Pivotal Software goes for a $100 million IPO

Pivotal Software, the arbiter of the open source Cloud Foundry project and one of the many horses in Dell’s stable, has filed for an IPO worth a potential $100 million (£70.4m).

The S-1 filing revealed Pivotal posted overall revenues of $509.4m for fiscal 2018, at an increase of 22.4% from the year before, with subscription revenue exceeding services revenue for the first time at $259m.

The company said it had 319 ‘subscription customers’ – defined as companies who spend at least $50,000 annually – at the end of the 2018 fiscal year, up from 275 compared with end-year 2017. Pivotal added that this increase was deliberately conservative as it was focusing on renewals rather than net additions but expected more of an increase in the coming 12 months.

Despite this, Pivotal has posted increasing losses - $282.7m for fiscal year 2018, compared with $232.9m and $163.5m respectively. Dell Technologies, the entity comprising Dell and EMC following the largest tech deal in history, will retain a controlling stake in Pivotal.

Pivotal has raised approximately $1.7 billion in funding across three rounds. The series A and B, both announced in April 2013, saw a $946m investment led by EMC and VMware – the former acquiring Pivotal Labs in 2012 – and a $105m raise led by General Electric (GE). 2016 saw a $653m series C round with five investors, most notably Ford.

Rumour and conjecture persisted at the start of this year around Dell’s wider plans. The latest theory is around a ‘reverse merger’ with VMware. Dell’s approximately 82% ownership of the virtualisation and end user computing giant forced the company to issue a filing at the beginning of February confirming it was ‘evaluating potential business opportunities’, while VMware for its part put out a statement saying it was ‘not in a position to speculate on the outcome of Dell’s evaluation of potential business opportunities.’

The scope of Pivotal’s filing however should not affect any wider speculation on Dell, according to Dale Peters, research director at TechMarketView. “Pivotal may have a big role to play in helping Dell move into the cloud, but this move is unlikely to be the major component of its wider strategic plans,” wrote Peters. “Rumours of a Pivotal IPO have been circulating for far longer than recent discussions concerning Dell’s future options. We will have to wait a little longer to see what its big move is going to be.”

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