false--01-31Q3202000015741350.0500.0150.0500.0150.0500.015P1Y426600055110000000.011055381581755142722800000P371DP364D0.400.50
0001574135
2019-02-02
2019-11-01
0001574135
us-gaap:CommonClassBMember
2019-11-29
0001574135
us-gaap:CommonClassAMember
2019-11-29
0001574135
2019-02-01
0001574135
us-gaap:CommonClassAMember
2019-02-01
0001574135
2019-11-01
0001574135
us-gaap:CommonClassBMember
2019-02-01
0001574135
us-gaap:CommonClassBMember
2019-11-01
0001574135
us-gaap:CommonClassAMember
2019-11-01
0001574135
2018-02-03
2018-11-02
0001574135
pvtl:SubscriptionMember
2018-02-03
2018-11-02
0001574135
2018-08-04
2018-11-02
0001574135
2019-08-03
2019-11-01
0001574135
pvtl:SubscriptionMember
2019-02-02
2019-11-01
0001574135
us-gaap:ServiceMember
2019-02-02
2019-11-01
0001574135
pvtl:SubscriptionMember
2019-08-03
2019-11-01
0001574135
us-gaap:ServiceMember
2018-08-04
2018-11-02
0001574135
us-gaap:ServiceMember
2018-02-03
2018-11-02
0001574135
pvtl:SubscriptionMember
2018-08-04
2018-11-02
0001574135
us-gaap:ServiceMember
2019-08-03
2019-11-01
0001574135
2018-11-02
0001574135
2018-02-02
0001574135
us-gaap:NoncontrollingInterestMember
2019-11-01
0001574135
2019-08-02
0001574135
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2019-02-02
2019-05-03
0001574135
2019-05-04
2019-08-02
0001574135
pvtl:DellMember
2019-05-04
2019-08-02
0001574135
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2019-08-02
0001574135
pvtl:VMwareMember
us-gaap:AdditionalPaidInCapitalMember
2019-02-02
2019-05-03
0001574135
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2019-08-03
2019-11-01
0001574135
pvtl:VMwareMember
2019-05-04
2019-08-02
0001574135
us-gaap:AdditionalPaidInCapitalMember
2019-05-04
2019-08-02
0001574135
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2019-11-01
0001574135
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2019-02-01
0001574135
us-gaap:AdditionalPaidInCapitalMember
2019-05-03
0001574135
us-gaap:AdditionalPaidInCapitalMember
2019-02-02
2019-05-03
0001574135
us-gaap:AdditionalPaidInCapitalMember
2019-08-03
2019-11-01
0001574135
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2019-11-01
0001574135
pvtl:DellMember
2019-02-02
2019-05-03
0001574135
us-gaap:AdditionalPaidInCapitalMember
2019-02-01
0001574135
2019-05-03
0001574135
2019-02-02
2019-05-03
0001574135
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2019-08-02
0001574135
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2019-08-03
2019-11-01
0001574135
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2019-05-04
2019-08-02
0001574135
us-gaap:RetainedEarningsMember
2019-05-03
0001574135
us-gaap:NoncontrollingInterestMember
2019-08-03
2019-11-01
0001574135
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2019-08-02
0001574135
us-gaap:NoncontrollingInterestMember
2019-02-01
0001574135
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2019-02-01
0001574135
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2019-02-02
2019-05-03
0001574135
us-gaap:NoncontrollingInterestMember
2019-05-04
2019-08-02
0001574135
us-gaap:RetainedEarningsMember
2019-05-04
2019-08-02
0001574135
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2019-05-03
0001574135
us-gaap:RetainedEarningsMember
2019-11-01
0001574135
us-gaap:RetainedEarningsMember
2019-08-03
2019-11-01
0001574135
pvtl:VMwareMember
us-gaap:AdditionalPaidInCapitalMember
2019-05-04
2019-08-02
0001574135
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2019-02-01
0001574135
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2019-11-01
0001574135
us-gaap:AdditionalPaidInCapitalMember
2019-08-02
0001574135
us-gaap:RetainedEarningsMember
2019-02-02
2019-05-03
0001574135
pvtl:DellMember
us-gaap:AdditionalPaidInCapitalMember
2019-08-03
2019-11-01
0001574135
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2019-05-03
0001574135
us-gaap:NoncontrollingInterestMember
2019-05-03
0001574135
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2019-05-03
0001574135
us-gaap:RetainedEarningsMember
2019-02-01
0001574135
pvtl:DellMember
2019-08-03
2019-11-01
0001574135
pvtl:VMwareMember
2019-02-02
2019-05-03
0001574135
us-gaap:NoncontrollingInterestMember
2019-08-02
0001574135
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2019-05-04
2019-08-02
0001574135
us-gaap:AdditionalPaidInCapitalMember
2019-11-01
0001574135
pvtl:DellMember
us-gaap:AdditionalPaidInCapitalMember
2019-02-02
2019-05-03
0001574135
us-gaap:RetainedEarningsMember
2019-08-02
0001574135
pvtl:DellMember
us-gaap:AdditionalPaidInCapitalMember
2019-05-04
2019-08-02
0001574135
us-gaap:NoncontrollingInterestMember
2019-02-02
2019-05-03
0001574135
pvtl:DellMember
us-gaap:AdditionalPaidInCapitalMember
2018-08-04
2018-11-02
0001574135
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2018-08-03
0001574135
2018-05-05
2018-08-03
0001574135
pvtl:DellMember
us-gaap:AdditionalPaidInCapitalMember
2018-02-03
2018-05-04
0001574135
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2018-02-03
2018-05-04
0001574135
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2018-05-05
2018-08-03
0001574135
us-gaap:AdditionalPaidInCapitalMember
2018-05-05
2018-08-03
0001574135
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2018-02-02
0001574135
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2018-02-02
0001574135
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2018-11-02
0001574135
us-gaap:RetainedEarningsMember
2018-05-04
0001574135
2018-02-03
2018-05-04
0001574135
us-gaap:AdditionalPaidInCapitalMember
2018-08-03
0001574135
us-gaap:AdditionalPaidInCapitalMember
2018-08-04
2018-11-02
0001574135
us-gaap:RetainedEarningsMember
2018-08-04
2018-11-02
0001574135
us-gaap:RedeemableConvertiblePreferredStockMember
2018-02-02
0001574135
pvtl:VMwareMember
us-gaap:AdditionalPaidInCapitalMember
2018-02-03
2018-05-04
0001574135
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2018-02-03
2018-05-04
0001574135
us-gaap:NoncontrollingInterestMember
2018-11-02
0001574135
pvtl:DellMember
2018-05-05
2018-08-03
0001574135
us-gaap:RetainedEarningsMember
2018-05-05
2018-08-03
0001574135
us-gaap:RetainedEarningsMember
2018-11-02
0001574135
us-gaap:NoncontrollingInterestMember
2018-05-04
0001574135
pvtl:VMwareMember
2018-05-05
2018-08-03
0001574135
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2018-02-03
2018-05-04
0001574135
us-gaap:AdditionalPaidInCapitalMember
2018-02-02
0001574135
us-gaap:RedeemableConvertiblePreferredStockMember
2018-05-04
