… And Bernstein Litowitz Berger & Grossman

Bernstein Litowitz Berger & Grossmann LLP announced that on September 10, 2014, it filed a securities class action lawsuit on behalf of its client Town of Davie Police Pension Plan against CommVault Systems, Inc., and certain of its senior executives.

The action, which is captioned Town of Davie Police Pension Plan v. CommVault Systems, Inc., et al., No. 3:14-cv-05628 (D.NJ), asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and 78t(a), and SEC Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5, on behalf of investors who purchased or otherwise acquired CommVault common stock during the period from May 15, 2013 and April 24, 2014, inclusive.

The complaint alleges that during the class period, CommVault and certain of its senior executives violated provisions of the Exchange Act by issuing false and misleading press releases, financial statements, filings with the SEC, and statements during investor conference calls.

CommVault is an independent provider of data and information management software, which is sold under the Simpana brand name.

CommVault derives about half of its annual revenue from licensing its software applications, with the remaining half of the company’s revenue coming in the form of services and maintenance revenue.

As alleged in the complaint, defendants misrepresented CommVault’s revenue growth by booking and subsequently recognizing deferred software licensing revenue to mask slowing revenue growth, while at the same time denying that revenue growth was in fact decelerating.

The company also misrepresented that it was increasing investments in its sales force and hiring more sales employees in order to continue to drive growth through fiscal year 2014 and beyond.

As a result of these misrepresentations, CommVault stock traded at artificially inflated prices during the class period.

On January 29, 2014, the company disclosed that it had only met its revenue growth target because of the timely recognition of deferred software licensing revenue, effectively depleting CommVault’s deferred licensing revenue. The company also disclosed that it had missed its sales force hiring target for the quarter. Then, on April 25, 2014, the company announced that its fiscal fourth quarter profit dropped as a result of significant deceleration in revenue growth. Despite the company’s prior representations that deferred revenue was a poor indicator of growth, without the ability to recognize deferred software licensing revenue, the company could no longer conceal the revenue growth deceleration it had been experiencing. The company also revealed that its financial results were negatively impacted, in large part, by inadequate staffing of sales and marketing personnel.

These disclosures caused a material decline in the price of CommVault stock.