Facts

Alteryx, Inc. is a data analytics company that offers a subscription-based platform for customers to access, prepare, and analyze data from a multitude of sources and then deploy and share analytics at scale to make data-driven decisions. Alteryx's Class A common stock trades on the New York Stock Exchange under the symbol "AYX." Dean A. Stoeker was the company's Chairman and Chief Executive Officer from its founding in 1997 until his separation on October 5, 2020. Stoeker then became Executive Chairman of the Board. Kevin Rubin was, at all relevant times, the company's Chief Financial Officer. At the end of 2018, the Financial Accounting Standards Board changed its Generally Accepted Accounting Principles to allow for revenue to be "pulled forward" into the current year. In Q1 2019, Alteryx adopted these new controlling accounting standards. Alteryx reported impressive revenue growth from Q1 2019 through Q4 2019: 51%, 59%, 65%, and 75% on a year-to-year basis. During the first two quarters of 2019, Stoecker and Rubin sold one million shares of Alteryx stock for more than $120 million in proceeds. On February 13, 2020, the company announced its 2019 fiscal year revenue was 65% higher than revenue in the 2018 fiscal year. It also predicted that its revenue would be over 30% higher than the 2020 fiscal year. Alteryx's stock increased $13.70 per share, up 9.49%, to close on February 14, 2020 at $158 per share. On May 6, 2020, the company released its Q1 2020 results which withdrew its 2020 fiscal year guidance from one quarter earlier and stated that revenue increased just 10% to 15% from the prior year. The company's share price fell $3.54, or 2.9%, to close at $118.96 per share on May 7, 2020. On November 5, 2020, the company reported its Annual Recurring Revenue (ARR) for every quarter since Q1 2019, which enabled investors to calculate the year-over-year sequential growth of ARR and compare it to revenue growth. Alejandro Handal, Steven Cardoza, and Homayon Farnoodymeher brought a federal securities class action against Alteryx, Inc., Stoeker, and Rubin in the District Court for the Central District of California, alleging violations of the Securities Exchange Act of 1934. The class included all persons or entities who purchased or acquired Alteryx securities between February 13, 2020 and August 7, 2020 and were damaged thereby.

PLAINTIFFS' CONTENTIONS: Plaintiffs contended that plaintiffs purchased Alteryx securities between February 13, 2020 and August 7, 2020 and suffered damages as a result of defendants' false and misleading statements and omissions. In particular, plaintiffs argued that defendants publicly disclosed in official SEC filings, on conference calls with investors, and in press releases that it employed a land-and-expand software sales strategy that focused on sales to existing customers while secretly employing an undisclosed rip-and-replace scheme that transferred existing customers into longer-term, lower-priced deals at a lower price to artificially boost revenue and in turn, improve the company's financial outlook. Plaintiffs alleged that this information was material because a reasonable investor would have considered it important to know of the impending revenue fiscal cliff in making their investment decisions. Further, plaintiffs maintained that Stoecker and Rubin possessed the power to control the contents of the company's reports to the SEC, press releases, and presentations to securities analysts and portfolio managers because of their executive positions within the company. As such, plaintiff contended that defendants knew that the material non-public information had not been disclosed to the public and were actively concealing it from them.

DEFENDANTS' CONTENTIONS: Defendants denied all contentions.

Result

The court granted the defendants' motion to dismiss.