Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Dynatrace Reports Fourth Quarter and Full Year Fiscal 2024 Financial Results By: Dynatrace via Business Wire May 15, 2024 at 06:30 AM EDT Exceeds high end of guidance across all FY24 metrics Delivers ARR growth of 20% year-over-year on a constant currency basis Achieves FY24 GAAP Operating Margin of 9% and Non-GAAP Operating Margin of 28% Announces $500 million share repurchase program Dynatrace (NYSE: DT), the leader in unified observability and security, today announced financial results for the fourth quarter and full year ended March 31, 2024. “Dynatrace delivered a strong finish to fiscal 2024. Our fourth quarter results exceeded guidance across all key operating metrics, fueled in part by a record number of 7-figure deals closed in the quarter,” said Rick McConnell, Chief Executive Officer. “We continue to see a growing number of companies looking to consolidate often ineffective and costly monitoring tools into a unified observability platform. We believe that our contextual analytics, AI leadership, and automation differentiate us in the market and empower us to capture this opportunity.” Dynatrace also announced today that its Board of Directors has authorized a share repurchase program for up to $500 million of common stock. “The share repurchase program demonstrates our confidence in the business and conviction in our future growth prospects,” said Jim Benson, Chief Financial Officer. “While investing in the business is our foremost priority, this program allows us to leverage our strong balance sheet and cash flow opportunistically to drive shareholder return while also allowing us the flexibility to consider strategic acquisitions to accelerate growth and deliver business value for our customers.” All growth rates are compared to the fourth quarter and full year of fiscal 2023 unless otherwise noted. Fourth Quarter Fiscal 2024 Financial Highlights: Total ARR of $1,504 million, an increase of 21%, or 20% on a constant currency basis Total Revenue of $381 million, an increase of 21%, or 21% on a constant currency basis Subscription Revenue of $360 million, an increase of 23%, or 22% on a constant currency basis GAAP Income from Operations of $23 million and Non-GAAP Income from Operations of $95 million GAAP EPS of $0.13 and non-GAAP EPS of $0.30, on a dilutive basis Full Year Fiscal 2024 Financial Highlights: Total Revenue of $1,431 million, an increase of 23%, or 22% on a constant currency basis Subscription Revenue of $1,359 million, an increase of 25%, or 24% on a constant currency basis GAAP Income from Operations of $128 million and Non-GAAP Income from Operations of $398 million GAAP EPS of $0.52 and non-GAAP EPS of $1.20, on a dilutive basis GAAP Operating Cash Flow of $378 million and Free Cash Flow of $346 million Business Highlights: Go-to-market traction: We closed a record 18 deals greater than $1 million in annual contract value (ACV) in the quarter. Fifteen of these deals were in collaboration with partners, including our first-ever 9-figure total contract value (TCV) deal, which was an expansion deal closed in conjunction with Accenture. We also closed our largest new logo win, a nearly 8-figure ACV deal. Industry recognition: We were named a Leader in the 2024 GigaOm Radar Report for Cloud Observability Solutions, positioned as the vendor closest to the center of the radar, reflecting Dynatrace's industry-leading innovation and ability to deliver the highest impact for customers. Customer recognition: Dynatrace was also recognized as a Customers' Choice in the 2024 Gartner® Peer Insights™ Voice of the Customer for Digital Experience Monitoring report, the only vendor with this distinction.1 Runecast acquisition: We successfully closed the acquisition of Runecast, an AI-powered security and compliance solution provider. We are integrating Runecast technology into the Dynatrace platform to enable customers to prevent cloud misconfigurations and compliance issues proactively with automated, AI-driven, real-time vulnerability assessments. Share Repurchase Program Share repurchases under the new $500 million program may be made from time to time on the open market, pursuant to Rule 10b5-1 trading plans, or other legally permissible means. The share repurchase program has no time limit, does not obligate Dynatrace to acquire a specified number of shares, and may be suspended, modified, or terminated at any time, without prior notice. The number of shares to be repurchased will depend on market conditions and other factors. Repurchases under the program are expected to be funded from a combination of existing cash balances and future cash flow. _____________________ 1 Gartner, Peer Insights Voice of the Customer: Digital Experience Monitoring, 24 April 2024. 