Gross vs net revenue

Also called principal vs agent, gross or net reporting

The accounting judgement of whether a studio books the full price a player pays as revenue, with platform or provider fees as a cost, or only the amount it receives after those fees.

Under IFRS 15 and ASC 606, the answer depends on whether the studio is the principal or an agent in each sale. A principal “controls the specified good or service before that good or service is transferred to a customer” and books the gross amount. An agent books its fee or commission (IFRS 15, B35). The indicators include who is responsible for fulfilment, who carries inventory risk and who sets the price.

One company can land on both sides. Electronic Arts reports most third-party storefront sales net of the fees the storefront keeps, but reports App Store and Google Play sales gross, with mobile platform fees in cost of revenue (EA 10-K, FY2026).

Merchants of record don’t agree either. Paddle’s help centre says revenue “should be based on the gross amount, including the Paddle fee” (Paddle), while FastSpring and Lemon Squeezy state no position. Write a principal-agent memo for each MoR contract. Sales tax collected on the sale is never your revenue under either view. See MoR accounting.