Highlands REIT Inc
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Real Estate : Equity Real Estate Investment Trusts (REITs) | Small Cap Value
Company profile

Highlands REIT Inc, located in Chicago Illinois, is a real estate investment trust.

Closing Price
$0.08
Day's Change
0.00 (0.00%)
Bid
--
Ask
--
B/A Size
--
Day's High
0.08
Day's Low
0.07
Volume
(Heavy Day)
Volume:
6,588

10-day average volume:
4,711
6,588

SEC tells BlackBerry to stop using non-GAAP revenue metric first highlighted by MarketWatch

10:26 am ET March 26, 2021 (MarketWatch)
Print

Ciara Linnane

BlackBerry's adjusted revenue number helped it beat consensus estimates even as actual revenue missed the mark

BlackBerry Ltd. has agreed to stop adjusting its revenue, an issue highlighted by MarketWatch in the past, after receiving a comment letter from the Securities and Exchange Commission questioning the practice.

The cybersecurity company (BB.T) highlighted non-GAAP revenue, or revenue that does not conform with Generally Accepted Accounting Principles, in first-quarter earnings posted in 2019 and subsequent periods, using a metric that the SEC does not allow, as MarketWatch wrote at the time (https://www.marketwatch.com/story/blackberrys-use-of-non-standard-metrics-violates-sec-rules-2019-06-26).

The Waterloo, Ontario--based company explained the move in a footnote, in which it said it had recorded "software deferred revenue acquired but not recognized due to business combination accounting rules of $20 million, of which $19 million was included in BlackBerry Cylance and $1 million was included in IoT (Internet of Things)."

See also: Square is dropping an accounting metric after the SEC said it's not allowed (https://www.marketwatch.com/story/square-is-dropping-an-accounting-metric-after-the-sec-said-its-not-allowed-2019-11-07)

In other words, it was adding in revenue that would never be allowed under GAAP as the result of an acquisition. That matters because the extra $20 million allowed the company to beat the FactSet consensus at the time, while its actual revenue number was a miss.

See also: SEC may be set to crack down on companies that adjust revenue (https://www.marketwatch.com/story/sec-may-be-set-to-crack-down-on-companies-that-adjust-revenue-2019-11-22)

"Considering your deferred revenue and commission expense were adjusted to fair value at the time of acquisition pursuant to GAAP, these non-GAAP adjustments intended to eliminate the impact of purchase accounting substitute individually tailored recognition and measurement methods for those of GAAP," the SEC wrote in its comment letter to BlackBerry. (https://www.sec.gov/Archives/edgar/data/1070235/000107023521000008/filename1.htm) Companies are not allowed to use individually tailored metrics when presenting financial results.

BlackBerry responded that investors and financial analysts often seek information regarding software deferred revenue acquired and software deferred commission expense for modeling purposes. It also argued that others in its industry make similar adjustments, including companies it considers to be peers.

But it also agreed to stop the practice and said the adjustments "trend to zero due to time elapsed since its acquisitions." BlackBerry will no longer offer non-GAAP revenue figures its financial-results reporting, starting with its fiscal year running March 1 through Feb. 28, 2022.

BlackBerry shares were down 0.4% early Friday but have surged 48% in 2021 while the S&P 500 has gained 4%.

Read on: A timely question after the GameStop saga: What are the tax advantages of qualifying for 'trader status' with the IRS? (https://www.marketwatch.com/story/a-timely-question-after-the-gamestop-saga-what-are-the-tax-advantages-of-qualifying-for-trader-status-with-the-irs-11616619487)

-Ciara Linnane; 415-439-6400; AskNewswires@dowjones.com

	

(END) Dow Jones Newswires

March 26, 2021 10:26 ET (14:26 GMT)

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