While sentiment drifted down in recent weeks, investors still came into Overstock.com's (BYON -4.83%) third-quarter earnings report with sky-high expectations. The business, which includes an unlikely pairing between e-commerce retailing and blockchain and cryptocurrency tech, is well positioned to boost sales and profits through several growth avenues.

On Thursday, Overstock's announcement contained further evidence that the retailing segment is seeing a sustained lift from pandemic-related consumer shopping changes even as management bets more aggressively on its blockchain unit.

Let's take a closer look.

The retail spike continues

Overstock's retailing segment is as strong as ever, with revenue more than doubling to $718 million. Like peers including Wayfair, the company has noticed surging demand for home furnishings as consumers shift spending toward online platforms and prioritize home upgrades. Wayfair notched an 82% sales boost in fiscal Q2 and reports its own Q3 results on Nov. 3.

A woman checks her smartphone while shopping.

Image source: Getty Images.

Overstock's management team highlighted several engagement metrics that suggest its growth might be sustainable well into 2021. Sales gains hardly slowed, for example, even as many brick-and-mortar competitors reopened in July, August, and September. The home furnishings business also notched a 141% spike in new customers, who are increasingly making repeat purchases. "I am as confident as ever in our retail business maintaining sustainable, profitable market share growth," CEO Jonathan Johnson said in a press release.

Overstock's blockchain progress was harder to quantify, but executives said they're seeing "meaningful advancements" there. The tZERO platform is scaling up its trading volume and finally starting to make small contributions to overall revenue growth while it posts modest losses.

Profits and cash

The company kept a tight lid on overall expenses in the period even as it spent aggressively on sales and marketing. Total operating costs rose by just 41%, which allowed operating income to improve to $30 million compared to a $30 million loss a year ago. Earnings per share landed at $0.50 compared to a loss of $0.89 per share. The core retailing business managed a solid uptick in profitability as its margin jumped to 13.6% of sales from 10.2%.

Overstock's operating cash trends have improved significantly this year, and that success was bolstered by a recent stock issuance that raised almost $200 million. It's likely that the capital raise was aimed at taking advantage of the soaring stock price, and management said it will be used to "support our continued growth trajectory."

Looking ahead

Investors can expect to see Overstock use some of those proceeds to try to lock in recent market share wins in the retailing business. That project starts with a likely competitive holiday season quarter ahead, during which rivals such as Wayfair will be working to capture more home furnishings shoppers and turn them into loyal customers.

Overstock has shown over the last six months that it can be a leader in the wider industry's growth, and that's good news for the upcoming Q4 shopping crush. But the big question heading toward 2021 is whether investors have overreacted to that success by pushing the stock higher by over 500% in just the past six months.