Hello, and welcome to the 2021 Annual Meeting of Stockholders for Overstock dotcom. Please note that today's meeting is being recorded. During the meeting, we'll have a question and answer session. You can submit questions or comments at any time by clicking on the message icon. It is now my pleasure to turn today's meeting over to Alison Abraham, Chairwoman of the Board of Directors of Overstock dotcom.
Ms. Abraham, the floor is yours.
Great. Thank you so much. Good afternoon. I'm Alison Abraham, the Chairwoman of the Board of Directors of Overstock dotcom. At the request of our CEO, Jonathan Johnson and the Board of Directors, I will serve as the Chair of today's meeting.
On behalf of the Board of Directors and the management of Overstock.com, I welcome you to the 2021 Annual Meeting of Stockholders of Overstock. We appreciate your attendance at today's virtual meeting. It is now 1 o'clock Mountain Time on May 13, 2021, and in accordance with the notice of the meeting, I call the Annual Meeting of the Stockholders to order, and I declare the polls open for the matters to be voted on by the company's shareholders at today's virtual meeting. For those viewing our live virtual meeting today, on the screen is an agenda for the meeting that will follow. As noted, we will provide an opportunity for questions and discussion after the meeting been formally adjourned.
Although we will not address questions until the end of the meeting, we are accepting questions now and encourage you to type your questions in early. You can submit your questions through the live virtual portal by clicking on the message icon. First, I'd like to introduce our Board of Directors. Their pictures are on the screen. Jonathan Johnson.
Jonathan is our Chief Executive Officer and has been a member of the Board of Directors since 2013. Barclay Corpus, Clay is an independent Director and he's Chair of the Compensation Committee and a member of the Nominating and Corporate Governance Committee. He's been a Director since 2007. Joseph Tobacco, Jr. Joe is an Independent Director and he's the Chair of the Nominating and Corporate Governance Committee and a member of the Comp Committee.
Joe has been a Director since 2007. Robert Shapiro, Rob is an independent Director and he is a member of the Audit Committee and he became a Director in February 2020. William Sneddell, Jr. William is an independent Director and he's a member of the Audit Committee and he became a Director in June 2020. Barbara Messing, she's an independent director and she's a member of the nominating and corporate governance Committee and a member of the Compensation Committee.
She became a Director last August 2020. And as I mentioned, my name is Allison Abraham. I've been a Director since 2002 and I'm currently Chair of the Audit Committee. Now I'd like to introduce you to our executive team. Jonathan Johnson, our Chief Executive Officer and member of the Board Dave Nielsen, President Mark Baker, Chief Product Officer Christa Dalton, Chief Customer Officer Ron Hilton, Chief Merchandising and Operations Officer Adrian Lee, our Chief Financial Officer Carter Lee, our Chief Administrative Officer Officer Glenn Niccol, Chief Legal Officer and Corporate Secretary Elizabeth Solomon, our Chief Marketing We have an excellent team of executives in place.
With us today, we also have the following: Eric Denning of KPMG, the company's independent auditor. If questions arise during the discussion period that our auditor should address, Mr. Denning will respond. As well, Doug Ives, who is the Assistant Vice President for our transfer agent, Computershare, is serving as the Inspector of the Elections. Mr.
Ives has taken the oath of Inspector for the Elections prior to this meeting. Glenn Niccol, our Chief Legal Officer and Corporate Secretary is serving as Secretary of this meeting. He will now provide a caution about forward looking statements that may be made during today's meeting and will then provide a report on the mailing of the notice of this meeting and the presence of a quorum. Glenn?
As we share information today to help you better understand our business, it is important to note that we may make statements in the course of this meeting that state our intentions, hopes, beliefs, expectations or predictions of the future. These and all other statements except for statements of historical fact constitute forward looking statements for could differ materially from those projected in any forward looking statements that may be made. We disclaim any intention or obligation to revise any forward looking statements except as required by law. Additional information concerning factors that could cause actual results to differ materially from those contemplated by our forward looking statements is contained in documents we file with the SEC, including, but not limited to, our most recent reports on Form 10 ks, 10 Q and 8 ks. In particular, please refer to the risk factors described in our Form 10 ks for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission on February 26, 2021, in our Form 10 Q for the quarter ended March 31, 2021, which was filed with the Securities and Exchange Commission on May 6, 2021, and in our subsequent filings with the Securities and Exchange Commission.
