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Overstock.Com Inc (NASDAQ:OSTK)
Q2 2019 Earnings Call
Aug 8, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2019 Overstock.com, Inc. Earnings Conference Call. [Operator Instructions]

It is now my pleasure to introduce, Chief Financial Officer, Gregory Iverson.

Gregory J. Iverson -- Chief Financial Officer

Good afternoon, and welcome to our second quarter 2019 earnings conference call. Joining me today are Dr. Patrick Byrne, Founder and CEO; Saum Noursalehi, CEO of tZERO; Jonathan Johnson, President of Medici Ventures; Dave Nielsen, President of Overstock Retail; and Seth Moore, Chief Strategy Officer of Overstock Retail.

Let me remind you that the following discussion and our responses to your questions reflect management's view as of today, August 8, 2019, and may include forward-looking statements, actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in our Form 10-K for 2018, our subsequent filings with the Securities and Exchange Commission, and in the press release filed today. Please review the forward-looking statements disclosure on Slide 2 of today's presentation.

During this call, we will discuss certain non-GAAP financial measures. The slides accompanying this webcast and our filings with the SEC, each posted on our Investor Relations website, contain additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable GAAP measures.

With that, I will turn the call over to Patrick.

Patrick Byrne -- Chief Executive Officer and Founder

Thank you, Greg. You see our agenda, we will be discussing Medici, beginning with and focusing on tZERO, and non-neglecting other members of our Medici keiretsu, then turning to retail, the magnificent company which spun all this wonderful blockchain keiretsu, and then to Q&A.

Next we'll be turning to Medici Ventures, Jonathan Johnson, who has orchestrated this wonderful symphony. Thank you very much.

Jonathan E. Johnson -- President of Medici Ventures

Thanks, Patrick. Going to Slide 5, as mentioned in previous earning calls, Medici Ventures continues to focus on building and advancing a blockchain tech stack for society. We have nearly all of the critical components in place, so we don't expect to grow the keiretsu as aggressively as we have in the past. Every month, we get more comfortable with the ability of our current keiretsu companies to deliver on our vision of a blockchain tech stack for society. We continue to support the growth of the Company's already in the Medici Ventures family, and help them in or operate in a symbiotic way as we build a government as a service solution.

Slide 6. Each of our keiretsu companies continues to build and deploy meaningful products. Today, we'll focus on a few that have hit significant milestones in the previous quarter. As we had in the past, let's begin with tZERO. Saum?

Saum Noursalehi -- Chief Executive Officer, tZERO

Thank you, Jonathan. We continue to execute against the strategic road map we laid out last quarter. If you go to Slide 8, these are some of the key milestones we've delivered this year. So it's been a busy year. This slide shows just kind of a steady stream of achievements that have come in. I'm going to highlight many of these in the coming slides, but wanted to call out the last two.

On August 6, we announced that we were awarded a patent for how traditional systems can be anchored into the blockchain. This is the second patent this year and we see it as complementary to the first. On the last item, you see in a few days we expect to trade the tZERO token among non-accredited investors, so for those tokens to become freely tradable.

Slide 9...

Patrick Byrne -- Chief Executive Officer and Founder

And before we go on, I'll just point out that it was over a year ago some laid out a road map that seemed unbelievably compressed to a number of people. And if you go back and check, every he has hit, essentially every day, maybe some -- let's say a week or two, something like that, but he has brought to life in just 15 months. This is an incredible set of achievements, that I actually don't think the market has recognized the significance of what these all stack up to.

Go ahead, Saum.

Saum Noursalehi -- Chief Executive Officer, tZERO

Thanks, Patrick. Next slide. This is Slide 9, the security token ecosystem. As you can see, we've made significant progress here. We completed on the left the tokenization, which less issuers digitize their assets. And also on the top right in blue, you see we signed up a second broker dealer ETC to trade security tokens. We're in conversations with additional third-party brokerages, so to create liquidity we want to make sure we allow multiple sources of brokerages to access this new ecosystem. And we've also filed for our own new member application for our own in-house retail broker dealer.

Unidentified Speaker -- Chief Executive Officer, tZERO

Saum, can you comment on the recent announcement of an Overstock dividend, what that has done for you in terms of?

Saum Noursalehi -- Chief Executive Officer, tZERO

Yes. And actually we will get to that, but the dividend we recently announced OSTKO will bring 40,000 to 50,000 new customers to this new ecosystem. So a huge advantage and getting adoption for our platform. And in addition, we've had a significant outreach of for many broker dealers -- big name broker dealers that are interested in participating in security tokens. And we have all the technology to power them and give them access to security token trading.

Unidentified Speaker -- Chief Executive Officer, tZERO

Thanks.

Saum Noursalehi -- Chief Executive Officer, tZERO

Okay. Next slide. This is a list of the Company priorities, which we further refined. The first onboard quality assets, enhance liquidity, launch the new version of our DLR, Digital Locate Receipt platform, and get our national exchange BSTX live.

Slide 11. So the first priority is to onward quality tokens. To achieve this, we launched OSTKO as the second token on June 27. This is digital preferred share of Overstock's public stock. We announced an LOI to tokenized the first major motion picture Atari, which is produced by Leonardo DiCaprio's production company. So we think it's -- this has the opportunity to massively disrupt how film raises capital. We've hired and it's not listed here, but a Head of Issuance, Brooke Navarro, a Managing Director from Barclays to lead the issuance effort. And we're having ongoing conversations with many other potential issuers.

Slide 12. Through enhanced liquidity, so as we get this trading platform live, it's going to be key to make sure it's a liquid market. On June 14, we filed the new member application for our own broker dealer. We launched the tZERO crypto app on both iOS and now Android, which will be really the foundation for trading all digital assets once we're approved as a retail broker dealer. We announced OSTKO's dividend, which we just spoke about, which is again very important for adoption of our platform, and getting big name brokerages plugged in. On August 12, just in a few days, tZERO token will become freely tradable by non-accredited investors. And we're in conversations with many other broker dealers interested in trading security tokens.

Slide 13. Some of the other initiatives, our third priority launch and scale the securities lending product. We completed the market data feed portion of this which aggregates the supply of hard to borrow inventory from multiple sources, and we're working on the next phase of that which is to integrate this technology with our order management service, which will allow short sellers or the demand side to make bids and get locates on pre-borrows. Target -- and we're currently targeting October to complete that. Lastly, we are working on our joint venture with Box Digital to launch BSTX. This is our joint venture and we're working closely with regulators on this, and aiming for late 2019, early 2020 launch.

Slide 14,. Lastly, we made some significant additions to our human capital, Brooke Navarro whom I mentioned as Head of Issuance from Barclays. She has over 10 years of experience in capital markets. Mike Mougias as Head of Investor Relations with over a decade of experience coming from IMAX Corporation. And last but not least, Alexandra Sotiropoulos, as Head of Communications, who joined us from Intermarket, the financial PR firm.