0001574135
us-gaap:AdditionalPaidInCapitalMember
2018-11-02
0001574135
us-gaap:RedeemableConvertiblePreferredStockMember
2018-08-03
0001574135
pvtl:VMwareMember
2018-08-04
2018-11-02
0001574135
pvtl:VMwareMember
2018-02-03
2018-05-04
0001574135
us-gaap:AdditionalPaidInCapitalMember
2018-02-03
2018-05-04
0001574135
us-gaap:NoncontrollingInterestMember
2018-05-05
2018-08-03
0001574135
pvtl:DellMember
us-gaap:AdditionalPaidInCapitalMember
2018-05-05
2018-08-03
0001574135
us-gaap:RetainedEarningsMember
2018-02-02
0001574135
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2018-05-05
2018-08-03
0001574135
us-gaap:NoncontrollingInterestMember
2018-08-03
0001574135
us-gaap:AdditionalPaidInCapitalMember
2018-05-04
0001574135
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2018-05-04
0001574135
us-gaap:NoncontrollingInterestMember
2018-08-04
2018-11-02
0001574135
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2018-08-04
2018-11-02
0001574135
2018-08-03
0001574135
us-gaap:RetainedEarningsMember
2018-02-03
2018-05-04
0001574135
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2018-02-02
0001574135
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2018-05-04
0001574135
2018-05-04
0001574135
us-gaap:NoncontrollingInterestMember
2018-02-03
2018-05-04
0001574135
us-gaap:RedeemableConvertiblePreferredStockMember
2018-02-03
2018-05-04
0001574135
pvtl:DellMember
2018-02-03
2018-05-04
0001574135
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2018-08-04
2018-11-02
0001574135
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2018-11-02
0001574135
us-gaap:NoncontrollingInterestMember
2018-02-02
0001574135
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2018-08-03
0001574135
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2018-08-03
0001574135
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2018-11-02
0001574135
us-gaap:RetainedEarningsMember
2018-08-03
0001574135
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2018-05-04
0001574135
pvtl:DellMember
2018-08-04
2018-11-02
0001574135
pvtl:VMwareMember
us-gaap:AdditionalPaidInCapitalMember
2018-08-04
2018-11-02
0001574135
us-gaap:RedeemableConvertiblePreferredStockMember
2018-11-02
0001574135
pvtl:VMwareMember
us-gaap:AdditionalPaidInCapitalMember
2018-05-05
2018-08-03
0001574135
us-gaap:CommonClassBMember
2018-04-17
2018-04-17
0001574135
pvtl:VMwareMember
pvtl:PivotalSoftwareIncMember
us-gaap:CommonClassBMember
2019-08-22
0001574135
pvtl:DellMember
pvtl:PivotalSoftwareIncMember
2019-08-22
0001574135
us-gaap:IPOMember
2018-04-20
2018-04-20
0001574135
pvtl:VMwareMember
2019-08-22
0001574135
us-gaap:CommonClassAMember
us-gaap:IPOMember
2018-04-20
2018-04-20
0001574135
pvtl:DellMember
pvtl:PivotalSoftwareIncMember
us-gaap:CommonClassBMember
2019-08-22
0001574135
us-gaap:IPOMember
2018-04-20
0001574135
pvtl:VMwareMember
pvtl:PivotalSoftwareIncMember
us-gaap:CommonClassAMember
2019-08-22
0001574135
us-gaap:CommonClassAMember
us-gaap:OverAllotmentOptionMember
2018-04-20
0001574135
us-gaap:CommonClassAMember
2018-04-17
2018-04-17
0001574135
us-gaap:CommonClassAMember
us-gaap:OverAllotmentOptionMember
2018-04-20
2018-04-20
0001574135
srt:MaximumMember
2019-02-02
2019-11-01
0001574135
srt:MinimumMember
2019-02-02
2019-11-01
0001574135
2018-04-06
2018-04-06
0001574135
us-gaap:AccountingStandardsUpdate201602Member
2019-02-02
0001574135
pvtl:DeferredSalesCommissionsMember
2018-02-03
2018-11-02
0001574135
pvtl:DeferredSalesCommissionsMember
2019-02-01
0001574135
pvtl:DeferredSalesCommissionsMember
2019-11-01
0001574135
pvtl:DeferredSalesCommissionsMember
2019-02-02
2019-11-01
0001574135
pvtl:DeferredSalesCommissionsMember
2019-08-03
2019-11-01
0001574135
pvtl:DeferredSalesCommissionsMember
2018-08-04
2018-11-02
0001574135
us-gaap:SoftwareAndSoftwareDevelopmentCostsMember
2019-02-01
0001574135
us-gaap:LeaseholdImprovementsMember
2019-02-01
0001574135
us-gaap:EquipmentMember
2019-02-01
0001574135
us-gaap:LeaseholdImprovementsMember
2019-11-01
0001574135
us-gaap:SoftwareAndSoftwareDevelopmentCostsMember
2019-11-01
0001574135
us-gaap:EquipmentMember
2019-11-01
0001574135
us-gaap:FurnitureAndFixturesMember
2019-02-01
0001574135
us-gaap:FurnitureAndFixturesMember
2019-11-01
0001574135
us-gaap:TechnologyBasedIntangibleAssetsMember
2019-02-01
0001574135
us-gaap:CustomerRelatedIntangibleAssetsMember
2019-02-01
0001574135
us-gaap:TrademarksAndTradeNamesMember
2019-02-01
0001574135
us-gaap:CustomerRelatedIntangibleAssetsMember
2019-11-01
0001574135
us-gaap:TrademarksAndTradeNamesMember
2019-11-01
0001574135
us-gaap:TechnologyBasedIntangibleAssetsMember
2019-11-01
0001574135
us-gaap:MoneyMarketFundsMember
us-gaap:FairValueInputsLevel1Member
2019-02-01
0001574135
us-gaap:FairValueInputsLevel1Member
2019-02-01
0001574135
us-gaap:MoneyMarketFundsMember
us-gaap:FairValueInputsLevel1Member
2019-11-01
0001574135
us-gaap:FairValueInputsLevel1Member
2019-11-01
0001574135
us-gaap:RevolvingCreditFacilityMember
2018-02-02
0001574135
us-gaap:RevolvingCreditFacilityMember
2018-02-03
2018-04-30
0001574135
us-gaap:RevolvingCreditFacilityMember
2019-05-06
0001574135
us-gaap:RevolvingCreditFacilityMember
2019-02-02
2019-11-01
0001574135
us-gaap:RevolvingCreditFacilityMember
2018-04-01
2018-11-02
0001574135
us-gaap:RevolvingCreditFacilityMember
2018-02-03
2018-05-04
0001574135
us-gaap:RevolvingCreditFacilityMember
2018-11-02
0001574135
us-gaap:RevolvingCreditFacilityMember
2019-10-22
2019-10-22
0001574135
pvtl:SubscriptionMember
srt:MaximumMember
2019-02-02
2019-11-01
0001574135
2019-11-02
2019-11-01
0001574135
pvtl:ProfessionalServicesMember
srt:MaximumMember
2019-02-02
2019-11-01
0001574135
2020-11-02
2019-11-01
0001574135
pvtl:SubscriptionMember
srt:MinimumMember
2019-02-02
2019-11-01
0001574135
pvtl:DellTaxSharingAgreementMember
pvtl:DellMember
2019-08-29
2019-08-29
0001574135
us-gaap:RestrictedStockUnitsRSUMember
2019-02-02
2019-11-01
0001574135
us-gaap:RestrictedStockUnitsRSUMember
2019-11-01
0001574135
us-gaap:RestrictedStockUnitsRSUMember
2019-02-01
0001574135
us-gaap:ResearchAndDevelopmentExpenseMember
2018-08-04
2018-11-02
0001574135
us-gaap:GeneralAndAdministrativeExpenseMember
2019-08-03
2019-11-01
0001574135
us-gaap:GeneralAndAdministrativeExpenseMember
2018-02-03
2018-11-02
0001574135
pvtl:SubscriptionMember
us-gaap:CostOfSalesMember
2019-02-02
2019-11-01
0001574135
us-gaap:SellingAndMarketingExpenseMember
2018-02-03
2018-11-02
0001574135
us-gaap:SellingAndMarketingExpenseMember
