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Pivotal Software (PVTL) Q1 Earnings & Revenues Top Estimates
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Pivotal Software reported first-quarter fiscal 2020 non-GAAP loss of 3 cents per share, much narrower than the year-ago quarter’s loss of 10 cents. The figure was also narrower than the Zacks Consensus Estimate of a loss of 5 cents.
Revenues of $185.7 million increased 19.3% on a year-over-year basis, primarily driven by higher subscription revenues. The figure also beat the Zacks Consensus Estimate of $184 million.
Pivotal Software, Inc. Price, Consensus and EPS Surprise
Subscription revenues (69.4% of total revenues) were $128.9 million, up 43% year over year due to an increase in the number of customers and growth in service adoption. However, Services revenues (30.6% of total revenues) declined 13.3% year over year to $56.9 million as a few projects were moved out of the reported quarter. Also, lower customer engagement levels hurt revenues.
Subscription customers grew 13% year over year to 383. The company added six net new customers in the quarter.
However, Pivotal landed fewer deals in the reported quarter owing to “its sales execution and complex technology landscape that increased sales cycle.” Additionally, a few deals that were supposed to close in the reported quarter were moved into second-quarter fiscal 2020.
Nevertheless, Pivotal closed some of these deals in early fiscal second quarter and the rest are expected to close by the end of it.
Pivotal continues to work with VMware to increase the adoption of Pivotal Container Service (PKS). The company currently has more than 140 PKS customers. This apart, Pivotal is also working with Dell Technologies (DELL - Free Report) to take advantage of Dell’s large customer base and its international presence. This is likely to further improve the adoption of Pivotal’s PKS services.
Additionally, the company noted that PKS became the “best Kubernetes product” for enterprise customers. Moreover, Pivotal benefited from robust performance of telecom, insurance, healthcare, transportation and energy industries.
Further, Pivotal is helping a Fortune 100 financial services company set up an online-banking platform. Notably, the financial services company is employing Pivotal Application Service (PAS) on Amazon’s (AMZN - Free Report) cloud computing platform, AWS.
In the reported quarter, the company was awarded the Digital Transformation Partner of the Year award by Wipro.
Dollar-based net expansion rate was 143% in first-quarter fiscal 2020.
Operating Details
In first-quarter fiscal 2020, non-GAAP gross profit increased 31.2% year over year to $130.4 million. Gross margin expanded 640 basis points (bps) to 70.2% owing to growth in subscription revenues.
Non-GAAP sales & marketing (S&M) expenses increased 14.5% year over year to $74.1 million due to investments in sales capacity. Non-GAAP general & administrative (G&A) expenses increased 28.7% to $18.3 million to support business growth.
Non-GAAP research & development (R&D) expenses increased 19.8% to $49.8 million owing to investments in products and “engineering talent.”
Non-GAAP total operating expenses increased 18% year over year to $142 million.
Non-GAAP operating loss of $11.8 million was narrower than the year-ago quarter’s loss of $21.1 million.
Balance Sheet
Pivotal exited the quarter with cash and cash equivalents of $854.2 million compared with $701.7 million as of Feb 1, 2019.
Cash flow from operations was $122.2 million in the reported quarter compared with $4.5 million in the year-ago quarter.
Guidance
Second-Quarter Fiscal 2020
Subscription revenues are anticipated between $131 and $133 million. Total revenues are anticipated between $185 and $189 million.
Non-GAAP loss from operations is expected between $9 million and $11 million. Non-GAAP net loss is expected between 3 cents and 4 cents per share.
Fiscal 2020
Subscription revenues are anticipated between $530 and $538 million. Total revenues are anticipated in the range of $756-$767 million.
Non-GAAP loss from operations is expected between $44 million and $49 million. Non-GAAP net loss is expected to be in the range of 13 cents to 15 cents per share.
