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TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

As confidentially submitted to the Securities and Exchange Commission on January 24, 2018.
This amendment no. 1 to the draft registration statement has not been publicly filed with the Securities and Exchange Commission,
and all information contained herein remains strictly confidential.

Registration No. 333-            


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



Pivotal Software, Inc.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
  7372
(Primary Standard Industrial
Classification Code Number)
  94-3094578
(I.R.S. Employer
Identification Number)

875 Howard Street, Fifth Floor
San Francisco, California 94103
(415) 777-4868

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)



Robert Mee
Chief Executive Officer
Pivotal Software, Inc.
875 Howard Street, Fifth Floor
San Francisco, California 94103
(415) 777-4868
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)



Copies to:

Alan F. Denenberg
Sarah K. Solum
Davis Polk & Wardwell LLP
1600 El Camino Real
Menlo Park, California 94025
(650) 752-2000

 

Andrew M. Cohen
General Counsel
Christopher Ing
Associate General Counsel
Pivotal Software, Inc.
875 Howard Street, Fifth Floor
San Francisco, California 94103
(415) 777-4868

 

Jeffrey R. Vetter
James D. Evans
Fenwick & West LLP
801 California Street
Mountain View, California 94041
(650) 988-8500

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

           If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

           If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý
(Do not check if a
smaller reporting company)
  Smaller reporting company o

Emerging growth company ý

           If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.    ý



CALCULATION OF REGISTRATION FEE

       
 
Title Of Each Class Of Securities
To Be Registered

  Proposed Maximum
Aggregate Offering
Price(1)(2)

  Amount Of
Registration Fee

 

Class A common stock, par value $0.01 per share

  $   $

 

(1)
Includes the aggregate offering price of additional shares that the underwriters have the option to purchase to cover over-allotments, if any.

(2)
Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

           The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

   


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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)
Issued                           , 2018

                      Shares

LOGO

CLASS A COMMON STOCK



Pivotal Software, Inc. is offering             shares of its Class A common stock. This is our initial public offering, and no public market currently exists for our Class A common stock. We anticipate that the initial public offering price will be between $             and $             per share.

We have two classes of common stock: Class A common stock and Class B common stock. The rights of the holders of the Class A common stock and Class B common stock will be identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote and each share of Class B common stock is entitled to ten votes. Each share of Class B common stock is convertible at the holder's option into one share of Class A common stock and will automatically convert into Class A common stock on a share-for-share basis under circumstances specified in our amended and restated certificate of incorporation in effect upon the closing of this offering.

Dell Technologies Inc. is currently our majority stockholder. Following this offering, Dell Technologies will own, indirectly through its subsidiaries (including VMware, Inc.), 351,028,548 shares of our outstanding Class B common stock, which will represent approximately         % of our total outstanding shares of common stock and approximately         % of our combined voting power immediately after this offering (or approximately         % if the underwriters exercise their over-allotment option in full). We will be a "controlled company" within the meaning of the corporate governance rules of the             .



We intend to apply for listing of our Class A common stock on the             under the symbol "             ."



We are an "emerging growth company" as defined under the federal securities laws. Investing in our Class A common stock involves risks. See "Risk Factors" beginning on page 16.



PRICE $    A SHARE



 
 
Price to
Public
 
Underwriting
Discounts and
Commissions(1)
 
Proceeds to
Pivotal

Per Share

  $       $            $         

Total

  $                     $                     $                  

(1)
See "Underwriters" for a description of the compensation payable to the underwriters.

We have granted the underwriters the right to purchase up to an additional             shares of our Class A common stock to cover over-allotments, if any.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of Class A common stock to purchasers on or about                           , 2018.



MORGAN STANLEY   GOLDMAN SACHS & CO. LLC

   

                           , 2018


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TABLE OF CONTENTS

 
  Page  

Prospectus Summary

    1  

Risk Factors

    16  

Special Note Regarding Forward-Looking Statements

    47  

Industry and Market Data

    48  

Use of Proceeds

    49  

Dividend Policy

    49  

Capitalization

    50  

Dilution

    53  

Selected Consolidated Financial Data

    55  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    58  

Business

    76  

Management

    93  

Executive Compensation

    101  

Certain Relationships and Related Party Transactions

    106  

Principal Stockholders

    111  

Description of Capital Stock

    114  

Material U.S. Federal Income and Estate Tax Consequences for Non-U.S. Holders of Class A Common Stock

    121  

Shares Eligible for Future Sale

    124  

Underwriters

    126  

Legal Matters

    132  

Experts

    132  

Where You Can Find More Information

    132  

Index to Consolidated Financial Statements

    F-1  



        In this prospectus, (i) "Pivotal Software, Inc.," "Pivotal," the "Company," "we," "us" and "our" refer to Pivotal Software, Inc. and its consolidated subsidiaries, (ii) "Dell" refers to Dell Inc., (iii) "Dell Technologies" refers to Dell Technologies Inc., the ultimate parent company of Dell Inc. and (iv) "DellEMC" refers to EMC Corporation, an indirect wholly-owned subsidiary of Dell Technologies that directly holds shares of our Class B common stock, whether before or after its acquisition by Dell Technologies.

        "Pivotal," the Pivotal logos and other trade names, trademarks or service marks of Pivotal appearing in this prospectus are the property of Pivotal. This prospectus contains additional trade names, trademarks and service marks of other companies, which are the property of their respective owners. We do not intend our use or display of other companies' trade names, trademarks or service marks to imply a relationship with or endorsement or sponsorship of us by these other companies.

        Neither we nor any of the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may provide you. We are offering to sell, and seeking offers to buy, shares of Class A common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Class A common stock.

        For investors outside the United States: neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of our Class A common stock and the distribution of this prospectus outside of the United States.

        Until                   , 2018 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade our Class A common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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PROSPECTUS SUMMARY

        This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our Class A common stock. You should read this entire prospectus carefully, including the section titled "Risk Factors" and our consolidated financial statements and related notes. Our fiscal year is the 52- or 53-week period ending on the Friday nearest January 31. Our 2016 fiscal year ("fiscal 2016") ended on January 29, 2016, and our 2017 fiscal year ("fiscal 2017") ended on February 3, 2017.


PIVOTAL SOFTWARE, INC.

We are transforming how the world builds software.

Overview

        We provide a leading cloud-native platform that makes software development and IT operations a strategic advantage for our customers. Our cloud-native platform, Pivotal Cloud Foundry ("PCF"), accelerates and streamlines software development by reducing the complexity of building, deploying and operating new cloud-native applications and modernizing legacy applications. This enables our customers' development and IT operations teams to spend more time writing code, waste less time on mundane tasks and focus on activities that drive business value – building and deploying great software. PCF customers can accelerate their adoption of a modern software development process and their business success using our platform through our complementary strategic services, Pivotal Labs ("Labs"). Enterprises across industries have adopted our platform to build, deploy and operate software, including enterprises in the automotive, financial services, industrial, insurance, media, retail, technology and telecommunications sectors.

        Cloud-native software is reshaping businesses across all industries, empowering enterprises to innovate at a higher velocity and become more digital, mobile, data-driven and always-connected. Cloud-native software is designed to be highly available, scalable and modular to allow for frequent iteration and feature releases. Despite the widespread availability of private and public cloud infrastructure, many organizations are burdened by legacy technologies and software development processes that prevent them from fully realizing the benefits of cloud-native software. As a result, organizations require a modern agile development process and a cloud-native platform that can be deployed on every major private and public cloud.

        Our offering, which includes PCF and Labs, enables organizations to build cloud-native software and compete in today's business environment.

    PCF accelerates and streamlines software development by reducing the complexity of building, deploying and operating modern applications. PCF integrates an expansive set of critical, modern software technologies to provide a turnkey cloud-native platform. PCF combines leading open-source software with our robust proprietary software to meet the exacting enterprise-grade requirements of large organizations, including the ability to operate and manage software across private and public cloud environments, such as Amazon Web Services, Microsoft Azure, Google Cloud Platform, VMware vSphere and OpenStack. PCF is sold on a subscription basis.

    Labs software development experts deliver strategic services that transfer the expertise for enterprises to accelerate their cloud-native transformation by implementing modern agile development practices. With Labs, we help customers co-develop new applications and transform existing ones while accelerating software development, streamlining IT operations and ultimately driving self-sustaining business transformation.

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        Our customers realize measurable improvement in developer productivity, software quality, security, time-to-market and IT operational efficiency. Some of our larger customers have achieved substantial structural efficiencies by leveraging our platform, such as significantly improving the ratio of developers to operators toward 200:1 or greater and increasing developer productivity, as measured by the amount of time developers are able to spend writing software code or by the frequency of meaningful improvements to the software they are developing, by 50% or more.

        We market and sell PCF and Labs through our sales force and ecosystem partners. We leverage our mutually beneficial commercial and go-to-market relationships with Dell Technologies and VMware, Inc. ("VMware") to win new customers and to expand our customer footprint. We also work closely with large public cloud providers, including Google and Microsoft, to bring our customers' workloads to their cloud infrastructure. We have received numerous industry awards, including in 2017 the Google Cloud Technology Partner of the Year for 2016 and an Azure consumption partner of the year award from Microsoft for 2016. We intend to continue to grow PCF and scale our strategic services by relying on global systems integrators ("SI"), such as Accenture and Cognizant, and boutique consulting firms that are building focused practices around Pivotal technology implementation, application migration and cloud-native development.

        Our complementary PCF and Labs offering enables organizations to effectively build cloud-native software and compete in today's business environment. Our customers often start with smaller PCF deployments in specific groups or departments and then expand their subscriptions as they seek to deploy and manage more applications and other workloads. Some of our customers use Labs to drive successful outcomes in their organization using our platform as they learn and adopt our modern software development practices. There is a positive correlation between customers using Labs and the expansion of their PCF subscriptions. Optimizing this synergy, including through our SI partners, is a key aspect of our overall business strategy.

        We are focused on subscription sales of our platform. Since announcing PCF in November 2013, our subscription customer count has grown rapidly to 270 as of the end of fiscal 2017. Our subscription revenue was $95.0 million and $150.0 million for fiscal 2016 and fiscal 2017, respectively, representing year-over-year growth of 58%. Our total revenue was $280.9 million and $416.3 million for fiscal 2016 and fiscal 2017, respectively, representing year-over-year growth of 48%. The second quarter of the current fiscal year was the first quarter in which subscription revenue exceeded our services revenue, and we expect that over time subscription revenue will become a larger percentage of our total revenue as customers continue to adopt PCF and as our SI partner ecosystem ramps to directly deliver strategic services to our customers. Our net loss was $282.7 million and $232.9 million for fiscal 2016 and fiscal 2017, respectively.

Industry Background

        Cloud-native software is reshaping businesses across all industries, empowering enterprises to innovate at a higher velocity and become more digital, mobile, data-driven and always-connected. Cloud-native software is designed to be highly available, scalable and modular to allow for frequent iteration and feature releases. Despite the widespread availability of private and public cloud infrastructure, many organizations are burdened by legacy technologies and software development processes that prevent them from fully realizing the benefits of cloud-native software. As a result, organizations require an agile development process and a cloud-native platform that can be deployed on every major private and public cloud.

        Enterprises can revolutionize their customer experiences, help create new revenue streams and improve the cost and speed of business operations by building and deploying cloud-native software. To build and deploy cloud-native software and adopt cloud infrastructure, enterprises require new technology and process. "Technology" consists of the platform and tools necessary to develop and

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efficiently operate cloud-native software and its associated infrastructure.  "Process" refers to the development and operational processes that consistently deliver high-quality software in a culture that embraces change.

GRAPHIC

    Approaches to Becoming Cloud Native

        In order to effectively develop cloud-native software, enterprises need to recognize three fundamental imperatives: (1) the need for cloud infrastructure software optimized for continuous delivery and highly efficient IT operations, (2) the need for agile software development methodologies and (3) the need to leverage open-source software.

    Cloud Infrastructure Software.  To drive developer and operations efficiency gains, enterprises need to (1) implement software-defined data center infrastructure, server virtualization and application containers on modern hardware, (2) develop next-generation operational software and middleware enabling IT infrastructure to become more automated and programmatic, (3) break down the traditional monolithic software architecture into "microservices," integrated development frameworks and automated releases and (4) facilitate continuous delivery, lifecycle management and monitoring.

    Agile Software Development Methodologies.  To facilitate continuous delivery and efficient IT operations and to closely align with business objectives, enterprises need to adopt agile development and DevOps techniques to rapidly deploy and manage new software in shorter development cycles, with faster deployment frequency and more dependable releases. These techniques are increasingly becoming the modern way for enterprises to develop cloud-native software.

    Open Source.  Some of the most innovative technologies, including application containers, big data stores, developer frameworks and machine learning libraries, are open source. Enterprises need to leverage powerful open-source software technologies.

    Legacy IT Challenges: Our Opportunity

        Despite the availability of these cloud technology and agile process advancements, many enterprises remain deeply invested in legacy technology and process that differ significantly from cloud-native approaches to software development and operations. These enterprises are seeking to leverage private and public cloud technologies and to use cloud-native software to transform their

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businesses. They continue to deploy monolithic software built on custom silos of supporting infrastructure. When changes to software become necessary, many manual steps and serial reviews and approvals by different functional teams are required, which can often lead to instability and downtime. For a large enterprise with hundreds or thousands of applications and large numbers of disparate hardware components in multiple data centers, the operational challenges can be daunting as hundreds or thousands of people in operations may be required just to support a small number of developers and to keep existing applications running. This complexity can create ingrained processes and cultures that are resistant to change, given the level of investment in legacy infrastructure and inefficient IT operations, which constrain innovation and new software development initiatives.

        In addition to these technology challenges, many enterprises implement legacy software development approaches such as the "waterfall" process, in which software development proceeds in a strict sequence from conception to analysis, design, construction, testing, implementation and maintenance. By the time such software is ready to be released, requirements and business priorities often have changed. The waterfall process is ill-suited for software development and IT operations where the code and user requirements are constantly changing.

        These legacy technologies and processes have created a number of challenges, including:

    Protracted development cycles and low developer productivity.  A Forrester study found that 72% of developers spend less than three hours a day productively writing code.

    Operational inefficiencies.  An International Data Corporation ("IDC") survey showed that IT personnel devote over 70% of their time to routine service request approval, monitoring, troubleshooting, provisioning, security patching and configuration management.

    Lack of flexibility to use multiple clouds.  Enterprises want the flexibility to choose between different clouds without having to rearchitect their software. However, if they deploy workloads to a single public cloud environment, they face difficulty moving those workloads to other public cloud environments. IDC expects more than 90% of enterprise IT organizations will commit to multi-cloud architectures by 2020.

    Integration complexity.  Legacy approaches to software development and IT operations have resulted in a patchwork of third-party tools, middleware, software components and operating systems that need to be regularly integrated and maintained.

    Difficulty in securing legacy IT infrastructure.  The silos and custom architecture found in legacy IT infrastructure are not designed to address evolving security threats.

    Lack of enterprise-grade platform to leverage open-source software.  Given the complexity and risk in adopting, integrating and maintaining an array of open-source technologies at enterprise scale, organizations need a single, secure and stable platform in order to leverage open-source software effectively.

Our Solution

        We provide a leading cloud-native platform that makes software development and IT operations a strategic advantage for our customers. PCF customers can accelerate their adoption of modern software development practices through Labs, our complementary strategic services. Our customers realize measurable improvement in developer productivity, software quality, security, time-to-market and IT operational efficiency. Our offering helps make developing and operating software a strategic advantage for our customers, empowering them to revolutionize their customer experiences, helping create new revenue streams and improving the speed and cost of business operations through software.

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Pivotal Customers Can Reallocate Spend from
Infrastructure Operations to Software Development

GRAPHIC

        Together, PCF and Labs provide the technology and the process to enable the operational efficiency and developer productivity needed to develop, deploy and manage cloud-native software.

    PCF is a cloud-native platform that accelerates and streamlines software development by reducing the complexity of building, deploying and operating modern applications. PCF integrates an expansive set of critical, modern open-source and proprietary software technologies to provide a turnkey cloud-native platform. Our platform allows developers and IT operators to focus on activities that drive business value – building and deploying great software. From our single platform, PCF enables the continuous delivery of any application to every major private and public cloud. PCF combines a set of key platform components which include:  a multi-cloud orchestration foundation, an embedded operating system, a central security and credential framework, a built-in advanced container networking and security engine, a complete and scalable application middleware environment and leading application and data microservices technologies. PCF also fosters a robust ecosystem of many first- and third-party cloud services and technologies which can be accessed on our platform through Pivotal Services Marketplace (the "Marketplace").

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    Labs software development experts deliver strategic services that transfer the expertise for enterprises to accelerate their cloud-native transformation by implementing modern agile development practices. With Labs, we help customers co-develop new applications and transform existing ones while accelerating software development, streamlining IT operations and ultimately driving self-sustaining business transformation.

        Key benefits of our offering include:

    Enhanced developer productivity.  PCF dramatically increases developer productivity by providing a standard development platform, frameworks and architectural patterns, so that developers can spend more time writing software that drives value to the business and its customers. In addition, Labs enables enterprises to evolve beyond traditional waterfall processes through co-development projects. Many of our customers have increased developer productivity by 50% or more and dramatically increased the frequency of software releases, sometimes moving from a semi-annual to a weekly (or even daily) production release cadence.

    Greater operational efficiency.  PCF enables our customers to standardize and automate common IT processes across public and private cloud environments related to IT environment builds, software testing and release and infrastructure and application updates. Some of our larger customers have achieved substantial structural efficiencies by leveraging our platform, such as significantly improving the ratio of developers to operators toward 200:1 or greater and increasing developer productivity by 50% or more.

    Flexibility to run software across private, public and multi-cloud environments.  PCF gives our customers a consistent developer interface for application deployment and operation across private, public and multi-cloud environments.

    Integrated by design.  From our single platform, PCF integrates an expansive set of critical, modern open-source and proprietary software technologies to provide a turnkey cloud-native platform that enables the continuous delivery of any application to every major private and public cloud. In addition, PCF fosters a robust ecosystem integrated through our Marketplace to extend the capabilities of the platform with many first- and third-party cloud services and technologies such as data persistence, caching, messaging, continuous integration and security.

    Unique infrastructure-native approach to security.  Our approach to security is designed to enable automatic updates to the platform without application downtime, eliminating the compromise between security and availability associated with legacy approaches to IT operations.

    Enterprise-grade platform.  Our platform is built to meet the exacting performance, availability, security and management requirements of large organizations. We combine the latest innovations from open-source projects such as application containers, big data stores and developer frameworks with our robust proprietary software components, such as platform management and monitoring, developer experience and authentication, to form an enterprise-grade platform. We enable large enterprises to leverage the benefits of cutting-edge open-source technologies built into PCF, our enterprise-grade platform, for their mission-critical operations and applications.

Competitive Strengths

        Our competitive strengths include:

    First mover in cloud-native transformations.

    Enterprise-grade software platform integrating open source.

    Blue-chip customer adoption.

    Large and growing PCF ecosystem.

    Leading cloud-native platform with strategic services.

    Viral adoption together with C-level focus.

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Market Opportunity

        Our cloud-native software addresses IT spending across the rapidly growing market for public cloud workloads, sometimes referred to as Platform-as-a-service ("PaaS"), and the market for application infrastructure, middleware and development software. We believe our cloud-native platform opportunity is the aggregate of these two markets, with spending today estimated at over $50 billion.

    According to Gartner, spending on cloud application infrastructure services (PaaS) is expected to be $10.6 billion in 2017, growing to $24.6 billion by 2021, representing a 23% compound annual growth rate ("CAGR").

    According to Gartner, spending on application infrastructure, middleware and development solutions is expected to be $40.6 billion in 2017, growing to $51.3 billion by 2021, representing a 6% CAGR.

Growth Strategy

        Key elements of our growth strategy include our plans to:

    Extend technology lead of our cloud-native platform.

    Maintain open cloud-native platform advantage.

    Continue to drive new customer adoption.

    Expand adoption within existing customers.

    Continue to capitalize upon our relationships with our strategic partners.

    Further leverage partnerships with public cloud vendors.

    Continue to leverage the combined strengths of PCF and Labs to drive PCF expansion.

Culture

        We believe our culture is unique and critical to our mission of transforming how the world builds software. Our culture reflects the learnings of our agile development roots and applies those insights to all aspects of our business. We have three core values:

    Do the right thing.

    Do what works.

    Be kind.

Risk Factors

        Investing in our Class A common stock involves risk. You should carefully consider all the information in this prospectus prior to investing in our Class A common stock. These risks are discussed more fully in the section titled "Risk Factors" immediately following this prospectus summary and elsewhere in this prospectus. These risks and uncertainties include, but are not limited to, the following:

    we have a limited operating history as an independent company, which makes it difficult to evaluate our prospects and increases the risk of your investment;

    we have incurred substantial losses and may not be able to generate sufficient revenue to achieve and sustain profitability;

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    our future success depends in large part on the growth of our target markets, and even if our target markets grow as expected, our ability to further penetrate these markets is uncertain;

    our future growth is largely dependent on PCF and related services, and challenges in market acceptance, adoption and growth of PCF could harm our business, results of operations and prospects;

    our subscription revenue growth rate, both in absolute terms and relative to total revenue, in recent periods may not be indicative of our future performance and ability to grow;

    our business and prospects will be harmed if our customers do not renew their subscriptions and expand their use of our platform;

    we operate in a highly competitive industry, and any failure to compete effectively could materially and adversely affect our business, results of operations and financial condition;

    our sales cycles can be long, unpredictable and vary seasonally, which can cause significant variation in the number and size of transactions that close in a particular quarter;

    we do not control and may be unable to predict the future course of open-source technologies, including those used in our offering, which could reduce the market appeal of our offering and damage our reputation;

    security and privacy breaches could expose us to liability, damage our reputation, compromise our ability to conduct business, require us to incur significant costs or otherwise adversely affect our financial results; and

    we are a controlled company, and Dell Technologies has the ability to exercise control over all matters requiring approval by our stockholders.

Corporate Information

        We were formed in April 2013. DellEMC and VMware transferred teams and contributed assets and technology to Pivotal that have become key elements of our cloud-native platform and strategic services. We were incorporated in the State of Delaware on April 1, 2013 under the name GoPivotal, Inc. and subsequently changed our name to Pivotal Software, Inc. Our principal executive offices are located at 875 Howard Street, Fifth Floor, San Francisco, California 94103, and our telephone number is (415) 777-4868. Our website is https://pivotal.io. Neither our website nor the information contained in or accessible from our website is incorporated into this prospectus or the registration statement of which it forms a part.

        Dell Technologies is our majority stockholder. For more information on our relationship with Dell Technologies, see "Certain Relationships and Related Party Transactions" and "Principal Stockholders."

        Upon the completion of this offering, Dell Technologies will own, indirectly through its subsidiaries (including VMware), 351,028,548 shares of our outstanding Class B common stock, which will represent approximately         % of our total outstanding shares of common stock and approximately         % of the combined voting power of both classes of our outstanding common stock immediately after this offering. As a result, Dell Technologies will be able to exercise control over all matters requiring approval by our stockholders, including the election of our directors and approval of significant corporate transactions. Dell Technologies' controlling interest may discourage or prevent a change in control of our company that other holders of our common stock may favor.

Emerging Growth Company Status

        We qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). For so long as we remain an emerging growth company, we are permitted

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and currently intend to rely on the following provisions of the JOBS Act that contain exceptions from disclosure and other requirements that otherwise are applicable to companies that conduct initial public offerings and file periodic reports with the Securities and Exchange Commission (the "SEC"). These JOBS Act provisions:

    provide an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting under the Sarbanes-Oxley Act of 2002, as amended;

    permit us to include reduced disclosure regarding executive compensation in this prospectus and our SEC filings as a public company; and

    provide an exemption from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute arrangements not previously approved.

        We will remain an emerging growth company until:

    the first to occur of the last day of the fiscal year (1) which follows the fifth anniversary of the completion of this offering, (2) in which we have total annual gross revenue of at least $1.07 billion or (3) in which the market value of our capital stock held by non-affiliates was $700 million or more as of the last business day of the preceding second fiscal quarter; or

    if it occurs before any of the foregoing dates, the date on which we have issued more than $1 billion in non-convertible debt over a three-year period.

        We have irrevocably elected not to avail ourselves of the provision of the JOBS Act that permits emerging growth companies to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. As a result, we will be subject to new or revised accounting standards at the same time as other public companies that are not emerging growth companies.

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THE OFFERING

Class A common stock offered by us

               shares

Class A common stock offered by us pursuant to the underwriters' over-allotment option

               shares

Common stock to be outstanding after this offering:

   

Class A common stock

               shares (or             shares, if the underwriters exercise their over-allotment option in full)

Class B common stock

  351,028,548 shares

Voting rights

  Following this offering, our two classes of authorized common stock will consist of Class A common stock and Class B common stock. The rights of the holders of the Class A common stock and Class B common stock will be identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote and each share of Class B common stock is entitled to ten votes. Each share of Class B common stock is convertible at the holder's option into one share of Class A common stock, and will automatically convert into Class A common stock on a share-for-share basis under circumstances specified in our certificate of incorporation, including (i) if such share is transferred such that it is no longer beneficially owned by certain of our existing stockholders and their permitted transferees or (ii) if Dell Technologies and certain of its affiliates beneficially own an aggregate number of shares of Class B common stock representing less than 37.5% of our outstanding capital stock. The foregoing conversion rights of the Class B common stock will cease if Dell Technologies or certain of its affiliates transfer any portion of our capital stock in a transaction intended to qualify for non-recognition of gain and loss under Section 355 of the Internal Revenue Code. See "Description of Capital Stock" for more information about the rights of each class of our common stock.

Dell's ownership of common stock to be outstanding after this offering:

   

Class A common stock

  No shares

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Class B common stock

  Immediately after this offering, Dell Technologies will own (indirectly through its subsidiaries, including VMware) 351,028,548 shares of our outstanding Class B common stock, which will represent approximately             % of our total outstanding shares of common stock and approximately             % of the combined voting power of both classes of our outstanding common stock (or             % and             %, respectively, if the underwriters exercise their over-allotment option in full).

Controlled company

  We are a "controlled company" within the meaning of the corporate governance rules of the             . Dell Technologies will have the ability to dispose of a controlling interest in our company without a vote of the Class A common stock.

Use of proceeds

  We estimate that the net proceeds to us from this offering will be approximately $         million, or approximately $         million if the underwriters exercise their over-allotment option in full, assuming an initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds of this offering for working capital and other general corporate purposes, including continued investments in the growth of our business described in "Business—Growth Strategy." In addition, we may use a portion of the net proceeds for investments in or acquisitions of businesses, technologies or other assets that we believe to be complementary. We do not have any existing agreements or commitments for any specific investments or acquisitions. We do not intend to transfer any net proceeds we receive from this offering to Dell Technologies, Dell or their respective affiliates, other than payments in the ordinary course of business under one or more of the agreements described under "Certain Relationships and Related Party Transactions." For information about our proposed use of proceeds, see "Use of Proceeds."