I'm going to turn it back over to Jonathan, our Chairman, who is managing our strategic investment project.

Jonathan E. Johnson -- President of Medici Ventures

Saum, you've done a great job advancing tZERO. And we're all excited about the work you and the tZERO team are doing, and to see tZERO product get in the hands of customers. So focusing on Slide 15, let me briefly discuss the status of tZERO's strategic investment efforts. First, Makara has completed its due diligence efforts, and is in the process of taking a proposal to its investment committee. We will update our owners as this materializes.

Second, I remind you that GSR made a $5 million investment in tZERO at a $1 billion post money valuation. Net investment was to be $2 million [Phonetic] in cash and $3 million [Phonetic] in Hong Kong exchange based stocks. We've collected the $2 million [Phonetic] in cash. Because of some technical difficulty in transferring the stocks, GSR is now liquidating those stocks and then contracted to transfer to tZERO, and will pay tZERO the remaining $3 million in cash. We expect tZERO to receive that remaining $3 million in cash by the end of this month. It will be at that point we will issue tZERO equity to GSR.

Next slide. I'd now like to shift focus to three other companies which have also hit significant milestones since our last call, Medici Land Governace, Bitt, and Voatz. On next slide, I'll start with Medici Land Governace, and highlight three of its recent developments . First, MLG announced that after its successful fall 2018 initial pilot land titling project in Lusaka, Zambia, it is now signed a memorandum of understanding with the Lusaka City Council to significantly expand land titling and administration in and around the capital city of Zambia. With a population of approximately 2.5 million people on its metropolitan district, Lusaka is one of the fastest growing cities in Southern Africa .

Second, MLG signed a memorandum of understanding with Liberia's Ministry of Finance and Development Planning. This MOU is expected to lead to a pro bono pilot project exploring the potential for the digitization of existing government services and the development of e-government platforms in Liberia. We believe this pilot could lead to further opportunities in Liberia for MLG and other Medici Venture companies developing applications for our broader government as a service concept.

And Third , MLG completed its earlier project with Teton County, Wyoming making Teton County the first county in the United States to record land information on a blockchain based platform. Teton County land record activities going back to 1996, including warranty deeds, mortgages release of liens, and other similar documents are now stored on a system using MLG's technology designed to track, record and make this information available to public in a transparent and beautiful way.

Patrick, do you want to comment on this at all?

Patrick Byrne -- Chief Executive Officer and Founder

Yes. Our strategy here as I've mentioned before, has been some pro bono projects that gave us the reason and the customer for whom to build specific tools -- different tools in the case of each project. We have each reached the point with those different tools and platforms that we've created snap together and create pretty much was certainly the most advanced blockchain land governance system in the world. And we're really at the cutting edge in Africa like using drones and all that stuff that you're hearing about work, the cutting edge of all that.

So those have snapped together and doing very valuable platform. I think people are going to be surprised at how much -- how lucrative this may turn out to be. That's not the only reason we did it. We think it has kind of world historical benefits. But it's -- this is not a pro bono project. At the end of the day, we have developed a very interesting and advanced blockchain based land governance platform way ahead of anything in the world. I can say that with confidence, this is that -- the technology they now have -- now all snapped together is way ahead of anything out there.

Jonathan E. Johnson -- President of Medici Ventures

Patrick, I know you and I couldn't be more pleased with the products and production and progress Medici Land Governace is making. Let's flip to the next Slide 18. Next, I'll focus on Bitt. which is our financial services company in Barbados. Bitt's digital money product and money launched in Barbados in December of 2017. It has been operating in the Central Bank of Barbados and Financial Services Commission regulatory sandbox. While in this regulatory sandbox, Bitt was under a full review of its anti-money laundering compliance processes and an audit of the mMoney operation. Bitt recently announced that mMoney has graduated from and exited the regulatory sandbox. This is a big deal.

Bitt is now candidate for regulation under legislation that is being currently drafted. And Bitt now has the stamp of approval from the Central Bank of Barbados and Financial Services Commission. Hope you can understand why we think this is such a big deal. These developments should provide great comfort to Bitt's potential partners and to consumers.

Beyond the mMoney product, Bitt is making steady progress developing its central banking product for the Eastern Caribbean Central Bank. Bitt continues to grow and use the development team at Medici Ventures for those development efforts. And we are seeing great collaborations between the teams in Barbados and Utah. Patrick?

Patrick Byrne -- Chief Executive Officer and Founder

Is it fair to say that, that our shareholders should think of the mMoney product and the central bank -- the digital central bank as two products that snapped together in a sense?

Jonathan E. Johnson -- President of Medici Ventures

Absolutely. Without the mMoney product, the central banks are less likely to issue digital currency. Having issued digital currency, having an mMoney application it can -- that citizens can use to use and transfer that digital currency is the key. So we talk about them separately, but they're really two halves to a whole circle.

Patrick Byrne -- Chief Executive Officer and Founder

Right. And our -- your mMoney -- and Jonathan is on the Board there and has played a key role in helping this company emerge a great company. That mMoney product has been out there for a...

Jonathan E. Johnson -- President of Medici Ventures

December 2017.

Patrick Byrne -- Chief Executive Officer and Founder

So almost two years now. So we are now just finishing up the central bank side of the -- of half of that, is a fair elucidation?

Jonathan E. Johnson -- President of Medici Ventures

Yes. The development team in Salt Lake is working closely with the Eastern Caribbean Central Bank on its requirement. The development process is going well. Our team in Salt Lake was in St. Kits in July, meeting with the central bankers and their technologists. We're very pleased with the progress of the development.

Patrick Byrne -- Chief Executive Officer and Founder

And I love that we'll be bringing that live. It's 600,000 people, 800,000 people live in the Eastern Caribbean community. So in a community of that size, a financial system of that size before we're moving on to bigger projects.

Jonathan E. Johnson -- President of Medici Ventures

The size is great because it's relatively small, but it's also eight different countries, which makes it even better sandbox, because you're dealing with cross-border transactions within a central bank community, truly a perfect place to start.

Patrick Byrne -- Chief Executive Officer and Founder

Yes.

Jonathan E. Johnson -- President of Medici Ventures

Okay. Turning to Slide 19, for the third earnings call in a row, I'd like to highlight Voatz. Last time I suggested that next on the road map for Voatz would be more states and municipalities adopting their product and technology, so happen. The next opportunity for Voatz is right here in our own backyard, Utah County, the second largest county in Utah is piloting the Voatz's mobile voting app in its municipal primary elections in August.

Patrick Byrne -- Chief Executive Officer and Founder

This August, this month?

Jonathan E. Johnson -- President of Medici Ventures

This month. Yes. Thank you. It will offer the blockchain based voting services to active duty military, they're eligible dependents and other overseas voters. It's nice to see the steady progress that Voatz is making.