We are holding this meeting pursuant to the notice of the meeting dated March 25, 2021, which was distributed to shareholders on or about March 29, 2021. A copy of an affidavit of distribution will be included with the minutes of this meeting. All shareholders of record at the close of business on March 15, 2021 are entitled to vote at this meeting. A list of shareholders entitled to vote has been available at overstock.com's headquarters for more than the past 10 days and is available at this meeting for examination by any shareholder through the online virtual meeting portal. We will file all documents concerning the meeting and the notice of the meeting with the records of the meeting.
The count of shares present immediately prior to the commencement of the meeting indicated that 37,344,948 shares of the company's voting shares were present in person or by proxy. This is about 78.5 percent of the total outstanding voting shares of the company as of the record date, which exceeds the percentage required to establish a quorum.
Thank you, Glenn. I declare a quorum present at this meeting and that this meeting is duly convened. The Board of Directors thanks all shareholders who return their proxies. Shareholders who return their proxies authorize the person named in the proxy card to vote on all proposals coming before this meeting. Shareholders are also able to vote their shares during this virtual meeting through the live virtual meeting portal in accordance with the voting instructions we provided in the notice we sent to our shareholders.
We will now turn to the proposals to be voted on. Barb?
The first matter for shareholder action is proposal number 1, the election of Jonathan E. Johnson III and Barclay S. Corbus. The Nominating Corporate Governance Committee with Clay Corbus abstaining nominated Jonathan Johnson and Clay Corbus for election as directors of Overstock.com. They each serve a term expiring on the date of the 2024 Annual Meeting of Overstock.com or until a successor is duly elected and qualified.
The Board has endorsed the committee's recommendation, and I am pleased to present the nomination and move for the reelection of the nominees to the Board of Directors. Is there a second to the motion?
This is Joe Tabacco. I second the proposal.
Thank you, Joe. With no other nominations coming before the shareholders in accordance with the company's bylaws, I declare the nominations closed. I suggest that those shareholders voting through the online virtual portal vote now. We will count the votes after we've completed all matters on the agenda. The second matter to be submitted to the shareholders for action is proposal number 2, the ratification of the appointment by the Audit Committee of the Board of Directors of KPMG LLP as the company's independent registered public accounting firm for the year ending December 31, 2021.
I'd like to call on William Knowles as a member of the Audit Committee for the recommendation of the Audit Committee and the Board of Directors in this regard. William?
Thank you. The Audit Committee has a responsibility for selecting the auditors for the company. The Audit Committee has unanimously selected KPMG LLP as the company's independent registered public accounting firm for 2021. I move for the ratification of the appointment of KPMG LLP as the company's independent registered public accounting firm for 2021 as described in the proxy statement.
Thanks, William. You've heard the motion. Is there a second?
Yes, Allison. This is Clay Corbis. I second the proposal.
Thank you, Clay. I suggest that those shareholders voting on the online virtual meeting portal vote now. The 3rd matter to be submitted to the shareholders for action is proposal number 3, the approval of the adoption of the Overstock.com, Inc. 2021 employee stock purchase plan. I'd like to call on Rob Shapiro for the recommendation of the Board of Directors in this regard.
Rob?
Thank you, Alison. This is Rob Shapiro. Our Board of Directors unanimously approved the adoption of the overstock.com2021 employee stock purchase plan on February 4, 2021, subject to the further approval of our stockholders at this meeting. I move for our shareholders to approve the 20 21 employee stock purchase plan as described in the proxy statement.
Thank you, Rob. You've heard a motion. Is there a second?
Yes, Allison. This is Clay Corbusken. I second the proposal.
Thanks, Clay. I suggest our shareholders voting on the online virtual meeting portal vote now. Okay. There being no further voting to be done, I declare the polls closed. I'll now ask that the secretary of the meeting report the preliminary results of the voting.
Glenn? The Inspector of Elections has provided a preliminary tabulation of votes. And based on the preliminary tabulation and reports, we confirm on a preliminary basis as follows. 1st, the holders of a plurality of the voting shares represented this meeting have voted for the election of both Jonathan E. Johnson III and Barclay F.