Proposed             stock symbol

   

        The number of shares of our Class A and Class B common stock that will be outstanding after this offering is based on 80,158,546 shares of our Class A common stock and 351,028,548 shares of our Class B common stock (including shares of our convertible preferred stock on an as-converted basis) outstanding as of February 3, 2017, and excludes:

    351,028,548 shares of our Class A common stock issuable upon conversion of the outstanding 351,028,548 shares of our Class B common stock;

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    78,722,954 shares of our Class A common stock issuable upon the exercise of options to purchase shares of our Class A common stock outstanding as of February 3, 2017, at a weighted average exercise price of $3.36 per share;

    19,343,294 shares of our Class A common stock reserved for future grant or issuance under our Amended and Restated 2013 Stock Plan (the "2013 Plan") as of February 3, 2017; and

    39,343,260 shares of our Class A common stock issuable upon the exercise of stock options granted after February 3, 2017, subsequent to an August 2017 increase of 30,000,000 shares of our Class A common stock reserved for future grant or issuance under the 2013 Plan, with a weighted average exercise price of $4.87 per share.

        Unless otherwise indicated, this prospectus reflects and assumes the following:

    no exercise of outstanding stock options subsequent to February 3, 2017;

    the automatic conversion and reclassification of (i) all outstanding shares of our convertible Series B and Series C preferred stock into an aggregate of 74,824,794 shares of our Class A common stock and (ii) all outstanding shares of our convertible Series A and Series C-1 preferred stock into an aggregate of 220,933,309 shares of our Class B common stock, which will occur immediately prior to the closing of this offering;

    no exercise by the underwriters of their over-allotment option to purchase up to         additional shares of our Class A common stock from us; and

    the filing and effectiveness of our amended and restated certificate of incorporation and the adoption and effectiveness of our amended and restated bylaws immediately upon the closing of this offering.

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SUMMARY CONSOLIDATED FINANCIAL DATA

        The following tables summarize our consolidated financial data. Our fiscal year is the 52- or 53-week period ending on the Friday nearest to January 31 of each year. Our 2016 fiscal year ("fiscal 2016") ended on January 29, 2016, and our 2017 fiscal year ("fiscal 2017") ended on February 3, 2017. We derived the summary consolidated statements of operations data for fiscal 2016 and fiscal 2017 and the consolidated balance sheet data as of February 3, 2017 from our audited consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future. The following summary consolidated financial and other data should be read in conjunction with the sections titled "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

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Consolidated Statements of Operations Data:

 
  Fiscal Year Ended  
 
  January 29, 2016   February 3, 2017  
 
  (in thousands, except per share data)
 

Revenue:

             

Subscription

  $ 94,976   $ 149,995  

Services

    185,898     266,272  

Total revenue

    280,874     416,267  

Cost of revenue:

             

Subscription(1)(2)

    33,830     31,253  

Services(1)

    153,509     203,096  

Total cost of revenue

    187,339     234,349  

Gross profit

    93,535     181,918  

Operating expenses:

             

Sales and marketing(1)(2)

    187,292     194,322  

Research and development(1)

    120,493     152,122  

General and administrative(1)(2)

    58,472     61,994  

Total operating expenses

    366,257     408,438  

Loss from operations

    (272,722 )   (226,520 )

Other expense, net

    (6,183 )   (3,732 )

Loss before provision for income taxes

    (278,905 )   (230,252 )

Provision for income taxes

    (3,767 )   (2,614 )

Net loss

    (282,672 )   (232,866 )

Less: Net loss attributable to non-controlling interest

    126     329  

Net loss attributable to Pivotal

  $ (282,546 ) $ (232,537 )

Net loss per share attributable to common stockholders, basic and diluted(3)

  $ (2.21 ) $ (1.73 )

Weighted average shares used in computing net loss per share attributable to common stockholders, basic and diluted(3)

    127,910     134,674  

Pro forma net loss per share, basic and diluted (unaudited)(3)

        $ (0.59 )

Weighted average shares used in computing pro forma net loss per share, basic and diluted (unaudited)(3)

          393,888  

(1)
Includes stock-based compensation expense as follows:
 
  Fiscal Year Ended  
 
  January 29, 2016   February 3, 2017  
 
  (in thousands)
 

Cost of revenue – subscription

  $ 818   $ 1,274  

Cost of revenue – services

    7,340     6,184  

Sales and marketing

    7,501     7,971  

Research and development

    8,232     7,290  

General and administrative

    7,117     6,132  

Total stock-based compensation expense

  $ 31,008   $ 28,851  

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(2)
Includes intangible asset amortization expense from our formation and subsequent business acquisitions as follows:
 
  Fiscal Year Ended  
 
  January 29, 2016   February 3, 2017  
 
  (in thousands)
 

Cost of revenue – subscription

  $ 12,448   $ 8,951  

Sales and marketing

    5,853     5,111  

General and administrative

    1,714     1,554  

Total intangible asset amortization expense

  $ 20,015   $ 15,616  
(3)
See Note 13 to our consolidated financial statements included elsewhere in this prospectus for an explanation of the method used to calculate our basic and diluted net loss per share attributable to common stockholders, our basic and diluted pro forma net loss per share and the weighted average number of shares used in the computation of the per share amounts.
 
  February 3, 2017  
 
  Actual   Pro Forma(1)   Pro Forma
As
Adjusted(2)(3)
 
 
  (in thousands)
 

Consolidated Balance Sheet Data:

                   

Cash and cash equivalents

  $ 133,873   $ 133,873   $    

Working capital

  $ 49,153   $ 49,153   $    

Total assets

  $ 1,116,245   $ 1,116,245   $    

Deferred revenue, current and noncurrent

  $ 242,632   $ 242,632   $    

Redeemable convertible preferred stock

  $ 1,248,327   $   $    

Total stockholders' (deficit) equity

  $ (490,644 ) $ 757,683   $    

(1)
The pro forma column in the balance sheet data table above reflects the automatic conversion of (a) all outstanding shares of our Series B and Series C convertible preferred stock into an aggregate of 74,824,794 shares of our Class A common stock and (b) all outstanding shares of our Series A and Series C-1 convertible preferred stock into an aggregate of 220,933,309 shares of our Class B common stock immediately prior to the completion of this offering.

(2)
The pro forma as adjusted column in the balance sheet data table above gives effect to (i) the pro forma adjustments set forth in (1) above and (ii) the sale by us of             shares of Class A common stock in this offering, at an assumed initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

(3)
Pro forma as adjusted balance sheet data is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing. Each $1.00 increase or decrease in the assumed initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the amount of our cash and cash equivalents, working capital, total assets and total stockholders' equity by $              million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. An increase or decrease of 1,000,000 shares in the number of shares offered by us would increase or decrease, as applicable, the amount of our cash and cash equivalents, working capital, total assets and total stockholders' equity by $              million, assuming an initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

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RISK FACTORS

        Investing in our Class A common stock involves a high degree of risk. You should carefully consider the following risks, together with all of the other information contained in this prospectus, including our consolidated financial statements and related notes and Management's Discussion and Analysis of Financial Condition and Results of Operations, before making a decision to invest in our Class A common stock. Any of the following risks could have a material and adverse effect on our business, results of operations, financial condition and prospects and could cause the trading price of our Class A common stock to decline, which may cause you to lose all or part of your investment. Our business, results of operations, financial condition and prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material.

Risks Related to Our Business and Industry

We have a limited operating history as an independent company, which makes it difficult to evaluate our prospects and increases the risk of your investment.

        We have a limited operating history as an independent company and are scaling quickly, which makes it difficult to evaluate our business and prospects, including our ability to plan for and model future growth. As a relatively early stage company, we have encountered and will continue to encounter risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, including the risks described in this prospectus. If we do not plan appropriately or do not address these risks successfully, our business and prospects will be adversely affected, and the market price of our Class A common stock could decline.

We have incurred substantial losses and may not be able to generate sufficient revenue to achieve and sustain profitability.

        We have incurred net losses in each year since we were formed, including net losses of $282.7 million and $232.9 million for fiscal 2016 and fiscal 2017, respectively. As of February 3, 2017, we had an accumulated deficit of $979.1 million and our net cash used in operating activities was $166.4 million in fiscal 2017. We may not achieve sufficient revenue to attain and maintain profitability. We expect our operating expenses to increase significantly in the future as we hire additional sales, research and development and other employees across functions, increase or make strategic investments, scale relationships with ecosystem partners and open new offices. In addition, we expect to incur significant additional legal, accounting and other expenses related to being a public company. As a result of these increased expenses, we will have to generate and sustain increased revenue in order to become profitable in future periods. Because some of the markets for our offering are rapidly evolving and are not mature, it is difficult for us to predict our future results of operations. We cannot assure you that we will achieve profitability in the future or that, if we do become profitable, we will be able to sustain profitability. Any failure by us to achieve, sustain or increase profitability or generate positive cash flow from operations on a consistent basis could cause the value of our Class A common stock to decline.

Our future success depends in large part on the growth of our target markets. Even if our target markets grow as expected, our ability to further penetrate these markets is uncertain.

        Our ability to increase sales of PCF and Labs depends on growth in our target markets, which include the markets for cloud application infrastructure, PaaS and application infrastructure, middleware and development solutions. Our expectations regarding the potential for future growth in the markets for these types of offerings, and the third-party growth estimates for these markets, are subject to uncertainty. In particular, even if there is increased enterprise adoption of public cloud strategies, we cannot assure you that enterprise demand for multi-cloud solutions like ours will grow

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commensurately. If market demand does not grow as expected, our business and prospects may be adversely affected.

        Even if these markets grow as expected, we cannot be sure that our business will grow at a similar rate, or at all. Our experience in the markets and our experience selling PCF is relatively limited, and PCF has been commercially available for a limited period of time. We began selling PCF in fiscal 2014 and frequently update its features and functionality. Our ability to increase sales of PCF and our other offerings is affected by a number of factors beyond our control, including market acceptance of our offerings by existing customers and potential new customers, the extension of our offerings to new use cases and workloads, changing open-source platform technologies and standards and the timing of development and release of new products, capabilities and functionality by our competitors and by us. In addition, while we seek to expand the use of PCF through our Labs projects, we cannot assure you that we will be successful or that PCF and Labs as a complementary offering will produce the benefits that we expect. In addition, we cannot assure you that our offerings and future enhancements to our offerings will be able to address future advances in technology or requirements of existing customers or potential new customers. If we are unable to meet customer demands, to leverage the strengths of PCF and Labs as a complementary offering or to achieve more widespread market acceptance of our offerings, our business, results of operations, financial condition and growth prospects will be adversely affected.

Our future growth is largely dependent on PCF and related services, and challenges in market acceptance, adoption and growth of PCF could harm our business, results of operations and prospects.

        We expect that we will depend on PCF and related services to generate the vast majority of our future revenue, as revenue from PCF and related services has represented a substantial majority and an increasing portion of our total revenue in each of fiscal 2016 and 2017. As a result, our operating results could suffer due to:

    declines in demand for PCF;

    failure of PCF to achieve continued market acceptance;

    the market for cloud-native software not continuing to grow, or growing more slowly than we expect;

    introduction of products and technologies that serve as a replacement or substitute for, or represent an improvement over, PCF;

    technological innovations or new open-source standards that PCF does not address or that favor competitors;

    sensitivity to current or future prices offered by us or competing solutions; and

    our inability to release enhanced versions of PCF on a timely basis.

        If the market for PCF grows more slowly than anticipated or if demand for PCF does not grow as quickly as we anticipate, whether as a result of competition, pricing sensitivities, product obsolescence, technological change, unfavorable economic conditions, uncertain geopolitical environment, budgetary constraints of our customers or other factors, our business, results of operations and prospects will be harmed.

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Our subscription revenue growth rate, both in absolute terms and relative to total revenue, in recent periods may not be indicative of our future performance and ability to grow.

        We have experienced significant growth in recent periods. Subscription revenue increased from $95.0 million in fiscal 2016 to $150.0 million in fiscal 2017. Subscription revenue has also increased as a percentage of total revenue in each of the last two fiscal years, resulting in an increase of our overall gross profit. Our strategy is to continue to increase subscription revenue in general, relative to services, and as a proportion of our total revenue.

        You should not consider our subscription revenue growth rate in recent periods as indicative of our future performance. We may not achieve similar growth rates in future periods. Any success that we may experience in the future will depend in large part on our ability to, among other things:

    add new customers and retain our existing customers;

    increase revenue from existing customers through increased or broader use of our platform within their organizations;

    improve the performance and capabilities of our platform through research and development;

    continue to successfully expand our business domestically and internationally; and

    successfully compete.

Our business and prospects will be harmed if our customers do not renew their subscriptions and expand their use of our platform.

        Our future growth depends in part on customers renewing their subscriptions and expanding their use of our platform. The broad adoption of our platform within a customer presents challenges, including changing the customer's culture and approach to the customer's development of internal expertise and infrastructure to manage and utilize our platform effectively.

        Existing customers have no obligation to renew their subscriptions after the initial term. Given our limited operating history, the limited commercial availability of PCF and the immaturity of the markets in which we operate, we may not be able to accurately predict the rate at which customers will renew their subscriptions. Our customers may not renew their subscriptions or may renew at lower levels or on terms that are less economically beneficial to us. Our customers' renewal rates may decline or fluctuate as a result of a number of factors, including customer dissatisfaction with our pricing or the functionality, features or performance of our platform, our inability to meet our contractual commitments, competitors' product offerings, internally-developed, open-source solutions that do not require vendor assistance, changing open-source standards, consolidation within our customer base and other factors, a number of which are beyond our control. If our customers do not renew their subscriptions or renew on less favorable terms, our revenue may grow more slowly than expected, if at all, and our business, results of operations and financial condition will be adversely affected.

        Even if our existing customers renew their subscriptions and continue to use PCF, it is important for our success and growth that these customers expand their use of our platform. The rate at which our customers expand their use of our platform depends on a number of factors, including general economic conditions, the functioning of our platform, the ability of our field organization, together with our partners, to assist our customers in identifying new use cases, modernizing their software development approach and IT operational infrastructure and achieving success with ingraining a new culture and our customers' overall satisfaction.

        The purchase of our software and services may be discretionary and can involve significant expenditures. If our existing customers cut costs, they may significantly reduce their enterprise software expenditures, and they may not renew or expand their use of our platform.

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        As technologies and the markets for our software and services change, our subscription-based business model for PCF may no longer meet the needs of our existing customers. Consequently, we may need to develop new and appropriate software and services and marketing and pricing strategies for our solutions. If we are unable to adapt our business model to changes in the marketplace or if demand for our software and services declines, our business, results of operations, financial condition and cash flows could be harmed.

We operate in a highly competitive industry. Any failure to compete effectively could materially and adversely affect our business, results of operations and financial condition.

        The markets within which we operate are highly competitive. A significant number of companies and open-source projects have developed or are developing products and services that currently, or in the future may, compete with some or all of our offerings. In addition, in some instances, we have strategic or other commercial relationships with companies with which we currently or in the future may compete. We face competition from:

    legacy application infrastructure and middleware from vendors such as IBM and Oracle;

    open-source based offerings supported by vendors such as RedHat; alternative Cloud Foundry-based offerings such as IBM Cloud and SAP Cloud Platform, which have proprietary features that are unique to their offerings; or potential customers' internally-developed, integrated and maintained efforts; and

    proprietary public cloud offerings from vendors such as Amazon Web Services, Google Cloud Platform and Microsoft Azure.

        Many of our principal competitors have substantially longer operating histories, larger numbers of existing customers, greater capital and research and development resources, broader sales and marketing capabilities, stronger brand and customer recognition, larger intellectual property portfolios and broader global distribution and presence. Our competitors may be able to offer products or functionality similar to ours at a more attractive price than we can by integrating such products with their other product offerings. Acquisitions and consolidation in our industry may provide our competitors even more resources or may increase the likelihood of our competitors offering integrated products with which we cannot effectively compete. New innovative start-ups and existing large companies that are making significant investments in research and development could also launch new products and services that we do not offer and that could gain market acceptance quickly. If we were unable to anticipate or react to these competitive challenges, our competitive position would weaken, which would adversely affect our business, results of operations and financial condition.

        In addition, one of the characteristics of open-source software is that, subject to specified restrictions, anyone may modify and redistribute the existing open-source software and use it to compete in the marketplace. Such competition can develop with a smaller degree of overhead and lead time than required by traditional proprietary software companies. New open source-based platform technologies and standards are consistently being developed and can gain popularity quickly. Improvements in open source could cause customers to replace software purchased from us with their internally-developed, integrated and maintained open-source software. It is possible for competitors with greater resources than ours to develop their own open-source software-based products and services, potentially reducing the demand for our solutions and putting price pressure on our offerings. We cannot guarantee that we will be able to compete successfully against current and future competitors, that competitive pressure or the availability of new open-source software will not result in price reductions, reduced operating margins or increased sales and marketing expenses or that we will increase our market share, any one of which could harm our business, financial condition, results of operations and cash flows.

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Our sales cycles can be long, unpredictable and vary seasonally, which can cause significant variation in the number and size of transactions that close in a particular quarter.

        Our results of operations may fluctuate, in part, because of the resource-intensive nature of our sales efforts, the length and variability of the sales cycle for our platform and the difficulty in making short-term adjustments to our operating expenses. Many of our customers are large enterprises, whose purchasing decisions, budget cycles and constraints and evaluation processes are unpredictable and out of our control. Further, the timing of our sales is difficult to predict. The length of our sales cycle, from initial evaluation to payment for our subscriptions can range from several months to well over a year and can vary substantially from customer to customer. Our sales efforts involve significant investment in resources in field sales, partner development, marketing and educating our customers about the use, technical capabilities and benefits of our platform and services. Customers often undertake a prolonged evaluation process, which frequently involves not only our platform but also those of other companies or the consideration of internally developed alternatives including those using open-source software. Some of our customers initially deploy our platform on a limited basis, with no guarantee that these customers will deploy our platform widely enough across their organization to justify our substantial pre-sales investment. As a result, it is difficult to predict exactly when, or even if, we will make a sale to a potential customer or if we can increase sales to our existing customers. Large individual sales have, in some cases, occurred in quarters subsequent to those we anticipated, or have not occurred at all. If our sales cycle lengthens or our substantial upfront investments do not result in sufficient revenue to justify our investments, our operating results could be adversely affected.

        We have experienced seasonal and end-of-quarter concentration of our transactions and variations in the number and size of transactions that close in a particular quarter, which impacts our ability to grow revenue over the long term and plan and manage cash flows and other aspects of our business and cost structure. Our transactions vary by quarter, with the fourth quarter typically being our largest. In addition, within each quarter, a significant portion of our transactions occur in the last two weeks of that quarter. If expectations for our business turn out to be inaccurate, our revenue growth may be adversely affected over time and we may not be able to adjust our cost structure on a timely basis and our cash flows may suffer.

We do not control and may be unable to predict the future course of open-source technologies, including those used in our offering, which could reduce the market appeal of our offering and damage our reputation.

        We do not control the development of the open-source technology in our offering. We incorporate disparate inputs from various open-source developers and open-source projects whose technology and development decisions we may not control. Different open-source projects may also overlap or compete with the ones that we incorporate into our offering. The technology developed by one group for one project may become more widely used than that developed or integrated by us. Additionally, another company's distribution of the same open-source technology may be favored by customers over ours if such other company is viewed as a more important contributor to such technology. If we acquire or adopt a new technology and incorporate it into our offering but a competing technology or distribution becomes more widely used or accepted, the market appeal of our offering may be reduced and that could harm our reputation, diminish our brand and harm our prospects.

        Different groups of open-source software programmers collaborate with one another to develop certain of the open-source software that may be contained in our offering. If open-source software programmers, many of whom we do not employ, or our own internal programmers do not continue to use, contribute to and enhance the open-source technologies that we rely on, the market appeal of our offering may be reduced, which could harm our reputation, diminish our brand and result in decreased revenue. We also cannot predict whether further developments and enhancements to these open-source technologies will be available from reliable alternative sources. If the open-source

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technologies that we rely on become unavailable, we may need to invest in researching and developing alternative technologies.

Security and privacy breaches could expose us to liability, damage our reputation, compromise our ability to conduct business, require us to incur significant costs or otherwise adversely affect our financial results.

        Any security breach, unauthorized access or usage, virus or similar breach or disruption of our systems or software could result in the loss of confidential information, damage to our reputation and brand, early termination of our contracts, litigation, regulatory investigations or other liabilities. We have in the past and may in the future experience security breaches. If our security measures are breached as a result of third-party action, employee error, malfeasance or otherwise and, as a result, someone obtains unauthorized access to sensitive data, including intellectual property, proprietary business information or personal information, our reputation would be damaged, our business may suffer and we could incur significant liability.

        Techniques used to obtain unauthorized access or to sabotage systems change frequently and are often not recognized until launched against a target. As a result, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived security breach of our systems occurs, the market perception of our security measures and the security capabilities of our products could be harmed and we could lose sales and customers. For example, we market PCF's security as one of its principal benefits, so the market perception of PCF's security is important to our business. Any significant security breaches could result in the loss of business, litigation and regulatory investigations and penalties that could damage our reputation and adversely impact our results of operations and financial condition. Moreover, if a high-profile security breach occurs with respect to another PaaS solution provider, our customers and potential customers may lose trust in these solutions generally, which could adversely impact our ability to retain existing customers or attract new ones.

        Moreover, PCF is deployed on a customer's private cloud, a public cloud of its choice, or multiple clouds, and we have no control over our customers and their security personnel, processes or technology. We do not have the ability to monitor or review the content that our customers store or transmit through PCF or the security measures they implement to deploy PCF. Accordingly, if there is a breach of PCF deployed at a customer's location or within a customer's control, our reputation could be damaged, our business may suffer and we could incur significant liability, even though our product was not necessarily the cause of such issue. We are also growing our partner ecosystem, which includes public cloud vendors, Sls and strategic partners, to sell, implement and support our offerings; we lack control over their security measures, and any breach of their security systems could similarly adversely affect us.

        Our security profile is also impacted by our use of open-source software in our offering. Open-source software enables public access to source code, which is generally not a security risk posed by proprietary products.

If we do not effectively hire, train, retain and oversee our sales force, we may be unable to add new customers or increase sales to our existing customers, and our business may be adversely affected.

        We depend on our sales force to obtain new customers and increase sales with existing customers. Our software and services offering is complex and there is competition for sales personnel with the range of abilities that we require. Our ability to achieve significant revenue growth will depend, in large part, on our success in continuing to hire, train and retain sufficient numbers of sales personnel to support our growth, including in international markets. In addition, a large percentage of our sales force is new to our company. New hires require significant training and oversight, typically over a period of

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several quarters, before they can achieve full productivity. Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. In addition, as we grow our sales force, its organization, management and leadership becomes increasingly difficult and complex, and, as a result, we may not be able to grow it successfully. If we are unable to hire, train and retain a sufficient number of effective sales personnel, if we are ineffective at overseeing a growing sales force or if the sales personnel we hire are otherwise unsuccessful in obtaining new customers or increasing sales to our existing customers, our business may be adversely affected.

Our future growth depends in large part on the success of our partner relationships.

        In addition to our sales force, we rely on partners, including our strategic partners DellEMC and VMware, public cloud vendors and SIs, to increase our sales and distribution of our software and services. We also have independent software vendor partners whose integrations increase our ecosystem of services. We are dependent on partner relationships to contribute to our growth and to create leverage in our business model. Our future growth will be increasingly dependent on the success of our partner relationships, and if those partnerships do not provide such benefits, our ability to grow our business will be harmed. If we are unable to scale our partner relationships effectively, or if our partners are unable to serve our customers effectively, we may need to expand our services organization, which could adversely affect our results of operations.

        Our agreements with our partners are generally non-exclusive, meaning our partners may offer products from several different companies to their customers or have their products or technologies also interoperate with products and technologies of other companies, including products that compete with our offerings. Moreover, some of our partners also compete with us. If our partners do not effectively market and sell our offerings, choose to use greater efforts to market and sell their own products or those of our competitors or fail to meet the needs of our customers, our ability to grow our business and sell our offerings will be harmed. Furthermore, our partners may cease marketing our offerings with limited or no notice and with little or no penalty, and new partners could require extensive training and may take several months or more to achieve productivity. The loss of a substantial number of our partners, our possible inability to replace them or the failure to recruit additional partners could harm our results of operations. Our partner structure could also subject us to lawsuits or reputational harm if, for example, a partner misrepresents the functionality of our offerings to customers or violates applicable laws or our corporate policies.

We may not be able to respond to rapid technological changes with new offerings, which could have a material adverse effect on our sales and profitability.

        The markets for our software platform are characterized by constant technological changes, changing open-source software platform technologies and standards, changing customer needs and frequent new software product introductions and improvements. The introduction of third-party solutions embodying new technologies and the emergence of new industry standards, including any open-source projects that have become widely adopted, could make our existing and future software offerings obsolete and unmarketable.

If we are not able to maintain and enhance our brand, our business and results of operations may be adversely affected.

        We believe that protecting our Pivotal brand and maintaining and enhancing our reputation as a pioneer in cloud-native software, agile software development and DevOps is critical to our relationship with our existing customers and partners and our ability to attract new customers and partners. The successful promotion of our brand will depend on a number of factors, including our ability to continue to develop high-quality features and functionality for our offerings, our ability to successfully

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differentiate our offerings, delivery of customer value, leadership in open-source software, our marketing efforts and our continued protection of our brand. Our brand promotion activities may not be successful or yield increased revenue.

        In addition, independent industry analysts often provide reviews of our offerings, as well as offerings of our competitors, and the perception of our offerings in the marketplace may be significantly influenced by these reviews. If these reviews are negative, or less positive as compared to those of our competitors' products and services, our brand may be adversely affected. The performance of our partners may also affect our brand and reputation if customers do not have a positive experience with our partners' services. The promotion of our brand requires us to make substantial expenditures, and we anticipate that the expenditures will increase as our market becomes more competitive, as we expand into new markets, and as more sales are generated through our partners and more services are performed by our partners. To the extent that these activities yield increased revenue, this revenue may not offset the increased expenses we incur. If we do not successfully maintain and enhance our brand, our business may not grow, we could lose customers or fail to attract potential customers, all of which would adversely affect our business, results of operations and financial condition.

Our stock price and trading volume will be heavily influenced by the way analysts and investors interpret our financial information and other disclosures. Any unfavorable interpretations published by analysts or held by investors could have a negative impact on our stock price, regardless of accuracy, and any decline or lapse in the publication of research by analysts could cause our stock price and trading volume to decline.

        The trading market for our Class A common stock will depend in part on the research reports that analysts publish about our business. If few analysts cover us, demand for our Class A common stock could decrease and our Class A common stock price and trading volume may decline. Similar results may occur if one or more of these analysts stop covering us in the future or fail to publish reports on us regularly.