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. Fourth Quarter 2024 Financial Highlights (Unaudited – In thousands, except per share data) Three Months Ended March 31, 2024 2023 Key Operating Metric: Annual recurring revenue (ARR) $ 1,503,819 $ 1,246,681 Year-over-Year Increase 21 % Year-over-Year Increase - constant currency (*) 20 % Total revenue $ 380,848 $ 314,475 Year-over-Year Increase 21 % Year-over-Year Increase - constant currency (*) 21 % Subscription revenue $ 360,109 $ 293,314 Year-over-Year Increase 23 % Year-over-Year Increase - constant currency (*) 22 % GAAP Financial Measures: GAAP income from operations $ 23,123 $ 19,431 GAAP operating margin 6 % 6 % GAAP net income $ 37,944 $ 80,293 GAAP net income per share - diluted $ 0.13 $ 0.27 GAAP shares outstanding - diluted 300,867 293,917 Net cash provided by operating activities $ 131,672 $ 120,427 Non-GAAP Financial Measures: Non-GAAP income from operations (*) $ 95,093 $ 77,935 Non-GAAP operating margin (*) 25 % 25 % Non-GAAP net income (*) $ 89,401 $ 92,459 Non-GAAP net income per share - diluted (*) $ 0.30 $ 0.31 Non-GAAP shares outstanding - diluted (*) 300,867 293,917 Free Cash Flow (*) $ 121,262 $ 114,512 Full Year 2024 Financial Highlights (Unaudited – In thousands, except per share data) Year Ended March 31, 2024 2023 Revenue: Total revenue $ 1,430,530 $ 1,158,530 Year-over-Year Increase 23 % Year-over-Year Increase - constant currency (*) 22 % Subscription revenue $ 1,359,354 $ 1,083,330 Year-over-Year Increase 25 % Year-over-Year Increase - constant currency (*) 24 % GAAP Financial Measures: GAAP income from operations $ 128,400 $ 92,811 GAAP operating margin 9 % 8 % GAAP net income $ 154,632 $ 107,959 GAAP net income per share - diluted $ 0.52 $ 0.37 GAAP shares outstanding - diluted 299,280 291,617 Net cash provided by operating activities $ 378,109 $ 354,885 Non-GAAP Financial Measures: Non-GAAP income from operations (*) $ 398,239 $ 291,791 Non-GAAP operating margin (*) 28 % 25 % Non-GAAP net income (*) $ 358,117 $ 282,224 Non-GAAP net income per share - diluted (*) $ 1.20 $ 0.97 Non-GAAP shares outstanding - diluted (*) 299,280 291,617 Free Cash Flow (*) 346,382 333,345 * 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 May 15, 2024, Dynatrace is issuing guidance for the first quarter and full year fiscal 2025 in the table below. This guidance is based on foreign exchange rates as of April 30, 2024. The total foreign exchange headwind for fiscal 2025 is expected to be approximately $10 million on ARR and revenue. 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 are compared to the first quarter and full year of fiscal 2024 unless otherwise noted. (In millions, except per share data) First Quarter Fiscal 2025 Full Year Fiscal 2025* ARR - $1,720 - $1,735 As reported - 14% - 15% Constant currency - 15% - 16% Total revenue $391 - $393 $1,644 - $1,658 As reported 17% - 18% 15% - 16% Constant currency 18% - 19% 16% - 17% Subscription revenue $374 - $376 $1,571 - $1,585 As reported 18% - 19% 16% - 17% Constant currency 19% 16% - 17% Non-GAAP income from operations $105 - $108 $459 - $467 Non-GAAP operating margin 27% - 27.5% 28% Non-GAAP net income $86 - $89 $383 - $392 Non-GAAP net income per diluted share $0.29 - $0.30 $1.26 - $1.29 Diluted weighted average shares outstanding 301 - 302 303 - 305 Free cash flow - $386 - $398 Free cash flow margin - 23.5% - 24% *Guidance growth rates rounded to the nearest percentage point. 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 at 8:00 a.m. Eastern Time today, May 15, 2024. To access the conference call from the U.S. and Canada, dial (866) 405-1247, or internationally, dial (201) 689-8045 with event confirmation #: 13746345. 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 July 15, 2024, by dialing (877) 660-6853 from the U.S. or Canada, or for international callers by dialing (201) 612-7415 and entering event confirmation #: 13746345. 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. 