2019-02-02
2019-11-01
0001574135
us-gaap:ResearchAndDevelopmentExpenseMember
2019-08-03
2019-11-01
0001574135
us-gaap:ResearchAndDevelopmentExpenseMember
2019-02-02
2019-11-01
0001574135
us-gaap:ServiceMember
us-gaap:CostOfSalesMember
2019-02-02
2019-11-01
0001574135
us-gaap:SellingAndMarketingExpenseMember
2019-08-03
2019-11-01
0001574135
us-gaap:SellingAndMarketingExpenseMember
2018-08-04
2018-11-02
0001574135
us-gaap:GeneralAndAdministrativeExpenseMember
2018-08-04
2018-11-02
0001574135
us-gaap:ServiceMember
us-gaap:CostOfSalesMember
2019-08-03
2019-11-01
0001574135
pvtl:SubscriptionMember
us-gaap:CostOfSalesMember
2018-02-03
2018-11-02
0001574135
pvtl:SubscriptionMember
us-gaap:CostOfSalesMember
2018-08-04
2018-11-02
0001574135
us-gaap:ResearchAndDevelopmentExpenseMember
2018-02-03
2018-11-02
0001574135
us-gaap:GeneralAndAdministrativeExpenseMember
2019-02-02
2019-11-01
0001574135
pvtl:SubscriptionMember
us-gaap:CostOfSalesMember
2019-08-03
2019-11-01
0001574135
us-gaap:ServiceMember
us-gaap:CostOfSalesMember
2018-08-04
2018-11-02
0001574135
us-gaap:ServiceMember
us-gaap:CostOfSalesMember
2018-02-03
2018-11-02
0001574135
us-gaap:EmployeeStockMember
2019-11-01
0001574135
us-gaap:EmployeeStockOptionMember
us-gaap:ShareBasedCompensationAwardTrancheOneMember
2019-02-02
2019-11-01
0001574135
us-gaap:MajorityShareholderMember
2019-08-03
2019-11-01
0001574135
us-gaap:EmployeeStockMember
us-gaap:CommonClassAMember
2018-04-20
0001574135
us-gaap:MajorityShareholderMember
2019-02-02
2019-11-01
0001574135
us-gaap:MajorityShareholderMember
2018-08-04
2018-11-02
0001574135
us-gaap:EmployeeStockMember
2018-08-04
2018-11-02
0001574135
us-gaap:EmployeeStockMember
2019-02-02
2019-11-01
0001574135
pvtl:EmployeeStockOptionandRestrictedStockUnitsRSUsMember
2019-11-01
0001574135
us-gaap:EmployeeStockOptionMember
us-gaap:ShareBasedCompensationAwardTrancheTwoMember
2019-02-02
2019-11-01
0001574135
us-gaap:RestrictedStockUnitsRSUMember
2018-02-03
2018-11-02
0001574135
us-gaap:EmployeeStockMember
2018-04-20
2018-04-20
0001574135
us-gaap:EmployeeStockOptionMember
2019-11-01
0001574135
us-gaap:RestrictedStockUnitsRSUMember
2018-08-04
2018-11-02
0001574135
us-gaap:RestrictedStockUnitsRSUMember
2019-08-03
2019-11-01
0001574135
us-gaap:EmployeeStockMember
2018-02-03
2018-11-02
0001574135
us-gaap:EmployeeStockMember
2019-08-03
2019-11-01
0001574135
us-gaap:EmployeeStockOptionMember
2019-02-02
2019-11-01
0001574135
pvtl:EquityIncentivePlans2018and2013Member
2019-11-01
0001574135
us-gaap:MajorityShareholderMember
2018-02-03
2018-11-02
0001574135
us-gaap:EmployeeStockOptionMember
2019-02-01
0001574135
us-gaap:EmployeeStockOptionMember
2019-02-02
2019-11-01
0001574135
us-gaap:RestrictedStockUnitsRSUMember
2019-02-02
2019-11-01
0001574135
us-gaap:RestrictedStockUnitsRSUMember
2018-02-03
2018-11-02
0001574135
us-gaap:EmployeeStockMember
2018-02-03
2018-11-02
0001574135
us-gaap:EmployeeStockOptionMember
2018-02-03
2018-11-02
0001574135
us-gaap:EmployeeStockMember
2019-02-02
2019-11-01
0001574135
pvtl:DellMember
2018-02-03
2018-11-02
0001574135
pvtl:FordMotorCompanyMember
us-gaap:DirectorMember
2018-02-03
2018-11-02
0001574135
pvtl:VMwareMember
2018-02-03
2018-11-02
0001574135
pvtl:DellMember
2019-02-02
2019-11-01
0001574135
pvtl:GeneralElectricCompanyMember
us-gaap:DirectorMember
2018-08-04
2018-11-02
0001574135
pvtl:FordMotorCompanyMember
us-gaap:DirectorMember
2018-08-04
2018-11-02
0001574135
pvtl:DellandVMWareAgencyAgreementMember
us-gaap:MajorityShareholderMember
2018-02-03
2018-11-02
0001574135
pvtl:VMwareMember
2019-08-03
2019-11-01
0001574135
pvtl:DellandVMWareAgencyAgreementMember
us-gaap:MajorityShareholderMember
2018-08-04
2018-11-02
0001574135
pvtl:FordMotorCompanyMember
us-gaap:DirectorMember
2019-02-01
0001574135
srt:MaximumMember
us-gaap:MajorityShareholderMember
2019-02-02
2019-11-01
0001574135
pvtl:VMwareMember
2018-08-04
2018-11-02
0001574135
pvtl:FordMotorCompanyMember
us-gaap:DirectorMember
2019-08-03
2019-11-01
0001574135
pvtl:FordMotorCompanyMember
us-gaap:DirectorMember
2019-02-02
2019-11-01
0001574135
pvtl:DellTaxSharingAgreementReturntoProvisionUpdateMember
pvtl:DellMember
2019-11-01
0001574135
pvtl:DellMember
2019-08-03
2019-11-01
0001574135
pvtl:FordMotorCompanyMember
us-gaap:DirectorMember
2019-11-01
0001574135
pvtl:GeneralElectricCompanyMember
us-gaap:DirectorMember
2018-02-03
2018-11-02
0001574135
pvtl:DellandVMWareAgencyAgreementMember
us-gaap:MajorityShareholderMember
2019-08-03
2019-11-01
0001574135
pvtl:DellandVMWareAgencyAgreementMember
us-gaap:MajorityShareholderMember
2019-02-02
2019-11-01
0001574135
pvtl:DellMember
2018-08-04
2018-11-02
0001574135
pvtl:DellTaxSharingAgreementMember
pvtl:DellMember
2019-11-01
0001574135
pvtl:VMwareMember
2019-02-02
2019-11-01
0001574135
srt:MinimumMember
us-gaap:MajorityShareholderMember
2019-02-02
2019-11-01
0001574135
srt:MaximumMember
us-gaap:MajorityShareholderMember
2018-08-04
2018-11-02
0001574135
srt:MaximumMember
us-gaap:MajorityShareholderMember
2018-02-03
2018-11-02
0001574135
srt:MaximumMember
us-gaap:MajorityShareholderMember
2019-08-03
2019-11-01
0001574135
srt:MinimumMember
us-gaap:MajorityShareholderMember
2019-08-03
2019-11-01
0001574135
srt:MinimumMember
us-gaap:MajorityShareholderMember
2018-08-04
2018-11-02
0001574135
srt:MinimumMember
us-gaap:MajorityShareholderMember
2018-02-03
2018-11-02
0001574135
pvtl:LitigationRelatedtotheMergerAgreementMember
us-gaap:SubsequentEventMember
2019-12-06
2019-12-06
0001574135
pvtl:LitigationRelatedtoViolationsofSecuritiesLawsinConnectionwithIPOandThereafterMember
2019-06-14
2019-06-27
0001574135
country:US
2019-08-03
2019-11-01
0001574135
country:US
2018-08-04
2018-11-02
0001574135
us-gaap:NonUsMember
2018-08-04
2018-11-02
0001574135
us-gaap:NonUsMember
2019-02-02
2019-11-01
0001574135
us-gaap:NonUsMember
2018-02-03
2018-11-02
0001574135
country:US
2018-02-03
2018-11-02
0001574135
us-gaap:NonUsMember
2019-08-03
2019-11-01
0001574135
country:US
2019-02-02
2019-11-01
pvtl:letter
pvtl:vote
xbrli:pure
iso4217:USD
xbrli:shares
pvtl:complaint
xbrli:shares
iso4217:USD
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________
FORM 10-Q
______________________________________________
|
| |
☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended November 1, 2019
OR
|
| |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 001-38460
_________________________________________________
Pivotal Software, Inc.
