Profitable can have many more meanings than you'd think. On the surface, to me, profitable means you make more money than you spend (subtracting all the costs of doing business, acquiring customers, taxes, payroll, etc).
Depending on who you're talking to, however, that can mean things like "it costs less to acquire a new customer than they're likely to spend", or that excluding things like salaries, rent, taxes and such, they're profitable.
In this case I'd guess it means that Uber pays less to drivers than the user pays them, and ignore everything else (marketing, salaries to employees, taxes, etc).
I mean sure, there are. In fact, there are lots of pretty standard ideas of what constitutes profitability. But if you just say, we're profitable, most people will assume you mean on a GAAP net income basis. If you don't mean that, you can say, we're cash flow positive or something like that. Or you could say, "we're profitable on an EBIT basis," or we have a positive gross margin. You can't just say, hey! if you exclude a bunch of our costs and count all of our revenue, the revenue is bigger!
'Profitable can have many more meanings than you'd think.'
Postmodernism meets accounting meets Bay Area startups. I like these threads were everyone isn't just a programmer, but an accounting expert.
This is hardly an area where startups are on the leading edge.
> For one contract, in July 2000, Enron and Blockbuster Video signed a 20-year agreement to introduce on-demand entertainment to various U.S. cities by year-end. After several pilot projects, Enron recognized estimated profits of more than $110 million from the deal, even though analysts questioned the technical viability and market demand of the service. When the network failed to work, Blockbuster withdrew from the contract. Enron continued to recognize future profits, even though the deal resulted in a loss.
Right, using accounting methods that were "generally recognized as having been invented at or by Enron, used nowhere else in the industry and at least passively, if not actively, misleading".
The Bloomberg article reported "In February, Uber earned an average of 19¢ per ride in the U.S., according to previously undisclosed financial documents" then added "Not included in Uber’s profitability calculations are interest, taxes, or equity-based compensation for employees".
This seems to suggest that everything else was taken into account in the profitability calculations, but a little skepticism does seem in order!
Really? Sure, a division can operate at a profit, or a product can be profitable while the rest of the enterprise is on fire, but profitable has a pretty solid definition in the GAAP world, doesn't it? Now I could totally see uber using all sorts of non-GAAP E.B.(some bullshit we haven't even thought up yet) metrics and those numbers can indicate favorable growth and a direction of future profitability but you couldn't seriously refer to that as "profit" when dealing with real investors.
Are you talking cash flow positive, net income positive, or operating income positive? If you want to talk about profitability, you'll need to be very specific.
It's hard to understand what companies mean when they say profitable these days.. maybe they meant gross profit positive or profitable on unit economics?
Depending on who you're talking to, however, that can mean things like "it costs less to acquire a new customer than they're likely to spend", or that excluding things like salaries, rent, taxes and such, they're profitable.
In this case I'd guess it means that Uber pays less to drivers than the user pays them, and ignore everything else (marketing, salaries to employees, taxes, etc).