Dynatrace Reports Third Quarter Fiscal Year 2024 Financial Results

Exceeds high end of guidance across all Q3 metrics

Delivers ARR growth of 21% year-over-year on a constant currency basis

Achieves GAAP Operating Margin of 10% and Non-GAAP Operating Margin of 29%

Dynatrace (NYSE: DT), the leader in unified observability and security, today announced financial results for the third quarter of fiscal 2024 ended December 31, 2023.

"Our Q3 results of balanced growth, profitability, and free cash flow reflect our continued ability to execute successfully in a dynamic market,” said Rick McConnell, Chief Executive Officer. “As customers look to address the business challenges of modern cloud environments, they are coming to Dynatrace for a more comprehensive observability architecture that enables them to drive innovation, optimize costs, and mitigate risk. Our contextual analytics, hypermodal AI, and automation differentiate the Dynatrace platform in the market and provide us with a powerful advantage to capture the opportunity ahead of us.”

Third Quarter Fiscal 2024 and Other Recent Business Highlights:

All growth rates are compared to the third quarter of fiscal 2023, unless otherwise noted.

Financial Highlights:

  • Total ARR of $1,425 million, an increase of 23%, or 21% on a constant currency basis
  • Total Revenue of $365 million, an increase of 23%, or 21% on a constant currency basis
  • Subscription Revenue of $348 million, an increase of 25%, or 23% on a constant currency basis
  • GAAP Income from Operations of $36 million, and Non-GAAP Income from Operations of $105 million
  • GAAP EPS of $0.14, and Non-GAAP EPS of $0.32, both on a dilutive basis

Business Highlights:

  • Platform innovation: Dynatrace recently hosted over 2,000 in-person attendees and over 4,000 virtual attendees for Perform 2024, the company's annual customer conference. As part of showcasing the value and innovation of the Dynatrace® platform, the company announced the following current and planned enhancements:
    • Dynatrace AI Observability provides insights into all layers of AI-powered applications, including large language models (LLMs) and generative AI solutions, to manage cost, experience, reliability, and security.
    • Dynatrace OpenPipeline empowers customers with full visibility of data at the point of ingest into the Dynatrace platform and evaluates data streams five to ten times faster than legacy technologies, based on our testing.
    • Dynatrace Data Observability helps ensure data collected via external sources, such as OpenTelemetry and Dynatrace APIs, is reliable and accurate.
  • Runecast acquisition: On January 29, 2024, we announced the signing of a definitive agreement to acquire Runecast, an AI-powered security and compliance solution provider. This planned addition to the Dynatrace platform will enable customers to proactively prevent cloud misconfigurations and compliance issues with automated, AI-driven, real-time vulnerability assessments.
  • Extended partnerships: Dynatrace achieved the Amazon Web Services (AWS) Security Competency, reflecting our deep technical expertise in helping customers proactively remediate vulnerabilities and defend against threats across their AWS environments. The AWS Security Competency helps customers select validated AWS Partner Network members who provide technology that helps organizations adopt, develop, and deploy security solutions on AWS.
  • Industry and customer recognition: Dynatrace was named a Leader in both the Cloud-Native Observability and Security quadrants in the 2023 ISG Provider Lens, Multi-Public Cloud Solutions Report, highlighting Dynatrace’s innovation and go-to-market success in the converging spaces of observability and security. Also, Dynatrace was recognized as a Gartner® Peer Insights™ Customers’ Choice in the 2023 Voice of the Customer for Application Performance Monitoring and Observability report for the fifth consecutive year.1 In addition, Dynatrace won the 2023 Silverlinings Innovation Award for Best Cloud AI Solution, for the platform’s Davis® AI and its proven ability to boost the performance and security of software environments.
  • Workplace recognition: We were named one of the Best Places to Work in Boston, San Francisco, and Colorado by BuiltIn; a Great Place to Work® in 13 of the countries where we operate; one of the Top 10 Best Workplaces in Tech in Austria by 2024 Great Place to Work®; and a Top Company in Austria by Kununu.

____________________

1
Gartner, Voice of the Customer for Application Performance Monitoring and Observability, 29 December 2023.

Gartner® and Gartner Peer Insights™ are trademarks of Gartner, Inc. and/or its affiliates. All rights reserved.

