NEW YORK, Sept. 16, 2020 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, reminds investors that a class action lawsuit has been filed in the United States District Court for the Northern District of California on behalf of investors that purchased Guidewire Software, Inc. (NYSE: GWRE) common stock between March 6, 2019 and March 4, 2020 (the “Class Period”). Investors have until September 23, 2020 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
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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.
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%.
On this 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.
The complaint, filed on July 24, 2020, 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.
If you purchased Guidewire common stock during the Class Period, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker, Melissa Fortunato or Marion Passmore by email at email@example.com, telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
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Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York and California. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.