Pivotal Announces Record Fourth Quarter Revenues, Up 118%

Pivotal Corporation (NASDAQ: PVTL), today announced record financial results for its fourth quarter and fiscal year ended June 30, 2000.


Vancouver, Canada, July 13, 2000 — Pivotal Corporation (NASDAQ: PVTL), today announced record financial results for its fourth quarter and fiscal year ended June 30, 2000.

Pivotal's net revenues in the fourth quarter of fiscal 2000 increased 118 percent to $18.2 million compared to $8.3 million in the fourth quarter of fiscal 1999. Revenue from licenses increased 111 percent to $13.1 million in the fourth quarter of fiscal 2000 compared to $6.2 million in the fourth quarter of fiscal 1999. Revenues from services and maintenance increased 139 percent to $5.0 million in the fourth quarter of fiscal 2000, compared to $2.1 million in the same quarter last fiscal year.

Net income, excluding acquisition-related charges and amortization of intangibles in the fourth quarter of fiscal 2000, was $523,000 or $0.02 per share, compared with an operating loss of $659,000 or $0.04 per share in the fourth quarter of fiscal 1999. All per share amounts are presented on a pro forma diluted basis, which assumes conversion of the convertible preferred stock from the original date of issuance.

Net loss including acquisition-related charges and amortization of intangibles in the fourth quarter of fiscal 2000, was $7.7 million or $0.37 per share, compared with a net loss of $659,000 or $0.04 per share in the fourth quarter of fiscal 1999. All per share amounts are presented on a pro forma diluted basis, which assumes conversion of the convertible preferred stock from the original date of issuance.

Net revenues for the year ended June 30, 2000 increased 109 percent to $52.9 million compared to $25.3 million for the year ended June 30, 1999. Net income, excluding acquisition-related charges and amortization of intangibles for the year ended June 30, 2000, was $26,000 or $0.00 per share, compared to a net loss of $2.8 million or $0.18 per share for the year ended June 30, 1999. Software license revenue for fiscal 2000 grew 99 percent over the last fiscal year, while service revenue grew 139 percent.

Pivotal's enterprise customer base totals more than 900 customers spanning diverse industries and geographic markets. New customers include ING Barings LLC, B&Q PLC, Emerson Electric, Headhunter.net, Inc., Intrawest Corporation, Ford Credit Denmark A/S, Norsat International Inc., Clarus Corporation, Norton Company, AristaSoft Corporation, Badger Meter, Inc., Capitalthinking.com, Inc., Centra Software, Inc., LAUNCHworks Inc., Epoch Partners, Biosite Diagnostics, Qiagen Inc., SSR Realty Advisors and Paradigm Geophysical.

According to Norm Francis, president and CEO, Pivotal, "Pivotal's first year as a public company was completed with success. Large enterprises are selecting Pivotal for innovative Microsoft-based solutions for managing the demand chain. Pivotal introduced Pivotal eRelationship 2000, Pivotal eSelling 2000 and Pivotal ePower 2000 - advanced Internet solutions that are reshaping the eBusiness landscape. Our global expansion initiatives have also increased our presence in North America, Europe and Asia Pacific. Our achievements in the past year strongly position Pivotal at the forefront of the Internet era."

According to Vince Mifsud, executive vice-president and CFO, Pivotal, "Pivotal accelerated revenue growth each quarter this year, with this quarter's growth at 118% over the same quarter last year and 30% sequential license revenue growth. Our extended product line, technology innovation and global sales presence allowed us to close large-enterprise scale deals. Pivotal also acquired Exactium and Simba Digital Conversations and successfully integrated these organizations and the Exactium eSelling 2000 product."

Fiscal 2000 Milestones


Completed initial public offering
Significant global expansion
Microsoft featured Pivotal at Windows 2000 launch
Pivotal eRelationship 2000 launched
Pivotal ePower 2000 launched
Pivotal establishes eBusiness Center of Excellence in Northern Ireland
Shipped Pivotal Interaction Engine
Shipped Pivotal Intelligence Engine
Established B2B Syndicate to deliver Web services and content
Won two Microsoft Industry Solutions Awards for Technology Excellence
Set record for industry-leading scalability
Established PivotalHost program
Introduced first wireless solution for the digital demand chain
Fourth Quarter Highlights

Strategic Acquisitions Strengthen Pivotal's Technological Leadership
The Exactium acquisition extends Pivotal's product line to include Pivotal eSelling 2000 and adds eSelling experts to the Pivotal team. Pivotal eSelling 2000 is the first eSelling platform that is fully engineered on an XML backbone. The solution enables companies to sell complex products and services over the Internet by providing an interactive, personalized buying experience.

The acquisition of Simba Digital Conversations enhances Pivotal's eBusiness solution with a unique eMarketing technology that will drive a new generation of business-to-business Web sites. The new technology allows companies to aggregate and analyze all Internet customer interactions such as email messages, Web chat session and Web site surfing. As a result, companies gain meaningful insight into the preferences, needs and buying trends of Internet customers.

Pivotal Penetrates Large Enterprise Market
Pivotal's customer roster expanded this quarter to include industry leaders such as Intrawest Corporation, Headhunter.net, Inc., B&Q PLC, Emerson Electric, Norsat International Inc. and Clarus Corporation. Pivotal also showed significant growth in the financial services sector with new customers such as ING Barings LLC, First Global, Inc., CapitalThinking.com, Inc., North Shore Credit Union and American First Federal Credit Union.

