10-Q 1 ostk-20220930.htm 10-Q ostk-20220930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2022
 
Or 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to                        
Commission file number: 000-49799

OVERSTOCK.COM, INC.
(Exact name of registrant as specified in its charter) 
Delaware 87-0634302
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
799 West Coliseum Way
Midvale
Utah84047
(Address of principal executive offices)(Zip Code)
 
(801) 947-3100
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 par valueOSTKNASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 

45,739,758 shares of the registrant's common stock, par value $0.0001, are outstanding on October 28, 2022.



OVERSTOCK.COM, INC.
TABLE OF CONTENTS TO QUARTERLY REPORT ON FORM 10-Q
For the Quarterly Period Ended September 30, 2022
 
Page
 
Item 1.
  
Item 2.
  
Item 3.
  
Item 4.
  
  
Item 1.
  
Item 1A.
  
Item 2.
  
Item 3.
  
Item 4.
  
Item 5.
  
Item 6.
  

2

Special Cautionary Note Regarding Forward-Looking Statements
This Report on Form 10-Q and the documents incorporated herein by reference, and our other public documents and statements our officers and representatives may make from time to time, contain forward-looking statements within the meaning of the federal securities laws. These statements are therefore entitled to the protection of the safe harbor provisions of these laws. You can find many of these statements by looking for words such as "may," "would," "could," "should," "will," "expect," "anticipate," "predict," "project," "potential," "continue," "contemplate," "seek," "assume," "believe," "intend," "plan," "forecast," "goal," "estimate," or other similar expressions which identify these forward-looking statements.

These forward-looking statements involve risks and uncertainties and relate to future events or our future financial or operating performance. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry and business, and on management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, you are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to assumptions, risks and uncertainties that are difficult to predict, and that actual results and outcomes may be materially different from the results or outcomes expressed or implied by any of our forward-looking statements for a variety of reasons, including among others:

any difficulties we may encounter as a result of our reliance on third-parties that we do not control for the performance of critical functions material to our business, such as carriers, fulfillment partners, and SaaS/IaaS providers;
any inability to compete successfully against existing or future competitors or to effectively market our business and generate customer traffic;
a recession or other economic downturn, in particular in the U.S. housing industry, or other changes in U.S. and global economic conditions or U.S. consumer spending;
any increases in the price of importing into the U.S. or transporting to our customers the types of merchandise we sell or other supply chain challenges that limit our ability to deliver merchandise to our customers in a timely manner;
increasing global inflation and rising interest rates;
any negative business impacts associated with our exit from non-home categories;
any inability to attract and/or retain key personnel;
any inability to effectively remediate previously identified material weaknesses in our internal control over financial reporting and any inability to maintain effective internal controls;
any inability to generate and maintain unpaid natural traffic to our Website;
the lasting impact that the COVID-19 pandemic, or the impact of other wide-spread disease or illness, may have on our business and the industries in which we operate;
any negative impact from most of our workforce working on a remote or hybrid schedule;
our exposure to cyber security risks, risks of data loss and other security breaches;
the risk that the amount of deferred tax assets we consider realizable could be reduced if estimates of future taxable income during the carryforward period are reduced;
the impacts that we would experience if governmental entities or providers of consumer devices and internet browsers further restrict or regulate the use of "cookie" tracking technologies;
the impact that any litigation, claims, or regulatory matters could have on our business, financial condition, results of operations, and cash flows;
any inability to convert new customers into repeat customers or maintain increased sales volumes;
negative global economic consequences of global conflict, including the ongoing tensions between the United States and Russia, and other effects of the ongoing conflict in Ukraine;
the impact that any government policies, mandates, or regulations, including those created in response to COVID-19, the climate, or taxes, could have on our business;
any challenges that would result in the event of any loss of functionality or unavailability of our Website or reduced performance of our transaction systems;
the possibility that we are unable to protect our proprietary technology and to obtain trademark protection for our marks;
current and future claims of intellectual property infringement to which we are subject;
any inability of Pelion Venture Partners to successfully manage the Medici Ventures, L.P. fund or tZERO, in which we are the limited partner and have a direct minority interest, respectively;
3

any strategic transactions, restructurings or other changes that we undertake and that prove to be detrimental to our business; and
the other risks described in this report or in our other public filings.

