b'theory that Eventbrites statement that it support[sRoberts v. Zuora, Inc., Case No. 19-cv-independent music customers], speak[s] their language,03422, 2020 WL 2042244 (N.D. Cal. and help[s] grow their business, was misleadingApr. 28, 2020) because it was inferior to Ticketfly, becauseProduct Integration Difficulties, Eventbrites statements did not make any comparison to Ticketfly nor did it tout Eventbrite Musics superiority.Platform FunctionalityWith respect to statements regarding customer loss,Zuora, Inc. is an enterprise software company that the court held plaintiffs failed to plead falsity, notingprovides subscription-based businesses with software that plaintiffs failed to allege sufficient facts explainingthat helps manage their operations. It provides five why or how Ticketflys customers were dissatisfiedsoftware products and its billing product (Billing) is with Eventbrites platform. Similarly, the court heldone of its core products. In May 2017, Zuora acquired that statements from a confidential witness that theyLeeyo Software, Inc. and Leeyos core product RevPro, lost customers when trying to migrate them did nota revenue management software product that assists constitute sufficient facts to support allegations of ancompanies with Accounting Standard Codification 606/atypical trend of customer losses such that EventbritesInternational Financial Reporting Standards 15 (ASC risk warning that it typically experience[d] moderate606) compliance.customer losses that tend to cluster around the time they deprecate the acquired platform was misleading.In April 2018, in preparation for its IPO, Zuora published The court noted such a statement only addressedits Registration Statement touting Zuoras functionality customer losses at a single point in time whenand integrated features, stating its solution functions Eventbrite deprecated the acquired platform and theas an intelligent subscription management hub that confidential witnesss statements were not sufficientlyautomates and orchestrates the entire subscription particularized to support falsity.order-to-cash process and highlighting that the product The court further held that the statement thatconsolidated data operations into a single system. On Eventbrites decision to integrate Ticketfly deliver[ed]April 16, 2018, Zuora sold 12.65 million shares of common the full power of both [companies] to customers, wasstock through its IPO, raising over $162.2 million. inactionable due to its vagueness. The court foundThroughout the class period, defendants regularly the statement merely expressed subjective optimismhighlighted the integrated features of Zuoras products, and explained that vague, generalized assertions ofincluding a May 4, 2018 press release where defendants corporate optimism or statements of mere puffing arestated that the Zuora platform was architected not actionable . because no reasonable investor wouldspecifically for dynamic, recurring subscription models rely on such statements.and acts as an intelligent subscription management hub that automates and orchestrates the entire order-to-With respect to the Section 11 claim, the court heldcash process, including billing and revenue recognition. that this claim (challenging a single disclosure in theZuoras website and Twitter also continued to highlight Registration Statement about its acquisition of Ticketflyits platforms integrated functionality, stating that through helping Eventbrite continue to expand and offer newZuoras subscription management technology .capabilities to existing creators which plaintiffs alsoyou can quote, order, bill, recognize revenue, report, challenged under Section 10(b)) was subject to theand automate the entire customer lifecycle from a heightened pleading standard required for fraud claims,single platform.which plaintiffs failed to meet. The court rejectedOn May 30, 2019, Zuora announced its first quarter plaintiffs argument that the heightened standard did2019 financial results reflecting a $20.6 million or 16% not apply because they were not alleging fraud for theyear-over-year loss due to declining large customer Section 11 claim, noting that the entire complaint wasgrowth and corresponding declining quarterly revenue built around the theory that defendants fraudulentlygrowth. Zuora also lowered its fiscal year 2020 guidance neglected to disclose that the Ticketfly integrationand revealed the departure of its president. On an was allegedly failing. The court also dismissed theearnings call that same day, Zuoras CEO attributed Item 303 claim on the ground that Eventbrite didthe poor financial results to challenges with Billing and disclose the risk of possible migration problems,RevPro integration, which started late and spanned including customer loss, in its offering materials,several months, as well as sales execution problems. which adequately addressed problems associatedThe next day, Zuoras share price fell by nearly 30%.with the Ticketfly migration. The case settled and was dismissed shortly afterOn June 14, 2019, investors filed a putative class action this decision. lawsuit against Zuora, its CEO and CFO in the U.S. District Court for the Northern District of California 26'