This week’s edition covers a few notable SEC Filings and earnings calls that focus on ASC 606.
To quickly identify ASC 606 information in the below links, click on the link, hit Control + F, enter the text “606” or “2014-09” or “ASC” and click through your search results.
SEC Filings and Earnings Calls
Our thoughts: The 8-K offers a short burst of information regarding the company’s ASC 606 adoption. It’s worth reading as a primer for the detailed presentation set forth in the company’s ASC 606 Adoption Investor Document (link is above). That document is one of the best ones reviewed to date for a number reasons. First, it offers substantial metrics to support its qualitative assertions. Additionally, the information was presented in both tabular and graphical formats. Yet, the document’s most impressive feature is the number of impacts that it covers in an intuitive, easy-to-read, approach. At the end of the document, the company goes as far as to provide side-by-side forward looking guidance under 605 and 606 respectively. This is well worth taking the time to read as it serves as a model of what to present, both in content and format, to thoroughly convey a company’s adoption and expected impacts of 606.
Our thoughts: This earnings call transcript has over 29 references to ASC 606. The company starts out explaining that it adopted ASC 606 as of Q1 2019 and the areas it impacted with a fair amount of detail. Where this transcript gets interesting are the types of questions the analysts ask and the company’s responses. A notable exchange occurs when an analyst asks what a specific revenue amount would have been in a prior year if reported under ASC 606 and how the company went about answering it.
Additionally, there’s a question regarding income statement impact timings under 606 where the company gives a very basic, yet to-the-point, answer to illustrate how a representative scenario will be handled under 606 going forward. From there questions center on “lost” or “vaporized” revenue per the 606 adoption and then more follow up questions regarding impacts to break it down by revenue type. Overall, reviewing this earnings call transcript’s 606 information is instructive for companies to reference in their presentations.
Our thoughts: Page 22 of the 10-Q, in the second and third paragraphs of the “Overview” section, offers a picture into how the company had to change the way it disaggregated revenue as part of adopting ASC 606 both quantitatively and qualitatively. Additionally, the company has notes throughout its filing to explain where amounts were adjusted due to the impact of ASC 606.
Similar to PTC. Inc.’s document linked earlier in this blog, the company provides a supplemental document titled “Impacts of ASC 606 and Other Items” that covers the fundamental details/impacts of its ASC 606 adoption. Due to the fact the company elected to adopt using the full retrospective method, it provides prior year impacts. Additionally, it provides a forward-looking outlook based on ASC 606. This is a solid presentation, but not to the level of the PTC., Inc. one earlier in this blog in our view (although still much better than many other companies’ approaches).
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