0001574135-19-000004.txt : 20190314 0001574135-19-000004.hdr.sgml : 20190314 20190314161222 ACCESSION NUMBER: 0001574135-19-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20190314 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190314 DATE AS OF CHANGE: 20190314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Pivotal Software, Inc. CENTRAL INDEX KEY: 0001574135 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 943094578 STATE OF INCORPORATION: DE FISCAL YEAR END: 0201 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-38460 FILM NUMBER: 19681202 BUSINESS ADDRESS: STREET 1: 875 HOWARD STREET, 5TH FLOOR CITY: SAN FRANCISCO STATE: CA ZIP: 94103 BUSINESS PHONE: (415) 777-4868 MAIL ADDRESS: STREET 1: 875 HOWARD STREET, 5TH FLOOR CITY: SAN FRANCISCO STATE: CA ZIP: 94103 FORMER COMPANY: FORMER CONFORMED NAME: GoPivotal, Inc. DATE OF NAME CHANGE: 20130410 8-K 1 pvtl-20190314x8k.htm 8-K Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________________________________
FORM 8-K
________________________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 14, 2019
________________________________________________________________
Pivotal Software, Inc.
(Exact name of registrant as specified in its charter)
________________________________________________________________
Delaware
 
001-38460
 
94-3094578
(State or other jurisdiction
 
(Commission
 
(IRS Employer
of incorporation)
 
File Number)
 
Identification No.)
875 Howard Street, Fifth Floor
 
 
San Francisco, California
 
94103
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (415) 777-4868
Not Applicable
(Former name or former address, if changed since last report)
________________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o              Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o              Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o              Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o              Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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 13(a) of the Exchange Act. ý
 




Item 2.02    Results of Operations and Financial Condition.
On March 14, 2019, Pivotal Software, Inc. (the “Company”) issued a press release announcing its financial results for its fiscal fourth quarter and fiscal year ended February 1, 2019. A copy of the press release is attached as Exhibit 99.1 to this report.
The information in this Item 2.02 and the exhibit attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01    Financial Statements and Exhibits.
(d) Exhibits
The following document is furnished as an exhibit to this report:
Exhibit
Number
 
Description of Exhibit
99.1
 


2



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Pivotal Software, Inc.
 
 
Date: March 14, 2019
/s/ Cynthia Gaylor
 
Cynthia Gaylor
 
Senior Vice President and Chief Financial Officer


3
EX-99.1 2 pvtl-8k_03142019ex99d1.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1

g413071mm01i001.jpg

Pivotal Reports Fourth Quarter and Full Fiscal Year 2019 Financial Results

Subscription revenue grows 50% year over year in 4Q19 and 55% year over year for FY19
Total revenue grows 27% year over year in 4Q19 and 29% year over year for FY19
Subscription customers increased 18% year over year to 377
Dollar-based net expansion rate of 149%

SAN FRANCISCO — March 14, 2019 – Pivotal Software, Inc. (NYSE: PVTL), a leading cloud-native platform provider, today reported results for the fourth quarter and full fiscal year 2019 ended February 1, 2019.

“Pivotal delivered a strong fourth quarter, wrapping up a successful initial year as a public company. Our unique combination of software and services is attracting new customers, and driving many of our existing customers to grow their investments with us,” said Rob Mee, CEO of Pivotal Software. “We are still in the early stages of this high-growth market. To capitalize on the digital transformation opportunity, we will continue to fuel innovation by investing in R&D, and at the same time, continue our relentless focus on satisfying customers as they move more mission-critical apps to our multi-cloud platform.”

Fourth Quarter Fiscal Year 2019 Financial Results
Revenue: Subscription revenue was $112.5 million, an increase of 50% year over year. Total revenue was $169.2 million, an increase of 27% year over year.

Operating Loss: GAAP operating loss was $42.0 million, or 25% of total revenue, compared to a loss of $45.2 million in Q4 of last year. Non-GAAP operating loss was $20.8 million, or 12% of total revenue, compared to a loss of $34.0 million in Q4 of last year.