        Even if our stock is actively covered by analysts, we do not have any control over the analysts or the measures that analysts or investors may rely upon to forecast our future results. For example, in order to assess our business activity in a given period, analysts and investors may look at the combination of revenue and changes in deferred revenue in a given period (sometimes referred to as "billings"). Over-reliance on billings or similar measures may result in analyst or investor forecasts that differ significantly from our own for a variety of reasons, including:

    a relatively large number of transactions occur at the end of the quarter. Invoicing of those transactions may or may not occur before the end of the quarter based on a number of factors including receipt of information from the customer, volume of transactions and holidays. A shift of a few days has little economic impact on our business, but can shift deferred revenue from one period into the next;

    multi-year upfront billings may distort trends;

    subscriptions that have deferred start dates; and

    services that are invoiced upon delivery.

        In addition, as required by the new revenue recognition standard under Accounting Standard Codification Topic 606, Revenue From Contracts With Customers ("ASC 606"), we disclose our remaining performance obligations. This disclosure obligation is prepared on the basis of estimates based upon contractual arrangements and historical patterns of delivery. Market practices surrounding the calculation of this measure are still evolving. It is possible that analysts and investors could misinterpret our disclosure or that the terms of our customer contracts or other circumstances could cause our methods for calculating this disclosure to differ significantly from others, which could lead to inaccurate or unfavorable forecasts by analysts and investors.

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        Regardless of accuracy, unfavorable interpretations of our financial information and other public disclosures could have a negative impact on our stock price. If one or more of the analysts who cover us publish unfavorable research about our business or otherwise downgrade our Class A common stock for any reason, the price of our Class A common stock would likely decline.

The loss of one or more members of our senior management team or an inability to attract and retain highly skilled employees, for which competition is intense, could adversely affect our planned growth.

        Our success depends largely upon the continued service of our senior management team. From time to time, there may be changes in our senior management team, which could disrupt our business. Members of our senior management could terminate their employment with us at any time.

        To execute our growth plan, we must attract and retain highly skilled employees. Competition for such personnel is intense, especially for engineers with high levels of experience in designing, developing and supporting software and for senior sales executives. We work on open-source software-based projects, making our developers highly marketable to other companies that work on similar projects. We may not be successful in attracting and retaining qualified personnel. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. Many of the companies with which we compete for experienced personnel have greater resources than we have. In addition, our compensation arrangements, such as our equity award programs, may not always be successful in attracting new employees and retaining and motivating our existing employees. Further, many of our employees may be able to receive significant proceeds from sales of our Class A common stock in the public markets after this offering, which may reduce their motivation to continue to work for us. In addition, employees may be more likely to leave us if the exercise prices of the stock options that they hold are significantly above the market price of our Class A common stock. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be severely harmed.

Failure to manage our growth and maintain our corporate culture will harm our business.

        We have substantially increased our overall headcount and expanded our business and operations in recent periods. Our headcount increased from 1,663 full-time employees at the beginning of fiscal 2016 to 2,305 full-time employees at the end of fiscal 2017. We have also expanded into additional geographic locations and added office space, including outside the United States. We expect to continue to expand our operations and employee headcount in the near term; however, our recent growth rates may not be indicative of our future growth. Our success will depend in part on our ability to continue to grow and to manage this growth effectively.

        Our recent growth has placed, and future growth will continue to place, significant demands on our management, infrastructure and other resources and increased our costs. We will need to continue to develop and improve our operational, financial and management controls, and our reporting systems and procedures to manage the expected growth of our operations and personnel, which will require significant capital expenditures and allocation of valuable management and employee resources. If we fail to implement these infrastructure improvements effectively, our ability to ensure uninterrupted operation of key business systems and comply with the rules and regulations that are applicable to public reporting companies will be impaired. Further, if we do not effectively manage the growth of our business and operations, the quality of our platform and services could suffer, and we may not be able to adequately address competitive challenges. This could impair our ability to attract new customers, retain existing customers and expand their use of our platform, all of which would adversely affect our brand, overall business, results of operations and financial condition.

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        We believe that our culture has been and will continue to be a key contributor to our success. Our culture and core principles are critical to how we run our business, how we engage with our key constituencies, including our customers, and how we build and deliver our offerings. If we do not continue to maintain our unique culture as we grow, our business could be harmed.

Incorrect or improper implementation or use of our software or inability of our platform to integrate with third-party software or hardware could result in customer dissatisfaction and negatively affect our business, operations, financial results and growth prospects.

        Our software is deployed in a wide variety of complex technology environments, and we believe our future success will depend on our ability to increase sales of our software subscriptions for use in such deployments. Our platform must also integrate with a variety of operating systems, software applications and hardware developed by others. We often assist our customers in achieving successful implementations for large, complex deployments. If we or our customers are unable to implement our software successfully, or are unable to do so in a timely manner, or if we are unable to devote the necessary resources to ensure that our solutions interoperate with other software, systems and hardware, customer perceptions of our company may be impaired, our reputation and brand may suffer and customers may choose not to increase their use of our software.

        Once our platform is implemented on our customers' selected hardware, software or cloud infrastructure, our customers may depend on our support organization services to help them take full advantage of PCF, quickly resolve post-deployment issues and provide effective ongoing support. If our support organization or those of our partners does not offer high-quality services, our ability to sell our offerings to existing customers or to have them renew their subscriptions would be adversely affected. In addition, as we expand our operations internationally, our support organization will face additional challenges, including those associated with delivering support, training and documentation in languages other than English.

The reliability of our platform will continue to be critical to our success. Sustained errors, failures or outages could lead to significant costs and service disruptions, which could negatively affect our business, financial results and reputation.

        Our reputation and ability to attract, retain and serve our customers are dependent upon the reliable performance of our platform and our underlying technical and network infrastructure. We have experienced, and will in the future experience, interruptions, outages and other performance problems. In addition, we rely on third-party service providers to host and deliver our cloud-based offerings, and these third parties may also experience interruptions, outages and other performance problems. Such disruptions may be due to a variety of factors, including infrastructure changes, human or software errors, capacity constraints and inadequate design. A future rapid expansion of our business could increase the risk of such disruptions. In some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time.

        Our offerings are highly technical and complex and, when deployed, have contained and may contain errors, defects or security vulnerabilities. Any errors, defects or security vulnerabilities discovered in our offerings could result in loss of revenue or delay in revenue recognition, loss of customers and increased service and warranty cost, any of which could adversely affect our business, results of operations and financial condition. In addition, we could face claims for product liability, tort or breach of warranty, including claims relating to changes to our products and services made by our strategic partners. Our contracts with customers contain provisions relating to warranty disclaimers and liability limitations, which may not be upheld. Defending a lawsuit, regardless of its merit, is costly and may divert management's attention and adversely affect the market's perception of us and our offerings. In addition, if our business liability insurance coverage proves inadequate or future coverage

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is unavailable on acceptable terms or at all, our business, results of operations and financial condition could be adversely impacted.

Adverse economic conditions or reduced information technology spending may adversely impact our revenues.

        Our business depends on the overall demand for information technology and on the economic health of our current and prospective customers. The purchase of our offerings is often discretionary and may involve a significant commitment of capital and other resources. Weak economic conditions, or a reduction in information technology spending even if economic conditions improve, would likely adversely impact our business, results of operations and financial condition in a number of ways, including by lengthening sales cycles, lowering prices for our products and services and reducing sales. In addition, any changes in the domestic or international political environment or deterioration in international relations as well as resulting regulatory or tax policy changes may adversely affect our business and financial results. Furthermore, during challenging economic times our customers may face issues in gaining timely access to sufficient credit, which could result in an impairment of their ability to make timely payments to us. If that were to occur, we may be required to increase our allowance for doubtful accounts, which would adversely affect our financial results.

We do not have an adequate history with our subscription or pricing models to accurately predict the long-term rate of customer adoption or renewal, or the impact these will have on our revenue or operating results.

        We have a limited history with our subscription offerings and pricing model and if, in the future, we are forced to reduce prices for our subscription offerings, our revenue and results of operations will be harmed. We may not be able to accurately predict the long-term rate of customer adoption or renewal, or the impact these will have on our revenue or operating results. We also have limited experience with respect to determining the optimal prices and pricing models for our solution. As a result, in the future we may be required to reduce our prices, which could adversely affect our revenue, gross margin, profitability, financial position and cash flow.

We generate revenue from sales outside of the United States, and we are therefore subject to a number of risks associated with international sales and operations. Challenges presented by international economic, political, legal, accounting and business factors could negatively affect our business, financial condition or results of operations.

        Our business is subject to several risks associated with our non-U.S. operations. These risks may intensify to the extent we successfully scale our non-U.S. business. Accordingly, our future results could be materially and adversely affected by a variety of factors relating to our non-U.S. operations, including, among others, the following:

    fluctuations in foreign currency exchange rates;

    changes in a specific country's or region's economic conditions;

    political or social unrest;

    trade restrictions;

    import or export licensing requirements;

    the overlap of different tax structures or changes in international tax laws;

    changes in regulatory requirements;

    difficulties in staffing and managing international operations;

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    stringent data protection regulations in some foreign countries;

    compliance with a variety of foreign laws and regulations; and

    longer payment cycles or collectability concerns in certain countries.

        The occurrence of any one of these risks could harm our business and results of operations. Additionally, operating in international markets requires significant management attention and financial resources. We cannot be certain that the investment and additional resources required to operate in other countries will produce desired levels of revenue or profitability.

        Sales to customers located outside of the United States represented 24% and 22% of our total revenue for fiscal 2016 and fiscal 2017, respectively, and we intend to continue to increase sales outside of the United States. In order to maintain and expand our sales internationally, we need to hire and train experienced personnel to staff and manage our foreign operations. To the extent that we experience difficulties in recruiting, training, managing and retaining international staff, and specifically sales management and sales personnel, we may experience difficulties in growing our international sales and operations. If we are not able to maintain successful partner relationships internationally, our future success in such markets could be limited. In addition, the costs associated with scaling our business outside the United States may be significant.

We are exposed to fluctuations in currency exchange rates, which could negatively affect our results of operations.

        Our sales contracts are primarily denominated in U.S. dollars, and therefore substantially all of our revenue is not subject to foreign currency risk. However, a strengthening of the U.S. dollar could increase the real cost of our platform to our customers outside of the United States, which could adversely affect our results of operations. In addition, an increasing portion of our operating expenses is incurred and an increasing portion of our assets is held outside the United States. These operating expenses and assets are denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates, which could have an adverse impact on the results of our operations.

Due to the global nature of our business, we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act or similar anti-bribery laws in other jurisdictions in which we operate, and various international trade and export laws.

        Non-U.S. operations, particularly in those countries with developing economies, are also subject to risks of violations of laws prohibiting improper payments and bribery, including the U.S. Foreign Corrupt Practices Act, U.K. Bribery Act and similar anti-bribery laws in foreign jurisdictions, which generally prohibit U.S.-based companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business to non-U.S. officials, or in the case of the U.K. Bribery Act, to any person. Our global operations require us to import from and export to several countries, which geographically stretches our compliance obligations. In addition, changes in such laws could result in increased regulatory requirements and compliance costs which could adversely affect our business, financial condition and results of operations. Our employees, contractors and agents may take actions in violation of the U.S. Foreign Corrupt Practices Act, U.K. Bribery Act or other anti-bribery laws. Any such violations, even if due to acts or inadvertence of our employees, or due to the acts or inadvertence of others, could subject us to civil or criminal penalties or otherwise have an adverse effect on our business and reputation.

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Our sales to government entities and highly regulated organizations are subject to a number of challenges and risks.

        We sell to U.S. federal and state and foreign governmental agency customers, as well as to customers in highly regulated industries such as financial services, pharmaceuticals, insurance and healthcare. Sales to such entities are subject to a number of challenges and risks. Selling to such entities can be highly competitive, expensive and time-consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale. Government contracting requirements may change and in doing so restrict our ability to sell into the government sector until we have attained the revised certification. Government demand and payment for our offerings are affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our offerings.

        Further, governmental and highly regulated entities may demand shorter subscription periods or other contract terms that differ from our standard arrangements, including terms that can lead those customers to obtain broader rights in our offerings than would be standard. Such entities may have statutory, contractual or other legal rights to terminate contracts with us or our partners due to a default or for other reasons, and any such termination may adversely affect our reputation, business results of operations and financial condition.

Because we recognize subscription revenue over the terms of our contracts, fluctuations in new transactions will not be immediately reflected in our operating results and may be difficult to discern. Professional services revenue may fluctuate significantly from period to period.

        We generally recognize subscription revenue from customers ratably over the terms of their contracts, which are typically one to three years. As a result, most of the subscription revenue we report for each quarter is derived from the recognition of deferred revenue relating to subscriptions entered into during previous periods. Consequently, a decline in subscription sales in any single quarter would likely have only a small impact on our revenue for that quarter. However, such a decline would negatively affect our revenue in future quarters. Accordingly, the effect of significant downturns in transactions and market acceptance of our platform may not be fully apparent from our reported results of operations until future periods.

        We may be unable to adjust our cost structure to reflect the changes in revenues. In addition, a significant portion of our costs are expensed as incurred, while subscription revenue is recognized over the applicable subscription term. As a result, increased growth in the number of our customers could result in our recognition of more costs than revenue in the earlier periods of the terms of our contracts. Our subscription model also makes it difficult for us to rapidly increase our revenue through additional transactions in any period, as revenue from new customers must be recognized over the applicable subscription term.

        Professional services revenue is recognized as the services are performed or delivered, depending on the type of engagement. Professional services engagements often span from a few weeks to several months, which makes it somewhat difficult to predict the timing of revenue recognition for such services and the corresponding effects on our results of operations. Professional services revenue has fluctuated and may continue to fluctuate significantly from period to period. In addition, because professional services expenses are recognized as the services are performed or upon completion of the project, professional services and total margins can significantly fluctuate from period to period.

If our goodwill or amortizable intangible assets become impaired, we may be required to record a significant charge to earnings.

        Under generally accepted accounting principles in the United States ("GAAP"), we review our amortizable intangible assets for impairment when events or changes in circumstances indicate the

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carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill or amortizable intangible assets may not be recoverable include a decline in our stock price and market capitalization, reduced future cash flow estimates and slower growth rates in our industry. We may be required to record a significant charge to earnings in our financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined, which could harm our results of operations.

We may acquire other businesses which could require significant management attention, disrupt our business, dilute stockholder value and adversely affect our results of operations.

        As part of our business strategy, we have in the past made, and may in the future make, acquisitions or investments in complementary companies, products and technologies that we believe fit within our business model and can address the needs of our customers and potential customers. In the future, we may not be able to acquire and integrate other companies, products or technologies in a successful manner. We may not be able to find suitable acquisition candidates, and we may not be able to complete such acquisitions on favorable terms, if at all. In addition, the pursuit of potential acquisitions may divert the attention of management and cause us to incur additional expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated. If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, including increases in revenue, and any acquisitions we complete could be viewed negatively by our customers, investors and industry analysts.

        Future acquisitions may reduce our cash available for operations and other uses. We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could adversely affect our financial condition or the value of our Class A common stock. The sale or issuance of equity to finance any such acquisitions would result in dilution to our stockholders. The incurrence of indebtedness to finance any such acquisition would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations. In addition, our future results of operations may be adversely affected by the dilutive effect of an acquisition, performance earnouts or contingent bonuses associated with an acquisition. Furthermore, acquisitions may require large, one-time charges and can result in increased debt, contingent liabilities, adverse tax consequences, additional stock-based compensation expenses, and the recording and subsequent amortization of amounts related to certain purchased intangible assets, any of which items could negatively affect our future results of operations. We may also incur goodwill impairment charges in the future if we do not realize the expected value of any such acquisitions.

We rely on third-party proprietary and open-source software for our offerings, and our inability to obtain third-party licenses for such software, or obtain them on favorable terms, or any errors or failures caused by such software could adversely affect our business, results of operations and financial condition.

        Some of our offerings include software or other intellectual property licensed from third parties. It may be necessary in the future to renew licenses relating to various aspects of these applications or to seek new licenses for existing or new applications. There can be no assurance that the necessary licenses will be available on acceptable terms or under open-source licenses permitting redistribution in commercial offerings, if at all. The inability to obtain certain licenses or other rights or to obtain such licenses or rights on favorable terms, could result in delays in product releases until equivalent technology can be identified, licensed or developed, if at all, and integrated into our products and may have a material adverse effect on our business, results of operations and financial condition. In addition, third parties may allege that additional licenses are required for our use of their software or intellectual property, and we may be unable to obtain such licenses on commercially reasonable terms or at all.

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Moreover, the inclusion in our offerings of software or other intellectual property licensed from third parties on a non-exclusive basis could limit our ability to differentiate our offerings from those of our competitors. In addition, to the extent that our platform depends upon the successful operation of third-party software in conjunction with our software, any undetected errors or defects in such third-party software could prevent the deployment or impair the functionality of our platform, delay new feature introductions, result in a failure of our platform and injure our reputation.

Our use of open-source software could subject us to possible litigation or cause us to subject our platform to unwanted open-source license conditions that could negatively impact our sales.

        A significant portion of our platform incorporates open-source software, and we will incorporate open-source software into other offerings or products in the future. Such open-source software is generally licensed by its authors or other third parties under open-source licenses. There is little legal precedent governing the interpretation of certain terms of these licenses, and therefore the potential impact of these terms on our business is unknown and may result in unanticipated obligations regarding our products and technologies. If an author or other third party that distributes such open-source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations. In addition, if we combine our proprietary software with open-source software in a certain manner, under some open-source licenses, we could be required to release the source code of our proprietary software, which could substantially help our competitors develop products that are similar to or better than ours.

        Our products are based in large part on open source provided under the Apache License 2.0. This license states that any work of authorship licensed under it, and any derivative work thereof, may be reproduced and distributed provided that certain conditions are met. It is possible that a court would hold this license to be unenforceable or that someone could assert a claim for proprietary rights in a program developed and distributed under it. Any ruling by a court that this license is not enforceable, or that open-source components of our products may not be reproduced or distributed, may negatively impact our distribution or development of all or a portion of our products. In addition, at some time in the future it is possible that the open-source cores of our products may be distributed under a different license or the Apache License 2.0 may be modified, which could, among other consequences, negatively impact our continuing development or distribution of the software code subject to the new or modified license.

We are subject to governmental export and import controls that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws.

        Our offerings are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department's Office of Foreign Assets Control. Exports of our offerings must be made in compliance with these laws and regulations. If we fail to comply with these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges, fines which may be imposed on us and responsible employees or managers and, in extreme cases, the incarceration of responsible employees or managers. Obtaining the necessary authorizations, including any required license, for a particular sale may be time-consuming, is not guaranteed and may result in the delay or loss of sales opportunities. In addition, changes in our offerings or changes in applicable export or import regulations may create delays in the introduction and sale of our offerings in international markets, prevent our customers with international operations from deploying our offerings or, in some cases, prevent the export or import of our offerings to certain countries, governments or persons altogether. Any change in export or import regulations, shift in the enforcement or scope of existing

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regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could also result in decreased use of our offerings, or in our decreased ability to export or sell our offerings to existing or potential customers with international operations. Any decreased use of our offerings or limitation on our ability to export or sell our offerings will likely adversely affect our business.

        Furthermore, we incorporate encryption technology into certain of our offerings. Various countries regulate the import of certain encryption technology, including through import permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our offerings or could limit our customers' ability to implement our offerings in those countries. Encrypted products and the underlying technology may also be subject to export control restrictions. Governmental regulation of encryption technology and regulation of imports or exports of encryption products, or our failure to obtain required import or export approval for our offerings, when applicable, could harm our international sales and adversely affect our revenue. Compliance with applicable regulatory requirements regarding the export of our offerings, including with respect to new releases of our offerings, may create delays in the introduction of our offerings in international markets, prevent our customers with international operations from deploying our products throughout their globally-distributed systems or, in some cases, prevent the export of our offerings to some countries altogether.

        Moreover, U.S. export control laws and economic sanctions programs prohibit the shipment of certain applications and services to countries, governments and persons that are subject to U.S. economic embargoes and trade sanctions. Any violations of such economic embargoes and trade sanction regulations could have negative consequences, including government investigations, penalties and reputational harm.

If we are unable to protect our intellectual property rights, our competitive position could be harmed or we could be required to incur significant expenses to enforce our rights.

        Our ability to protect our intellectual property affects the success of our business. We rely on trade secret, patent, copyright and trademark laws and confidentiality agreements with employees and third parties, all of which offer only limited protection. The steps we have taken to protect our proprietary rights may not be adequate to preclude misappropriation of our proprietary information or infringement of our intellectual property rights, and our ability to police such misappropriation or infringement is uncertain, particularly in countries outside of the United States. While we have patents and patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications or the patent protection may not be obtained quickly enough to meet our business needs. Even if patents are issued from our patent applications, which is not certain, they may be contested, circumvented or invalidated in the future. Moreover, the rights granted under any issued patents, such as in connection with open-source software, may not provide us with proprietary protection or competitive advantages, and, as with any technology, competitors may be able to develop similar or superior technologies to our own now or in the future. In addition, we rely on contractual and license agreements with third parties in connection with their use of our products and technology. There is no guarantee that such parties will abide by the terms of such agreements or that we will be able to adequately enforce our rights.

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        Detecting and protecting against the unauthorized use of our products, technology and proprietary rights is expensive, difficult and, in some cases, impossible. Litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Such litigation could result in substantial costs and diversion of management resources, either of which could harm our business, results of operations and financial condition, and there is no guarantee that we would be successful. Furthermore, many of our current and potential competitors have the ability to dedicate substantially greater resources to protecting their technology or intellectual property rights than we do. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property, which could result in a substantial loss of our market share.

Claims by others that we or our customers, whose software applications we helped to create, infringe the proprietary technology of such other persons could force us to pay damages or prevent us from using certain technology in our products.

        Third parties could claim that our products or technology infringe their proprietary rights. This risk may increase as the number of products and competitors in our market increases and overlaps occur. Any claim of infringement by a third party, even one without merit, could cause us to incur substantial costs defending against the claim, and could distract our management from our business. Furthermore, a party making such a claim, if successful, could secure a judgment that requires us to pay substantial damages. A judgment could also include an injunction or other court order that could prevent us from offering our products. In addition, we might be required to seek a license for the use of such intellectual property, which may not be available on commercially reasonable terms or at all. Alternatively, we may be required to develop non-infringing technology, which could require significant effort and expense and may ultimately not be successful. We have received, or may in the future receive, notices alleging that we have misappropriated, misused or infringed other parties' intellectual property rights, including allegations made by our competitors or by non-practicing entities, and, to the extent we gain greater market visibility, we face a higher risk of being the subject of intellectual property infringement assertions. Any of these events could seriously harm our business, results of operations and financial condition.

        Third parties may also assert infringement claims against our customers and strategic partners. Any of these claims could require us to initiate or defend potentially protracted and costly litigation on their behalf, regardless of the merits of these claims, because we generally indemnify our customers and strategic partners from claims of infringement of proprietary rights of third parties in connection with the use of our products. If any of these claims succeed, we may be forced to pay damages on behalf of our customers or strategic partners, which could materially affect our results of operations and cash flows.

Our business could be materially adversely affected as a result of war, acts of terrorism, natural disasters or climate change.

        War, acts of terrorism and natural disasters, such as an earthquake, may cause damage or disruption to our employees, facilities, customers and partners, which could have a material adverse effect on our business, results of operations or financial condition. Such events may also cause damage or disruption to transportation and communication systems and to our ability to manage logistics in such an environment. These risks may be heightened due to the location of our headquarters in the San Francisco Bay Area, an area known for seismic activity.

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Investments made in our growth may not achieve the expected associated benefits on a timely basis or at all.

        We have experienced, and may continue to experience, rapid growth and organizational change, which has placed, and may continue to place, significant demands on our management and our operational and financial resources. Additionally, we continue to increase the breadth and scope of our offerings and our operations. To support this growth, and to manage any future growth effectively, we must continue to improve our IT and financial infrastructures, our operating and administrative systems and our ability to manage headcount, capital and internal processes in an efficient manner. Our organizational structure is also becoming more complex as we grow our operational, financial and management infrastructure and we must continue to improve our internal controls as well as our reporting systems and procedures. We intend to continue to invest to expand our business, including investing in research and development and sales and marketing operations, hiring additional personnel, improving our internal controls, reporting systems and procedures, upgrading our infrastructure and increasing our office space. If we do not achieve the benefits anticipated from these investments, or if the achievement of these benefits is delayed, our results of operation may be adversely affected.

Operating as a public company, including maintaining effective internal control over financial reporting, will require us to incur substantial costs and will require substantial management attention. In addition, our management team has limited experience managing a public company.

        As a public company, we will incur substantial legal, accounting and other expenses that we did not incur as a private company, particularly one that had operated as part of a larger corporate organization. For example, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations of the SEC. Stock exchange rules will also apply to us following this offering. As part of the new requirements, we will need to establish and maintain effective disclosure and internal controls and make changes to our corporate governance practices. We expect that compliance with these requirements will increase our legal and financial compliance costs and will make some activities more time-consuming.

        Most of our management and other personnel have little experience managing a public company and preparing public filings. In addition, we expect that our management and other personnel will need to divert attention from other business matters to devote substantial time to the reporting and other requirements of being a public company. In particular, we expect to incur significant expense and devote substantial management effort to complying with the requirements of Section 404 of the Sarbanes-Oxley Act when applicable. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve other aspects of our internal control over financial reporting. We will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.

We are implementing several new systems and process improvements as part of our increased independence from Dell Technologies. If these new systems or processes prove ineffective or inadequate, or if we fail to successfully implement them, our business and results of operations may suffer.

        We have recently implemented several new systems to support our operations, and are continuing to implement technology and process improvements. For example we recently implemented new

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systems and processes and added personnel for enterprise resource planning, invoicing, accounts receivable, accounts payable, human capital management and payroll and benefits. We previously received some of these services from Dell and certain of its subsidiaries.

        There can be no assurance that our transition, implementation and operation of such systems will be successful. We may be unable to implement or operate these systems and processes or add personnel in a timely and cost-effective manner.

We may require additional financing in the future and may not be able to obtain such financing on favorable terms, if at all, which could slow or stop our ability to grow or otherwise harm our business.

        We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, improve our operating infrastructure or acquire complementary businesses and technologies. Prior to this offering, we have financed our operations primarily through equity financings and through the accumulation of a net payable due to DellEMC, which was subsequently converted into preferred stock. We may not be able to obtain additional financing on terms favorable to us, if at all. We may need to engage in equity or debt financings to secure additional funds. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests and the per share value of our Class A common stock could decline. There can be no assurance that we will be able to meet the conditions necessary to obtain loans under our existing revolving credit facility or any future debt financing arrangement. In addition, with respect to debt financing transactions, the holders of debt would have priority over the holders of our common stock, and we may be required to accept terms that restrict our ability to incur additional indebtedness and our ability to operate our business. We may also be required to take other actions that would otherwise be in the interests of the debt holders and force us to maintain specified liquidity or other ratios, any of which could harm our business, financial condition and operating results. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be adversely affected.