(Exact name of registrant as specified in its charter)
__________________________________________________
|
| | |
Delaware | | 94-3094578 |
(State or other jurisdiction of | | (I.R.S. Employer |
incorporation or organization) | | Identification No.) |
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)
Securities registered pursuant to Section 12(b) of the Act:
|
| | |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Class A Common Stock, par value $0.01 | PVTL | New York Stock Exchange |
_______________________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 | ☐
| | Accelerated filer | ☐ | |
| | | | | |
Non-accelerated filer | ☑
| | Smaller reporting company | ☐ | |
| | | Emerging growth company | ☑ | |
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. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑.
There were 281,106,853 shares of common stock outstanding, consisting of 105,592,581 outstanding shares of Class A common stock and 175,514,272 outstanding shares of Class B common stock, as of November 29, 2019.
Pivotal Software, Inc.
Table of Contents
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Pivotal Software, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
|
| | | | | | | |
| November 1, 2019 | | February 1, 2019 |
Assets | |
| | |
|
Current assets: | |
| | |
|
Cash and cash equivalents | $ | 821,939 |
| | $ | 701,733 |
|
Accounts receivable, net of allowance of $5,511 and $4,266 as of November 1, 2019 and February 1, 2019, respectively | 156,627 |
| | 308,492 |
|
Due from Parent | 1,627 |
| | 951 |
|
Deferred sales commissions, current | 35,669 |
| | 39,572 |
|
Other assets, current | 17,426 |
| | 16,738 |
|
Total current assets | 1,033,288 |
| | 1,067,486 |
|
Property, plant and equipment, net | 26,167 |
| | 27,879 |
|
Operating lease right-of-use assets | 126,416 |
| | — |
|
Intangible assets, net | 14,496 |
| | 18,680 |
|
Goodwill | 696,226 |
| | 696,226 |
|
Deferred income taxes | 300 |
| | 258 |
|
Deferred sales commissions, noncurrent | 34,646 |
| | 35,522 |
|
Other assets, noncurrent | 7,266 |
| | 4,417 |
|
Total assets | $ | 1,938,805 |
| | $ | 1,850,468 |
|
| | | |
Liabilities and Stockholders’ Equity | | | |
Current liabilities: | | | |
Accounts payable | $ | 15,238 |
| | $ | 18,421 |
|
Due to Parent | 16,355 |
| | 20,241 |
|
Accrued expenses | 54,549 |
| | 64,723 |
|
Income taxes payable | 590 |
| | 1,232 |
|
Deferred revenue, current | 289,693 |
| | 376,985 |
|
Operating lease liabilities, current | 22,571 |
| | — |
|
Other liabilities, current | 10,687 |
| | 4,373 |
|
Total current liabilities | 409,683 |
| | 485,975 |
|
Deferred revenue, noncurrent | 47,071 |
| | 89,603 |
|
Operating lease liabilities, noncurrent | 116,305 |
| | — |
|
Other liabilities, noncurrent | 2,183 |
| | 9,412 |
|
Total liabilities | 575,242 |
| | 584,990 |
|
Commitments and contingencies (Note 15) |
|
| |
|
|
Stockholders’ equity: | | | |
Class A common stock | 1,055 |
| | 901 |
|
Class B common stock | 1,755 |
| | 1,755 |
|
Additional paid-in capital | 2,732,206 |
| | 2,540,921 |
|
Accumulated deficit | (1,377,458 | ) | | (1,284,503 | ) |
Accumulated other comprehensive income | 5,329 |
| | 5,687 |
|
Total Pivotal stockholders’ equity | 1,362,887 |
| | 1,264,761 |
|
Non-controlling interest | 676 |
| | 717 |
|
Total stockholders’ equity | 1,363,563 |
| | 1,265,478 |
|
Total liabilities and stockholders’ equity | $ | 1,938,805 |
| | $ | 1,850,468 |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
Pivotal Software, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| November 1, 2019 | | November 2, 2018 | | November 1, 2019 | | November 2, 2018 |
Revenue: | |
| | |
| | |
| | |
|
Subscription | $ | 139,758 |
|
| $ | 100,775 |
| | $ | 403,604 |
| | $ | 288,390 |
|
Services | 58,521 |
|
| 67,368 |
| | 173,386 |
| | 199,896 |
|
Total revenue | 198,279 |
|
| 168,143 |
| | 576,990 |
| | 488,286 |
|
| | | | | | | |
Cost of revenue: | | | | | | | |
Subscription | 9,649 |
|
| 7,813 |
| | 27,313 |
| | 24,047 |
|
Services | 51,292 |
|
| 53,179 |
| | 154,755 |
| | 157,470 |
|
Total cost of revenue | 60,941 |
|
| 60,992 |
| | 182,068 |
| | 181,517 |
|
| | | | | | | |
Gross Profit | 137,338 |
| | 107,151 |
| | 394,922 |
| | 306,769 |
|
Operating expenses: | | | | | | | |
Sales and marketing | 83,198 |
|
| 70,620 |
| | 247,458 |
| | 210,308 |
|
Research and development | 58,832 |
|
| 51,880 |
| | 173,763 |
| | 143,309 |
|
General and administrative | 30,640 |
|
| 20,546 |
| | 75,342 |
| | 57,979 |
|
Total operating expenses | 172,670 |
| | 143,046 |
| | 496,563 |
| | 411,596 |
|
| | | | | | | |
Loss from operations | (35,332 | ) | | (35,895 | ) | | (101,641 | ) | | (104,827 | ) |
Other income, net | 2,634 |
|
| 1,866 |
| | 10,054 |
| | 2,412 |
|
Loss before provision for income taxes | (32,698 | ) | | (34,029 | ) | | (91,587 | ) | | (102,415 | ) |
Provision for income taxes | 409 |
|
| 776 |
| | 1,409 |
| | 549 |
|
Net loss | (33,107 | ) | | (34,805 | ) | | (92,996 | ) | | (102,964 | ) |
Less: Net loss (income) attributable to non-controlling interest | 4 |
|
| (45 | ) | | 41 |
| | (8 | ) |
Net loss attributable to Pivotal | $ | (33,103 | ) | | $ | (34,850 | ) | | $ | (92,955 | ) | | $ | (102,972 | ) |
| | | | | | | |
Net loss per share attributable to common stockholders, basic and diluted | $ | (0.12 | ) | | $ | (0.13 | ) | | $ | (0.34 | ) | | $ | (0.50 | ) |
| | | | | | | |
Weighted average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 277,567 |
| | 258,408 |
| | 272,935 |
| | 207,072 |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
Pivotal Software, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| November 1, 2019 | | November 2, 2018 | | November 1, 2019 | | November 2, 2018 |
Net loss | $ | (33,107 | ) | | $ | (34,805 | ) | | $ | (92,996 | ) | | $ | (102,964 | ) |
Foreign currency translation adjustments | (92 | ) | | (194 | ) | | (358 | ) | | (28 | ) |
Comprehensive loss | (33,199 | ) | | (34,999 | ) | | (93,354 | ) | | (102,992 | ) |
Less: Net loss (income) attributable to the non-controlling interest | 4 |
| | (45 | ) | | 41 |
| | (8 | ) |
Comprehensive loss attributable to Pivotal | $ | (33,195 | ) | | $ | (35,044 | ) | | $ | (93,313 | ) | | $ | (103,000 | ) |
The accompanying notes are an integral part of the condensed consolidated financial statements.
