- Subscription revenue grew 38% year over year
- Total revenue grew 17% year over year
- Subscription customers increased 12% year over year to 397
- Dollar-based net expansion rate of 139%
Pivotal Software, Inc. (NYSE: PVTL), a leading cloud-native
platform provider, today reported results for the second quarter
fiscal year 2020 ended August 2, 2019.
“Pivotal delivered a solid performance in the second quarter. We
remain focused on customer success and winning new customers with
our differentiated, multi-cloud platform. Subscription revenue
growth of 38% and 17% total revenue growth were driven by customer
expansions and new customer wins,” said Rob Mee, CEO of Pivotal
Software. “Our platform and strategic services enable enterprises
to modernize their development practices and securely operate their
most important applications across multi-cloud environments.”
Second Quarter Fiscal 2020 Financial Results
Revenue: Subscription revenue was $135.0 million, an
increase of 38% year over year. Total revenue was $193.0 million,
an increase of 17% year over year.
Operating Loss: GAAP operating loss was $31.4 million, or
16% of total revenue, compared to a loss of $35.4 million in Q2 of
last year. Non-GAAP operating loss was $4.5 million, or 2% of total
revenue, compared to a loss of $14.6 million in Q2 of last
year.
Net Income (Loss): GAAP net loss was $28.1 million,
compared to a loss of $35.6 million in Q2 of last year. GAAP net
loss per share was $0.10, compared to a loss of $0.14 in Q2 of last
year. Non-GAAP net loss was $1.2 million, compared to a loss of
$14.8 million in Q2 of last year. Non-GAAP net income (loss) per
share was $0.00, compared to a loss of $0.06 in Q2 of last
year.
Cash Flow: Operating cash flow was negative $58.5 million
compared to operating cash flow of $18.4 million in Q2 of last
year.
Cash and cash equivalents were $808.4 million as of
August 2, 2019.
Recent Business Highlights
- Subscription customers grew 12% year over year to 397
- Dollar-based net expansion rate was 139%
- New features added to Pivotal Cloud Foundry (PCF) include:
- Pivotal Application Service (PAS) 2.6 adds new capabilities to
make it easier for developers to build, wire and run cloud native
applications. Highlights include the ability to deploy a custom
sidecar process alongside your application and new integrations
with Spinnaker, the leading tool for multi-cloud continuous
delivery
- Pivotal Container Service (PKS) 1.5 delivers support for
Windows .Net on Kubernetes
- The alpha version of PAS on Kubernetes improves the developer
and operator experience when using Kubernetes
- The alpha version of Pivotal Build Service brings developer
productivity and operational excellence to containers in
Kubernetes
- Named to Fast Company’s list of the 50 Best Workplaces for
Innovators
Financial Outlook and Webcast
Given the announcement made on August 22, 2019 regarding
Pivotal's entry into a definitive agreement to be acquired by
VMware, Pivotal will not be providing a financial outlook for its
third quarter or for the fiscal year 2020. Pivotal will no longer
be hosting a conference call to discuss second quarter fiscal year
2020 financial results.
About Pivotal
Pivotal combines our cloud-native platform, developer tools, and
unique methodology to help the world’s largest companies transform
the way they build and run their most important applications. Our
technology is used by Global 2000 companies to achieve strategic
advantages in software development and IT operations. Learn more at
pivotal.io.
Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to the most
directly comparable financial results as determined in accordance
with GAAP are included at the end of this press release following
the accompanying financial data. For a description of these
non-GAAP financial measures, including the reasons management uses
each measure, please see the section of the tables titled "About
Non-GAAP Financial Measures."
Key Metric Definitions
Subscription Customers: Pivotal defines the number of
subscription customers as the organizations that have a
subscription contract for Pivotal’s software resulting in at least
$50,000 of annual revenue in that period.
Dollar-Based Net Expansion Rate: Pivotal’s dollar-based net
expansion rate compares its subscription revenue from a common
group of customers across comparable periods. Pivotal calculates
its dollar-based net expansion rate for all periods on a trailing
four-quarter basis.
