Why Pivotal Software Inc (NYSE: PVTL) stock is going gangbusters today

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Pivotal Software Inc (NYSE: PVTL) stock rose 25.7% on June 13th, 2018 (as of  10:43 AM GMT-4; Source: Google finance) after the company posted better than expected results for the first quarter of FY 19, which is its first report since an April initial public offering. During the first quarter, PVTL saw strong customer momentum, adding new customers such as StubHub, Dick’s Sporting Goods and others in the technology, retail, telecom, supermarket, medical equipment, and mobile gaming sectors. The company also saw strong demand from the existing customers such as West Corp and Garmin who both expanded their usage of PCF.

PVTL in the first quarter of FY 19 has reported the adjusted loss per share of $0.10, beating the analysts’ estimates for the adjusted loss per share of $0.13. The company had reported the adjusted revenue growth of 28 percent to $155.7 million in the first quarter of FY 19, beating the analysts’ estimates for revenue of $140.44 million. Subscription revenue came in at $90.1 million, up from $53.4 million a year ago, while PVTL’s other revenue generator, services, declined slightly, from $67.8 million to $65.6 million. Subscription performance was driven by strong expansion of existing customers, due to the dollar-based net expansion rate of 156%, coupled with 20% growth in the customer base relative to Q1 of last year, ending the quarter with 339 subscription customers. The total gross margin for Q1 was 64%, up 10 points compared to 54% in the year ago period, due to a higher subscription revenue mix combined with slightly higher subscription margins.

PVTL for the second quarter of FY 19, expects Subscription revenue in the range of $92 to $93 million. Total revenue is expected in the range of $157 to $159 million, Non-GAAP loss from operations is expected in the range of $23 to $22 million for Q2 2019. Non-GAAP net loss per share is expected in the range of 10¢ to 9¢, assuming weighted average shares outstanding of approximately 249 million for the second quarter 2019.

PVTL has projected full-year 2019 adjusted losses in the range 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. Further, for FY 19 PVTL expects subscription revenue in the range of $380 to $384 million and Non-GAAP loss from operations in the range of $96 to $91 million.

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