Most of the well managed public software companies recognize their revenue pretty conservatively. They use the FASB rules (financial accounting standards board) which is strongly encouraged by the SEC.
There are some pretty specific guidelines as to when to recognize revenue, and most companies don't screw around with this anymore, because the down side is too great.
The top reasons why companies defer revenue recognition is:
1) delivery of an order or services not complete
2) concern about collectability of payment (bad credit, or dispute)
3) sold something not yet able to ship - like new product or version
4) something like annual support, which is recognized ratably over the term of the maintenance agreement, generally 12 months.
In hardware, you have to manufacture the things and ship them. In industrial software, particularly software products such as CLFY, VNTV, etc., where you just have to make a tape and stick it in FedEx, the manufacturing aspect is generally not an issue. It usually comes down to some sort of special item, custom work, professional services not yet delivered, etc. If this were a retail software product, there could be some manufacturing/duplication issues, some holdbacks for retruns/exchanges, and so forth, but not an issue here.
Most likely, Clarify took an order involving lots of consulting, which will get delivered over time, or maybe they also took an order involving some sort of integration of the Metropolis software with theirs, and can't yet deliver.
Usually, when you announce a large deferred order, you are sort of apologizing, but it isn't really a bad thing. I bet every client-server application software company that also provides professional services has a huge backlog - which is in effect, a deferred order.
This AM, I see that VNTV is up about 2, CLFY up 1.5 and Scopus has been moving up steadily. PRobably the RMDY effect from end of last week.
I don't own any CLFY. Have block of SCOP @ 17 and VNTV averaging around $3 (used to work there), also have bought more at various times. |
