TMT insights: Financial reporting and accounting quarterly﹘Q1 2025

In this edition

Data center expansion accelerates as global AI demand surges, prompting TMT companies to balance scalable infrastructure investments with increased regulatory scrutiny around data localization and export controls.
M&A and IPO activity rebounds amid policy shifts under the new administration, driving the industry to strategically adapt deal-making and compliance practices to navigate evolving antitrust environments and reporting obligations.
Potential tariff measures are introducing cost and operational challenges across the TMT industry and may have accounting implications across several areas of the business.
The FASB is seeking feedback from stakeholders through invitations to comments on the accounting for and disclosure of intangible assets, key performance indicators (KPIs) and its future standard-setting agenda.
Reminders on new and upcoming guidance including segment reporting, crypto assets and income tax disclosures.
The SEC rescinded SAB 121 for safeguarding customers’ crypto assets, announced the launch of a crypto task force, and issued a statement on meme coins.
In sustainability reporting: SEC delays implementation of the climate disclosure rule, while the European Commission publishes sustainability reporting Omnibus package.

Issue spotlight

Stay ahead of the curve as we look toward Q2 with updates on AI-driven data center expansion, sector M&A activity, reporting reminders, guidance on crypto, sustainability reporting and more.

Business update

What’s top of mind for TMT business leaders as we close out the first quarter of 2025 and head into the rest of the year? Shifting regulatory landscapes, the surge of AI-driven transformation, evolving M&A activity and increasing compliance scrutiny are shaping the business outlook for the technology, media and telecommunications (TMT) sector. Amid the disruption, companies are still making bold moves — whether optimizing their digital infrastructure, preparing for IPOs, or navigating new regulatory frameworks. Here’s a look at the trends shaping the industry as we step into Q2.

AI drives the next wave of data center expansion
M&A market gains momentum amid policy shifts
Regulatory pressures intensify compliance challenges
Readiness is key to approaching an uncertain IPO pipeline

AI drives the next wave of data center expansion

The AI boom continues to reshape the TMT sector, with data centers at the heart of this transformation. AI and machine learning require power-intensive infrastructure, pushing hyperscalers and cloud providers to rethink their operational models. The global demand for data centers is skyrocketing, with investment expected to reach $1 trillion by 2027. However, scalability is a challenge — operators will have to navigate power constraints, supply chain vulnerabilities and geopolitical risks. Optimizing existing infrastructure, integrating adaptive cooling and leveraging microgrids are emerging as key strategies for balancing efficiency with sustainability goals.

At the same time, global regulatory scrutiny on data sovereignty and national security concerns is adding complexity. Countries are imposing stricter data localization rules, requiring companies to rethink their expansion strategies while mitigating compliance risks.

M&A market gains momentum amid policy shifts

Following a slow recovery in 2024, M&A activity is picking up. Investors are cautiously optimistic, with expectations that a potentially less aggressive antitrust environment under the Trump administration could accelerate transactions. However, economic uncertainty and evolving regulatory landscapes are still shaping deal strategy.

Private equity buyers and corporations with strong balance sheets are leading the charge, particularly in AI-driven acquisitions. Companies are actively seeking M&A opportunities to enhance their capabilities in AI, cloud computing and digital infrastructure. Private equity's influence is also extending into the sports industry. We’re seeing an increase in private equity-backed acquisitions, with firms investing in franchises, smart stadiums and AI-driven fan engagement technologies. Recent changes allowing private equity to hold stakes in major sports leagues are further fueling deal activity, reflecting a broader trend of financial players targeting high-growth, technology-driven assets.

Across TMT more broadly, the ongoing shift toward strategic partnerships and ecosystem-driven business models across is also influencing sector deal structures, allowing companies to unlock higher margins and expand market reach. But regulatory requirements continue to evolve, pushing businesses to stay agile, balancing investment strategies with compliance readiness to capitalize on emerging opportunities.

New reporting obligations — such as supply chain disclosures under revised Hart-Scott-Rodino (HSR) rules — could further complicate deal-making for multinational firms. Compliance teams are being asked to collect extensive data on supply chain dependencies, foreign subsidies and competitive overlaps, requiring significant resource allocation. Emerging technologies are playing a growing role in regulatory processes, helping businesses efficiently map compliance obligations and streamline reporting.

Regulatory pressures intensify compliance challenges

With global policymakers tightening regulations around AI, cybersecurity and data privacy, TMT companies should adopt more agile compliance models. The new US administration is also bringing regulatory and policy shifts, particularly in tax, trade and digital governance. The administration's stance on digital service taxes and tariffs could further complicate supply chains, particularly for semiconductor firms that are already under scrutiny due to national security concerns. A strengthened "Buy American" mandate and tighter export controls may impact global competitiveness, compelling companies to reassess their sourcing strategies.