Our future quarterly results may fluctuate significantly and may be difficult to predict, and if we fail to meet the expectations of analysts or investors, our stock price and the value of your investment could decline substantially.

        Our results of operations, including our revenue, operating expenses and cash flows, have fluctuated from quarter to quarter in the past and may continue to fluctuate as a result of a variety of factors, many of which are outside of our control, may be difficult to predict and may or may not fully reflect the underlying performance of our business. Some of the factors that may cause our results of operations to fluctuate from quarter to quarter include:

    our ability to attract new customers;

    our ability to retain existing customers and expand their use of our platform;

    our ability to successfully execute our partner strategy;

    success of our pricing strategy;

    changes in customers' budgets and in the timing of their purchasing decisions;

    our ability to successfully expand our business internationally;

    seasonal and end-of-quarter concentration of our transactions;

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    the timing and success of new products, features and services by us and our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or ecosystem partners;

    significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform;

    our ability to optimize the synergies between Labs and PCF and increase subscription revenue as a percentage of revenue;

    our ability to fully utilize our strategic services resources;

    potential asset impairments, charges or other expenses;

    potential claims or litigation;

    the collectability of receivables;

    general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate;

    the impact of new accounting pronouncements; and

    foreign currency exchange rate fluctuations.

We recently realigned our fiscal calendar to coincide with Dell Technologies' fiscal calendar. This realignment, and any errors in our implementation of the realignment, could adversely impact our business and results of operations.

        Prior to February 2017, the fiscal calendars for Dell Technologies and Pivotal did not align. We reported on a calendar year basis through December 31, 2016, whereas Dell Technologies reports on a 52- or 53-week fiscal year basis ending on the Friday nearest to January 31 of each year. Following Dell Technologies' acquisition of EMC Corporation in September 2016, we changed our fiscal calendar effective January 1, 2017 so that our fiscal calendar would align with that of Dell Technologies.

        The process of implementing a fiscal calendar transition has required and will continue to require us to adjust our processes, data and systems that our management and personnel rely upon to conduct our business operations and coordinate our worldwide activities. There can be no assurance that errors and failures will not occur that could impair our ability to conduct our operations efficiently and effectively. Any such failures of our processes, data and systems could adversely impair our business and results of operations.

        In addition, our new fiscal year is more typical for companies in the retail sector and less typical for software companies. Seasonal buying patterns in the software sector tend to be concentrated in the fourth calendar quarter of the year and, within each quarter, in the last two weeks of that quarter. It is possible that the change in fiscal year could negatively impact the performance of our sales force and the purchasing activities of our customers.

Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.

        GAAP are subject to interpretation by the Financial Accounting Standards Board (the "FASB"), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results for periods prior to and subsequent to such change, and could affect the reporting of transactions completed before the announcement of a change.

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        For example, in May 2014, the FASB issued ASC 606, which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. We adopted this standard and its impact is reflected in our consolidated financial statements, which include several newly required disclosures. Market practices with respect to these disclosures are still evolving, and securities analysts and investors may not fully understand the implications of our disclosures or how or why they may differ from similar disclosures by other companies. Any additional new accounting standards could have a significant effect on our reported results. If our reported results fall below analyst or investor expectations, our stock price could decline.

We are an emerging growth company and the reduced disclosure requirements applicable to emerging growth companies may make our Class A common stock less attractive to investors.

        We are an emerging growth company as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we intend to take advantage of some of the exemptions from the reporting requirements applicable to other public companies. For example, we intend to take advantage of the exemption from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments. It is possible that investors will find our Class A common stock less attractive as a result of our reliance on these exemptions. If so, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.

Our business is subject to a wide range of laws and regulations, including privacy and data protection laws, and our failure to comply with those laws and regulations could harm our business, results of operations and financial condition.

        Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, product safety, environmental laws, consumer protection laws, anti-bribery laws, import and export controls, federal securities laws and tax laws and regulations. In certain foreign jurisdictions, these regulatory requirements may be more stringent than those in the United States. These laws and regulations are subject to change over time and thus we must continue to monitor and dedicate resources to ensure continued compliance.

        In addition, our business is subject to regulation by various federal, state and foreign governmental agencies responsible for monitoring and enforcing privacy and data protection laws. The regulatory framework for privacy issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future, as many new laws and regulations regarding the collection, use and disclosure of personal information have been adopted or are under consideration and existing laws and regulations may be subject to new and changing interpretations. In the United States, these include rules and regulations promulgated under the authority of the Federal Trade Commission, and state breach notification laws. Internationally, many of the jurisdictions in which we operate have established their own data security and privacy legal framework with which we or our customers must comply. We expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States, the European Union (the "E.U.") and other jurisdictions, and we cannot yet determine the impacts such future laws, regulations and standards may have on our business or the businesses of our customers, including, for example, the E.U.'s General Data Protection Regulation (the "GDPR"), which will come into force in May 2018.

        Non-compliance with applicable regulations or requirements could subject us to investigations, sanctions, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or

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criminal litigation, our business, results of operations, and financial condition could be materially adversely affected. In addition, responding to any action will likely result in a significant diversion of management's attention and resources and an increase in professional fees. Enforcement actions and sanctions could harm our business, results of operations and financial condition. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations and policies that are applicable to the businesses of our customers may limit the use and adoption of, and reduce the overall demand for, our software.

        In addition to government regulation, privacy advocates and industry groups have established or may establish new self-regulatory standards that may place additional burdens on us. Our customers may contractually obligate or expect us to meet voluntary certification or other standards established by such third parties, and if we are unable to meet these standards, it could adversely affect our ability to provide our solutions to certain customers and could harm our business.

Risks Related to Our Relationship with Dell Technologies, Dell, DellEMC and VMware

Holders of our Class A common stock have limited ability to influence matters requiring stockholder approval.

        Our Class B common stock has ten votes per share, and our Class A common stock, which is the stock we are offering in this offering, has one vote per share. Following this offering, Dell Technologies will own 351,028,548 shares of our outstanding Class B common stock, which will represent approximately          % of our total outstanding shares of common stock and approximately         % of the combined voting power of both classes of our outstanding common stock immediately after this offering (or approximately         % and         %, respectively, if the underwriters exercise their over-allotment option in full). Through its control of Class B common stock, Dell Technologies will control the vote to elect all of our directors and to approve or disapprove all other matters submitted to a stockholder vote.

Dell Technologies has the ability to prevent a change in control transaction and may sell control of Pivotal without benefiting other stockholders.

        Dell Technologies' voting control gives Dell Technologies the ability to prevent transactions that would result in a change in control of Pivotal, including transactions in which holders of our Class A common stock might otherwise receive a premium for their shares over the then-current market price. In addition, Dell Technologies is not prohibited from selling a controlling interest in us to a third party and may do so without the approval of the holders of our Class A common stock and without providing for a purchase of any shares of Class A common stock held by persons other than Dell Technologies. Accordingly, shares of Class A common stock may be worth less than they would be if Dell Technologies did not maintain voting control over us.

Dell Technologies' ability to control our board of directors may make it difficult for us to recruit independent directors.

        So long as Dell Technologies beneficially owns shares of our common stock representing at least a majority of the votes entitled to be cast by the holders of outstanding voting stock, Dell Technologies can effectively control and direct our board of directors. Further, the interests of Dell Technologies and our other stockholders may diverge. Under these circumstances, it may become difficult for us to recruit independent directors.

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We engage in related party transactions with Dell Technologies and/or VMware that may divert our resources, create opportunity costs and prove to be unsuccessful.

        We currently engage in a number of related party transactions with Dell Technologies and VMware through our joint marketing and sales of our products and services and our mutually beneficial commercial and go-to-market relationships, and we expect to engage in additional related party transactions with Dell Technologies and VMware to leverage the benefits of our strategic alignment. Our participation in these transactions may cause certain of our other vendors and ecosystem partners who compete with Dell Technologies and its subsidiaries and VMware to also view us as their competitors. We cannot predict whether our stockholders and industry or securities analysts will react positively to announcements of new related party transactions.

        In addition, these transactions may prove not to be successful and may divert our resources or the attention of our management from other opportunities.

Dell Technologies and VMware may compete with us, which could reduce our market share.

        There can be no assurance that Dell Technologies or VMware will not compete with us in the future. None of our agreements with Dell Technologies, DellEMC or VMware contain any restrictions on their ability to compete with us. In addition, the intellectual property agreements that we have with DellEMC and VMware (both controlled by Dell Technologies) provide DellEMC and VMware the ability, subject to certain limitations, to use certain of our existing source code and certain updates to continue producing their products and services, and to use certain of our existing intellectual property to produce products and services that may compete with ours (subject to certain limitations on future competing products, as applicable). DellEMC's and VMware's rights in this regard extend to its majority owned subsidiaries, which could include joint ventures where DellEMC or VMware holds a majority position and one or more of our competitors hold minority positions.

        Dell Technologies could also assert control over us in a manner which could impede our growth or our ability to enter new markets or otherwise adversely affect our business. Further, Dell Technologies could utilize its control over us to cause us to take or refrain from taking certain actions, including entering into relationships with strategic, technology and other marketing partners, enforcing our intellectual property rights or pursuing corporate opportunities or product development initiatives that could adversely affect our competitive position, including our competitive position relative to that of Dell Technologies or VMware in markets where we compete with them.

Conflicts of interest may arise because some of our directors and officers own stock or other equity interests in Dell Technologies or VMware and hold management positions with Dell Technologies or VMware.

        Some of our directors and officers own stock or other equity interests in Dell Technologies or VMware. In addition, some of our directors are officers or directors of Dell Technologies or VMware. Ownership of such equity interests by our directors and officers and the presence of executive officers or directors of Dell Technologies or VMware on our board of directors could create, or appear to create, conflicts of interest with respect to matters involving both us and any one of them that could have different implications for any of these investors than they do for us. We cannot assure you that potential conflicts of interest will be resolved in our favor or that we will be able to take advantage of corporate opportunities presented to individuals who are officers or directors of both us and Dell Technologies or VMware. As a result, we may be precluded from pursuing certain advantageous transactions or growth initiatives.

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Our inability to resolve in a manner favorable to us any potential conflicts or disputes that arise between us and Dell Technologies or its subsidiaries with respect to our past and ongoing relationships may adversely affect our business and prospects.

        Potential conflicts or disputes may arise between Dell Technologies or its subsidiaries and us in a number of areas relating to our past or ongoing relationships, including:

    actual or anticipated variations in our quarterly or annual results of operations;

    tax, employee benefit, indemnification and other matters arising from our relationship with Dell Technologies or its subsidiaries;

    business combinations involving us;

    our ability to engage in activities with certain ecosystem partners;

    sales or dispositions by either of DellEMC or VMware of all or any portion of their beneficial ownership interest in us;

    the nature, quality and pricing of services Dell Technologies or its subsidiaries have agreed to provide us;

    business opportunities that may be attractive to us and Dell Technologies or its subsidiaries;

    intellectual property or other proprietary rights; and

    joint sales and marketing activities with Dell Technologies or its subsidiaries.

        The resolution of any potential conflicts or disputes between us and Dell Technologies or its subsidiaries over these or other matters may be less favorable to us than the resolution we might achieve if we were dealing with an unaffiliated party.

        The agreements we have entered into with Dell Technologies and certain of its subsidiaries, which are described in this prospectus, are of varying durations and may be amended upon agreement of the parties. The terms of these agreements were primarily determined by Dell Technologies or its subsidiaries, and therefore may not be representative of the terms we could obtain on a stand-alone basis or in negotiations with an unaffiliated third party. For so long as we are controlled by Dell Technologies, we may not be able to negotiate renewals or amendments to these agreements, if required, on terms as favorable to us as those we would be able to negotiate with an unaffiliated third party.

We are a "controlled company" within the meaning of the         rules and, as a result, we will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. Accordingly, holders of our Class A common stock will not have the same protections afforded to stockholders of companies that are subject to such requirements.

        After the closing of this offering, Dell Technologies will indirectly through its subsidiaries, including VMware, own none of the outstanding shares of our Class A common stock and all of the shares of our Class B common stock, representing         % of the total outstanding shares of common stock or         % of the combined voting power of the outstanding common stock. Through its control of the Class B common stock, which is generally entitled to ten votes per share in the election of directors, Dell Technologies will control the vote to elect all of our directors. As a result, we will be a "controlled company" within the meaning of the         rules. Under these rules, a "controlled company" may elect not to comply with certain corporate governance requirements, including the requirements that, within one year of the closing of this offering, a listed company have a:

    board that is composed of a majority of "independent directors," as defined under the rules of the             ;

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    compensation committee that is composed entirely of independent directors; and

    nominating committee that is composed entirely of independent directors.

        We intend to utilize these exemptions. After the closing of this offering, our board of directors will not have a majority of independent directors and only our audit committee will be subject to requirements under SEC and         rules to consist entirely of independent directors. Accordingly, holders of our Class A common stock will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the             .

We rely on contractual arrangements with our strategic partners for a significant portion of our revenue.

        Transactions processed through our strategic partners under our agency agreements with DellEMC and VMware generated 46% of our revenue in fiscal 2016 and 44% of our revenue in fiscal 2017. Any adverse changes in our joint sales arrangements or the effectiveness of such arrangements with DellEMC or VMware could have a material impact on our results of operations.

Our stock price could be impacted by the reported results and other statements of Dell Technologies.

        As the majority owner of our stock, Dell Technologies includes our accounts in its consolidated financial statements, subject to non-controlling interest adjustments to eliminate the portion of our accounts that are attributable to other stockholders outside of the Dell Technologies consolidated group of companies. Such non-controlling interest adjustments include those pertaining to both Pivotal and other companies for which Dell Technologies is a less than 100% owner. Dell Technologies does not report Pivotal's financial information as a standalone segment. Accordingly, any information about Pivotal that is included in Dell Technologies' financial statements or other public statements is necessarily limited. Nevertheless, the information provided or the conclusions that investors or analysts draw from such information could have an adverse impact on the trading price of our Class A common stock.

Third parties may seek to hold us responsible for liabilities of Dell Technologies, DellEMC or VMware, which could result in a decrease in our income.

        Third parties may seek to hold us responsible for liabilities of Dell Technologies, DellEMC or VMware. Under the original contribution agreements with DellEMC and VMware pursuant to which DellEMC and VMware contributed certain of their businesses to us when we were first formed, DellEMC and VMware agreed to indemnify us for claims and losses relating to liabilities related to DellEMC's and VMware's businesses and not related to our business. The original contribution agreements have no set terms, and these indemnification obligations will continue indefinitely except to the extent limited by law or the mutual agreement of the parties. However, if those liabilities are significant and we are ultimately held liable for them, we cannot assure you that we will be able to recover the full amount of our losses from Dell Technologies, DellEMC or VMware.

Dell Technologies' or VMware's competitive position in certain markets may constrain our ability to build and maintain partnerships.

        Our existing and potential partner relationships may be negatively affected by our relationships with Dell Technologies and VMware, our largest stockholders. We do and may partner with companies that compete with Dell Technologies or VMware in certain markets. Dell Technologies' control over us and VMware may affect our ability to effectively partner with these companies. These companies may favor our competitors because of our relationship with Dell Technologies and VMware.

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To preserve Dell Technologies' ability to conduct a tax-free distribution of the shares of our Class B common stock that it beneficially owns, we may be prevented from pursuing opportunities to raise capital, acquire other companies or undertake other transactions, which could hurt our ability to grow.

        To preserve its ability to effect a future tax-free spin-off of us, or certain other tax-free transactions involving us, Dell Technologies is required to maintain "control" of us within the meaning of Section 368(c) of the Internal Revenue Code, which is defined as 80% of the total voting power and 80% of each class of nonvoting stock. We have entered into a tax sharing agreement with Dell Technologies, which restricts our ability to issue any stock, issue any instrument that is convertible, exercisable or exchangeable into any of our stock or which may be deemed to be equity for tax purposes, or take any other action that would be reasonably expected to cause Dell Technologies to beneficially own stock in us that, on a fully diluted basis, does not constitute "control" within the meaning of Section 368(c) of the Internal Revenue Code. We also have agreed to indemnify Dell Technologies for any breach by us of the tax sharing agreement. As a result, we may be prevented from raising equity capital or pursuing acquisitions or other growth initiatives that involve issuing equity securities as consideration.

Our net operating loss carryforwards and other tax assets are generally unavailable for our use.

        Since fiscal 2014, our U.S. federal and state net operating losses and research credits and foreign tax credits have been fully applied against DellEMC's or Dell Technologies' consolidated returns as we were included in the consolidated U.S. federal and state income tax returns of DellEMC and, after Dell Technologies' acquisition of EMC Corporation, Dell Technologies. Accordingly, our U.S. federal and state net operating loss carryforwards as of February 3, 2017 are not representative of the tax assets we will have as a public company, when we expect to leave Dell Technologies' U.S. federal and certain state returns. Upon the completion of this offering, our federal and state net operating loss carryforwards and our federal and state tax credits will be eliminated or significantly reduced. We also expect that we would continue to maintain a valuation allowance for such net operating loss carryforwards and credits. Pursuant to our tax sharing agreement with Dell Technologies and DellEMC, we are limited in our ability to carryback net operating losses.

We could be held liable for the tax liabilities of other members of Dell Technologies' consolidated tax group.

        We have historically been included in either DellEMC's consolidated group or Dell Technologies' consolidated group for U.S. federal income tax purposes, as well as in certain consolidated, combined or unitary groups that include Dell Technologies, DellEMC or certain of their subsidiaries for state and local income tax purposes, although we expect that as a result of this offering, we will no longer be included in Dell Technologies' consolidated group. Pursuant to a tax sharing agreement with Dell Technologies and DellEMC, we and Dell Technologies generally will make payments to each other such that, for any taxable period in which we or any of our subsidiaries are included in a Dell Technologies' consolidated, combined or unitary return, the amount of taxes to be paid by us will be determined, subject to certain adjustments, as if we and each of our subsidiaries were in a separate group.

        When we become subject to income tax audits as a member of a Dell Technologies' group return, the tax sharing agreement provides that Dell Technologies has authority to control the audit and represent Dell Technologies' and our interests to the tax authority. Accordingly, if we and Dell Technologies differ on appropriate responses and positions to take with respect to tax questions that may arise in the course of an audit, our ability to affect the outcome of such audits may be impaired.

        Each member of a consolidated group during any part of a consolidated return year is jointly and severally liable for tax on the consolidated return of such year and for any subsequently determined deficiency thereon. Similarly, in some jurisdictions, each member of a consolidated, combined or unitary

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return for state, local or non-U.S. income tax purposes is jointly and severally liable for the state, local or non-U.S. income tax liability of each other member of the consolidated, combined or unitary return. Accordingly, for any period in which we are included in the Dell Technologies consolidated return for U.S. federal income tax purposes or any other consolidated, combined or unitary return of Dell Technologies and its subsidiaries, we could be liable in the event that any income tax liability was incurred, but not discharged, by any other member of any such return.

Risks Related to this Offering and Ownership of Our Class A Common Stock

An active trading market for our Class A common stock may never develop or be sustained.

        Although we have applied to list our Class A common stock on         under the symbol         , we cannot assure you that an active trading market for our Class A common stock will develop on that exchange or elsewhere or, if developed, that any market will be sustained. Accordingly, we cannot assure you of the likelihood of your ability to sell your shares of Class A common stock when desired, the prices that you may be able to obtain for your shares or the liquidity of any trading market.

The price of our Class A common stock may be volatile, which could cause the value of your investment to decline.

        Technology stocks have historically experienced high levels of volatility. The trading price of our Class A common stock is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our Class A common stock. Factors that may cause the market price of our Class A common stock to fluctuate include:

    announcements of new offerings, services or technologies, relationships with partners, acquisitions or other events by us or our competitors;

    changes in economic conditions;

    price and volume fluctuations in the overall stock market from time to time;

    significant volatility in the market price and trading volume of technology companies in general and of companies in our industry;

    fluctuations in the trading volume of our shares or the size of our public float;

    actual or anticipated changes or fluctuations in our results of operations or other key metrics;

    whether our results of operations or other key metrics meet the expectations of securities analysts or investors;

    actual or anticipated changes in the expectations of investors or securities analysts;

    the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

    developments or disputes concerning our intellectual property or other proprietary rights;

    litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;

    changes in accounting standards, policies, guidelines, interpretations or principles;

    regulatory developments in the United States, foreign countries or both;

    major catastrophic events in our domestic and foreign markets;

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    sales of large blocks of our stock; and

    departures of key personnel.

        In addition, if the market for technology stocks or the overall stock market experience a loss of investor confidence, the trading price of our Class A common stock could decline for reasons unrelated to our business, results of operations or financial condition. The trading price of our Class A common stock might also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us.

        In the past, following periods of volatility in the market price of a company's securities, securities class action litigation has often been brought against that company. If our Class A common stock price is volatile, we may become the target of securities litigation. Securities litigation could result in substantial costs and divert our management's attention and resources from our business, and this could have a material adverse effect on our business, results of operations and financial condition.

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

        The principal purposes of this offering are to increase our financial flexibility, create a public market for our Class A common stock and facilitate our future access to the public equity markets. We currently intend to use the net proceeds from this offering for working capital and general corporate purposes, including continued investments in the growth of our business. In addition, we may use a portion of the net proceeds received by us from this offering for investments in or acquisitions of businesses, technologies or other assets that we believe to be complementary. However, we have no current understandings, agreements or commitments for any specific material acquisitions at this time. As a result, our management will have broad discretion in the allocation and use of the net proceeds from this offering.

        The failure by our management to allocate or use these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value. Our ultimate use of the net proceeds from this offering may vary substantially from their currently intended use.

If you purchase our Class A common stock in this offering, you will incur immediate and substantial dilution.

        The initial public offering price is substantially higher than the pro forma as adjusted net tangible book value (deficit) per share of our Class A common stock of $           per share immediately following this offering. Investors purchasing Class A common stock in this offering will pay a price per share that substantially exceeds the net tangible book value (deficit) per share. As a result, investors purchasing Class A common stock in this offering will incur immediate dilution of $          per share, based on the initial public offering price of $         per share, the midpoint of the price range set forth on the cover page of this prospectus.

        This dilution is due to the substantially lower price paid by our investors who purchased shares prior to this offering as compared to the price offered to the public in this offering. In addition, the exercise of any outstanding options would result in additional dilution. As a result of the dilution to investors purchasing shares in this offering, investors may receive less than the purchase price paid in this offering in the event of our liquidation. See "Dilution" for additional information.

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Sales of a substantial number of shares of our Class A common stock in the public market by our existing stockholders following this offering could cause the price of our Class A common stock to decline.

        Sales of a substantial number of shares of our Class A common stock in the public market, or the perception that these sales might occur, could depress the price of our Class A common stock and could impair our ability to raise capital through the sale of additional equity securities. We cannot predict the effect that sales may have on the prevailing price of our Class A common stock.

        Subject to certain exceptions described in the section titled "Underwriters," we, our executive officers, directors and holders of a substantial majority of our common stock and securities convertible into or exercisable or exchangeable for shares of our common stock have entered into lock-up agreements with the underwriters of this offering under which we and they have agreed that, subject to certain exceptions, without the prior written consent of                           , as representative of the underwriters, we and they will not dispose of or hedge any of these securities for a period of 180 days after the date of this prospectus. In addition, our executive officers, directors and holders of substantially all of these securities have entered into market standoff agreements with us under which they have agreed that, subject to certain exceptions, without our consent, they will not dispose of or hedge any of these securities for a period of 180 days after the date of this prospectus. We have agreed that, without the prior written consent of                           , as representative of the underwriters, we will not release any of the securities subject to these market standoff agreements. When the lock-up period in the lock-up agreements and market standoff agreements expires, we and our locked-up security holders will be able to sell our shares in the public market. In addition,                           , as representative of the underwriters, may release all or some portion of the shares subject to the lock-up agreements or market standoff agreements prior to the expiration of the lock-up period. See "Underwriters" for more information on agreed exceptions to these lockup agreements. Sales of a substantial number of such shares upon expiration of, or the perception that such sales may occur, or early release of the securities subject to, the lock-up agreements or market standoff agreements, could cause our stock price to fall or make it more difficult for you to sell your Class A common stock at a time and price that you deem appropriate.

        Based on shares outstanding as of the last day of fiscal 2017, holders of up to approximately 425,853,342 shares of our Class A common stock (including shares issuable upon conversion of Class B common stock) will have rights, subject to certain conditions, to require us to file registration statements covering the sale of their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We also intend to register the offer and sale of all shares of capital stock that we may issue under our equity compensation plans.

Future sales and issuances of our common stock or rights to purchase common stock could result in additional dilution to our stockholders and could cause the price of our Class A common stock to decline.

        We may issue additional Class A or Class B common stock, convertible securities or other equity following the completion of this offering. We also expect to issue Class A common stock to our employees, directors and other service providers pursuant to our equity incentive plans. Such issuances could be dilutive to investors and could cause the price of our Class A common stock to decline. If we seek to engage in additional equity financing, we may not be able to obtain such financing on favorable terms, if at all. New investors in such issuances could receive rights senior to those of holders of our Class A common stock.

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The difference in the voting rights of our classes of capital stock may harm the value and liquidity of our Class A common stock.

        Our Class B common stock has 10 votes per share, and our Class A common stock has one vote per share. See "Description of Capital Stock." The difference in the voting rights of the Class A common stock and the Class B common stock could harm the value of the Class A common stock to the extent that any current or future investor in our common stock ascribes value to the voting rights associated with the Class B common stock. The existence of dual classes of our common stock could result in less liquidity for any such class than if there were only one class of our capital stock.

The dual class structure of our common stock may adversely affect the trading price of our Class A common stock.

        Our Class B common stock has ten votes per share and our Class A common stock, which is the stock we are offering in this offering, has one vote per share. As discussed in "Risk Factors—Holders of our Class A common stock have limited ability to influence matters requiring stockholder approval," this control may adversely affect the market price of our Class A common stock.

        In addition, in 2017, FTSE Russell, S&P Dow Jones and MSCI announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices to exclude companies with multiple classes of shares of common stock from being added to such indices. FTSE Russell announced plans to require new constituents of its indices to have at least five percent of their voting rights in the hands of public stockholders, whereas S&P Dow Jones announced that companies with multiple share classes, such as ours, will not be eligible for inclusion in the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500. MSCI also opened public consultations on their treatment of no-vote and multi-class structures and has temporarily barred new multi-class listings from its ACWI Investable Market Index and US Investable Market 2500 Index. We cannot assure you that other stock indices will not take a similar approach to FTSE Russell, S&P Dow Jones and MSCI in the future. Under the announced policies, our dual class capital structure would make us ineligible for inclusion in any of these indices and, as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track these indices will not invest in our stock. These policies are new and it is unclear what effect, if any, they will have on the valuations of publicly traded companies excluded from the indices, but it is possible that they may depress these valuations compared to those of other similar companies that are included.

