Cohen Milstein Sellers & Toll PLLC is conducting an investigation to determine whether Envivio, Inc. (“Envivio” or the “Company”) and certain of its officers and directors violated Sections 11 and 15 of the Securities Act of 1933.
The first of several class action lawsuits was filed in the U.S. District Court for the Northern District of California by another law firm on behalf of all persons or entities that purchased or otherwise acquired the common stock of Envivio, Inc. (NASDAQ: ENVI) pursuant or traceable to the Company's initial public offering on or after April 24, 2012 ("IPO"). Envivio sold 7.75 million shares in the IPO priced at $9.00 per share.
The complaints allege that the Registration Statement failed to disclose that: (1) due to budgetary constraints Envivio’s largest customers were not increasing their demand for Envivio’s services to the extent represented; (2) Envivio was experiencing an extensive lengthening in its sales cycle for closing new business; (3) Envivio was having trouble maintaining a competitive advantage and was losing deals to rival video processing technologies; and (4) Envivio’s past revenue results were not indicative of its future operations as the Company’s business was not growing as fast as represented, particularly in North America and Western Europe.
Following the IPO, the Company reported continuous and steep declines in its revenues and there was a recurring disparity between the guidance provided by the Company and its actual sales. On December 4, 2012, Envivio released its actual third quarter results, including revenue of just $7.2 million, which was 49% below reported revenue for the third quarter of the prior year. The Company also reported a net loss of $5.6 million, or ($0.21) per share, compared to net income of $484,000, or breakeven a year earlier, announced a “restructuring of its sales force,” and the departure of Chief Operating Officer, Kevin O'Keefe.