According to the Complaint, Nutanix “provides a leading enterprise cloud platform that powers many of the world’s business applications and end user services by providing software solutions that digitize traditional silos of enterprise computing.”
The Complaint alleges that during the Class Period, Defendants made repeated statements that Nutanix was investing heavily in growth and was increasing sales and marketing activities while maintaining high profit margins. Contrary to these statements, and as revealed by the Defendants on February 28, 2019, starting with the fourth fiscal quarter of 2017 (beginning May 1, 2017) through the third fiscal quarter of 2018 (ending April 30, 2018), Defendants did not increase Nutanix’s lead generation spending, but rather held lead generation spending, an admitted “key component to building pipeline,” flat. Further, starting with the fourth fiscal quarter of 2018 (beginning May 1, 2018) through the second fiscal quarter of 2019 (ending January 31, 2019), rather than either increasing lead generation spending or holding that spending flat, Defendants actually decreased Nutanix’s lead generation spending.
The Complaint further alleges that by misrepresenting the magnitude of Nutanix’s marketing spending, and failing to disclose Nutanix was pulling back on lead generation spending, Defendants were able to misrepresent that Nutanix had improved its profit margins through business acumen, rather than the truth – that Nutanix was skimping on important drivers of revenue growth.
On July 10, 2019, the Court issued an Order consolidating cases and appointing Lead Plaintiff and Counsel. Lead Plaintiff filed a consolidated Complaint on September 9. Defendants filed a Motion to Dismiss the consolidated Complaint on October 24. On March 9, 2020, the Court issued an Order granting Defendants' Motion to Dismiss. Plaintiffs were given leave to amend the Complaint. On April 17, Lead Plaintiff filed a second amended Complaint. Defendants filed a Motion to Dismiss the second amended Complaint on May 22. On September 11, the Court issued an Order denying Defendants' Motion to Dismiss.