Pivotal Software shines in post-IPO earnings report

Pivotal Software Inc. issued an earnings beat Tuesday afternoon in its first report since an April initial public offering that Chief Executive Rob Mee described as “a statement of permanence and independence.”

In an interview ahead of his first conference call with analysts, Mee called the quarterly results a “strong start,” but insisted the company is driven more by building and shipping its software than financial results. Pivotal’s  cloud-focused software helps developers build and manage applications, and Mee said adding the requirements of being a public company to that mission meant “a lot to keep in mind,” but he was seeking to keep a sharp focus.

“We’re really focused on two things: Growth in our subscription revenues and customer base,” Mee said in a telephone interview.

Mee called out a new deal with Dick’s Sporting Goods Inc.  that Pivotal landed in the quarter, as well as an expansion of its deal with West Corp., as examples of Pivotal’s gains. Mee also pointed out that those deals were landed independent from controlling owner Dell Technologies Inc., amid concerns that Pivotal could be too dependent on Dell to help land deals.

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“We are not at all dependent on the Dell Technologies portfolio,” Mee said, adding that the IPO was a “statement of permanence and independence” to customers and the market.

Still, Mee credited some go-to-market partnerships with Dell and another corporate family member, VMware Inc.  , with helping it land certain deals, specifically mentioning a new container service launched in collaboration with VMware and Alphabet Inc.’s  Google in the quarter.

Overall, Pivotal reported a fiscal first-quarter net loss of $32.5 million, or 31 cents a share, on sales of $155.7 million, with revenue rising 28% from the same quarter a year ago and the net loss declining from 76 cents a share. After adjusting for stock-based compensation — which can be a hefty expense in the first quarter after an IPO — Pivotal claimed a loss of 10 cents a share, after reporting adjusted losses of 20 cents a share a year ago. Analysts on average expected adjusted earnings of 13 cents a share on sales of $140.4 million, according to FactSet.

Subscription revenue came in at $90.1 million, up from $53.4 million a year ago, while Pivotal’s other revenue generator, services, actually declined slightly, from $67.8 million to $65.6 million. Pivotal pointed out that it added 20 new subscription customers in the quarter, for a total of 339.

Pivotal projected full-year adjusted losses of 37 cents to 39 cents a share on revenue of $642 million to $649 million, easily beating the average analyst estimate of a loss of 45 cents a share on sales of $622 million, according to FactSet.

Pivotal shares sold for $15 in the IPO and closed at $21.21 Tuesday, growth of more than 41%. Shares initially gained more than 8% in after-hours trading, briefly rising above Pivotal’s high of $22.60, before settling closer to a 5% gain.