site logo

Financial reporting enters a new age

Fotolia

Note from the editor

The way finance leaders track and report their company's financial performance is in constant flux. 

Finance leaders increasingly rely on metrics outside generally accepted accounting practices (GAAP) to help investors, analysts and regulators understand their company's performance.

Especially for fast-moving technology companies in the software-as-a-service (SaaS) space that rely on recurring revenue, forward-looking non-GAAP metrics are key to showing growth. As former Salesforce CFO Graham Smith memorably put it, "Revenue for a SaaS company is like light from a distant star; it came from something that happened a long time ago." 

That's why finance leaders rely on measures like churn, net promoter score, and new customer growth. These are what reveal company health.

To help you as you think about your own approach to tracking and reporting your company's performance, we've compiled a number of articles from CFO Dive. Together, they look at the full range of non-GAAP metrics that CFOs find indispensable. We hope you find the coverage useful.

Robert Freedman Editor

Accounting GAAP: Why digital companies struggle with reporting standards

The legacy accounting system often misses the mark for many businesses.

Center for Audit Quality: Auditors can improve non-GAAP measures

Inconsistent calculation of EBITDA and other metrics not used in formal reporting can be made more informative if they're subject to external review.

Which KPIs are worth tracking?

Srinivas Pothireddy, vice president at Apps Associates, told CFO Dive which metrics to analyze and which to ignore for meeting today's digitized demands.

SaaS metrics are often misreported

As non-GAAP measures, they might be based on variables other companies don’t share, but they can be made more accurate, says SaaStr head Jason Lemkin.

How CFOs can use churn, NPS data to grow revenue

By linking net promoter score with other metrics, finance chiefs can help executives know where intervention can help boost recurring revenue.

Freshly CFO: Metric definition key to sound business decisions

Unless a metric means the same thing to everybody, leaders can’t drive a successful company strategy, Matt Hagel of Freshly says.

The only 3 KPIs Peloton CFO tracks

Jill Woodworth, a panelist at the MIT Sloan CFO Summit and the CFO of Peloton, told the audience how she and her team have worked to figure out their user base.

CFO KPI Close-up: Return on invested capital

"ROIC is a vastly superior way to measure long-term success than EBITDA," Jack McCullough of CFO Leadership Council says. So why don't more CFOs track it?

CFO KPI Close-up: Churn

"Really every SaaS company CFO should be tracking churn ... churn and retention are key," Ben Murray, CFO of Mobile Solutions, said.

CFO KPI Close-up: Cash flow

When the economic outlook is cloudy and grim, "cash is king" rings 10 times truer, CFOs say.

CFO KPI Close-up: Customer retention

Retaining customers begins with not giving them an excuse to leave, especially during times of economic uncertainty, three customer retention experts say.

CFO KPI Close-up: Talent retention

With turnover more costly, talent retention has become a marker of a company's health and a primary CFO responsibility.

Financial reporting enters a new age

The way finance leaders track and report their company's financial performance is in constant flux. Finance leaders are now increasingly rely on metrics outside GAAP to help investors, analysts and regulators understand their company's performance.

included in this trendline
  • The only 3 KPIs Peloton CFO tracks
  • How CFOs can use churn, NPS data to grow revenue
  • Accounting GAAP: Why digital companies struggle with reporting standards
Our Trendlines go deep on the biggest trends. These special reports, produced by our team of award-winning journalists, help business leaders understand how their industries are changing.
Davide Savenije Editor-in-Chief at Industry Dive.