Gartner® Peer Insights™ content consists of the opinions of individual end users based on their own experiences, and should not be construed as statements of fact, nor do they represent the views of Gartner or its affiliates. Gartner does not endorse any vendor, product or service depicted in this content nor makes any warranties, expressed or implied, with respect to this content, about its accuracy or completeness, including any warranties of merchantability or fitness for a particular purpose.

Third Quarter 2024 Financial Highlights

(Unaudited – In thousands, except per share data)

 

 

 

 

 

Three Months Ended

December 31,

 

 

 

2023

 

 

 

2022

 

Key Operating Metric:

 

 

 

Annual recurring revenue

$

1,425,284

 

 

$

1,162,591

 

Year-over-Year Increase

 

23

%

 

 

Year-over-Year Increase - constant currency (*)

 

21

%

 

 

 

 

 

 

Revenue:

 

 

 

Total revenue

$

365,096

 

 

$

297,456

 

Year-over-Year Increase

 

23

%

 

 

Year-over-Year Increase - constant currency (*)

 

21

%

 

 

 

 

 

 

Subscription revenue

$

348,294

 

 

$

279,152

 

Year-over-Year Increase

 

25

%

 

 

Year-over-Year Increase - constant currency (*)

 

23

%

 

 

 

 

 

 

GAAP Financial Measures:

 

 

 

GAAP income from operations

$

35,720

 

 

$

33,887

 

GAAP operating margin

 

10

%

 

 

11

%

 

 

 

 

GAAP net income

$

42,691

 

 

$

15,026

 

 

 

 

 

GAAP net income per share - diluted

$

0.14

 

 

$

0.05

 

 

 

 

 

GAAP shares outstanding - diluted

 

299,246

 

 

 

291,228

 

 

 

 

 

Net cash provided by operating activities

$

75,657

 

 

$

61,962

 

 

 

 

 

Non-GAAP Financial Measures:

 

 

 

Non-GAAP income from operations (*)

$

104,636

 

 

$

80,653

 

Non-GAAP operating margin (*)

 

29

%

 

 

27

%

 

 

 

 

Non-GAAP net income (*)

$

96,184

 

 

$

73,469

 

 

 

 

 

Non-GAAP net income per share - diluted (*)

$

0.32

 

 

$

0.25

 

 

 

 

 

Non-GAAP shares outstanding - diluted (*)

 

299,246

 

 

 

291,228

 

 

 

 

 

Free Cash Flow (*)

$

67,357

 

 

$

57,574

 

* Use of Non-GAAP Financial Measures

In our earnings press releases, conference calls, slide presentations, and webcasts, we may use or discuss non-GAAP financial measures, as defined by Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the consolidated financial statements. Our earnings press releases containing such non-GAAP reconciliations can be found in the Investor Relations section of our website at ir.dynatrace.com.

Financial Outlook

Based on information available as of February 8, 2024, Dynatrace is issuing guidance for the fourth quarter and updating guidance for full year fiscal 2024 in the table below.

This guidance reflects foreign exchange rates as of January 31, 2024. We now expect foreign exchange to be a tailwind of approximately $10 million on ARR and approximately $13 million on revenue for fiscal 2024. Given recent weakening in the U.S. dollar, this represents an incremental tailwind of approximately $15 million to ARR and $6 million to revenue for the full year when compared to our prior guidance.

Growth rates for ARR, Total revenue, and Subscription revenue are presented in constant currency to provide better visibility into the underlying growth of the business.

All growth rates below are compared to the fourth quarter and full year of fiscal 2023.

(In millions, except per share data)

Q4 Fiscal 2024

Guidance

Total revenue

$372 - $377

 

 

As reported

18% - 20%

 

 

Constant currency

18% - 19%

 

 

Subscription revenue

$353 - $358

 

 

As reported

20% - 22%

 

 

Constant currency

20% - 21%

 

 

Non-GAAP income from operations

$85 - $90

 

 

Non-GAAP operating margin

23% - 24%

 

 

Non-GAAP net income

$79 - $84

 

 

Non-GAAP net income per diluted share

$0.26 - $0.28

 

 

Diluted weighted average shares outstanding

300 - 301

 

 

 

 

 

 

 

(In millions, except per share data)

Current Guidance

Fiscal 2024

 

Prior Guidance

Fiscal 2024*

 

