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One of the things I find interesting is how they treat bookings like revenue. In reality Uber is just like Visa. They are a transaction processor. Visa does n

One of the things I find interesting is how they treat bookings like revenue. In reality Uber is just like Visa. They are a transaction processor. Visa does not report revenue of trillions of dollars per year. For Uber actual revenue is somewhere between "Gross Profit" (865M) and "Net Revenue" (2B) and then their actual operating expenses are between 2B and 3.2B depending on what you call revenue and cost of revenue. The bottom line is that they are taking huge losses for relatively small amounts of revenue. Reporting your transaction volume as revenue is really infantile and should get you laughed out of the room, but here we are.

code4tee 9y ago
Groupon did something similar. It’s silly and anyone with two brain cells firing sees right though the BS. Also they want to claim their drivers are not employees but then want to count the full fare as “revenue.” Sigh.
- ncallaway 9y ago
  It does seem to fully contradict the notion that driver's are independent contractors if they count the fare as revenue.
- fancyfacebook 9y ago
  This is one of the reasons I bailed on accounting as a possible study in college. I really liked the idea of accounting for the whole of a massive business and understanding every unit, but most of the advanced stuff ended up being "here's how to get creative and not go to prison over it". Obfuscation over clarification. Really strange profession.
  - cjalmeida 9y ago
    IMO is quite the opposite. Accounting, as "science", is mostly about making sure numbers represent a good view of reality, with a very conservative bias. Those example are gimmicks set by C management that, while legal, certainly raised a few eyebrows in the accounting dept. Also, having accounting training helps detection BS practices.
  - wjnc 9y ago
    Agree with the strange profession. However, to accountants defense: the rules are pretty open and in any industry, most professional insiders easily know most of the loopholes. It's the layman / politician / civil servant that might get fooled because their common sense does not hold up. In the case of Uber, not a single investor will not recognize this. Where does this go wrong? SME where the accountant has to expect less questions, since there are no professionals watching the stock. That's why banks do their own due diligence (and p2p lending is more risky). Investing in individual stocks based on your reading of an annual report. No way you are more savvy than the leeways an accountant has.
advisedwang 9y ago
If you buy into the idea that they are just a middle man connecting independent drivers with customers, then yeah. If you see them as a cab company, then their reporting makes sense.
- saas_co_de 9y ago
  > If you buy into the idea that they are just a middle man connecting independent drivers with customers That is what they legally are. If they aren't that then they don't have any business at all.
drsim 9y ago
Agreed for their current model. However Uber is very different to Visa. What's the endgame for Uber? Surely that's operating an autonomous fleet. No drivers. Visa will always have merchants, but Uber will not always have drivers.
- saas_co_de 9y ago
  Yes, this reporting would make sense for the imaginary company that operates with technology that does not currently exist, but that is not the way that companies typically make financial statements. (also why Uber is not public)
  - deleted 9y ago
    [deleted]
- batmansmk 9y ago
  None of the current business supports this endgame. Recruiting drivers, trying to match demand and offer, offering insurances, loans to drivers to get vehicles, negotiating with authorities to not have to pass taxi certification for drivers... All those cost points don't benefit the endgame.
  - jey 9y ago
    The theory is that the customer install base, brand, and mindshare are the valuable assets that will give them a head start in the autonomous sector.
- cmurf 9y ago
  I think all the autonomous fleet stuff done by Uber is pure hype to get more investors thinking that is the endgame, and that it's not just viable in the next 5-10 years, but inevitability. There is no reason why municipalities should not consider their own autonomous fleets as part of public transit. The roads are already public, having a fully autonomous fleet is hardly any different than public buses or trains purchased from private manufacturers. It'll be a commodity (or at least it should be, short of monopolization and cronyism).
hn_throwaway_99 9y ago
I don't understand your objection at all. They clearly break out "Gross Bookings", which is the total of all fares, from "Net Revenue", which is the amount that goes to Uber after paying drivers. The income statement is very clear in that respect.
- deleted 9y ago
  [deleted]
- saas_co_de 9y ago
  > The income statement is very clear in that respect A matter of opinion I guess. I would characterize it as being as misleading as possible without actually being false. The point is that Bookings are not income at all so they don't belong anywhere on an income statement. "Contra Revenue" and "Net Revenue" are pure fiction because the Bookings are not revenue in the first place. Once again, if you want to see how a real company run by adults does this, just look at Visa's annual report: http://s1.q4cdn.com/050606653/files/doc_financials/annual/2017/Visa-2017-Annual-Report.pdf http://s1.q4cdn.com/050606653/files/doc_financials/annual/20... Spoiler Alert: transaction volume is on Page 38.
  - beambot 9y ago
    Bookings would certainly be a key financial metric... and would certainly belong on a financial statement since the funds transit Uber's books before being distributed to 3rd parties.
    - saas_co_de 9y ago
      Transaction volume is an important metric for tracking the growth of the business, but it is not revenue. The fact that the funds go through Uber's account has nothing to do with it. See Uber's terms of service: "with respect to Third Party Providers, Charges you incur will be owed directly to Third Party Providers, and Uber will collect payment of those charges from you, on the Third Party Provider’s behalf as their limited payment collection agent" https://www.uber.com/legal/terms/us/ https://www.uber.com/legal/terms/us/ Bookings are not revenue, which is why Uber can't call them revenue, but then wtf is "Contra Revenue" and how does Bookings - Contra Revenue = Net Revenue? Basic math: 5 Apples - 2 Oranges != 3 Oranges
mandeepj 9y ago
>In reality Uber is just like Visa. They are a transaction processor. No. Sorry. They are also processing the transaction and keeping the whole amount of transaction which is not what Visa does.
- tinymollusk 9y ago
  Don't they pay drivers 70%? That's somewhere in between paying your service contractor and passing along the 97% that VISA does.
gregshap 9y ago
They show Gross Bookings were $9.7B in Q3 of 2017. Net Revenue was $2.0B which is after paying drivers.
dopamean 9y ago
How do companies like Ticketmaster handle this? They sell tons of tickets but their revenue comes from the service charges right?
- ProAm 9y ago
  I wouldn't know, they wanted to charge me to print their financials at home.
- saas_co_de 9y ago
  Sort of hard to tell since Ticketmaster is part of Live Nation and so they don't go into a lot of detail on their financials. http://s1.q4cdn.com/788591527/files/doc_financials/2016/annual/LYV-2016.12.31-10K_FINAL_rev7_hosting-only.pdf http://s1.q4cdn.com/788591527/files/doc_financials/2016/annu... If you look at the Live Nation annual report you will see Ticketmaster reporting revenue of 1.8B (P.34) on 186M fee-bearing tickets sold (P.29). They don't specifically say what the face value of those tickets was but they are almost certainly only reporting their fees as revenue because the average is less than $10 per ticket and their revenue includes other things besides ticket fees.
gumby 9y ago
> Reporting your transaction volume as revenue is really infantile and should get you laughed out of the room, but here we are. It’s not GAAP so as long as you’re private it’s merely stupid — if they tried that when public the SEC would be involved. Of course they couldn’t go public that way in the first place.