Patrick Byrne -- Chief Executive Officer and Founder

What a -- what another opportunity Americans are ready for a solution to the voting. I mean there is no who doesn't -- there is no one believes anymore, I think in [Indecipherable] the voting system as it exists.

Jonathan E. Johnson -- President of Medici Ventures

I'll just make two comments on this, Patrick. One is, I think the way to adoption is first overseas voters and that's what -- that's the thin wedge that Voatz has entered with. Next it will be disabled voters who need access under the American with Disabilities Act, then it will be voted by mail voters, and then frankly, it will be everyone who want to use this as an alternative. So I think that's how Voatz expands its footprint to be larger and larger.

I'd also mention yesterday I was reading Harvard Business Review article, which is published yesterday on how to get out the vote. And its number one thing was get out the vote should be non partisan in nature. Frankly, that's what Voatz is. It's a nonpartisan company that's helping make it easier for people to vote where it's been difficult for them to vote. Yes.

Patrick Byrne -- Chief Executive Officer and Founder

Hallelujah you, brother.

Jonathan E. Johnson -- President of Medici Ventures

Yes. Let's go to Slide 20. We've highlighted just four of our keiretsu companies. That doesn't mean that the others aren't making progress. Each is in its own pace and several are working together. For example this quarter, I was in Washington, DC, with the CEOs of GreenChain and Vincent that they presented to legislators and regulators how blockchain is being used in the supply chain area. Several of our keiretsu companies use Netkey as an identity vendor. And of course our world-class development team in Medici Ventures is working with some of our keiretsu companies to help develop products and get them into production. The symbiotic nature of the keiretsu model is really blossoming well. To quote that [Speech Overlap] Please.

Patrick Byrne -- Chief Executive Officer and Founder

[Speech Overlap] but just that. When I think of a value that maybe people on the outside don't understand having started different companies and this is such -- this has been proven to be such an accelerator, especially since Jonathan took it over, got it organized like it has been such an accelerator, the advantage to these companies for being connected within Medici. And then frankly for Medici that they'll be connected to a 1,600% tech company -- retail service stack company is letting us put distance. I had been expecting by this point others to be catching up with us in different areas and instead, it seems to me that we're putting distance between ourselves and competitors in these different companies.

Jonathan E. Johnson -- President of Medici Ventures

The benefit of Medici Ventures is being part of Overstock in the retail organization is our brother in arms of this has just been really, really important. So thanks for noting that. To close the Medici Ventures section of the presentation, let me remind our owners that 2019 continues to be the year of product in production for the Medici Ventures keiretsu companies. While we look to feel our identity pillar, it feels like our keiretsu is reaching its rightsize. Moving forward, we plan to focus on supporting the growth and development of our existing companies.

We will of course continue to keep a finger on the pulse of the industry, and to even reach out proactively on interesting opportunities. But we will only add if we find just the right addition to the family. So Patrick, with that I'll pass it back to you to discuss the retail business.

Patrick Byrne -- Chief Executive Officer and Founder

Thank you, Jonathan. Now, to Overstock Retail. Dave Nielsen, our President of Retail, take it away.

Dave Nielsen -- President, Overstock Retai

Thank you, Patrick. While we anticipated a small loss due to the weak seasonal nature of Q2, our retail business has snapped back quicker than anticipated, delivering positive adjusted EBITDA. As Patrick has mentioned on our previous earnings calls, many expected this turnaround to take years to return to profitability. We first began speaking of turning this shift three quarters ago. And as you can see from the Slide 22, we beat our estimate and delivered positive adjusted EBITDA of a positive $2 million within three quarters. This is the first positive adjusted EBITDA quarter Since Q2 2017.

Before we go any further in the financial results, I'd like to turn the time to Seth Moore, Chief Strategy Officer of Retail, to introduce you to the retail strategy and the road map we'll be focused on as we move forward. Seth?

Seth Moore -- Chief Strategy Officer

Absolutely. So on Slide 23, I'll start by saying the past few quarters, we've shared with you the progress in our financial recovery, but now we're at a point where we can share with you a deeper explanation of the strategy underlying our recoveries. Let's start the discussion with some foundational market analysis. The home furnishings industry is a $301 billion highly fragmented market. As you can see here, the top five players only make up about 35% of the market with 65% of the market residing with retailers with a 2% or less market share.

On Slide 24, you'll see that of that $301 billion market, only 19% of it is online, which as you can see on the following slide, represent significant under penetration relative to many other product categories. Taken together, this represents a significant opportunity for us. The market is fragmented, primarily because the kinds of home shopping experiences that delight one customer, may actually turn away other customers, making it difficult to consolidate wallet share across a broad range of customers.

So on slide 27, you will see in recognition of that fact, we've done some significant segmentation work across-the-home shopping market through various behavioral, attitudinal and consumption variables, and broke the market into the six specific consumer segments. We're targeting two of them through a differentiated and narrowed focus on their shopping preferences. These two segments combined to make up about 40% of the home goods market. That's roughly a $120 billion, and already have an affinity for the experience that Overstock delivers.

On the next slide, you'll see that the attributes that make Overstock a great fit for these customers are their love of deal hunting on high quality items, and the fact that they seek a balance in function, style, ease and price. They both want beautiful comfortable homes, but they're also not the type of people who you shopping for those items in their homes as a form of recreation. The friction these customers experience in finding the products they like as well as the deals they crave is what creates the dissatisfaction with incumbents in the home furnishings industry.

To satisfy them, you'll see on the next slide that we're expanding our moat around three core competencies that they already appreciate about Overstock. These competencies are more personalized relationship with the customers, a high value promotional pricing on quality home goods, that helps them feel smart about their purchases and shopping experience with easy and friction less to remove the risk required in buying in other home furnishings retailers. We have a number of metrics that we look at in order to benchmark our progress against these three competencies that I want to walk you through.

First, as you can see here we're making progress year-over-year and improving our 28 day repeat rate through our personalization efforts. We've significantly also increased our private label penetration, as a percentage of our sales. This private label program gives the customer value cues, both in terms of quality and in terms of price on our offerings, and help to differentiate the experience for the customer.

Patrick Byrne -- Chief Executive Officer and Founder

I'll point out on that. We once did have a thriving private label business over a decade ago and sort of stopped it at one point. We've just really started this again and [Indecipherable] already popped to 12%. It's been less than a year. I would imagine you will see this by accelerate -- continued to accelerate. And Dave, do you want to estimate, what you think this goes to?

Dave Nielsen -- President, Overstock Retai

We'd like to see this 50% to 60%, maybe even higher -- with 50% to 60% of our revenue.

Seth Moore -- Chief Strategy Officer

Yes. Right.

Patrick Byrne -- Chief Executive Officer and Founder

And I think that you'll see it by a year from now at 30% at something comfortable.