Net Loss: GAAP net loss was $38.9 million, compared to a loss of $37.2 million in Q4 of last year. GAAP net loss per share was $0.15, compared to a loss of $0.54 in Q4 of last year. Non-GAAP net loss was $17.7 million, compared to a loss of $26.1 million in Q4 of last year. Non-GAAP net loss per share was $0.07, compared to a loss of $0.12 in Q4 of last year.

Cash Flow: Operating cash flow was $8.0 million compared to negative operating cash flow of $15.7 million in Q4 of last year.

Cash and cash equivalents were $701.7 million as of February 1, 2019.

Full Year Fiscal 2019 Financial Results
Revenue: Subscription revenue was $400.9 million, an increase of 55% year over year. Total revenue was $657.5 million, an increase of 29% year over year.

Operating Loss: GAAP operating loss was $146.8 million, or 22% of total revenue, compared to a loss of $168.3 million in FY18. Non-GAAP operating loss was $71.3 million, or 11% of total revenue, compared to a loss of $128.5 million in FY18.

Net Loss: GAAP net loss was $141.9 million, compared to a loss of $163.5 million in FY18. GAAP net loss per share was $0.64, compared to a loss of $2.38 in FY18. Non-GAAP net loss was $69.6 million, compared to a loss of $123.7 million in FY18. Non-GAAP net loss per share was $0.28, compared to a loss of $0.57 in FY18.

Cash Flow: Operating cash flow was negative $5.4 million compared to operating cash flow of negative $116.5 million for FY18.

Recent Business Highlights
Subscription customers grew 18% year over year to 377 in Q4
Dollar-based net expansion rate was 149%
Released new features to Pivotal Cloud Foundry to help enterprises achieve meaningful business outcomes through the continuous delivery of high-quality software and simplification of operations including:





Pivotal Application Service 2.4 added several new capabilities, including rolling application deployments to give developers more control over how application code is deployed
Pivotal Container Service 1.3 delivered the latest stable release of Kubernetes, production support for running on Microsoft Azure, and improvements to networking and availability
The alpha version of Pivotal Function Service offered customers Kubernetes-based, multi-cloud, event-driven functions
Named one of CRN’s 20 Coolest Cloud Platform Vendors of the 2019 Cloud 100

Financial Outlook
For the first quarter of fiscal 2020, Pivotal currently expects:
Subscription revenue of $124.5 to $125.5 million
Total revenue of $183 to $185 million
Non-GAAP loss from operations of $13.5 to $12.5 million
Non-GAAP net loss per share of 6¢ to 5¢, assuming weighted average shares outstanding of approximately 267 million

For the full fiscal year 2020, Pivotal currently expects:
Subscription revenue of $542 to $547 million
Total revenue of $798 to $806 million
Non-GAAP loss from operations of $38 to $36 million
Non-GAAP net loss per share of 15¢ to 13¢, assuming weighted average shares outstanding of approximately 272 million

Pivotal has not reconciled these forward-looking non-GAAP measures to comparable forward-looking GAAP measures because of the potential variability and uncertainty of incurring these costs and expenses in the future. Accordingly, a reconciliation is not available without unreasonable effort.

Conference Call and Webcast Information
Pivotal will host a conference call at 2:00pm PDT (5:00pm EDT) today to discuss our financial results. A live audio webcast of the conference call will be accessible on Pivotal’s investor relations web page at https://pivotal.io/investors. A replay of the webcast will be available following the conference call.

About Pivotal
Pivotal combines our cloud-native platform, developer tools, and unique methodology to help the world’s largest companies transform the way they build and run their most important applications. Our technology is used by Global 2000 companies to achieve strategic advantages in software development and IT operations. Learn more at pivotal.io.

Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to the most directly comparable financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled "About Non-GAAP Financial Measures."

Key Metric Definitions
Subscription Customers: Pivotal defines the number of subscription customers as the organizations that have a subscription contract for Pivotal’s software resulting in at least $50,000 of annual revenue in that period.

Dollar-Based Net Expansion Rate: Pivotal’s dollar-based net expansion rate compares its subscription revenue from a common group of customers across comparable periods. Pivotal calculates its dollar-based net expansion rate for all periods on a trailing four-quarter basis.