Guidance Change

at Midpoint**

Total ARR

$1,485 - $1,495

 

$1,480 - $1,490

 

$5

As reported

19% - 20%

 

19% - 20%

 

— bps

Constant currency

18% - 19%

 

19% - 20%

 

(100) bps

Total revenue

$1,422 - $1,427

 

$1,409 - $1,419

 

$11

As reported

23%

 

22%

 

100 bps

Constant currency

22%

 

21% - 22%

 

50 bps

Subscription revenue

$1,352 - $1,357

 

$1,334 - $1,344

 

$16

As reported

25%

 

23% - 24%

 

150 bps

Constant currency

24%

 

22% - 23%

 

150 bps

Non-GAAP income from operations

$388 - $393

 

$377 - $386

 

$9

Non-GAAP operating margin

27.25% - 27.5%

 

27%

 

50 bps

Non-GAAP net income

$348 - $353

 

$328 - $337

 

$18

Non-GAAP net income per diluted share

$1.16 - $1.18

 

$1.09 - $1.12

 

$0.06

Diluted weighted average shares outstanding

299 - 300

 

300 - 301

 

(1)

Free cash flow

$330 - $335

 

$313 - $320

 

$16

Free cash flow margin

23%

 

22% - 23%

 

50 bps

*Prior guidance was issued on November 2, 2023.

**Changes in our guidance metrics are rounded to the nearest 50 bps.

Reconciliations of non-GAAP income from operations, non-GAAP net income, non-GAAP net income per diluted share and free cash flow guidance to the most directly comparable GAAP measures are not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of share-based compensation expense, employer taxes and tax deductions specific to equity compensation awards that are directly impacted by future hiring, turnover and retention needs, as well as unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.

Conference Call and Webcast Information

Dynatrace will host a conference call and live webcast to discuss its results and business outlook for investors and analysts at 8:00 a.m. Eastern Time today, February 8, 2024. To access the conference call from the U.S. and Canada, dial (866) 405-1247, or internationally, dial (201) 689-8045 with conference ID# 13743643. The call will also be available live via webcast on the company’s website, ir.dynatrace.com.

An audio replay of the call will also be available until 11:59 p.m. Eastern Time on February 22, 2024, by dialing (877) 660-6853 from the U.S. or Canada, or for international callers by dialing (201) 612-7415 and entering conference ID# 13743643. In addition, an archived webcast will be available at ir.dynatrace.com.

We announce material financial information to our investors using our Investor Relations website, press releases, SEC filings and public conference calls and webcasts. We also use these channels to disclose information about the company, our planned financial and other announcements, attendance at upcoming investor and industry conferences, and for complying with our disclosure obligations under Regulation FD.

Non-GAAP Financial Measures & Key Metrics

In addition to disclosing financial measures prepared in accordance with GAAP, this press release and the accompanying tables contain certain non-GAAP financial measures.

Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies. Dynatrace considers these non-GAAP financial measures to be important because they provide useful indicators of its performance and liquidity measures. These are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short and long-term operational plans. In addition, investors often use similar measures to evaluate the performance of a company. Non-GAAP financial measures are presented for supplemental informational purposes only for understanding the company’s operating performance. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from non-GAAP financial measures presented by other companies. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the consolidated financial statements.

Dynatrace presents constant currency amounts for Revenue and Annual Recurring Revenue to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. Dynatrace provides this non-GAAP financial information to aid investors in better understanding our performance.

Annual Recurring Revenue (ARR) is defined as the daily revenue of all subscription agreements that are actively generating revenue as of the last day of the reporting period multiplied by 365. We exclude from our calculation of Total ARR any revenues derived from month-to-month agreements and/or product usage overage billings.

Constant Currency amounts for ARR, Total Revenue and Subscription Revenue are presented to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign exchange rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year.

Dollar-Based Gross Retention Rate is defined as the ARR from all customers as of one year prior, less contraction and customer churn, divided by the total ARR from one year prior. This metric reflects the percentage of ARR from all customers as of the year prior that has been retained.

