BOCA RATON, FL—(July 25, 2020) – Saxena White P.A. has filed a securities fraud class action lawsuit in the United States District Court for the Northern District of California against Guidewire Software, Inc. (“Guidewire” or the “Company”) (NYSE: GWRE) on behalf of all persons or entities who purchased or otherwise acquired Guidewire common stock between March 6, 2019 and March 4, 2020, inclusive (the “Class Period”).
If you purchased Guidewire common stock during the Class Period and wish to apply to be lead plaintiff, a motion on your behalf must be filed with the Court by no later than September 23, 2020. You may contact David Kaplan (firstname.lastname@example.org), an attorney and Director at Saxena White P.A., to discuss your rights regarding the appointment of lead plaintiff or your interest in the class action. You may also retain counsel of your choice and need not take any action at this time to be a class member.
Guidewire provides enterprise-level software systems for the property and casualty (“P&C”) insurance industry. During the Class Period, Defendants represented to investors that Guidewire was well-positioned to capitalize on a shift in the P&C insurance industry away from on-premise software systems to software systems provided over the cloud. Defendants touted the “robust” demand that existed for Guidewire’s cloud-based products and assured investors that customer demand was “enduring and broad-based across most or all segments of the market.” Defendants further touted the demand for Guidewire’s cloud offering by reporting, at the end of each quarter, that cloud sales represented a substantial and growing percentage of the Company’s overall sales. The Company also issued highly favorable revenue and Annual Recurring Revenue (“ARR”) guidance, and assured investors that customer demand remained strong across the Company’s entire product offering, including its legacy on-premise business.
As alleged in the Class Action Complaint, these statements were materially false and misleading in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and SEC Rule 10b-5. Specifically, the Complaint alleges that the demand for Guidewire’s cloud products was weak and the Company’s transition to the cloud was not going well because Guidewire’s cloud-based products needed to be significantly improved to meet customer needs and catch-up with rival systems. Further, Guidewire’s failed transition to the cloud was damaging the Company’s traditional on-premise business, as customers delayed purchasing decisions or declined to renew existing licenses. As a result, Guidewire’s revenue guidance, including guidance principally based on significantly increasing demand for the Company’s cloud-based products, was baseless and unattainable.
On March 4, 2020, only three months after reiterating its strong revenue guidance for fiscal 2020, the truth about Guidewire’s failed cloud transition emerged. In announcing its financial results for the second quarter of 2020, the Company was forced to slash its revenue guidance for fiscal year 2020 by $57 million, from a range of $759 million to $771 million down to $702 million to $714 million. Rather than forecasting a year-over-year revenue increase of up to 7% for fiscal 2020, the Company was now forecasting a substantial revenue decline of approximately 7.5%. The Company similarly lowered its critical ARR guidance to be between 11% and 12% in fiscal 2020, compared to its previous range of 14% to 16%.
In reaction to the news, Guidewire’s stock price plummeted by 17% in a single day, falling from $112.48 on March 3, 2020 to $93.56 on March 4, 2020, a decline of $18.92 per share that wiped out more than $1.5 billion in market capitalization.
You may obtain a copy of the Complaint and inquire about actively joining the class action at www.saxenawhite.com.
Saxena White P.A., with offices in Florida, New York, and California, concentrates its practice on prosecuting securities fraud and complex class actions on behalf of institutions and individuals. Currently serving as lead counsel in numerous securities fraud class actions nationwide, the firm has recovered hundreds of millions of dollars on behalf of injured investors and is active in major litigation pending in federal and state courts throughout the United States.