According to the Complaint, Zuora is a cloud-based subscription management platform. Its business consists of three components: Zuora Central Platform, a subscription management hub; order-to-revenue products; and an application marketplace. Its flagship products are RevPro, a revenue recognition automation solution that enables customers to group transactions into revenue contracts and performance obligations, and Billing, which is designed for subscription billing. Zuora acquired RevPro in May 2017 when it acquired Leeyo.
The Complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, the Complaint alleges Defendants failed to disclose to investors: (1) that the Company would focus on implementing RevPro for new customers ahead of the deadline to comply with accounting standard ASC 606; (2) that, as a result, the Company lacked adequate resources to integrate RevPro with the core business; (3) that the Company would focus on RevPro integration a year after the acquisition closed; (4) that delays in integrating RevPro would materially impact the business; (5) that the market for RevPro was limited to customers seeking to implement new accounting standards such as ASC 606; (6) that, after the deadline for ASC 606 compliance passed, demand for RevPro was reasonably likely to decline; and (7) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
On September 9, 2019, the Court issued an Order appointing Lead Plaintiff and Counsel. Lead Plaintiff filed a consolidated amended Complaint on November 8. Defendants filed a Motion to Dismiss the consolidated amended Complaint on January 22, 2020. On April 28, the Court issued an Order denying Defendants' Motion to Dismiss.