Startup HeadSpin to Return Funding After Probe of Financial Statements

HeadSpin, a mobile app testing company recently valued at $1.16 billion, plans to return up to $95 million in funding to investors after an internal review of financial irregularities forced it to restate its financials.

The previously unreported review follows the board’s discovery that the company was on track to post only $15 million in annual recurring revenue by year’s end, a sliver of the $100 million in ARR it forecast in February. In a rare move, the company would lower the value of its Series C stock by nearly 80%, assigning a new share price that implies a valuation of less than $250 million. HeadSpin confirmed the recapitalization plan, but said it has not established a new valuation for the company.

The company has also replaced CEO and co-founder Manish Lachwani with a new chief executive. Nikesh Arora, a former SoftBank president who now chairs HeadSpin’s board, helped lead the internal review.