Seth Moore -- Chief Strategy Officer

Absolutely. On Slide 31, you'll see that our means for generating smart value for the customer come primarily through our cost reduction efforts. As was reported in recent article in Search Engine Land, in June we made another significant breakthrough in the recovery of our STO rankings. You can see that while we have made over a 100% improvement year-over-year, we still have lots of opportunity to grow just to get back to where we were in 2017.

We believe this will be a significant growth engine for us going forward and helps us control our marketing expenses, and offer more competitive pricing.

Patrick Byrne -- Chief Executive Officer and Founder

That graph, I'm going to footnote that. That graph in the upper left really tells the story of what happened in the last two years. We really thought we were skimming along two years ago, that collapse in our STO told in one graph is that graph. And it is because of JPNAP that we survived that. We -- I don't think there is -- there are other companies that have had collapses like that. We had -- and in March of 2017 was itself a little spike. We were running more like 400,000 of our different keyword we care about showing up in the top researchers and Google, that fell to 50,000. Other companies have had something like that happen, and they all went out of business. I can't think of anyone who survived. Because of JPNAP we here with us today and you'll be hearing from, we did survive that. And as you can see, we've gone from 50,000 back to 150,000. And that's so that significant progress. It's going to be -- but -- and June, we had a very nice June and Google's new algorithm rolled out in the first week of June, and we've seen that -- had a -- but it tells us we've been doing the right things and focusing on the right things in our STO efforts.

Seth Moore -- Chief Strategy Officer

Absolutely. We also made progress from a logistics standpoint as we continue the multi-year trend in driving down returns and returns cost, as well as realizing freight savings from rebalancing carrier lanes. And all of that together adds up to the improvement you see in our perceived price advantage versus other online retailers. We expect these trends to continue and have initiatives around continuing to drive these costs out of our ecosystem.

Patrick Byrne -- Chief Executive Officer and Founder

Kind of one more. This one of them lower left, and Seth was a very key part of this. The net returns costs, which is a measure of the true net economic cost to us of our returns, which is a combination of what percentage of products get return, what percentage of them can be resold versus liquidated, the cost of all the handling and sorting, and all that stuff, we come up with a true number. We have over time. I mean, here you see it this dropped 50%, that is real nickel and dime management. And that just that alone, if you know how many of those there was things like that in this Company that created a moat that makes it in my view something of value to when I look at these other companies that are much, much larger brick and mortar companies, and the value we could say theoretically bring by bringing that kind of a skill is sort of worth more than the current trading [Indecipherable] company. Go ahead.

Seth Moore -- Chief Strategy Officer

Finally, on this last slide, I think you'll see that we also continue to make significant progress in the improvement of our web site experience. We've reduced the page load times both of our mobile and desktop websites, and we've also seen significant improvement in the percentage of our products on which we can message free two-day delivery. A number we expect to continue to improve in the coming quarters as our fulfillment services offerings continue to expand. These improvements take into together are driving meaningful improvement to our net promoter score at the point of sale, which we believe is a good representation of the quality of our shopping experience.

Patrick Byrne -- Chief Executive Officer and Founder

I mean, 82, by the way -- in 82 NPS at point of sale is astronomical.

Seth Moore -- Chief Strategy Officer

Yes.

Patrick Byrne -- Chief Executive Officer and Founder

I mean there's -- if you went back 20 years ago, there were not enterprises of any kind, now we got a couple of that. [Phonetic]

Seth Moore -- Chief Strategy Officer

So -- absolutely. And we think that's really key with these customer segments that we drive the friction out of that experience, and make them comfortable with shopping with us in a way that they just aren't particularly in the legacy brick and mortar environment. So with that, I'll go ahead and kick it back to Dave to discuss the financial results of our completed initiatives as well as some of our upcoming road map

Dave Nielsen -- President, Overstock Retai

Thank you, Seth. Turning to Slide 33, if you would. We've had a focused and productive quarter. The key initiatives and product now live on our new site monetization ad tech is really spinning up nicely and creating some interest with our partners. Adoption is happening even -- happening even quicker than we expected. We've also completed all of our freight contracts as Seth just mentioned and rebalanced our freight lanes, which in turn is providing improved margins. We've continued to expand our reach of machine learning throughout our organization, an estimate we've completed approximately 40% of the needed integrations.

AS Seth just mentioned, we've spent a significant amount of energy, focusing on our target audience, defining our retail strategy and rolling it out to the entire team. Moving to Slide 34, going forward, we'll be focusing our energies around reporting our progress on the three core competencies that our customers already appreciate about Overstock. First, in building a personal relationship with each customer will focus on increasing our volume of 3D content, while expanding, as Patrick mentioned our private label program and fully integrating our CRM platform into all of our customer facing products by the end of 2020.

Next, we'll create a smart value for our customers by continuing to reduce the friction created by returns and complete the integration of our multi-carrier freight lane implementation. And finally, we'll deliver an easy and seamless shopping journey by continue to expand our number of two-day shipping products and accelerating our growth in our award winning mobile apps

As we move to Slide 35, you'll see year-over-year improvement in our gross margin coming in at 19.7% which is an 80 basis point improvement over Q2 of 2018. The primary driver behind this improvement is the rebalancing of our freight lanes by adding additional carriers to our freight mix. We're in the initial stages of this multi-carrier strategy and we'll continue to see improvement on our gross margins as we build out our freight and logistics carriers and footprint.

As I shared at the beginning of the retail segment, we're thrilled to deliver our first positive adjusted EBITDA quarter since since Q2 of 2017. Note that this number is inclusive of our allocated share of services cost of 70%. Finally, note, our year-over-year decrease in revenue of 23%. This is due to our pulling back on the marketing [Indecipherable] from a year ago. We anticipate as we move into November and December of 2019, and on to 2020, we'll deliver sustained profitable growth, as we focus on our strategy.

On Slide 36, as we continue through this transition, you can see that we improve our retail expense line and are out looking to continue that improvement throughout 2019, as we've been -- as we have additional contracts and costs that were eliminating as we move forward throughout the year. We anticipate our contribution dollars will continue to improve throughout the second half of 2019, as we execute on several of our Company initiatives, primarily driven by two that I previously mentioned, expanded site monetization via new ad tech and the rebalancing our freight contracts.

Moving to Slide 37, I'll turn it over to Patrick for a moment.

Patrick Byrne -- Chief Executive Officer and Founder

Great, thank you. So on the left, you see the graph Dave is just showing you and on the right, you see the competition. And what I'd like to call as their March to progress. It's to me, those are march to profitability. It to me is -- I mean we do not talk about the competition four years. We did not talk -- and of course I'm speaking Wayfair. It seems to me at some point silly of me like there is an elephant in the room that's not being addressed.