Pivotal Software, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
| | | | | | | |
| Nine Months Ended |
| November 1, 2019 | | November 2, 2018 |
Cash flows from operating activities: | |
| | |
|
Net loss | $ | (92,996 | ) | | $ | (102,964 | ) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | | | |
Depreciation and amortization of intangible assets | 12,743 |
| | 13,824 |
|
Amortization of lease right-of-use assets and other expense | 22,946 |
| | — |
|
Stock-based compensation expense | 73,561 |
| | 49,233 |
|
Provision for doubtful accounts | 612 |
| | 2,361 |
|
Deferred income taxes | (57 | ) | | (147 | ) |
Gain on sale of investment | (746 | ) | | (3,234 | ) |
Other | 326 |
| | 1,491 |
|
Changes in assets and liabilities | | | |
Accounts receivable | 151,221 |
| | 43,895 |
|
Due from Parent | (1,076 | ) | | 37 |
|
Deferred sales commissions | 4,780 |
| | 6,697 |
|
Other assets | (1,553 | ) | | (2,758 | ) |
Accounts payable | (2,851 | ) | | (2,041 | ) |
Due to Parent | (5,584 | ) | | (3,337 | ) |
Deferred revenue | (129,804 | ) | | (10,189 | ) |
Accrued expenses | (9,442 | ) | | (16,186 | ) |
Operating lease liabilities | (23,080 | ) | | — |
|
Other liabilities | 6,039 |
| | 9,970 |
|
Net cash provided by (used in) operating activities | 5,039 |
|
| (13,348 | ) |
| | | |
Cash flows from investing activities: | | | |
Additions to property, plant and equipment | (7,222 | ) | | (6,929 | ) |
Proceeds from sale of investment | 1,929 |
| | 3,234 |
|
Net cash used in investing activities | (5,293 | ) |
| (3,695 | ) |
| | | |
Cash flows from financing activities: | | | |
Proceeds from the initial public offering, net of issuance costs paid | — |
| | 544,674 |
|
Proceeds from the issuance of common stock | 85,172 |
| | 41,852 |
|
Proceeds from employee stock plans | 8,967 |
| | — |
|
Contribution from Dell | 26,500 |
| | 41,277 |
|
Borrowings on credit facility | — |
| | 15,000 |
|
Repayments on credit facility | — |
| | (35,000 | ) |
Net cash provided by financing activities | 120,639 |
|
| 607,803 |
|
Effect of exchange rate changes on cash and cash equivalents | (179 | ) | | 1,032 |
|
Net increase in cash and cash equivalents | 120,206 |
| | 591,792 |
|
Cash and cash equivalents at beginning of period | 701,733 |
| | 73,012 |
|
Cash and cash equivalents at end of period | $ | 821,939 |
| | $ | 664,804 |
|
| | | |
Supplemental disclosure of non-cash operating: | | | |
Operating right-of-use assets obtained in exchange for lease liabilities | 8,105 |
| | — |
|
Supplemental disclosure of non-cash financing | | | |
Amounts owing to Dell included in Due to Parent | (1,800 | ) | | — |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
Pivotal Software, Inc.
Condensed Consolidated Statement of Stockholders’ Equity
(in thousands)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Class A Common Stock | | Class B Common Stock | | Additional paid-in capital | | Accumulated deficit | | Accumulated other comprehensive income | | Non- controlling interest | | Total stockholders’ equity |
| | Shares | | Par value | | Shares | | Par value | | | | | |
Balances at February 1, 2019 | | 90,124 | | $ | 901 |
| | 175,514 | | $ | 1,755 |
| | $ | 2,540,921 |
| | $ | (1,284,503 | ) | | $ | 5,687 |
| | $ | 717 |
| | $ | 1,265,478 |
|
Stock-based compensation (Pivotal equity) | | | | | | | | | | 21,707 |
| | | | | | | | 21,707 |
|
Issuance of common stock under employee equity plans | | 4,159 |
| | 42 |
| | | | | | 29,972 |
| | | | | | | | 30,014 |
|
Vested restricted stock units | | 2,018 |
| | 20 |
| | | | | | (20 | ) | | | | | | | | — |
|
Investment from Dell, net | | | | | | | | | | 26,730 |
| | | | | | | | 26,730 |
|
Investment from VMware | | | | | | | | | | 33 |
| | | | | | | | 33 |
|
Translation adjustment | | | | | | | | | | | | | | (192 | ) | | | | (192 | ) |
Net Loss | | | | | | | | | | | | (31,737 | ) | | | | (46 | ) | | (31,783 | ) |
Balances at May 3, 2019 | | 96,301 | | $ | 963 |
| | 175,514 | | $ | 1,755 |
| | $ | 2,619,343 |
| | $ | (1,316,240 | ) | | $ | 5,495 |
| | $ | 671 |
| | $ | 1,311,987 |
|
Stock-based compensation (Pivotal equity) | | | | | | | | | | 25,166 |
| | | | | | | | 25,166 |
|
Issuance of common stock under employee equity plans | | 1,793 |
| | 18 |
| | | | | | 14,852 |
| | | | | | | | 14,870 |
|
Vested restricted stock units | | 539 |
| | 5 |
| | | | | | (5 | ) | | | | | | | | — |
|
Investment from Dell, net | | | | | | | | | | 690 |
| | | | | | | | 690 |
|
Investment from VMware | | | | | | | | | | (34 | ) | | | | | | | | (34 | ) |
Translation adjustment | | | | | | | | | | | | | | (74 | ) | | | | (74 | ) |
Net Loss | | | | | | | | | | | | (28,115 | ) | | | | 9 |
| | (28,106 | ) |
Balances at August 2, 2019 | | 98,633 | | $ | 986 |
| | 175,514 | | $ | 1,755 |
| | $ | 2,660,012 |
| | $ | (1,344,355 | ) | | $ | 5,421 |
| | $ | 680 |
| | $ | 1,324,499 |
|
Stock-based compensation (Pivotal equity) | | | | | | | | | | 26,047 | | | | | | | | 26,047 |
|
Issuance of common stock under employee equity plans | | 6,276 | | 63 | | | | | | 48,637 | | | | | | | | 48,700 |
|
Vested restricted stock units | | 629 | | 6 | | | | | | (6) | | | | | | | | — |
|
Investment from Dell, net | | | | | | | | | | (2,484) | | | | | | | | (2,484 | ) |
Translation adjustment | | | | | | | | | | | | | | (92 | ) | | | | (92 | ) |
Net Loss | | | | | | | | | | | | (33,103 | ) | | | | (4 | ) | | (33,107 | ) |
Balances at November 1, 2019 | | 105,538 | | $ | 1,055 |
| | 175,514 | | $ | 1,755 |
| | $ | 2,732,206 |
| | $ | (1,377,458 | ) | | $ | 5,329 |
| | $ | 676 |
| | $ | 1,363,563 |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
Pivotal Software, Inc.
