Tech stock to watch: Pivotal Software Inc (NYSE: PVTL)

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Pivotal Software Inc (NYSE: PVTL) stock rose over 0.2% on 5th September, 2019 (as of 11:43 am GMT-4; Source: Google finance) after the company posted decent results for the second quarter of FY 20. Net loss was $28.1 million, narrower than a loss of $35.6 million in the prior-year quarter driven by customer expansions and new customer wins. For the second quarter, subscription customers grew 12% year-over-year to 397. The dollar-based net expansion rate was 139%. The subscription revenue growth rate has slowed compared to the previous year as the company added few new customers and retained lesser existing customers during the quarter. Operating cash flow was negative $58.5 million compared to operating cash flow of $18.4 million in Q2 of last year. Cash and cash equivalents were $808.4 million as of August 2, 2019.

Moreover, the new features added to Pivotal Cloud Foundry (PCF) include Pivotal Application Service (PAS) 2.6 adds new capabilities to make it easier for developers to build, wire and run cloud native applications. The highlights include the ability to deploy a custom sidecar process alongside your application and new integrations with Spinnaker, the leading tool for multi-cloud continuous delivery. Further, Pivotal Container Service (PKS) 1.5 delivers support for Windows .Net on Kubernetes. The alpha version of PAS on Kubernetes improves the developer and operator experience when using Kubernetes. The alpha version of Pivotal Build Service brings developer productivity and operational excellence to containers in Kubernetes

PVTL in the second quarter of FY 20 has reported the adjusted earnings per share of less than 1 cent, beating the analysts’ estimates for the adjusted loss per share of 4 cents. The company had reported the adjusted revenue growth of 17 percent to $193 million in the second quarter of FY 20, beating the analysts’ estimates for revenue of $186.3 million. Subscription revenue was $135.0 million, an increase of 38% year over year. Non-GAAP operating loss was $4.5 million, or 2% of total revenue, compared to a loss of $14.6 million in Q2 of last year.

Meanwhile, Pivotal has agreed to be acquired by VMware therefore PVTL will not provide a financial outlook for its third quarter or for fiscal 2020.

Additionally, the company’s business model focuses on the large and growing market, rapidly growing subscription revenue at scale, and strong customer adoption and expansion. It also includes strategic services to accelerate customer adoption as well as improving gross margins and operating leverage.

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