Pivotal Announces Record Second Quarter 2001 Results with Revenue Growth of 123%

Pivotal Corporation today announced record financial results for its second fiscal quarter ended December 31, 2000.


VANCOUVER, BRITISH COLUMBIA, January 22, 2001 — Pivotal Corporation today announced record financial results for its second fiscal quarter ended December 31, 2000.

Net revenues in the second quarter of fiscal 2001 increased 123 percent to $25.7 million compared to $11.5 million in the second quarter of fiscal 2000. License revenues increased 104 percent to $16.3 million in the second quarter of fiscal 2001 compared to $8.0 million in the second quarter of fiscal 2000. Revenues from services and maintenance increased 167 percent to $9.4 million in the second quarter of fiscal 2001, compared to $3.5 million in the same quarter last fiscal year.

Net income excluding amortization of goodwill in the second quarter of fiscal 2001 was $724,000 or $0.03 per share, compared to a net loss of $132,000 or ($0.01) per share in the second quarter of fiscal 2000.

Net loss after amortization of goodwill in the second quarter of fiscal 2001 was $4.7 million or ($0.20) per share, compared to a net loss of $164,000 or ($0.01) per share in the second quarter of fiscal 2000.

``This quarter Pivotal advanced its enterprise market strategy for Demand Chain Networks,' said Norm Francis, president and CEO. ``With the Pivotal Demand Chain Network solution suite and our expanded relationship with Microsoft, the company is addressing the demand for smart, safe and cost-effective technologies that impact revenue quickly and improve customer retention. The Pivotal suite is an outstanding option for companies that want a single infrastructure that fuses the best of Internet, wireless and traditional technologies.'

According to Vince Mifsud, COO and CFO, ``Pivotal announced another quarter of triple-digit revenue growth as we continued to penetrate the Microsoft-based enterprise marketplace consisting of medium and large enterprises globally. During the quarter, we improved our cash position by completing an equity financing, which provided net proceeds of $50.9 million and we successfully completed and integrated two acquisitions.'

New customers signed in the quarter included Farm Credit Services of America, American Medical Security, Inc., Atlas Copco, Ericsson Canada Inc., ESRI GmbH, Industrial & Financial Systems AB (IFS AB), Minolta Austria GmbH, TradeSource Inc. and Asco Joucomatic SA.

Repeat purchases by customers continued at a strong pace this quarter. Additional Pivotal solutions were ordered by Syngenta, Data Return, Principal Financial Group, Allen Systems Group, Software Spectrum and Informatica Corporation.

Second Quarter Highlights

Corporate Expansion

Acquired Project One Business Technologies
Acquired CRM Unit of Software Spectrum
Completed an equity financing providing net proceeds of $50.9 million
Established Japanese subsidiary to provide solutions for the Japanese market
Strategic Alliances

Pivotal and Microsoft launched global business development initiative
Pivotal and Microsoft are embarking on a three-year, multi-million dollar initiative to lead the rapidly growing enterprise market for demand chain management. The initiative includes funding for a co-marketing program, solution centers to showcase the combined offering, a co-development lab, and Microsoft sales and service professionals trained on Pivotal solutions. The goal of the initiative is to accelerate adoption of Pivotal-Microsoft solutions in Global 2000 enterprises.

Pivotal launched two new hosting alliances Pivotal and Datawest Solutions Inc. will provide solutions specifically designed for financial services companies. Pivotal's solutions hosted and operated by Datawest will allow financial services companies to consolidate customer information and conduct personalized marketing, sales, support and service. Pivotal also initiated an alliance with Interpath Communications Inc., a full-service enterprise Application Service Provider (ASP) that offers a range of managed hosted applications and consulting services.
Pivotal and Yokogawa Electric signed strategic agreement to serve the Japanese market
Yokogawa Electric, a Japanese technology leader, is selling, marketing, implementing, customizing and supporting Pivotal solutions for the Japanese market. These solutions enable Japanese companies to increase revenue and improve customer retention.

Industry Recognition

Ranked in the top ten of the Deloitte & Touche Technology Fast 500 in North America
Named Best Integrated CRM/eBusiness Solution at Microsoft-sponsored Industry Solution Awards
Management Updates

Vincent Mifsud has been promoted to Chief Operating Officer (COO). As COO, Mifsud is responsible for Pivotal's worldwide operations including sales, marketing, professional services, finance and administration. Mifsud began his career at Pivotal in 1998 as CFO, and later his duties were expanded to include the role of executive vice-president, operations. Mifsud will continue to retain the duties of Chief Financial Officer (CFO) until a replacement is appointed.

Glenn Hasen, formerly executive vice-president, global field operations, has left the company after making a significant contribution over the past few years.


Conference call details:
Date: Monday, January 22, 2001
Start Time: 5:30 p.m. ET (2:30 p.m. PT)
Dial-In Phone Number: 1-415-537-1834
Conference Call Name: 2nd Quarter 2001 Earnings Call
Live Audio Streaming: www.pivotal.com


During the earnings call, we will be discussing the results as contained in this release and may be discussing forward looking statements and providing guidance.

If you are unable to participate, a replay will be available from 7:30 p.m. ET January 22nd through to 7:30 p.m. ET January 24th, 2001. For callers within the U.S. or Canada, the replay number is 1-800-633-8284. For callers outside of the U.S. or Canada, the replay number is 1-858-812-6440. The replay pass code for all callers is 17308168. In addition, the replay will be available via our website one hour after the completion of the call at www.pivotal.com.


PIVOTAL CORPORATION
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 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 1000 organizations in traditional, commercial and public market sectors and the new digital economy, including KPMG, Intrawest Corporation, Goldman Sachs, 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 ability of the demand chain network solutions to provide the anticipated benefits to third parties, 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 ability to train the sales and service organizations to deliver the demand chain network solution; the retention and hiring of qualified employees; the possibility of technical difficulties or delay in future product introductions, improvements and customer implementations; product pricing or other initiatives of Pivotal's competitors; successful integration of recent acquisitions; the continued interest, cooperation and performance of important third parties with whom Pivotal has business relationships; the ability to adequately protect the company's proprietary rights; and other factors as described in Pivotal's SEC filings. 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
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