Dollar-Based Net Retention Rate (NRR) is defined as the Dynatrace ARR at the end of a reporting period for the cohort of Dynatrace accounts as of one year prior to the date of calculation, divided by the Dynatrace ARR one year prior to the date of calculation for that same cohort. Our dollar-based net retention rate reflects customer renewals, expansion, contraction and churn, and excludes the benefit of Dynatrace ARR resulting from the conversion of Classic products to the Dynatrace platform. Effective the first quarter of fiscal year 2023, we began to exclude the headwind associated with the Dynatrace perpetual license ARR given diminishing impact of perpetual license ARR. We believe that eliminating the perpetual license headwind results in a dollar-based net retention rate metric that better reflects Dynatrace’s ability to expand existing customer relationships. Dollar-based net retention rate is presented on a constant currency basis.

Dynatrace Customers are defined as accounts, as identified by a unique account identifier, that generate at least $10,000 of Dynatrace ARR as of the reporting date. In infrequent cases, a single large organization may comprise multiple customer accounts when there are distinct divisions, departments or subsidiaries that operate and make purchasing decisions independently from the parent organization. In cases where multiple customer accounts exist under a single organization, each customer account is counted separately based on a mutually exclusive accounting of ARR.

Free Cash Flow is defined as net cash provided by (used in) operating activities less capital expenditures (reflected as "purchase of property and equipment" and "capitalized software additions" in our financial statements).

About Dynatrace

Dynatrace exists to make the world's software work perfectly. Our unified platform combines broad and deep observability and continuous runtime application security with the most advanced AIOps to provide answers and intelligent automation from data at an enormous scale. This enables innovators to modernize and automate cloud operations, deliver software faster and more securely, and ensure flawless digital experiences. That's why the world's largest organizations trust the Dynatrace® platform to accelerate digital transformation.

Cautionary Language Concerning Forward-Looking Statements

This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding management’s expectations related to platform innovation, the Runecast acquisition (which is subject to customary closing conditions and expected to close later in Dynatrace's fourth quarter which ends on March 31, 2024), partnerships, and business outlook, including our financial guidance for the fourth quarter and full year of fiscal 2024. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, our ability to maintain our revenue growth rates in future periods; market adoption of our product offerings; continued demand for, and spending on, our solutions; our ability to innovate and develop solutions that meet customer needs, including through Davis AI; the ability of our platform and solutions to effectively interoperate with customers’ IT infrastructures; our ability to acquire new customers and retain and expand our relationships with existing customers; our ability to expand our sales and marketing capabilities; our ability to compete; our ability to maintain successful relationships with partners; security breaches, other security incidents and any real or perceived errors, failures, defects or vulnerabilities in our solutions; our ability to protect our intellectual property; our ability to hire and retain necessary qualified employees to grow our business and expand our operations; our ability to successfully complete acquisitions and to integrate newly acquired businesses and offerings; the effect on our business of the macroeconomic environment, associated global economic conditions and geopolitical disruption; and other risks set forth under the caption “Risk Factors” in our Form 10-Q filed on February 8, 2024 and our other SEC filings. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

DYNATRACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited – In thousands, except per share data)

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Nine Months Ended

December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

Subscription

$

348,294

 

 

$

279,152

 

 

$

999,245

 

 

$

790,016

 

Service

 

16,802

 

 

 

18,304

 

 

 

50,437

 

 

 

54,039

 

Total revenue

 

365,096

 

 

 

297,456

 

 

 

1,049,682

 

 

 

844,055

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of subscription

 

46,888

 

 

 

36,891

 

 

 

134,584

 

 

 

105,393

 

Cost of service

 

16,744

 

 

 

15,044

 

 

 

47,961

 

 

 

46,264

 

Amortization of acquired technology

 

4,237

 

 

 

3,889

 

 

 

12,035

 

 

 

11,669

 

Total cost of revenue

 

67,869

 

 

 

55,824

 

 

 

194,580

 

 

 

163,326

 

Gross profit

 

297,227

 

 

 

241,632

 

 

 

855,102

 

 

 

680,729

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development (1)

 

80,102

 

 

 

54,531

 

 

 

220,468

 

 

 

156,847

 

Sales and marketing (1)

 

132,723

 

 

 

112,292

 

 

 

385,445

 

 

 

323,313

 

General and administrative (1)

 

43,232

 

 

 

34,354

 

 

 

127,075

 

 

 

107,485

 

Amortization of other intangibles

 

5,451

 

 

 

6,573

 

 

 

16,838

 

 

 

19,719

 

Restructuring and other

 

(1

)

 

 

(5

)

 

 

(1

)

 

