Pivotal Software Financial Report Summaries

Risks

• We have a limited operating history as an independent company, which makes it difficult to evaluate our prospects and increases the risk of your investment.
• We have incurred substantial losses and may not be able to generate sufficient revenue to achieve and sustain profitability.
• Our future success depends in large part on the growth of our target markets. Even if our target markets grow as expected, our ability to further penetrate these markets is uncertain.
• Our future growth is largely dependent on PCF and platform-related services, and challenges in market acceptance, adoption and growth of PCF could harm our business, results of operations and prospects.
• Our subscription revenue growth rate, both in absolute terms and relative to total revenue, in recent periods may not be indicative of our future performance and ability to grow. Similarly, our services revenue growth rate has fluctuated in recent periods, may continue to fluctuate and will likely decline over the long term as we scale our PCF business.
• Our business and prospects will be harmed if our customers do not renew their subscriptions and expand their use of our platform.
• We operate in a highly competitive industry. Any failure to compete effectively could materially and adversely affect our business, results of operations and financial condition.
• Our sales cycles can be long, unpredictable and vary seasonally, which can cause significant variation in the number and size of transactions that close in a particular quarter.
• We do not control and may be unable to predict the future course of open-source technologies, including those used in our offering, which could reduce the market appeal of our offering and damage our reputation.
• Security and privacy breaches could expose us to liability, damage our reputation, compromise our ability to conduct business, require us to incur significant costs or otherwise adversely affect our financial results.
• Critical vulnerabilities and security defects could harm the market perception of our products or services.
• If we do not effectively hire, train, retain and oversee our sales force, we may be unable to add new customers or increase sales to our existing customers, and our business may be adversely affected.
• Our future growth depends in large part on the success of our partner relationships.
• We may not be able to respond to rapid technological changes with new offerings, which could have a material adverse effect on our sales and profitability.
• Our stock price and trading volume are heavily influenced by the way analysts and investors interpret our financial information and other disclosures. Any unfavorable interpretations published by analysts or held by investors could have a negative impact on our stock price, regardless of accuracy, and any decline or lapse in the publication of research by analysts could cause our stock price and trading volume to decline.
• The loss of one or more members of our senior management team or an inability to attract and retain highly skilled employees, for which competition is intense, could adversely affect our planned growth.
• Failure to manage our growth and maintain our corporate culture will harm our business.
• Incorrect or improper implementation or use of our software or inability of our platform to integrate with third-party software or hardware could result in customer dissatisfaction and negatively affect our business, operations, financial results and growth prospects.
• The reliability of our platform will continue to be critical to our success. Sustained errors, failures or outages could lead to significant costs and service disruptions, which could negatively affect our business, financial results and reputation.
• Adverse economic conditions or reduced information technology spending may adversely impact our revenues.
• We do not have an adequate history with our subscription or pricing models to accurately predict the long-term rate of customer adoption or renewal, or the impact these will have on our revenue or operating results.
• We generate revenue from sales outside of the United States, and we are therefore subject to a number of risks associated with international sales and operations. Challenges presented by international economic, political, legal, accounting and business factors could negatively affect our business, financial condition or results of operations.
• We are exposed to fluctuations in currency exchange rates, which could negatively affect our results of operations.
• Due to the global nature of our business, we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act or similar anti-bribery laws in other jurisdictions in which we operate, and various international trade and export laws.
• Our sales to government entities and highly regulated organizations are subject to a number of challenges and risks.
• Because we recognize subscription revenue over the terms of our contracts, fluctuations in new transactions will not be immediately reflected in our operating results and may be difficult to discern. Professional services revenue may fluctuate significantly from period to period.
• If our goodwill or amortizable intangible assets become impaired, we may be required to record a significant charge to earnings.
• We may acquire other businesses which could require significant management attention, disrupt our business, dilute stockholder value and adversely affect our results of operations.