Condensed Consolidated Statement of Redeemable Convertible Preferred Stock and Stockholders’ Equity
(in thousands)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Redeemable Convertible Preferred Stock | | | Class A Common Stock | | Class B Common Stock | | Additional paid-in capital | | Accumulated deficit | | Accumulated other comprehensive income | | Non- controlling interest | | Total stockholders’ equity |
| Shares | | Amount | | | Shares | | Par value | | Shares | | Par value | | | | | |
Balances at February 2, 2018 | 147,879 | | $ | 1,248,327 |
| | | 4,293 | | $ | 43 |
| | 65,048 | | $ | 650 |
| | $ | 595,113 |
| | $ | (1,142,600 | ) | | $ | 5,554 |
| | $ | 712 |
| | $ | (540,528 | ) |
Stock-based compensation (Pivotal equity) | | | | | | | | | | | | | | 10,526 |
| | | | | | | | 10,526 |
|
Issuance of common stock under employee equity plans | | | | | | 1,087 | | 11 |
| | | | | | 6,599 |
| | | | | | | | 6,610 |
|
Conversion of preferred stock to common stock | (147,879) | | (1,248,327 | ) | | | 37,412 | | 374 |
| | 110,466 | | 1,105 |
| | 1,246,848 |
| | | | | | | | 1,248,327 |
|
Initial public offering, net of issuance costs | | | | | | 38,667 | | 387 |
| | | | | | 544,034 |
| | | | | | | | 544,421 |
|
Investment from Dell, net | | | | | | | | | | | | | | 11,662 |
| | | | | | | | 11,662 |
|
Investment from VMware | | | | | | | | | | | | | | (51 | ) | | | | | | | | (51 | ) |
Translation adjustment | | | | | | | | | | | | | | | | | | 161 |
| | | | 161 |
|
Net Loss | | | | | | | | | | | | | | | | (32,515 | ) | | | | (42 | ) | | (32,557 | ) |
Balances at May 4, 2018 | — |
| | $ | — |
| | | 81,459 | | $ | 815 |
| | 175,514 | | $ | 1,755 |
| | $ | 2,414,731 |
| | $ | (1,175,115 | ) | | $ | 5,715 |
| | $ | 670 |
| | $ | 1,248,571 |
|
Stock-based compensation (Pivotal equity) | | | | | | | | | | | | | | 18,747 |
| | | | | | | | 18,747 |
|
Issuance of common stock under employee equity plans | | | | | | 400 | | 4 |
| | | | | | 2,810 |
| | | | | | | | 2,814 |
|
Investment from Dell, net | | | | | | | | | | | | | | 255 |
| | | | | | | | 255 |
|
Investment from VMware | | | | | | | | | | | | | | 25 |
| | | | | | | | 25 |
|
Translation adjustment | | | | | | | | | | | | | | | | | | 5 |
| | | | 5 |
|
Net Loss | | | | | | | | | | | | | | | | (35,607 | ) | | | | 5 |
| | (35,602 | ) |
Balances at August 3, 2018 | — |
| | $ | — |
| | | 81,859 |
| | $ | 819 |
| | 175,514 |
| | $ | 1,755 |
| | $ | 2,436,568 |
| | $ | (1,210,722 | ) | | $ | 5,720 |
| | $ | 675 |
| | $ | 1,234,815 |
|
Stock-based compensation (Pivotal equity) | | | | | | | | | | | | | | 19,151 |
| | | | | | | | 19,151 |
|
Issuance of common stock under employee equity plans | | | | | | 4,885 | | 48 |
| | | | | | 32,853 |
| | | | | | | | 32,901 |
|
Investment from Dell, net | | | | | | | | | | | | | | 426 |
| | | | | | | | 426 |
|
Investment from VMware | | | | | | | | | | | | | | 41 |
| | | | | | | | 41 |
|
Translation adjustment | | | | | | | | | | | | | | | | | | (194 | ) | | | | (194 | ) |
Net Loss | | | | | | | | | | | | | | | | (34,850 | ) | | | | 45 |
| | (34,805 | ) |
Balances at November 2, 2018 | — |
| | $ | — |
| | | 86,744 |
| | $ | 867 |
| | 175,514 |
| | $ | 1,755 |
| | $ | 2,489,039 |
| | $ | (1,245,572 | ) | | $ | 5,526 |
| | $ | 720 |
| | $ | 1,252,335 |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
Notes to Condensed Consolidated Financial Statements
(unaudited)
| |
1. | Overview and Basis of Presentation |
Company and Background
Pivotal Software, Inc. and its consolidated subsidiaries (“Pivotal,” “we,” “us,” “our” and the “Company”) provide a leading cloud-native application platform, Pivotal Cloud Foundry (“PCF”), and differentiated services, Pivotal Labs (“Labs”). Our leading software platform and differentiated services enable enterprises to adopt modern software and development methodologies that transform their products and the economics of their business. We help make software development and operations a strategic advantage for our customers to revolutionize the experiences they offer their own customers, drive new sources of revenue and improve the speed and cost of business operations. We were incorporated in the State of Delaware on April 1, 2013.
Reverse Stock Split
In April 2018, the Company’s board of directors and stockholders approved an amendment to the Company’s amended and restated certificate of incorporation effecting a 1-for-2 reverse stock split of the Company’s issued and outstanding shares of common stock and preferred stock. The reverse split was effected on April 6, 2018. The par values of the common stock and redeemable convertible preferred stock were not adjusted as a result of the reverse stock split. All issued and outstanding share and per share amounts included in the accompanying unaudited condensed consolidated financial statements have been adjusted to reflect this reverse stock split for all periods presented.
Fiscal Years
Our fiscal year is the 52- or 53-week period ending on the Friday nearest January 31. Our 2019 fiscal year (“fiscal 2019”) ended on February 1, 2019 and our 2020 fiscal year (“fiscal 2020”) will end on January 31, 2020.
Initial Public Offering
On April 19, 2018, we commenced an initial public offering (“IPO”), which closed on April 24, 2018. As part of the IPO, we issued and sold 38,667,000 shares of Class A common stock, which included 5,550,000 shares sold pursuant to the exercise by the underwriters’ option to purchase additional shares at a public offering price of $15.00 per share. We received net proceeds of $548.1 million from the IPO, after underwriters’ discounts and commissions and before deducting offering costs of approximately $3.7 million. Prior to the completion of the IPO, all shares of Series A and C-1 redeemable convertible preferred stock then outstanding were converted into 110,466,653 shares of Class B common stock on a one-to-one basis and all shares of Series B and C redeemable convertible preferred stock then outstanding were converted into 37,412,396 shares of Class A common stock on a one-to-one basis.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated financial statements include the results of Pivotal Software, Inc. and its wholly-owned and majority-owned subsidiaries. The condensed consolidated balance sheet as of February 1, 2019 included herein was derived from the audited financial statements as of that date. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of our management, the information contained herein reflects all adjustments necessary for a fair statement of Pivotal’s results of operations, financial position and cash flows for the periods presented. All such adjustments are of a normal, recurring nature. The results of operations for the periods presented in this report are not necessarily indicative of results to be expected for the full fiscal year 2020. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended February 1, 2019, filed with the SEC on March 29, 2019.
