On March 25, 2020, the Honorable Dustin B. Pead, Magistrate Judge for the U.S. District Court for District of Utah, entered an order appointing the Indiana Public Retirement System and the Public School Teachers’ Pension and Retirement Fund of Chicago as Lead Plaintiff, and Cohen Milstein as Lead Counsel in this securities fraud class action against Pluralsight, Inc., a provider of cloud-based and video training courses for software developers, IT administrators, and creative professionals.
Originally filed in the U. S. District Court for the Southern District of New York, and later transferred to the District of Utah, this securities fraud class action is on behalf of investors who purchased or otherwise acquired Pluralsight common stock from August 2, 2018 through July 31, 2019. The complaint charges Pluralsight and certain of its officers with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.
Shortly before the start of the class period, Pluralsight completed its initial public offering (“IPO”), raising $357 million in gross proceeds. Less than a year later, Pluralsight completed a secondary public offering (“SPO”) on March 6, 2019, whereby it sold 15.6 million shares at a price of $29.25 per share, for gross proceeds of over $450 million. According to the complaint, the SPO served as a massive cash-out for Pluralsight insiders, as all the proceeds went to Company insiders and related parties; and conversely none of the money was raised to fund corporate developments or initiatives.
The complaint alleges that throughout the Class Period, Pluralsight misrepresented the Company’s business outlook, particularly related to the Company’s salesforce and its ability to generate strong growth in billings. Specifically, the Company failed to disclose that Pluralsight was experiencing substantial delays in hiring and properly training the salesforce necessary to meet its lofty billing projections. In addition, the Company knew at the time of the March 2019 SPO, that it was behind schedule onboarding new sales representatives, which was hurting the Company’s sales execution and preventing Pluralsight from meeting its high growth projections. Instead of disclosing such facts at the time of the SPO, and to cash-out at inflated prices, Defendants intentionally obscured and omitted this pertinent information from investors.
On July 31, 2019, after the close of the markets, Pluralsight announced disappointing financial results for the second quarter ended June 30, 2019, and that its billings growth rate had sharply deteriorated from over 40% to just 23% year-over-year. The Company blamed its declining growth in billings on sales execution challenges and other issues with its salesforce. Pluralsight also disclosed that its Chief Revenue Officer was resigning. In response to these disclosures, Pluralsight’s share price plummeted. The stock price fell $12.13 per share in a single day – a nearly 40% drop – to close at $18.56 per share on August 1, 2019.
As a result, the Class has suffered significant damages due to Defendants’ false and misleading statements and omissions.
City of Birmingham Firemen’s and Policemen’s Supplemental Pension System, et al. v. Pluralsight, Inc., et al., Case No. 1:19-cv-00128, U. S. District Court for the District of Utah