Forward-Looking Statements
 
This press release contains statements relating to Pivotal’s expectations, projections, beliefs, and prospects (including statements regarding fueling innovation by investing in R&D and Pivotal’s financial outlook), which are "forward-looking statements” within the meaning of the federal securities laws and by their nature are uncertain. Words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "plans," and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are not guarantees of future performance, and you are cautioned not to place undue reliance on these forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements as a result of many factors, including but not limited to: (i) Pivotal’s limited operating history as an independent company, which makes it difficult to evaluate Pivotal’s prospects; (ii) the substantial losses Pivotal has incurred and the risks of not being able to generate sufficient revenue to achieve and sustain profitability; (iii) Pivotal’s future success depending in large part on the growth of Pivotal’s target markets; (iv) Pivotal’s future growth depending largely on Pivotal Cloud Foundry and Pivotal’s platform-related services; (v) Pivotal’s subscription revenue growth rate not being indicative of Pivotal’s future performance or ability to grow;(vi) Pivotal’s business and prospects being harmed if customers do not renew their subscriptions or expand their use of Pivotal’s platform;(vii) any failure by Pivotal to compete effectively; (viii) Pivotal’s long and unpredictable sales cycles that vary seasonally and which can cause significant variation in the number and size of transactions that can close in a particular quarter; (ix) Pivotal’s lack of control of and inability to predict the future course of open-source technologies, including those used in Pivotal Cloud Foundry; and (x) any security or privacy breaches. All information set forth in this release is current as of the date of this release. These forward-looking statements are based on current expectations and are subject to uncertainties, risks, assumptions, and changes in condition, significance, value and effect as well as other risks disclosed previously and from time to time in documents filed by us with the U.S.Securities and Exchange Commission (SEC). Additional information will be made available in Pivotal’s annual report on Form 10-K and other future reports that Pivotal may file with the SEC, which could cause actual results to vary from expectations. Pivotal disclaims any obligation to, and does not currently intend to, update any such forward-looking statements, whether written or oral, that may be made from time to time except as required by law.




Pivotal Software, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts); (unaudited)
 
 
Three Months Ended
 
Fiscal Year Ended
 
February 1, 2019
 
February 2, 2018
 
February 1, 2019
 
February 2, 2018
Revenue:
 

 
 

 
 

 
 

Subscription
$
112,476

 
$
74,979

 
$
400,866

 
$
259,018

Services
56,732

 
58,265

 
256,628

 
250,418

Total revenue
169,208

 
133,244

 
657,494

 
509,436

Cost of revenue:
 

 
 

 
 

 
 

Subscription
8,095

 
7,729

 
32,142

 
30,472

Services
51,103

 
49,786

 
208,573

 
197,922

Total cost of revenue
59,198

 
57,515

 
240,715

 
228,394

Gross profit
110,010

 
75,729

 
416,779

 
281,042

Operating expenses:
 

 
 

 
 

 
 

Sales and marketing
76,077

 
61,860

 
286,385

 
221,187

Research and development
53,097

 
41,036

 
196,406

 
160,947

General and administrative
22,823

 
18,022

 
80,802

 
67,204

Total operating expenses
151,997

 
120,918

 
563,593

 
449,338

Loss from operations
(41,987
)
 
(45,189
)
 
(146,814
)
 
(168,296
)
Other income (expense), net
3,074

 
1,615

 
5,486

 
2,145

Loss before provision for (benefit from) income taxes

(38,913
)
 
(43,574
)
 
(141,328
)
 
(166,151
)
Provision for (benefit from) income taxes

21

 
(6,255
)
 
570

 
(2,637
)
Net loss
(38,934
)
 
(37,319
)
 
(141,898
)
 
(163,514
)
Less: Net loss (income) attributable to non-controlling interest
3

 
83

 
(5
)
 
(1
)
Net loss attributable to Pivotal
$
(38,931
)
 
$
(37,236
)
 
$
(141,903
)
 