Corbus as named in the proxy statement for terms expiring on the date of the annual meeting in 2024 or until a successor is duly elected and qualified. 2nd, the holders of majority of the voting shares of the company represented at this meeting and voting on the matter, which shares affirmatively also constitute at least a majority of the required quorum, have voted in favor of the ratification of the appointment of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2021. 3rd, the holders of a majority of the voting shares represented at this meeting have voted for the adoption of the Overstock.com2021 employee stock purchase
plan. Thanks, Gwen. Subject to the final tabulation of the votes, I declare that the shareholders of Overstock.com have duly elected both nominees for Director, Jonathan E. Johnson III and Barclay F. Corbus, as named in the proxy statement.
I'm also pleased to announce that shareholders have duly ratified the appointment of KPMG LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2021. Finally, I'm also pleased to announce that the shareholders have voted to approve the Overstock.com, Inc. 2021 employee stock purchase plan. On behalf of the entire Board, I thank the shareholders for their support. We will provide final results of the votes in the form of an 8 ks, which we will file with the SEC within 4 business days.
There being no other official business, this concludes the 2021 Annual Meeting of Shareholders. Again, thank you for all who attended our virtual meeting. This meeting is now adjourned. Now we come to the part of our agenda for providing a discussion about our current state of our business as well as a question and answer period. If you have any questions you would like answered during today's meeting, please type them in.
I'd like to now turn this time over to our CEO, Jonathan Johnson.
Thank you, Allison. It's good to have that meeting behind us. It means another year has passed. And it's great to be with our shareholders today. It has been quite a year since we last met.
And when I say that, I mean it has been a great year for Overstock, one of sustainable, profitable market share growth. Let me start with a few recent corporate updates. Slide 9, please. On January 25, we entered a strategic partnership with Pellion Venture Partners for oversight of our Medici Ventures portfolio. We closed that transaction on April 23 in less than 3 months, quicker than expected.
This should be yet another clear indication of what the new overstock has been about for the last 18 months, execution. We do what we say we will do and in this case, ahead of schedule. Overstock is now a passive limited partner and a fund controlling the Medici Ventures portfolio. Talion has oversight of the fund, including sole authority and responsibility regarding investment decisions and in exercising all shareholder rights Medici Ventures holds in the portfolio of companies. It's great to have this transaction closed.
It allows Pellion to focus on the Medici Ventures portfolio and it allows Overstock to focus on our core furniture and home furnishings business. I think there is real upside for Overstock. And I look forward to seeing where Pellaeon takes them. After the announcement of the Pellaeon transaction, we asked for and received free clearance from the SEC to deconsolidate Medici Ventures from Overstock's financial results. You saw some of that in our Q1 filings and you'll see it going forward as we file our quarterly statements with the SEC.
Overstock continues to work well on our remote first arrangement. The team is working hard and the business is running well. We are in no urgent rush to get back to the office. In fact, we've postponed our return to the office to no sooner than next January. We want to better understand how to best structure our work model going forward, learning from others, both their successes and their failures.
We remain committed to ensuring the safety of our employees and the continuity of our business operations. Slide 10, please. Overstock is now a top four brand in the large and growing U. S. Online furniture and home furnishing markets.
We've moved up from the number 5 spot. Our goal, of course, is to continue to move up the ranks. Let me note 3 things happening in this market. First, it is growing and now estimated at $325,000,000,000 up from $300,000,000,000 last year, and that's just in the United States. 2nd, it appears a true secular shift in consumer behavior is underway and sticking.
Market data shows online penetration of the category, which peaked at 42% at the height of the shutdown last year, settling around 35% toward the end of 20 20, where we feel like it is now stabilized. I think this shift in consumer behavior will continue to grow. Customers have become accustomed to buying home furnishings online, just like they did with so many other products in the past. Macroeconomic trends are good for the furniture and home furnishing market. We see positive GDP, shrinking unemployment, economic growth, record housing starts as housing starts surged in March, growing 37% versus March 2020 to the highest level since June of 2006, exceeding economics forecast.
And there is the lasting shift of the great reshuffling as the American workforce permanently migrates from cities to suburbs, one of the impactful themes to come out of the pandemic. As we look forward, we don't think it's a question of whether consumers will buy furniture on home furnishings. We think it's a question of where, online or in store. And we think consumers will increasingly opt for the selection, value and convenience of buying online. And we think that means overstock.
Slide 11, please. We have strategically and purposefully differentiated ourselves from our competitors to attract customers and capture market share. We are not trying to be all things to all people. Instead, we offer a value proposition that resonates with a a particular subset of the market. This differentiation is twofold.
