Pivotal Software, Inc.: Initiation of Research Coverage

Tuesday, May 15, 2018

William Blair & Company initiated research coverage of Pivotal Software, Inc. (PVTL $18.98), a leading cloud-native application platform provider. Analyst Bhavan Suri estimates the company can generate subscription revenue growth of 40% for fiscal 2019, 38% for fiscal 2020, and 35% for fiscal 2021, and sees a clear path to non-GAAP profitability by fiscal 2021.

“Pivotal’s core offering, called Pivotal Cloud Foundry, significantly reduces the complexity of building, deploying, and managing cloud applications by abstracting the middleware layer of the IT stack and providing preconfigured application frameworks,” Suri said. “This drives tangible benefits for customers, including meaningful increases in software quality, developer productivity, time to market, and IT operations efficiency. The application platform market is expected to grow from $13.9 billion in 2017 to $17.9 billion in 2021, implying that Pivotal has only about 2% market penetration. Our research indicates that Pivotal has a multifaceted moat, giving it strong prospects for emerging as a long-term share winner.”

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William Blair or an affiliate was a manager or co-manager of a public offering of equity securities of Pivotal Software, Inc. within the prior 12 months.

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William Blair or an affiliate received compensation for investment banking services or non-investment-banking services from Pivotal Software, Inc. within the last 12 months. Pivotal Software, Inc. is or was, within the last 12 months, an investment banking client of William Blair & Company and/or one or more of its affiliates.

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Current Ratings Distribution (as of 5/14/18)

Coverage Universe
Outperform (Buy): 65%
Market Perform (Hold): 33%
Underperform (Sell): 1%

Inv. Banking Relationships*
Outperform (Buy): 20%
Market Perform (Hold): 10%
Underperform (Sell): 0%

* Percentage of companies in each rating category that are investment banking clients, defined as companies for which William Blair has received compensation for investment banking services within the past 12 months.

The compensation of the research analyst is based on a variety of factors, including the quality and accuracy of research, client feedback, contributions to other firm departments, competitive factors, and firm profitability.

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