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Nguyen v. Maxpoint Interactive, Inc.

United States District Court, S.D. New York

February 13, 2017

ANDREW D. NGUYEN, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
v.
MAXPOINT INTERACTIVE, INC. et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          LAURA TAYLOR SWAIN United States District Judge.

         MaxPoint Interactive, Inc. (“MaxPoint, ” or the “Company”) made an initial public offering of common stock in March 2015. In this putative class lawsuit brought against MaxPoint, several of its executive officers and directors (the “Individual Defendants, ” together with MaxPoint, “Company Defendants”), and underwriters (the “Underwriter Defendants, ” together with Company Defendants, “Defendants”), Lead Plaintiff Phil Lifschitz (“Plaintiff”), alleging that MaxPoint's Registration Statement omitted material information, asserts a claim under Section 11 of the Securities Act, 15 U.S.C. §77k, against all Defendants; a claim under Section 12(a)(2) of the Securities Act, 15 U.S.C. §77l(a)(2), against MaxPoint, certain of the Individual Defendants, and the Underwriter Defendants; and a claim under Section 15 of the Securities Act, 15 U.S.C. §77o, against MaxPoint and the Individual Defendants. The Court has jurisdiction of this action pursuant to 28 U.S.C. § 1331.

         MaxPoint, the Individual Defendants and, separately, the Underwriter Defendants, have moved to dismiss the First Amended Complaint (“FAC”). The Court has reviewed all of the parties' submissions carefully. For the following reasons, the motions to dismiss the FAC are granted.

         Background

         Unless otherwise noted, the following facts are taken from the FAC and are assumed to be true for the purposes of this motion practice.

         MaxPoint, founded in 2006, offers business intelligence and marketing automation software service designed to enable national brands to drive local, in-store sales. (FAC ¶ 18.) The Company's customers consist primarily of national retail, consumer products, automotive, restaurant, healthcare, and entertainment brands that use its software platform to predict the most likely local buyers of a specific product at a particular retail location and then execute cross-channel digital marketing campaigns to reach these buyers. (Id. ¶ 19.) MaxPoint sells its advertising services solution directly to customers and through advertising agencies. (Id. ¶ 24.) The Company defines “enterprise customers” as those customers who have spent more than $10, 000 with it during a trailing twelve-month period. (See id.)

         On or about July 2, 2014, MaxPoint filed with the SEC a draft Registration Statement on Form S-1, which would later be utilized for the IPO following several amendments made in response to comments received from the SEC. (Id. ¶ 25.) On March 5, 2015, the SEC declared the Registration Statement effective. (Id.) On or about March 6, 2015, MaxPoint and the Underwriter Defendants priced the IPO and filed the final Prospectus for the IPO, which forms part of the Registration Statement (including the Prospectus, the “Registration Statement” or “Reg. St.”).

         The Registration Statement on page 6, under the subheading “Risks Related to Our Business, ” stated, inter alia:

• If we are unable to attract new customers or our existing customers do not allocate a greater portion of their marketing spend to us, our revenue growth will be adversely affected.
• We have historically relied, and expect to continue to rely, on a small number of customers for a significant portion of our revenue, and the loss of any of these customers may significantly harm our business, results of operations and financial condition.

         The Registration Statement, beginning on Page 13, under the heading “Risk Factors” and subheading “Risks Related to Our Business and Industry, ” further stated, inter alia:

Our limited operating history makes it difficult to evaluate our business and prospects and may increase the risks associated with your investment.
We commenced operations in 2006 and, as a result, have only a limited operating history upon which our business and future prospects may be evaluated. Although we have experienced substantial revenue growth in recent years, we may not be able to sustain this rate of growth or even maintain our current revenue levels. We have encountered and will continue to encounter risks and ...

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