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Comment by treis | Hacker News Reader

Their revenue is a bit misleading since most of it goes to CC processing fees. This tweet says net profit was 214k in 2019:

https://twitter.com/shl/status/1215673023472140289

Probably triple that this year with the Covid bounce. So obviously doing well for himself, but not quite as good as you think.

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From the Tweet, from Sahil (CEO) himself:

  Gumroad, Inc in 2019:
  Revenue: $5M (up 46% YOY)
  Gross profit: $1.7M (up 68% YOY)
  Net profit: $214K

I not familiar enough with the Gumroad model to understand why how the creators made $73M in 2019, but Gumroad revenue was only $5M.

> "I not familiar enough with the Gumroad model to understand why how the creators made $73M in 2019, but Gumroad revenue was only $5M."

I would imagine that monies collected on behalf of someone else for transmission to them do not count as revenue since they do not at any point belong to the business. Banks do not claim deposits or incoming checks as revenue, for example.

It is the difference between gross and net revenue. It is why bookmakers don't report all the bets they take in as revenue. Banks that trade securities don't recognise the money from securities they sell as revenue. Roughly, you only recognise revenue on the part of the transaction that economically accrues to you. If you are just a middleman, you only recognise your commission (this is, however, very complex...for example, some companies that trade in commodities recognise product sold on the top-line because they take ownership of the cargo...so it varies...the accounting in this case is what I would want to know as someone using the financial statements).

Sounds like it's a market place, so that's the money the sellers(creators) received.

Gumroad likely only takes a small cut on each transaction (so about 6% in this case?).

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