In evaluating all forward-looking statements, you should specifically consider the risks outlined above and in this Report, especially under the headings "Special Cautionary Note Regarding Forward-Looking Statements," "Risk Factors," "Legal Proceedings," and "Management's Discussion and Analysis of Financial Condition and Results of Operations." These factors may cause our actual results and outcomes to differ materially from those contemplated by any forward-looking statement. Although we believe that our expectations reflected in the forward-looking statements are reasonable, we cannot guarantee or offer any assurance of future results, levels of activity, performance or achievements or other future events. Our forward-looking statements contained in this report speak only as of the date of this report and, except as required by law, we undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report or any changes in our expectations or any change in any events, conditions or circumstances on which any of our forward-looking statements are based.
4

PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

Overstock.com, Inc.
Consolidated Balance Sheets (Unaudited)
(in thousands, except per share data)
September 30,
2022
December 31,
2021
Assets  
Current assets:  
Cash and cash equivalents$427,530 $503,341 
Restricted cash204 25 
Accounts receivable, net of allowance for credit losses of $3,000 and $2,429
20,753 21,190 
Inventories6,070 5,137 
Prepaids and other current assets20,746 22,097 
Total current assets475,303 551,790 
Property and equipment, net107,180 109,479 
Deferred tax assets, net40,726 40,035 
Goodwill6,160 6,160 
Equity securities, including securities measured at fair value of $93,407 and $102,529
311,356 342,682 
Operating lease right-of-use assets8,790 12,584 
Other long-term assets, net2,720 3,236 
Total assets$952,235 $1,065,966 
Liabilities and Stockholders' Equity  
Current liabilities:  
Accounts payable$84,650 $102,293 
Accrued liabilities88,834 101,902 
Unearned revenue51,052 59,387 
Operating lease liabilities, current5,283 5,402 
Other current liabilities3,467 3,349 
Total current liabilities233,286 272,333 
Long-term debt, net35,369 37,984 
Operating lease liabilities, non-current4,138 7,960 
Other long-term liabilities2,797 3,303 
Total liabilities275,590 321,580 
Commitments and contingencies (Note 9)
Continued on the following page

See accompanying notes to unaudited consolidated financial statements.
5

Overstock.com, Inc.
Consolidated Balance Sheets (Unaudited)
(in thousands, except per share data)
September 30,
2022
December 31,
2021
Stockholders' equity:  
Preferred stock, $0.0001 par value, authorized shares - 5,000
  
Series A-1, issued and outstanding - 0 and 4,204
  
Series B, issued and outstanding - 0 and 357
  
Common stock, $0.0001 par value, authorized shares - 100,000
  
Issued shares - 51,071 and 46,625
  
Outstanding shares - 45,740 and 43,023
5 4 
Additional paid-in capital977,790 960,544 
Accumulated deficit(158,318)(136,590)
Accumulated other comprehensive loss(525)(537)
Treasury stock at cost - 5,331 and 3,602
(142,307)(79,035)
Total stockholders' equity676,645 744,386 
Total liabilities and stockholders' equity$952,235 $1,065,966 

