Yes, and they would take a corresponding gross margin hit as the driver's payment comes from revenue rather than being accounted for before it.

I do not think this a shell game to make the revenue number larger. The way drivers are paid while driving UberX vs. Uber Pool is different, and that probably has accounting rule impact.

GAAP doesn't have to include stock based compensation as a normal expense. If you throw in the fact that Uber compensates at 50% in stock this is probably a shell game.

That's not true: https://www.fool.com/investing/2017/04/14/okta-inc-ipo-what-....

If you're using GAAP, you have to include stock-based compensation as a cost. There are, however, a lot of tech companies that try and spin non-GAAP earnings by removing stock-based compensation, which can paint a very different picture (e.g., Salesforce)

This is probably basically about the fact that driver portion is more complicated in UberPool than in the rest of their services.

It's to Uber's credit that on an ordinary ride, they don't try to claim that they have revenue equal to the entire fare. That would be an easy way for them to make their top-line financials look way more palatable than they actually are (ie, that they lost about $3B on $20B, rather than $3B on $7B).

But it may be genuinely hard to report on just the share of UberPool revenue that does not go to the driver, as my understanding is that the calculation is much more complicated in that case.

Uh, that seems like something they'd get called out on pretty quickly if they tried, and would make them look worse off with the actual number than if they just opened with it

Uber's gotten away with a lot of stuff but I doubt even they could pull a 'whoops, forgot our expenses' sleight of hand. Especially since they try and frame drivers as 'contractors' and not employees

Revenue, not profit. They wouldn't be saying that they forgot about expenses, just that their expenses come out of $20B in revenue, not $7B in revenue.

Probably not to their credit, it's something their auditors wouldn't accept because it's fairly straightforward accounting.

These aren't security filings or for their investors. It's to the press. Nobody external is forcing them to account for anything in any particular way that's not blatantly fraudulent.

That sentence seems like its intention is to confuse the reader. To me it means for UberX: Fare - Cost = Revenue, and for UberPool: Fare = Revenue.

Fare less costs should be profit, not revenue. The only way this makes sense is if uber believes they are charging drivers for getting them customers, but believes that they directly operating the carpool. There's probably some language somewhere in codification that says "significant involvement" or "more than not" or something like that requiring them to treat them differently.

Can someone explain how GAAP would consider only Uber's share of an UberX revenue, but the entirety of an UberPool as revenue? This doesn't really make sense to me.

Drivers are charged a percentage-fee for Uber's share of the ride in UberX. In Uber Pool, the driver is paid by Uber (as opposed to just through Uber) a variable amount that is not as easy for us on the outside to calculate as the percentage model.

Ah. So a driver doesn't just get a simple 75% cut of an UberPool fare. That actually makes a lot of sense. Thanks.

And that somehow justifies Uber saying that all UberPool money collected is revenue? Because the math is hard?

This company is like a Russian nesting doll shell game. There's more in each layer and every layer is a distraction.

I don't think there's anything hard about computing this, but in the normal case companies report all the money they collect as revenue, and then subtract costs to show their profits.

In the marketplace case this is deceitful because the marketplace owner doesn't really have a way to bring the costs of the product down, so it's much more realistic to only consider their margin as revenue.

In the UberPool case I think there's a reasonable argument to be made that since they are paying drivers a flat fee, but charging users based on dynamic pricing and packing a variable number of people in each vehicle Uber has more flexibility in terms of how it provides the service to customers, the top line number of how much they are charging users is more reasonable. Uber cuts their costs on an UberPool ride in half every time they put two groups in the same car.

You would really want to see the data broken out by category if you were an investor, since mixing the two types in the revenue number is sort of meaningless since we don't know the split, but we're not exactly in a position to demand financials.

Still, I think this data shows a much rosier picture than HN wants to paint about how "Uber is losing money on every ride"/"Selling 2 dollar bills for $1" etc. the 2.8B loss is huge, but when you look at it compared to the $20B bookings number, you can see that they're not significantly subsidizing rides, but rather using their war chest to compete on price. They only need a 15% price increase to become profitable, which shows their prices are in the right ballpark, even if they're not profitable right now.

I do wonder if this is essentially a move to try and compete more effectively for talent that, besides being outraged, may be starting to believe HN about how likely Uber is to fail.

Didn't the article the other day about how Uber is "cheating" drivers show the drivers are paid distance+time and not just a % of the rider's fare?

I think it's a question of Uber's role in the transaction, and whether they're considered an "Agent" of the seller (the driver), or the transaction's principal.

I think this is a matter of accounting judgment.

I'm not an accountant, but I remember reading somewhere that pure agency transactions have different accounting treatment vs. "principal" transactions where the party in question assumes more risk and is not acting strictly as a representative of another party (the UberX driver).

[1] http://www.journalofaccountancy.com/news/2015/aug/fasb-propo...

Uber drivers are contractors (or, at least that's what Uber claims), who are paid by customers and give Uber a cut.

In the car of Pool, Uber hires the driver.

I think so!