We do not expect to pay any cash dividends for the foreseeable future. Investors may never obtain a return on their investment.

        We have never paid dividends to our stockholders. Anyone considering investing in our Class A common stock should not rely on such investment to provide dividend income. We do not anticipate that we will pay any cash dividends to holders of Class A common stock in the foreseeable future. Instead, we currently plan to retain any earnings to maintain and expand our existing operations. In addition, our current revolving credit facility and future debt financing arrangements contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase the Class A common stock.

Delaware law and our certificate of incorporation and bylaws will contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders may consider favorable.

        Our amended and restated certificate of incorporation and amended and restated bylaws that will be in effect immediately upon the closing of this offering will contain provisions that could delay or

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prevent a change in control of our company. These provisions could also make it difficult for stockholders to elect directors who are not nominated by the current members of our board of directors or take other corporate actions, including effecting changes in our management. These provisions include:

    a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;

    the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

    the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

    the prohibition of cumulative voting in the election of directors or any other matters, which would otherwise allow less than a majority of stockholders to elect director candidates;

    the requirement for advance notice for nominations for election to the board of directors or for proposing matters that can be acted upon at a stockholders' meeting; and

    in the event that Dell Technologies or its successor-in-interest no longer owns shares of our common stock representing at least a majority of the votes entitled to be cast in the election of directors, stockholders may not act by written consent and may not call special meetings of the stockholders.

        These provisions in our amended and restated certificate of incorporation and bylaws and under Delaware law could discourage potential takeover attempts and could reduce the price that investors might be willing to pay for shares of our common stock.

Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

        Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our bylaws or any action asserting a claim against us that is governed by the internal affairs doctrine. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and may discourage these types of lawsuits. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus, particularly in the sections titled "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," contains forward-looking statements. In some cases, you can identify these statements by forward-looking words such as "may," "might," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue," the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business.

        These statements are only predictions based on our current expectations and projections about future events and trends. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially and adversely from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed under the caption entitled "Risk Factors." You should specifically consider the numerous risks described under "Risk Factors." Moreover, we operate in a competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially and adversely from those contained in any forward-looking statements we may make.

        Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Except to the extent required by law, we undertake no obligation to update any of these forward-looking statements after the date of this prospectus to conform our prior statements to actual results or revised expectations or to reflect new information or the occurrence of unanticipated events. Given these risks, uncertainties and assumptions, you are cautioned not to place undue reliance on such forward-looking statements as predictions of future performance or otherwise.

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INDUSTRY AND MARKET DATA

        Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size, is based on information from various sources, including those listed below, on assumptions that we have made that are based on such information and other, similar sources and on our knowledge of the markets for our solutions. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While we believe the market position, market opportunity and market size information included in this prospectus is generally reliable, such information is inherently imprecise. In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate is necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled "Risk Factors" and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

        Certain information in this prospectus is contained in independent industry publications. The sources of these independent industry publications are provided below:

    Forecast Analysis: Public Cloud Services, Worldwide, 2015-2021, 3Q17 Update, Gartner, October 2017

    Forecast Analysis: Enterprise Software Markets, Worldwide, 2014-2021, Gartner, September 2017

    How to Respond to the 2018 Threat Landscape, Gartner, November 2017

    Forrester Business Technographics Global Developer Survey, 2016

    IDC Infobrief: Optimisation Drives Digital Transformation, January 2017

    IDC FutureScape: Worldwide Cloud 2018 Predictions, October 2017

        The Gartner Reports described herein, (the "Gartner Reports") represent research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this Prospectus) and the opinions expressed in the Gartner Reports are subject to change without notice.

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USE OF PROCEEDS

        We estimate that the net proceeds to us from this offering will be approximately $          million, or approximately $          million if the underwriters exercise their over-allotment option in full, assuming an initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        Each $1.00 increase or decrease in the assumed initial public offering price per share would increase or decrease our net proceeds by approximately $          million, assuming that the number of shares of Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each 1,000,000 share increase or decrease in the number of shares offered by us would increase or decrease our net proceeds by approximately $          million, assuming an initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        The principal purposes of this offering are to increase our financial flexibility, create a public market for our Class A common stock and facilitate our future access to the public equity markets. We intend to use the net proceeds of this offering for working capital and other general corporate purposes, including continued investments in the growth of our business described in "Business—Growth Strategy." In addition, we may use a portion of the net proceeds for investments in or acquisitions of businesses, technologies or other assets that we believe to be complementary. We do not have any existing agreements or commitments for any specific investments or acquisitions. We do not intend to transfer any net proceeds we receive from this offering to Dell Technologies, Dell or their respective affiliates, other than payments in the ordinary course of business under one or more of the agreements described under "Certain Relationships and Related Party Transactions."

        Our expected uses of the net proceeds from this offering represent our intentions based on our present plans and business conditions. We cannot predict with certainty all of the particular uses for such proceeds or the amounts that we actually will spend on the uses specified above. Accordingly, our management will have significant flexibility in applying the net proceeds of this offering.

        The timing and amount of our actual application of the net proceeds from this offering will be based on many factors, including our cash flows from operations and the growth of our business. Pending the uses set forth above, we intend to invest the net proceeds from this offering in a variety of investments, including short-term and intermediate-term, interest-bearing securities.


DIVIDEND POLICY

        We have never declared or paid any cash dividends on our capital stock. We currently anticipate that we will retain all available funds for use in the operation and expansion of our business. We do not anticipate paying any cash dividends in the foreseeable future. The terms of our revolving credit facility also restrict our ability to pay dividends, and we may also enter into other credit agreements or other borrowing arrangements in the future that will restrict our ability to declare or pay cash dividends on our capital stock.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and capitalization as of February 3, 2017 on:

    an actual basis;

    a pro forma basis, giving effect to (i) the automatic conversion of (a) all outstanding shares of our Series B and Series C convertible preferred stock into an aggregate of 74,824,794 shares of our Class A common stock and (b) all outstanding shares of our Series A and Series C-1 convertible preferred stock into an aggregate of 220,933,309 shares of our Class B common stock immediately prior to the closing of this offering and (ii) the filing and effectiveness of our amended and restated certificate of incorporation immediately upon the closing of this offering; and

    a pro forma as adjusted basis to reflect (i) the pro forma adjustments set forth above and (ii) the sale by us of              shares of our Class A common stock in this offering, based upon the receipt by us of the estimated net proceeds from this offering at an assumed initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

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        This table should be read in conjunction with the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes contained elsewhere in this prospectus.

 
  As of February 3, 2017  
 
  Actual   Pro Forma   Pro Forma
As Adjusted(1)
 
 
  (in thousands, except share and
per share data)

 

Cash and cash equivalents

  $ 133,873   $ 133,873   $    

Long-term debt

  $   $   $  

Redeemable convertible preferred stock:

                   

Series A preferred stock, $0.01 par value; 140,190,476 shares authorized, issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma and pro forma as adjusted

    490,667            

Series B preferred stock, $0.01 par value; 30,031,747 shares authorized, issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma and pro forma as adjusted

    105,111            

Series C preferred stock, $0.01 par value; 44,793,047 shares authorized, issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma and pro forma as adjusted

    233,000            

Series C-1 preferred stock, $0.01 par value; 80,742,833 shares authorized, issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma and pro forma as adjusted

    419,549            

Stockholders' (deficit) equity:

                   

Preferred stock, $0.01 par value; no shares authorized, issued or outstanding, actual;             shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted

                   

Class A common stock, $0.01 par value; 575,000,000 shares authorized, 5,333,752 shares issued and outstanding, actual;           shares authorized, 80,158,546 shares issued and outstanding, pro forma,           shares authorized,            shares issued and outstanding, pro forma as adjusted

    53     801        

Class B common stock, $0.01 par value; 375,000,000 shares authorized, 130,095,239 shares issued and outstanding, actual;             shares authorized, 351,028,548 shares issued and outstanding, pro forma,           shares authorized, 351,028,548 shares issued and outstanding, pro forma as adjusted

    1,301     3,510        

Additional paid-in capital

    479,395     1,724,765        

Accumulated deficit

    (979,085 )   (979,085 )      

Accumulated other comprehensive income

    6,981     6,981        

Non-controlling interest

    711     711        

Total stockholders' (deficit) equity

    (490,644 )   757,683        

Total capitalization

  $ (491,355 ) $ 756,972   $    

(1)
Each $1.00 increase or decrease in the assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease our cash and cash equivalents, additional paid-in capital, total stockholders' equity and total capitalization by approximately

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    $              million, assuming that the number of shares of our Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each increase or decrease of 1,000,000 shares in the number of shares offered by us would increase or decrease the amount of our cash and cash equivalents, additional paid-in capital, total stockholders' equity and total capitalization by approximately $              million, assuming an initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        If the underwriters' over-allotment option to purchase additional shares of our Class A common stock from us were exercised in full, pro forma as adjusted cash and cash equivalents, additional paid-in capital, total stockholders' equity and total capitalization and shares of Class A common stock outstanding as of February 3, 2017 would be $              million, $              million, $              million, $              million and             shares, respectively.

        The number of shares of our Class A common stock and Class B common stock that will be outstanding after this offering is based on 80,158,546 shares of our Class A common stock and 351,028,548 shares of our Class B common stock (including shares of our convertible preferred stock on an as-converted basis) outstanding as of February 3, 2017, and excludes:

    351,028,548 shares of our Class A common stock issuable upon conversion of the outstanding 351,028,548 shares of our Class B common stock;

    78,722,954 shares of our Class A common stock issuable upon the exercise of options to purchase shares of our Class A common stock outstanding as of February 3, 2017, at a weighted average exercise price of $3.36 per share;

    19,343,294 shares of our Class A common stock reserved for future grant or issuance under our Amended and Restated 2013 Stock Plan (the "2013 Plan") as of February 3, 2017; and

    39,343,260 shares of our Class A common stock issuable upon the exercise of stock options granted after February 3, 2017, subsequent to an August 2017 increase of 30,000,000 shares of our Class A common stock reserved for future grant or issuance under the 2013 Plan, with a weighted average exercise price of $4.87 per share.

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DILUTION

        If you purchase shares of our Class A common stock in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share of our Class A common stock in this offering and the pro forma as adjusted net tangible book value per share of our Class A common stock immediately after this offering.

        Our pro forma net tangible book value (deficit) as of February 3, 2017 was $(29.8) million or $(0.07) per share of common stock. Pro forma net tangible book value (deficit) per share represents our total tangible assets, less our total liabilities, divided by the aggregate number of shares of our Class A and Class B common stock outstanding, after giving effect to the automatic conversion of (i) all outstanding shares of our Series B and Series C convertible preferred stock into an aggregate of 74,824,794 shares of our Class A common stock and (ii) all outstanding shares of our Series A and Series C-1 convertible preferred stock into an aggregate of 220,933,309 shares of our Class B common stock, which conversion will occur immediately prior to the closing of this offering.

        After giving effect to the sale by us of the         shares of Class A common stock in this offering, at an assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and the receipt of the net proceeds after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of February 3, 2017 would have been $         or $         per share. This amount represents an immediate increase in pro forma net tangible book value (deficit) to existing stockholders of $         per share and an immediate dilution to new investors of $         per share. Dilution per share represents the difference between the price per share to be paid by new investors for the shares of Class A common stock sold in this offering and the pro forma net tangible book value per share immediately after this offering. The following table illustrates this per share dilution:

Assumed initial public offering price per share

        $    

Pro forma net tangible book value (deficit) per share as of February 3, 2017

  $ (0.07 )      

Increase in pro forma net tangible book value (deficit) per share attributable to new investors

             

Pro forma as adjusted net tangible book value per share after offering

             

Dilution in pro forma net tangible book value per share to new investors

        $    

        Each $1.00 increase or decrease in the assumed initial public offering price per share would increase or decrease our pro forma as adjusted net tangible book value per share after this offering by $         per share and the dilution in pro forma per share to investors participating in this offering by $         per share, assuming that the number of shares of Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each 1,000,000 share increase or decrease in the number of shares offered by us would increase or decrease our pro forma as adjusted net tangible book value per share after this offering by $          per share and the dilution in pro forma as adjusted net tangible book value per share to investors participating in this offering by $         per share, assuming an initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        If the underwriters exercise their over-allotment option to purchase additional shares of our Class A common stock in full, the pro forma as adjusted net tangible book value per share of our Class A common stock after this offering would be $         per share, and the dilution in pro forma net tangible book value per share to investors in this offering would be $         per share of Class A common stock.

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        The following table sets forth, on a pro forma as adjusted basis as described above, as of February 3, 2017, the differences between our existing stockholders and the new investors purchasing shares of our Class A common stock in this offering, with respect to the number of shares of Class A common stock purchased from us, the total consideration paid, or to be paid, and the average price per share paid, or to be paid, by existing stockholders and by the new investors, at an assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and before deducting estimated underwriting discounts and commissions and offering expenses payable by us:

 
   
   
  Total
Consideration
   
 
 
  Shares Purchased    
 
 
  Average Price
Per Share
 
 
  Number   Percent   Amount   Percent  
 
  (in thousands)
   
  (in thousands)
   
   
 

Existing stockholders

    431,187             % $ 472,499             % $ 1.10  

New investors

                               

Total

          100 % $       100 %      

        Each $1.00 increase or decrease in the assumed initial public offering price per share would increase or decrease the total consideration paid by new investors, total consideration paid by all stockholders and the average price per share paid by all stockholder by approximately $         , $         and $         , respectively, assuming that the number of shares of Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each 1,000,000 share increase or decrease in the number of shares offered by us would increase or decrease the total consideration paid by new investors, total consideration paid by all stockholders and the average price per share paid by all stockholder by approximately $         , $         and $         , respectively, assuming an initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        The foregoing tables assume no exercise of the underwriters' over-allotment option or of outstanding stock options after February 3, 2017. If the underwriters' over-allotment option is exercised in full, the number of shares of common stock held by our existing stockholder will represent approximately         % of the total number of shares of our common stock outstanding after this offering; and the number of shares held by new investors will represent approximately         % of the total number of shares of our common stock outstanding after this offering.

        In addition, to the extent any outstanding stock options are exercised, investors participating in this offering will experience further dilution.

        The number of shares of our Class A and Class B common stock that will be outstanding after this offering is based on 80,158,546 shares of our Class A common stock and 351,028,548 shares of our Class B common stock (including shares of our convertible preferred stock on an as-converted basis) outstanding as of February 3, 2017, and excludes:

    351,028,548 shares of our Class A common stock issuable upon conversion of the outstanding 351,028,548 shares of our Class B common stock;

    78,722,954 shares of our Class A common stock issuable upon the exercise of options to purchase shares of our Class A common stock outstanding as of February 3, 2017, at a weighted average exercise price of $3.36 per share;

    19,343,294 shares of our Class A common stock reserved for future grant or issuance under our Amended and Restated 2013 Stock Plan (the "2013 Plan") as of February 3, 2017; and

    39,343,260 shares of our Class A common stock issuable upon the exercise of stock options granted after February 3, 2017, subsequent to an August 2017 increase of 30,000,000 shares of our Class A common stock reserved for future grant or issuance under the 2013 Plan, with a weighted average exercise price of $4.87 per share.

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SELECTED CONSOLIDATED FINANCIAL DATA

        The following tables contain selected consolidated financial data. Our fiscal year is the 52- or 53-week period ending on the Friday nearest to January 31 of each year. Our 2016 fiscal year ("fiscal 2016") ended on January 29, 2016, and our 2017 fiscal year ("fiscal 2017") ended on February 3, 2017. We derived the selected consolidated statements of operations data for fiscal 2016 and fiscal 2017 and the consolidated balance sheet data as of January 29, 2016 and February 3, 2017 from our audited consolidated financial statements included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in the future. The following selected consolidated financial data should be read in conjunction with the sections titled "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

 
  Fiscal Year Ended  
 
  January 29, 2016   February 3, 2017  
 
  (in thousands, except per share data)
 

Consolidated Statements of Operations Data:

             

Revenue:

             

Subscription

  $ 94,976   $ 149,995  

Services

    185,898     266,272  

Total revenue

    280,874     416,267  

Cost of revenue:

             

Subscription(1),(2)

    33,830     31,253  

Services(1)

    153,509     203,096  

Total cost of revenue

    187,339     234,349  

Gross profit

    93,535     181,918  

Operating expenses:

             

Sales and marketing(1),(2)

    187,292     194,322  

Research and development(1)

    120,493     152,122  

General and administrative(1),(2)

    58,472     61,994  

Total operating expenses

    366,257     408,438  

Loss from operations

    (272,722 )   (226,520 )

Other expense, net

    (6,183 )   (3,732 )

Loss before provision for income taxes

    (278,905 )   (230,252 )

Provision for income taxes

    (3,767 )   (2,614 )

Net loss

  $ (282,672 ) $ (232,866 )

Less: Net loss attributable to non-controlling interest

    126     329  

Net loss attributable to Pivotal

  $ (282,546 ) $ (232,537 )

Net loss per share attributable to common stockholders, basic and diluted(3)

  $ (2.21 ) $ (1.73 )

Weighted average shares used in computing net loss per share attributable to common stockholders, basic and diluted(3)

    127,910     134,674  

Pro forma net loss per share, basic and diluted (unaudited)(3)

        $ (0.59 )

Weighted average shares used in computing pro forma net loss per share, basic and diluted (unaudited)(3)

          393,888  

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(1)
Includes stock-based compensation expense as follows:
 
  Fiscal Year Ended  
 
  January 29, 2016   February 3, 2017  
 
  (in thousands)
 

Cost of revenue – subscription

  $ 818   $ 1,274  

Cost of revenue – services

    7,340     6,184  

Sales and marketing

    7,501     7,971  

Research and development

    8,232     7,290  

General and administrative

    7,117     6,132  

Total stock-based compensation expense

  $ 31,008   $ 28,851  
(2)
Includes intangible asset amortization expense from our formation and subsequent business acquisitions as follows:
 
  Fiscal Year Ended  
 
  January 29, 2016   February 3, 2017  
 
  (in thousands)
 

Cost of revenue – subscription

  $ 12,448   $ 8,951  

Sales and marketing

    5,853     5,111  

General and administrative

    1,714     1,554  

Total intangible asset amortization expense

  $ 20,015   $ 15,616  
(3)
See Note 13 to our consolidated financial statements included elsewhere in this prospectus for an explanation of the method used to calculate our basic and diluted net loss per share attributable to common stockholders, our basic and diluted pro forma net loss per share and the weighted average number of shares used in the computation of the per share amounts.
 
  January 29,
2016
  February 3,
2017
 
 
  (in thousands)
 

Consolidated Balance Sheet Data:

             

Cash and cash equivalents

  $ 69,862   $ 133,873  

Working (deficit) capital

  $ (398,064 ) $ 49,153  

Total assets

  $ 934,355   $ 1,116,245  

Deferred revenue, current and noncurrent

  $ 172,666   $ 242,632  

Redeemable convertible preferred stock

  $ 595,778   $ 1,248,327  

Total stockholders' deficit

  $ (294,027 ) $ (490,644 )

 

 
  Fiscal Year Ended  
 
  January 29,
2016
  February 3,
2017
 
 
  (in thousands)
 

Consolidated Statements of Cash Flows Data:

             

Net cash provided by (used in) operating activities

  $ 29,190   $ (166,351 )

Net cash used in investing activities

  $ (33,556 ) $ (28,916 )

Net cash provided by financing activities

  $ 9,436   $ 258,276  

Non-GAAP Financial Information

        In addition to our results determined in accordance with GAAP, we believe the following non-GAAP information is useful in evaluating our operating results. We use the following non-GAAP financial information, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information may be helpful to investors because it provides consistency and comparability with past financial performance, and assists in comparisons with

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other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is 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 measures used by other companies. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the GAAP financial measures together with such reconciliations.

    Non-GAAP Gross Profit and Non-GAAP Gross Margin

 
  Fiscal Year Ended  
 
  January 29,
2016
  February 3,
2017
 
 
  (dollars in thousands)
 

Gross profit

  $ 93,535   $ 181,918  

Add:

             

Stock-based compensation expense included in cost of revenue

    8,158     7,458  

Intangible asset amortization expense included in cost of revenue

    12,448     8,951  

Non-GAAP gross profit

  $ 114,141   $ 198,327  

Gross margin

   
33

%
 
44

%

Non-GAAP gross margin

    41 %   48 %

    Non-GAAP Operating Loss

 
  Fiscal Year Ended  
 
  January 29,
2016
  February 3,
2017
 
 
  (in thousands)
 

Operating loss

  $ (272,722 ) $ (226,520 )

Add:

             

Stock-based compensation expense

    31,008     28,851  

Intangible asset amortization expense

    20,015     15,616  

Non-GAAP operating loss

  $ (221,699 ) $ (182,053 )

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the section titled "Selected Consolidated Financial Data" and our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties; our future results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled "Risk Factors" included elsewhere in this prospectus. Our fiscal year is the 52- or 53-week period ending on the Friday nearest January 31. Our 2016 fiscal year ("fiscal 2016") ended on January 29, 2016, and our 2017 fiscal year ("fiscal 2017") ended on February 3, 2017.

Overview

        We provide a leading cloud-native platform that makes software development and IT operations a strategic advantage for our customers. Our cloud-native platform, Pivotal Cloud Foundry ("PCF"), accelerates and streamlines software development by reducing the complexity of building, deploying and operating new cloud-native applications and modernizing legacy applications. This enables our customers' development and IT operations teams to spend more time writing code, waste less time on mundane tasks and focus on activities that drive business value – building and deploying great software. PCF customers can accelerate their adoption of a modern software development process and their business success using our platform through our complementary strategic services, Pivotal Labs ("Labs"). Enterprises across industries have adopted our platform to build, deploy and operate software, including enterprises in the automotive, financial services, industrial, insurance, media, retail, technology and telecommunications sectors.

        Our offering, which includes PCF and Labs, enables organizations to build cloud-native software and compete in today's business environment.

    PCF accelerates and streamlines software development by reducing the complexity of building, deploying and operating modern applications. PCF integrates an expansive set of critical, modern software technologies delivered continuously to provide a turnkey cloud-native platform. PCF combines leading open-source software with our robust proprietary software to meet the exacting enterprise-grade requirements of large organizations, including the ability to operate and manage software across private and public cloud environments, such as Amazon Web Services, Microsoft Azure, Google Cloud Platform, VMware vSphere and OpenStack. PCF is sold on a subscription basis.

    Labs software development experts deliver strategic services that transfer the expertise for enterprises to accelerate their cloud-native transformation by implementing modern agile development practices. With Labs, we help customers co-develop new applications and transform existing ones while accelerating software development, streamlining IT operations and ultimately driving self-sustaining business transformation.

        We were formed in April 2013. DellEMC and VMware transferred teams and contributed assets and technology to Pivotal that have become key elements of our cloud-native platform and strategic services. Following the acquisition of EMC Corporation by Dell Technologies in September 2016, Pivotal's majority stockholder became Dell Technologies. While we initially received certain back office and other administrative services from DellEMC and VMware, over time we have implemented our own systems and processes, reducing our reliance on these partners for most of these services. Today, we jointly market and sell our products and services with DellEMC and VMware and enjoy significant and mutually beneficial commercial and go-to-market relationships with them.

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        Since our formation, we have focused on continuously enhancing our offering and growing our subscription customer base. Certain company milestones are reflected in the table below.


Number of Subscription Customers

GRAPHIC

Our Revenue Model

        We generate a substantial and increasing portion of our revenue from the sale of PCF subscriptions. We generate subscription revenue primarily from the sale of time-based subscriptions. Customers purchase subscriptions of our software platform and choose where to deploy it. Deployment options include a customer's private cloud, a public cloud of its choice, or multiple private and public clouds. Our customers subscribe to use our software platform with pricing based on the number of workloads, such as applications, containers or other microservices. Subscriptions are offered typically for one- to three-year terms, and we recognize revenue from our subscriptions ratably over the subscriptions' term. We generally bill our customers annually in advance, although for our multi-year contracts, some customers pay the full contract amount in advance. We expect that over time subscription revenue will become a larger percentage of our total revenue as customers continue to adopt and expand their PCF subscriptions and as our systems integrator ("SI") partner relationships ramp to directly deliver Labs-like services to our customers.

        We offer strategic services including Labs, implementation and other services. Labs involves co-development and application transformation services. We offer implementation services to enable

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our customers to configure, deploy, test, launch and operate PCF. Part of our strategy to scale our business is to rely, in part, on SI partners to deliver co-development, application transformation and implementation services to our customers, particularly as our customers move from early deployment to broader adoption of PCF. Our strategic services are typically priced on a time and materials basis with revenue recognized upon the delivery of the services.

Our Sales and Customer Success Model

        We market and sell PCF and Labs primarily through our sales force and increasingly through joint selling with our partners. Organizations of all sizes are embracing cloud-native software development and operations. We target Global 2000 enterprises across industries, companies outside the Global 2000 that develop software to differentiate their businesses and public sector organizations. We are committed to extending and strengthening relationships within our partner ecosystem to expand the reach of our sales force, especially with DellEMC, VMware, Microsoft and Google.

        We work closely with customers to identify and advance their cloud-native transformation objectives with our platform, including jointly developing value-based metrics and business milestones that demonstrate success on our platform. We use strategic services delivered by us directly or through our partner ecosystem to help customers successfully deploy, configure and operate our platform as well as increase their developer productivity.

        We believe our customers will increase their pace of innovation, usage of our platform and the number of workloads they deploy on PCF as they realize the benefits of our platform and strategic services. Our partners provide us with additional sales leverage by sourcing new prospects and up-selling additional or expanded use cases. Our partner ecosystem also significantly expands our international sales reach and consists of the following:

    Public Cloud:  We work with all three of the major public cloud vendors, Amazon, Google and Microsoft and drive large numbers of workloads to their public cloud platforms. We received in 2017 the Google Cloud Technology Partner of the Year for 2016 and an Azure consumption partner of the year award from Microsoft for 2016.

    Systems Integrators:  Leading enterprise technology providers have launched dedicated practices focused on implementing PCF and providing Labs-like services. These enterprise technology providers include Accenture (which recently announced the Accenture Pivotal Business Group), Capgemini, CGI and Cognizant. These SIs create leverage for us by applying our cloud-native platform agile techniques to help customers transform. They also have begun to deliver co-development, application transformation and PCF implementation services.

