Again, William, I am just speculating. But at this point,
I can only speculate as I dont have enough concrete data
to make a meaningful judgement.
Please tell me why the following can't happen?
Let's say company A charge 1M license fee for a 2 year
contract, and at the moment A recognize revenue over the
lifetime of the contract.
Say in the latest quarter, A sold 10 licenses. It should
report 10M / 8 = 1.25M in revenue for the quarter, and
a backlog of 8.75M in the pipe.
Then, at the conference, A told us that starting from
the next quarter, it is going to recognize all revenue
up front and it estimates to have 3M revenue for the
quarter, much much higher than the 1.25M for the current
quarter.
So, do you think investors will like this announcement?
Absolutely not! Because everyone can pretty much calculate
that A is only going to sell 2 license in the coming
quarter (2M + 1.25M deferred).
Of course, I am using the extreme example here and any
real company's revenue model (including ARBA's) is much
more complicated than this. But whatever ARBA said last
night, for investors like myself, it is not clear! And
wall street hates uncertainty.
I like ARBA as a company very much. But I am going to
find out answers before I step in and buy here. |
