Pivotal Software Inc. (NYSE: PVTL) reported a narrower loss in the second quarter of 2020 helped by a 17% growth in the total revenues. The results exceeded analysts’ expectations.
Net loss was $28.1 million or $0.10 per share, narrower than a loss of $35.6 million or $0.14 per share in the prior-year quarter. The adjusted per-share results swung to breakeven from a loss of $0.06 a year ago.
Total revenue increased by 17% to $193 million and subscription revenue climbed by 38% to $135 million. The growths were driven by customer expansions and new customer wins.
Given the announcement made on August 22, 2019, regarding Pivotal agreed to be acquired by VMware (NYSE: VMW), Pivotal will not provide a financial outlook for its third quarter or for fiscal 2020. Pivotal will no longer be hosting a conference call to discuss second-quarter fiscal 2020 financial results.
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.
It is expected that the new customers are waiting for the acquisition to be completed so that they can sign up with new owners for the subscriptions. The future results are likely to be impacted by the ability to attract new customers, retain existing customers, and expand their use of its platform.
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.