1st, we specialize in furniture and home furnishings. We are not a mass merchandiser and we are increasingly leaning into home. 2nd, we focus on providing smart value, which means offering great products at great prices. Importantly, we are not an everyday low price leader. Our model is promotionally driven because it resonates with our target customers.
Our goal is to win on price post promotion. These differentiators place us in our own unique quadrant within the competitive landscape. While you see one other player is in our quadrant, that player does not focus on the same customer segments, offer the same quality of goods for the price nor focus on being a pure play online retailer. There is a lot of white space in our quadrant and that white space is overstocks. Slide 12, please.
This slide shows the 2 customer segments that naturally have the highest propensity to shop with Overstock. They are who we focus on serving. These two segments represent 40% or about $130,000,000,000 of the large and growing home furnishings market. Our primary customer segment, the Savvy Shopper, loves the deal. She wants to feel like she's winning.
Our promotional model is critically important to her. Our secondary segment, the reluctant refresher, wants an easy and hassle free experience. Our brand pillars of product findability and easy delivery and support are critically important to her. We continue to focus on improving the customer experience for these two segments and refining our targeting and retention efforts. Slide 13, please.
Our brand vision is to make dream homes for all a reality. Our focus on home will only increase as we continue to lean into this category. We are focused on and having success with the 2 customer segments that naturally over index to shop with us. We are focused on providing them and of course other shoppers with a great customer experience. We use technology to enable execution against our 4 2021 initiatives.
One reason we are confident we can do what we say we are going to do is because we remain focused. I think the entire organization now understands the power of focus. We've proven it to ourselves and we've proven it to our investors over the past 18 months. Our strategy keeps us aligned on delivering what matters most to our customers and in turn is producing sustainable, profitable market share growth. Slide 14, please.
As we announced on our Q4 earnings call and again on our Q1 call, these are the 4 strategic 2021 initiatives. They are improving on-site search and taxonomy, which means improving product findability second, expansion into Canada, serving our Canadian customers from Canada rather than to Canada. 3rd, establishing our government business. Our federal GSA pilot serves as the foundation for this. We're expanding it from there by reaching out to state and local entities, adding new partners and expanding the product offering.
And 4th, improving the entire enterprise platform, which means increasing cloud adoption and ever modernizing our systems. Now we are squarely in build mode on most of these. So there is not a lot to report right now. We're focused and we're executing. We will report on the progress of each as trends emerge and materiality warrants.
We know these are the right 2021 initiatives for us. Slide 15, please. Overstock is well positioned for continued growth. Our revenue growth is outpacing driven by our technology, our customer focus and our business model. We have improved and maintained normalized gross margins.
Our target remains in the 22% range. We continue to exercise discipline in our spending. Our expenses are growing slower than revenue, driving really nice operating leverage. This flows through to produce long term adjusted EBITDA margins in the mid single digits. As anyone knows who has ever listened to one of our earnings calls or participated in an investor event, which we do many of these days, our mantra is sustainable, profitable market share growth.
I'm sometimes asked, 1, why this mantra? And 2, what gives me confidence in our ability to achieve it? Let me answer those questions. 1, is sustainable profitable market share growth the right goal? Without question, yes.
It's important to grow market share. Anything else is shrinking. Growth begets growth and size has its advantages. It's equally important to be profitable. It's the sustainable way to grow.
And as
far as timing goes, now is the opportune time to be focused on market share growth as we are in the middle of a secular shift in consumer behavior to online home furnishings purchases. 2nd, what is our confidence level in achieving this?
High,
both for the short and long term. We believe the structural changes and improvements we've been making for the last year and a half, the new overstock, if you will, will continue to prove out in consistent metrics and performance, which is perhaps not yet reflected in investors' current outlook or expectations for Overstock or Medici Ventures Fund assets. We will remain focused, disciplined and committed to delivering on our long term plan. I think the results from those efforts will become more and more apparent over time. Slide 16, please.
As previously mentioned, we closed our strategic partnership with Pelion Ventures a couple of weeks ago a few weeks ago. This slide summarizes the key terms of the Pellon agreement arrangement. We converted Medici Ventures into a fund that is now managed by Talion, which has sole authority and responsibility regarding all investment and management decisions. Talion has the reins. The fund has an 8 year life.
