The simple version

Cash leaves the company either way. What changes is which line in the accounts absorbs it.

If the company got something distinct for the money, a service it could have bought from anyone, the payment is treated like any other cost and sits with the costs.

If it got nothing distinct, the payment is treated as a discount on its own earnings instead. The money-coming-in line is published already reduced by it, and no cost line ever carries it.

The numbers

• Uber Technologies, Inc., Form 10-K for the fiscal year ended December 31, 2025, accession 0001543151-26-000015, filed February 13, 2026, states in Note 1 that incentives provided to customers are recorded as a reduction of revenue if the company does not receive a distinct good or service or cannot reasonably estimate the fair value of the good or service received.
• The same note draws the opposite treatment for referrals: incentives earned by customers for referring new customers are paid in exchange for a distinct service and are accounted for as customer acquisition costs, expensed as incurred in sales and marketing expenses. The filing states the amounts presented as sales and marketing expenses on that basis for 2023, 2024 and 2025 were immaterial.
• The note also states that in some transactions, incentives and payments made to customers may exceed the revenue earned in the transaction, and that in those transactions the resulting shortfall amount is recorded as a reduction of revenue.
• Market-wide promotions, described in the filing as pricing actions that reduce the fare charged to end-users who are not customers, are recorded as a reduction of revenue at the time the transaction is completed.
• By contrast, targeted discounts and promotions offered to end-users who are not customers are recorded as sales and marketing expenses at the time they are redeemed, and end-user referrals are recorded as sales and marketing expenses when earned.
• Refunds to end-users that the company recovers from Drivers and Merchants are recorded as a reduction of revenue.
• The filing does not give a total dollar amount for incentives recorded as a reduction of revenue. We read the note and found no such figure, so no total appears anywhere in this article.

Why one payment is a cost and the other is not

A cost is what you pay for something you received. The accounts can show it as a cost because there is an identifiable thing on the other side of the payment.

A sweetener with nothing identifiable on the other side is harder to place. Nothing was bought, so calling it a cost would imply a purchase that did not happen.

The rule treats it as what it economically is: a reduction in the price the company charged. You handed back part of your own fee, so your fee is smaller, and that is reported by shrinking the money-coming-in line rather than by adding a cost.

The consequence worth holding on to is that the published top line is not what customers paid. It is what customers paid minus whatever was handed back without buying anything, and the two are not separated on the face of the accounts.

The actual math on a $20 piece of work

Take a job where the customer pays $20, the company keeps a fee of $4, and it hands the worker a $6 sweetener to pick the job up. All three amounts are ours and appear in no filing.

The $6 bought nothing distinct, so it comes off the money-coming-in line rather than going in with costs. The $4 fee less the $6 sweetener leaves minus $2.

Run a thousand of those and the line reads minus $2,000 where a cost treatment would have shown $4,000 coming in and $6,000 going out. The difference on the top line is $6,000, and no cost line moves at all.

That arithmetic is ours, applied to the two rules the filing states, and the filing gives no example of its own.

What this means

A falling top line can mean fewer customers, lower prices, or more money handed back. Those are three different businesses and the headline figure reads the same in all three.

It also means comparing two companies on the top line alone can mislead if one hands back a lot and the other hands back little. The one that discounts heavily looks smaller rather than more expensive to run.

The transferable habit is to ask what has already been netted out of a number before you compare it with anything. A figure that arrives pre-reduced is not the same kind of thing as a figure with the reductions shown underneath.

What this is NOT

This article explains when a payment to a supplier is recorded as a cost and when it is instead taken off revenue, using Note 1 of Uber Technologies, Inc.'s Form 10-K for the fiscal year ended December 31, 2025, read on November 5, 2026, as the worked example. The $20 job, the $4 fee, the $6 sweetener and the thousand jobs are all ours and appear in no filing, and the arithmetic drawn from them is ours applied to the rules the filing states. The filing gives no total for incentives recorded as a reduction of revenue and we found none. It is not a recommendation to buy, sell or hold any security and not a view on any company. It is not a claim that this treatment is wrong or misleading: it follows the revenue standard, the filing sets it out in detail, and the company discloses which payments go where. It is not accounting advice, and anyone applying these rules should work from the standard itself and a qualified accountant. This is not a political endorsement or criticism of anyone.

Sources

• Uber Technologies, Inc., Form 10-K for the fiscal year ended December 31, 2025, accession 0001543151-26-000015, filed February 13, 2026, Note 1, Description of Business and Summary of Significant Accounting Policies, as rendered in the filing: the Incentives to Customers paragraphs, the referral treatment as customer acquisition costs, the shortfall sentence, the End-User Discounts and Promotions paragraphs, and the Refunds and Credits paragraph. Read November 5, 2026: https://www.sec.gov/Archives/edgar/data/1543151/000154315126000015/R9.htm