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Investigations  /  02.12.2018

Aerohive Networks Inc.

Aerohive Accused of Hiding Sales Execution Problems   

According to the complaint, on November 1, 2017, Aerohive Networks, Inc. (NYSE: HIVE) held a conference call with investors and analysts, during which Aerohive officials touted the company’s “significant sales efficiency” and “improved sales productivity” while predicting revenue in fourth quarter 2017 to be between $40 million and $42 million.  Aerohive officials did not reveal that there were underlying sales execution issues—including underperforming team members and orders coming in below forecast—which would cause Aerohive to overstate guidance for the fourth quarter 2017.  On January 16, 2018, Aerohive disclosed that it expected revenue for the fourth quarter 2017 to be only $37 million, citing underperforming sales team members. Following the disappointing news, Aerohive’s stock fell nearly 29%, to close at $4.07 per share on January 17, 2018.  Finally, in a conference call on February 8, 2018, Aerohive admitted that forecasting accuracy is a “pretty serious execution problem” for the company, and revealed that it employed overoptimistic assessments of deals in the pipeline because it failed to adequately assess the realistic close date and the probability of close inside the quarterly window.

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