HAGENS BERMAN, NATIONAL TRIAL ATTORNEYS, Files Consolidated Amended Complaint against Zuora and its Senior Executives
SAN FRANCISCO - Hagens Berman today filed a consolidated amended class action complaint against cloud-based subscription software provider Zuora, Inc. (NYSE: ZUO), its Chief Executive Officer, and its Chief Financial Officer. The detailed complaint incorporates evidence of what attorneys allege to show Defendants’ intent to deceive Zuora investors about the true functionality of Zuora’s subscription order-to-cash platform, Zuora Central, and its flagship software application products, Zuora Billing and Zuora RevPro.
The complaint was filed in the U.S. District Court for the Northern District of California, on behalf of all purchasers of Zuora common stock between April 12, 2018 and May 30, 2019 (“Class Period”).
Defendants have until January 8, 2020 to respond to the complaint.
The complaint alleges that throughout the Class Period, Defendant represented Zuora Central acted as an intelligent subscription management hub that automated, integrated and orchestrated the entire subscription order-to-cash process, including billing through Zuora Billing, and revenue recognition through Zuora RevPro. According to the complaint, Defendants concealed the existence of significant technical challenges that prevented the successful integration of Zuora’s two core products, ultimately resulting in reduced revenue growth, missed sales, and waning demand for Zuora’s platform and applications.
The truth emerged on May 30, 2019, when Defendants disclosed the integration failure, sales execution issues and disappointing financial performance and outlook. Analysts were shocked by the Company’s disclosures, questioning senior management how “can RevPro not be integrated?” On this news, Zuora’s share price plummeted 30%, erasing nearly $520 million in market capitalization in a single trading day.
“We have spent months investigating investors’ claims. Simply put, we believe that Zuora and its senior management mislead investors into thinking its solution was functionally integrated and that Defendants should compensate the investors they have deceived,” said Reed Kathrein, the Hagens Berman partner leading the litigation.
On September 9, 2019, the court appointed New Zealand Methodist Trust Association (“MTA”) as Lead Plaintiff and approved MTA’s selection of Hagens Berman to serve as Lead Counsel for the Class.
According to the complaint, due to technical challenges, Zuora’s customers using Billing and RevPro were unable to integrate and reconcile the data from both systems. The complaint alleges that the technical issue was so severe that customers either needed to export the data from Billing and import it into RevPro manually for revenue recognition, or invest a significant amount of time and resources to build their own customized integration that ingests the required data from Billing into RevPro.
As the complaint alleges, Defendants knew of Zuora’s platform’s inability to integrate RevPro successfully. According to the complaint, Defendants conducted secret project initiatives with code names like ZoZ, ZoR and Keystone, but were unable to develop an effective integration. But at the same time, Defendants told investors its solution “can quote, order, bill, recognize revenue, report, and automate the entire customer lifecycle from a single platform[.]”
Defendants’ alleged misconduct violates Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
Individuals with information regarding Zuora may contact Hagens Berman by emailing [email protected] or by calling 510-725-3040. Find out more about the class-action lawsuit against Zuora here: https://www.hbsslaw.com/cases/zuo.
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About Hagens Berman
Hagens Berman is a national law firm with nine offices in eight cities around the country and eighty attorneys. The firm represents investors, whistleblowers, workers and consumers in complex litigation. More about the firm and its successes is located at hbsslaw.com. For the latest news visit our newsroom or follow us on Twitter at @classactionlaw.
Reed Kathrein, 510-725-3000