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Pivotal Software (PVTL) Q4 Loss Narrows, Revenues Up Y/Y

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Pivotal Software (PVTL - Free Report) reported fourth-quarter fiscal 2019 non-GAAP loss of 7 cents per share, much narrower than the year-ago quarter’s loss of 12 cents. The figure was also narrower than the Zacks Consensus Estimate of loss of 9 cents.

Revenues of $169.2 million increased 27% on a year-over-year basis, primarily driven by higher subscription revenues. The figure missed the Zacks Consensus Estimate of $170 million.

Pivotal Software, Inc. Price, Consensus and EPS Surprise

Pivotal Software, Inc. Price, Consensus and EPS Surprise | Pivotal Software, Inc. Quote


Quarter Details

Subscription revenues (66.5% of total revenues) were $112.5 million, up 50% year over year due to an increase in the number of customers and growth in service adoption. Services revenues (33.5% of total revenues) declined 2.6% year over year to $56.7 million as a few projects were moved out of the reported quarter.

Subscription customers grew 18% year over year to 377. The company added nine net new customers in the quarter and 58 in fiscal 2019 up 32% year over year.

Notably, Pivotal stated that about 33% of its customers are Fortune 100 companies.

In the reported quarter, company also added a few Fortune 500 customers including HSBC, British Telecom, Prime Therapeutics and CVS Health Corporation (CVS - Free Report) .

Dollar-based net expansion rate was 149% in fourth-quarter fiscal 2019. During the quarter, the company released updates to Pivotal Application Service (PAS) and Pivotal Container Service (PKS).

Notably, the latest release, PKS 1.3 provided the latest Kubernetes support to Microsoft (MSFT - Free Report) Azure. The company noted that currently it has more than 100 customers who are using PKS.

Pivotal’s exclusive solutions are helping it retain and attract customers per management. This is evident from the fact that the company closed 55 software deals worth more than $1 million and 15 deals worth more than $10 million in fiscal 2019.

Operating Details

In fourth-quarter fiscal 2019, non-GAAP gross profit surged 45.7% year over year to $114.9 million. Gross margin expanded 870 basis points (bps) to 67.9% owing to growth in subscription revenues.

Non-GAAP sales & marketing (S&M) expenses increased 19.3% year over year to $69.3 million. Non-GAAP general & administrative (G&A) expenses increased 17.3% to $19 million. Non-GAAP research & development (R&D) expenses increased 22.6% to $47.4 million.

Non-GAAP operating expenses increased 20.1% year over year to $135.7 million.

Non-GAAP operating loss of $20.8 million was narrower than the year-ago quarter’s loss of $34 million.

Balance Sheet

Pivotal exited the quarter with cash and cash equivalents of $ 701.7 million compared with $664.8 million as of Nov 2, 2018.

Cash flow from operations was $7.9 million in the reported quarter. Cash used in operations was $36.2 million in third-quarter 2019 .

Guidance

First-Quarter Fiscal 2020

Subscription revenues are anticipated between $124.5 and $125.5 million. Total revenues are anticipated between $183 and $185 million.

Non-GAAP loss from operations is expected between $12.5 million and $13.5 million. Non-GAAP net loss is expected between 5 cents and 6 cents per share.

Fiscal 2020

Subscription revenues are anticipated between $542 and $547 million. Total revenues are anticipated in the range of $798-$806 million.

Non-GAAP loss from operations is expected between $36 million and $38 million. Non-GAAP net loss is expected to be in the range of 13 cents to 15 cents per share.

Pivotal stated that it will continue to work with VMware (VMW - Free Report) to increase adoption of PKS.

Currently, Pivotal Software carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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