code4tee 9y ago

Groupon did something similar. It’s silly and anyone with two brain cells firing sees right though the BS. Also they want to claim their drivers are not employees but then want to count the full fare as “revenue.” Sigh.

ncallaway 9y ago
It does seem to fully contradict the notion that driver's are independent contractors if they count the fare as revenue.
fancyfacebook 9y ago
This is one of the reasons I bailed on accounting as a possible study in college. I really liked the idea of accounting for the whole of a massive business and understanding every unit, but most of the advanced stuff ended up being "here's how to get creative and not go to prison over it". Obfuscation over clarification. Really strange profession.
- cjalmeida 9y ago
  IMO is quite the opposite. Accounting, as "science", is mostly about making sure numbers represent a good view of reality, with a very conservative bias. Those example are gimmicks set by C management that, while legal, certainly raised a few eyebrows in the accounting dept. Also, having accounting training helps detection BS practices.
- wjnc 9y ago
  Agree with the strange profession. However, to accountants defense: the rules are pretty open and in any industry, most professional insiders easily know most of the loopholes. It's the layman / politician / civil servant that might get fooled because their common sense does not hold up. In the case of Uber, not a single investor will not recognize this. Where does this go wrong? SME where the accountant has to expect less questions, since there are no professionals watching the stock. That's why banks do their own due diligence (and p2p lending is more risky). Investing in individual stocks based on your reading of an annual report. No way you are more savvy than the leeways an accountant has.

advisedwang 9y ago

If you buy into the idea that they are just a middle man connecting independent drivers with customers, then yeah. If you see them as a cab company, then their reporting makes sense.

saas_co_de 9y ago
> If you buy into the idea that they are just a middle man connecting independent drivers with customers That is what they legally are. If they aren't that then they don't have any business at all.

drsim 9y ago

Agreed for their current model. However Uber is very different to Visa. What's the endgame for Uber? Surely that's operating an autonomous fleet. No drivers. Visa will always have merchants, but Uber will not always have drivers.