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Pivotal Software (PVTL) Q1 Earnings & Revenues Top Estimates
Pivotal Software reported first-quarter fiscal 2020 non-GAAP loss of 3 cents per share, much narrower than the year-ago quarter’s loss of 10 cents. The figure was also narrower than the Zacks Consensus Estimate of a loss of 5 cents.
Revenues of $185.7 million increased 19.3% on a year-over-year basis, primarily driven by higher subscription revenues. The figure also beat the Zacks Consensus Estimate of $184 million.
Pivotal Software, Inc. Price, Consensus and EPS Surprise
Pivotal Software, Inc. price-consensus-eps-surprise-chart | Pivotal Software, Inc. Quote
Quarter Details
Subscription revenues (69.4% of total revenues) were $128.9 million, up 43% year over year due to an increase in the number of customers and growth in service adoption. However, Services revenues (30.6% of total revenues) declined 13.3% year over year to $56.9 million as a few projects were moved out of the reported quarter. Also, lower customer engagement levels hurt revenues.
Subscription customers grew 13% year over year to 383. The company added six net new customers in the quarter.
However, Pivotal landed fewer deals in the reported quarter owing to “its sales execution and complex technology landscape that increased sales cycle.” Additionally, a few deals that were supposed to close in the reported quarter were moved into second-quarter fiscal 2020.
Nevertheless, Pivotal closed some of these deals in early fiscal second quarter and the rest are expected to close by the end of it.
Pivotal continues to work with VMware to increase the adoption of Pivotal Container Service (PKS). The company currently has more than 140 PKS customers. This apart, Pivotal is also working with Dell Technologies (DELL - Free Report) to take advantage of Dell’s large customer base and its international presence. This is likely to further improve the adoption of Pivotal’s PKS services.
Additionally, the company noted that PKS became the “best Kubernetes product” for enterprise customers. Moreover, Pivotal benefited from robust performance of telecom, insurance, healthcare, transportation and energy industries.
Further, Pivotal is helping a Fortune 100 financial services company set up an online-banking platform. Notably, the financial services company is employing Pivotal Application Service (PAS) on Amazon’s (AMZN - Free Report) cloud computing platform, AWS.
In the reported quarter, the company was awarded the Digital Transformation Partner of the Year award by Wipro.
Dollar-based net expansion rate was 143% in first-quarter fiscal 2020.
Operating Details
In first-quarter fiscal 2020, non-GAAP gross profit increased 31.2% year over year to $130.4 million. Gross margin expanded 640 basis points (bps) to 70.2% owing to growth in subscription revenues.
Non-GAAP sales & marketing (S&M) expenses increased 14.5% year over year to $74.1 million due to investments in sales capacity. Non-GAAP general & administrative (G&A) expenses increased 28.7% to $18.3 million to support business growth.
Non-GAAP research & development (R&D) expenses increased 19.8% to $49.8 million owing to investments in products and “engineering talent.”
Non-GAAP total operating expenses increased 18% year over year to $142 million.
Non-GAAP operating loss of $11.8 million was narrower than the year-ago quarter’s loss of $21.1 million.
Balance Sheet
Pivotal exited the quarter with cash and cash equivalents of $854.2 million compared with $701.7 million as of Feb 1, 2019.
Cash flow from operations was $122.2 million in the reported quarter compared with $4.5 million in the year-ago quarter.
Guidance
Second-Quarter Fiscal 2020
Subscription revenues are anticipated between $131 and $133 million. Total revenues are anticipated between $185 and $189 million.
Non-GAAP loss from operations is expected between $9 million and $11 million. Non-GAAP net loss is expected between 3 cents and 4 cents per share.
Fiscal 2020
Subscription revenues are anticipated between $530 and $538 million. Total revenues are anticipated in the range of $756-$767 million.
Non-GAAP loss from operations is expected between $44 million and $49 million. Non-GAAP net loss is expected to be in the range of 13 cents to 15 cents per share.
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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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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