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 (NYSE: DT) exists to make the world’s software work perfectly. Our unified platform combines broad and deep observability and continuous runtime application security with Davis® hypermodal AI 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 industry trends, future financial and operational performance and operational expenditures and investments, the share repurchase program and sources and uses of capital, expected growth, and business outlook, including our financial outlook for the first quarter and full year of fiscal 2025. 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, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, which we plan to file later this month. 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. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended March 31, Twelve Months Ended March 31, 2024 2023 2024 2023 (unaudited) Revenue: Subscription $ 360,109 $ 293,314 $ 1,359,354 $ 1,083,330 Service 20,739 21,161 71,176 75,200 Total revenue 380,848 314,475 1,430,530 1,158,530 Cost of revenue: Cost of subscription 50,181 39,052 184,765 144,445 Cost of service 17,462 16,618 65,423 62,882 Amortization of acquired technology 4,230 3,895 16,265 15,564 Total cost of revenue 71,873 59,565 266,453 222,891 Gross profit 308,975 254,910 1,164,077 935,639 Operating expenses: Research and development 84,271 61,502 304,739 218,349 Sales and marketing 148,788 124,702 534,233 448,015 General and administrative 47,338 42,702 174,412 150,172 Amortization of other intangibles 5,455 6,573 22,293 26,292 Total operating expenses 285,852 235,479 1,035,677 842,828 Income from operations 23,123 19,431 128,400 92,811 Interest income (expense), net 11,024 4,066 37,284 (3,409 ) Other (expense) income, net (4,045 ) 2,412 (10,769 ) 565 Income before income taxes 30,102 25,909 154,915 89,967 Income tax benefit (expense) 7,842 54,384 (283 ) 17,992 Net income $ 37,944 $ 80,293 $ 154,632 $ 107,959 Net income per share: Basic $ 0.13 $ 0.28 $ 0.53 $ 0.38 Diluted $ 0.13 $ 0.27 $ 0.52 $ 0.37 Weighted average shares outstanding: Basic 296,264 289,751 294,051 287,700 Diluted 300,867 293,917 299,280 291,617 SHARE-BASED COMPENSATION Three Months Ended March 31, Twelve Months Ended March 31, 2024 2023 2024 2023 (unaudited) Cost of revenue $ 6,962 $ 4,973 $ 26,622 $ 18,383 Research and development 19,424 12,067 69,543 41,406 Sales and marketing 16,939 13,748 65,762 51,147 General and administrative 12,273 11,233 46,969 35,938 Total share-based compensation expense $ 55,598 $ 42,021 $ 208,896 $ 146,874 DYNATRACE, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) March 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 778,983 $ 555,348 Short-term investments 57,891 — Accounts receivable, net 602,739 442,518 Deferred commissions, current 98,935 83,029 Prepaid expenses and other current assets 66,749 37,289 Total current assets 1,605,297 1,118,184 Long-term investments 46,350 — Property and equipment, net 53,325 53,576 Operating lease right-of-use asset, net 61,390 68,074 Goodwill 1,335,494 1,281,812 Intangible assets, net 50,995 63,599 Deferred tax assets, net 138,836 79,822 Deferred commissions, non-current 93,310 86,232 Other assets 24,782 14,048 Total assets $ 3,409,779 $ 2,765,347 Liabilities and shareholders' equity Current liabilities: Accounts payable $ 21,410 $ 21,953 Accrued expenses, current 233,675 188,380 Deferred revenue, current 987,953 811,058 Operating lease liabilities, current 15,513 15,652 Total current liabilities 1,258,551 1,037,043 Deferred revenue, non-current 62,308 34,423 Accrued expenses, non-current 18,404 29,212 Operating lease liabilities, non-current 54,013 59,520 Deferred tax liabilities 1,013 280 Total liabilities 1,394,289 1,160,478 Shareholders' equity: Common shares, $0.001 par value, 600,000,000 shares authorized, 296,962,547 and 290,411,108 shares issued and outstanding at March 31, 2024 and 2023, respectively 297 290 Additional paid-in capital 2,249,349 1,989,797 Accumulated deficit (198,757 ) (353,389 ) Accumulated other comprehensive loss (35,399 ) (31,829 ) Total shareholders' equity 2,015,490 1,604,869 Total liabilities and shareholders' equity $ 3,409,779 $ 2,765,347 DYNATRACE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended March 31, 2024 2023 Cash flows from operating activities: Net income $ 154,632 $ 107,959 Adjustments to reconcile net income to cash provided by operations: Depreciation 15,499 12,541 Amortization 39,441 42,070 Share-based compensation 208,896 146,874 Loss on extinguishment of debt — 5,925 Deferred income taxes (59,915 ) (53,534 ) Other 11,216 988 Net change in operating assets and liabilities: Accounts receivable (161,888 ) (94,910 ) Deferred commissions (23,520 ) (45,191 ) Prepaid expenses and other assets (47,401 ) 26,753 