Our majority-controlling stockholder is Dell Technologies Inc. (“Dell”). VMware, Inc. (“VMware”), which is also a majority-owned subsidiary of Dell, and Dell are collectively referred to as the “Parent” in these notes to the consolidated financial statements. Our results of operations and financial position are consolidated with Dell’s financial statements.
Our financial information includes estimates and allocations of certain corporate functions provided to us by Dell. These estimates and allocations of costs are considered reasonable by our management. Our historical results are not necessarily indicative of what our results of operations, financial position, cash flows or costs and expenses would have been, or will be in future periods, had we transacted with a third party during the periods presented.
Proposed Merger with VMware
On August 22, 2019, Pivotal entered into an Agreement and Plan of Merger (the “Merger Agreement”) with VMware and Raven Transaction Sub, Inc., a Delaware corporation and a wholly owned subsidiary of VMware (“Merger Sub”). The Merger Agreement provides that, subject to certain terms and conditions, Merger Sub will merge with and into Pivotal (the “Merger”), with Pivotal surviving the Merger and becoming a wholly owned subsidiary of VMware.
Pivotal and VMware are both majority-owned subsidiaries of Dell. Based on the amount of outstanding capital stock reported in this report on Form 10-Q, VMware owns approximately 15.7% of Pivotal’s outstanding common stock, consisting entirely of shares of Pivotal’s Class B common stock, par value $0.01. Dell indirectly through VMware and through EMC Equity Assets LLC, a Delaware limited liability company (“EMC”), beneficially owns 100% of the outstanding shares of the Class B common stock, representing approximately 62.4% of Pivotal’s outstanding common stock.
The terms of the Merger Agreement provide that, unless otherwise specified in the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of Pivotal’s Class A common stock will be canceled and automatically converted into the right to receive $15.00 in cash, without interest and subject to deduction for any required withholding tax. The terms of the Merger Agreement also provide that, unless otherwise specified in the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of the Class B common stock will be converted into the right to receive 0.0550 of a share of Class B common stock of VMware.
The Merger and the Merger Agreement have been approved by the boards of directors of each of VMware (acting upon the unanimous recommendation of a special committee of the board of directors of VMware, consisting solely of independent and disinterested directors, authorized to, among other things, negotiate, evaluate and approve or disapprove potential transactions with Pivotal) and Pivotal (acting upon the unanimous recommendation of a special committee of the board of directors of Pivotal (the “Pivotal Special Committee”), consisting solely of independent and disinterested directors authorized to, among other things, negotiate, evaluate and approve or disapprove a potential transaction with VMware).
Completion of the transaction is conditioned on the adoption of the Merger Agreement by the holders of (i) at least a majority of the outstanding shares of the Class A common stock not owned by VMware or any of its affiliates (including Dell and EMC), (ii) at least a majority of the outstanding shares of the Class A common stock, (iii) at least a majority of outstanding shares of the Class B common stock, and (iv) at least a majority of the outstanding shares of the Class A common stock and the Class B common stock, voting together as a single class, which condition is not subject to waiver by Pivotal or VMware.
Completion of the transaction is also subject to other customary closing conditions including (i) the absence of any order, judgment or decree by any governmental entity that prohibits or makes the consummation of the transaction illegal, (ii) subject to certain exceptions, the accuracy of each party’s representations and warranties and (iii) compliance in all material respects by each party with its obligations under the Merger Agreement. The transaction is not subject to a financing condition.
The Merger Agreement contains customary representations and warranties of both Pivotal and VMware. Pivotal has also agreed to customary covenants regarding the operation of Pivotal and its subsidiaries prior to the effective time of the Merger, including covenants not to, during the pendency of the Merger, solicit alternative transactions or, subject to certain exceptions, enter into discussions concerning, or provide confidential information in connection with, an alternative transaction.
The Merger Agreement contains certain customary termination rights for Pivotal and VMware, including a right for either party to terminate the Merger Agreement if the Merger is not completed by February 18, 2020, unless otherwise extended pursuant to the terms of the Merger Agreement. The Merger Agreement further provides that, upon termination of the Merger Agreement under certain specified circumstances, Pivotal will be obligated to pay VMware a termination fee of $95.0 million.
Concurrently with the execution of the Merger Agreement, Ford Motor Company (“Ford”) entered into a voting agreement pursuant to which Ford has agreed, among other things and subject to the terms and conditions set forth therein, to vote its shares of the Class A common stock in favor of the adoption of the Merger Agreement and the transactions contemplated thereby, including the Merger. Until the closing, Pivotal will continue to operate as an independent company.
Pivotal’s definitive proxy statement on Schedule 14A and amended Schedule 13E-3 were filed with the SEC on November 27, 2019. Pivotal has set the close of business on November 4, 2019 as the record date for the special meeting of
stockholders scheduled for December 27, 2019, at which stockholders will vote on, among other things, a proposal to approve and adopt the Merger Agreement.
A description of the material terms of the Merger Agreement can be found in Pivotal’s Current Report on Form 8-K filed with the SEC on August 27, 2019 and Pivotal’s definitive proxy statement on Schedule 14A.
| |
2. | Significant Accounting Policies |
Consolidation
The condensed consolidated financial statements and accompanying notes are prepared in accordance with GAAP and include our accounts and the accounts of our majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation.
Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Estimates are revised as additional information becomes available. In the condensed consolidated statements of operations, estimates are used when accounting for revenue arrangements, including the determination of the standalone selling price of performance obligations, the amortization period of deferred commissions, income taxes and the related valuation allowance and the valuation of common stock options. In the condensed consolidated balance sheets, estimates are used in determining the valuation and recoverability of assets, such as accounts receivable, fixed assets, deferred sales commissions, goodwill and other identifiable intangible assets, and estimates are used in determining the reported amounts of liabilities, including the impact of contingencies and operating lease liabilities, all of which also impact the condensed consolidated statements of operations. Actual results could differ from these estimates.
Significant Accounting Policies
Notwithstanding the addition of the policy below for leases, there were no significant changes to our accounting policies disclosed in “Note 2—Summary of Significant Accounting Policies” of our Annual Report on Form 10-K for the fiscal year ended February 1, 2019.
Leases
We determine if an arrangement is a lease at its inception. Our operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for our operating leases, we generally use an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating right-of-use (“ROU”) assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. We account for lease and non-lease components as a single lease component for all of our operating leases.
Our operating leases are included in operating ROU assets, current operating lease liabilities and noncurrent operating lease liabilities in our condensed consolidated balance sheet. Leases with a term of 12 months or less are not recorded on the condensed consolidated balance sheet.
