Pivotal Software files for IPO

While everyone was looking at Dropbox’s debut, Pivotal Software dropped its IPO filing. 

The enterprise cloud computing company is majority-owned by Dell, which came about after its merger with EMC in 2016. It was spun off from Dell, EMC and VMware in April 2013.

Since then, it raised $1.7 billion in funding from Microsoft, Ford and General Electric.

Here’s how it describes its business:

Pivotal looks to “provide a leading cloud-native platform that makes software development and IT operations a strategic advantage for our customers. Our cloud-native platform, Pivotal Cloud Foundry (‘PCF’), accelerates and streamlines software development by reducing the complexity of building, deploying and operating new cloud-native applications and modernizing legacy applications.”

According to the filing, Pivotal brought in $509.4 million in revenue for its fiscal year ending in February 2018. This compares to $416.3 million in revenue for 2017 and $280.9 million in revenue the year before.

The company is losing a lot of money, however. Losses for fiscal 2018 stood at $163.5 million, better than the negative $232.5 million seen in 2017 and $282.5 million in 2016.

“We have incurred substantial losses and may not be able to generate sufficient revenue to achieve and sustain profitability,” the company warned in the “risk factors” section of its IPO filing.

Pivotal also acknowledges that it faces competition from “legacy application infrastructure and middleware form vendors” like IBM and Oracle. It says it additionally competes with “open-source based offerings supported by vendors” like RedHat. It also faces challenges from SAP Cloud Platform, Amazon Web Services and Microsoft Azure.

Pivotal says it believes it will stand out from the pack because of its security and ease of use. It also says it has strong brand awareness and a good reputation. It says it is innovative, with 118 U.S. patents and 73 pending.

The company says it has filed for a $100 million IPO, but this is just a placeholder that is subject to change.

Morgan Stanley and Goldman Sachs are serving as lead underwriters. Davis Polk and Fenwick & West are serving as counsel.

Pivotal has not yet indicated which ticker symbol or stock exchange it intends to list on. But given the timing of the filing, we should expect the company to debut in April.

The year was off to a slow start for tech IPOs with just Cardlytics and Zscaler debuting, but now we’re seeing a flurry with Dropbox, Spotify, Zuora and Pivotal.

Strong performance of both Dropbox and Zscaler has been seen as a favorable sign for tech IPOs.

 



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