 

(15

)

Total operating expenses

 

261,507

 

 

 

207,745

 

 

 

749,825

 

 

 

607,349

 

Income from operations

 

35,720

 

 

 

33,887

 

 

 

105,277

 

 

 

73,380

 

Interest income (expense), net

 

10,605

 

 

 

(4,787

)

 

 

26,260

 

 

 

(7,475

)

Other (expense) income, net

 

(3,901

)

 

 

1,617

 

 

 

(6,724

)

 

 

(1,847

)

Income before income taxes

 

42,424

 

 

 

30,717

 

 

 

124,813

 

 

 

64,058

 

Income tax benefit (expense)

 

267

 

 

 

(15,691

)

 

 

(8,125

)

 

 

(36,392

)

Net income

$

42,691

 

 

$

15,026

 

 

$

116,688

 

 

$

27,666

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.14

 

 

$

0.05

 

 

$

0.40

 

 

$

0.10

 

Diluted

$

0.14

 

 

$

0.05

 

 

$

0.39

 

 

$

0.10

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

294,869

 

 

 

287,957

 

 

 

293,295

 

 

 

287,120

 

Diluted

 

299,246

 

 

 

291,228

 

 

 

298,335

 

 

 

290,803

 

 

(1) Prior period results have been updated to allocate depreciation expense to operating expenses based upon location and headcount.

UNAUDITED SHARE-BASED COMPENSATION

 

 

Three Months Ended

December 31,

 

Nine Months Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Cost of revenue

$

6,975

 

$

4,285

 

$

19,660

 

$

13,410

Research and development

 

18,678

 

 

11,057

 

 

50,119

 

 

29,339

Sales and marketing

 

15,947

 

 

13,385

 

 

48,823

 

 

37,399

General and administrative

 

13,222

 

 

6,777

 

 

34,696

 

 

24,705

Total share-based compensation

$

54,822

 

$

35,504

 

$

153,298

 

$

104,853

DYNATRACE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

 

 

 

 

 

December 31,

2023

 

March 31,

2023

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

782,649

 

 

$

555,348

 

Accounts receivable, net

 

361,653

 

 

 

442,518

 

Deferred commissions, current

 

90,059

 

 

 

83,029

 

Prepaid expenses and other current assets

 

52,301

 

 

 

37,289

 

Total current assets

 

1,286,662

 

 

 

1,118,184

 

Property and equipment, net

 

49,408

 

 

 

53,576

 

Operating lease right-of-use assets, net

 

65,895

 

 

 

68,074

 

Goodwill

 

1,312,691

 

 

 

1,281,812

 

Other intangible assets, net

 

54,118

 

 

 

63,599

 

Deferred tax assets, net

 

129,119

 

 

 

79,822

 

Deferred commissions, non-current

 

79,724

 

 

 

86,232

 

Other assets

 

21,596

 

 

 

14,048

 

Total assets

$

2,999,213

 

 

$

2,765,347

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

13,230

 

 

$

21,953

 

Accrued expenses, current

 

171,929

 

 

 

188,380

 

Deferred revenue, current

 

757,141

 

 

 

811,058

 

Operating lease liabilities, current

 

16,288

 

 

 

15,652

 

Total current liabilities

 

958,588

 

 

 

1,037,043

 

Deferred revenue, non-current

 

38,508

 

 

 

34,423

 

Accrued expenses, non-current

 

29,918

 

 

 

29,212

 

Operating lease liabilities, non-current

 

58,002

 

 

 

59,520

 

Deferred tax liabilities

 

321

 

 

 

280

 

Total liabilities

 

1,085,337

 

 

 

1,160,478

 

 

 

 

 

Shareholders' equity:

 

 

 

Common shares, $0.001 par value, 600,000,000 shares authorized, 295,777,477 and 290,411,108 shares issued and outstanding at December 31, 2023 and March 31, 2023, respectively

 

296

 

 

 

290

 

Additional paid-in capital

 

2,186,766

 

 

 

1,989,797

 

Accumulated deficit

 

(236,701

)

 

 

(353,389

)

Accumulated other comprehensive loss

 

(36,485

)

 

 

(31,829

)

Total shareholders' equity

 

1,913,876

 

 

 

1,604,869

 

Total liabilities and shareholders' equity

$

2,999,213

 

 

$

2,765,347

 

DYNATRACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited – In thousands)

 

 

 

 

 

Nine Months Ended

December 31,

 

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

Net income

$

116,688

 

 

$

27,666

 

Adjustments to reconcile net income to cash provided by operations:

 

 

 

Depreciation

 

11,781

 

 

 

9,012

 

Amortization

 

29,067

 

 

 

31,566

 

Share-based compensation

 

153,298

 

 

 

104,853

 

Deferred income taxes

 

(49,579

)

 

 

2,057

 

Loss on extinguishment of debt

 

 

 

 

5,925

 

Other

 

7,016

 

 

 

3,114

 

Net change in operating assets and liabilities:

 

 

 

Accounts receivable

 

83,444

 

 

 

40,314

 

Deferred commissions

 

874

 

 

 

(17,198

)

Prepaid expenses and other assets

 

(27,437

)

 

 

29,616

 

Accounts payable and accrued expenses

 

(24,022

)

 

 

19,365

 

Operating leases, net

 

1,253

 

 

 

(36

)

Deferred revenue

 

(55,946

)

 

 

(21,796

)

Net cash provided by operating activities

 

246,437

 

 

 

234,458

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Purchase of property and equipment

 

(16,662

)

 

 

(15,625

)

Capitalized software additions

 

(4,655

)

 

 

 

Acquisition of a business, net of cash acquired

 

(32,297

)

 

 

 

Net cash used in investing activities

 

(53,614

)

 

 

(15,625

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Repayment of term loans

 

 

 

 

(281,125

)

Debt issuance costs

 

 

 

 

(1,949

)

Proceeds from employee stock purchase plan

 

19,472

 

 

 

17,806

 

Proceeds from exercise of stock options

 

24,205

 

 

 

15,102

 

Equity repurchases

 

 

 

 

(15

)

Net cash provided by (used in) financing activities

 

43,677

 

 

 

(250,181

)

 

 

 

 

Effect of exchange rates on cash and cash equivalents

 

(9,199

)

 

 

(9,168

)

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

227,301

 

 

 

(40,516

)

 

 

 

 

Cash and cash equivalents, beginning of period

 

555,348

 

 

 

462,967

 

Cash and cash equivalents, end of period

$

782,649

 

 

$

422,451

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands, except percentages)

 

 

Three Months Ended December 31, 2023

 

GAAP

Share-based

compensation

Employer

payroll taxes

on employee

stock

transactions

Amortization

of other

intangibles

Restructuring

& other

Non-GAAP

Non-GAAP income from operations:

Cost of revenue

$

67,869

 

$

(6,975

)

$

(284

)

$

(4,237

)

$

 

$

56,373

 

Gross profit

 

297,227

 

 

6,975

 

 

284

 

 

4,237

 

 

 

 

308,723

 

Gross margin

 

81

%

 

 

 

 

 

85

%

Research and development

 

80,102

 

 

(18,678

)

 

(1,196

)

 

 

 

 

 

60,228

 

Sales and marketing

 

132,723

 

 

(15,947

)

 

(1,029

)

 

 

 

201

 

 

115,948

 

General and administrative

 

43,232

 

 

(13,222

)

 

(360

)

 

 

 

(1,739

)

 

27,911

 

Amortization of other intangibles

 

5,451

 

 

 

 

 

 

(5,451

)

 

 

 

 

Restructuring and other

 

(1

)

 

 

 

 

 

 

 

1

 

 

 

Income from operations

$

35,720

 

$

54,822

 

$

2,869

 

$

9,688

 

$

1,537

 

$

104,636

 

Operating margin

 

10

%

 

 

 

 

 

29

%

 

 

Three Months Ended December 31, 2022

 

GAAP

Share-based

compensation

Employer

payroll taxes

on employee

stock

transactions

Amortization

of other

intangibles

Restructuring

& other

Non-GAAP

Non-GAAP income from operations:

Cost of revenue

$

55,824

 

$

(4,285

)

$

(114

)

$

(3,889

)

$

 

$

47,536

 

Gross profit

 

241,632

 

 

4,285

 

 

114

 

 

3,889

 

 

 

 

249,920

 

Gross margin

 

81

%

 

 

 

 

 

84

%

Research and development (1)

 

54,531

 

 

(11,057

)

 

(329

)

 

 

 

 

