Comment by fauigerzigerk | Hacker News Reader

Comment by fauigerzigerk | Hacker News Reader

Putting myself in the shoes of a short seller, I would be concerned that this could be read as, yes management is inflating the measure that determines their bonuses, but this says nothing about the success of the business itself.

While AFFO (a non-GAAP measure) may be inflated, it hasn't grown faster than the relevant GAAP measures. In fact, net income has almost doubled since 2021 while AFFO has only grown 23%. Revenue growth has been 23% as well.

None of this is wildly inconsistent. The only thing that really stands out is the sudden drop in maintenance CapEx in 2015.

They do highlight some other things about the data center market that may be relevant to the share price, but this seems far less damning than the AFFO issue.

I find it wonderful that the IASB lets these non-GAAP shenanigans continue to be. They could easily create a much larger distinction between GAAP and non-GAAP accounting, for instance by requiring a stronger separation in the presentation of different measures. Accountants can’t be very happy with yearly changing non-GAAP definitions that are “ment to” increase comparability but actually serve mostly to give boards a feeling that they have influence over presentation of how they think it is, instead of presentation of how it is.

>> When Equinix transitioned to become a REIT in 2015, it began using AFFO as a key metric in determining executive bonuses. That same year, Equinix reported a sudden 47% drop in maintenance CapEx, leading to an estimated 19% boost to reported AFFO.

Also, is it common to use non-GAAP, accounting-dependant measures to compensate executives?

At best, this seems like a strategic conflict of interest (bonuses vs good for the business) without an impenetrable firewall around the CFO's org. And even then, sets up an adversarial dynamic where everyone is against the CFO.

I get any bonus metric will be juiced, but that's why metrics that are less game-able are used.

The notes about power/utilisation seemed pretty significant. I don’t really know how to weigh them agonist the accounting claims, or why those appeared first.

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