Robbins LLP: Commvault Systems, Inc. (CVLT) Misled Shareholders According to a Recently Filed Shareholder Derivative Lawsuit
Robbins LLP announces that a shareholder derivative lawsuit was filed on behalf of Commvault Systems, Inc. (NasdaqGS: CVLT) in the U.S. District Court for the District of New Jersey, Trenton Vicinage. The complaint is brought against certain current and former officers and directors of Commvault for alleged breaches of fiduciary duties and unjust enrichment from at least 2013 through the present. Commvault provides data and information management software applications and related services in North America, Europe, Australia, and Asia.
Commvault Accused of Engaging in Accounting Scheme
According to the complaint, Commvault officials predicted that the company’s revenue would increase from $500 million in fiscal year 2013 to $1 billion in the upcoming years. Analysts predicted that to meet that goal, Commvault’s software revenue would need to regularly grow 20% as measured quarterly on a year-over-year basis. However, upon losing its primary business partner, Dell, Inc., on which Commvault relied for 20% of its revenue, Commvault engaged in an accounting scheme that involved delaying the company’s recognition of software revenue in order to hide the truth about the loss of Dell and the company’s decelerating growth. Specifically, Commvault deferred software revenues totaling $6 million – an amount nearly three times greater than any other deferred software revenue increase in the previous five fiscal years.
Commvault officials allegedly knew that the company would not be able to meet its revenue targets without Dell. In fact, according to the complaint, Commvault officials falsely assured investors in a conference call that they had “completely mitigated any Dell risk” by replacing Dell with other strategic partners. However, on April 25, 2014, when Commvault ran out of deferred software revenue, it shocked the market with a poor fiscal 2014 fourth quarter, stating that current period software growth was only 10% year-over-year and that fiscal fourth quarter profit had declined 7.8% due to significant deceleration in software revenue growth. On this news, the company’s stock fell from $68.58 per share to close at $47.56 per share, or over 30%, on April 25, 2014.
Commvault Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Leonid Kandinov at (800) 350-6003, or you can complete the form below and we will contact you directly.