 

43,145

 

Sales and marketing (1)

 

112,292

 

 

(13,385

)

 

(297

)

 

 

 

 

 

98,610

 

General and administrative (1)

 

34,354

 

 

(6,777

)

 

(68

)

 

 

 

3

 

 

27,512

 

Amortization of other intangibles

 

6,573

 

 

 

 

 

 

(6,573

)

 

 

 

 

Restructuring and other

 

(5

)

 

 

 

 

 

 

 

5

 

 

 

Income from operations

$

33,887

 

$

35,504

 

$

808

 

$

10,462

 

$

(8

)

$

80,653

 

Operating margin

 

11

%

 

 

 

 

 

27

%

 

(1) Prior period results have been updated to allocate depreciation expense to operating expenses based upon location and headcount.

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands, except per share data)

 

 

 

 

 

Three Months Ended

December 31,

 

 

 

2023

 

 

 

2022

 

Non-GAAP net income:

 

 

 

Net income

$

42,691

 

 

$

15,026

 

Income tax (benefit) expense

 

(267

)

 

 

15,691

 

Non-GAAP effective cash tax

 

(18,516

)

 

 

(9,080

)

Interest (income) expense, net

 

(10,605

)

 

 

4,787

 

Cash received from interest, net

 

10,064

 

 

 

1,896

 

Share-based compensation

 

54,822

 

 

 

35,504

 

Employer payroll taxes on employee stock transactions

 

2,869

 

 

 

808

 

Amortization of other intangibles

 

5,451

 

 

 

6,573

 

Amortization of acquired technology

 

4,237

 

 

 

3,889

 

Transaction, restructuring, and other

 

1,537

 

 

 

(8

)

Loss (gain) on currency translation

 

3,901

 

 

 

(1,617

)

Non-GAAP net income

$

96,184

 

 

$

73,469

 

 

 

 

 

Share count:

 

 

 

Weighted-average shares outstanding - basic

 

294,869

 

 

 

287,957

 

Weighted-average shares outstanding - diluted

 

299,246

 

 

 

291,228

 

 

 

 

 

Shares used in non-GAAP per share calculations:

 

 

 

Weighted-average shares outstanding - basic

 

294,869

 

 

 

287,957

 

Weighted-average shares outstanding - diluted

 

299,246

 

 

 

291,228

 

 

 

 

 

Non-GAAP net income per share:

 

 

 

Net income per share - basic

$

0.14

 

 

$

0.05

 

Net income per share - diluted

$

0.14

 

 

$

0.05

 

Non-GAAP net income per share - basic

$

0.33

 

 

$

0.26

 

Non-GAAP net income per share - diluted

$

0.32

 

 

$

0.25

 

 

 

Three Months Ended

December 31,

 

 

2023

 

 

 

2022

 

Free Cash Flow:

 

 

 

Net cash provided by operating activities

$

75,657

 

 

$

61,962

 

Purchase of property and equipment

 

(3,645

)

 

 

(4,388

)

Capitalized software additions

 

(4,655

)

 

 

 

Free Cash Flow

$

67,357

 

 

$

57,574

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands, except percentages)

 

 

 

 

 

Nine Months Ended December 31, 2023

 

 

GAAP

 

Share-based

compensation

 

Employer

payroll taxes

on employee

stock

transactions

 

Amortization

of other

intangibles

 

Restructuring

& other

 

Non-GAAP

Non-GAAP income from operations:

Cost of revenue

$

194,580

 

 

$

(19,660

)

 

$

(1,516

)

 

$

(12,035

)

 

$

 

 

$

161,369

 

Gross profit

 

855,102

 

 

 

19,660

 

 

 

1,516

 

 

 

12,035

 

 

 

 

 

 

888,313

 

Gross margin

 

81

%

 

 

 

 

 

 

 

 

 

 

85

%

Research and development

 

220,468

 

 

 

(50,119

)

 

 

(4,391

)

 

 

 

 

 

 

 

165,958

 

Sales and marketing

 

385,445

 

 

 

(48,823

)

 

 

(3,341

)

 

 

 

 

 

399

 

 

 

333,680

 

General and administrative

 

127,075

 

 

 

(34,696

)

 

 

(1,125

)

 

 

 

 

 

(5,725

)

 

 

85,529

 

Amortization of other intangibles

 

