Pivotal Reports Record Quarter with 102 Percent Year over Year Revenue Growth

Pivotal Corporation (Nasdaq: PVTL) ('Pivotal'), The eBusiness Relationship Company™, a leading provider of eBusiness relationship management (eBRM) solutions, today announced financial results for its second fiscal quarter ended December 31, 1999.


Vancouver, Canada, January 20, 2000 — Pivotal Corporation (Nasdaq: PVTL) ('Pivotal'), The eBusiness Relationship Company™, a leading provider of eBusiness relationship management (eBRM) solutions, today announced financial results for its second fiscal quarter ended December 31, 1999.

Net revenue for the second quarter of fiscal 2000 increased 102 percent to $11.5 million compared to $5.7 million in the second quarter of fiscal 1999. Revenues from licenses increased 86 percent to $8.0 million in the second quarter of fiscal 2000 compared to sales of $4.3 million in the second quarter of fiscal 1999. Revenues from services and maintenance increased 153 percent to $3.5 million in the second quarter of fiscal 2000, compared to $1.4 million in the second quarter of fiscal 1999.

Net loss for the second quarter of fiscal 2000 was $164,000, or $0.01 per share, compared to a net loss of $643,000, or $0.04 per share, in the second quarter of fiscal 1999. All per share amounts are computed on a pro forma basic basis which assumes conversion of the convertible preferred stock from the original date of issuance.

Revenues for the six-month period ended December 31, 1999 were $20.2 million compared with $10.3 million for the same period last year, an increase of 97 percent. Net loss was $850,000 or $0.04 per share, compared with net loss of $1.5 million or $0.10 per share for the first six months of fiscal 1999, decreases of 43 and 60 percent, respectively. Software license revenues for the first half of fiscal 2000 grew 86 percent over the same period last year, while service revenues grew 127 percent.

The company's user base surpassed 100,000 users this quarter and its customer base expanded to more than 710 customers with the signing of 91 new customers spanning diverse industries and geographic markets. New customers include Ericsson, CornerDrugstore.com, Deloitte & Touche, Splitrock Services, Trader.com, Pfizer, Medpool.com, NEC, Viewlocity.com, Timber Products, Mikohn Gaming, Idiom, Cyclone Commerce, Meridian Energy, Concur Technologies, and Pacific Life Insurance Company.

"Our second quarter as a public company has resulted in solid financial results and excellent market momentum," said Norm Francis, president and chief executive officer of Pivotal. "Pivotal's quick-to-deploy, scalable Pivotal eRelationship 2 solutions continue to produce a dramatic impact in both traditional business sectors and emerging dot.com companies. The drive to incorporate the Internet into every aspect of the demand-chain, with our all-Web solutions for eCommerce, eMarketing, eSales, and eService, is strategically positioned to maximize this opportunity. Our eBusiness focus continues to experience strong customer demand."

According to Vince Mifsud, CFO and vice-president, operations of Pivotal, "We're pleased to report that Pivotal had strong performance this quarter. Our revenue growth on a percentage basis continued to accelerate, as indicated by our 102 percent year over year revenue growth."


Second Quarter Highlights

TWO PRESTIGIOUS MICROSOFT AWARDS
For the third year in a row Pivotal has won top honors in Microsoft's annual Industry Solutions Awards competition. This year, Pivotal won awards in both categories in which it was selected as a finalist: "Best Internet Solution - Customer Self Service" and "Best Integrated Customer Relationship Management".

PIVOTAL INTRODUCES ERELATIONSHIP 2 AND B2B SYNDICATE
Pivotal introduced, Pivotal eRelationship 2, a highly scalable, comprehensive Web solution for 360° eBusiness relationship management, the dynamic process of engaging customers, business partners, and employees in personalized eMarketing, eSales, eCommerce, and eService relationships over the Internet. Pivotal eRelationship 2 is comprised of three integrated Web Applications - CustomerHub, PartnerHub, and IntraHub, designed specifically for the customers, business partners and employees of B2B organizations.

