That report, done in conjunction with Suffolk University, researches the number and type of non-GAAP adjustments to net income that companies among the S&P 500 make to their annual earnings. In a previous post about this year’s report, we reviewed our key findings and the overall volume of non-GAAP adjustments: 2,249 individual adjustments in 2024, worth a total of $304 billion.

Today we want to look at non-GAAP adjustments from another angle: which categories of non-GAAP adjustment are most common and which ones involve the most dollars? 

Our report classifies all earnings adjustments into 1 of 11 categories, listed below. (Foreign currency adjustments are a new category added this year.)

Let’s first look at the distribution of adjustment categories by size — that is, the mix of how much each category accounted for the total dollar value of non-GAAP adjustments. Figure 1, below, shows the distribution of adjustment categories by size for 2024. It’s the “Percent of total” column, second from right.

As you can see, amortization of intangibles accounted for 31 percent of the total non-GAAP adjustments in 2024, restructuring costs were worth 18.7 percent, and impairments were worth 17.4 percent. 

That’s interesting unto itself, but the distribution of adjustment categories has changed over time. Figure 2, below, shows how that distribution has changed over the last three years.

For example, notice that amortization of intangible assets has been one of the largest categories for three years running, while impairments went from 35 percent of the total in 2022 to only 17.4 percent in 2024. Restructuring costs popped from 11 percent of the total in 2023 to nearly 19 percent in 2024. 

Why? Calcbench can’t say for certain. Macro-economic factors might account for some changes. For example, robust stock market performance in 2023 and 2024 made stock-based compensation more expensive under GAAP; that could explain the steady upward march in the size of stock-based pay adjustments since 2022. 

On the other hand, amortization of intangibles follows a fixed schedule under GAAP, regardless of macro-economic trends. So it’s not surprising to see that amortization adjustments are large (because intangible assets are a significant portion of many companies’ balance sheets) and tend to rank among the largest of all 11 categories every year.

Distribution of Adjustment Categories by Frequency 

We can also look at the distribution of adjustment categories by frequency: the percentage of companies claiming a certain category of adjustment, rather than that category’s dollar value. As seen in Figure 3, below, this paints a rather different picture.

Here we can see that the portion of adjustments has held relatively steady in some categories, such as amortization, tax adjustments, and gains or losses on investments. That makes sense; those categories are items that many companies tend to make year in and year out, regardless of broader economic trends. 

On the other hand, notice the jump in restructuring adjustments, from less than 10 percent of all adjustments in 2022 to 15 percent of all adjustments in 2024. And if you go back to Figure 2, you can also see that restructuring costs went from 11 percent of all dollars adjusted in 2023 to 19 percent in 2024. 

That could be due to more companies launching restructuring programs last year. If the economy sputters in 2025, presumably that will lead to even more restructuring efforts — and therefore more restructuring adjustments — in next year’s report.

That’s why an understanding of non-GAAP net income is so useful to financial analysis. It can help you perceive broad trends in economic performance that might not align with the fixed and traditional world of GAAP reporting rules, and give you a better window into management’s thinking.

You can download the full Non-GAAP Adjustments report from our Research page. Later this week we’ll continue our exploration of the report with a look at industries and companies with lots of non-GAAP adjustment activity.