Overstock has committed approximately $45,000,000 to the fund. Pellion's annual management fees are paid by the fund. We are thrilled the deal was closed. Pareon is the right firm to take these companies like Tzero, Bit, Notes, GrainChain, Medici Land Governance, Piernova, Vincent and others to the next level, and they're motivated to do so. We've structured the deal economics so to appropriately reward fund performance.
For most of the fund assets, there is roughly a seventy-thirty split on upside after returning Overstock's initial investment. Slide 17, please. I'll briefly recap before we move to questions and answers. We are doing what we told you we would do. We have delivered record sales and profitability, generating revenue growth above 80% and EBITDA margins in the mid single digits in each of the last four quarters.
We've entered a strategic partnership for oversight of the Medici Ventures portfolio, closed the deal quickly. We are deconsolidating those assets post close. We provided you with more information and detailed disclosures about new customer For anyone who wants to see those, please look at our Q1 earnings call. We are focused and executing on the right strategic initiatives, those we believe will have the most positive impact on our business. We still have lots of opportunity to improve, mostly in the block of the blocking and tackling variety.
This includes further leaning into home and increasing the Overstock brand association with home, further cementing our competitive position and further improving adoption of our mobile app. Market share growth remains our key objective. We are confident we will continue to deliver sustainable profitable market share growth. Now let's take some questions.
Our first question is as follows. Please describe progress with the GSA. Is Overstock getting its fair share of volume? If not, is it due to political reasons?
Thank you for that question. Alexis, it would be great if we can get names of people who have asked these questions in healthcare. But thank you for that question. Progress with the GSA is slow. It's slow for all three companies in the pilot, which means Amazon, Fisher Scientific and Overstock.
And the GSA itself has acknowledged that the pilot is getting off to a slower start than the GSA had hoped. And so GSA is looking at ways to increase adoption within the federal government. That may, and I emphasize the word may, include allowing us to market directly to procurement officers. I don't think any of the slowness has anything to do with politics. Current administration or politics within any of the companies participating in the pilot.
It's slow, and we are working to make it go faster. That includes working beyond the GSA to expand broken state, cities, university context to expand what we're doing with the government. But as we get more info, we'll provide more numbers in our earnings
calls. Thanks, Jonathan. Our second question is from shareholder Michael Schneider. What are the biggest actions we should expect under the new CMO? And could that include a rebranding?
Michael, nice to hear from you. Thank you for the question. One of the things that I've learned from Elizabeth, who is just fantastic and 7, 8 weeks on the job is impressing people with all of her ideas is that she wants to make sure we're not sharing too much of our secret sauce of what we'll do. Let me share a little bit. We've mentioned that we're working to increase adoption of our mobile app.
Elizabeth is working squarely on that. That's an important thing for us to do. As a sticky marketing channel that's cheaper for us and breeds real customer loyalty. Another thing that Elizabeth is focused on is optimizing our use of different marketing channels. We're marketing a lot of different ways.
And as Elizabeth has come in and taken a look at that, at each of those channels, some we should be doing more in and some we should probably be doing less in. And she's working to optimize that and we'll do that over the months years to come. As far as the rebranding, Michael, we get that question asked a lot. And I would say Overstock as a brand name has a lot positives associated with it and certainly some negatives. Overstock has great brand recognition.
Most people in the United States have heard of Overstock. What most people don't do is associate Overstock with home goods. And so Elizabeth and the marketing team are working to increase that. It could include a rebranding, but it's not been decided whether it will include a rebranding. Dave, I know you're on the call.
Is there anything you would add to my answer?
You touched on that last topic. Our brand association with home furnishings is critical. And I would just add to that, that that is a focus of this team right out of the gate. We know we need to improve that. You covered it well, Jonathan.
Thank you.
Hi, Doug.
Did I tell that? It's clinical.
Jonathan, we have no further questions at this time.
Okay. Well, let me say this to our shareholders. 1st, thank you for being an Overstock shareholder. Thank you for entrusting your capital with me and the rest of this management team. Thanks for participating in today's meeting.
If there's one thing you should take away from this call is that we are better positioned than ever to continue to take market share and deliver profitability. So until we talk again, we'll keep working diligently to deliver on those two goals and to deliver on our 2020 one plan. Allison?
Thank you, Jonathan. We will now conclude the informal part of our meeting. We thank you again for attending today's virtual meeting.
This concludes the meeting. You may now disconnect.