Forward-Looking Statements
This press release contains statements relating to Pivotal’s
expectations, projections, beliefs, and prospects, which are
"forward-looking statements” within the meaning of the federal
securities laws and by their nature are uncertain. Words such as
"believe," "may," "will," "estimate," "continue," "anticipate,"
"intend," "expect," "plans," and similar expressions are intended
to identify forward-looking statements. Such forward-looking
statements are not guarantees of future performance, and you are
cautioned not to place undue reliance on these forward-looking
statements. Actual results could differ materially from those
projected in the forward-looking statements as a result of many
factors, including but not limited to: (i) Pivotal’s limited
operating history as an independent company, which makes it
difficult to evaluate Pivotal’s prospects; (ii) the substantial
losses Pivotal has incurred and the risks of not being able to
generate sufficient revenue to achieve and sustain profitability;
(iii) Pivotal’s future success depending in large part on the
growth of Pivotal’s target markets; (iv) Pivotal’s future growth
depending largely on Pivotal Cloud Foundry and Pivotal’s
platform-related services; (v) Pivotal’s subscription revenue
growth rate not being indicative of Pivotal’s future performance or
ability to grow; (vi) Pivotal’s business and prospects being harmed
if customers do not renew their subscriptions or expand their use
of Pivotal’s platform; (vii) any failure by Pivotal to compete
effectively; (viii) Pivotal’s long and unpredictable sales cycles
that vary seasonally and which can cause significant variation in
the number and size of transactions that can close in a particular
quarter; (ix) Pivotal’s lack of control of and inability to predict
the future course of open-source technologies, including Kubernetes
and those used in Pivotal Cloud Foundry; and (x) any security or
privacy breaches. All information set forth in this release is
current as of the date of this release. These forward-looking
statements are based on current expectations and are subject to
uncertainties, risks, assumptions, and changes in condition,
significance, value and effect as well as other risks disclosed
previously and from time to time in documents filed by us with the
U.S. Securities and Exchange Commission (SEC). Additional
information will be made available in Pivotal’s annual report on
Form 10-K and other future reports that Pivotal may file with the
SEC, which could cause actual results to vary from expectations.
Pivotal disclaims any obligation to, and does not currently intend
to, update any such forward-looking statements, whether written or
oral, that may be made from time to time except as required by
law.
Pivotal Software, Inc. Condensed Consolidated Statements
of Operations (in thousands, except per share amounts);
(unaudited)
Three Months Ended Six Months
Ended
August 2,
August 3,
August 2,
August 3,
2019
2018
2019
2018
Revenue: Subscription
$
134,990
$
97,494
$
263,846
$
187,615
Services
58,006
66,914
114,865
132,528
Total revenue
192,996
164,408
378,711
320,143
Cost of revenue: Subscription
9,108
8,105
17,664
16,234
Services
51,417
53,129
103,463
104,291
Total cost of revenue
60,525
61,234
121,127
120,525
Gross profit
132,471
103,174
257,584
199,618
Operating expenses: Sales and marketing
82,639
70,550
164,260
139,688
Research and development
58,676
47,001
114,931
91,429
General and administrative
22,557
21,025
44,702
37,433
Total operating expenses
163,872
138,576
323,893
268,550
Loss from operations
(31,401
)
(35,402
)
(66,309
)
(68,932
)
Other income, net
3,820
237
7,420
546
Loss before provision for (benefit from) income taxes
(27,581
)
(35,165
)
(58,889
)
(68,386
)
Provision for (benefit from) income taxes
525
437
1,000
(227
)
Net loss
(28,106
)
(35,602
)
(59,889
)
(68,159
)
Less: Net loss (income) attributable to non-controlling interest
(9
)
(5
)
37
37
Net loss attributable to Pivotal
$
(28,115
)
$
(35,607
)
$
(59,852
)
$
(68,122
)
Net loss per share attributable to common stockholders, basic
and diluted
$
(0.10
)
$
(0.14
)
$
(0.22
)
$
(0.38
)
Weighted average shares outstanding used in computing net loss per
share attributable to common stockholders, basic and diluted
272,724
257,240
270,619
181,404
Pivotal Software, Inc. Condensed Consolidated Balance
Sheets (in thousands); (unaudited)
August 2,
February 1,
2019
2019
Assets Current assets: Cash and cash equivalents
$
808,432
$
701,733
Accounts receivable, net of allowance of $5,965 and $4,266 as of
August 2, 2019 and February 1, 2019, respectively
122,713
308,492
Due from Parent
30,081
951
Deferred sales commissions, current
36,124
39,572
Other assets, current
12,948
16,738
Total current assets
1,010,298
1,067,486
Property, plant and equipment, net
