Pivotal Software began selling public stock shares at $15 apiece April 20 on the New York Stock Exchange, becoming the fourth notable IT player to go public this year. Zscaler (March 16), Dropbox (March 23) and Zuora (April 12) are the others.
San Francisco-based Pivotal, an independent subsidiary that is 95 percent owned by Dell Technologies, didn’t give people a lot of notice, filing its S-1 affidavit with the U.S. Securities and Exchange Commission March 23 but announcing its intentions to go public only two days ago.
Pivotal said it expects to raise approximately $555 million at the $15-a-share price. After an initial spike to $16.58 right after the opening bell, the stock leveled off at around $15.50 for most of the day before closing at $15.73, up about 5 percent.
What Pivotal Does
If you don’t know what Pivotal actually does, or its history, you’re not alone. Fundamentally, Pivotal makes a platform-as-a-service offering called Cloud Foundry that enables companies to modernize their on-site IT systems to become new-generation—and ostensibly more efficient—operations in the cloud. It also sells other software and services.
Business applications must be rewritten to run efficiently on cloud servers. Pivotal sells cloud-based software and services that enable these often-complicated transfer processes, often called “digital transformation.”
Pivotal Cloud Foundry (PCF), the company's core platform, is based on the open-source Cloud Foundry PaaS project. The PaaS market has shifted over the last four years and so has Pivotal, which is why the new Kubernetes and serverless projects—including container-based deployments of microservices—are important to the company and its customers.
Cloud Foundry's origins date back to 2011, when it started as a project inside VMware. Eventually it was spun out into its own company, which was Pivotal. In 2015, the Cloud Foundry Foundation was formed to shepherd the open-source project.
How Cloud Foundry, Docker, Kubertnetes Overlap
While Cloud Foundry works with Docker and Kubernetes, it can run independent of them. The functionalities between them, however, are starting to overlap, as developers can use Cloud Foundry, or pieces of it, to deploy Kubernetes-based container applications.
Pivotal’s lineage is a bit complicated. The company originated in 1989 as Pivotal Labs, was acquired by EMC in March 2012 and refounded, so to speak, as Pivotal Software by Bill Cook, Paul Maritz, Rob Mee and Scott Yara in April 2013. Mee still serves as the CEO.
Maritz, Pivotal’s current board chairman, was a former key player in the development of the Microsoft Windows operating system, served as VMware’s CEO for a couple of years and also was Pivotal’s first CEO under EMC ownership.
Company Seeing Steady Growth
In October 2015, Dell acquired EMC (and thus, VMware and Pivotal, among other entities) for $67 billion in the largest IT-only deal to date. VMware, a separately traded subsidiary of EMC, and Pivotal—which were always aligned in technology thought, culture and process management—have shared a number of development projects during the last five years.
Pivotal’s FY2018 (ending Jan. 31) revenue grew by 22 percent year-over-year to $259 million, driven by a 73 percent jump in subscription revenue. More than 85 percent of the gain was attributable to existing customers, and most of the remaining growth was attributable to new customers. Services revenue decreased by $15.9 million.
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