BUSINESS SEGMENTS

Segment information has been prepared in accordance with ASC Topic 280 Segment Reporting. As described in Note 1—Basis of Presentation, we have recast our segment information to conform with current year presentation. We determined our segments based on how we manage our business. In the fourth quarter of 2018, we completed our review of our segment reporting and in light of a strategic shift in our Chief Operating Decision Maker's long-term strategic focus for our organization, we no longer consider the split of retail direct and retail partner as a distinct and relevant measure of our business. Accordingly, Direct and Partner are no longer considered separate reportable segments but are included under Retail in our Business Segment disclosures. Our Medici business includes one reportable segment, tZERO. We use pre-tax net income (loss) as the measure to determine our reportable segments. As a result, the remainder of our Medici business is not significant as compared to our Retail and tZERO segments. Our Other segment consists of Medici Ventures' remaining operations.

Our Retail segment primarily consists of amounts earned through e-commerce sales through our Website. In addition, substantially all our corporate support costs (administrative functions such as finance, human resources, and legal) are included within our Retail segment.

Our tZERO segment primarily consists of amounts earned through securities transaction through our broker-dealers and costs incurred to execute our tZERO business initiatives.

We do not allocate assets between our segments for our internal management purposes, and as such, they are not presented here. There were no significant inter-segment sales or transfers during the years ended December 31, 2018, 2017 and 2016.

The following table summarizes information about reportable segments and a reconciliation to consolidated net income (loss) for the years ended December 31, 2018, 2017 and 2016 (in thousands):



	Retail			tZERO			Other			Total
2018
Revenue, net	$	1,800,187		$	19,043		$	2,362		$	1,821,592
Cost of goods sold	1,452,195			13,127			2,362			1,467,684
Gross profit	347,992			5,916			—			353,908
Operating expenses	506,113			47,006			17,995			571,114
Interest and other income (expense), net (1)	(476		)	233			(2,505		)	(2,748		)
Pre-tax loss	$	(158,597	)	$	(40,857	)	$	(20,500	)	(219,954		)
Benefit for income taxes										(2,384		)
Net loss (2)										$	(217,570	)



	Retail			tZERO			Other			Total
2017
Revenue, net	$	1,728,104		$	16,493		$	159		$	1,744,756
Cost of goods sold	1,392,558			11,647			—			1,404,205
Gross profit	335,546			4,846			159			340,551
Operating expenses	365,648			17,101			4,436			387,185
Interest and other income (expense), net (1)	4,680			—			(5,780		)	(1,100		)
Pre-tax loss	$	(25,422	)	$	(12,255	)	$	(10,057	)	(47,734		)
Provision (benefit) for income taxes										64,188
Net loss (2)										$	(111,922	)

2016
Revenue, net	$	1,784,782		$	15,181		$	—		$	1,799,963
Cost of goods sold	1,458,411			10,203			—			1,468,614
Gross profit	326,371			4,978			—			331,349
Operating expenses	307,669			15,826			939			324,434
Interest and other income (expense), net (1)	13,630			—			—			13,630
Pre-tax income (loss)	$	32,332		$	(10,848	)	$	(939	)	20,545
Provision (benefit) for income taxes										9,297
Net income (loss) (2)										$	11,248

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(1)	— The above amounts exclude intercompany transactions eliminated in consolidation, which consist primarily of service fees and interest. The net amounts of these intercompany transactions were $3.5 million, $2.0 million, and $594,000 for the years ended December 31, 2018, 2017 and 2016, respectively.


(2)	— Pre-tax income (loss) presented for segment reporting purposes is before any adjustments attributable to noncontrolling interests.

For the years ended December 31, 2018, 2017 and 2016, substantially all our sales revenues were attributable to customers in the United States. At December 31, 2018 and 2017, substantially all our fixed assets were located in the United States.