Pivot3 positions itself for possible IPO

Is an IPO being planned? Hyper-converged system supplier Pivot3 says it had record growth in the first half of 2016, with a 103 per cent revenue increase and more than 400 new customers, and has hired a new CFO.

Bill Stover has been appointed Pivot3's finance head. Mike Dansby was the prior CFO, serving from June 2014 to July this year, and with no subsequent entry on his LinkedIn profile. Stover has Micron CFO time in his background and thinks Pivot3 has excellent growth potential.

CEO Ron Nash said, "Bill Stover, with his experience as CFO of a publicly traded company for over a decade, is exactly what we need at this time." Why would he say this when Pivot3 isn't a public company and doesn't have the financial burdens of a public business? It looks like an IPO is a prospect in Nash's future view.

In a release about its growth, Nash's canned quote said; "Pivot3 is experiencing record growth, but we are also becoming more efficient as we grow. We are building a company that is competent, innovative, visionary, customer-focused, fast-growing and financially stable, earning our customers' and industry's respect. None of our competitors have all of those attributes. We are here to build a company for long-term success, with the best technology, team and financially prudent growth strategy."

Pivot3 doesn't publicly compare its second 2016 quarter to the first one, which saw:

• June 2016 – vSTAC product combines Pivot3 HCIA with Nexgen AFA and QoS.
• May 2016 – possible deal with X-IO suggested but fails to complete.
• April 2016 – highest-ever revenue run rate in 2016 first quarter:
• • >50 per cent year-on-year revenue increase.
  • Development team doubled in size.
  • Go-to-market organization grew nearly 50 per cent.
  • Channel partner count grew by almost 400 per cent.
  • 50 per cent of revenue came from outside video surveillance.
  • Video surveillance business grew 50 per cent.
  • More than 2,000 customers.
• March 2015 – gained $54.6m funding.
• January 2016 – merges with NexGen and its AFA and QoS tech.

It does say it grew its employee count by 40 per cent in this half year, up to the 230 level, and now has more than 16,000 systems deployed. The customer count is around 2,200.

With the added Nexgen tech, all of its video surveillance and other customers can be offered HCIA gear to run other applications on top of the surveillance apps.

Comment

The hyper-converged product space is a cauldron of growth and intense competition. We expect Dell/EMC to rapidly become the leading vendor, with Nutanix possibly second, and HPE fighting SimpliVity and Cisco for third, fourth and fifth place. Many other players, Pivot3 among them, provide complete systems or else software for Lenovo and other server vendors' hardware.

Pivot3's task is to emerge and break free from this pack and join the presumed top six vendors. If it can convert a large proportion of its 16,000 customers to run its latest HCIA gear, then that will give a great base from which to grow.

A little-known fact is that Bob Fernander, the CEO at Imation, was CEO at Pivot3 from May 2007 to March 2012, leaving to run Gnodal. Rich Bravman became CEO we understand, until April 2013 but then left. Ron Nash, who was then chairman of Pivot3's board, became the CEO as well in November of 2013, when it was mainly focussed on the video surveillance and VDI markets, with converged storage and compute vSTAC appliances.

Back then it had around 600 customers, so growing that to 2,200 in three years by riding the HCIA train is pretty good. What we are seeing now is Nash's run for Pivot3 HCIA glory. ®