Groupon's PR Boss Suddenly Quit After Just Two Months On The Job - Here's Why

This all makes sense, but the point that 'sunchild was raising wasn't about gross vs. net revenue; it was the fact that Mason was talking about their revenue without talking about their offsetting liabilities.

I have 100% confidence that any 2 people on HN could, given enough time to dig through accounting details, find something to disagree about in the 10K of any public company in the world.

eBay couldn't meaningfully do Groupon accounting because they do not beneficially possess the total transaction cost for any length of time. Paypal accounting gets incredibly complicated, but basically, if A agrees to buy B's widget on eBay for $100 with $10 of eBay fees, eBay gets the $10 from B's credit card and, a short period later, A pays B directly through a subsidiary which Very Carefully (TM) never puts the $100 on eBay's balance sheet or under their direct control. eBay doesn't call it revenue because eBay can't spend that money.

Groupon can spend that money.

There are many businesses which make active use of money that is owed to other people prior to actually paying it. Warren Buffets owns a lot of insurance companies. A huge portion of his investment operations are funded by float: basically, you have to pay him premiums and then he gives them back to you when (statistically speaking) your house burns down some years later. In the interim, it's his money, and if he manages float correctly it buys a company like e.g. Coca Cola on a continuous basis.

Or: take Bingo Card Creator as an example at the waaaaay opposite end of the scale. Many of my sales come through Google ads. It is basically economically equivalent to giving them 50% of the purchase price of 50% of my sales -- in fact, there is a Google pricing option which would make that exactly equivalent. However, crucially, I do not pay Google contemporaneously with the sale: like Groupon, our contractual arrangement means I pay them quite a bit later.

Ads placed on September 4th turn into sales on, statistically, September 5th which turns into money in my bank account on roughly September 7th. I get invoiced for the ads on approximately September 25th and then have until October 20th to pay my credit card prior to paying a penny of interest.

This means that I'm generally holding a couple of thousand of dollars of "Google's money" in my pockets at any given time. (It goes up and down depending on what time of the year this is. At the moment, it's a little under $1.5k off the top of my head.) Crucially, I can spend it. I'd have to replace it prior to summer (when the float tends to evaporate, due to how my market works), but if I want to replace a laptop or pay for a plane ticket for a couple months without having to pay credit card interest rates or dip into savings, I can take the money I was going to pay to Chase to pay Google in October, and then instead pay Chase in October with the money I was going to pay them in November, and then... you get the general picture.

I think the contingencies you're talking about here are things like channel inventory and buybacks, not "any expenses".

"The money you have before accounting for expenses" is practically the definition of "revenue", isn't it? When people say "revenue" they're talking about the top line.

I'm not an accountant either, but having worked with them my understanding of "revenue recognition" is, loosely, "the point at which a promise of income can be accounted for as actual income". For instance, when a reseller commits to move Nx1000 units of a product at $Y, when does the producer get to account for $Nx1000xY dollars income.

My point stands on it's own two feet. I never said Groupon was engaged in fraud.

I was responding to the parent comment's proposition that criminal behavior is irrelevant to pre-IPO activity. Fraud is a criminal offense, and fraud is defined as "an intentional deception made for personal gain". The point is: Fraud is always a course of action available to the SEC, FTC and AGs.