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  "documentTitle": "Progyny, Inc. (PGNY)",
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  "authorName": "Spruce Point Capital Management",
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  "presentationDate": "2023-02-07 00:00:00",
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  "notes": "Uses a three-part table structure to demonstrate the impact of unbilled A/R on revenue performance.",
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      "kind": "callout",
      "text": "We note that issues with unbilled receivables have been a central elements of predicting shareholder disappointment at previous recent Spruce Point research targets such as C3.ai (AI) and Leidos (LDOS).(2)",
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      "text": "Unbilled A/Rs at all-time highs and the increase in 3Q22 was substantial.",
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      "text": "The three most recent beats (and six times in PGNY's public history) relied on revenue recognized from increased unbilled A/R in order to surpass Wall Street revenue estimates.",
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      "text": "revenue surprise",
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      "kind": "paragraph",
      "text": "We believe a lever that PGNY may be using to accelerate revenue recognition is unbilled accounts receivable and corresponding unbilled revenues. PGNY's use of unbilled accounts receivables (revenues that have been recognized but not yet billed to a customer) are at historic highs. By adjusting revenues for changes in unbilled A/R, PGNY would have missed revenue expectations on six occasions and in all three quarters in 2022. A recent academic study into unbilled receivables concluded, \"Preceding studies have shown that unbilled receivables may lead either to earnings management or accounting fraud and issued warnings for stakeholders to carefully observe unbilled receivables.\"(1)",
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      "text": "Preceding studies have shown that unbilled receivables may lead either to earnings management or accounting fraud and issued warnings for stakeholders to carefully observe unbilled receivables. — Academy of Accounting and Financial Studies Journal",
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      "kind": "source-note",
      "text": "Sources: Bloomberg, PGNY FY19 10-K, 1Q20 10-Q, 2Q20 10-Q, 3Q20 10-Q, FY20 10-K, 1Q21 10-Q, 2Q21 10-Q, 3Q21 10-Q, FY21 10-K, 1Q22 10-Q, 2Q22 10-Q, 3Q22 10-Q (1) \"Unbilled Receivables, Loss Allowances and Earnings Management\", Academy of Accounting and Financial Studies Journal, 2019 (2) See Spruce Point reports AI, LDOS",
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      "text": "PGNY's Unbilled Revenues and Revenue Surprise History Analysis",
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      "text": "Without Revenue Recognition Related To Unbilled Accounts Receivables, PGNY Would Have Missed Wall Street Revenue Expectations Every Quarter Thus Far In FY22",
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