The Pivotal B2B Syndicate™, is a select group of companies that provide real-time content, applications and services to users of Pivotal's eRelationship 2.

FIRST WIRELESS SOLUTION FOR EBUSINESS RELATIONSHIP MANAGEMENT
Pivotal announced Pivotal Anywhere which provides wireless access to Pivotal eBRM solutions. The solution operates on the BlackBerry™ wireless device from Research In Motion Limited. Pivotal Anywhere meets the increasing demand among business users for live access to corporate and Internet information while disconnected from the corporate network.

PIVOTAL SELECTED FOR MICROSOFT/CISCO APPLICATION HOSTING PROGRAM
Pivotal announced that Pivotal eRelationship 2 solutions have been selected by Microsoft and Cisco for their Internet application hosting program. The program provides end-to-end solutions for Application Service Providers (ASPs). This collaborative initiative will provide ASPs with a first-rate hosted solution based on Pivotal's award-winning eBRM technology.

EUROPEAN EXPANSION AND ACQUISITION OF FRENCH-BASED TRANSITIF
On December 6, 1999, Pivotal announced the acquisition of Transitif S.A., a leading French distributor of eBRM solutions. The acquisition provides Pivotal with a strengthened presence in France and an ability to directly service the company's rapidly growing French customer base.

To strengthen its presence in the European market, Pivotal appointed additional executives to its European management team. The company appointed Mark Inskipp as vice president, Europe, Mike Antoniades as director of business development, Europe, Middle East and Africa (EMEA) and Mike Carlile as director of sales for the U.K. Pivotal also announced the recent wins of two major European customers-Siemens and Ericsson.

EXPANSION IN NORTH AMERICA CONTINUES
The company continued to extend its presence in North America this quarter by enlarging its first-rate sales force and opening additional offices. Pivotal established new offices in Denver and Minneapolis and expanded its Chicago location.


BONDED GUARANTEE FOR EBRM PROJECTS
Pivotal and Gladwyne Software Surety (GSS), a leader in information technology (IT) risk management services, announced on December 8, 1999, an initiative that provides a third-party guarantee for KPMG implementations of Pivotal solutions. This insurance-backed IT initiative marks a turning point in the software industry by establishing true accountability for IT implementation. The surety bond protects the investment of KPMG/Pivotal customers by guaranteeing that KPMG implementations of Pivotal solutions are on time and on budget.

Financial Statements

This is the cleaned-up text:

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in United States dollars; all amounts in thousands except per share data)
Unaudited

Three months ended December 31, Six months ended December 31,
2000 1999 2000 1999
Revenues:
Licences $ 16,346 $ 8,026 $ 30,114 $ 14,123
Services and maintenance 9,385 3,516 16,675 6,094
Total revenues 25,731 11,542 46,789 20,217
Cost of revenues:
Licenses 979 410 1,845 694
Services and maintenance 4,979 1,813 8,849 3,181
Total cost of revenues 5,958 2,223 10,694 3,875
Gross profit 19,773 9,319 36,095 16,342
Operating expenses:
Sales and marketing 12,914 6,917 24,412 12,632
Research and development 4,509 2,125 8,426 3,694
General and administrative 2,100 968 3,876 1,675
Total operating expenses 19,523 10,010 36,714 18,001
Income (loss) before amortization, other income and taxes 250 (691) (619) (1,659)
Amortization of goodwill (5,405) (32) (10,400) (32)
Loss from operations (5,155) (723) (11,019) (1,691)
Interest and other income 644 685 987 1,042
Loss before income taxes (4,511) (38) (10,032) (649)
Income taxes 170 126 103 201
Net loss $ (4,681) $ (164) $ (10,135) $ (850)
Loss per share :
Basic and diluted $ (0.20) $ (0.01) $ (0.45) $ (0.05)
Pro forma basic and diluted $ (0.04)
Weighted average number of shares used to calculate loss per share:
Basic and diluted 23,002 20,025 22,750 16,859
Pro forma basic and diluted 19,202
Supplemental financial information excluding amortization of goodwill:
Net income (loss) $ 724 $ (132) $ 265 $ (818)
Net income (loss) per share:
Basic and diluted $ 0.03 $ (0.01) $ 0.01 $ (0.05)

CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in United States dollars; all amounts in thousands)

December 31, 2000 September 30, 2000 June 30, 2000
ASSETS (unaudited)
Current assets
Cash and cash equivalents $ 6,744 ###### $ 4,734
Short- term investments 72,307 22,247 30,788
Accounts receivable 24,670 17,622 16,764
Prepaid expenses 3,121 1,931 1,859
Total current assets 106,842 55,715 54,145
Property and equipment, net 8,595 7,720 7,231
Goodwill, intangibles and other assets, net 63,124 55,978 60,569
Total assets $ 178,561 ###### $ 121,945
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 22,100 ###### $ 16,877
Deferred revenue 10,425 10,155 8,971
Total current liabilities 32,525 27,074 25,848
Shareholders' equity 146,036 92,339 96,097
Total liabilities and shareholders' equity $178,561 ###### $121,945

Pivotal Corporation, The eBusiness Relationship Company, enables organizations, globally, to capitalize on the power of the Internet and increase revenue by providing highly scalable, 360° eBusiness relationship management (eBRM) Web, wireless, and hosted solutions for eMarketing, eSales, eCommerce, and eService that engage customers, business partners, and employees in personalized, one to-one relationships. The Pivotal eRelationship 2000 eBRM solution provides personalized, intelligent, self service relationship hubs for customers and business partners integrated with a unified digital workplace for front office employees. Pivotal solutions combine eCommerce, business portal, and customer relationship management capabilities within a flexible, scalable, standards-based architecture ideally suited to the needs of B2B organizations seeking to merge the power of the Internet with traditional business models. The Pivotal eRelationship 2000 solution holds the current eBRM world record for scalability on the Microsoft Windows 2000 business Internet platform, benchmarked at 20,000 concurrent users averaging less than one second in response time. Pivotal solutions are exclusively to optimize the Microsoft Windows 2000 and Windows NT 4.0 operating platforms.

Pivotal solutions are sold in 34 countries and available in English, French, German, Spanish, Portuguese, Swedish, Japanese and Chinese. Pivotal's worldwide customer base comprises over 700 organizations in traditional market sectors and the new digital economy, including KPMG, CornerDrugstore.com, Ericsson, Medpool.com, HarperCollins Publishing, Deutsche Bank, FOSS, Trader.com, Southern Company, Lucent Technologies, NEC, Deloitte & Touche, Principal Financial Group and Red Cross Australia.


Pivotal is a public company traded on the NASDAQ under the symbol "PVTL."

This press release contains forward-looking statements including the anticipated growth of certain markets, Pivotal's plans and expectations for future growth, its ability to maintain leadership in the eBusiness marketplace and the anticipated benefits of relationships with a number of third parties. These statements are based on management's current projections, beliefs and opinions at the date of this press release. Actual results could differ materially from those anticipated in these statements based upon a number of factors including the possible failure of the eBRM and eBusiness markets to grow as anticipated; the possibility of technical difficulties or delay in future product introductions and improvements; product pricing or other initiatives of Pivotal's competitors; and the continued interest, cooperation and performance of important third parties with whom Pivotal has business relationships. Pivotal undertakes no responsibility to update forward-looking statements if circumstances or management's projections, beliefs or opinions change. Jacqueline Voci
Tel: 425.897.6992
Fax: 425.897.8401
Email: jvoci@pivotal.com

Investor Contact
Vince Mifsud
Tel: (604) 904-5303
Email: investor-relations@pivotal.com