I view Wayfair as business by the so similar to our own, and more ways and you would probably even guess that. And then having to choose -- chosen to do this, which looks odd to me, but I know I'm old-fashioned having your your expense structure roll like that. And I know there are people who believe in that. But that -- it's such a central fact I think of the fact of the online business. That it means that it changes our strategy completely. But our strategy can be come instead of trying to bang your head against that, what's going on on the right is just to focus on the most exquisite jewel of a tech platform. And competing on that basis and we can have a multi-billion dollar Company making tens of millions of dollars a year again. And we're not going to trying to measure our self against growing 40%, but losing $180 million a quarter. So that's as clear annunciation of the -- of this -- our future strategies we can make.

Dave Nielsen -- President, Overstock Retai

And might I add to that. I'm very pleased that we're on the left side chart we sit today.

Patrick Byrne -- Chief Executive Officer and Founder

Yes.

Dave Nielsen -- President, Overstock Retai

Where we sit today. We're on a great trajectory.

Patrick Byrne -- Chief Executive Officer and Founder

Nicely done. Nicely managed, Dave.

Dave Nielsen -- President, Overstock Retai

Thank you. It's a whole team. As we turn to Slide 38, let me point out that our second quarter retail contribution was equal to our first quarter, coming in at $39 million, a $42 million improvement over second quarter of 2018. Typically our second quarter is our softest quarter of the year, which speaks to the continued recovery and positive trajectory. And finally, as we turn to Slide 39, you'll see that our current outlook is to finish the year at $167 million. This equates to an adjusted EBITDA of $17.5 million for the year and there is an increase of $2.5 million and adjusted EBITDA from our previous Q1 estimate of $15 million. We're very bullish about our retail business we like the trajectory we're on.

And with that Patrick, I'll turn it back to you.

Patrick Byrne -- Chief Executive Officer and Founder

Thank you, Dave. We won't walk through each of these again. We've -- what we're is -- we're in the business of technological disruption. We are doing it now with capital markets tZERO. I mean, that's really the main event. We think that tZERO is -- I'm not going to try to convince shareholders about whether to believe in the blockchain revolution or not. That's you do your own homework on that. But if you believe in it, you probably understand why security tokens are the killer app of that revolution. But we have a multi-year head start and building the best training system for security tokens out there. And at this point now, given just the announcements in the last few weeks, it's -- we have really crossed -- we have crossed some lines and put a lot of distance between us and competitors.

And -- OK. With that, let's move on to the questions. And the question -- we have questions for tZERO, Medici, Retail and App. tZERO, Saum, why don't we start here? The digital dividend decision was brilliant, says one flower. In simple terms, what it means to average Overstock investor, how if at all is it beneficial to tZERO? For example, it seems to us that it should drive trading volume on the ATS, which would be favorable to TDRs as the shareholder. Saum?

Saum Noursalehi -- Chief Executive Officer, tZERO

Yes. It's obviously a benefit to investors in that we're rewarding them with access to preferred share dividends for every 10 share owned on September 23, the investor gets one digital share of Overstock, which is all tradable on our -- on the tZERO ATS. How is this beneficial to tZERO, we talked about it earlier, but it brings 40,000 to 50,000 customers to the platform. So getting that initial adoption, which is key as well as bringing other broker dealers to the table that we wanted to plug into the security token ecosystem.

Patrick Byrne -- Chief Executive Officer and Founder

Okay. Saum, you wrote action letter to token holders; when should token holders expect the next?

Saum Noursalehi -- Chief Executive Officer, tZERO

We are thinking on a quarterly basis, but if they're helpful we can do a more frequently, but perhaps even monthly.

Patrick Byrne -- Chief Executive Officer and Founder

Okay. How is the digital crypto wallet app performing? How many downloads and assets in size?

Saum Noursalehi -- Chief Executive Officer, tZERO

So we've had 1,000 of downloads and I think we have like $100,000 in assets right now, and that's with no marketing. We plan to start doing some marketing in the coming weeks, so in the next one to two weeks you'll see us start to market through kind of -- on the digital side on Google and on Facebook.

Jonathan E. Johnson -- President of Medici Ventures

And I would add to that that there is a ramp up period to getting assets and based on KYC laws and everything, make sure that people aren't hiding money in those accounts. So that will continue to grow.

Saum Noursalehi -- Chief Executive Officer, tZERO

Yes.

Patrick Byrne -- Chief Executive Officer and Founder

Saum, you made a number of significant additions to management. Who are the new people, what are the roles? And when do you think it will -- they will result in actual increased revenue?

Saum Noursalehi -- Chief Executive Officer, tZERO

Yes. We talked about Brooke, who is Head of issuance. She is over kind of business development, so is a very direct line to revenues and getting new tokens into the platform. She is already improving our processes there and helping the areas of focus in our prospecting. So I expect in the next quarter that she will help drive revenues to the business. And then we have -- we talked about Mike [Indecipherable] and Alexandra who is Head of Communications. And I think you're already seeing them, they're helping more in an indirect way, but you've seen communication kind of go up and volume coming from tZERO, not only is that due to execution, but they've been great in getting the word out. And so I think they'are actually contributing to the increases that you've seen in our token price.

Patrick Byrne -- Chief Executive Officer and Founder

In general Saum, somebody asked, investors we have spoken to have referred year products as taking a lot longer than expected to generate revenue. Would you agree with that assertion, why or why not?

Saum Noursalehi -- Chief Executive Officer, tZERO

I do not agree with that. This is a completely new alternative to how capital markets work today and that takes time. And so we're starting to see revenues come in from the blockchain side of the business, but we -- I mean, we just got the platform live at the end of January. And so, we're seeing steady increases in revenues from the ATS and crypto, and we expect that to continue.

Patrick Byrne -- Chief Executive Officer and Founder

May I add that I think that's an absurd question. This guy is inventing a parallel universe based and blockchain to our national capital market, and better than it. And I think it's an absurd assertion. Okay. What day will be tZERO token be open for trading on the ATS on for all investors, not just the credit?

Saum Noursalehi -- Chief Executive Officer, tZERO

We're targeting August 12.

Patrick Byrne -- Chief Executive Officer and Founder

Okay. Next set of questions. Any update on timing for Boston exchange JV and SEC regulatory approval?

Saum Noursalehi -- Chief Executive Officer, tZERO

It's hard to estimate, but we're shooting for end of the year -- this year or early 2020.

Patrick Byrne -- Chief Executive Officer and Founder

Any update on your pipeline and new potential security offerings to trade on tZERO?

Saum Noursalehi -- Chief Executive Officer, tZERO

Nothing we want to publicly share, but we have a pipeline of about 200 companies. And we're focused on the top 5% of that, so 10 companies that are issuance team is working with.

Patrick Byrne -- Chief Executive Officer and Founder

We have another. I know that there is some very interesting ones in the pipeline.

Saum Noursalehi -- Chief Executive Officer, tZERO

Yes.

Patrick Byrne -- Chief Executive Officer and Founder

tZERO will likely need funding soon. What is the plan for this?