$
(163,515
)
Net loss per share attributable to common stockholders, basic and diluted
$
(0.15
)
 
$
(0.54
)
 
$
(0.64
)
 
$
(2.38
)
Weighted average shares outstanding used in computing net loss per share attributable to common stockholders, basic and diluted
263,381

 
69,260

 
221,149

 
68,574




Pivotal Software, Inc.
Condensed Consolidated Balance Sheets
(in thousands); (unaudited)
 
 
February 1, 2019
 
February 2, 2018
Assets
\

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
701,733

 
$
73,012

Accounts receivable, less allowance for doubtful accounts of $4,266 and $3,264 as of February 1, 2019 and February 2, 2018, respectively
308,492

 
210,677

Due from Parent
951

 
31,096

Deferred sales commissions, current
39,572

 
38,937

Other assets, current
16,738

 
13,012

Total current assets
1,067,486

 
366,734

Property, plant and equipment, net
27,879

 
31,985

Intangible assets, net
18,680

 
26,651

Goodwill
696,226

 
696,226

Deferred income taxes
258

 
463

Deferred sales commissions, noncurrent
35,522

 
24,890

Other assets, noncurrent
4,417

 
6,448

Total assets
$
1,850,468

 
$
1,153,397

Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
18,421

 
$
17,214

Due to Parent
20,241

 
15,451

Accrued expenses
64,723

 
64,251

Income taxes payable
1,232

 
1,748

Deferred revenue, current
376,985

 
260,341

Other liabilities, current
4,373

 
1,109

Total current liabilities
485,975

 
360,114

Deferred revenue, noncurrent
89,603

 
57,126

Deferred income taxes

 
427

Debt, noncurrent

 
20,000

Other liabilities, noncurrent
9,412

 
7,931

Total liabilities
584,990

 
445,598

Redeemable convertible preferred stock

 
1,248,327

Stockholders’ equity (deficit):
 

 
 

Class A common stock
901

 
43

Class B common stock
1,755

 
650

Additional paid-in capital
2,540,921

 
595,113

Accumulated deficit
(1,284,503
)
 
(1,142,600
)
Accumulated other comprehensive income
5,687

 
5,554

Total Pivotal stockholders’ equity (deficit)
1,264,761

 
(541,240
)
Non-controlling interest
717

 
712

Total stockholders’ equity (deficit)
1,265,478

 
(540,528
)
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)
$
1,850,468

 
$
1,153,397




Pivotal Software, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands); (unaudited)
 
 
Three Months Ended
 
Fiscal Year Ended
 
February 1, 2019
 
February 2, 2018
 
February 1, 2019
 
February 2, 2018
Cash flows from operating activities:
 

 
 

 
 

 
 

Net loss
$
(38,934
)
 
$
(37,319
)
 
$
(141,898
)
 
$
(163,514
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 

 
 

 
 

 
 

Depreciation and amortization
4,334

 
5,505

 
18,158

 
22,237

Stock-based compensation expense
19,800

 
8,695

 
69,033

 
28,629

Provision for doubtful accounts
(257
)
 
529

 
2,104

 
609

Deferred income taxes
(3
)
 
(7,284
)
 
(150
)
 
(6,969
)
Gain on sale of investment

 

 
(3,234
)
 

Other
(21
)
 
328

 
1,470

 
1,178

Changes in assets and liabilities:
 

 
 

 
 

 
 

Accounts receivable
(143,755
)
 
(80,338
)
 
(99,860
)
 
(66,136
)
Due from Parent
508

 
(438
)
 
545

 
(1,096
)
Deferred sales commissions
(17,965
)
 
(14,166
)
 
(11,268
)
 
(10,360
)
Other assets
192

 
2,989

 
(2,566
)
 
2,647

Accounts payable
3,398

 
(1,305
)
 
1,357

 
12,636

Due to Parent
9,247

 
(960
)
 
5,910

 
(34,984
)
Deferred revenue
159,533

 
89,960

 
149,344

 
74,360

Accrued expenses
17,654

 
17,539

 
1,468

 
21,549

Other liabilities
(5,738
)
 
