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  "docSlug": "c54d9b8bb206",
  "documentTitle": "Verint Systems, Inc. (VRNT)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Spruce Point Capital Management",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-05-23 00:00:00",
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  "notes": "Uses a combination of a table and callout boxes to visually demonstrate the 'revenue benefit' and 'earnings benefit' derived from accounting changes.",
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      "kind": "callout",
      "text": "But at the end of the day, I think it's quite immaterial whether it was Topic 605 and now Topic 606 [ASU No. 2014-09], and actually we believe that had we stayed under the Topic 605 revenue guidelines, our results will be quite similar.",
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      "text": "$51.5M earnings benefit (73% change!!!)",
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      "text": "$47.8M revenue benefit (4% change)",
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      "kind": "callout",
      "text": "Spruce Point finds this defense extremely suspect, and believes that the impact of ASC 606 should be deducted from sales when calculating Verint's organic growth.",
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      "text": "revenue tailwind: $50M",
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      "kind": "paragraph",
      "text": "When transitioning accounting standards to ASC 606, management chose to use the “modified retrospective method,” under which it did not restate prior period results as they would have appeared under ASC 606. This gave Verint a ~$50M revenue tailwind in FY19 on our organic sales estimate of $1.1B, thus boosting reported sales by 4%. Earnings, meanwhile, grew by a full 73%! Management claimed that “business practice changes” undertaken in advance of adopting new revenue recognition standards – not the accounting change itself – were responsible for the large delta, and, therefore, that the FY19 results reported under ASC 606 could be compared to prior periods on an apples-to-apples basis. Spruce Point finds this defense extremely suspect, and believes that the impact of ASC 606 should be deducted from sales when calculating Verint's organic growth.",
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      "text": "But at the end of the day, I think it's quite immaterial whether it was Topic 605 and now Topic 606 [ASU No. 2014-09], and actually we believe that had we stayed under the Topic 605 revenue guidelines, our results will be quite similar. — VRNT Q2 FY19 Earnings Call",
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      "kind": "table",
      "text": "Consolidated Statement of Operations table showing As Reported vs Balances without Adoption of ASU No. 2014-09",
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      "kind": "title",
      "text": "Adoption of ASC 606 Revenue Recognition Standards Provide Powerful Revenue Tailwind",
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