Pivotal Ships Pivotal Interaction Engine
The Pivotal Interaction Engine is a state of the art solution for managing the next generation of "Interaction Centers" that are displacing traditional call centers as the primary strategy for after-the-sale relationship management. These "Interaction Centers" unify all customer communications including, phone, email, fax and Web chat into a universal inbox and unified queue for more efficient coordination of customer issues and more effective customer communications.

Pivotal Ships Pivotal Intelligence Engine
The Pivotal Intelligence Engine enables sales, marketing, and customer service professionals to transform customer data into meaningful information that allows them to analyze past business performance, monitor present business operations, and establish effective plans for the future. The Intelligence Engine provides Web-based tools for data mining, data analysis, and marketing campaign management and trend tools to statistically project sales and marketing performance. The Intelligence Engine is central to identifying the most successful combinations of customers, products, regions, and channels.

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

Three months ended June 30,

Year ended June 30,

2000

1999

2000

1999

(Unaudited)

(Unaudited)

Revenues

Licences

$ 13,136

$ 6,214

$ 37,384

$ 18,819

Services and maintenance

5,049

2,109

15,555

6,508

Total revenues

18,185

8,323

52,939

25,327

Cost of revenues

Licenses

812

98

2,141

536

Services and maintenance

2,671

1,105

8,147

3,078

Total cost of revenues

3,483

1,203

10,288

3,614

Gross profit

14,702

7,120

42,651

21,713

Operating expenses

Sales and marketing

10,319

5,005

31,165

16,830

Research and development

2,803

1,800

8,906

4,958

General and administrative

1,318

845

4,190

2,466

Total operating expenses

14,440

7,650

44,261

24,254

Income (loss) before amortization, other income and taxes

262

(530)

(1,610)

(2,541)

Goodwill and other intangibles

1,280

-

1,409

-

In-process research and development and other charges

6,979

-

6,979

-

Loss before other income and taxes

(7,997)

(530)

(9,998)

(2,541)

Interest and other income (loss)

478

(69)

2,193

(24)

Loss before income taxes

(7,519)

(599)

(7,805)

(2,565)

Income taxes

217

60

557

243

Net loss

$ (7,736)

$ (659)

$ (8,362)

$ (2,808)

Loss per share

Basic and diluted

$ (0.37)

$ (0.17)

$ (0.45)

$ (0.72)

Pro-forma basic and diluted

$ (0.37)

$ (0.04)

$ (0.39)

$ (0.18)

Weighted average number of shares used to calculate loss per share

Basic and diluted

20,686

3,915

18,643

3,888

Pro-forma basic and diluted

20,686

15,966

21,339

15,940

Excluding acquisition related charges and amortization of intangibles

Net income (loss)

$ 523

$ (659)

$ 26

$ (2,808)

Loss per share

Basic

$ 0.03

$ (0.17)

$ 0.00

$ (0.72)

Diluted

$ 0.02

$ (0.17)

$ 0.00

$ (0.72)

Pro-forma basic and diluted

$ 0.02

$ (0.04)

$ 0.00

$ (0.18)

Weighted average number of shares used to calculate loss per share

Basic

20,686

3,915

18,643

3,888

Diluted

22,013

3,915

20,167

3,888

Pro-forma basic and diluted

22,013

15,966

21,339

15,940




LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
(Expressed in United States dollars; all amounts in thousands)

June 30, 2000

June 30, 1999

ASSETS

Current assets:

Cash and cash equivalents

$ 4,734

$ 9,338

Short term investments

30,788

-

Accounts receivable

16,764

8,304

Prepaid expenses

1,859

1,029

Total current assets

54,145

18,671

Property and equipment, net

7,231

3,051

Other assets

60,569

-

Total assets

$ 121,945

$ 21,722

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current liabilities:

Accounts payable and accrued liabilities

$ 16,877

$ 6,329

Deferred revenue

8,971

5,085

Total current liabilities

25,848

11,414

Redeemable convertible preferred shares

-

17,500

Shareholders' equity (deficit)

96,097

(7,192)

Total liabilities and shareholders' equity (deficit)

$ 121,945

$ 21,722




Pivotal Corporation enables large and medium-sized businesses worldwide to make, serve, and manage customers with superior speed and efficiency by providing XML-based demand chain networks that deliver personalized customer experiences across every touch point in real-time. These networks unify Internet commerce, CRM, eSelling, and wireless technologies to manage collaborative relationships between customers, business partners, and employees; guide intelligent commerce transactions across multiple channels; seamlessly integrate the demand chain with the supply chain; and fully exploit Microsoft platform standards.


Pivotal solutions are sold in 35 countries and are available in English, French, German, Spanish, Portuguese, Swedish, Japanese and Chinese. Pivotal's worldwide customer base includes more than 1,000 organizations in traditional, commercial and public market sectors and the new digital economy, including KPMG, Intrawest Corporation, Emerson Electric, US Filter, Ericsson, Nissan Motor Corp., HarperCollins Publishers, Qiagen Inc., Deutsche Bank, Trader.com, Southern Company, Lucent Technologies, Inc., NEC, Deloitte & Touche, Principal Financial Group and Red Cross Australia.


Pivotal is a public company traded on the NASDAQ under the symbol “PVTL” and the Toronto Stock Exchange under the symbol “PVT.” More information can be found on the corporate Web site at http://www.pivotal.com.

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 demand chain network solution 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. Investor Contact:
Vincent Mifsud
Tel: 604/904-5850
Email: vmifsud@pivotal.com

Press Contact:
Jacqueline Voci
Tel: 425.897.6992
Fax: 425.897.8401
Email: jvoci@pivotal.com