There is no specific definition of non-GAAP. Sometimes, investors prefer certain non-GAAP earnings to better gauge the core performance of some business operations, because GAAP earnings are non-specific and too inclusive. Companies that use GAAP are required to report expenses in the same period as they report related revenue. It is often difficult to compare non-GAAP earnings to each other because there are no standardized methods for computing them. Non-GAAP financial measures are considered useful by many investors and analysts who believe that GAAP financial measures do not adequately capture a companyâs value. Technology companies are among the most frequent abusers of non-GAAP EPS because they use a significant amount of stock compensation and have large asset impairments and R&D costs. To understand non-GAAP earnings, it's important to understand GAAP earnings. GAAP specifications include definitions of concepts and principles, as well as industry-specific rules. As explained below, the guidance unambiguously sets forth the staffâs view that GAAP measures must be presented first, and must also be discussed and analyzed narratively. However, there are no regulations around non-GAAP earnings per share (EPS). Presenting non-GAAP financial measures on the face of any pro forma information required to be disclosed by Article 11. Information and translations of non gaap in the most comprehensive dictionary definitions resource on the web. Examples of non-GAAP earnings include free cash flow and core earnings. Pro-forma earnings are earnings that exclude certain costs that a company believes provide a distorted picture of its true profitability. The real value of the company is difficult to analyze due to a lack of standardization in the computation, thus making it difficult for comparison. A company's quality of earnings is important, so investors need to consider the validity of non-GAAP exclusions on a case-by-case basis to avoid being misled. While companies may be unhappy about this new rigid approach, implementation of new CDI 102.10 should ultimately be more straightforward than the application of so⦠Non-GAAP earnings are an alternative accounting method used to measure the earnings of a company. While non-GAAP earnings may have a tendency to manipulate earnings numbers, they also provide legitimate uses for both investors and management. The SEC has begun taking enforcement actions against improper practices where companies provide greater prominence to non-GAAP figures than GAAP figures. Non-GAAP financial measures are disclosed outside of financial statements (e.g., press releases, investor presentations, sections of annual reports, securities offering documents etc.) That is why the Securities and Exchange Commission (SEC) requires publicly traded companies to use GAAP accounting in the first place. In general terms, this means excluding certain items from its financial or operating results, often in an attempt to explain the impact of a nonrecurring (one-time) item or event. GAAP stands for Generally Accepted Accounting Principles. GAAP earnings now significantly trail non-GAAP earnings, as companies become addicted to “one-time” adjustments, which become meaningless when they happen every quarter. GAAP is a way for public companies to report their earnings using time-honored accounting principles, including accrual accounting, revenue recognition and expense matching. The GAAP vs non-GAAP debate can be confusing if you aren't sure what the two terms mean. Non-GAAP earnings are an alternative accounting method used to measure the earnings of a company. Non-Gaap Meaning | Methods that do not encompass the "generally accepted accounting policies", to calculate the financial information about companies. 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