Variable lease payments, which do not vary based on an index or rate, are excluded from our ROU asset and lease liability determination. Our variable lease payments are typically usage-based and we record them in the period in which the obligation for those payments is incurred. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Recently Adopted Accounting Pronouncement
Leases—In 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires lessees to recognize most lease liabilities on their balance sheets but recognize the lease expense on their statements of operations in a manner similar to current practice. The standard states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The standard is effective for annual and interim periods beginning with our fiscal 2020. We have adopted this standard on the first day of our fiscal year ending January 31, 2020, using a modified retrospective transition method. We elected the transition method discussed in ASU 2018-11 and our reporting for the comparative periods presented in the year of adoption continue to be in accordance with “Leases (Topic 840),” including the associated disclosure requirements. We elected the package of practical expedients permitted under the transition guidance, which, among other things, allows us to carry forward the historical lease classification. We did not elect the practical expedient to use hindsight in determining the lease term and in assessing impairment of right-of-use assets.
The adoption of this standard effective the beginning of our new fiscal year, resulted in the recognition of operating lease assets and liabilities of approximately $136.4 million and $149.1 million, respectively, as of February 2, 2019. The difference between the amounts, represented the deferred rent for leases that existed as of the date of adoption, which was an offset to the opening balance of right-of-use assets. The adoption of the standard on February 2, 2019 did not have a material impact on our condensed consolidated statements of operations, stockholders’ equity and cash flows.
New Accounting Pronouncements to be Adopted
Financial Instruments—Credit Losses—In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 changes the impairment model for most financial assets, and will require the use of an expected loss model in place of the currently used incurred loss method. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. This update to the standard is effective for our interim and annual periods beginning February 1, 2020. The Company is currently evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements.
Intangibles—Goodwill and Other—Internal-Use Software—In August 2018, the FASB issued ASU No. 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update to the standard is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. Entities can choose to adopt the ASU 2018-15 prospectively or retrospectively. This standard is effective for our interim and annual periods beginning February 1, 2020. The Company is currently evaluating the impact of the adoption of ASU 2018-15 on its consolidated financial statements.
| |
3. | Deferred Sales Commissions |
Deferred sales commissions, current and noncurrent, were $70.3 million and $75.1 million as of November 1, 2019 and February 1, 2019, respectively. Amortization expense for deferred commissions costs was $13.6 million and $12.5 million for the three months ended November 1, 2019 and November 2, 2018, respectively, and was $40.2 million and $36.9 million for the nine months ended November 1, 2019 and November 2, 2018, respectively. We amortize the commissions related to sales to new subscription customers, or the expansion of existing subscription customers, over an estimated period of benefit which has been determined to be the expected customer life. We amortize the commissions related to renewals of existing subscription customer contracts over the term of the contracts. Commissions paid for services contracts are amortized over the expected service delivery periods of the services. There were no impairment losses recorded related to the commissions costs capitalized for the periods presented.
| |
4. | Property, Plant and Equipment |
Property, plant and equipment consist of the following (in thousands):
|
| | | | | | | |
| November 1, 2019 | | February 1, 2019 |
Furniture and fixtures | $ | 7,844 |
| | $ | 7,298 |
|
Equipment | 25,313 |
| | 21,471 |
|
Software | 7,700 |
| | 6,900 |
|
Leasehold improvements | 39,683 |
| | 38,171 |
|
Total property, plant and equipment | 80,540 |
| | 73,840 |
|
Accumulated depreciation | (54,373 | ) | | (45,961 | ) |
Property, plant and equipment, net | $ | 26,167 |
| | $ | 27,879 |
|
For both the three months ended November 1, 2019 and November 2, 2018, depreciation expense was $2.8 million, and for the nine months ended November 1, 2019 and November 2, 2018, depreciation expense was $8.6 million and $8.7 million, respectively.
Intangible assets, excluding goodwill, consist of the following (in thousands):
|
| | | | | | | | | | | |
| November 1, 2019 |
| Gross Carrying Amount | | Accumulated Amortization | | Net Book Value |
Purchased technology | $ | 87,573 |
| | $ | (87,560 | ) | | $ | 13 |
|
Trademarks and tradenames | 12,900 |
| | (12,681 | ) | | 219 |
|
Customer relationships and customer lists | 55,800 |
| | (41,536 | ) | | 14,264 |
|
Intangible Assets | $ | 156,273 |
| | $ | (141,777 | ) | | $ | 14,496 |
|
|
| | | | | | | | | | | |
| February 1, 2019 |
| Gross Carrying Amount | | Accumulated Amortization | | Net Book Value |
Purchased technology | $ | 87,573 |
| | $ | (87,420 | ) | | $ | 153 |
|
Trademarks and tradenames | 12,900 |
| | (11,612 | ) | | 1,288 |
|
Customer relationships and customer lists | 55,800 |
| | (38,561 | ) | | 17,239 |
|
Intangible Assets | $ | 156,273 |
| | $ | (137,593 | ) | | $ | 18,680 |
|
For the three months ended November 1, 2019 and November 2, 2018, amortization expense was $1.5 million and $1.6 million, respectively, and for the nine months ended November 1, 2019 and November 2, 2018, amortization expense was $4.2 million and $5.1 million, respectively.
As of November 1, 2019, future expected amortization expense of intangible assets is expected to be as follows (in thousands):
|
| | | | |
Fiscal Year | | Amortization Expense |
Remainder of 2020 | | $ | 1,274 |
|
2021 | | 3,835 |
|
2022 | | 3,111 |
|
2023 | | 2,948 |
|
2024 | | 2,693 |
|
Thereafter | | 635 |
|
6. Leases
We lease certain office spaces which we have classified as operating leases. Most of our leases include one or more options to renew. The exercise of lease renewal options are at our sole discretion and we included all renewals that are reasonably certain at the reporting period end date in the calculation of our ROU assets and liabilities.
Certain of our sublease arrangements include an option to early terminate the lease arrangement. We do not disclose sublease income for periods for which a termination option exists, unless we are reasonably certain it will not be exercised.
Supplemental balance sheet information related to leases were as follows:
|
| |
| November 1, 2019 |
Operating leases: | |
Weighted average remaining lease term (in years) | 6.6 |
Weighted average discount rate (in percentage points) | 6.0 |
The components of lease expense for the periods presented were as follows (in thousands):
|
| | | | | | | |
| Three months ended | | Nine months ended |
| November 1, 2019 | | November 1, 2019 |
Operating lease cost | $ | 7,529 |
| | $ | 22,946 |
|
Short term lease cost (a) | — |
| | — |
|
Variable lease cost | 2,370 |
| | 6,304 |
|
Sublease income | (1,322 | ) | | (5,260 | ) |
Total net lease cost | $ | 8,577 |
| | $ | 23,990 |
|
(a) During the three and nine months ended November 1, 2019, no material short-term leases were capitalized.
Maturities of lease liabilities were as follows (in thousands):
|
| | | |
| November 1, 2019 |
| Operating Leases (a) |
Remainder of 2020 | $ | 9,232 |
|
2021 | 30,738 |
|
2022 | 28,639 |
|
2023 | 24,422 |
|
2024 | 21,181 |
|
2025 and thereafter | 57,814 |
|
Total lease payments | 172,026 |
|
Less: Imputed interest | (33,150 | ) |
Present value of lease liabilities | $ | 138,876 |
|
(a) Operating lease payments exclude $16.6 million of legally binding minimum lease payments for leases signed but not yet commenced.
Our future minimum lease commitments as of February 1, 2019, as disclosed in our most recent Annual Report on Form 10-K, represent our undiscounted non-cancelable operating lease arrangements, and have not materially changed since the last Form 10-K filing.
Accrued expenses consist of the following (in thousands):
|
| | | | | | | |
| November 1, 2019 | | February 1, 2019 |
Accrued salaries, commissions and benefits | $ | 31,534 |
| | $ |
|