Aerohive Networks, Inc.
- Company Name
- Aerohive Networks, Inc.
- Stock Symbol
- Class Period
- November 1, 2017 to January 16, 2018
- Motion Deadline
- March 20, 2018
- Northern District of California
The complaint charges Aerohive and certain of its officers with violations of the Securities Exchange Act of 1934. Aerohive, together with its subsidiaries, designs and develops cloud networking and enterprise Wi-Fi solutions in the Americas, Europe, the Middle East and Africa, and the Asia Pacific region.
The complaint alleges that throughout the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Aerohive’s business and financial prospects. According to the complaint, contrary to defendants’ statements during the Class Period that, due to the Company’s “sales efficiency” and “productivity,” Aerohive was expecting fourth quarter 2017 “revenue in the range of $40 million to $42 million,” defendants had uncovered underlying sales execution issues at the end of the third quarter of 2017 that would cause Aerohive’s fourth quarter revenue guidance to be overstated. As a result of defendants’ false statements and/or omissions, Aerohive securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of $6.27 per share.
Then on January 16, 2018, Aerohive issued a press release announcing its preliminary fourth quarter 2017 financial results, revealing that it “expect[ed] net revenue for the fourth quarter to be approximately $37 million, which is below the Company’s previously stated guidance of $40 million to $42 million.” Defendants attributed the revenue shortfall to “underlying sales execution issues” uncovered at the end to the third quarter. David K. Flynn, Aerohive’s CEO, stated in the release that “‘[w]e delivered non-GAAP operating profitability in our fourth quarter but were disappointed that our revenue was below our prior guidance . . . . Following the change in our sales leadership at the end of our third quarter, we uncovered underlying sales execution issues which became fully apparent in the last month of the fourth quarter’” and have “‘taken actions to replace underperforming sales team members.’” On this news, the price of Aerohive shares fell $1.63 per share, or over 29%, to close at $4.07 per share on January 17, 2018.