Pomerantz Appointed Lead Counsel in Anaplan Securities Litigation
On November 12, 2020, U.S. District Judge Richard Seeborg of the Northern District of California appointed Pomerantz LLP as Lead Counsel on behalf of Lead Plaintiff Fadel Sakkal in Grobler v. Anaplan Inc. et al, 20-cv-05959-RS (N.D. Cal.), a securities litigation being pursued on behalf of a class of defrauded investors regarding allegations that Anaplan, Inc. (“Anaplan”) failed to disclose material adverse information about the performance of its sales organization.
Anaplan, a Delaware corporation that is headquartered in San Francisco, is a software company that offers a cloud-based business-planning platform that enables data-driven decision-making for finance, sales, marketing, IT and human resources.
The complaint alleges that, between November 21, 2019 and February 26, 2020, the defendants failed to disclose that: (i) the departure of the Company’s Chief Growth Officer, after just six months in the role, contributed to disruption in the sales organization; (ii) difficulty with the timely integration of newly-hired sales leadership and reorganization of sales territories resulted in the Company failing to close “some key near term” sales in the Americas; (iii) as a result, Anaplan’s financial guidance was baseless and unattainable in regard to “calculated billings growth” — defined as revenue plus the sequential change in total deferred revenue as presented on the balance sheet (a metric widely seen as a predictor of future revenue growth); and (iv) Anaplan insiders sold approximately $30 million worth of the Company’s stock at artificially inflated prices while in possession of this non-public information.
On November 21, 2019, Anaplan issued a press release announcing its financial results for the third quarter ended October 31, 2019 in which the Company raised its revenue guidance for the fourth quarter, estimating total revenue of up to $97.5 million, representing a 40% growth rate compared to the same quarter the year before. Regarding calculated billings, the Company announced that it had booked $114.4 million in billings, 59% higher versus the same period the year before. On an earnings conference call the same day, Anaplan’s Chief Financial Officer, David H. Morton stated that the Company was “raising our revenue and operating margin outlook, driven by the third quarter performance and the ongoing strength we see in our business” and that billings were expected to “track in line with overall revenue growth rates.”
Between November 21, 2019 and February 26, 2020, Frank Calderoni, Anaplan’s Chief Executive Officer, and David Morton sold a combined $30 million worth of Anaplan stock. Notably, Calderoni sold 187,175 shares in February, after the Company’s fourth quarter ended but before the financial results for the quarter had been issued to the public.
The truth began to emerge on February 27, 2020, when the Company issued a press release announcing its financial results for the fourth quarter and full fiscal year ended January 31, 2020, revealing that, although it exceeded revenue guidance for the quarter with a growth rate of 42% year-over-year, its calculated billings for the quarter fell far short of expectations with a growth rate of just 25%, well below the 40% growth rate projected by Morton on the November 21, 2019 earnings call. On this news, Anaplan’s share price fell $14.06 per share, or 24.2%, to close at $44.03 per share on February 27, 2020.
Pomerantz’s Anaplan litigation is led by Partner Jennifer Pafiti.