Non-GAAP measure

Non-GAAP measures are financial figures a company reports outside generally accepted accounting principles, built from a GAAP figure by adding back or removing items it chooses, and reconciled to the nearest GAAP equivalent.

Upwork Inc.'s non-GAAP measures are adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP diluted earnings per share, among others. Each starts from a GAAP line, usually net income, and strips out stock-based compensation, amortisation of acquired intangibles, restructuring and similar items Upwork regards as outside its underlying performance. Securities rules permit this on conditions: the GAAP figure must be shown with equal or greater prominence, a reconciliation must be given, and the company must say why it believes the measure is useful. The reconciliation tables at the end of each earnings release attached to the Form 8-K, and the same tables in the 10-Q and 10-K, are where the definitions are to be found.

Non-GAAP measures are not the same as key business metrics. Gross services volume and active clients are operating statistics that have no GAAP equivalent at all, so there is nothing to reconcile them to; adjusted EBITDA is a reworked version of a GAAP number. Both sit outside the audited statements and both are defined by the company, but the rules that govern them differ.

The usual caution applies. A non-GAAP figure is management's view of the business, and the adjustments are chosen by management; its value is in consistency over time within one company, not in comparisons between companies.