Uber and Lyft’s accounting both define drivers as customers, not passengers, and this definition increases their sales $ by over 10%

From Wall Street Journal:

Uber and Lyft each provide substantial discounts and incentives to riders, which subsidize the cost of trips and encourage usage. But they don’t account for these amounts in their sales numbers. Instead they categorize them as marketing expenses. That inflates reported gross profits and distorts common analyses of the companies’ unit economics.

This distortion is possible because both companies inexplicably assert that their customers are not the passengers but the drivers…

And instead, passengers are called “end-users”. These definitions allow them to adjust their sales:

In 2018 Lyft included $338.4 million of rider incentives and refunds in “marketing expenses.” Had it been treated as ordinary sales discounts, reported revenue would have been some 16% lower than the $2.16 billion disclosed. The same year Uber reported that $1.4 billion in “sales and marketing” was for consumer discounts, promotions and refunds. If treated as ordinary sales discounts, sales would have been 12% lower than the $11.27 billion reported.

You can see Uber’s S-1 filing to the SEC calls passengers end-users:

End-users access the Platform for free and the Company has no performance obligation to end-users. As a result, end-users are not the Company’s customers.

Uber says there, “Drivers are our customers”.

 

 

h/t goodDayM

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