27,462
27,879
Operating lease right-of-use assets
130,102
—
Intangible assets, net
15,981
18,680
Goodwill
696,226
696,226
Deferred income taxes
342
258
Deferred sales commissions, noncurrent
32,865
35,522
Other assets, noncurrent
7,416
4,417
Total assets
$
1,920,692
$
1,850,468
Liabilities and Stockholders’ Equity Current liabilities:
Accounts payable
$
11,554
$
18,421
Due to Parent
12,007
20,241
Accrued expenses
60,260
64,723
Income taxes payable
1,113
1,232
Deferred revenue, current
304,977
376,985
Operating lease liabilities, current
21,820
—
Other liabilities, current
5,356
4,373
Total current liabilities
417,087
485,975
Deferred revenue, noncurrent
55,429
89,603
Operating lease liabilities, noncurrent
121,520
—
Other liabilities, noncurrent
2,157
9,412
Total liabilities
596,193
584,990
Stockholders’ equity: Class A common stock
986
901
Class B common stock
1,755
1,755
Additional paid-in capital
2,660,012
2,540,921
Accumulated deficit
(1,344,355
)
(1,284,503
)
Accumulated other comprehensive income
5,421
5,687
Total Pivotal stockholders’ equity
1,323,819
1,264,761
Non-controlling interest
680
717
Total stockholders’ equity
1,324,499
1,265,478
Total liabilities and stockholders’ equity
$
1,920,692
$
1,850,468
Pivotal Software, Inc. Condensed Consolidated Statements
of Cash Flows (in thousands); (unaudited)
Three
Months Ended Six Months Ended August 2, August
3, August 2, August 3,
2019
2018
2019
2018
Cash flows from operating activities: Net loss
$
(28,106
)
$
(35,602
)
$
(59,889
)
$
(68,159
)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: Depreciation and amortization of intangible
assets
4,336
4,599
8,434
9,354
Amortization of lease right-of-use assets and other expense
7,804
-
15,417
-
Stock-based compensation expense
25,427
19,044
47,397
29,805
Provision for doubtful accounts
(257
)
388
(197
)
619
Deferred income taxes
(12
)
64
(103
)
(405
)
Gain on sale of investment
-
-
(746
)
(3,234
)
Other
(16
)
1,449
497
1,461
Changes in assets and liabilities: Accounts receivable
(5,003
)
46,454
185,566
76,340
Due from Parent
(265
)
(7
)
(2,230
)
(236
)
Deferred sales commissions
(348
)
3,075
6,105
4,272
Other assets
1,075
(3,920
)
2,788
(2,457
)
Accounts payable
(4,948
)
3,984
(7,150
)
(547
)
Due to Parent
(1,653
)
(2,130
)
(8,119
)
(3,185
)
Deferred revenue
(56,667
)
(31,218
)
(106,276
)
(10,554
)
Accrued expenses
12,885
5,692
(3,916
)
(16,213
)
Operating lease liabilities
(7,024
)
-
(14,811
)
-
Other liabilities
(5,695
)
6,497
973
5,959
Net cash provided by (used in) operating activities
(58,467
)
18,369
63,740
22,820
Cash flows from investing activities: Additions to property,
plant and equipment
(2,732
)
(2,173
)
(4,936
)
(4,052
)
Proceeds from sale of investment
-
-
1,929
3,234
Net cash used in investing activities
(2,732
)
(2,173
)
(3,007
)
(818
)
Cash flows from financing activities: Proceeds from the
initial public offering, net of issuance costs paid
-
(2,580
)
-
544,674
Proceeds from the issuance of common stock
5,962
2,814
36,542
9,424
Proceeds from employee stock plans
8,967
-
8,967
-
Contribution from Dell
-
9,300
-
41,277
Borrowings on credit facility
-
-
-
15,000
Repayments on credit facility
-
-
-
(35,000
)
Net cash provided by financing activities
14,929
9,534
45,509
575,375
Effect of exchange rate changes on cash and cash equivalents
487
512
457
1,319
Net increase (decrease) in cash and cash equivalents
(45,783
)
26,242
106,699
598,696
Cash and cash equivalents at beginning of period
854,215
645,466
701,733
73,012
Cash and cash equivalents at end of period
$
808,432
$
671,708
$
808,432
$
671,708
Pivotal Software, Inc. GAAP to Non-GAAP
Reconciliation (in thousands, except percentages and per share
amounts); (unaudited)
Three Months Ended August 2,
2019 GAAP Stock-basedcompensationexpense
Amortization ofacquiredintangibles Gain on sale
ofinvestment Non-GAAP Cost of subscription revenue
$
9,108
$
(602
)
$
(51
)
$
-
$
8,455
Subscription gross margin
93.3
%
0.4
%
0.0
%
-
%
93.7
%
Cost of services revenue
51,417
(5,533
)
-
-
45,884
Services gross margin
11.4
%
9.5
%
-
%
-
%
20.9
%
Gross profit
132,471
6,135
51
-
138,657
Gross margin
68.6
%
3.2
%
0.0
%
-
%
71.8
%
Sales and marketing
82,639
(7,610
)
(1,107
)
-
73,922
Research and development
58,676
(7,635
)
-
-
51,041
General and administrative
22,557
(4,047
)
(356
)
-
18,154
Total operating expenses
163,872
(19,292
)
(1,463
)
-
143,117
Loss from operations
(31,401
)
25,427
1,514
-
(4,460
)
Operating margin
(16.3
%)
13.2
%
0.8
%
-
%
(2.3
%)
Other income, net
3,820
-
-
-
3,820
Net loss attributable to Pivotal
$
(28,115
)
$
25,427
$
1,514
$
-
$
(1,174
)
Net income (loss) per share, basic and diluted (1)
$
(0.10
)
$
0.00
(1) GAAP and Non-GAAP net income (loss) per common share
calculated based upon 272,724 basic and diluted weighted average
shares outstanding of common stock.