Saum Noursalehi -- Chief Executive Officer, tZERO

I'm actually not terribly worried about this. Overstock and Medici are committed to funding tZERO. And so the team would actually like to execute a bit more and start generating more meaningful revenues before we raise capital. All that said, we are working to raise money, and Jonathan is working closely with Makara, as he mentioned.

Patrick Byrne -- Chief Executive Officer and Founder

Jonathan?

Jonathan E. Johnson -- President of Medici Ventures

Yes. As I mentioned in the call, Makara has taken the proposal to its investment committee or is taking it to its investment committee, we'll move forward. But absent that, Medici and Overstock continue to see tZERO is the crown jewel, something that will be funded by us as long as needed.

Saum Noursalehi -- Chief Executive Officer, tZERO

Right.

Patrick Byrne -- Chief Executive Officer and Founder

Next, when will tZERO get a New York crypto license, and what steps are being taken?

Saum Noursalehi -- Chief Executive Officer, tZERO

Yes. The New York bit license is challenging to get. We are working on it and we are hopeful we'll get in the next six months.

Patrick Byrne -- Chief Executive Officer and Founder

Okay. What is the marketing strategy for the tZERO app? Overstock customers don't seem like the -- likely the target market?

Saum Noursalehi -- Chief Executive Officer, tZERO

Yes. The traditional customers for crypto and we had an analysis done by on analyst is high income men between the age of 30 and 40. But we think that mark -- this market is evolving and coin more and more is understood. So we want to test audiences and see where it resonates. Overstock does have some customers that we think have an overlap and so we're going to kind of test broadly and identify the groups where it really resonates.

Patrick Byrne -- Chief Executive Officer and Founder

Thank you. Thank you, Saum, excellent work on tZERO. And again where people us may not understand where there may be hidden value is the distance some has with security tokens. If you believe in that field, what tZERO has done and has built in the last 15 months, and is now -- has been bringing to market in recent weeks is I think puts us way ahead of the competition.

Next, let's go to Medici. Jonathan, you want to address these questions?

Jonathan E. Johnson -- President of Medici Ventures

Sure.

Patrick Byrne -- Chief Executive Officer and Founder

Okay. Facebook, -- this also from Tom Forte from D.A. Davidson. Facebook seems to be interested in creating a cryptocurrency to us to be an enormous validation of your multi-year investment spending on blockchain. Would you agree with that?

Jonathan E. Johnson -- President of Medici Ventures

Yes. And what I think any time household names get involved in anything blockchain it's good for what we're doing in Medici Ventures. So whether it's Facebook coming out with its Libra cryptocurrency or Walmart, which recently received a patent for its own private cryptocurrency, all of these things seem to normalized and mainstreamed something is we've understood for years now. And I do think it -- is a validation of what we're working on.

Patrick Byrne -- Chief Executive Officer and Founder

Are there opportunities for you, Tom asked, for you to work with Facebook to advance that company's efforts?

Jonathan E. Johnson -- President of Medici Ventures

Again yes, we have had some initial discussions, even before Libra was announced with -- by Facebook. And we'll continue to advance those discussions, both at the Medici level and sometimes at the to the keiretsu company level. We know that some of our companies have reached out are trying to work with Facebook on this area

Patrick Byrne -- Chief Executive Officer and Founder

Why not do STOs -- security token offerings for more or all of your investments such as Medici Land Governace, Bitt and Voatz?

Jonathan E. Johnson -- President of Medici Ventures

So that's a great question, Tom. Many of the keiretsu companies are interested in doing security token offerings on the tZERO platform. But I would say, as with all equity raises, the timing has to be right for this specific company. And just because it hasn't happened already, don't assume it won't.

Patrick Byrne -- Chief Executive Officer and Founder

Let me footnote that if I may. I love that idea. And you've named companies that I think would be perfect. Well, they need a few more months or a few more quarters, some revenue, but they would be perfect for Reg A or Reg A plus or even small Reg A offerings. And I would like tZERO to be -- that's an market that I think tZERO should be in. And it would be great for America if we could tokenize the Reg A and Reg A plus offerings. So I -- my hope is that you -- as this keiretsu emerges, one of the things that will happen as you will see some of these portfolio companies doing small offerings on tZERO. And in the process we'll figure out the right way to do Reg offerings and security tokens. So one hand washes the other.

Okay. Going on to Allen Klee of Maxim. Could you update on Medici Land Governace? The status of the capital Zambia, potential contract and what it could represent dollar wise?

Jonathan E. Johnson -- President of Medici Ventures

So we talked about this in the presentation. Zambia is a big deal. The -- it's gone from 50,000 title pilot program to much larger paid program. We're not talking about the dollars here, but as Patrick frequently says, MLG is among one of the portfolio companies, where big numbers are batted around.

Patrick Byrne -- Chief Executive Officer and Founder

Yes. The three companies where you hear the word trillions is when you talk about T one [Phonetic] -- people within tZERO, Medici Land Governace, and Bitt. The addressable markets there are use the word trillions a lot. Okay.

Okay. What are the opportunities in voting, Jonathan?

Jonathan E. Johnson -- President of Medici Ventures

As I talked about in the presentation, I think the way that offered -- the way the voting is going to expand is first is an alternative for overseas voters ,then disabled voters, then absentee voters, and then all voters. This is going to be iterative expansion, but it's an expansion process that makes sense.

Patrick Byrne -- Chief Executive Officer and Founder

And that's -- really when that's addressing U.S. voting. People -- countries that are talking to us about Jonathan's GaaS product, Government-as-a-Service, one of the things they bring up, or one of the first layers that they want, and I'm thinking one country in particular, is that we would get voting in that country on the Voatz.

Jonathan E. Johnson -- President of Medici Ventures

So I would say, I saw an email just this morning from a premier of a country that we're talking to, to his voting minister copying me and the CEO of Voatz, asking the premier to get on. This is something we wanted [Speech Overlap]

Patrick Byrne -- Chief Executive Officer and Founder

Yes. The premier asking the minister.

Jonathan E. Johnson -- President of Medici Ventures

[Speech Overlap] he Minister to get on it. This is something we want to do quickly. So I think the United States, the process is, as I have described, I think it's countries elsewhere, the process could jump to the fourth step immediately.

Patrick Byrne -- Chief Executive Officer and Founder

Yes. Okay. Overall, how do you think about how much you willing to post his losses in Medici, Jonathan? If you got wins in Medici, does this mean the overall segment losses will go down or will there just be more spending on other investments?

Jonathan E. Johnson -- President of Medici Ventures

So let me begin by saying Medici is -- Medici Ventures is an incubator, and it will take time for each of the keiretsu companies to get ramped up. We're more pleased with how quickly some are ramping up than others, but that of course is to be expected. As tZERO and MLG ramp up to profitability, Medici Ventures losses will be significantly reduced. We like the -- we'd like to be operating at a place in the next year or so where retail profits are more than able to fund Medici Ventures' operating outlays. As I mentioned during the call, we're slowing down our search for companies to add to our keiretsu.

