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Constant currency

A non-GAAP view of growth that holds exchange rates still: how companies calculate it, how it differs from GAAP translation, and Netflix's and PepsiCo's 10-Ks.

The short answer

Constant-currency growth retells a sales or profit change as if exchange rates had not moved. It is a non-GAAP figure: the official revenue line in the income statement is still recorded at the rates in effect when the sales occurred. Companies use it so a weaker or stronger dollar does not hide, or exaggerate, the change in the underlying business.

How it is calculated

Netflix's 10-K for 2025 explains the method directly. To exclude the effect of foreign currency rate fluctuations on revenue, it calculates current-period revenue assuming foreign exchange rates had remained constant with the rates from each of the corresponding months of the prior-year period, and it excludes the impact of hedging gains or losses realized as revenues. It also says this non-GAAP measure should be considered in addition to, not as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

In Netflix's results, revenue rose 16% as reported and 17% on a constant-currency basis: the dollar's move slightly understated the growth in local-currency sales. Other companies will show the opposite pattern in a year when the dollar strengthens. PepsiCo's 10-K for 2025 reports operating profit both as adjusted for items affecting comparability and on a constant-currency basis, and labels both as non-GAAP measures.

Source: Netflix 10-K for fiscal 2025, filed Jan 23, 2026 · PepsiCo 10-K for fiscal 2025, filed Feb 3, 2026

How this differs from comprehensive income

The GAAP statements already include currency effects: revenue is translated at period rates, and the translation of a foreign subsidiary's equity goes to other comprehensive income. Constant currency does not change those statements. It is a sidecar calculation, usually in the MD&A, that answers a narrower question: what would growth have been if the dollar had stood still? GAAP vs. non-GAAP covers the rules that apply when a company publishes a figure like this, including a reconciliation to the nearest GAAP number.

What to check

The method. Some companies hold the prior year's rates constant; some use a single average rate. Netflix says it uses the corresponding months of the prior year.
Hedges. Netflix excludes hedging gains or losses from both periods. Other companies may leave them in.
The gap between reported and constant-currency growth is the currency effect the company wants you to see. A large gap is a reason to read the company's foreign-exchange discussion, not a verdict on the business.

Common questions

What does constant currency mean?

A non-GAAP recalculation of revenue or profit as if exchange rates had not changed from a prior period, so that growth can be compared without the dollar's move.

Is constant-currency revenue in the income statement?

No. The income statement uses the exchange rates in effect during the period. Constant currency appears in the MD&A or a non-GAAP section, with a reconciliation to the reported figure.

How does Netflix calculate it?

It recasts current-period revenue at the foreign-exchange rates from the corresponding months of the prior year and excludes hedging gains or losses realized as revenues.

Why can reported growth and constant-currency growth differ?

If the dollar weakens, foreign sales translate into more dollars and reported growth can exceed constant-currency growth. If the dollar strengthens, the opposite happens.

Is constant currency the same as other comprehensive income?

No. Other comprehensive income records translation adjustments in equity under GAAP. Constant currency is a non-GAAP way of retelling growth.

Disclosures

Editor holdings: The editor holds no position in any company named on this page. As of Nov 11, 2026.
Compensation: Nobody paid for this page. No affiliate links on this page.
Sources: Each company's own SEC filings, linked next to each number.
Last updated: Nov 10, 2026

General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.

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