Preface

We are pleased to present the 2025 edition of Non-GAAP Financial Measures and Metrics. This Roadmap combines the SEC’s guidance on non-GAAP measures with Deloitte’s interpretations and examples in a comprehensive, reader-friendly format. The 2025 edition of this publication reflects recent developments related to non-GAAP measures, key performance indicators (KPIs), and metrics. For a summary of substantive changes made to the Roadmap since publication of the 2024 edition, see Appendix J.

For the 12 months ended July 31, 2025, non-GAAP measures remained among the top areas of SEC comment. The SEC staff continues to focus on registrants’ application of the guidance in its non-GAAP Compliance and Disclosure Interpretations (C&DIs), which the staff updated in December 2022 in response to the high volume of disclosure comments and questions related to such measures. The C&DIs address how the staff evaluates certain non-GAAP measures, provide the staff’s criteria for considering such measures misleading, and include examples of when a non-GAAP measure may be more prominent than the corresponding GAAP measure.

The SEC staff is expected to continue monitoring registrants’ use of non-GAAP measures and metrics; accordingly, registrants should remain mindful of key focus areas, including (1) whether there is undue prominence of non-GAAP measures; (2) whether certain adjustments are potentially misleading (e.g., the removal of normal, recurring cash operating costs or changes in accounting recognition that could represent tailored accounting); (3) enhancement of the disclosure related to the purpose and use of non-GAAP measures; (4) identification and clear labeling of non-GAAP measures and adjustments; (5) whether measures are appropriately characterized as liquidity or performance measures; (6) reconciliation requirements; (7) the presentation of the income tax effects of non-GAAP adjustments; and (8) disclosures related to certain financial or operating metrics. The SEC staff also continues to speak publicly about the importance of registrants’ implementation of appropriate controls and procedures related to the disclosure of non-GAAP measures.

Given the ongoing uncertainty associated with macroeconomic events (e.g., the Russia-Ukraine war, geopolitical unrest in the Middle East, supply-chain disruptions, global tariffs, and changes in tax law) and related economic conditions, companies may be faced with a number of financial reporting and disclosure challenges that result in the recognition of infrequent or unusual gains, charges, or losses. Registrants that are considering reflecting these items in their non-GAAP measures should be mindful of the various requirements and interpretations related to the use of such measures. The SEC issued a sample letter to companies regarding disclosures about the financial impact of the Russia-Ukraine war and related supply-chain disruptions. The letter included examples of SEC comments that issuers can consider when evaluating potential non-GAAP adjustments. While the SEC’s interpretive guidance and sample comments address specific macroeconomic events, registrants should remain aware that the underlying principles may apply to other circumstances.

In 2024, the IASB issued IFRS 18, which will require entities to disclose management-defined performance measures in a single location within the notes to the financial statements. Companies reporting under IFRS® Accounting Standards will be required to retrospectively apply IFRS 18 for annual periods beginning on or after January 1, 2027, and early adoption is permitted.

Also in 2024, the FASB issued an invitation to comment (ITC) on whether it should explore standard setting related to financial KPIs. The ITC defines financial KPIs as “any financial measure that is calculated or derived from the financial statements and/or underlying accounting records that is not presented in the GAAP financial statements.” As a result, many non-GAAP measures would be viewed as financial KPIs. If the FASB pursues this project, it may engage in future standard setting that permits certain non-GAAP measures to be included in a company’s financial statements that are prepared in accordance with U.S. GAAP.

We hope that you find this Roadmap helpful, and we welcome your suggestions for future improvements. If you need assistance with applying the non-GAAP guidance or have other questions about this topic, we encourage you to consult our technical specialists and other professional advisers.