    Independent Software Vendors:  Pivotal Services Marketplace (the "Marketplace") has over 75 independent software vendors ("ISVs") offering services integrated with our platform. These ISVs include Apigee, AppDynamics, Black Duck, Dynatrace, MongoDB, MuleSoft, New Relic, Redis Labs, Solace and Splunk, enabling enterprises to quickly realize additional benefits of our platform.

    Strategic Partners:  We jointly market and sell our products and services with DellEMC and VMware and enjoy significant and mutually beneficial commercial and go-to-market relationships.

Factors Affecting our Performance

    Subscription Customers

        We are focused on continuing to attract new subscription customers. Since announcing PCF in November 2013, our subscription customer count has grown rapidly to 270 as of the end of fiscal 2017.

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We define the number of subscription customers as the organizations that have a subscription contract for our software resulting in at least $50,000 of annual revenue. While we may enter into subscription agreements with multiple parties inside a larger organization, we count a customer as an addition to our subscription customers only if it represents a unique global ultimate parent. In the case of the U.S. government, we count U.S. government departments and major agencies as unique subscription customers. Our business and results of operations will depend in part on our ability to continue to retain and add subscription customers.

    Expansion within our Subscription Customer Base

        We are focused on retaining our customers and expanding their usage of our platform. Our customers often start with smaller deployments in specific groups or departments and then expand their usage as they seek to deploy and manage more applications and other workloads on PCF. Our sales force, together with our partners, assists our customers in identifying and implementing these initiatives. Our business and results of operations will depend in part on our ability to drive higher customer usage of our platform.

    PCF and Labs Synergy

        Many of our customers learn agile software development processes from Labs co-development projects, and as a result, we believe they are more fully able to capture the benefits of our platform. There is a positive correlation between customers using Labs and the expansion of their PCF subscriptions. Labs is intended to help customers drive successful business outcomes in their organizations using our platform as they learn and adapt our best practices in cloud-native software development to their culture. Our business and results of operations will depend in part on our ability to optimize the synergies between our complementary PCF and Labs offerings.

    Mix of Subscription and Services Revenue

        Our business model and primary focus is on selling subscriptions of PCF. We sell and deliver complementary strategic services designed to support and accelerate our customers' cloud-native transformation as they deploy, consume and expand their PCF use. Since announcing PCF in November 2013, we have rapidly grown our subscription customers to 270 as of the end of fiscal 2017. Despite this rapid growth of our PCF subscriptions, services revenue exceeded our subscription revenue during fiscal 2016 and fiscal 2017. This trend was caused in part by our subscription revenue being recognized on a ratable basis over the subscription term while revenue for our complementary strategic services is recognized as delivered. The second quarter of our current fiscal year was the first quarter in which subscription revenue exceeded our services revenue. We are focused on subscription sales of our platform and expect that over time subscription revenue will become a larger percentage of our total revenue as customers continue to adopt PCF and as our SI partners ramp to directly deliver these services to our customers. Our business and results of operations will depend in part on our ability to increase our subscription revenue as a percentage of our total revenue.

    Investments in Growth

        We have made and expect to continue to make substantial investments across our business. Specifically, we have increased our total employee base over time, and we intend to continue to invest in our business to take advantage of our market opportunity and to expand our sales capacity and further improve sales productivity to drive additional revenue and support the growth of our global customer base. Additionally, we continue to expend resources on the development and expansion of our partner ecosystem to supplement our sales and services resources and increase our reach in our target markets. We also expect to continue to make significant investments in research and development to expand our product and engineering teams to further develop our platform. We

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expect to incur increased general and administrative expenses to support our growth and operations as a public company. Our business and results of operations will depend in part on the effectiveness of these investments.

Components of Results of Operations

    Revenue

    Subscription

        Subscription revenue is primarily derived from sales of PCF subscriptions. Our customers subscribe to use our software platform for a variety of workloads, such as applications, containers or other microservices. Subscriptions are offered typically for one- to three-year terms, and we recognize revenue from our subscriptions ratably over the subscriptions' term. We generally bill our customers annually in advance, although for our multi-year contracts, some customers pay the full contract amount in advance.

        To a lesser extent, we generate revenue from certain historical software products sold on a perpetual license basis. Perpetual license revenue represented less than 5% of our total revenue in fiscal 2017. We expect the percentage of perpetual license revenue to continue to decline as a percentage of total revenue. We generally recognize revenue from our perpetual licenses upon delivery, assuming all the other revenue recognition criteria are satisfied.

    Services

        Services revenue is primarily derived from Labs, as well as implementation and other professional services. To a decreasing extent, services revenue also includes revenue from maintenance and support associated with the perpetual licenses described above.

    Cost of Revenue

    Subscription

        Cost of subscription revenue consists primarily of personnel and related costs, consisting of salaries, benefits, bonuses and stock-based compensation ("personnel costs") directly associated with our customer support and allocated overhead costs. Additionally, cost of subscription revenue includes intangible asset and other asset amortization expense and certain third-party expenses such as cloud infrastructure costs and software and support fees.

    Services

        Cost of services revenue consists primarily of personnel costs directly associated with delivery of Labs, implementation and other professional services, costs of third-party contractors and allocated overhead costs.

    Operating Expenses

    Sales and Marketing

        Sales and marketing expenses consist primarily of personnel costs as well as commissions. Other sales and marketing costs include travel and entertainment, promotional events (such as our SpringOne Platform Conference) and allocated overhead costs.

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    Research and Development

        Research and development expenses consist primarily of personnel costs, cloud infrastructure costs related to our research and development efforts and allocated overhead costs.

    General and Administrative

        General and administrative expenses consist primarily of personnel costs and allocated overhead costs for our administrative, legal, information technology, human resources, finance and accounting employees and executives. Our general and administrative expenses also include professional fees, audit fees, tax services and legal fees, as well as insurance and other corporate expenses.

    Other Expense, Net

        Other expense, net primarily consists of gains and losses from transactions denominated in a currency other than the functional currency.

    Provision for Income Taxes

        Provision for income taxes consists primarily of income taxes related to foreign and state jurisdictions in which we conduct business. We maintain a full valuation allowance on our federal and state deferred tax assets as we have concluded that it is not more likely than not that the deferred assets will be utilized.

        Since fiscal 2014, our U.S. federal and state net operating losses and research credits and foreign tax credits have been fully applied against the consolidated U.S. federal and state tax returns of Dell EMC or Dell Technologies. This initial public offering is expected to cause us to no longer be included in the consolidated Dell Technologies U.S. federal and state tax returns. As a result, our federal net operating loss carryforwards will be eliminated and our state net operating loss carryforwards will be reduced. See Note 9 to our consolidated financial statements included elsewhere in this prospectus and "Risk Factors—Our net operating loss carryforwards and other tax assets are generally unavailable for our use" for further information.

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Results of Operations

 
  Fiscal Year Ended  
 
  January 29, 2016   February 3, 2017  
 
  (in thousands)
 

Consolidated Statements of Operations Data:

             

Revenue:

             

Subscription

  $ 94,976   $ 149,995  

Services

    185,898     266,272  

Total revenue

    280,874     416,267  

Cost of revenue:

             

Subscription

    33,830     31,253  

Services

    153,509     203,096  

Total cost of revenue

    187,339     234,349  

Gross profit

    93,535     181,918  

Operating expenses:

             

Sales and marketing

    187,292     194,322  

Research and development

    120,493     152,122  

General and administrative

    58,472     61,994  

Total operating expenses

    366,257     408,438  

Loss from operations

    (272,722 )   (226,520 )

Other expense, net

    (6,183 )   (3,732 )

Loss before provision for income taxes

    (278,905 )   (230,252 )

Provision for income taxes

    (3,767 )   (2,614 )

Net loss

  $ (282,672 ) $ (232,866 )

Less: Net loss attributable to non-controlling interest

    126     329  

Net loss attributable to Pivotal

  $ (282,546 ) $ (232,537 )

 

 
  Fiscal Year Ended  
 
  January 29, 2016   February 3, 2017  

Percentage of Revenue Data:

             

Revenue:

             

Subscription

    34 %   36  %

Services

    66     64  

Total revenue

    100     100  

Cost of revenue:

             

Subscription

    12     7  

Services

    55     49  

Total cost of revenue

    67     56  

Gross profit

    33     44  

Operating expenses:

             

Sales and marketing

    67     46  

Research and development

    43     37  

General and administrative

    21     15  

Total operating expenses

    131     98  

Loss from operations

    (98 )   (54 )

Other expense, net

    (2 )   (1 )

Loss before provision for income taxes

    (100 )   (55 )

Provision for income taxes

    (1 )   (1 )

Net loss

    (101 )   (56 )

Less: Net loss attributable to non-controlling interest

    0     0  

Net loss attributable to Pivotal

    (101 )%   (56 )%

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Comparison of Fiscal 2016 and Fiscal 2017

    Revenue

 
  Fiscal Year Ended    
   
 
 
  January 29,
2016
  February 3,
2017
  Change  
 
  Amount   Amount   Amount   %  
 
  (dollars in thousands)
 

Revenue:

                         

Subscription

  $ 94,976   $ 149,995   $ 55,019     58  %

Services

    185,898     266,272     80,374     43  %

Total revenue

  $ 280,874   $ 416,267   $ 135,393     48  %

        Total revenue increased by $135.4 million, or 48%, from $280.9 million in fiscal 2016 to $416.3 million in fiscal 2017.

        Subscription revenue increased by $55.0 million, or 58%, from $95.0 million in fiscal 2016 to $150.0 million in fiscal 2017. The increase in subscription revenue was primarily due to the addition of 95 subscription customers in fiscal 2017 and increased sales to existing subscription customers.

        Services revenue increased by $80.4 million, or 43%, from $185.9 million in fiscal 2016 to $266.3 million in fiscal 2017. The increase in services revenue was due to increased demand for our strategic services, which was primarily due to the net increase in our subscription customers from 175 to 270, which in turn drove increased demand for strategic and implementation services typically attached to new customer subscriptions.

    Cost of Revenue

 
  Fiscal Year Ended    
   
 
 
  January 29,
2016
  February 3,
2017
  Change  
 
  Amount   Amount   Amount   %  
 
  (dollars in thousands)
 

Cost of revenue:

                         

Subscription

  $ 33,830   $ 31,253   $ (2,577 )   (8 )%

Services

    153,509     203,096     49,587     32  %

Total cost of revenue

  $ 187,339   $ 234,349   $ 47,010     25  %

Gross margin:

                         

Subscription

    64 %   79 %            

Services

    17 %   24 %            

Total gross margin

    33 %   44 %            

        Total cost of revenue increased by $47.0 million, or 25%, from $187.3 million in fiscal 2016 to $234.3 million in fiscal 2017.

        Cost of subscription revenue decreased by $2.6 million, or 8%, from $33.8 million in fiscal 2016 to $31.3 million in fiscal 2017. The decrease in cost of subscription revenue was primarily due to a $10.7 million decrease in amortization expense for intangible and other assets as certain assets were fully amortized in fiscal 2016, partially offset by an increase of $8.1 million relating to cloud infrastructure cost and software and support fees as well as personnel costs to support the increase in subscription customers.

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        Cost of services revenue increased by $49.6 million, or 32%, from $153.5 million in fiscal 2016 to $203.1 million in fiscal 2017. The increase in services costs was primarily due to an increase of $37.7 million in personnel costs to support new or existing customer contracts and $9.3 million in facilities costs to support our global expansion.

    Operating Expenses

    Sales and Marketing

 
Fiscal Year Ended  
 
 
January 29,
2016
February 3,
2017
Change
 
Amount Amount Amount %
 
(dollars in thousands)

Sales and marketing

$ 187,292 $ 194,322 $ 7,030 4  %

        Sales and marketing expense increased by $7.0 million, or 4%, from $187.3 million in fiscal 2016 to $194.3 million in fiscal 2017. The increase in sales and marketing expense was primarily due to an increase of $6.3 million in personnel costs and commissions.

    Research and Development

 
Fiscal Year Ended  
 
 
January 29,
2016
February 3,
2017
Change
 
Amount Amount Amount %
 
(dollars in thousands)

Research and development

$ 120,493 $ 152,122 $ 31,629 26  %

        Research and development expense increased by $31.6 million, or 26%, from $120.5 million in fiscal 2016 to $152.1 million in fiscal 2017. The increase in research and development expense was primarily due to an increase of $20.9 million in personnel costs as we increased our development efforts and $7.8 million in cloud infrastructure costs related to our research and development efforts.

    General and Administrative

 
Fiscal Year Ended  
 
 
January 29,
2016
February 3,
2017
Change
 
Amount Amount Amount %
 
(dollars in thousands)

General and administrative

$ 58,472 $ 61,994 $ 3,522 6  %

        General and administrative expense increased by $3.5 million, or 6%, from $58.5 million in fiscal 2016 to $62.0 million in fiscal 2017. The increase in general and administrative expense was primarily due to an increase of $2.2 million in personnel costs.

    Other Expense, Net

 
Fiscal Year Ended  
 
 
January 29,
2016
February 3,
2017
Change
 
Amount Amount Amount %
 
(dollars in thousands)

Other expense, net

$ 6,183 $ 3,732 $ (2,451 ) (40 )%

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        Other expense, net decreased by $2.5 million, or 40%, from $6.2 million in fiscal 2016 to $3.7 million in fiscal 2017. The decrease in other expense was primarily due to certain foreign currency losses in Canada in fiscal 2016 that did not recur in fiscal 2017.

Liquidity and Capital Resources

    Overview

        We had cash and cash equivalents of $133.9 million as of the end of fiscal 2017. We have historically funded our operations through equity financings and the accumulation of a net payable due to DellEMC and its subsequent conversion into convertible preferred stock in May 2016. See Note 14 to our consolidated financial statements included elsewhere in this prospectus. We believe that the net proceeds raised in this offering, our cash on hand, our accounts receivable and our loan facility will provide us with sufficient liquidity to fund our business and meet our obligations for at least the next 12 months. Our future capital requirements will depend on many factors, including our rate of revenue growth, billing terms of our subscription contracts, timing of collection of accounts receivable, the rate of expansion of our workforce, the timing and extent of our expansion into new markets, the timing of introductions of new functionality and enhancements to our platform and the continuing market acceptance of our platform, as well as general economic and market conditions. We may need to raise additional capital or incur indebtedness to continue to fund our operations in the future or to fund our needs for other strategic initiatives, such as acquisitions.

        Our cash and cash equivalents and accounts receivable, net were as follows:

 
  January 29,
2016
  February 3,
2017
 
 
  (in thousands)
 

Cash and cash equivalents

  $ 69,862   $ 133,873  

Accounts receivable, net

  $ 52,230   $ 145,372  

        We generally bill our customers annually in advance, although for our multi-year contracts, some customers pay the full contract amount in advance. Our accounts receivable was $52.2 million as of January 29, 2016 compared to $145.4 million as of February 3, 2017. The change in accounts receivable reflects a change in the balance sheet presentation of amounts invoiced to our customers by DellEMC as our agent. In fiscal 2016, these invoiced amounts were recorded as an offset to the net payable due from us to DellEMC. In fiscal 2017, upon and following the conversion of such net payable due to DellEMC into preferred stock, such invoiced amounts are recorded as accounts receivable. See Note 2 to our consolidated financial statements included elsewhere in this prospectus for a description of the change in our agency arrangement with DellEMC.

        We regularly monitor our accounts receivable for collectability. As of January 29, 2016 and February 3, 2017, our allowance for doubtful accounts was $1.7 million and $4.1 million, respectively. The increase in our allowance for doubtful accounts was attributable to growth in revenue and the resulting impact of longer-aged receivables.

    Revolving Credit Facility

        In September 2017, we entered into a credit agreement and a related security agreement with Silicon Valley Bank, as administrative agent, and other banks named therein that provide for a senior secured revolving credit facility in an aggregate principal amount not to exceed $100.0 million (the "Revolving Facility"). We may also request from time to time, subject to certain conditions, increases in the commitments under the Revolving Facility in an aggregate amount of up to $50.0 million on the same maturity, pricing and other terms applicable to the then-existing commitments under the Revolving Facility. There can be no assurance that such increases will be available. Borrowings under the

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Revolving Facility are secured by our tangible assets. Our borrowing capacity under the Revolving Facility is based on our subscription revenue. The Revolving Facility has a maturity date of September 8, 2020. We have $20.0 million in outstanding loans under the Revolving Facility as of December 15, 2017.

        Any borrowings under the Revolving Facility may be drawn, at our option, as Eurodollar or Alternate Base Rate ("ABR") loans. ABR loans bear interest at a rate equal to the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) 3.00%, in each case plus a margin ranging from 0% to 0.50%. Eurodollar loans bear interest at a rate equal to an adjusted LIBOR rate plus a margin ranging from 3.00% to 3.50%. The margins on outstanding borrowings are determined based on our average daily usage of the Revolving Facility. We are also obligated to pay other customary fees for a credit facility of this type, including an unused commitment fee and fees associated with letters of credit.

        We have the option to repay any borrowings under the Revolving Facility prior to maturity without penalty. The Revolving Facility contains customary representations and warranties and requires us to comply with certain covenants, including financial covenants relating to our operating performance and liquidity. We were in compliance with these covenants as of the date of this prospectus.

    Cash Flows

 
  Fiscal Year Ended  
 
  January 29,
2016
  February 3,
2017
 
 
  (in thousands)
 

Net cash provided by (used in):

             

Operating activities

  $ 29,190   $ (166,351 )

Investing activities

  $ (33,556 ) $ (28,916 )

Financing activities

  $ 9,436   $ 258,276  

        Operating Activities.    Cash provided by operating activities was $29.2 million during fiscal 2016, compared to cash used in operating activities of $166.4 million during fiscal 2017. This decline in operating cash flows for the fiscal periods was primarily due to a reduction in the net payable due to DellEMC as described in Note 14 to our consolidated financial statements included elsewhere in this prospectus and increases in accounts receivable and deferred revenue balances as the business continued to grow, offset by an increase in Due to Parent as described in Note 14 to our consolidated financial statements included elsewhere in this prospectus and a decrease in our net loss. Commencing in the fiscal year ended January 30, 2015, as a means to improve our cash flows, we curtailed the settlement of domestic receivables and payables to DellEMC and agreed with DellEMC that the amounts payable to and due from DellEMC could be settled on a net basis. As of January 29, 2016, the net payable of $398.4 million due to DellEMC was comprised of $587.1 million of amounts payable to DellEMC, offset by $188.7 million of amounts due from DellEMC. In fiscal 2017, $400.0 million of the net payable due to DellEMC was settled through the issuance of preferred stock in connection with our Series C-1 financing, with the remainder of the net payable due to DellEMC balance settled on a cash basis. All subsequent activities are recorded as Due to Parent on the consolidated balance sheet and have generally been settled on a quarterly basis.

        Investing Activities.    Cash used in investing activities was $33.6 million and $28.9 million for fiscal 2016 and fiscal 2017, respectively. For the periods presented, investing activities consisted of capital expenditures for property and equipment of $12.3 million and $19.5 million for fiscal 2016 and fiscal 2017, respectively, to support facility infrastructure and acquisitions of businesses. In fiscal 2016, our investing activities were primarily impacted by acquisitions of businesses totaling $21.2 million. In addition, fiscal 2017 included investments in new and upgraded back office systems, including enterprise resource planning and human capital management systems, to facilitate our growth.

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        Financing Activities.    Cash flows from financing activities was $9.4 million and $258.3 million for fiscal 2016 and fiscal 2017, respectively. Financing activities for fiscal 2016 primarily consisted of the proceeds from the issuance of common stock through exercises of stock options of approximately $8.3 million. Cash flows from financing activities for fiscal 2017 were primarily due to the $252.5 million in net cash proceeds from the issuance of our Series C and C-1 convertible preferred stock.

    Commitments and Contractual Obligations

        The following table summarizes our commitments to settle contractual obligations as of February 3, 2017.

 
  Payments Due By Period  
 
  Less than
1 Year
  1 - 3 Years   3 - 5 Years   More than
5 Years
  Total  
 
  (in thousands)
 

Operating lease obligations(1)

  $ 25,916   $ 38,145   $ 27,115   $ 38,086   $ 129,262  

Purchase obligations(2)

    22,839     4,551             27,390  

Total contractual obligations

  $ 48,755   $ 42,696   $ 27,115   $ 38,086   $ 156,652  

(1)
Represents minimum operating lease payments under operating leases for office facilities, excluding potential lease renewals. The amounts in the table are net of expected sublease income.

(2)
Represents future minimum payments under non-cancelable purchase commitments. For those agreements with variable terms, we do not estimate what the total obligation may be beyond any minimum quantities and/or pricing.

        The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. The table does not include obligations under agreements that we can cancel without a significant penalty.

        For information about operating leases and purchase obligations, see Note 15 to our consolidated financial statements included elsewhere in this prospectus.

    Off-Balance Sheet Arrangements

        As of February 3, 2017, we were not subject to any obligations pursuant to any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes, that have or are reasonably likely to have a material effect on our financial condition, results of operations or liquidity.

Critical Accounting Policies and Estimates

        We prepare our financial statements in conformity with generally accepted accounting principles in the United States ("GAAP"). The preparation of financial statements in accordance with GAAP requires certain estimates, assumptions and judgments to be made that may affect our consolidated financial statements. Accounting policies that have a significant impact on our results are described in Note 2 to our consolidated financial statements included elsewhere in this prospectus. The accounting policies discussed in this section are those that we consider to be the most critical. We consider an accounting policy to be critical if the policy is subject to a material level of judgment and if changes in those judgments are reasonably likely to materially impact our results.

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    Revenue Recognition

        We elected to early adopt Accounting Standards Codification Topic 606, Revenue From Contracts With Customers ("ASC 606"), effective February 4, 2017, using the full retrospective transition method. Under this method, the consolidated financial statements for fiscal 2016 and fiscal 2017 are presented as if ASC 606 had been effective for those periods. We applied ASC 606 using a practical expedient where the transaction price allocated to the remaining performance obligations and an explanation of when we expect to recognize that amount as revenue for all reporting periods presented before the date of the initial application is not disclosed.

        In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services, consisting of subscriptions of our software platform, professional services and historical software products sold on a perpetual license basis. The amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for these services. We apply the following five steps to recognize revenue:

        1)     Identify the contract with a customer.    We consider the terms and conditions of our contracts to identify contracts under ASC 606. We consider that we have a contract with a customer when the contract is approved, we can identify each party's rights regarding the services to be transferred, we can identify the payment terms for the services, we have determined the customer has the ability and intent to pay and the contract has commercial substance. We use judgment in determining the customer's ability and intent to pay, which is based upon factors including the customer's historical payment experience or, for new customers, credit and financial information pertaining to the customers.

        2)     Identify the performance obligations in the contract.    Performance obligations in our contracts are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. Our performance obligations consist of (i) subscriptions consisting of (a) licenses, (b) post contract support ("PCS"), which includes real-time support and online access to documentation, technical resources and discussion forums, and (c) rights to continued delivery of unspecified upgrades, major releases and patches, (ii) professional services and (iii) other software offerings consisting of licenses and maintenance.

        3)     Determine the transaction price.    We determine transaction price based on the consideration to which we expect to be entitled in exchange for transferring services to the customer. In determining the transaction price, any variable consideration would be considered, to the extent applicable, if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of our contracts contain a significant financing component.

        4)     Allocate the transaction price to performance obligations in the contract.    If the contract contains a single performance obligation, the entire transaction price is allocated to that performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price ("SSP"). The transaction price in our subscription offering is allocated to the performance obligations that are rendered over time.

        5)     Recognize revenue when or as we satisfy a performance obligation.    Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised services to a customer. We recognize revenue when we transfer control of the services to our customers for an amount that reflects the consideration that we expect to receive in exchange for those services. All revenue is generated from contracts with customers. For subscription arrangements, we also provide

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PCS and continuous unspecified upgrades, major releases and patches over the course of the subscription term, and services are therefore delivered over the life of the contract.

    Subscription

        We generate revenue from subscription sales of our software platform. The subscription offering provides customers with a term-based license to our platform, which includes, among other items, open-source software, support, security updates, enhancements, upgrades and compatibility to certified systems, all of which are offered on an if and when available basis. The fixed consideration related to subscription revenue is recognized ratably over the contract term beginning on the date that our platform is made available to the customer.

        The typical subscription term is one to three years. Our contracts are non-cancelable over the contract term. Customers have the right to terminate their contracts generally only if we breach the contract and we fail to remedy the breach in accordance with the contractual terms.

        Subscription revenue also includes certain historical software products that are sold on a perpetual license basis. Software revenue is recognized when the product is delivered to the customer. The risk of loss transfers and acceptance of the software license occurs when the license is made available for download.

    Services

        Services revenue is primarily derived from Labs, as well as implementation and other services. To a lesser extent, services revenue also includes revenue from maintenance and support from perpetual licenses associated with our legacy data and application products. Labs, implementation and other services revenue are provided on a time and materials basis and recognized over time as services are delivered. Maintenance revenue related to legacy software licenses is recognized ratably over the term as the obligation to the customer is fulfilled.

    Contracts with Multiple Performance Obligations

        Most of our contracts with customers contain multiple promised services consisting of (i) our subscriptions and (ii) our services that are distinct and accounted for separately. The transaction price is allocated to the separate performance obligations on a relative SSP basis. We determine SSP based on our overall pricing and discounting objectives, taking into consideration the geographical region of the customer, type of offering, and value of contracts for the type of subscription and services sold.

    Variable Consideration

        Revenue from sales is recorded at the net sales price, which is the transaction price, and includes estimates of variable consideration. The amount of variable consideration that is included in the transaction price is constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue will not occur when the uncertainty is resolved.

        We provide support to our customers on an ongoing basis throughout the subscription term. Fees paid for support are non-refundable. Customers must deploy the then-current major release of our software to receive support. We do not offer refunds, rebates or credits to our customers in the normal course of business. The impact of other forms of variable consideration has not been material.

    Sales through Agency Arrangements with Strategic Partners

        We have separate agency arrangements with DellEMC and VMware where we market and jointly sell our subscriptions and related services to customers. Based on these agency agreements, DellEMC and VMware invoice our customers and collect invoiced amounts on our behalf. We bear the collectability risk if customers default on payments. No partners, other than DellEMC and VMware, are parties to our contractual arrangements with our customers.

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    Deferred Revenue

        Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are recognized as revenue over the contractual period.

        We receive payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. We generally bill our customers annually in advance, although for our multi-year contracts, some customers prefer to pay the full multi-year contract amount in advance. Payment terms on invoiced amounts are typically 30 to 90 days. Contract assets include amounts related to our contractual right to consideration for both completed and partially completed performance obligations that may not have been invoiced; such amounts have been insignificant to date.

    Costs to Obtain and Fulfill a Contract

        We capitalize sales commissions and agency fees that are incremental to the acquisition of all contracts with customers. These costs are recorded as deferred sales commissions on the consolidated balance sheets. We determine whether costs should be deferred based on our sales compensation plans and agency agreements when the costs are in fact incremental and would not have occurred absent the customer contract. The deferred commission amounts are recoverable through the future revenue streams under the non-cancelable customer contracts.

