- Company Name
- Cloudera, Inc.
- Stock Symbol
- Class Period
- April 28, 2017 to June 5, 2019
- Motion Deadline
- August 6, 2019
- Northern District of California
The complaint charges Cloudera and certain of its current and former officers with violations of the Securities Exchange Act of 1934. Cloudera is a software company specializing in the provision of data management, machine learning, and advanced analytical tools to businesses. Its chief product platform is a hybrid open source software, or “HOSS,” model that combines the Company’s proprietary software with open source technology, most notably the Apache Software Foundation’s open-source Hadoop software. On January 3, 2019, Cloudera completed a merger with Hortonworks, its primary competitor in the Hadoop data analytics space.
The complaint alleges that during the Class Period, the defendants made false and misleading statements and/or failed to disclose adverse facts pertaining to Cloudera's business, operations, and financial condition. Specifically, defendants failed to disclose that: (i) Cloudera was finding it increasingly difficult to identify large enterprises interested in adopting the Company's Hadoop-based platform; (ii) Cloudera needed to expend an increasing amount of capital on sales and marketing activities to generate new revenues; (iii) Cloudera had materially diminished sales opportunities and prospects and could not generate annual positive cash flows for the foreseeable future; (iv) the primary motivation for the Company's merger with Hortonworks was to generate growth through the acquisition of Hortonworks’ existing customers (as opposed to obtaining them organically); and (v) the purported synergies and other benefits of the merger with Hortonworks were materially overstated. As a result of this information being withheld from the market, the price of Cloudera common stock was artificially inflated to more than $23 per share during the Class Period.
On April 3, 2018, less than a year after Cloudera went public, in connection with its announcement of its fourth quarter and fiscal 2018 financial results, Cloudera issued disappointing guidance for fiscal 2019 of only $435 million to $445 million, representing a sharp deceleration in growth. In addition, the Company stated it expected negative operating cash flows for the year and non-GAAP losses of between $0.62 and $0.59 per share. In response, the price of Cloudera common stock fell 40% to $13.29 per share.
On October 3, 2018, Cloudera announced that it had entered into a definitive merger agreement with Hortonworks, and on January 3, 2019, that the merger with Hortonworks had closed.
On March 13, 2019, Cloudera announced its fourth quarter and fiscal 2019 financial results, providing weak guidance for the first quarter of 2020. On this news, the price of Cloudera stock fell nearly 20%. Then, on June 5, 2019, Cloudera announced first quarter 2020 revenues of $187.5 million, but stated that several customers had elected to “postpone renewal and expansion” of their subscription agreements. The Company also announced that its losses from operations had ballooned to $103.8 million, roughly double the prior year-over-year period, and that its CEO, defendant Thomas J. Reilly, would be retiring from the Company. On this news, the price of Cloudera common stock fell 40% to close at $5.21 per share.