Just a reminder if you are interested in visiting a great BNI group come visit us at Legends at the Bennett Valley Golf Course on Fridays just before 7AM. The “Best Networkers In Town” would be happy to have you visit. Great, free way to meet around 40 Business People here in Sonoma County. If you want any other information about this let me know.
Well even though we are in the middle of my review of Quarterly Earnings, I come to find that the companies that I have reviewed have conspired against me. Cyan, Enphase, and Keysight are all doing their Quarterly Calls next week. So in the interim I have a couple of Earnings issues to talk about.
There has been significant announcements from both Enphase and Cyan over the past month or so. Cyan has told us that Q4 earnings are going to be better than originally expected and that they have a new product. I will be interested to understand where this new revenue came from. If you recall, Cyan already predicted a 1 time bump in Q1. I will want to know if there is where the Q4 bump has come from or if there is a second bump coming. I also want to hear about Cyan’s new platform and positioning.
Enphase has done two announcement that look to push the company more toward the commercial space. One of these announcements is an acquisition of another company. I will be curious to see how this is projected to impact future earnings. In particular, this acquisition was listed as an asset purchase from the way I read things. This normally means that the target was not doing well financially. So, I will be curious to hear why this is good for Enphase.
To the other topic today and that is what is GAAP and non-GAAP when it applies to earnings. First off an expansion of the acronym. GAAP means Generally Accepted Accounting Principles. You should then say to yourself, hey it soulds like I should look at those GAAP numbers. Well, in general that is true. The problem is that at some times the way things are accounted for confuse things. The difference between GAAP and non-GAAP numbers is supposed to be what they mean for the ongoing business. The idea is that some things in GAAP do not actually cost the company money, but compensate for how money was spent in the past. So, what is supposed to happen is that the company provides non-GAAP results that tell you more about the ongoing operations of the company. What you should evaluate is the reconciliation that the company gives you around this. These numbers should tell you what the changes are between the two results.
So, when you look at results for a quarter take a look at all 3 tables. The GAAP, the non-GAAP, and Reconciliation tables are all important. Your job is to see if you agree with the changes and which results are more important to you.
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