At the same time, regulatory frameworks for artificial intelligence, cybersecurity and digital competition are evolving. The administration’s appointment of technology leaders as senior advisors signal a push toward deregulation in AI and infrastructure investments, facilitating growth in data centers, 5G and cloud computing. However, compliance complexities are expected to rise, particularly as states introduce their own AI and privacy regulations. Diverging regulatory approaches between the US and the European Union could prompt companies to adapt regionally, further challenging global operational consistency. To navigate these changes, enterprises should adopt agile compliance models, integrating regulatory readiness into their business strategy to manage risks while seizing growth opportunities.

Readiness is key to approaching an uncertain IPO pipeline

The tech IPO market is poised to make a comeback after a slowdown in previous years. While PwC expects activity to pick up by mid-2025, the recovery may be more measured than in previous “open window” periods, as companies wait for stability in central bank policies and broader economic conditions under the new presidential administration. Investor enthusiasm around AI and cloud computing is driving renewed interest in public offerings, creating a window of opportunity for startups looking to go public with more than 700 unicorns in the private market.

Successful IPOs demand strong operational maturity. Many startups underestimate the extent to which their financial reporting, compliance mechanisms and governance structures need to evolve before hitting the public markets. Companies preparing for an IPO should begin implementing enterprise resource planning (ERP) systems, enhancing internal controls and operating as a public company at least 12 months before filing. Notably, 65% of recent IPOs disclosed material weaknesses at launch, often tied to inadequate financial reporting oversight and internal controls. To mitigate these risks, startups are increasingly leveraging benchmarking data and readiness assessments to enable a smooth transition to the public markets.

Accounting update

In this issue, we include reminders on accounting for tariffs, provide updates on recent FASB releases, and highlight new and upcoming accounting standards.

Tariffs – financial reporting and accounting implications

The evolving US trade policy landscape is introducing significant cost and operational challenges for businesses across industries, including the TMT sector. Through the America First Trade Policy and the Fair and Reciprocal Plan, the US government has introduced potential tariff measures that have far-reaching implications for importers and purchases across all sectors. Countries such as China, Mexico and Taiwan face heightened tariff rates on goods including semiconductors, smartphones and IT networking equipment. These tariffs threaten to disrupt production timelines, raise infrastructure costs and reduce margins for companies dependent on cross-border supply chains.

From a financial reporting and accounting perspective, businesses should consider how these increased costs affect inventory valuations, asset impairments and financial statement disclosures. Tariff policy changes could also impact tax strategies and regulatory reporting requirements.

The accounting implications of new tariffs extend to several areas of the business. Under US GAAP, tariffs are factored into the cost of inventory under ASC 330, Inventory, and could potentially affect realizability assessments. Similarly, tariffs on capital goods are capitalized under ASC 360, Property, Plant and Equipment. Companies will also need to evaluate potential revenue recognition changes under ASC 606, Revenue from Contracts with Customers, if price adjustments or modifications result due to the ability to pass on tariff costs to customers. Additionally, increased tariffs could materially impact future cash flows and serve as impairment indicators for goodwill and other long-lived assets, requiring companies to assess assets for impairment under ASC 350, Intangibles-Goodwill and Other, and ASC 360.

As trade policies continue to evolve, staying informed and proactive is critical for mitigating risks. Companies should monitor policy and regulatory shifts, particularly the potential for reciprocal tariffs and regulatory amendments. Proactive adaptation, strategic financial planning and agile supply chain management will be key in sustaining profitability and navigating the complexities of this dynamic trade environment.

Refer to these additional resources for more information:

FASB seeks feedback on future standard setting

The FASB continues to make headway on its current technical agenda, aiming to further progress proposals on software costs, environmental credits and government grants, among others, during 2025. Meanwhile, the FASB is asking for feedback on the topics it should address next through a series of invitations to comment (ITCs). TMT companies are encouraged to provide input on these topics to help the FASB identify priorities for its future standard-setting agenda.

Financial key performance indicators for business entities

The FASB issued an invitation to comment seeking feedback on whether:

Financial key performance indicators (KPIs) –– such as adjusted EBITDA, free cash flow, and return on invested capital –– should be standardized and, if so, which ones.
Entities should be required or permitted to disclose KPIs in their GAAP financial statements and, if so, when and for what types of entities.

The comment period for this ITC is open until April 30.

Accounting for and disclosure of intangibles

The FASB issued an invitation to comment seeking feedback on the accounting for and disclosure of intangible assets, including patents, trademarks and customer relationships. The ITC requests feedback on the recognition of intangibles and whether the method of acquisition (internally developed, acquired in a business combination, or acquired in an asset purchase) should result in different accounting outcomes.

