not expenses from which we will be able to back away," Byrne said. "Thus for the first time we must grow into what we have built. Yet as we get bigger and as the online space gets more crowded, our continued hyper-growth becomes more difficult."

Overstock entered the online-auction space last September. Of that move Byrne said, "It cost us $1.2 million to be in the auctions game, down from $1.6 million in Q1, but not the $600,000 for which I was shooting."

Byrne also reported, "Our Auctions business reduced its losses. Listings are up nicely over last quarter, while gross merchandise volume rose at a more muted pace. This is a long work in progress."

Auction Gross Merchandise Volume for the quarter was $7.4 million, compared to $5.6 million for the previous quarter (ended March 31, 2005) and $7.1 million for the quarter ended December 31, 2004.

Average registrant acquisition cost for auctions for the past three quarters was $7.51, $8.26 and $7.41, respectively.

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