saas_co_de 9y ago
Yes, this reporting would make sense for the imaginary company that operates with technology that does not currently exist, but that is not the way that companies typically make financial statements. (also why Uber is not public)
- deleted 9y ago
  [deleted]
batmansmk 9y ago
None of the current business supports this endgame. Recruiting drivers, trying to match demand and offer, offering insurances, loans to drivers to get vehicles, negotiating with authorities to not have to pass taxi certification for drivers... All those cost points don't benefit the endgame.
- jey 9y ago
  The theory is that the customer install base, brand, and mindshare are the valuable assets that will give them a head start in the autonomous sector.
cmurf 9y ago
I think all the autonomous fleet stuff done by Uber is pure hype to get more investors thinking that is the endgame, and that it's not just viable in the next 5-10 years, but inevitability. There is no reason why municipalities should not consider their own autonomous fleets as part of public transit. The roads are already public, having a fully autonomous fleet is hardly any different than public buses or trains purchased from private manufacturers. It'll be a commodity (or at least it should be, short of monopolization and cronyism).

hn_throwaway_99 9y ago

I don't understand your objection at all. They clearly break out "Gross Bookings", which is the total of all fares, from "Net Revenue", which is the amount that goes to Uber after paying drivers. The income statement is very clear in that respect.

deleted 9y ago
[deleted]
saas_co_de 9y ago
> The income statement is very clear in that respect A matter of opinion I guess. I would characterize it as being as misleading as possible without actually being false. The point is that Bookings are not income at all so they don't belong anywhere on an income statement. "Contra Revenue" and "Net Revenue" are pure fiction because the Bookings are not revenue in the first place. Once again, if you want to see how a real company run by adults does this, just look at Visa's annual report: http://s1.q4cdn.com/050606653/files/doc_financials/annual/2017/Visa-2017-Annual-Report.pdf http://s1.q4cdn.com/050606653/files/doc_financials/annual/20... Spoiler Alert: transaction volume is on Page 38.
- beambot 9y ago
  Bookings would certainly be a key financial metric... and would certainly belong on a financial statement since the funds transit Uber's books before being distributed to 3rd parties.
  - saas_co_de 9y ago
    Transaction volume is an important metric for tracking the growth of the business, but it is not revenue. The fact that the funds go through Uber's account has nothing to do with it. See Uber's terms of service: "with respect to Third Party Providers, Charges you incur will be owed directly to Third Party Providers, and Uber will collect payment of those charges from you, on the Third Party Provider’s behalf as their limited payment collection agent" https://www.uber.com/legal/terms/us/ https://www.uber.com/legal/terms/us/ Bookings are not revenue, which is why Uber can't call them revenue, but then wtf is "Contra Revenue" and how does Bookings - Contra Revenue = Net Revenue? Basic math: 5 Apples - 2 Oranges != 3 Oranges

mandeepj 9y ago

>In reality Uber is just like Visa. They are a transaction processor. No. Sorry. They are also processing the transaction and keeping the whole amount of transaction which is not what Visa does.

tinymollusk 9y ago
Don't they pay drivers 70%? That's somewhere in between paying your service contractor and passing along the 97% that VISA does.

gregshap 9y ago

They show Gross Bookings were $9.7B in Q3 of 2017. Net Revenue was $2.0B which is after paying drivers.

dopamean 9y ago

How do companies like Ticketmaster handle this? They sell tons of tickets but their revenue comes from the service charges right?

ProAm 9y ago
I wouldn't know, they wanted to charge me to print their financials at home.
saas_co_de 9y ago
Sort of hard to tell since Ticketmaster is part of Live Nation and so they don't go into a lot of detail on their financials. http://s1.q4cdn.com/788591527/files/doc_financials/2016/annual/LYV-2016.12.31-10K_FINAL_rev7_hosting-only.pdf http://s1.q4cdn.com/788591527/files/doc_financials/2016/annu... If you look at the Live Nation annual report you will see Ticketmaster reporting revenue of 1.8B (P.34) on 186M fee-bearing tickets sold (P.29). They don't specifically say what the face value of those tickets was but they are almost certainly only reporting their fees as revenue because the average is less than $10 per ticket and their revenue includes other things besides ticket fees.

gumby 9y ago

> Reporting your transaction volume as revenue is really infantile and should get you laughed out of the room, but here we are. It’s not GAAP so as long as you’re private it’s merely stupid — if they tried that when public the SEC would be involved. Of course they couldn’t go public that way in the first place.