See accompanying notes to unaudited consolidated financial statements.
6

Overstock.com, Inc.
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
 
 Three months ended
September 30,
Nine months ended
September 30,
 2022202120222021
Net revenue$460,279 $689,390 $1,524,438 $2,143,787 
Cost of goods sold352,807 532,682 1,170,649 1,658,729 
Gross profit107,472 156,708 353,789 485,058 
Operating expenses    
Sales and marketing53,520 75,650 169,973 234,460 
Technology29,628 31,178 93,159 92,084 
General and administrative18,665 21,031 61,002 66,562 
Total operating expenses101,813 127,859 324,134 393,106 
Operating income5,659 28,849 29,655 91,952 
Interest income (expense), net976 (139)966 (424)
Other expense, net(46,283)(79)(48,378)(7)
Income (loss) from continuing operations before income taxes(39,648)28,631 (17,757)91,521 
Provision (benefit) for income taxes(2,653)(1,795)1,968 (47,328)
Income (loss) from continuing operations(36,995)30,426 (19,725)138,849 
Income from discontinued operations, net of income taxes   217,246 
Consolidated net income (loss)$(36,995)$30,426 $(19,725)$356,095 
Less: Net loss attributable to noncontrolling interests—discontinued operations   (335)
Net income (loss) attributable to stockholders of Overstock.com, Inc.$(36,995)$30,426 $(19,725)$356,430 
Consolidated net income (loss) per share of common stock:    
Net income (loss) attributable to common shares—basic
Continuing operations$(0.81)$0.64 $(0.46)$2.91 
Discontinued operations   4.58 
Total$(0.81)$0.64 $(0.46)$7.49 
Net income (loss) attributable to common shares—diluted
Continuing operations$(0.81)$0.63 $(0.46)$2.89 
Discontinued operations   4.54 
Total$(0.81)$0.63 $(0.46)$7.43 
Weighted average shares of common stock outstanding:
Basic45,708 43,014 43,954 42,970 
Diluted45,708 43,324 43,954 43,320 

See accompanying notes to unaudited consolidated financial statements.
7

Overstock.com, Inc.
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(in thousands)
 
 Three months ended
September 30,
Nine months ended
September 30,
 2022202120222021
Consolidated net income (loss)$(36,995)$30,426 $(19,725)$356,095 
Other comprehensive income
Unrealized gain on cash flow hedges, net of expense for taxes of $0, $0, $0, and $0
4 4 12 12 
Other comprehensive income4 4 12 12 
Comprehensive income (loss)(36,991)30,430 (19,713)356,107 
Less: Comprehensive loss attributable to noncontrolling interests—discontinued operations   (335)
Comprehensive income (loss) attributable to stockholders of Overstock.com, Inc.$(36,991)$30,430 $(19,713)$356,442 

See accompanying notes to unaudited consolidated financial statements.

8

Overstock.com, Inc.
Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
(in thousands)
 Three months ended
September 30,
Nine months ended
September 30,
2022202120222021
Equity attributable to stockholders of Overstock.com, Inc. 
Shares of common stock issued
Balance at beginning of period51,026 46,607 46,625 46,331 
Common stock issued upon vesting of restricted stock 3 3 264 279 
Common stock issued for ESPP purchases42  84  
Conversion of preferred stock  4,098  
Balance at end of period51,071 46,610 51,071 46,610 
Shares of treasury stock
Balance at beginning of period5,331 3,595 3,602 3,563 
Repurchases of common stock  1,652  
Tax withholding upon vesting of employee stock awards 1 77 80 
Sale of treasury stock   (47)
Balance at end of period5,331 3,596 5,331 3,596 
Total shares of common stock outstanding45,740 43,014 45,740 43,014 
Common stock
Balance at beginning of period$5 $4 $4 $4 
Conversion and elimination of preferred stock  1  
Balance at end of period$5 $4 $5 $4 
Shares of Series A-1 preferred stock issued
Balance at beginning of period 4,204 4,204 4,204 
Conversion and elimination of preferred stock  (4,204) 
Balance at end of period 4,204  4,204 
Shares of treasury stock
Balance at beginning of period    
Repurchases of shares  7  
Conversion and elimination of preferred stock  (7) 
Balance at end of period    
Total shares of Series A-1 preferred stock outstanding 4,204  4,204 
Shares of Series B preferred stock issued and outstanding
Balance at beginning of period 357 357 357 
Conversion and elimination of preferred stock  (357) 
Balance at end of period 357  357 
Preferred stock$ $ $ $ 
Continued on the following page

