Followers | 689 |
Posts | 143817 |
Boards Moderated | 35 |
Alias Born | 03/10/2004 |
Friday, November 08, 2019 7:50:21 AM
By: MarketWatch | November 8, 2019
News has implication for other companies that use the same metric, including BlackBerry, Progress Software and Symantec
Square Inc. is making a change to its accounting after receiving a comment letter from the Securities and Exchange Commission in a move that has implications for other U.S. companies.
The payment company is abandoning its practice of offering an adjusted revenue number, a metric that does not conform with Generally Accepted Accounting Principles, or GAAP, the U.S. standard, and that the Securities and Exchange Commission does not allow, as MarketWatch has reported in the past.
San Francisco-based Square SQ, +5.00% said the recent third quarter would be the last time it included adjusted revenue in a quarterly report, after it received a comment letter from the Securities and Exchange Commission and follow-up communications on the practice.
In an FAQ on the change, the company explained that it started using the metric in November 2015, “to provide investors and analysts with useful metrics to measure the performance and growth of our ongoing recurring business and allow comparability to other businesses in the payment processing sector.”
It will now “discontinue the use of the adjusted revenue measure based on the SEC’s evolving position with respect to non-GAAP performance measures,” the FAQ said.
The SEC does allow companies to supplement their reporting with certain non-GAAP disclosures, but adjusted revenue is only allowed in very discrete circumstances.
In a speech at Baruch College in May of 2016, just after the SEC issued updated guidelines for companies on non-GAAP metrics, the former SEC Deputy Chief Accountant, Wesley Bricker, singled out adjusted revenue for special concern: “If you present adjusted revenue,” he told the audience, “you will likely get a comment; moreover, you can expect the staff to look closely, and skeptically, at the explanation as to why the revenue adjustment is appropriate.”
Square’s use of adjusted revenue actually was one that the SEC might have allowed as it initially sought to “clearly and pro-actively prepare investors well in advance for the elimination of the impact of Starbucks revenue and expenses,” as MarketWatch reported. Square’s payment-processing agreement with Starbucks was about to expire in 2015, and the company knew that it would not be renewed.
As that contract was a major part of the company’s then revenue, its loss would mean a big adjustment to its revenue trend. However, the company continued to use the adjusted revenue, even after the loss of the Starbucks revenue no longer presented an issue for comparability.
It used the metric to adjust gross revenue to net by subtracting transaction-based costs and bitcoin costs, and also to add back deferred revenue that had been permanently written off after an acquisition. As a result adjusted revenue was typically lower than GAAP total net revenue. (The letter from the SEC is not yet available on the SEC’s site for public viewing and Square declined to provide a copy before the regulator makes it public.)
The news has implications for other companies, including cybersecurity software makers BlackBerry Ltd. BB, -0.36% and Symantec, which was recently renamed NortonLifeLock Inc. NLOK, +1.42%, and Progress Software PRGS, +1.51% that also use adjusted revenue metrics.
In late 2018, Symantec stock dropped dramatically when it revealed an investigation related to “the company’s public disclosures including commentary on historical financial results, its reporting of certain non-GAAP measures including those that could impact executive compensation programs, certain forward-looking statements, stock trading plans and retaliation.”
Symantec, BlackBerry and Progress Software were doing the same thing; adding back revenue write-downs from acquisitions to GAAP revenue numbers that made their numbers look better.
The three companies did not respond to emailed requests for comment.
Symantec is now defending a class-action lawsuit regarding these allegations and recently received several comment letters from the SEC on the disclosures. The SEC’s investigation of the company continues.
Square shares were up 5.8% Thursday, and have gained about 16% in 2019, while the S&P SPX, +0.27% as gained 23% and the Dow Jones Industrial Average DJIA, +0.66% has gained about 16%.
Read Full Story »»»
DiscoverGold
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
• DiscoverGold
Recent SQ News
- Square Financial Services Launches Grant Initiative to Drive Community Development in Utah • Business Wire • 08/26/2024 06:00:00 PM
- Songwriters Can Now Manage Their Catalog with TIDAL • Business Wire • 08/26/2024 04:00:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/23/2024 09:07:38 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/23/2024 09:06:56 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/23/2024 09:06:09 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/23/2024 09:02:41 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/22/2024 08:25:46 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/22/2024 08:23:28 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/21/2024 09:23:10 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/21/2024 09:22:27 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/21/2024 09:21:45 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/21/2024 09:21:01 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/21/2024 08:09:57 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/15/2024 09:06:18 PM
- Google Forced to Modify Play Store, Apple Innovates, Victoria’s Secret Hires CEO, Mars Buys Kellanova • IH Market News • 08/15/2024 10:05:46 AM
- Google Mandated to Modify Play Store, Apple Innovates, Victoria’s Secret Hires CEO, Mars Buys Kellanova • IH Market News • 08/15/2024 10:05:46 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/13/2024 09:32:03 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/13/2024 08:09:15 PM
- Square’s Summer Quarterly Restaurant Report: Service Fees Continue to Grow, Wages Stay Above Inflation • Business Wire • 08/13/2024 11:00:00 AM
- Form 4/A - Statement of changes in beneficial ownership of securities: [Amend] • Edgar (US Regulatory) • 08/09/2024 09:03:32 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 08/01/2024 08:19:06 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/01/2024 08:16:55 PM
- Block Announces Second Quarter 2024 Results • Business Wire • 08/01/2024 08:10:00 PM
- Square Joins US Foods® CHECK® Business Tools Program to Help Restaurants Save Time and Money Through Powerful Technology • Business Wire • 07/25/2024 01:00:00 PM
- Microsoft Shares Drop 2% and CrowdStrike Plunges 21% Pre-Market Following Major Global Outage • IH Market News • 07/19/2024 10:01:22 AM
VHAI - Vocodia Partners with Leading Political Super PACs to Revolutionize Fundraising Efforts • VHAI • Sep 19, 2024 11:48 AM
Dear Cashmere Group Holding Co. AKA Swifty Global Signs Binding Letter of Intent to be Acquired by Signing Day Sports • DRCR • Sep 19, 2024 10:26 AM
HealthLynked Launches Virtual Urgent Care Through Partnership with Lyric Health. • HLYK • Sep 19, 2024 8:00 AM
Element79 Gold Corp. Appoints Kevin Arias as Advisor to the Board of Directors, Strengthening Strategic Leadership • ELMGF • Sep 18, 2024 10:29 AM
Mawson Finland Limited Further Expands the Known Mineralized Zones at Rajapalot: Palokas step-out drills 7 metres @ 9.1 g/t gold & 706 ppm cobalt • MFL • Sep 17, 2024 9:02 AM
PickleJar Announces Integration With OptCulture to Deliver Holistic Fan Experiences at Venue Point of Sale • PKLE • Sep 17, 2024 8:00 AM