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UNIQUS Point of View – Use of non-GAAP Measures

Recently, companies have increasingly been disclosing non-GAAP measures in their investor communication and capital markets-related offering documents. The rationale for using such non-GAAP measures is that they assist management in providing the users of financial information with an understanding of the company’s key business drivers and enable management to present a perspective to users, which might not be possible only through GAAP measures.

Considering companies’ increasing use of non-GAAP measures, the regulators have continued to focus on the same as part of their supervisory agenda. For example, the Securities Exchange Commission (SEC) in the United States of America vigilantly monitors the non-GAAP measures and metrics being published by companies. In India, the Securities and Exchange Board of India (SEBI), in November 2022, approved specific rules to be followed by companies that use Key Performance Indicators (KPIs) metrics in the offering documents.

This publication highlights our analyses on the use of non-GAAP measures by companies and provides our perspective, which can be accessed here . Across all industries and sectors, it is true that effective use of non-GAAP measures requires careful, up-front, and thoughtful planning. This requires an investment to be made by the companies. However, that investment and compliance with the applicable rules and regulations can allow management to effectively communicate their perspective on their company’s financial position and/or performance and aid in meaningful stakeholder engagement.
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