Tech company Intellego is experiencing a dramatic plunge of around 45 percent on the stock market, despite reporting robust sales figures in its Q3 report. The sharp decline is attributed to the company’s method of revenue recognition, as a significant portion of reported sales consists of unpaid invoices.
This accounting method can be interpreted as aggressive bookkeeping.
“In practice, this means the company has to finance the entire period itself before the customer pays. It may sound harmless, but it has major consequences for cash flow,” writes Douglas Forsling, an employee at Cicero Fonder and active within Unga Aktiesparare, commenting generally on the accounting method.
Forsling further notes that in such situations, it is crucial for the company to be able to trust that payment will be received; otherwise, “the entire calculation falls apart.”
Richard Bråse, former Di analyst and now fund manager at Protean, also commented on Intellego on X.
“It seems that 83 percent of Intellego’s ‘revenue’ for the quarter comes from invoicing that is supposed to be fully paid in two years,” he wrote.