See accompanying notes to unaudited consolidated financial statements.
9

Overstock.com, Inc.
Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
(in thousands)
Three months ended
September 30,
Nine months ended
September 30,
2022202120222021
Additional paid-in capital
Balance at beginning of period$972,845 $954,518 $960,544 $970,873 
Stock-based compensation to employees and directors4,056 2,542 13,390 8,216 
Common stock issued for ESPP purchases889  2,779  
Conversion and elimination of preferred stock  1,043  
Sale of treasury stock   2,726 
Subsidiary equity award tender offer   (2,130)
Change in noncontrolling interest ownership   (22,625)
Other  34  
Balance at end of period$977,790 $957,060 $977,790 $957,060 
Accumulated deficit
Balance at beginning of period$(121,323)$(199,229)$(136,590)$(525,233)
Net income (loss) attributable to stockholders of Overstock.com, Inc.(36,995)30,426 (19,725)356,430 
Dividend issued upon conversion and elimination of preferred stock  (1,697) 
Conversion and elimination of preferred stock  (306) 
Balance at end of period$(158,318)$(168,803)$(158,318)$(168,803)
Accumulated other comprehensive loss
Balance at beginning of period$(529)$(545)$(537)$(553)
Net other comprehensive income4 4 12 12 
Balance at end of period$(525)$(541)$(525)$(541)
Treasury stock
Balance at beginning of period$(142,288)$(78,568)$(79,035)$(71,399)
Repurchases of common stock and Series A-1 preferred shares  (60,077) 
Tax withholding upon vesting of employee stock awards (19)(38)(3,501)(7,850)
Conversion and elimination of preferred stock  306  
Sale of treasury stock   643 
Balance at end of period(142,307)(78,606)(142,307)(78,606)
Total equity attributable to stockholders of Overstock.com, Inc.$676,645 $709,114 $676,645 $709,114 
Equity attributable to noncontrolling interests
Balance at beginning of period$ $ $ $62,634 
Net loss attributable to noncontrolling interests   (335)
Change in noncontrolling interest ownership   22,625 
Deconsolidation of subsidiaries   (84,924)
Total equity attributable to noncontrolling interests$ $ $ $ 
Total stockholders' equity$676,645 $709,114 $676,645 $709,114 

See accompanying notes to unaudited consolidated financial statements.
10

Overstock.com, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Nine months ended
September 30,
 20222021
Cash flows from operating activities:  
Consolidated net income (loss)$(19,725)$356,095 
Income from discontinued operations, net of income taxes (217,246)
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:  
Depreciation and amortization12,480 14,332 
Non-cash operating lease cost4,138 3,758 
Stock-based compensation to employees and directors13,390 7,649 
Increase in deferred income taxes, net(691)(51,749)
Loss from equity method securities49,227 711 
Other non-cash adjustments97 689 
Changes in operating assets and liabilities:  
Accounts receivable, net745 (2,305)
Inventories(933)461 
Prepaids and other current assets1,991 3,259 
Other long-term assets, net(1,004)(1,050)
Accounts payable(17,360)14,831 
Accrued liabilities(11,633)(19,945)
Unearned revenue(8,335)(6,959)
Operating lease liabilities(4,285)(3,891)
Other long-term liabilities(506)1,444 
Net cash provided by continuing operating activities17,596 100,084 
Net cash used in discontinued operating activities (17,128)
Net cash provided by operating activities17,596 82,956 
Cash flows from investing activities:  
Purchase of equity securities(18,920) 
Contributions for capital calls (41,122)
Capital distribution from investment1,224  
Expenditures for property and equipment(9,724)(9,658)
Other investing activities, net(584)(1,281)
Net cash used in continuing investing activities(28,004)(52,061)
Net cash used in discontinued investing activities (29,703)
Net cash used in investing activities(28,004)(81,764)
Continued on the following page

See accompanying notes to unaudited consolidated financial statements.
11

Overstock.com, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Nine months ended
September 30,
20222021
Cash flows from financing activities:  
Repurchase of shares(60,077) 
Payments on long-term debt(2,570)(2,191)
Payments of taxes withheld upon vesting of employee stock awards(3,501)(7,850)
Proceeds from employee stock purchase plan924  
Other financing activities, net (1)
Net cash used in continuing financing activities(65,224)(10,042)
Net cash provided by discontinued financing activities 2,085 
Net cash used in financing activities(65,224)(7,957)
Net decrease in cash, cash equivalents, and restricted cash(75,632)(6,765)
Cash, cash equivalents, and restricted cash, beginning of period, inclusive of cash balances of discontinued operations503,366 519,181 
Cash, cash equivalents, and restricted cash, end of period, inclusive of cash balances of discontinued operations427,734 512,416 
Less: Cash, cash equivalents, and restricted cash of discontinued operations  
Cash, cash equivalents, and restricted cash, end of period$427,734 $512,416 

See accompanying notes to unaudited consolidated financial statements.

