According to the law firm press release, CommVault is an independent provider of data and information management software, which is sold under the Simpana brand name. CommVault derives about half of its annual revenue from licensing its software applications, with the remaining half of the Company's revenue coming in the form of services and maintenance revenue.
As alleged in the Complaint, Defendants misrepresented CommVault's revenue growth by booking and subsequently recognizing deferred software licensing revenue to mask slowing revenue growth, while at the same time denying that revenue growth was in fact decelerating. The Company also misrepresented that it was increasing investments in its sales force and hiring more sales employees in order to continue to drive growth through fiscal year 2014 and beyond. As a result of these misrepresentations, CommVault stock traded at artificially inflated prices during the Class Period.
On January 29, 2014, the Company disclosed that it had only met its revenue growth target because of the timely recognition of deferred software licensing revenue, effectively depleting CommVault's deferred licensing revenue. The Company also disclosed that it had missed its sales force hiring target for the quarter. Then, on April 25, 2014, the Company announced that its fiscal fourth quarter profit dropped significantly as a result of significant deceleration in revenue growth. Despite the Company's prior representations that deferred revenue was a poor indicator of growth, without the ability to recognize deferred software licensing revenue, the Company could no longer conceal the revenue growth deceleration it had been experiencing. The Company also revealed that its financial results were negatively impacted, in large part, by inadequate staffing of sales and marketing personnel. These disclosures caused a material decline in the price of CommVault stock.
On January 12, 2015, the Court issued an Order appointing lead plaintiff and approving lead counsel. An amended complaint was filed on March 19, 2015.
On December 17, 2015, the Court issued an Order granting Defendants' Motion to Dismiss. Plaintiffs were allowed to amend their complaint. A second amended complaint was filed on February 5, 2016. Defendants filed a Motion to Dismiss the second amended complaint on April 5, 2016. On September 30, 2016, the Court issued an Order denying the Defendants' Motion to Dismiss.
On November 30, 2017, the parties entered into a Stipulation of Settlement. This Settlement was preliminarily approved on January 22, 2018. On May 14, the Court approved the Settlement and entered Final Judgment. The Court issued Orders awarding Attorneys' Fees and Expenses and Approving Plan of Allocation of Net Settlement Fund on May 21. On July 10, 2020, the Court issued an Order approving the net Settlement fund's distribution plan.