• We rely on third-party proprietary and open-source software for our offerings, and our inability to obtain third-party licenses for such software, or obtain them on favorable terms, or any errors or failures caused by such software could adversely affect our business, results of operations and financial condition.
• Our use of open-source software could subject us to possible litigation or cause us to subject our platform to unwanted open-source license conditions that could negatively impact our sales.
• We are subject to governmental export and import controls that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws.
• If we are unable to protect our intellectual property rights, our competitive position could be harmed or we could be required to incur significant expenses to enforce our rights.
• Claims by others that we or our customers, whose software applications we helped to create, infringe the proprietary technology of such other persons could force us to pay damages or prevent us from using certain technology in our products.
• Our business could be materially adversely affected as a result of war, acts of terrorism, natural disasters or climate change.
• Investments made in our growth may not achieve the expected associated benefits on a timely basis or at all.
• We are implementing several new systems and process improvements as part of our increased independence from Dell. If these new systems or processes prove ineffective or inadequate, or if we fail to successfully implement them, our business and results of operations may suffer.
• We may require additional financing in the future and may not be able to obtain such financing on favorable terms, if at all, which could slow or stop our ability to grow or otherwise harm our business.
• Our future quarterly results and key metrics may fluctuate significantly and may be difficult to predict, and if we fail to meet the expectations of analysts or investors, our stock price and the value of your investment could decline substantially.
• We realigned our fiscal calendar to coincide with Dell’s fiscal calendar. This realignment could adversely impact our business and results of operations.
• Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.
• Holders of our Class A common stock have limited ability to influence matters requiring stockholder approval.
• Dell has the ability to prevent a change in control transaction and may sell control of Pivotal without benefiting other stockholders.
• Dell’s ability to control our board of directors may make it difficult for us to recruit independent directors.
• We engage in related party transactions with Dell and/or VMware that may divert our resources, create opportunity costs and prove to be unsuccessful.
• Dell and VMware may compete with us, which could reduce our market share.
• Conflicts of interest may arise because some of our directors and officers own stock or other equity interests in Dell or VMware and hold management positions with Dell or VMware.
• Our inability to resolve in a manner favorable to us any potential conflicts or disputes that arise between us and Dell or its subsidiaries with respect to our past and ongoing relationships may adversely affect our business and prospects.
• We utilize our contractual arrangements with our strategic partners to facilitate and expedite a significant portion of our revenue.
• Our stock price could be impacted by the reported results and other statements of Dell.
• Third parties may seek to hold us responsible for liabilities of Dell or VMware, which could result in a decrease in our income.
• Dell or VMware’s competitive position in certain markets may constrain our ability to build and maintain partnerships.
• To preserve Dell’s ability to conduct a tax-free distribution of the shares of our Class B common stock that it beneficially owns, we may be prevented from pursuing opportunities to raise capital, acquire other companies or undertake other transactions, which could hurt our ability to grow.
• Our net operating loss carryforwards and other tax assets prior to our initial public offering are generally unavailable for our use.
• We could be held liable for the tax liabilities of other members of Dell’s consolidated tax group.
• An active trading market for our Class A common stock may not continue or be sustained.
• We are involved in numerous class action lawsuits and other litigation matters that are expensive and time consuming, and, if resolved adversely, could harm our business, financial condition, or results of operations.
• Future sales and issuances of our common stock or rights to purchase common stock could result in additional dilution to our stockholders and could cause the price of our Class A common stock to decline.
• The difference in the voting rights of our classes of capital stock may harm the value and liquidity of our Class A common stock.
• The dual class structure of our common stock may adversely affect the trading price of our Class A common stock.
• We do not expect to pay any cash dividends for the foreseeable future. Investors may never obtain a return on their investment.
• Delaware law and our amended and restated certificate of incorporation and bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders may consider favorable.
• Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
• The announcement and pendency of our proposed merger with VMware could adversely affect our business, financial results and operations.
• Failure to complete the proposed merger could adversely affect our business and the market price of our common stock.
• We are subject to litigation related to the proposed merger.