16,838

 

 

 

 

 

 

 

 

 

(16,838

)

 

 

 

 

 

 

Restructuring and other

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

Income from operations

$

105,277

 

 

$

153,298

 

 

$

10,373

 

 

$

28,873

 

 

$

5,325

 

 

$

303,146

 

Operating margin

 

10

%

 

 

 

 

 

 

 

 

 

 

29

%

 

 

Nine Months Ended December 31, 2022

 

GAAP

 

Share-based

compensation

 

Employer

payroll taxes

on employee

stock

transactions

 

Amortization

of other

intangibles

 

Restructuring

& other

 

Non-GAAP

Non-GAAP income from operations:

Cost of revenue

$

163,326

 

 

$

(13,410

)

 

$

(526

)

 

$

(11,669

)

 

$

(380

)

 

$

137,341

 

Gross profit

 

680,729

 

 

 

13,410

 

 

 

526

 

 

 

11,669

 

 

 

380

 

 

 

706,714

 

Gross margin

 

81

%

 

 

 

 

 

 

 

 

 

 

84

%

Research and development (1)

 

156,847

 

 

 

(29,339

)

 

 

(1,259

)

 

 

 

 

 

 

 

 

126,249

 

Sales and marketing (1)

 

323,313

 

 

 

(37,399

)

 

 

(1,195

)

 

 

 

 

 

 

 

 

284,719

 

General and administrative (1)

 

107,485

 

 

 

(24,705

)

 

 

(510

)

 

 

 

 

 

(380

)

 

 

81,890

 

Amortization of other intangibles

 

19,719

 

 

 

 

 

 

 

 

 

(19,719

)

 

 

 

 

 

 

Restructuring and other

 

(15

)

 

 

 

 

 

 

 

 

 

 

 

15

 

 

 

 

Income from operations

$

73,380

 

 

$

104,853

 

 

$

3,490

 

 

$

31,388

 

 

$

745

 

 

$

213,856

 

Operating margin

 

9

%

 

 

 

 

 

 

 

 

 

 

25

%

 

(1) Prior period results have been updated to allocate depreciation expense to operating expenses based upon location and headcount.

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands, except per share data)

 

 

 

 

 

 

 

Nine Months Ended

December 31,

 

 

 

2023

 

 

 

2022

 

Non-GAAP net income:

 

 

Net income

$

116,688

 

$

27,666

 

Income tax expense

 

8,125

 

 

36,392

 

Non-GAAP effective cash tax

 

(58,986

)

 

(23,454

)

Interest (income) expense, net

 

(26,260

)

 

7,475

 

Cash received from (paid for) interest, net

 

24,556

 

 

(637

)

Share-based compensation

 

153,298

 

 

104,853

 

Employer payroll taxes on employee stock transactions

 

10,373

 

 

3,490

 

Amortization of other intangibles

 

16,838

 

 

19,719

 

Amortization of acquired technology

 

12,035

 

 

11,669

 

Transaction, restructuring, and other

 

5,325

 

 

745

 

Loss on currency translation

 

6,724

 

 

1,847

 

Non-GAAP net income

$

268,716

 

$

189,765

 

 

 

 

Share count:

 

 

Weighted-average shares outstanding - basic

 

293,295

 

 

287,120

 

Weighted-average shares outstanding - diluted

 

298,335

 

 

290,803

 

 

 

 

Shares used in non-GAAP per share calculations:

 

 

Weighted-average shares outstanding - basic

 

293,295

 

 

287,120

 

Weighted-average shares outstanding - diluted

 

298,335

 

 

290,803

 

 

 

 

Non-GAAP net income per share:

 

 

Net income per share - basic

$

0.40

 

$

0.10

 

Net income per share - diluted

$

0.39

 

$

0.10

 

Non-GAAP net income per share - basic

$

0.92

 

$

0.66

 

Non-GAAP net income per share - diluted

$

0.90

 

$

0.65

 

 

 

Nine Months Ended

December 31,

 

 

2023

 

 

 

2022

 

Free Cash Flow:

 

 

Net cash provided by operating activities

$

246,437

 

$

234,458

 

Purchase of property and equipment

 

(16,662

)

 

(15,625

)

Capitalized software additions

$

(4,655

)

 

 

Free Cash Flow

$

225,120

 

$

218,833

 

 

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