Three Months
Ended August 3, 2018 GAAP
Stock-basedcompensationexpense Amortization
ofacquiredintangibles Gain on sale ofinvestment
Non-GAAP Cost of subscription revenue
$
8,105
$
(411
)
$
(433
)
$
-
$
7,261
Subscription gross margin
91.7
%
0.4
%
0.4
%
-
%
92.6
%
Cost of services revenue
53,129
(4,188
)
-
-
48,941
Services gross margin
20.6
%
6.3
%
-
%
-
%
26.9
%
Gross profit
103,174
4,599
433
-
108,206
Gross margin
62.8
%
2.8
%
0.3
%
-
%
65.8
%
Sales and marketing
70,550
(5,688
)
(910
)
-
63,952
Research and development
47,001
(5,386
)
-
-
41,615
General and administrative
21,025
(3,371
)
(384
)
-
17,270
Total operating expenses
138,576
(14,445
)
(1,294
)
-
122,837
Loss from operations
(35,402
)
19,044
1,727
-
(14,631
)
Operating margin
(21.5
%)
11.6
%
1.1
%
-
%
(8.9
%)
Other income, net
237
-
-
-
237
Net loss attributable to Pivotal
$
(35,607
)
$
19,044
$
1,727
$
-
$
(14,836
)
Net loss per share, basic and diluted (1)
$
(0.14
)
$
(0.06
)
(1) GAAP and Non-GAAP net loss per common share calculated
based upon 257,240 basic and diluted weighted average shares
outstanding of common stock.
Six Months Ended August 2,
2019 GAAP Stock-basedcompensationexpense
Amortization ofacquiredintangibles Gain on sale
ofinvestment Non-GAAP Cost of subscription revenue
$
17,664
$
(1,108
)
$
(120
)
$
-
$
16,436
Subscription gross margin
93.3
%
0.4
%
0.0
%
-
%
93.8
%
Cost of services revenue
103,463
(10,211
)
-
-
93,252
Services gross margin
9.9
%
8.9
%
-
%
-
%
18.8
%
Gross profit
257,584
11,319
120
-
269,023
Gross margin
68.0
%
3.0
%
0.0
%
-
%
71.0
%
Sales and marketing
164,260
(14,421
)
(1,867
)
-
147,972
Research and development
114,931
(14,109
)
-
-
100,822
General and administrative
44,702
(7,548
)
(712
)
-
36,442
Total operating expenses
323,893
(36,078
)
(2,579
)
-
285,236
Loss from operations
(66,309
)
47,397
2,699
-
(16,213
)
Operating margin
(17.5
%)
12.5
%
0.7
%
-
%
(4.3
%)
Other income, net
7,420
-
-
-
7,420
Net loss attributable to Pivotal
$
(59,852
)
$
47,397
$
2,699
$
-
$
(9,756
)
Net loss per share, basic and diluted (1)
$
(0.22
)
$
(0.04
)
(1) GAAP and Non-GAAP net loss per common share calculated
based upon 270,619 basic and diluted weighted average shares
outstanding of common stock.
