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Pivotal Reports First Quarter Fiscal Year 2019 Financial Results

June 12, 2018

SAN FRANCISCO--(BUSINESS WIRE)--Jun 12, 2018--Pivotal Software, Inc. (NYSE: PVTL), a leading cloud-native platform provider, today announced financial results for the fiscal 2019 first quarter ended May 4, 2018.

“The first quarter was a strong start to our fiscal year 2019 as we continued to deliver robust growth at scale,” said Rob Mee, CEO of Pivotal Software. “We generated subscription revenue growth of 69% and 28% total revenue growth driven by existing customers expanding their usage of our platform and continued growth in our customer base. Our unique advantage is the combination of our software platform, Pivotal Cloud Foundry ®, and our differentiated strategic services offering, Pivotal Labs. Together our platform and strategic services enable enterprises to modernize their development practices and securely operate their most important applications across multi-cloud environments.”

First Quarter Fiscal Year 2019 Financial Results

Revenue: Subscription revenue was $90.1 million, an increase of 69% year over year. Total revenue was $155.7 million, an increase of 28% year over year.

Operating Loss: GAAP operating loss was $33.5 million, or 22% of total revenue, compared to a loss of $48.4 million in Q1 of last year. Non-GAAP operating loss was $21.0 million, or 14% of total revenue, compared to a loss of $39.5 million year over year.

Net Loss: GAAP net loss was $32.5 million, compared to a loss of $51.5 million year over year. GAAP net loss per share was $0.31, compared to a loss of $0.76 in Q1 of last year. Non-GAAP net loss was $23.3 million, compared to a loss of $42.7 million year over year. Non-GAAP net loss per share was $0.10, compared to a loss of $0.20 in Q1 of last year.

Cash Flow: Operating cash flow for the quarter was $4.5 million compared to a negative operating cash flow of $4.4 million in Q1 of last year.

Cash and cash equivalents were $645.5 million as of May 4, 2018.

Recent Business Highlights

Pivotal added 20 net new subscription customers from Q4 of fiscal 2018 for a total of 339 subscription customers in Q1 Dollar-based net expansion rate was 156% Released Pivotal Cloud Foundry PAS version 2.1 which is designed to deliver a world class experience for .NET developers, support for Windows Server 2016, and Windows native containerization technology Launched Pivotal Container Service (PKS) version 1.0, a joint collaboration among Pivotal, VMware, and Google engineered to deliver secure enterprise-grade Kubernetes

Financial Outlook

For the second quarter of fiscal 2019, Pivotal currently expects:

Subscription revenue of $92 to $93 million Total revenue of $157 to $159 million Non-GAAP loss from operations of $23 to $22 million Non-GAAP net loss per share of 10¢ to 9¢, assuming weighted average shares outstanding of approximately 249 million

For the full fiscal year 2019, Pivotal currently expects:

Subscription revenue of $380 to $384 million Total revenue of $642 to $649 million Non-GAAP loss from operations of $96 to $91 million Non-GAAP net loss per share of 39¢ to 37¢, assuming weighted average shares outstanding of approximately 244 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 on June 12, 2018. 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 brings together its cloud-native platform, developer tools, and unique methodology to help the world’s largest companies transform the way they build software and run their most strategic applications. Pivotal’s products are used by Global 2000 companies and developers to make software development and IT operations a strategic advantage. 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 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), including Pivotal’s prospectus dated April 19, 2018, and filed pursuant to Rule 424(b) under the U.S. Securities Act of 1933, as amended. Additional information will be made available in Pivotal’s quarterly report on Form 10-Q 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.

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