Patrick Byrne -- Chief Executive Officer and Founder

Well said. Thank you, Jonathan on Medici. And beautiful work both of you fellows in tZERO and in taking -- pulling Medici together as an organization.

Turning now to retail, some questions. I am going to farm these out to different people. Dave, to what specifically do you attribute the turnaround in your retail business, including the return to free cash flow generation, what gives you confidence in the sustainable?

Dave Nielsen -- President, Overstock Retai

Okay. Thank you, Tom. Patrick, as you know, we've made some tough decisions in rightsizing our expense structure. We also have backed off of the aggressive after burner marketing spend that you've mentioned on a few calls -- a few of the previous calls. We've returned to our strategy of sustainable profitable growth. So that ex chart that I talked about with expenses and contribution being put in line, that's been some tough decisions, some -- and returning to our strategy of profitable growth -- sustainable profitable growth, I emphasize that.

Regarding the confidence and sustainability, as Seth discussed earlier, this $301 billion home furnishings market is fragmented, and the largest retailer is only 11% with 60% plus of the market share being owned by people with 2% or less. By narrowing our focus and our innovation and focusing on our key customer segments, increasing the use of AI and machine learning across the enterprise, improving our logistics and operations effectiveness, and staying disciplined to our expenses, we see no reason we can't say it's sustainable.

Patrick Byrne -- Chief Executive Officer and Founder

Thank you. Seth, what do think stand on our SEO efforts, and shareholders heard Google made changes to its algorithm, this year and have that once again hurt some retailers come in?

Seth Moore -- Chief Strategy Officer

Yes. They did make some big updates in June. But as we showed you on the chart earlier, I think in short, it's been a fairly productive month for us. I think we've seen more value from our SEO program. We're now up more than 100% year-over-year in terms of our ranking in the top 3, and saw a significant uptick in June, and we're really pleased that the improvements we're making to our site experience are being recognized and awarded by Groupon.

Patrick Byrne -- Chief Executive Officer and Founder

Thank you. Next question. Sounds like you have an FCA executive involved in retail efforts. What is the exact doing as it looks like FC is currently doing well? Dave, wanted you take that.

Dave Nielsen -- President, Overstock Retai

Thank you. Yes, we do. We're thrilled to have Kamelia Aryafar here with this, the PhD in machine learning and data science. She is our Chief Algorithms Officer. She is leading the teams that are implementing AI, machine learning and real-time data access, search [Indecipherable] and personalization across the retail enterprise, just to name a couple of things she is working on.

We believe -- as Seth talked about our customer strategy, we believe it's data driven personalized approach that Kamelia can bring to the table, we can take Overstock to new levels.

Patrick Byrne -- Chief Executive Officer and Founder

Yes. And I think we even said in our last quarterly call, that we've probably taken machine learning to by 25% of where we plan on taking it. We're up to about 40% now, hope to get to get this 70% by the end of the year take. I think you said earlier in the call to the end of next year to really do a 100%.

Dave Nielsen -- President, Overstock Retai

We get to a 100%.

Patrick Byrne -- Chief Executive Officer and Founder

That's Kamelia, what -- that's the answer what she has helped brought us. As well as really shrewd business savviness. So speaking of Kamelia, I've got a question for you. Club O, you announced some changes to the effort after quarter end such as price matching. How should investors think about those efforts impacting Club O? Kamelia?

Kamelia Aryafar -- Chief Algorithms Officer

Hi, Patrick. We are continually seeking new benefits that will reward our current loyal members, and drive additional new customers to become loyal. We expect these new benefits to helping through our overall sign up and retention rates. Price much guarantee ensures that our Club O members have a fearless shopping experience with Overstock. We believe benefits like this will encourage our members to engage with Overstock more frequently and more confidently.

Patrick Byrne -- Chief Executive Officer and Founder

Thank you. Welcome. This is your first time speaking in earnings call. Welcome.

Okay. Next, Prime Day. This is for JP. Were your sales helped or hurt by Amazon's Prime's two day sales event? JP, none? [Phonetic]

John Paul -- Chief Marketing Officer

Well, Patrick, I first want to thank you for your kind words earlier about the seeing through the SEO slide. I think the team's nature is oftentimes seen when the way we rally to a challenge. And the fact that we're reporting positive adjusted EBITDA, when our most lucrative channel is only partially recovered with potential upside is a testament what's the team has done the last year.

On Prime Day, we saw a positive impact. As Seth talked to the fact that our prices have amazing perception of how good they are, because they are great. And so when a competitor creates a lot of traffic and pull it online, we see much of that traffic come over to Overstock, see our great home prices and purchase here. So we tend to get positive impact when a competitor does a major event.

Patrick Byrne -- Chief Executive Officer and Founder

Thank you. Well said. And -- well said. Dave, talk just about logistics. What percent of merchandise do you sell and deliver to customers on a two-day basis? And how has that changed over time?

Dave Nielsen -- President, Overstock Retai

Thank you, Patrick. As such, showed on the previous slide, we've grown our deliveries to 22% within two days. We expect that to grow. We anticipate over the next two years to get that to roughly 60% of our business. And we have many initiatives with a Supplier Oasis Fulfillment Services, our SOFS program is you'll hear us frequently refer to that technology. It allows our partners to put their products pre-positioned in warehouses closer to the customers and we are undergoing that initiative as we speak.

Patrick Byrne -- Chief Executive Officer and Founder

I'm going to footnote that. We build some years ago, if you go back in the earnings call transcripts, you will hear -- you will see our discussions of SOFS. We spent $30 million more building in agile lean supply chain that would lead us manage inventory and in a 1,000 warehouses. That is a key part of increasing the percentage of SKUs that show on a to-day basis. We know what that does for us. And the -- how much it increases the likelihood of a product selling by being able to say, we will deliver this within two days due. Taking that number from 22% to 60% over a couple of years just that alone taking the -- that itself drop will drive a -- an acceptable -- not an overwhelming, but a very acceptable sales rate alone, just that technological innovation. And -- so -- OK.

Moving on, Dave, to what extent is your legacy home e-commerce business affected by tariffs, including the latest round that was announced 10% on everything else Made in China?

Dave Nielsen -- President, Overstock Retai

Yes. The most recent round of tariffs, the announcement last week of the 10% was primarily on goods of clothing, toys and footwear, non-material really to our business at this point in home furnishings. However, earlier in the year, back in May, we did reduce our outlook, our bottom line by about $1 million because of the tariff rates from a 10% to 25% on those goods that hit directly in the heart of home furnishings.