542

 
4,232

 
2,723

Net cash provided by (used in) operating activities
7,993

 
(15,723
)
 
(5,355
)
 
(116,491
)
Cash flows from investing activities:
 

 
 

 
 

 
 

Additions to property, plant and equipment
(2,482
)
 
(1,828
)
 
(9,411
)
 
(12,877
)
Proceeds from sale of investment

 

 
3,234

 

Net cash used in investing activities
(2,482
)
 
(1,828
)
 
(6,177
)
 
(12,877
)
Cash flows from financing activities:
 

 
 

 
 

 
 

Proceeds from the initial public offering, net of issuance costs paid
(253
)
 

 
544,421

 

Proceeds from the issuance of common stock
19,584

 
3,207

 
61,436

 
9,757

Proceeds from employee stock plans
9,371

 

 
9,371

 

Contribution from Dell
3,009

 
17,074

 
44,286

 
42,874

Borrowings on credit facility, net of debt issuance costs

 
19,670

 
15,000

 
18,815

Repayments on credit facility

 

 
(35,000
)
 

Net cash provided by financing activities
31,711

 
39,951

 
639,514

 
71,446

Effect of exchange rate changes on cash and cash equivalents
(293
)
 
(1,617
)
 
739

 
(2,939
)
Net increase (decrease) in cash and cash equivalents
36,929

 
20,783

 
628,721

 
(60,861
)
Cash and cash equivalents at beginning of period
664,804

 
52,229

 
73,012

 
133,873

Cash and cash equivalents at end of period
$
701,733

 
$
73,012

 
$
701,733

 
$
73,012




Pivotal Software, Inc.
GAAP to Non-GAAP Reconciliation
(in thousands, except percentages and per share amounts); (unaudited)
 
 
Three Months Ended February 1, 2019
 
GAAP
 
Stock-based
compensation
expense
 
Amortization of
acquired
intangibles
 
Gain on sale of
investment
 
Non-GAAP
Cost of subscription revenue
$
8,095

 
$
(427
)
 
$
(234
)
 
$

 
$
7,434

Subscription gross margin
92.8
 %
 
0.4
%
 
0.2
%
 
%
 
93.4
 %
Cost of services revenue
51,103

 
(4,237
)
 

 

 
46,866

Services gross margin
9.9
 %
 
7.5
%
 
%
 
%
 
17.4
 %
Gross profit
110,010

 
4,664

 
234

 

 
114,908

Gross margin
65.0
 %
 
2.8
%
 
0.1
%
 
%
 
67.9
 %
Sales and marketing
76,077

 
(5,969
)
 
(832
)
 

 
69,276

Research and development
53,097

 
(5,726
)
 

 

 
47,371

General and administrative
22,823

 
(3,441
)
 
(371
)
 

 
19,011

Total operating expenses
151,997

 
(15,136
)
 
(1,203
)
 

 
135,658

Loss from operations
(41,987
)
 
19,800

 
1,437

 

 
(20,750
)
Operating margin
(24.8
)%
 
11.7
%
 
0.8
%
 
%
 
(12.3
)%
Other income (expense), net
3,074

 

 
 
 

 
3,074

Net loss attributable to Pivotal
$
(38,931
)
 
$
19,800

 
$
1,437

 
$

 
$
(17,694
)
Net loss per share, basic and diluted (1)
$
(0.15
)
 
 
 
 
 
 
 
$
(0.07
)
 
 
 
 
 
 
 
 
 
 

(1) GAAP and Non-GAAP net loss per common share calculated based upon 263,381 basic and diluted weighted average shares outstanding of common stock.
 