Six Months Ended August 3,
2018 GAAP Stock-basedcompensationexpense
Amortization ofacquiredintangibles Gain on sale
ofinvestment Non-GAAP Cost of subscription revenue
$
16,234
$
(638
)
$
(865
)
$
-
$
14,731
Subscription gross margin
91.3
%
0.3
%
0.5
%
-
%
92.1
%
Cost of services revenue
104,291
(6,477
)
-
-
97,814
Services gross margin
21.3
%
4.9
%
-
%
-
%
26.2
%
Gross profit
199,618
7,115
865
-
207,598
Gross margin
62.4
%
2.2
%
0.3
%
-
%
64.8
%
Sales and marketing
139,688
(9,259
)
(1,816
)
-
128,613
Research and development
91,429
(8,250
)
-
-
83,179
General and administrative
37,433
(5,181
)
(767
)
-
31,485
Total operating expenses
268,550
(22,690
)
(2,583
)
-
243,277
Loss from operations
(68,932
)
29,805
3,448
-
(35,679
)
Operating margin
(21.5
%)
9.3
%
1.1
%
-
%
(11.1
%)
Other income (expense), net
546
-
-
(3,234
)
(2,688
)
Net loss attributable to Pivotal
$
(68,122
)
$
29,805
$
3,448
$
(3,234
)
$
(38,103
)
Net loss per share, basic and diluted (1)
$
(0.38
)
$
(0.16
)
(1) GAAP net loss per common share calculated based upon
181,404 basic and diluted weighted average shares outstanding of
common stock. Non-GAAP net loss per common share calculated based
upon 240,719 basic and diluted weighted average shares outstanding
of common stock.
Pivotal Software, Inc. GAAP to Non-GAAP
Weighted Average Shares Outstanding Reconciliation (in
thousands); (unaudited)
Three Months Ended Six
Months Ended August 2, August 3, August 2,
August 3,
2019
2018
2019
2018
GAAP weighted average shares outstanding, basic and diluted
272,724
257,240
270,619
181,404
Assumed preferred stock conversion
–
–
–
59,315
Non-GAAP weighted average shares outstanding, basic and diluted
272,724
257,240
270,619
240,719
About Non-GAAP Financial Measures
To supplement Pivotal’s consolidated financial statements, which
are prepared and presented in accordance with GAAP, Pivotal
provides investors with certain non-GAAP financial measures,
including but not limited to: non-GAAP cost of subscription,
non-GAAP cost of services, non-GAAP gross profit, non-GAAP gross
margin, non-GAAP sales and marketing expense, non-GAAP research and
development expense, non-GAAP general and administrative expense,
non-GAAP operating loss, non-GAAP operating margin, non-GAAP net
loss, non-GAAP net loss per share, and non-GAAP weighted average
shares outstanding. Certain of these non-GAAP financial measures
exclude stock-based compensation, amortization of acquired
intangibles and gain on sale of investment. For more information on
the comparable GAAP to non-GAAP financial measures, please see the
reconciliation table included with this release.
Management believes non-GAAP information is useful in evaluating
the operating results, ongoing operations, and for internal
planning and forecasting purposes. Management also believes that
non-GAAP financial measures provide consistency and comparability
with past financial performance and assist investors with comparing
Pivotal to other companies, some of which use similar non-GAAP
financial measures to supplement their GAAP results. Management
believes non-GAAP financial measures are presented for supplemental
informational purposes only and should not be considered a
substitute for financial information presented in accordance with
GAAP and may be different from similarly-titled non-GAAP financial
measures used by other companies.
Pivotal excludes stock-based compensation because it is non-cash
in nature and excludes it in order to facilitate comparisons to
other companies’ results. Pivotal excludes amortization of acquired
intangibles because it is consistent with how management evaluates
operating results and prepares financial plans and forecasts. While
the purchase accounting for an acquisition reflects the accounting
value assigned to intangible assets, management believes the GAAP
impact of acquired intangible assets is not representative of long
term operating results. Pivotal excludes gains/losses on sales of
strategic investments because management believes these are more
reflective of discrete events and less reflective of results in a
particular period.
Source: Pivotal Investor Relations
©2019 Pivotal Software, Inc. All rights reserved. Pivotal is a
trademark and/or registered trademark of Pivotal Software, Inc. in
the United States and/or other countries.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190904005808/en/
Pivotal Software Investor Contact: Helyn Corcos
hcorcos@pivotal.io or Media Contact: Joseph Roualdes
jroualdes@pivotal.io
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Pivotal Software (NYSE:PVTL)
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Von Jan 2024 bis Jan 2025
