Introduction
DoorDash customers placed $102.0 billion of orders through its marketplaces in 2025. DoorDash reported $13.7 billion of revenue. The other $88 billion or so never appeared in its income statement, because DoorDash concluded that it does not control the meals it delivers or the delivery itself: it arranges both, as an agent for merchants and for consumers, and records as revenue only what it keeps after paying merchants and couriers. Had the same business been structured so that DoorDash bought the food and resold it, its revenue would have been several times larger, while its profit would have been the same.
That is the effect of the principal versus agent judgment under Accounting Standards Codification (ASC) 606. It decides whether a company reports revenue gross, at the full price the customer pays, or net, at the fee or commission it retains. It is one of the largest single judgments in revenue accounting for marketplaces, travel companies, distributors, advertising businesses and payment processors, and it is part of the wider framework explained in revenue recognition under ASC 606.
The Test: Control Before Transfer
The analysis starts by identifying the specified good or service the customer receives, such as a meal, a hotel night or a software license, and asking whether the company controls it before it is transferred to the customer. A company that controls it is a principal; one that arranges for another party to provide it is an agent. The analysis is performed separately for each specified good or service, so a company can be a principal for some parts of a contract and an agent for others.
- Principal and agent
Under ASC 606, a principal controls a specified good or service before transferring it to the customer and reports revenue at the gross amount it is entitled to. An agent arranges for another party to provide the good or service and reports revenue at the fee or commission it retains.
To support the control assessment, ASC 606 offers three indicators that a company is a principal:
- Primary responsibility: it is primarily responsible for fulfilling the promise, including the acceptability of the good or service, and is usually the party the customer holds accountable.
- Inventory risk: it bears the risk of holding the goods before they are sold, or after return, or of having committed to services before obtaining a customer.
- Pricing discretion: it has discretion in setting the price the customer pays.
These indicators support the control conclusion rather than replace it. Deloitte's discussion of principal versus agent considerations quotes the Financial Accounting Standards Board's (FASB) reasoning in Accounting Standards Update (ASU) 2016-08: the indicators support the assessment of whether the company controls the specified good or service, do not override it, and are not a checklist to be scored. A company with pricing discretion but no inventory risk and no responsibility for fulfillment may still be an agent.
Same Profit, Different Revenue
The consequences are easiest to see on one transaction. Suppose a platform facilitates the sale of a $100 product supplied by a merchant, keeping $15 and passing $85 to the merchant. As a principal, it would record the full $100 as revenue and the $85 as cost of revenue; as an agent, it records only its $15:
| Line item | Principal (gross) | Agent (net) |
|---|---|---|
| Revenue | 100 | 15 |
| Cost of revenue paid to the merchant | (85) | 0 |
| Gross profit | 15 | 15 |
| Operating expenses | (10) | (10) |
| Operating income | 5 | 5 |
| Gross margin | 15% | 100% |
| Operating margin | 5% | 33% |
The platform's cash, gross profit and operating income are identical under both presentations.
Gross profit, operating income, net income and cash are identical. Revenue, cost of revenue and every margin measured against revenue are not: the agent appears to earn a 100% gross margin and a 33% operating margin, the principal 15% and 5%. Revenue growth rates differ too whenever the mix of gross and net business changes. How gross profit is built up from revenue and cost of revenue is explained in cost of goods sold and gross profit.
DoorDash: An Agent by Design
DoorDash's 2025 annual report explains the judgment directly. For order facilitation, DoorDash concludes that it is an agent for partner merchants, because it cannot redirect the products to another consumer and obtains no economic benefit from them. For delivery facilitation, it acts in the vast majority of cases as an agent for the consumer, because it only arranges for a delivery opportunity to be offered to couriers and does not control how the delivery is provided. It therefore reports revenue net: the amounts collected from consumers, less what it remits to merchants and couriers.
The company's key metrics show the scale of the difference:
| Measure, 2025 | Amount | Share of gross order value |
|---|---|---|
| Marketplace gross order value | $102.0 billion | 100% |
| Revenue | $13.7 billion | 13.4% |
| Gross profit | $6.7 billion | 6.6% |
| Net income attributable to DoorDash | $0.9 billion | 0.9% |
DoorDash reports a net revenue margin, revenue as a share of gross order value, of 13.4% in both 2024 and 2025. The ratio, often called a take rate, is the natural way to analyze an agent: growth in gross order value shows how much commerce passes through the platform, and the take rate shows how much of it the company keeps. Revenue grew 28% in 2025, a little faster than gross order value, which the company attributes partly to more advertising revenue and fewer credits and refunds.
When the Answer Differs Within One Company
Many companies are principals for some activities and agents for others. A food delivery platform that also runs its own convenience stores, buying and holding inventory, is a principal for those sales and reports them gross alongside its net marketplace revenue. An online retailer reports its own inventory sales gross and the commissions it earns from third-party sellers net. A ride-hailing company can be an agent in one country and a principal in another, depending on whether local rules or contracts make it responsible for providing transport. The revenue note's disaggregation tables usually show the split, and the blog's analysis of gross vs net revenue works through ride-hailing and travel examples.
- Gross merchandise value (GMV)
The total value of goods or services sold through a marketplace or platform, before deducting amounts paid to merchants, drivers or other suppliers. It is an operating metric, not revenue, for companies that act as agents, and is often called gross bookings or gross order value.
Where the Judgment Gets Hard
The judgment is straightforward at the extremes: a retailer buying and reselling its own stock is a principal; a booking site passing on a hotel's price for a commission is an agent. The hard cases sit in between, and they recur across industries:
- 1.Travel: an online travel agency acting as merchant of record, collecting payment and setting the price, may still be an agent if the hotel remains responsible for the stay.
- 2.Advertising technology: a company buying advertising space and reselling it may be a principal if it controls the inventory, or an agent if it only arranges placement for an advertiser.
- 3.Distribution of software and cloud services: a reseller of third-party licenses is often an agent, reporting only its margin, even when it invoices the customer for the full amount.
- 4.Pass-through costs: shipping, taxes and third-party costs re-billed to customers raise the question of whether the company controls the underlying service.
In each case, small changes in contract terms, such as who bears inventory risk or who handles customer complaints, can move a company from one side of the line to the other. A change in business model that switches a market from net to gross can therefore lift reported revenue growth sharply without any change in profit, and the reverse can depress it, which is why companies typically disclose such changes and their effect on growth.
What Bankers Do With the Distinction
In valuation and comparisons, the rule of thumb is to compare like with like. For agents, bankers focus on gross transaction volume, take rate and EBITDA; for principals, on revenue and gross margin; and when comparing a principal with an agent, on gross profit and EBITDA, which gross or net presentation does not affect. In diligence, they check whether a target's revenue policy matches its peers' and the buyer's, because a combined company will apply one policy, and a change can alter reported revenue and margins after closing. Revenue multiples, in particular, need adjusting before they are compared, and the Valuation guide's article on enterprise value to revenue and other multiples covers when bankers rely on them at all.
The principal-versus-agent judgment is a reminder that revenue is a measure of what a company controls, not of the commerce it touches. DoorDash's $102 billion of orders and its $13.7 billion of revenue describe the same business; the gap between them is an accounting conclusion about control, and understanding it is what makes the two numbers comparable with anyone else's.