 
Three Months Ended February 2, 2018
 
GAAP
 
Stock-based
compensation
expense
 
Amortization of
acquired
intangibles
 
Gain on sale of
investment
 
Non-GAAP
Cost of subscription revenue
$
7,729

 
$
(178
)
 
$
(977
)
 
$

 
$
6,574

Subscription gross margin
89.7
 %
 
0.2
%
 
1.3
%
 
%
 
91.2
 %
Cost of services revenue
49,786

 
(1,988
)
 

 

 
47,798

Services gross margin
14.6
 %
 
3.4
%
 
%
 
%
 
18.0
 %
Gross profit
75,729

 
2,166

 
977

 

 
78,872

Gross margin
56.8
 %
 
1.6
%
 
0.7
%
 
%
 
59.2
 %
Sales and marketing
61,860

 
(2,693
)
 
(1,110
)
 

 
58,057

Research and development
41,036

 
(2,394
)
 

 

 
38,642

General and administrative
18,022

 
(1,442
)
 
(368
)
 

 
16,212

Total operating expenses
120,918

 
(6,529
)
 
(1,478
)
 

 
112,911

Loss from operations
(45,189
)
 
8,695

 
2,455

 

 
(34,039
)
Operating margin
(33.9
)%
 
6.5
%
 
1.8
%
 
%
 
(25.5
)%
Other income (expense), net
1,615

 

 

 

 
1,615

Net loss attributable to Pivotal
$
(37,236
)
 
$
8,695

 
$
2,455

 
$

 
$
(26,086
)
Net loss per share, basic and diluted (1)
$
(0.54
)
 
 
 
 
 
 
 
$
(0.12
)
 
 
 
 
 
 
 
 
 
 
 
(1) GAAP net loss per common share calculated based upon 69,260 basic and diluted weighted average shares outstanding of common stock. Non-GAAP net loss per common share calculated based upon 217,139 basic and diluted weighted average shares outstanding of common stock.     



 
Fiscal Year Ended February 1, 2019
 
GAAP
 
Stock-based
compensation
expense
 
Amortization of
acquired
intangibles
 
Gain on sale of
investment
 
Non-GAAP
Cost of subscription revenue
$
32,142

 
$
(1,469
)
 
$
(1,439
)
 
$

 
$
29,234

Subscription gross margin
92.0
 %
 
0.4
%
 
0.4
%
 
%
 
92.7
 %
Cost of services revenue
208,573

 
(14,962
)
 

 

 
193,611

Services gross margin
18.7
 %
 
5.8
%
 
%
 
%
 
24.6
 %
Gross profit
416,779

 
16,431

 
1,439

 

 
434,649

Gross margin
63.4
 %
 
2.5
%
 
0.2
%
 
%
 
66.1
 %
Sales and marketing
286,385

 
(21,082
)
 
(3,557
)
 

 
261,746

Research and development
196,406

 
(19,497
)
 

 

 
176,909

General and administrative
80,802

 
(12,023
)
 
(1,521
)
 

 
67,258

Total operating expenses
563,593

 
(52,602
)
 
(5,078
)
 

 
505,913

Loss from operations
(146,814
)
 
69,033

 
6,517

 

 
(71,264
)
Operating margin
(22.3
)%
 
10.5
%
 
1.0
%
 
%
 
(10.8
)%
Other income (expense), net
5,486

 

 

 
(3,234
)
 
2,252

Net loss attributable to Pivotal
$
(141,903
)
 
$
69,033

 
$
6,517

 
$
(3,234
)
 
$
(69,587
)
Net loss per share, basic and diluted (1)
$
(0.64
)
 
 
 
 
 
 
 
$
(0.28
)
 
 
 
 
 
 
 
 
 
 
 
(1) GAAP net loss per common share calculated based upon 221,149 basic and diluted weighted average shares outstanding of common stock. Non-GAAP net loss per common share calculated based upon 250,806 basic and diluted weighted average shares outstanding of common stock.
 
