So I know I’m late to the discussion, but I have thoroughly enjoyed the deep dive into Pivotal, and the way this board can analyze a company.
My main question I haven’t seen anyone address is this:
The company is worth $5B. $509M in revenue last year. And all of this with 319 customers?
That would imply at best, $1.5M spend per customer each year if all customers were the same. However, I suspect that most of the 319 customers are not spending anywhere near $1.5M on pivotal. They even promote this on their own website here: https://pivotal.io/hellogbye
HelloGbye is a startup based around a travel app. They have 5 employees. They used Pivotal’s office space as their own. Does anyone think they are spending $1.5M on the pivotal product? They even promote here how affordable their service is: https://run.pivotal.io/pricing/
Sure, they boast “7 of the largest banks, 9 of the largest automakers, 7 of the largest insurers, 8 of the largest retailers, and 9 of the largest Telcos” work with them. But that all combined is 40 customers. How much of that $509M in revenue came from those 40 customers? And last year they averaged 11 new customers per quarter. I know we have been over that, but how many of those 45 new customers are startups like HelloGbye that will never reach the level of Citibank or Liberty Mutual?
One of the reasons I invested in INST was because through this board we found fine print details about their pricing and how much each customer was spending on their service. That investment has been one of the best I have owned the last 8 months. Is there any clarity anywhere on how much the average customer spends with Pivotal, and how much is concentrated in the large customers? And how much they are actually growing customers that are significant to the bottom line and not just startup dreams?
The growth in subscription revenue looks very intriguing, I agree. But if they already had those 40 huge customers, and then they changed their entire business to SaaS-based, it would make total sense for those numbers to grow, they already have large enterprises to spend the money! I’m curious how much they are actually growing customers that add the same value as Citi or LM.
Thanks for the discussion. I’m happy to follow along.