12

Overstock.com, Inc.
Notes to Unaudited Consolidated Financial Statements
 
1. DESCRIPTION OF BUSINESS
 
Overstock.com, Inc. is a leading online furniture and home furnishings retailer and technology-focused innovator that sells products at a smart value. Our online shopping site offers a wide selection of quality furniture, décor, area rugs, bedding and bath, home improvement, outdoor, and kitchen and dining items, among others. Overstock.com, which receives tens of millions of visits per month, provides customers access to millions of products from third-party partners. As used herein, "Overstock," "the Company," "we," "our" and similar terms include Overstock.com, Inc. and its wholly-owned subsidiaries, unless the context indicates otherwise. As used herein, the term "Website" refers to the Company's internet websites located at www.overstock.com, www.o.co, www.overstock.ca, and www.overstockgovernment.com and the Company's mobile app.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation

We have prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP") have been omitted in accordance with the rules and regulations of the SEC. These financial statements should be read in conjunction with our audited annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes to our significant accounting policies disclosed in Note 2—Accounting Policies, included in Part II, Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for the year ended December 31, 2021.

The accompanying unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in our opinion, necessary for a fair presentation of results for the interim periods presented. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for any future period or the full fiscal year, due to seasonality and other factors.

We operate as a single segment that includes all of our continuing operations, which primarily consists of amounts earned through e-commerce product sales through our Website. All corporate support costs (administrative functions such as finance, human resources, and legal) are allocated to our single reportable segment. Substantially all of our revenues are attributable to customers in the United States. Substantially all our property and equipment are located in the United States.

Unless otherwise specified, disclosures in these consolidated financial statements reflect continuing operations only. The operating results for Medici Ventures Inc. ("Medici Ventures") and tZERO Group, Inc. ("tZERO"), our former subsidiaries, for the periods prior to their deconsolidation have been reflected in our consolidated statements of operations as discontinued operations for all periods presented. Certain prior period data, primarily related to discontinued operations, have been reclassified in the consolidated financial statements and accompanying notes to conform to the current period presentation. See Note 3—Discontinued Operations for further information.

Out of period adjustments

In the third quarter of 2022, the Company recorded immaterial out-of-period adjustments primarily related to an error arising from the use of incomplete third-party information utilized in the valuation of our equity method securities, which impacted those values in the first and second quarters of 2022. This resulted in a $31.4 million increase in other expense and a $3.6 million increase of income tax benefit resulting in a $27.8 million increase of net loss for the quarter ended September 30, 2022, with no net impact to the nine months ended September 30, 2022. Management has determined that this adjustment was not material to any of its previously issued financial statements.

Principles of consolidation
 
The accompanying consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany account balances and transactions have been eliminated in consolidation.
     
13

Use of estimates
 
The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in our consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, receivables valuation, revenue recognition, Club O and gift card breakage, sales returns, inventory valuation, depreciable lives and valuation of property and equipment, and internally-developed software, goodwill valuation, intangible asset valuation, equity securities valuation, income taxes, stock-based compensation, performance-based compensation, self-funded health insurance liabilities, and contingencies.

Our estimates involve, among other items, forecasted revenues, sales volume, pricing, cost and availability of inventory, cost and availability of labor supply, consumer demand and spending habits, and the continued operations of our supply chain and logistics network. Although these estimates are based on our best knowledge of current events and actions that we may undertake in the future, the variability of these factors depends on a number of factors, including uncertainty associated with macroeconomic conditions, such as supply chain challenges, inflation, rising interest rates, or the current conflict between Russia and Ukraine, how long these conditions will persist, what additional regulations may be introduced or reintroduced by governments or private parties or what effect any such additional regulations may have on our business and thus our accounting estimates may change from period to period. To the extent there are differences between these estimates and actual results, our consolidated financial statements may be materially affected.

