Pivotal Software closes up 5% following IPO, raised $555 million

Marco Green
April 21, 2018

The company had priced shares at 15.

The company's independence is not complete; Dell Technologies remains the controlling shareholder in the company, but Mee said chairman and CEO Michael Dell is content to let Pivotal operate as a standalone company.

Dell Technologies is expected to hold nearly three-quarters of the stock and because there are two types of share - class A and B, with B having 10 times higher voting power than A - will also possess about 96 per cent of the voting power. Pivotal is set to trade on the New York Stock Exchange under the ticker PVTL, starting Friday.

The long-awaited Pivotal IPO has an implied valuation of $3.8bn if it shifts 37 million shares at that price point. (It's unclear whether Microsoft still has a stake.) General Electric also planned to invest $105 million for a 10 percent share in 2013. GE is selling nearly 3.9 million of its 19.4 million shares in the IPO, according to the filing. The software company is a spinoff from Dell, which acquired data storage giant EMC in 2016. Taking staff and resources from EMC and VMware, EMC's virtualization subsidiary, Pivotal had the goal of helping large enterprise businesses gain access to cloud infrastructure and develop and iterate on software, in particular software that could be used in the cloud, more quickly, efficiently, and productively-much like fast-moving Internet tech companies, from Google and Amazon to small startups.

In 2012, EMC bought Pivotal in an all-cash deal, only to spin it back out in 2013 as a new company called Pivotal Software, with Paul Maritz - an industry legend who had most recently served as the CEO of VMware, an EMC subsidiary - as its chief executive. After an initial spike to $16.58 right after the opening bell, the stock leveled off at around $15.50 for most of the day before closing at $15.73, up about 5 percent.

The S-1 form it filed in March lifted a veil on Pivotal's annual revenues: showing $509m for FY 2017/18; $416m in 16/17; and $280.9m the year before.

In its first iteration, Pivotal Labs was a consulting company that helped customers like Twitter and eBay learn how to organize their engineering teams for peak efficiency. That will especially be true with VMware selling its products, he said.

According to the filing, Pivotal brought in $509.4 million in revenue for its fiscal year ending in February.

The company has yet to turn a profit - its net loss was $163.5 million for fiscal 2018.

Pivotal's IPO comes as a number of other enterprise technology companies go public, a change from the relatively slow drip over the past few years. Dropbox (March 23) and Zuora (April 12) are the others. The other side of the business is in selling Pivotal Cloud Foundry, Pivotal Big Data Suite, and other software.

David Holley is Xconomy's national correspondent based in Austin, TX.

Pivotal is hoping the public markets are a good fit and that it can use its proceeds from the IPO for general corporate purposes, such as growth of its business.

Other reports by Click Lancashire

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