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You're just missing some terminology. This stuff is surprisingly complex -- which gives technical people used to worrying about mind-numbing levels of complexit

You're just missing some terminology. This stuff is surprisingly complex -- which gives technical people used to worrying about mind-numbing levels of complexity an edge ;) "Revenue" is confusing for business like this. More precise reporting usually reports either "GMV" (gross marketplace value, all the payments Uber took in) or "net revenue", which would deduct the amounts paid to drivers. If an article said "revenue" without further qualification and it was a marketplace business, I'd probably assume they were talking about GMV. "Profit" is to some extent a fiction of the accounting department -- the relevant question is actually cashflow. Money in, money out. When you need to make a payment for loan service/payroll/etc and don't have the cash, you're headed for bankruptcy; that's pretty easy to understand. By way of comparison, whether or not a firm is "profitable" requires making a bunch of complicated judgments about whether you've actually "earned" the cash you've collected (e.g. gift cards, multi-year software contracts) and on the expense side, how to spread the cost of large, long-term, fixed assets (like code development, PCs, etc) against what they productively delivered (revenue-wise) over long timescales, potentially decades. That's called depreciation and amortization and it's a big topic in accounting school. One thing many developers forget is that customer acquisition, especially in marketplace businesses like Uber, DEVOURS cash. Uber spends like crazy on everything from conventional advertising (digital, TV, radio), referral/sign-up credits, rider incentives, cross-promotions with other brands (stay at X hotel and get uber for 10% off), etc. Uber is uniquely complex because it's sort of an aggregated conglomerate of a bunch of markets with differing stages of maturity and profitability. Think of each of these as different businesses, where the older, more developed (e.g. Chicago, New York) ones are putting cash into the business, subsidizing the spend (investment) on developing a good competitive position in later markets. And yes, there is absolutely truckloads of money available if you can show you can reliably acquire customers on a business with good economics.

sonnyblarney 8y ago
Profit is not a fiction, it's just a different thing that cash flow. Cash flows ultimately reconcile with profit. Or they should.
- joevandyk 8y ago
  It’s difficult to show how much profit you had in Q2 2018, let’s say. Hence the fiction qualifier.
  - sonnyblarney 8y ago
    "It’s difficult to show how much profit you had in Q2 2018," ? It's right on their public statements. The components of it are not known, but then again, same thing applies to their cash flow.
- unreal37 8y ago
  It's fiction in that it can be whatever they want it to be. Like Amazon was known for years to intentionally not make a profit. They arranged their business so that all the money they made got plowed back into the business in such a way that they could claim a slight loss. That was in their control to some degree.
  - sonnyblarney 8y ago
    "It's fiction in that it can be whatever they want it to be." No, absolutely not. There are well accepted accounting principles. If a company wants to re-invest, then they can do that - but 'profit' is a material, objective thing, of course it changes profit, but it also would change 'cash flow'. Financial accounting is a real thing, not any kind of fiction. It gets to be fiction when there are things that are difficult to account for, or intangible things like goodwill. But if they book a sale on Dec 1 - then that's revenue, even if the money doesn't come in until 3 months later.
    - jcampbell1 8y ago
      Goodwill is simply the difference between book value and price paid for an acquired company. For instance when Google bought YouTube for a billion it was almost all recorded as a Goodwill asset. Each year, Google must decide if YouTube continues to be worth at least a billion dollars, otherwise they may need to write down the goodwill, much like any other impaired asset. Buying companies are like buying other assets except they don't depreciate on the books and are called goodwill. Writedowns of goodwill are the same as any other asset impairment. I really wish goodwill was called "acquisition premium" and everyone would get it.
jiveturkey 8y ago
> "Revenue" is confusing for business like this. More precise reporting usually reports either "GMV" (gross marketplace value, all the payments Uber took in) Your description is confusing itself. GMV is total retail value of transactions through a C2C type of business. eg ebay GMV would be the gross dollar value of all transactions. ebay revenue would represent ebay's total commissions, listing fees, and other income from being an agent in the sale. So, while GMV is truly, quoting you, "all the payments Uber took in", because for Uber (unlike ebay) you don't pay the driver directly but rather all transactions are brokered by Uber, it is more clear to say that GMV is the total value of all rides. While stating that it's money taken in by Uber is true, it isn't as clear a description when you're trying to explain GMV. > If an article said "revenue" without further qualification and it was a marketplace business, I'd probably assume they were talking about GMV. I'd assume revenue, because GMV is not revenue. If only 1 number is reported, revenue, or net revenue if you will, is what we care about so that's what I'd assume is being reported. GMV without take rate is not that interesting.

sonnyblarney 8y ago

Profit is not a fiction, it's just a different thing that cash flow. Cash flows ultimately reconcile with profit. Or they should.

joevandyk 8y ago
It’s difficult to show how much profit you had in Q2 2018, let’s say. Hence the fiction qualifier.
- sonnyblarney 8y ago
  "It’s difficult to show how much profit you had in Q2 2018," ? It's right on their public statements. The components of it are not known, but then again, same thing applies to their cash flow.
unreal37 8y ago
It's fiction in that it can be whatever they want it to be. Like Amazon was known for years to intentionally not make a profit. They arranged their business so that all the money they made got plowed back into the business in such a way that they could claim a slight loss. That was in their control to some degree.
- sonnyblarney 8y ago
  "It's fiction in that it can be whatever they want it to be." No, absolutely not. There are well accepted accounting principles. If a company wants to re-invest, then they can do that - but 'profit' is a material, objective thing, of course it changes profit, but it also would change 'cash flow'. Financial accounting is a real thing, not any kind of fiction. It gets to be fiction when there are things that are difficult to account for, or intangible things like goodwill. But if they book a sale on Dec 1 - then that's revenue, even if the money doesn't come in until 3 months later.
  - jcampbell1 8y ago
    Goodwill is simply the difference between book value and price paid for an acquired company. For instance when Google bought YouTube for a billion it was almost all recorded as a Goodwill asset. Each year, Google must decide if YouTube continues to be worth at least a billion dollars, otherwise they may need to write down the goodwill, much like any other impaired asset. Buying companies are like buying other assets except they don't depreciate on the books and are called goodwill. Writedowns of goodwill are the same as any other asset impairment. I really wish goodwill was called "acquisition premium" and everyone would get it.

jiveturkey 8y ago

> "Revenue" is confusing for business like this. More precise reporting usually reports either "GMV" (gross marketplace value, all the payments Uber took in) Your description is confusing itself. GMV is total retail value of transactions through a C2C type of business. eg ebay GMV would be the gross dollar value of all transactions. ebay revenue would represent ebay's total commissions, listing fees, and other income from being an agent in the sale. So, while GMV is truly, quoting you, "all the payments Uber took in", because for Uber (unlike ebay) you don't pay the driver directly but rather all transactions are brokered by Uber, it is more clear to say that GMV is the total value of all rides. While stating that it's money taken in by Uber is true, it isn't as clear a description when you're trying to explain GMV. > If an article said "revenue" without further qualification and it was a marketplace business, I'd probably assume they were talking about GMV. I'd assume revenue, because GMV is not revenue. If only 1 number is reported, revenue, or net revenue if you will, is what we care about so that's what I'd assume is being reported. GMV without take rate is not that interesting.