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  "documentTitle": "PowerSchool Holdings, Inc. (PWSC)",
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  "authorName": "Spruce Point Capital Management",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2024-04-17 00:00:00",
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  "pageNumber": 91,
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  "notes": "The slide uses direct quotes from 10-K filings to highlight the discrepancy between PowerSchool's accounting policy and its actual contract terms.",
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      "text": "PowerSchool amortizes its contract acquisition costs over 7 years; the longest period observed among comparable companies. Spreading out contract acquisition costs over a longer period enables the Company to present a more favorable view of earnings in periods with larger volumes of contract signings / renewals. Considering PowerSchool's average contract length is 3 years, we believe this extended amortization schedule violates the spirit of GAAP's matching principle, which requires expenses to be matched over the same period as revenues.",
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      "text": "Spreading out contract acquisition costs over a longer period enables the Company to present a more favorable view of earnings in periods with larger volumes of contract signings / renewals.",
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      "text": "amortization period: 7 years",
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      "text": "Contract and customer acquisition costs, consisting primarily of sales commissions, are incremental and recoverable costs of obtaining a contract. These costs are capitalized using the portfolio approach and are amortized over the expected period of benefit, which is the estimated life of the technology (determined to be approximately 7 years) provided in the underlying contract. — PWSC FY23 10-K",
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      "text": "Source: PWSC FY23 10-K, INST FY23 10-K, TYL FY23 10-K, BLKB FY23 10-K",
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      "text": "Comparison of amortization periods across PWSC, INST, TYL, and BLKB based on 10-K disclosures.",
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      "kind": "title",
      "text": "PowerSchool Amortizes Contract Acquisition Costs Over 7 Years, Despite 3 Year Contracts",
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