I read this on a Fool article about Weibo’s earnings…
For the second quarter, Weibo expects to record revenues of roughly $425 million. Hitting that target on the nose would amount to a 68% year-over-year jump, and the forecast was prepared under the new accounting rules that moves collected sales tax payments out of the top-line revenue calculation. That’s how GAAP revenue accounting will work from now on and it’s a detail you should consider when doing year-over-year comparisons for the next three quarters. As a rule of thumb, it looks like you could subtract roughly $10 million from the revenues that were collected in each quarter of 2017.
If you use non-GAAP numbers, it should not bother you, otherwise this may apply to calculations for other stocks.
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And another twist in an article on MELI…
One trend that isn’t sexy but has played a major yet often misunderstood role throughout first-quarter earnings season has been the newest accounting method from the Financial Accounting Standards Board with respect to revenue recognition, and MercadoLibre found itself in the crosshairs of the new standard’s potential negative impact.
Coming into Wednesday’s first-quarter financial report, MercadoLibre investors expected extremely strong sales gains, although they were ready to see some deterioration on the bottom line. MercadoLibre remained fundamentally strong, but some of the numbers were negatively affected by the changed accounting standards, disappointing some of those who were looking for even healthier-looking performance from the e-commerce company.
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Accounting changes were massive, though. For instance, the new method required MercadoLibre to take out $112.5 million in shipping subsidies for the first quarter. If you added that number back in, revenue growth would have risen to more than 60%, topping what investors had expected…
Even less reason to react to initial earnings reports.
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