The article GAAP vs. Non-GAAP: What's the Difference? says:

Technology companies have been large users of non-GAAP adjustments as these companies typically don't report high net income from the use of GAAP, due to the nature of their businesses.

Could you please explain why the nature of their businesses causes them to have low net income?

1 Answer 1


The nature of their businesses is that they are not making money.

They use non-GAAP accounting to persuade investors to give them money. In many ways, it is financial marketing.

Often, they are not making money because they are spending alot to try to grow quickly in a competitive market.

  • Thank you, but this has nothing to do with the nature of their business, this is just the fact that any growing company has a lot of expences.
    – Daniel
    Oct 25, 2020 at 13:01
  • It is all about the last sentence. Tech companies have more incentive to grow quickly than many other companies. The Investopodia page isn't providing any significant insight here.
    – minou
    Oct 25, 2020 at 15:25
  • 1
    @Daniel , no, its' a systematic con-job. It's the nature of the "social-media" nonsense bubble.
    – Fattie
    Oct 25, 2020 at 15:44

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