3. DISCONTINUED OPERATIONS

On January 25, 2021, we entered into an agreement with Medici Ventures, Pelion MV GP, L.L.C. ("Pelion"), and Pelion, Inc., pursuant to which Medici Ventures converted to a Delaware limited partnership (the "Partnership") and Pelion became the sole general partner of the Partnership, and we became the limited partner of the Partnership. The term of the Partnership is eight years. A tZERO debt conversion was completed during the quarter ended March 31, 2021, following which Medici Ventures and Overstock held approximately 42% and 41%, respectively, of tZERO's outstanding common stock. On April 23, 2021, we entered into the Limited Partnership Agreement with Pelion, pursuant to which Pelion became the sole general partner, holding a 1% equity interest in the Partnership, and Overstock became a limited partner, holding a 99% equity interest in the Partnership. Our retained equity interests in these entities are classified as equity method securities as we are deemed to have significant influence, but not control, over these entities through holding more than a 20% interest in the entity. See Note 6—Equity Securities for further information. The operating results for the periods prior to the April 23, 2021 deconsolidation of Medici Ventures and tZERO have been reflected in our consolidated statements of operations as discontinued operations for all periods presented.

14

Results of discontinued operations through the transaction date were as follows (in thousands):
Three months ended
September 30,
Nine months ended
September 30,
2022202120222021
Net revenue$ $ $ $17,394 
Cost of goods sold   13,716 
Gross profit   3,678 
Operating expenses
Technology   7,133 
Selling, general, and administrative   13,509 
Total operating expenses   20,642 
Operating loss from discontinued operations   (16,964)
Interest income, net   192 
Other income, net   4,081 
Gain on deconsolidation   243,541 
Income from discontinued operations before income taxes   230,850 
Provision for income taxes   13,604 
Net income from discontinued operations$ $ $ $217,246 
Less: Net loss attributable to noncontrolling interests from discontinued operations   (335)
Net income from discontinued operations attributable to stockholders of Overstock.com, Inc.$ $ $ $217,581 


4. FAIR VALUE MEASUREMENT

The following tables summarize our assets and liabilities measured at fair value on a recurring basis using the following levels of inputs (in thousands): 
 
Fair Value Measurements at September 30, 2022
 TotalLevel 1Level 2Level 3
Assets:    
Cash equivalents—Money market funds$250,889 $250,889 $ $ 
Equity securities, at fair value93,407 380  93,027 
Trading securities held in a "rabbi trust" (1)328 328   
Total assets$344,624 $251,597 $ $93,027 
Liabilities:    
Deferred compensation accrual "rabbi trust" (2)$328 $328 $ $ 
Total liabilities$328 $328 $ $ 
 
15

 
Fair Value Measurements at December 31, 2021
 TotalLevel 1Level 2Level 3
Assets:    
Cash equivalents—Money market funds$ $ $ $ 
Equity securities, at fair value102,529 174  102,355 
Trading securities held in a "rabbi trust" (1)179 179   
Total assets$102,708 $353 $ $102,355 
Liabilities:    
Deferred compensation accrual "rabbi trust" (2)$188 $188 $ $ 
Total liabilities$188 $188 $ $ 
 ___________________________________________
(1)    — Trading securities held in a rabbi trust are included in Other long-term assets, net in the consolidated balance sheets.
(2)    — Non-qualified deferred compensation in a rabbi trust is included in Accrued liabilities and Other long-term liabilities in the consolidated balance sheets.

The following table provides activity for our Level 3 investments (in thousands):
Amount
Level 3 investments at December 31, 2020
$ 
Increase due to acquisition of Level 3 investments99,723 
Increase in fair value of Level 3 investments2,632 
Level 3 investments at December 31, 2021
102,355 
Increase due to acquisition of Level 3 investments18,920 
Decrease in fair value of Level 3 investments(28,248)
Level 3 investments at September 30, 2022
$93,027 

5. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following (in thousands):
 September 30,
2022
December 31, 2021
Computer hardware and software, including internal-use software and website development$233,847 $225,256 
Building69,350 69,293 
Furniture and equipment12,446 12,067 
Land12,781 12,781 
Leasehold improvements2,700 2,601 
Building machinery and equipment9,791 9,809