 
Fiscal Year Ended February 2, 2018
 
GAAP
 
Stock-based
compensation
expense
 
Amortization of
acquired
intangibles
 
Gain on sale of
investment
 
Non-GAAP
Cost of subscription revenue
$
30,472

 
$
(520
)
 
$
(4,913
)
 
$

 
$
25,039

Subscription gross margin
88.2
 %
 
0.2
%
 
1.9
%
 
%
 
90.3
 %
Cost of services revenue
197,922

 
(6,548
)
 

 

 
191,374

Services gross margin
21.0
 %
 
2.6
%
 
%
 
%
 
23.6
 %
Gross profit
281,042

 
7,068

 
4,913

 

 
293,023

Gross margin
55.2
 %
 
1.4
%
 
1.0
%
 
%
 
57.5
 %
Sales and marketing
221,187

 
(8,619
)
 
(4,811
)
 

 
207,757

Research and development
160,947

 
(7,833
)
 

 

 
153,114

General and administrative
67,204

 
(5,109
)
 
(1,437
)
 

 
60,658

Total operating expenses
449,338

 
(21,561
)
 
(6,248
)
 

 
421,529

Loss from operations
(168,296
)
 
28,629

 
11,161

 

 
(128,506
)
Operating margin
(33.0
)%
 
5.6
%
 
2.2
%
 
%
 
(25.2
)%
Other income (expense), net
2,145

 

 

 

 
2,145

Net loss attributable to Pivotal
$
(163,515
)
 
$
28,629

 
$
11,161

 
$

 
$
(123,725
)
Net loss per share, basic and diluted (1)
$
(2.38
)
 
 
 
 
 
 
 
$
(0.57
)
 
 
 
 
 
 
 
 
 
 
 
(1) GAAP net loss per common share calculated based upon 68,574 basic and diluted weighted average shares outstanding of common stock. Non-GAAP net loss per common share calculated based upon 216,453 basic and diluted weighted average shares outstanding of common stock.



Pivotal Software, Inc.
GAAP to Non-GAAP Weighted Average Shares Outstanding Reconciliation
(in thousands); (unaudited)
 
 
Three Months Ended
 
Twelve Months Ended
 
February 1, 2019
 
February 2, 2018
 
February 1, 2019
 
February 2, 2018
GAAP weighted average shares outstanding, basic and diluted
263,381

 
69,260

 
221,149

 
68,574

Assumed preferred stock conversion

 
147,879

 
29,657

 
147,879

Non-GAAP weighted average shares outstanding, basic and diluted
263,381

 
217,139

 
250,806

 
216,453




About Non-GAAP Financial Measures
 
To supplement Pivotal’s consolidated financial statements, which are prepared and presented in accordance with GAAP, Pivotal provides investors with certain non-GAAP financial measures, including but not limited to: non-GAAP cost of subscription, non-GAAP cost of services, non-GAAP gross profit, non-GAAP gross margin, non-GAAP sales and marketing expense, non-GAAP research and development expense, non-GAAP general and administrative expense, non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, and non-GAAP weighted average shares outstanding. Certain of these non-GAAP financial measures exclude stock-based compensation, amortization of acquired intangibles and gain on sale of investment. For more information on the comparable GAAP to non-GAAP financial measures, please see the reconciliation table included with this release.

Management believes non-GAAP information is useful in evaluating the operating results, ongoing operations, and for internal planning and forecasting purposes. Management also believes that non-GAAP financial measures provide consistency and comparability with past financial performance and assist investors with comparing Pivotal to other companies some of which use similar non-GAAP financial measures to supplement their GAAP results. Management believes non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP and may be different from similarly-titled non-GAAP financial measures used by other companies.

Pivotal excludes stock-based compensation because it is non-cash in nature and excludes it in order to facilitate comparisons to other companies’ results. Pivotal excludes amortization of acquired intangibles because it is consistent with how management evaluates operating results and prepares financial plans and forecasts. While the purchase accounting for an acquisition reflects the accounting value assigned to intangible assets, management believes the GAAP impact of acquired intangible assets is not representative of long term operating results. Pivotal excludes gains/losses on sales of strategic investments because management believes these are more reflective of discrete events and less reflective of results in a particular period.
 
Source: Pivotal Investor Relations
 
Pivotal Software
Investor Contact:
Helyn Corcos
hcorcos@pivotal.io
 
or
 
Media Contact:
Joseph Roualdes
jroualdes@pivotal.io
 
©2019 Pivotal Software, Inc. All rights reserved. Pivotal is a trademark and/or registered trademark of Pivotal Software, Inc. in the United States and/or other countries.

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