        Commissions paid upon the acquisition of an initial contract and any subsequent renewals are amortized over an estimated period of benefit based upon the weighted-average term of contracts and related product and service delivery periods as commission rates paid on initial and renewal sales are consistent. Amortization is recognized on a straight-line basis and included in sales and marketing expense in the consolidated statements of operations. We periodically review these deferred costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred sales commissions.

    Intangible Assets and Goodwill

        Intangible assets include developed technology, trademarks and trade names, customer relationships and customer lists and non-competition agreements. Intangible assets are amortized based on either the pattern in which the economic benefits of the intangible assets are estimated to be realized or on a straight-line basis, which approximates the economic benefit pattern.

        Finite-lived intangible assets are reviewed for impairment on a quarterly basis. When events or changes indicate the carrying amount of an asset may not be recoverable, recoverability of these assets is measured by comparison of their carrying amount to future undiscounted cash flows to be generated. If impairment is indicated based on a comparison of the assets' carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

        Goodwill includes goodwill generated by our acquisitions of businesses as well as goodwill related to our formation. Goodwill is not amortized and is carried at its historical cost. Goodwill is tested for impairment on an annual basis in the fourth fiscal quarter, or sooner if an indicator of impairment occurs. To determine whether goodwill is impaired, we first assess certain qualitative factors. Based on this assessment, if it is determined more likely than not that the fair value of a reporting unit is less than its carrying amount, we perform the quantitative analysis of the goodwill impairment test. For the quantitative analysis, we compare the fair value of our reporting units to their carrying values. If the estimated fair value exceeds book value, goodwill is considered not to be impaired and no additional steps are necessary. However, if the fair value of the reporting unit is less than book value, then under the second step the carrying amount of the goodwill is compared to its implied fair value.

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    Stock-Based Compensation

        Our stock-based compensation includes awards related to Pivotal stock and awards previously granted by DellEMC and VMware to certain employees who transferred to Pivotal at our formation and during subsequent years. These Pivotal employees have been allowed to retain and vest in their historical DellEMC or VMware awards, in each case, so long as they remain employed by Pivotal and such awards are outstanding. Awards granted by DellEMC are no longer outstanding as the vesting of these awards was automatically accelerated on the last trading day prior to the effective date of Dell Technologies' acquisition of DellEMC. Compensation expense related to stock-based transactions is measured and recognized in the financial statements based on fair value. In general, the fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model and a single option award approach. This model requires that at the date of grant we determine the fair value of the underlying common stock, the expected term of the award, the expected volatility, risk-free interest rates and expected dividend yield. The stock-based compensation expense, net of forfeitures, is recognized using a straight-line basis over the requisite service periods of the awards, which is generally four years. We estimated a forfeiture rate, based on an analysis of actual historical forfeitures, to calculate stock-based compensation expense.

    Common Stock Valuations

        Our board of directors determined the fair value of the common stock underlying our share-based awards for Pivotal stock with input from management and contemporaneous third-party independent valuations.

        Given the absence of a public trading market for our common stock, and in accordance with the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation ("AICPA Guide"), our board of directors in its judgment considered numerous objective and subjective factors to determine the best estimate of the fair value of our common stock including:

    contemporaneous valuations performed at periodic intervals by a third-party independent valuation firm;

    rights, preferences and privileges of our convertible preferred stock relative to those of our common stock;

    our actual and expected operating and financial performance;

    pricing and timing of transactions in our equity;

    likelihood of achieving a liquidity event, such as an initial public offering;

    market multiples of comparable companies in our industry;

    stage of development;

    industry information such as market size and growth;

    illiquidity of share-based awards involving securities in a private company; and

    macroeconomic conditions.

        The valuations performed by a third-party independent valuation firm were just one of the factors used by our board of directors to assist with the valuation of the common stock.

        In valuing our common stock, we determined the equity value of our company using both the income and the market approach valuation methods. The income approach estimates value based on the expectation of future cash flows that a company will generate. These future cash flows are

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discounted to their present values using a discount rate applicable to a company at our stage of maturity and adjusted to reflect the risks inherent in our cash flows. The market approach estimates value based on a comparison of the subject company to comparable public companies in a similar line of business. From the comparable companies, a representative market value multiple is determined and then applied to the subject company's financial results to estimate the value of the subject company.

        We have used the Probability Weighted Expected Return Method ("PWERM") to determine the fair value of our common stock. Under PWERM, multiple valuation approaches were used and then combined into a single probability weighted valuation. Our approaches included the use of initial public offering scenarios, a scenario assuming continued operation as a private entity and a scenario assuming dissolution of the company.

        Application of these approaches involves the use of estimates, judgment and assumptions that are highly complex and subjective, such as those regarding our expected future revenue, expenses and future cash flows, discount rates, market multiples, the selection of comparable companies and the probability of possible future events. Changes in any or all of these estimates and assumptions or the relationships between those assumptions impact our valuations as of each valuation date and may have a material impact on the valuation of our common stock.

    Recently Issued Accounting Pronouncements

        Information about recently issued accounting pronouncements is presented in Note 2 to our consolidated financial statements included elsewhere in this prospectus.

    JOBS Act Accounting Election

        The JOBS Act permits an "emerging growth company" such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to opt out of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

    Quantitative and Qualitative Disclosures about Market Risk

        We are exposed to market risk in the ordinary course of business.

    Credit and interest rate risk

        The fair values of our cash and cash equivalents are exposed to counterparty credit risk. Accordingly, while we periodically review our portfolio in an effort to mitigate counterparty risk, the principal values of our cash and cash equivalents could suffer a loss of value. Any future borrowings incurred under the credit agreement would accrue interest at a floating rate based on a formula tied to certain market rates at the time of incurrence. A 10% increase or decrease in interest rates would not have a material effect on our interest expense.

    Concentration risk

        As of January 29, 2016, one customer represented 14% of accounts receivable. As of February 3, 2017, no individual customer represented 10% or more of accounts receivable.

        DellEMC and VMware invoice our customers and collect invoiced amounts on our behalf. As of January 29, 2016, $188.7 million of amounts invoiced on our behalf was recorded as an offset to the net payable due to DellEMC and $11.9 million invoiced by VMware was recorded in accounts receivable. As of February 3, 2017, $81.1 million invoiced on our behalf by DellEMC and VMware was recorded in accounts receivable.

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    Foreign currency risk

        Although 22% of our total revenue for fiscal 2017 was derived from sales outside the United States, the majority of such revenue is from sales transactions that are denominated in U.S. dollars. For transactions denominated in a currency other than the functional currency, we are exposed to risks of foreign currency fluctuation and are subject to transaction gains and losses, which are recorded as other expense, net in the consolidated statements of operations.

        Our results of operations and cash flows have been and will continue to be subject to fluctuations because of changes in foreign currency exchange rates, particularly changes in exchange rates between the U.S. Dollar and the British Pound, the Euro and the Canadian Dollar, the currencies of countries where we currently have our most significant international operations.

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BUSINESS

We are transforming how the world builds software.

Overview

        We provide a leading cloud-native platform that makes software development and IT operations a strategic advantage for our customers. Our cloud-native platform, Pivotal Cloud Foundry ("PCF"), accelerates and streamlines software development by reducing the complexity of building, deploying and operating new cloud-native applications and modernizing legacy applications. This enables our customers' development and IT operations teams to spend more time writing code, waste less time on mundane tasks and focus on activities that drive business value – building and deploying great software. PCF customers can accelerate their adoption of a modern software development process and their business success using our platform through our complementary strategic services, Pivotal Labs ("Labs"). Enterprises across industries have adopted our platform to build, deploy and operate software, including enterprises in the automotive, financial services, industrial, insurance, media, retail, technology and telecommunications sectors.

        Cloud-native software is reshaping businesses across all industries, empowering enterprises to innovate at a higher velocity and become more digital, mobile, data-driven and always-connected. Cloud-native software is designed to be highly available, scalable and modular to allow for frequent iteration and feature releases. Despite the widespread availability of private and public cloud infrastructure, many organizations are burdened by legacy technologies and software development processes that prevent them from fully realizing the benefits of cloud-native software. As a result, organizations require a modern agile development process and a cloud-native platform that can be deployed on every major private and public cloud.

        Our offering, which includes PCF and Labs, enables organizations to build cloud-native software and compete in today's business environment.

    PCF accelerates and streamlines software development by reducing the complexity of building, deploying and operating modern applications. PCF integrates an expansive set of critical, modern software technologies delivered continuously to provide a turnkey cloud-native platform. PCF combines leading open-source software with our robust proprietary software to meet the exacting enterprise-grade requirements of large organizations, including the ability to operate and manage software across private and public cloud environments, such as Amazon Web Services, Microsoft Azure, Google Cloud Platform, VMware vSphere and OpenStack. PCF is sold on a subscription basis.

    Labs software development experts deliver strategic services that transfer the expertise for enterprises to accelerate their cloud-native transformation by implementing modern agile development practices. With Labs, we help customers co-develop new applications and transform existing ones while accelerating software development, streamlining IT operations and ultimately driving self-sustaining business transformation.

        Our customers realize measurable improvement in developer productivity, software quality, security, time-to-market and IT operational efficiency. Some of our larger customers have achieved substantial structural efficiencies by leveraging our platform, such as significantly improving the ratio of developers to operators toward 200:1 or greater and increasing developer productivity, as measured by the amount of time developers are able to spend writing software code or by the frequency of meaningful improvements to the software they are developing, by 50% or more.

        We market and sell PCF and Labs through our sales force and ecosystem partners. We leverage our mutually beneficial commercial and go-to-market relationships with Dell Technologies and VMware to win new customers and to expand our customer footprint. We also work closely with large public cloud

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providers, including Google and Microsoft, to bring our customers' workloads to their cloud infrastructure. We have received numerous industry awards, including in 2017 the Google Cloud Technology Partner of the Year for 2016 and an Azure consumption partner of the year award from Microsoft for 2016. We intend to continue to grow PCF and scale our strategic services by relying on global systems integrators ("SI"), such as Accenture and Cognizant, and boutique consulting firms that are building focused practices around Pivotal technology implementation, application migration and cloud-native development.

        Our complementary PCF and Labs offering enables organizations to effectively build cloud-native software and compete in today's business environment. Our customers often start with smaller PCF deployments in specific groups or departments and then expand their subscriptions as they seek to deploy and manage more applications and other workloads. Some of our customers use Labs to drive successful outcomes in their organization using our platform as they learn and adopt our modern software development practices. There is a positive correlation between customers using Labs and the expansion of their PCF subscriptions. Optimizing this synergy, including through our SI partners, is a key aspect of our overall business strategy.

        We are focused on subscription sales of our platform. Since announcing PCF in November 2013, our subscription customer count has grown rapidly to 270 as of the end of fiscal 2017. Our subscription revenue was $95.0 million and $150.0 million for fiscal 2016 and fiscal 2017, respectively, representing year-over-year growth of 58%. Our total revenue was $280.9 million and $416.3 million for fiscal 2016 and fiscal 2017, respectively, representing year-over-year growth of 48%. The second quarter of the current fiscal year was the first quarter in which subscription revenue exceeded our services revenue, and we expect that over time subscription revenue will become a larger percentage of our total revenue as customers continue to adopt PCF and as our SI partner ecosystem ramps to directly deliver strategic services to our customers. Our net loss was $282.7 million and $232.9 million for fiscal 2016 and fiscal 2017, respectively.

Industry Background

        Cloud-native software is reshaping businesses across all industries, empowering enterprises to innovate at a higher velocity and become more digital, mobile, data-driven and always-connected. Cloud-native software is designed to be highly available, scalable and modular to allow for frequent iteration and feature releases. Despite the widespread availability of private and public cloud infrastructure, many organizations are burdened by legacy technologies and software development processes that prevent them from fully realizing the benefits of cloud-native software. As a result, organizations require an agile development process and a cloud-native platform that can be deployed on every major private and public cloud.

        Enterprises can revolutionize their customer experiences, help create new revenue streams and improve the cost and speed of business operations by building and deploying cloud-native software. To build and deploy cloud-native software and adopt cloud infrastructure, enterprises require new technology and process. "Technology" consists of the platform and tools necessary to develop and efficiently operate cloud-native software and its associated infrastructure. "Process" refers to the development and operational processes that consistently deliver high-quality software in a culture that embraces change.

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GRAPHIC

    Approaches to Becoming Cloud Native

        In order to effectively develop cloud-native software, enterprises need to recognize three fundamental imperatives: (1) the need for cloud infrastructure software optimized for continuous delivery and highly efficient IT operations, (2) the need for agile software development methodologies and (3) the need to leverage open-source software.

    Cloud Infrastructure Software.  To drive developer and operations efficiency gains, enterprises need to (1) implement software-defined data center infrastructure, server virtualization and application containers on modern hardware, (2) develop next-generation operational software and middleware enabling IT infrastructure to become more automated and programmatic, (3) break down the traditional monolithic software architecture into "microservices," integrated development frameworks and automated releases and (4) facilitate continuous delivery, lifecycle management and monitoring.

    Agile Software Development Methodologies.  To facilitate continuous delivery and efficient IT operations and to closely align with business objectives, enterprises need to adopt agile development and DevOps techniques to rapidly deploy and manage new software in shorter development cycles, with faster deployment frequency and more dependable releases. These techniques are increasingly becoming the modern way for enterprises to develop cloud-native software.

    Open Source.  Some of the most innovative technologies, including application containers, big data stores, developer frameworks and machine learning libraries, are open source. Enterprises need to leverage powerful open-source software technologies.

    Legacy IT Challenges: Our Opportunity

        Despite the availability of these cloud technology and agile process advancements, many enterprises remain deeply invested in legacy technology and process that differ significantly from cloud-native approaches to software development and operations. These enterprises are seeking to leverage private and public cloud technologies and to use cloud-native software to transform their businesses. They continue to deploy monolithic software built on custom silos of supporting infrastructure. When changes to software become necessary, many manual steps and serial reviews and approvals by different functional teams are required, which can often lead to instability and downtime. For a large enterprise with hundreds or thousands of applications and large numbers of disparate

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hardware components in multiple data centers, the operational challenges can be daunting as hundreds or thousands of people in operations may be required just to support a small number of developers and to keep existing applications running. This complexity can create ingrained processes and cultures that are resistant to change, given the level of investment in legacy infrastructure and inefficient IT operations, which constrain innovation and new software development initiatives.

        In addition to these technology challenges, many enterprises implement legacy software development approaches such as the "waterfall" process, in which software development proceeds in a strict sequence from conception to analysis, design, construction, testing, implementation and maintenance. By the time such software is ready to be released, requirements and business priorities often have changed. The waterfall process is ill-suited for software development and IT operations, where the code and user requirements are constantly changing.

        The legacy IT challenges are illustrated in the diagram below:

GRAPHIC

        These legacy technologies and processes have created a number of challenges, including:

    Protracted development cycles and low developer productivity.  Cloud-native software benefits most from fast development cycles, but many enterprises have neither the technologies nor the processes to deliver on those requirements. Developing monolithic software using the waterfall process often results in a linear and serial process prone to delays and developer downtime. Additionally, with legacy IT, developers often waste time waiting for a proper development environment to be set up. Legacy development environments often lack effective frameworks to enable microservices designed to improve developer productivity. As a result,

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      many enterprises experience protracted development cycles and low developer productivity. A Forrester study found that 72% of developers spend less than three hours a day productively writing code.

    Operational inefficiencies.  Legacy approaches to IT create operational inefficiencies when many people must be dedicated to keeping existing applications running and performing mundane systems administration tasks such as configuring and deploying infrastructure, integrating disparate systems and software and patching security vulnerabilities. This inefficiency is often replicated across each application and infrastructure silo. An International Data Corporation ("IDC") survey showed that IT personnel devote over 70% of their time to routine service request approval, monitoring, troubleshooting, provisioning, security patching and configuration management. As a result, resources that could be allocated to developing and deploying innovative software are diverted to non-strategic tasks.

    Lack of flexibility to use multiple clouds.  Enterprises want to optimize for performance and cost in choosing among private, public and multi-cloud environments. IDC expects more than 90% of enterprise IT organizations will commit to multi-cloud architectures by 2020. They want the flexibility to choose from a variety of cloud environments as well as to move workloads among these cloud environments. However, if they deploy workloads directly into a single vendor's public cloud environment, they face difficulty moving to other public cloud environments without re-architecting their software. Therefore, enterprises need a platform that provides consistent development and operational capabilities across all types of clouds.

    Integration complexity.  Legacy approaches to software development and IT operations have resulted in a patchwork of third-party tools, middleware, software components and operating systems. In addition to the operational complexity of managing IT infrastructures, significant effort is required to integrate these items. This issue is particularly problematic for data, as the number of sources grows with the adoption of the internet of things ("IoT").

    Difficulty in securing Legacy IT infrastructure.  The silos and custom architecture found in legacy IT infrastructure need to be independently secured. Legacy approaches to IT operations are not designed to address evolving security threats that develop over time. Threats can emerge when vulnerabilities are discovered and when enterprises do not implement patches that remediate known vulnerabilities. Gartner predicts that through 2021, 99% of vulnerabilities exploited will continue to be ones known by security and IT professionals for at least one year.

    Lack of enterprise-grade platform to leverage open-source software.  Large enterprises have strict IT requirements regarding the availability and scalability of software that they use. Moreover, some of the most innovative technologies, including application containers, big data stores, developer frameworks and machine learning libraries, are open-source software. Open-source software that meets these availability and scalability requirements is available but requires significant self-reliance and investment by enterprises to adopt these technologies. Given the complexity and risk in adopting, integrating and maintaining an array of open-source technologies at enterprise scale, organizations need a single, secure and stable platform in order to leverage open source. The software must be highly available and extremely resilient because it needs to run mission-critical applications that can rarely go down.

Our Solution

        We provide a leading cloud-native platform that makes software development and IT operations a strategic advantage for our customers. PCF customers can accelerate their adoption of modern software development practices through Labs, our complementary strategic services. Our customers realize measurable improvement in developer productivity, software quality, security, time-to-market and IT operational efficiency. Our offering helps make developing and operating software a strategic

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advantage for our customers, empowering them to revolutionize their customer experiences, helping create new revenue streams and improving the speed and cost of business operations through software.


Pivotal Customers Can Reallocate Spend from
Infrastructure Operations to Software Development

GRAPHIC

        Together, PCF and Labs provide the technology and the process to enable the operational efficiency and developer productivity needed to develop, deploy and manage cloud-native software.

    PCF is a cloud-native platform that accelerates and streamlines software development by reducing the complexity of building, deploying and operating modern applications. PCF integrates an expansive set of critical, modern open-source and proprietary software technologies delivered continuously to provide a turnkey cloud-native platform. Our platform allows developers and IT operators to focus on activities that drive business value – building and deploying great software. From our single platform, PCF enables the continuous delivery of any application to every major private and public cloud. PCF combines a set of key platform components which include:  a multi-cloud orchestration foundation, an embedded operating system, a central security and credential framework, a built-in advanced container networking and security engine, a complete and scalable application middleware environment and leading

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      application and data microservices technologies. PCF also fosters a robust ecosystem of many first-and third-party cloud services and technologies which can be accessed on our platform through Pivotal Services Marketplace (the "Marketplace").

    Labs software development experts deliver strategic services that transfer the expertise for enterprises to accelerate their cloud-native transformation by implementing modern agile development practices. With Labs, we help customers co-develop new applications and transform existing ones while accelerating software development, streamlining IT operations and ultimately driving self-sustaining business transformation.

        Key benefits of our offering include:

    Enhanced developer productivity.  PCF, complemented by agile development techniques, dramatically increases developer productivity by providing a standard development platform, frameworks and architectural patterns, so that developers can spend more time writing software that drives value to the business and its customers. PCF provides developers with preconfigured application development and microservices environments tuned to enable the rapid development and deployment of software. Rather than waiting for application development environments to be set up by separate operations teams, with PCF, developers can focus on developing software. In addition, Labs enables enterprises to evolve beyond traditional waterfall processes through co-development projects. Many of our customers have increased developer productivity by 50% or more and dramatically increased the frequency of software releases, sometimes moving from a semi-annual to a weekly (or even daily) production release cadence.

    Greater operational efficiency.  PCF enables our customers to standardize and automate common IT processes across public and private cloud environments related to IT environment builds, software testing and release and infrastructure and application updates. PCF automates many operational functions, resulting in significant efficiency gains. In addition, Labs projects help our customers to adopt microservices architecture and DevOps release practices, which are supported by PCF and that drive greater collaboration between developers and IT operators. Some of our larger customers have achieved substantial structural efficiencies by leveraging our platform, such as significantly improving the ratio of developers to operators toward 200:1 or greater and increasing developer productivity by 50% or more.

    Flexibility to run software across private, public and multi-cloud environments.  PCF gives our customers a consistent developer interface for application deployment and operation across private, public and multi-cloud environments. For example, no software changes are required to move software running on PCF between an Amazon Web Services public cloud environment and a vSphere private cloud. Enterprises have the flexibility to run their applications on the cloud of their choice, and developers do not need to customize or change applications to target a different underlying infrastructure.

    Integrated by design.  From our single platform, PCF integrates an expansive set of critical, modern open-source and proprietary software technologies to provide a turnkey cloud-native platform that enables the continuous delivery of any application to every major private and public cloud. In addition, PCF fosters a robust ecosystem integrated through our Marketplace to extend the capabilities of the platform with many first- and third-party cloud services and technologies such as data persistence, caching, messaging, continuous integration and security. Our Marketplace has over 75 independent software vendors ("ISVs") offering services integrated with our platform from Apigee, AppDynamics, Black Duck, Dynatrace, MongoDB, MuleSoft, New Relic, Redis Labs, Solace and Splunk, enabling enterprises to quickly realize the additional benefits of our platform.

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    Unique infrastructure-native approach to security.  Our approach to security is designed to enable automatic updates to the platform without application downtime, eliminating the compromise between security and availability associated with legacy approaches to IT operations. PCF also integrates credential storage and automated credential rotation, enhancing the security of credentials in our customers' environments. Because we deliver a full stack application environment from operating system to middleware, and we have built end-to-end tests for components across all major private and public clouds, our customers are able to quickly and reliably deploy updates and patch known vulnerabilities.

    Enterprise-grade platform.  Our platform is built to meet the exacting performance, availability, security and management requirements of large organizations. We combine the latest innovations from open-source projects such as application containers, big data stores and developer frameworks with our robust proprietary software components, such as platform management and monitoring, developer experience and authentication, to form an enterprise-grade platform that can be used in private, public or multi-cloud environments. We enable large enterprises to leverage the benefits of cutting-edge open-source technologies built into PCF, our enterprise-grade platform, for their mission-critical operations and applications.

Competitive Strengths

        Our competitive strengths include:

    First mover in cloud-native transformations.  We have been at the forefront of the agile development and cloud-native platform movements, and we offer our customers a highly differentiated approach to cloud-native transformation. Labs has been refining its disciplined agile process for over 25 years. In 2013, DellEMC and VMware contributed Labs and other cloud assets, including Cloud Foundry and Spring, to form Pivotal. We apply Labs' processes to our development of the PCF platform, resulting in ongoing, rapid and prioritized feature development.

    Enterprise-grade software platform integrating open source.  We designed PCF to use open source while also meeting the exacting performance, availability, security and management requirements of large organizations. We engage with and often lead open-source communities to influence and integrate with the latest technologies while concurrently innovating using proprietary software to deliver an enterprise grade solution to our customers. The combined approach allows us to deliver more value to our customers, achieve meaningful software differentiation and make it more difficult for others to "free-ride" on open-source innovation. In addition, we enable developers to use many of the modern and popular developer tools that are available in the open-source community. For example, we integrate PCF with leading open-source projects such as Kubernetes, as well as popular Pivotal-led open-source projects such as Spring Boot framework and Spring Cloud tools.

    Blue-chip customer adoption.  Many of the world's largest organizations are using our platform, including more than 50 of the Fortune 500 companies. Our blue-chip customer base provides insights into enterprise IT needs and validates our platform in the most complex IT environments. These insights have helped us to enhance and extend our offering to address a wider range of organizations, including Global 2000 enterprises across industries, companies outside the Global 2000 that develop software to differentiate their businesses and public sector organizations.

    Large and growing PCF ecosystem.  We are at the center of a large and growing PCF ecosystem. We believe that as more of this ecosystem integrates with our platform, we experience positive network effects that drive faster adoption of our platform and further differentiate our software.

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      Public Cloud.  We work with all three of the major public cloud vendors, Amazon, Google and Microsoft and drive large numbers of workloads to their public cloud platforms. We received in 2017 the Google Cloud Technology Partner of the Year award for 2016 and an Azure consumption partner of the year award from Microsoft for 2016.

      Systems Integrators.  Leading enterprise technology providers have launched dedicated practices focused on implementing PCF and providing Labs-like services. These enterprise techonology providers include Accenture ( which recently announced the Accenture Pivotal Business Group), Capgemini, CGI and Cognizant. These SIs create leverage for us by applying our cloud-native platform agile techniques to help customers transform. They also have begun to deliver co-development, application transformation and PCF implementation services.

      Independent Software Vendors.  Our Marketplace has over 75 ISVs offering services integrated with our platform. These ISVs include Apigee, AppDynamics, Black Duck, Dynatrace, MongoDB, MuleSoft, New Relic, Redis Labs, Solace and Splunk, enabling enterprises to quickly realize additional benefits of our platform.

      Strategic Partners.  We jointly market and sell our products and services with DellEMC and VMware and enjoy significant and mutually beneficial commercial and go-to-market relationships.

    Leading cloud-native platform with strategic services.  Our cloud-native platform combines technology and agile development through our renowned Labs processes, enabling cloud-native transformation within enterprises. Through our complementary offering we enable customers to adapt their cultures to embrace change, accelerate software development, streamline IT operations and ultimately drive self-sustaining business transformation, which we believe will create additional demand for PCF.

    Viral adoption together with C-level focus.  Our platform leverages open-source technology, including Cloud Foundry and Spring, the most popular Java application development framework for the enterprise. Our leadership and integration of open-source projects allows us to innovate faster and gain enterprise acceptance. We also make PCF available for free download for evaluation purposes. In addition to promoting wide adoption, we have an enterprise sales force that often provides us with access to C-level executives because the decision to use PCF and Labs is often a strategic transformative one. We believe that our bottoms-up developer adoption and our top-down strategic access differentiates us from our competitors and helps us gain significant traction in the enterprise.

Market Opportunity

        Our cloud-native software addresses IT spending across the rapidly growing market for public cloud workloads, sometimes referred to as Platform-as-a-service ("PaaS"), and the market for application infrastructure, middleware and development software. We believe our cloud-native platform opportunity is the aggregate of these two markets, with spending today estimated at over $50 billion.

