Software company MicroStrategy listed on the NASDAQ in 1998. In March 2000, Forbes published an article which questioned the upfront booking of its revenues. A few weeks later, the company announced that it would restate its financials which prompted a share price collapse. In April, the SEC opened an investigation which resulted in fraud charges being brought against senior management. Restated financials revealed that management had been bringing forward increasing amounts of revenue, inflating sales by 2% in FY97, rising to 36% by FY99. In reality, the company was loss-making. Judging by restatements, the way to have spotted aggressive revenue recognition would have been to track receivable days net of deferred revenue. These rose from 46 days in FY97, to 79 by FY99, a 73% increase.

Last updated February 2022

The information on this page has been compiled from publicly available sources. GMT Research Limited has not verified the information and does not warrant its accuracy. Any claims made or views expressed are not necessarily those of GMT Research Limited.