5 ms·

It doesn't sound particularly misleading to me. That's just what "gross" means. Gross is always way, way higher than net. You wouldn't subtract the wholesale

It doesn't sound particularly misleading to me. That's just what "gross" means. Gross is always way, way higher than net. You wouldn't subtract the wholesale cost from the gross income of a retail chain, you wouldn't subtract employee wages from the gross income of a software firm, and you wouldn't subtract contractor payments from Lyft.

pbreit 11y ago
That's not quite true. You normally wouldn't refer to Lyft's total proceeds as "revenue", gross or otherwise. Retail stores hold inventory which runs the risk of going unsold. Not true of Lyft. Ebay calls it "gross merchandise sales". PayPal calls it "total payment volume". Google subtracts "TAC" out of its network revenue. Etc. I've seen Uber refer to it as "gross bookings".
- deleted 11y ago
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jcdavis 11y ago
Sure, but I'd argue even using gross in a situation where you aren't the primary provider is misleading. Financial processors such as Visa (or Square for that matter), pretty much only talk about net revenue (Square's S-1 uses "Gross Payment Volume" to talk about gross, and never uses the phrase "gross revenue" once). We are certainly in the weeds of semantics, but I do find the phrasing of that misleading.
gamblor956 11y ago
Under generally accepted accounting principles (GAAP), and their European equivalent, IFRS, a company generally cannot include in income payments it receives on behalf of others. Lyft, and Uber, rely on the fiction that they are merely booking apps for drivers, so the fares belong to the driver, and Lyft and Uber are merely entitled to a portion of the fare for providing the booking service. At no time are they/were they entitled to the entire fare, so booking the entire fare as income flies in the face of good accounting--and, for publicly traded companies, the law. The only reason startups do this is to artificially inflate their valuations. It's really not much different from cooking the books.
- rory096 11y ago
  This. See Sam Altman's blog post earlier this year[1] - using the word revenue to mean gross merchandise volume is grossly (ahem) misleading and arguably a felony. [1] http://blog.samaltman.com/financial-misstatements http://blog.samaltman.com/financial-misstatements
- forrestthewoods 11y ago
  Do Lyft/Uber get to float the money before paying it to drivers? If they get a week of float then it's maybe(?) gross income that they can make quite a lot of money off of before paying out drivers.
  - sreyaNotfilc 11y ago
    From what I remember from an Uber driver, they get paid every Thursday. So I guess the money could float around for a bit before finally reaching the driver.
  - smackfu 11y ago
    That only works if Lyft/Uber get the money from the credit cards very quickly.
- deleted 11y ago
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pbreit 11y ago

That's not quite true. You normally wouldn't refer to Lyft's total proceeds as "revenue", gross or otherwise. Retail stores hold inventory which runs the risk of going unsold. Not true of Lyft. Ebay calls it "gross merchandise sales". PayPal calls it "total payment volume". Google subtracts "TAC" out of its network revenue. Etc. I've seen Uber refer to it as "gross bookings".

deleted 11y ago
[deleted]

jcdavis 11y ago

Sure, but I'd argue even using gross in a situation where you aren't the primary provider is misleading. Financial processors such as Visa (or Square for that matter), pretty much only talk about net revenue (Square's S-1 uses "Gross Payment Volume" to talk about gross, and never uses the phrase "gross revenue" once). We are certainly in the weeds of semantics, but I do find the phrasing of that misleading.

gamblor956 11y ago

Under generally accepted accounting principles (GAAP), and their European equivalent, IFRS, a company generally cannot include in income payments it receives on behalf of others. Lyft, and Uber, rely on the fiction that they are merely booking apps for drivers, so the fares belong to the driver, and Lyft and Uber are merely entitled to a portion of the fare for providing the booking service. At no time are they/were they entitled to the entire fare, so booking the entire fare as income flies in the face of good accounting--and, for publicly traded companies, the law. The only reason startups do this is to artificially inflate their valuations. It's really not much different from cooking the books.

rory096 11y ago
This. See Sam Altman's blog post earlier this year[1] - using the word revenue to mean gross merchandise volume is grossly (ahem) misleading and arguably a felony. [1] http://blog.samaltman.com/financial-misstatements http://blog.samaltman.com/financial-misstatements
forrestthewoods 11y ago
Do Lyft/Uber get to float the money before paying it to drivers? If they get a week of float then it's maybe(?) gross income that they can make quite a lot of money off of before paying out drivers.
- sreyaNotfilc 11y ago
  From what I remember from an Uber driver, they get paid every Thursday. So I guess the money could float around for a bit before finally reaching the driver.
- smackfu 11y ago
  That only works if Lyft/Uber get the money from the credit cards very quickly.
deleted 11y ago
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