Priorities for the FASB’s future standard-setting agenda

The FASB issued an invitation to comment requesting stakeholder feedback on its future standard-setting priorities. Based on initial outreach to different stakeholder groups, the Board identified potential topics for improvements in several areas, including combinations of entities, financial instruments, intangibles, other assets and liabilities, retirement and other employee benefits, income and expenses, presentation and disclosure in financial reporting, and current research agenda projects. The ITC requests input on which topics may require immediate attention and other topics the Board should consider.

The comment period for this ITC is open until June 30.

The FASB updates its technical agenda periodically, generally when significant milestones are achieved on individual projects. Refer to the agenda for the latest updates.

New and upcoming accounting standards

Segment reporting

The FASB’s new segment expense standard, ASU 2023-07, Improvements to Reportable Segment Disclosures, is now effective for calendar year-end public entities.

With many public entities having filed their 2024 annual reports, the focus on application of this new guidance will now shift to the interim requirements. The segment guidance requires that nearly all annual segment disclosures, including the new disclosures introduced by ASU 2023-07, be made on an interim basis. These include reported measures of segment profit or loss, total assets, revenues, interest revenue and expense, depreciation, depletion and amortization, unusual items, equity in income of investees, income tax expense or benefit, significant non-cash items other than depreciation depletion and amortization, equity method investments, and total additions to long-lived assets. Significant segment expenses and other segment items disclosures are also required for interim periods.

Dig deeper with this Financial Statement Presentation Guide on the required segment disclosures for interim periods.

Crypto assets

With crypto assets continuing to gain prominence, it's essential for companies to understand and comply with the evolving accounting standards for reporting these assets. ASU 2023-08, Accounting for and Disclosure of Crypto Assets, which provides guidance on the measurement, presentation, and disclosure of in-scope crypto assets, became effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Under this standard, companies holding crypto assets that meet certain criteria must subsequently measure them at fair value, with the remeasurement recorded in net income. Additionally, the ASU provides expanded disclosure requirements, such as the disclosure of significant crypto asset holdings and a reconciliation of the beginning and ending balances of crypto assets.

Read our Crypto Assets Guide for further information on the accounting for and disclosure of crypto assets.

Income tax disclosures

The FASB’s new standard on income tax disclosures, ASU 2023-09, Improvements to Income Tax Disclosures, will be effective for calendar-year public companies in their 2025 annual reports.

The new guidance focuses on two specific disclosure areas:

A disaggregated effective tax rate reconciliation
A break-down of income taxes paid by jurisdiction

Given the magnitude of changes to income tax disclosures as compared to the existing requirements, we recommend companies start now to develop the processes and systems to gather the data and implement controls over the disclosures. Starting early can also help entities assess the extent of comparability of results for prior periods, which may influence the decision to adopt the disclosure prospectively or retrospectively.

Read our publication, FASB issues guidance on income tax disclosures, for further information.

Disaggregation of income statement expenses – clarifying the effective date

The FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, at the end of 2024. In the first quarter, the FASB clarified the effective date through the issuance of ASU 2025-01. Public business entities (PBEs) must implement the new disclosure requirements for annual reporting periods beginning after December 15, 2026, and for interim periods within annual periods beginning after December 15, 2027. The standard requires PBEs to provide greater transparency into expense classifications on the income statement, helping investors better understand cost structures and improving financial statement comparability across industries. PBEs should begin assessing their internal expense reporting processes to ensure alignment with the upcoming requirements.

Read our publication, FASB issues new disaggregated expense disclosure requirements (DISE), for further information.

For a complete list of recently issued accounting standards and their effective dates, including links to PwC resources, refer to the Guidance effective for calendar year-end public companies and Guidance effective for calendar year-end nonpublic companies pages on Viewpoint.

Regulatory update

On the regulatory front, we provide updates on SEC activity and sustainability reporting across multiple frameworks.

SEC comment letter trends

The SEC Division of Corporation Finance's filing review process monitors the disclosures made by registrants. Based on the analysis of comment letters publicly issued to technology, media and telecommunications companies in the 12 months ended December 31, 2024, (1) non-GAAP measures, (2) management’s discussion and analysis, (3) segment reporting, (4) revenue, and (5) business combinations generated the highest volume of SEC comments.

Check out the following links for more details related to current comment letter trends, as well as some of the current top five trending areas:

New SAB Topic rescinds SAB 121 for safeguarding customers’ crypto assets and SEC Acting Chairman announces formation of crypto task force

On January 23, the SEC staff released Staff Accounting Bulletin No. 122 (SAB 122), which rescinds the interpretive guidance in SAB 121 for reporting entities that have an obligation to safeguard customers' crypto assets and became effective on January 30 upon publishing in the Federal Register. SAB 122 applies to all reporting entities in the scope of SAB 121.

