BUSINESS SEGMENTS

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

BUSINESS SEGMENTS

BUSINESS SEGMENTS

Segment information has been prepared in accordance with ASC Topic 280 Segment Reporting. Segments were determined based on how we manage the business, which, in our view, consists primarily of our Retail and Medici businesses. Our Retail business consists of our Direct and Partner segments, and the Medici business is included in Other. Although the Direct and Partner segments both relate to our Retail business, we do not combine these segments because they have dissimilar economic characteristics, such as gross profit margins. We do not allocate operating expenses for our Direct and Partner segments below gross profit, which is the measure we use to determine our reportable segments. Because we use gross profit to determine our reportable segments, our Medici business is not significant as compared to our other segments. We evaluate the performance of our segments and allocate resources to them based primarily on gross profit. There were no significant inter-segment sales or transfers during the three and nine months ended September 30, 2016 and 2015.

The table below summarizes information about our reportable segments for the three and nine months ended September 30, 2016 and 2015 (in thousands):

	Three months ended  September 30,									Nine months ended  September 30,
	Direct		Partner		Other		Total			Direct		Partner		Other		Total
2016
Revenue, net	$	24,620	$	413,019	$	3,925	$	441,564		$	75,901	$	1,187,364	$	10,516	$	1,273,781
Cost of goods sold	23,955		335,306		2,587		361,848			72,459		961,227		6,750		1,040,436
Gross profit	$	665	$	77,713	$	1,338	$	79,716		$	3,442	$	226,137	$	3,766	$	233,345
Operating expenses							84,763									226,088
Interest and other income, net							1,112									9,408
Provision (benefit) for income taxes							(543		)							8,178
Consolidated net income (loss)							$	(3,392	)							$	8,487
2015
Revenue, net	$	33,621	$	357,590	$	—	$	391,211		$	104,184	$	1,073,384	$	—	$	1,177,568
Cost of goods sold	31,989		286,771		—		318,760			95,751		860,272		—		956,023
Gross profit	$	1,632	$	70,819	$	—	$	72,451		$	8,433	$	213,112	$	—	$	221,545
Operating expenses							75,822									218,990
Interest and other income, net							739									2,576
Provision (benefit) for income taxes							(15		)							3,774
Consolidated net income (loss)							$	(2,617	)							$	1,357

The direct segment includes revenues, direct costs, and cost allocations associated with sales of inventory we own. Costs for this segment include product costs, freight, warehousing and fulfillment costs, credit card fees and customer service costs.

The partner segment includes revenues, direct costs and cost allocations associated with sales of inventory owned by our partners. Costs for this segment include product costs, outbound freight and fulfillment costs, credit card fees and customer service costs.

Assets have not been allocated between the segments for our internal management purposes and, as such, they are not presented here.

For the three and nine months ended September 30, 2016 and 2015, substantially all of our sales revenues were attributable to customers in the United States. At September 30, 2016 and December 31, 2015, substantially all of our fixed assets were located in the United States.