Patrick Byrne -- Chief Executive Officer and Founder

The next question is for me. What do I think of the current trade war, and what I view on the end game. First of all, practically every economist for 200 years has believed in free trade. I am going to shock people by -- well, certainly the doctrine that is informing the decision on this in Washington are really not about economics, they're about national security. There's a book called Mike -- called out The 100 Year Marathon by Michael Pillsbury, that is really the doctrine that is informing this administration. He has a protege, so to speak, Peter Navarro, who is the trade guy. But if you really want to understand the thinking that is informing this all, just read Michael Pillsbury, The 100 Year Marathon.

So they see this in terms of national security. And the thesis is that China in 1949 started on a 100 year marathon to take the U.S. down. And they're basically 67 years into it, they were when the book was written, but they're about 20 years ahead of schedule. That's the thesis of the book. And I think that's really what's informing the hardline trade policy.

What do I think? I think that the right solution is something Buffett put out 20 years ago that I wish people paid more attention to because he is sees -- saw free trade and imposing a cost is a way for us to currently led better and get Nike sneaker -- well, I should say brand. But to get sneakers as such that we trade a little pieces paper for and it's our children and grandchildren have to honor those little of piece of paper. So it was a way of us living higher on the hog and taking things away from our grandchildren is what he -- and so anyway I wish people would look up hit the proposal he made 20 years ago.

Okay. Next question, we'll give this to Seth. eBay has indicated that the new online sales tax laws following the Supreme Court's ruling last year have hurt U.S. sales by more than 100 bps. Other e-commerce companies such as FC have referred to it as a headwind. What impact that is having on our e-commerce business?

Seth Moore -- Chief Strategy Officer

Yes. So I would say in terms of our e-commerce business, there are benefits and detriments from the change in policy. The detriments are clear collecting sales tax in every state has its cost. The benefit is we do not operate physically in a number of states because of that policy. And so we've gained access to those states. We've opened some additional programs that have largely offset I think the cost to us. And that was really Overstock's push all along is we wanted a level playing field with the uniform set of standards that was easy to comply with in terms of sales tax.

Some of the platforms you mentioned that don't really operate as retailers, but rather as platforms already operated in the number of those states, but their sellers did not. And so I think our situation is somewhat differentiated from eBay in that sense.

Jonathan E. Johnson -- President of Medici Ventures

Patrick, may I comment on this?

Patrick Byrne -- Chief Executive Officer and Founder

Sure. Please do.

Jonathan E. Johnson -- President of Medici Ventures

So because Overstock was the tip of the spear in this fight, we were I think more prepared and better positioned for the Supreme Court's ruling in way fair. And we were able to act quickly and nimbly so that we really didn't slip a stitch at all. And while this may have hurt and still be hurting other competitors, not so for us.

Seth Moore -- Chief Strategy Officer

Right.

Patrick Byrne -- Chief Executive Officer and Founder

Okay. Two more questions. Thank you, Jonathan. Two more questions in the other category. One you stay around and answer these, Jonathan. One of them is that the SEC investigation has been dragging on and acts as a cloud hovering over the company. Have you asked the SEC to provide guidance as to when this man Jonathan who is recovering attorney used to be General Counsel before you trade it off? [Speech Overlap]

Jonathan E. Johnson -- President of Medici Ventures

Thank you for that introduction. I'll be pleased to answer your question. Yes. We regularly meet with the SEC. And I have personally met with the SEC Enforcement Team. The answer to your question is, yes, but the SEC as good as it is an engaging in regular dialog with us will not put a shot clock on itself. So we are working to get an answer. We're in regular dialog, but the SEC won't say one.

Patrick Byrne -- Chief Executive Officer and Founder

We did announce this SEC as latest series of interactions with the SEC last March 1. I will point out that we complied with an enormous document request. And I think we spent $10 million to $13 million or something . So the shareholders can know that we understand that we want to accelerate this process and we have done our part and have been extraordinarily responsive in everything that they've asked for. Glen, General Counsel, would you?

Jonathan E. Johnson -- President of Medici Ventures

Let me just also just comment on that, Patrick. The fact that we are in regular weekly dialog with the SEC is -- it's not unprecedented, highly unusual. So our cooperation with the SEC is appreciated and I think moving this faster than even slower process would be. Glen?

E. Glen Nickle -- General Counsel

Yes. I would echo Jonathan's comments that we have been as cooperatively as -- or as cooperatively -- are cooperative as possible during this, and continue to work with the SEC on this matter.

Patrick Byrne -- Chief Executive Officer and Founder

I think the SEC should put -- we should give them an office within tZERO. They have spent so much of the last two years there -- three years. We've had the six month investigation, a year of investigation -- well, investigations aren't the right word, but OK.

E. Glen Nickle -- General Counsel

Yes. That's the next step.

Patrick Byrne -- Chief Executive Officer and Founder

Okay. That would be the next. But we are being extremely cooperative. And last question. I'm obviously concerned about the share price, and I don't think that reflects the value of the underlying assets. What is the management or Board planning to do about this? Jonathan?

Jonathan E. Johnson -- President of Medici Ventures

So management is focused on running the business the best it can for long-term value like we always are. I would say this, if shareholders are concerned about the share price and it being subject to manipulation, and I will note I've seen that we've again shown up -- Overstock has again shown up from time to time on the regulation through show securities threshold list. Those shareholders should contact the SEC and ask the SEC what it's doing to protect them against market manipulation.

Patrick Byrne -- Chief Executive Officer and Founder

Jonathan, thank you for that answer. I would add to that, if you are contacting the SEC shareholders, let them know how much you like the dividend idea and how much you look forward to receiving that dividend.

So with that said, we have a tremendous network of ecosystem of companies emerging here. If you go back to the transcript of this call, you'll note all these places that these companies are starting to cooperate with each other and help each other. We think we are -- we have crossed a strategically important line so that we're back to where the retail business we think in over the future it's cash generation should support the the block chain businesses, as well as return to being one they few profitable -- actually profitable e-commerce companies on the Internet. And we're just going to keep on focusing on developing that the retail company has this exquisite jewel of a tech platform that -- so that -- that's, -- its future. And meanwhile the blockchain companies are at the very leading edge of the biggest ideas in the blockchain revolution.

So everyone, thanks for joining. Talk to you in a few months .

Operator -- Chief Executive Officer and Founder

[Operator Closing Remarks]

Questions and Answers:

Duration: 70 minutes

Call participants:

Gregory J. Iverson -- Chief Financial Officer

Patrick Byrne -- Chief Executive Officer and Founder

Jonathan E. Johnson -- President of Medici Ventures

Saum Noursalehi -- Chief Executive Officer, tZERO

Unidentified Speaker

Dave Nielsen -- President, Overstock Retai

Seth Moore -- Chief Strategy Officer

Kamelia Aryafar -- Chief Algorithms Officer

John Paul -- Chief Marketing Officer

E. Glen Nickle -- General Counsel

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