Zendesk, Inc. (ZEN) Fails to Disclose Data Breach
According to the class action complaint for alleged violations of the Securities Exchange Act of 1934, throughout the relevant period, Zendesk’s financial results boasted large year-over-year revenue increases and assured investors the Company ” seeing strong global demand and revenue growth in every region.” However, Zendesk’s financial statements were misleading and had failed to disclose that its clients had been subject to data breaches since 2016 and that the Company was experiencing slowing demand for its SaaS offerings. Then, on July 30, 2019, Zendesk issued a press release that revealed an increase of $54.5 million in net losses and a revenue growth rate that had fallen short of previously reported expectations. On this news, Zendesk’s share price fell $10 per share to close at $83.56 per share. On October 2, 2019, Zendesk finally revealed that the Company had experienced a data breach in 2016 and was working to determine what data was exposed. On this news, Zendesk’s share price fell another $2.90 per share to close at $69.81. The stock has yet to recover.