The new guidance is effective for annual periods beginning after December 15, 2024, and must be applied retrospectively to all prior periods. Upon adoption, entities should include disclosure of the effects of the change in accounting principle in accordance with ASC 250, Accounting Changes and Error Corrections. Early adoption is also permitted, which means that reporting entities that have not filed (or issued) their financial statements and early adopt SAB 122 would not include the safeguarding liability and corresponding asset (or any of the SAB 121 required disclosures) in their 2024 financial statements. An entity that has a safeguarding obligation should assess whether it has any loss contingencies under ASC 450, Contingencies. SAB 122 does not affect the guidance in ASC 350-60 related to accounting and disclosures for certain crypto assets.

In other news, SEC Acting Chairman Uyeda announced the launch of a crypto task force that will be led by Commissioner Hester Peirce. The task force’s mission will be developing a regulatory framework that provides clarity on registration and disclosure for crypto assets.

SEC staff issues statements on meme coins and crypto mining

On February 27, the SEC’s Division of Corporation Finance (Corp Fin) released a statement expressing its views on “meme coins.” Corp Fin describes a “meme coin” as a type of crypto asset inspired by internet memes, characters, current events or trends for which the promoter seeks to attract an enthusiastic online community to purchase the meme coin and engage in its trading. Corp Fin’s view is that these types of meme coins do not meet the definition of a security under the federal securities laws. As such, neither meme coin purchasers nor holders are protected by the federal securities laws. Corp Fin also considered the Howey test and determined the offer and sale of meme coins does not involve an investment in an enterprise and is not undertaken with a reasonable expectation of profits derived from the entrepreneurial or managerial efforts of others. This statement does not extend to meme coins that are inconsistent with this description, and Corp Fin indicated that it will evaluate the economic realities of a given crypto asset transaction when determining whether the crypto asset meets the definition of a security.

On March 20, Corp Fin released a statement to provide its views on certain activities related to proof-of-work networks referred to as “mining.” Corp Fin believes that a company performing “Mining Activities” over “Covered Crypto Assets” (both as defined in the statement) on its own or as part of a mining pool do not involve the offer and sale of securities.

Expansion of nonpublic review of draft registration statements

On March 3, Corp Fin announced expanded accommodations for submissions of draft registration statements for review on a nonpublic basis. Since 2017, the SEC staff has allowed certain registration statements to be submitted for staff review on a nonpublic basis, providing companies flexibility to address SEC review comments and update their disclosures on a nonpublic basis prior to the effectiveness of the related registration statement. The changes announced this week expand the population of filings eligible for nonpublic review, extend the availability of nonpublic review to follow-on registration statements regardless of how much time has passed since the registrant’s initial public offering and allow a company to omit the names of underwriters from its initial nonpublic draft registration statement.

SEC votes to end defense of climate disclosure rules

On March 27, the SEC voted to end its defense of the rules requiring disclosure of climate-related risks and greenhouse gas emissions. SEC Acting Chairman Mark T. Uyeda said, “The goal of today’s Commission action and notification to the court is to cease the Commission’s involvement in the defense of the costly and unnecessarily intrusive climate change disclosure rules.” Following the vote, SEC staff sent a letter to the court stating that the Commission withdraws its defense of the rules, and that Commission counsel are no longer authorized to advance the arguments in the brief the Commission had filed. The letter states that the Commission yields any oral argument time back to the court.

European Commission publishes sustainability reporting “Omnibus” package

On February 26, the European Commission (EC) published the first of the “Omnibus” packages intended to simplify sustainability reporting requirements. The package includes proposals related to the Corporate Sustainability Reporting Directive (CSRD) as well as proposed changes to the Corporate Sustainability Due Diligence Directive (CSDDD), the Carbon Border Adjustment Mechanism (CBAM), and regulations related to InvestEU and other EU investment programs. The EC also issued a draft Delegated Act to propose changes to the EU Taxonomy Regulation (EU Taxonomy).

Read our summary, European Commission publishes ‘Omnibus’ proposals, and listen to our podcast, Sustainability now: Navigating “Omnibus” uncertainty, for further information.

Check out the other episodes of our ongoing Sustainability Now podcast series:

Download the full report: Download the full report: TMT insights Q1 2025

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About PwC’s TMT industry practice

Our TMT practice is dedicated to helping business leaders in the technology, media and telecommunications industries manage their complex businesses while delivering sustained outcomes. In doing so, we offer a range of capabilities, including risk, transformation, cloud and digital, deals, sustainability, cybersecurity and privacy, governance and boards, tax services, and much more. We are committed to advancing quality in everything we do.