    According to Gartner, spending on cloud application infrastructure services (PaaS) is expected to be $10.6 billion in 2017, growing to $24.6 billion by 2021, representing a 23% compound annual growth rate ("CAGR").

    According to Gartner, spending on application infrastructure, middleware and development solutions is expected to be $40.6 billion in 2017, growing to $51.3 billion by 2021, representing a 6% CAGR.

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Growth Strategy

        Key elements of our growth strategy include our plans to:

    Extend technology lead of our cloud-native platform.  We have developed an industry leading cloud-native application platform, and we intend to continue enhancing our product capabilities and expanding our partner ecosystem as our customer requirements evolve.

    Maintain open cloud-native platform advantage.  We have played a central role in founding and popularizing application infrastructure- and development-related open-source projects, including Cloud Foundry, Spring and RabbitMQ. We intend to continue to partner with technology leaders and third-party software vendors to continue to offer the latest technologies for our customers. For example, we recently collaborated with Google and VMware to create our Kubernetes-based PCF offering called PKS. We intend to maintain our open approach and grow the participation of our ecosystem.

    Continue to drive new customer adoption.  We are focused on Global 2000 enterprises across industries, companies outside the Global 2000 that develop software to differentiate their businesses and public sector organizations. We target these enterprises and organizations because they represent a large market opportunity. Our relationships with Dell Technologies and VMware and with major public cloud vendors provide us with additional reach. We intend to continue building our sales force and strengthening our partner relationships to drive new customer adoption.

    Expand adoption within existing customers.  We intend to broaden our relationships with existing customers by helping them continue to make software development and operations a strategic advantage. Our sales force and partners assist our customers in identifying new use cases for our platform and migrating their existing applications to our platform, which increases our PCF footprint. For example, some of our largest customers began with a relatively small deployment and now run thousands of mission-critical applications on our platform. Part of our strategy to scale our business is to rely, in part, on SI partners to deliver co-development, application transformation and implementation services to our customers, particularly as our customers move from early deployment to broader adoption of PCF.

    Continue to capitalize upon our relationships with our strategic partners.  Our deep relationships with Dell Technologies and VMware broaden our reach into the largest organizations around the globe. Product integrations with DellEMC and VMware enable turn-key solutions for customers. We intend to continue to leverage our mutually beneficial commercial and go-to-market relationships with Dell Technologies and VMware to win new customers and to expand our customer footprint.

    Further leverage partnerships with public cloud vendors.  We work with all three major public cloud providers: Amazon, Microsoft and Google. These partners also enhance our field organization's efforts across industries. We intend to maintain strong engagement with our cloud partner ecosystem to gain increased reach and greater distribution of our offering, accelerate customer expansion and penetrate new markets.

    Continue to leverage the combined strengths of PCF and Labs to drive PCF expansion.  We have realized significant benefits in innovating PCF development and Labs process improvements by capitalizing on the PCF and Labs feedback loop with customers. We intend to focus our Labs resources on customers with the greatest PCF opportunity and acquiring new customers with significant PCF opportunity. There is a positive correlation between customers using Labs and the expansion of their PCF subscriptions.

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Culture

        We believe our culture is unique and critical to our mission of transforming how the world builds software. Our culture reflects the learnings of our agile development roots and applies those insights to all aspects of our business. We have three core values:

    Do the right thing.  In addition to expecting all of our employees to conduct themselves ethically, doing the right thing means that we focus on our customers and key constituencies, and we do not put personal interest ahead of what is best for the company. We empower our employees to make decisions based on who has the best ideas, not title or chain of command.

    Do what works.  Our approach to decision-making is disciplined, data driven and team oriented. We simplify, test, iterate, solve problems and continuously improve. We bring together diverse groups of empowered employees to solve complicated problems and we co-locate, co-develop and work as one team with our customers.

    Be kind.  We value and hire for empathy, diversity, humility and respectfulness. To succeed in our mission, we have to walk in the shoes of others, listen to different perspectives and collaborate.

Our Complementary Platform and Strategic Services Offering

        Our complementary platform and strategic services offering provides both the platform and agile development methodologies for organizations to build cloud-native software that is necessary to compete in today's business environment. PCF enables customers to deploy, operate and update software in an automated way, enabling greater resiliency, security and scale with fewer operations staff, which in turn allows them to focus on creating business value. Our Labs team pairs with customers to co-develop cloud-native software and transform their development practices. This synergistic relationship enables our Labs customers to adopt PCF as part of their cloud-native and self-sustaining business transformation.

    Pivotal Cloud Foundry

        PCF is a platform that provides a consistent way to launch, and quickly iterate on, applications in the most popular programming languages (such as Java, .Net, Ruby, Python, Node.js and Go) and frameworks (such as Spring) across private, public and multi-cloud environments. PCF leverages Cloud Foundry open-source software and adds enterprise-grade qualifications and capabilities such as platform enhancements, infrastructure automation, application enablement, cloud-native enablement, security and enterprise support. The critical platform components of PCF include: a multi-cloud orchestration foundation, an embedded operating system, a central security and credential framework, a built-in advanced container networking and security engine, a robust and scalable application middleware environment and leading application and data microservices technologies. PCF automates and simplifies many of the common tasks necessary to take application code from development to production, including deploying, configuring, scaling, networking and securing applications. It enables developers to spend less time implementing or re-implementing common requirements and instead focus on building business value. PCF enables developers to speed up application development and reduce time to market.

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Pivotal Cloud Foundry Architecture

GRAPHIC

        The components of PCF include:

    Products to handle customers' differing workloads and needs.  

    Pivotal Application Service.  Pivotal Application Service ("PAS") is our flagship cloud-native application platform announced in November 2013 that allows enterprises to continuously deploy and operate custom software securely and at scale across popular private and public clouds. Many enterprises have adopted PAS, formerly known as PCF Elastic Runtime, as their multi-cloud platform for new and existing applications. PAS is built for secure and continuous deployment of applications built using microservices. PAS integrates the Spring Cloud microservices framework, enables agentless logging and metrics collection, integrated credential storage and rotation and single-sign-on, and delivers full stack application middleware so that developers can spend more time focusing on developing and deploying cloud-native software.

    Pivotal Container Service.  Pivotal Container Service ("PKS") is our container management platform that we launched together with Google and VMware in August 2017, which leverages our common services and core technologies from PCF. PKS allows enterprises to deploy and operate Kubernetes, an open-source system for container operations, in an enterprise-grade manner across private and public clouds. Containers package and isolate applications with their entire runtime environment – they contain all of the files necessary to run on their own. PKS includes VMware NSX to programmatically manage software-based

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        virtual networks and is also integrated with VMware tools such as vRealize Operations Manager, vSAN network storage and Wavefront.

      Pivotal Function Service.  Pivotal Function Service ("PFS") is our recently announced multi-cloud Function-as-a-Service ("FaaS") platform designed to allow enterprises to develop, run and manage applications composed of event-driven functions across private and public clouds, leveraging our common services and core technologies from PCF. FaaS is a further automation and abstraction of application architecture so that application logic can be run without regard to the underlying infrastructure, operating system or middleware components, an approach often referred to as "serverless." FaaS allows customers to write only the function logic necessary to accomplish a given task while the platform provides all of the other necessary runtime capabilities. We believe that FaaS will become a common requirement of customer applications as event-driven systems gain popularity, particularly in IoT applications.

      Pivotal Services Marketplace.  Our Marketplace provides customers access to Pivotal and partner products that deploy and operate on PCF. These services, such as MySQL, Pivotal Cloud Cache, RabbitMQ and Redis, and partner products, including Apigee, AppDynamics, Black Duck, Dynatrace, MongoDB, MuleSoft, New Relic, Redis Labs, Solace and Splunk, have been integrated with our platform to leverage certain of our common services and core technologies on PCF. Pivotal Cloud Cache is a distributed, highly available, in-memory data store, enabling PCF users to access data at high speed.

    Common Platform Services.  For each of our products above, PCF has common services that support operational efficiency, developer productivity, security and availability, which enable us to efficiently add PCF products and enable our customers to better make use of our platform and products.

    Shared Monitoring and Logging.  PCF enables agentless logging, metrics collection and application event tracing to help operators and developers understand the performance and health of applications. PCF also supports out of the box integrations with popular application performance management and analytics tools such as AppDynamics, Dynatrace, New Relic and Splunk.

    Shared Security.  PCF's shared security services are comprised of User Account and Authentication ("UAA") and CredHub. UAA is a multi-tenant identity management service and modern authorization framework. It is used in PCF as an authentication server and also acts as a single sign-on server for applications deployed to the platform. CredHub is a secure, centralized credential management component that secures credential generation, storage, lifecycle management and access.

    Shared Networking.  PCF includes integration to software-defined networking to help developers consistently deliver more secure, robust applications while substantially reducing the common bottleneck that happens when application developers must navigate legacy networking technologies and siloed network administrators.

    BOSH.  BOSH is open-source orchestration software that provides an integrated set of foundational services and core technologies for deploying and operating PCF. BOSH enables operators to build and manage environments for large and complex IT systems. BOSH unifies release engineering, deployment and lifecycle management of small and large-scale cloud software, with the ability to provision and deploy software across hundreds of virtual machines on both private and public cloud environments. It is designed to perform monitoring, failure recovery and software updates without downtime. BOSH also integrates a hardened operating system. Our approach simplifies the operating system lifecycle. Our embedded operating

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      system contains a bare minimum skeleton to make the operating system securely configured by default. With this approach, PCF greatly reduces the operational burden that most enterprises incur to support regular operating system patching and updates.

    Multi-Cloud.  PCF supports all of the major private and public cloud platforms: Amazon Web Services, Microsoft Azure, Google Cloud Platform, OpenStack and VMware vSphere. We collaborate with these cloud providers to maintain tight integration to the infrastructure layer. We automate the underlying cloud infrastructure of a PCF deployment, thereby reducing the operator burden to build and maintain their clouds and the need for developers to focus on the underlying infrastructure.

    Other Data Products.  We also offer other data products, such as Pivotal Gemfire and Pivotal Greenplum. To make building data-driven applications easy for our customers, our strategy is to continue developing integrations, including between Pivotal Greenplum and PCF, while also working to modernize Pivotal Greenplum to make it easier to deploy and operate on any cloud.

    Labs

        Labs offers strategic services for organizations to adopt and implement agile development and to transform existing applications to run on PCF.

        Labs has been pioneering and refining agile development processes for over 25 years. With Labs' disciplined and agile processes, software is developed collaboratively, with cross-functional teams who break down projects into discrete tasks and work iteratively within an environment of changing requirements. Rather than deploying periodic and major releases, software is deployed frequently, which allows for continuous feedback as the product takes shape. Our approach also involves pair-programming, in which Labs experts are paired with customer engineers. Each pair works in close collaboration, sometimes using a single keyboard, to write code together.

        Using a practice known as Test Driven Development ("TDD"), developers write the tests before writing the actual software code. After the test is written, developers write the software code that allows the test to be passed or made "green." Each step in the process is tracked and the developer does not progress to building a new function until the existing function is turned from "red" to "green." TDD promotes disciplined, focused development and avoids over-engineering. The code is continuously vetted, concurrently with quality assurance throughout the process, eliminating the need for a separate quality assurance organization and stage.

        Labs also applies an operational practice known as "DevOps." Embracing these agile processes can be challenging for many organizations whose cultures have ingrained waterfall development methodologies, separate "dev," "ops" and other organizational silos and are generally resistant to change. We implement a structured approach designed to break through these silos and imprint Labs' disciplines with our customers and with our partners. We use Labs development methodologies to enable our customers to create new applications and re-platform legacy applications to the PCF platform. Our objective is to teach our customers Labs' agile processes so that they can become self-sufficient and transform how they build software.

    Implementation and Other Services

        We also offer platform implementation services to enable our customers and partners to deploy, provision and operate the PCF platform at scale.

        We deliver product support and other services to assist our customers in meeting their business goals with our software.

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        Premium support services are delivered by our global support organization. These services are offered during the term of the subscription, or maintenance term for certain legacy software products, and include: unlimited and responsive phone, web and email based issue, or ticket, support; unspecified product updates and upgrades; and online access to documentation, technical resources, knowledge base and discussion forums.

        Additionally, we offer training to strategic partners so they can provide Labs-like services, driving increased leverage in our business model. We also offer a range of standard and customized internet and in-person courses to educate end users, operators and partners to upgrade their Pivotal product knowledge and capabilities.

Open-Source Initiatives

        Pivotal supports open-source projects and communities for collaborative innovation such as: Cloud Foundry, Spring, Kubernetes, ODPi, Apache Geode, Apache HTTP Server, Apache MADlib, Apache Tomcat, Redis, RabbitMQ, Eclipse Foundation and various others.

    Cloud Foundry Foundation

        In December 2014, we established the Cloud Foundry Foundation, an independent nonprofit, open-source project. The Cloud Foundry Foundation now has more than 65 members comprised of leading technology providers and global enterprises. The Cloud Foundry Foundation develops and maintains a number of programs and work groups designed to help advance awareness and adoption of the Cloud Foundry platform. Cloud Foundry is an open-source, cloud-agnostic application deployment platform. We believe that the Cloud Foundry Foundation helps promote Cloud Foundry as a leading PaaS open-source technology with an expansive ecosystem. The Cloud Foundry Foundation hosts Cloud Foundry Summits in North America and Europe every year. We are a major sponsor of the Cloud Foundry community and a leading contributor to the project.

    Spring

        Spring is the leading open-source framework for developers building modern Java applications and microservices. Millions of developers use Spring regularly. Spring simplifies complexities of application development so that developers can focus on building features and business value. Spring Boot, introduced in the fiscal year ended January 30, 2015, is an extension of Spring designed to simplify the bootstrapping and development of cloud-native applications and is particularly popular for building microservices. The Spring Boot framework applies an opinionated approach to configuration, eliminating the need to define or implement boilerplate configuration before starting to build an application. Spring Cloud, built on top of Spring Boot and Netflix Open Source, provides components that enable common patterns in microservices application architectures, such as distributed configuration management, service discovery, circuit breakers, intelligent routing and micro-proxy. Using Spring Cloud, developers can quickly build and deploy a complex application that is highly available, resilient to failure and easily configured. PCF includes Spring Cloud as an integrated component of PAS, making it simpler for developers to deliver microservice applications on the platform. Spring has a large and active community that provides continuous feedback and contributions based on diverse real-world use cases. We are the primary sponsor of the Spring Community and leading contributor to the project.

Sales and Marketing

        Our sales efforts are centered on landing and expanding PCF subscriptions. Frequently, an organization will subscribe to PCF for near-term consumption needs for a single division or small set of

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applications and then subsequently expand its subscription capacity and deployment to other divisions or a broader set of applications across the organization.

        We primarily sell PCF through our sales force, which is comprised of enterprise sales representatives who team with platform architects, or technical sales engineers, and supporting business operations personnel. Our account teams are organized primarily by geographic coverage with some specialization for various industries.

        Our sales efforts target the C-suite, technology professionals, software developers and data scientists. In addition to our sales force, we rely on partners, including our strategic partners DellEMC and VMware, public cloud vendors and SIs, to increase our sales and distribution of our technology and services. In addition, we have ISV partners whose integrations enable enterprises to receive additional benefits of our platform. Our principal marketing programs include: webinars, user conferences (such as the SpringOne Platform conference and Cloud Foundry Foundation Summits in North America and Europe) and cooperative marketing efforts with partners. We generate customer leads, accelerate sales opportunities and build brand awareness through our marketing programs and through our ecosystem partners.

Research and Development

        Our ability to compete depends in large part on our continuous commitment to research and development and our ability to rapidly introduce new technologies, features and functionality. Our research and development organization is responsible for the design, development, testing and certification of our offerings. We focus our efforts on developing our core technologies and further enhancing their usability, functionality, reliability, performance and flexibility. We also apply the Labs process to our development of PCF, resulting in ongoing, rapid and prioritized feature development.

        Research and development expenses were $120.5 million and $152.1 million for fiscal 2016 and fiscal 2017, respectively.

Competition

        The markets within which we operate are highly competitive. A significant number of companies and open-source projects have developed or are developing products and services that currently, or in the future may, compete with some or all of our offerings. In addition, in some instances we have strategic or other commercial relationships with companies with which we currently or may in the future compete. We face competition from:

    legacy application infrastructure and middleware from vendors such as IBM and Oracle;

    open-source based offerings supported by vendors such as RedHat; alternative Cloud Foundry-based offerings such as IBM Cloud and SAP Cloud Platform, which have proprietary features that are unique to their offerings; or potential customers' internally-developed, integrated and maintained efforts; and

    proprietary public cloud offerings from vendors such as Amazon Web Services, Google Cloud Platform and Microsoft Azure.

        We believe we can compete favorably based on the following competitive factors:

    enterprise-grade performance and features such as scalability, security and ease of use;

    breadth, depth and quality of platform functionality;

    ability to deploy in a variety of infrastructure environments, specifically multi-cloud functionality;

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    ability to innovate and rapidly respond to customer needs and changing open-source software standards;

    quality and transformative impact of strategic services and level of customer satisfaction;

    platform extensibility and ability to integrate with other technology infrastructures;

    brand awareness and reputation; and

    size of customer base and level of user adoption.

Intellectual Property

        Intellectual property is an important aspect of our business, and we seek protection for our intellectual property as appropriate. To establish and protect our proprietary rights, we rely upon a combination of patent, copyright, trade secret and trademark laws and contractual restrictions such as confidentiality agreements, licenses and intellectual property assignment agreements. We maintain a policy requiring our employees, contractors, consultants and other third parties to enter into confidentiality and proprietary rights agreements to control access to our proprietary information. These laws, procedures and restrictions provide only limited protection, and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed or misappropriated. Furthermore, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States, and we therefore may be unable to protect our proprietary technology in certain jurisdictions. Moreover, we contribute code to, and our platform incorporates, open source licensed to the general public under open-source software licenses such as the Apache 2.0 Software License. Such licenses can grant licensees broad permissions to use, copy, modify and redistribute contributed code. As a result, open-source development and licensing practices can limit the value of certain of our intellectual property assets.

        As of August 4, 2017, we had been granted 108 U.S. patents and had 71 U.S. patent applications pending. We also had 17 issued patents and 33 patent applications pending in foreign jurisdictions. Our patents expire between 2023 and 2036. We regularly review our development efforts to assess the existence and patentability of new intellectual property. We also pursue the registration of our domain names, trademarks and service marks and copyrights in our software in the United States and in certain locations outside the United States.

Legal Proceedings

        From time to time, we are involved in legal proceedings and subject to claims arising in the ordinary course of our business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the resolution of these ordinary course matters will not have a material adverse effect on our business, operating results, financial condition or cash flows. Even if any particular litigation is not resolved in a manner that is adverse to our interests, such litigation can have a negative impact on us because of defense and settlement costs, diversion of management resources from our business and other factors.

Facilities

        We currently lease approximately 66,510 square feet of space for our current corporate headquarters in San Francisco, California under a lease agreement that expires in June 2019. Our other primary offices are in New York, London and Singapore under leases that expire at varying times between January 2019 and December 2030. We intend to add new facilities or expand existing facilities as we grow our business, and we believe that suitable additional space will be available as needed to accommodate any such expansion of our organization.

Employees

        As of February 3, 2017, we had 2,305 full-time employees. Of these employees, 1,583 are in the United States, and 722 are in our international locations.

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MANAGEMENT

Executive Officers and Directors

        The following table sets forth information regarding our executive officers and directors as of November 30, 2017:

Name
  Age   Position

Robert Mee

    54   Chief Executive Officer and Director

William Cook

    59   President

Onsi Fakhouri

    34   Senior Vice President, Cloud R&D

Cynthia Gaylor

    44   Senior Vice President, Chief Financial Officer

Edward Hieatt

    40   Senior Vice President, Services

Andrew Cohen

    52   Senior Vice President, General Counsel and Corporate Secretary

Scott Yara

    44   Senior Vice President, Products

Paul Maritz

    62   Chairman of the Board

Michael S. Dell

    52   Director

Zane Rowe

    47   Director

Egon Durban

    44   Director

William D. Green

    64   Director

Marcy S. Klevorn

    58   Director

Khozema Z. Shipchandler

    43   Director

    Robert Mee

        Mr. Mee has served as our Chief Executive Officer and as a member of our board of directors since August 2015. Prior to that, Mr. Mee was our Senior Vice President of Products and Research & Development from April 2013 to August 2015. Mr. Mee was part of Pivotal's founding team in April 2013. Prior to joining Pivotal, Mr. Mee was Vice President of the Pivotal Labs Division at DellEMC, a data storage, information security, virtualization, analytics and cloud computing company, from 2012 to April 2013, where he was responsible for all aspects of the Pivotal Labs business. Prior to DellEMC, he served as Founder, Chief Executive Officer and majority stockholder of Pivotal Labs LLC from 1989 until it was acquired by DellEMC in 2012. We believe that Mr. Mee is qualified to serve on our board of directors because of his leadership experience serving as our Chief Executive Officer and the Founder and Chief Executive Officer of Pivotal Labs LLC, his deep knowledge of and expertise in agile software development and the technology industry generally, and his background as part of Pivotal's founding team.

    William Cook

        Mr. Cook has served as our President since April 2013. Mr. Cook was part of Pivotal's founding team in April 2013. Prior to joining Pivotal, Mr. Cook served as President of the Greenplum Division at DellEMC from 2010 to 2013, where he was responsible for all aspects of the Greenplum business. Prior to DellEMC, Mr. Cook was the Chief Executive Officer of Greenplum, Inc., an open-source data company, from 2006 until Greenplum's acquisition by DellEMC in 2010. Prior to Greenplum, Mr. Cook held leadership positions at various companies, including spending 19 years at Sun Microsystems, a computer systems and software company, where he most recently served as Senior Vice President of U.S. Sales.

    Onsi Fakhouri

        Mr. Fakhouri has served as our Senior Vice President, Cloud R&D, since May 2017, and is responsible for the development of Pivotal's cloud-native offerings. Prior to that, Mr. Fakhouri was Vice

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President, Cloud R&D from January 2016 to May 2017, and Vice President, Engineering for Cloud Foundry from April 2015 to January 2016. He also was a distinguished software engineer and product manager from 2013 to April 2015. Prior to joining Pivotal in 2013, Mr. Fakhouri was a senior software engineer in the Pivotal Labs Division at DellEMC from 2012 to 2013. Prior to DellEMC, he was a software engineer at Pivotal Labs LLC from September 2010 until it was acquired by DellEMC in 2012.

    Cynthia Gaylor

        Ms. Gaylor has served as our Senior Vice President and Chief Financial Officer since May 2016. Prior to joining us, Ms. Gaylor was an independent strategic advisor from November 2014 to May 2016. From June 2013 to October 2014, Ms. Gaylor was the Head of Corporate Development and an Advisor at Twitter. Prior to Twitter, Ms. Gaylor was a Managing Director at Morgan Stanley, serving in various positions in the technology investment banking group between March 2006 and May 2013.

    Edward Hieatt

        Mr. Hieatt has served as our Senior Vice President, Services, since January 2016, and is responsible for our Customer Success Organization. Prior to that, Mr. Hieatt was Vice President of Labs from January 2014 to January 2016. Prior to joining Pivotal in 2013, Mr. Hieatt was Senior Director of Engineering at the Pivotal Labs Division of DellEMC from 2012 to 2013, where he was responsible for the operations of the Pivotal Labs consultancy. Prior to DellEMC, he served as Vice President of Engineering of Pivotal Labs LLC, which he joined as a software engineer in 2003, until it was acquired by DellEMC in 2012.

    Andrew Cohen

        Mr. Cohen has served as our Senior Vice President, General Counsel and Corporate Secretary since July 2016. From our founding in April 2013 to July 2016, Mr. Cohen was Vice President, General Counsel and Corporate Secretary. Prior to joining Pivotal, Mr. Cohen held various leadership positions at DellEMC from 1998 to 2013, including serving as Vice President and Assistant General Counsel from January 2007 to April 2013, where he was responsible for a number of legal functions, including compliance, litigation, mergers and acquisitions, investigations and real estate, as well as leading a compliance technology solutions team.

    Scott Yara

        Mr. Yara has served as our Senior Vice President, Products, since September 2016. Mr. Yara was our President and Head of Products from July 2014 to September 2016 and was Senior Vice President, Products from April 2013 to July 2014. Mr. Yara was part of Pivotal's founding team in April 2013. Prior to joining Pivotal, Mr. Yara served as Senior Vice President of the Greenplum Division at DellEMC from August 2010 to April 2013, where he was responsible for product development. Prior to DellEMC, Mr. Yara co-founded Greenplum, which was acquired by DellEMC in 2010.

    Paul Maritz

        Mr. Maritz has served as a member of our board of directors since April 2013 and Chairman of our board of directors since September 2016. Mr. Maritz served as our Chief Executive Officer from April 2013 through August 2015. From September 2012 through March 2013, Mr. Maritz served as Chief Strategist at DellEMC. Mr. Maritz also served as a director of VMware, a cloud infrastructure and digital workspace technology company and majority-owned subsidiary of Dell Technologies, from July 2008, when he joined VMware as Chief Executive Officer, to December 2017. Mr. Maritz was VMware's Chief Executive Officer from July 2008 through August 2012 and President from July 2008 to January 2011. Prior to joining VMware, he was President of DellEMC's Cloud Infrastructure and Services Division after DellEMC acquired Pi Corporation in February 2008. Mr. Maritz was a founder of Pi, a software

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company focused on building cloud-based solutions, and served as its Chief Executive Officer. Before founding Pi, Mr. Maritz spent 14 years working at Microsoft Corporation, a multinational technology company, where he served as a member of the five-person Executive Committee that managed the company. We believe that Mr. Maritz is qualified to serve on our board of directors because of his experience serving in various executive positions at Pivotal, VMware, DellEMC and other global technology companies, which provided him in-depth knowledge of our business and the issues we face. In addition, Mr. Maritz's substantial experience in the information technology sector, ranging from development of software products to founding a company developing cloud computing software, provides the board of directors with significant expertise on a variety of issues important to our business.

    Michael S. Dell

        Mr. Dell has served as a member of our board of directors since September 2016. He has served as Chairman and Chief Executive Officer of Dell Technologies since October 2013. Mr. Dell has held the title of Chairman of Dell Inc. since he founded that company in 1984. Mr. Dell also served as Chief Executive Officer of Dell Inc. from 1984 until July 2004 and resumed that role in January 2007. In 1998, Mr. Dell formed MSD Capital, L.P. for the purpose of managing his and his family's investments, and, in 1999, he and his wife established the Michael & Susan Dell Foundation to provide philanthropic support to a variety of global causes. Mr. Dell also serves as a director and non-executive Chairman of the board of directors of VMware and of SecureWorks Corp., a majority-owned subsidiary of Dell Technologies. As the Chairman, Chief Executive Officer and founder of Dell Technologies, Mr. Dell oversees one of the world's largest technology companies and is recognized as one of the leading innovators and influencers in the business wo