Neighborhood Intelligence Targets Revenue of $2.0 Billion to $2.1 Billion in 2027
Key Facts
Neighborhood Intelligence said on November 5 that it expects consolidated revenue of $2.0 billion to $2.1 billion in 2027 and a gross margin of 33% to 34%, according to a company statement. The outlook sets a financial framework for next year after sharp revenue growth in the third quarter, which the company attributed mainly to its acquisitions of Kirkland’s and The Container Store. Management said it sees a path to raising gross margin to 37% over the long term. According to the company, that path depends on improving sourcing and product assortment, maintaining inventory discipline and expanding higher-margin home services. NXH shares closed at $1.67 in the November 5 session, according to EL7 data.
Revenue in the third quarter of 2026 was about $509 million, up 98% year over year, according to the earnings statement. The company said the two acquisitions were the main driver of the increase, contributing $229 million in revenue growth compared with the same period a year earlier. It added that its core e-commerce business and an improved product assortment contributed a further $23 million. In that core business, e-commerce revenue rose about 9%, driven by a 75% increase in Overstock.com revenue. The breakdown shows that overall sales growth combined the expansion of the group through acquisitions with improvement in its existing e-commerce business.
Active customers reached 9.0 million in the third quarter, up 117% year over year, while delivered orders rose to 4.0 million, an increase of 217%. Average orders per active customer also climbed to 2.0 from 1.3 in the year-earlier period, up 53%. Chief Executive Marcus Lemonis said the pre-acquisition e-commerce business delivered sustained revenue growth and reached adjusted EBITDA breakeven. He added: "The company's pre-acquisition e-commerce business achieved two important milestones worth noting: sustained revenue growth and adjusted EBITDA breakeven." The description puts the core business's performance in the context of the broader expansion reflected in the group's post-acquisition figures.
The company posted gross profit of $173 million in the third quarter, equivalent to a reported margin of about 34% of net revenue. The quarter included a planned $14 million accounting benefit related to purchase accounting and inventory conditions identified before the acquisitions closed. The reported quarterly margin is therefore close to the target range for 2027, but the quarter's figures included this specific benefit. Net loss, meanwhile, was $26 million, compared with a loss of $5 million in the year-earlier quarter. Adjusted EBITDA loss was also $26 million, versus $5 million a year earlier.
The company said the quarter's results included about $20 million in special items, mostly acquisition-related and restructuring costs, as well as noncash losses from store closures. Sales and marketing expenses were $54 million, or 10.7% of net revenue, with the ratio improving by 330 basis points year over year. On cash, net cash used in operating activities in the first nine months of 2026 was $118.449 million, compared with $50.212 million in the same period of 2025. As of September 30, the company said it had $127 million in cash, cash equivalents and restricted cash, along with $228 million in inventory and real estate free of borrowings. It also said it completed a registered direct offering in October that generated about $45.5 million in gross proceeds and about $43.0 million after fees and expenses.
Management said it had removed more than $50 million in selling, general and administrative costs and annual merger synergies from the start of the year through November 5, and identified more than $40 million in additional annual operating and merger savings. The company expects the full benefits of integration and synergies to emerge over a period of about 6 to 9 months. Management estimated the operating impact of sales growth, saying each additional $100 million in organic revenue could add about $30 million to operating contribution. Realizing these savings and when they flow through to results remain tied to integrating the acquired businesses. The company said its 2027 plan assumes continued weakness in housing starts and existing-home sales, with the latter remaining near levels seen during the Great Recession.
The company said existing-home sales in 2025 were below 2009 levels and about 25% lower than the 2015 to 2019 average. From its 2027 base, management sees annual organic growth of about 5% as achievable over the following three to four years, even without a recovery in the housing market. It also said that mid-single-digit organic revenue growth, combined with greater operating efficiency and expansion of higher-margin home services, would position the company to turn group-level cash flow positive in the second half of 2027. That shift remains contingent on achieving those operating goals, according to management. The company views any modest improvement in the housing market as a potential additional tailwind, while its base outlook assumes continued weakness.