A very large majority of the time, we want to use adjusted or non-GAAP figures vs GAAP figures.
We use non-GAAP figures because these are the figures analysts use to compare performance. Comparing non-GAAP figures allow investors to understand if a company beat or missed estimates.
Sometimes there are no adjustments and the GAAP figure will be the comparable figure.
What is GAAP? (Generally Accepted Accounting Principles)
GAAP accounting refers to a common set of accounting standards. GAAP is the system that allows accountants to do their jobs and create financial statements; however, not every investor needs to know about all the accounting a company needs to do. There are different standards across the world, for example in Europe there is IFRS vs non-IFRS.
Non-GAAP earnings, sometimes referred to as adjusted earnings or proforma earnings, are preferred by analysts and investors because one-off items like goodwill, one-time charges related to foreign exchange adjustments, or other one-time charges are omitted. These charges should not be used as a gauge of continuing operations.
During earnings companies will give a GAAP figure, but also may have to make an adjustment for a one-time charge, which would result in a non-GAAP figure.
Here is an example from the DAL earnings report where the company chose to delineate between its GAAP and non-GAAP results. This is an ideal scenario for an investor wanting to quickly and easily get the adjusted figure:
This kind of differentiation can also look something like this example from ticker NTIC, which is a little less clean but still very helpful by the company to do it this way:
In this example, both the GAAP and non-GAAP figures are in the same bullet.