Pivotal Software stock crashes despite earnings and guidance beat


Pivotal Software Inc. must be wondering what it did wrong today after seeing its share price plunge by more than 25 percent in after-hours trading.

The stock drop came after beating Wall Street’s estimates on both earnings and guidance in its second quarterly earnings report since going public in April.

The company, which makes software for building cloud computing applications, reported a net loss of 14 cents per share on revenue of $164.4 million for its fiscal second quarter, up 30 percent from a year ago. The loss before certain costs such as stock compensation came in at 6 cents per share. The result beat Wall Street’s expectations of a loss of 9 cents per share on revenue of $158.2 million.

The company added that its subscription revenue, which is viewed as a steadier and more predictable and profitable income stream than traditional software licenses, came in at $97.5 million in the quarter, beating analysts estimates of $93 million.

“Pivotal delivered another strong performance in the second quarter,” Pivotal Chief Executive Rob Mee (pictured) said in a statement. “We remain focused on customer success and winning new customers with our differentiated, multi-cloud platform.”

Pivotal also beat the analysts on guidance, but only just. It said it’s expecting a loss of between 8 and 9 cents per share on revenue of $163 million for the third quarter. Analysts were expecting a loss of 10 cents per share on revenue of $163 million.

It’s not immediately clear why Pivotal’s stock plummeted so far and so fast in the after-hours trading session, but CNBC speculated the most likely reason is that shareholders were simply hoping for much more than what the company actually delivered. Update: On Thursday, shares ended up falling 20 percent.

The price action might also have something to do with the somewhat unusual nature of Pivotal’s stock. The company went public on April 20, raising $497 million in its initial public offering. However, its parent company Dell Technologies Inc. still owns 70 percent of its shares and controls almost 96 percent of its voting power, which is a key caveat that may have helped prompted some of its investors to bail out after guidance only just beat estimates.

Despite today’s beating, Pivotal’s stock is still up around 30 percent since its IPO.

Photo: Pivotal Software

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