Accounts payable and accrued expenses 37,896 58,680 Operating leases, net 1,026 1,186 Deferred revenue 202,227 145,544 Net cash provided by operating activities 378,109 354,885 Cash flows from investing activities: Purchase of property and equipment (26,459 ) (21,540 ) Capitalized software additions (5,268 ) — Acquisition of businesses, net of cash acquired (57,111 ) — Purchases of investments (104,210 ) — Net cash used in investing activities (193,048 ) (21,540 ) 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 31,191 32,939 Equity repurchases — (15 ) Net cash used in financing activities 50,663 (232,344 ) Effect of exchange rates on cash and cash equivalents (12,089 ) (8,620 ) Net increase in cash and cash equivalents 223,635 92,381 Cash and cash equivalents, beginning of year 555,348 462,967 Cash and cash equivalents, end of year $ 778,983 $ 555,348 DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands) Three Months Ended March 31, 2024 GAAP Share-based compensation Employer payroll taxes on employee stock transactions Amortization of intangibles Restructuring & other Non-GAAP Non-GAAP income from operations: Cost of revenue $ 71,873 $ (6,962 ) $ (542 ) $ (4,230 ) $ — $ 60,139 Gross profit 308,975 6,962 542 4,230 — 320,709 Gross margin 81 % 84 % Research and development 84,271 (19,424 ) (1,055 ) — (26 ) 63,766 Sales and marketing 148,788 (16,939 ) (1,626 ) — (615 ) 129,608 General and administrative 47,338 (12,273 ) (392 ) — (2,431 ) 32,242 Amortization of other intangibles 5,455 — — (5,455 ) — — Income from operations $ 23,123 $ 55,598 $ 3,615 $ 9,685 $ 3,072 $ 95,093 Operating margin 6 % 25 % Three Months Ended March 31, 2023 GAAP Share-based compensation Employer payroll taxes on employee stock transactions Amortization of intangibles Restructuring & other Non-GAAP Non-GAAP income from operations: Cost of revenue $ 59,565 $ (4,973 ) $ (272 ) $ (3,895 ) $ — $ 50,425 Gross profit 254,910 4,973 272 3,895 — 264,050 Gross margin 81 % 84 % Research and development 61,502 (12,067 ) (445 ) — — 48,990 Sales and marketing 124,702 (13,748 ) (1,143 ) — (1,332 ) 108,479 General and administrative 42,702 (11,233 ) (841 ) — (1,982 ) 28,646 Amortization of other intangibles 6,573 — — (6,573 ) — — Income from operations $ 19,431 $ 42,021 $ 2,701 $ 10,468 $ 3,314 $ 77,935 Operating margin 6 % 25 % DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands, except per share data) Three Months Ended March 31, 2024 2023 Non-GAAP net income: Net income $ 37,944 $ 80,293 Income tax benefit (7,842 ) (54,384 ) Non-GAAP effective cash tax (16,618 ) 10,084 Interest income, net (11,024 ) (4,066 ) Cash received from interest, net 10,926 4,440 Share-based compensation 55,598 42,021 Employer payroll taxes on employee stock transactions 3,615 2,701 Amortization of other intangibles 5,455 6,573 Amortization of acquired technology 4,230 3,895 Transaction, restructuring, and other 3,072 3,314 Loss (gain) on currency translation 4,045 (2,412 ) Non-GAAP net income $ 89,401 $ 92,459 Share count: Weighted-average shares outstanding - basic 296,264 289,751 Weighted-average shares outstanding - diluted 300,867 293,917 Shares used in non-GAAP per share calculations: Weighted-average shares outstanding - basic 296,264 289,751 Weighted-average shares outstanding - diluted 300,867 293,917 Non-GAAP net income per share: Net income per share - basic $ 0.13 $ 0.28 Net income per share - diluted $ 0.13 $ 0.27 Non-GAAP net income per share - basic $ 0.30 $ 0.32 Non-GAAP net income per share - diluted $ 0.30 $ 0.31 Three Months Ended March 31, 2024 2023 Free Cash Flow: Net cash provided by operating activities $ 131,672 $ 120,427 Purchase of property and equipment (9,797 ) (5,915 ) Capitalized software additions (613 ) — Free Cash Flow $ 121,262 $ 114,512 DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands) Year Ended March 31, 2024 GAAP Share-based compensation Employer payroll taxes on employee stock transactions Amortization of intangibles Restructuring & other Non-GAAP Non-GAAP income from operations: Cost of revenue $ 266,453 $ (26,622 ) $ (2,058 ) $ (16,265 ) $ — $ 221,508 Gross profit 1,164,077 26,622 2,058 16,265 — 1,209,022 Gross margin 81 % 85 % Research and development (1) 304,739 (69,543 ) (5,446 ) — (26 ) 229,724 Sales and marketing (1) 534,233 (65,762 ) (4,967 ) — (216 ) 463,288 General and administrative (1) 174,412 (46,969 ) (1,517 ) — (8,155 ) 117,771 Amortization of other intangibles 22,293 — — (22,293 ) — — Income from operations $ 128,400 $ 208,896 $ 13,988 $ 38,558 $ 8,397 $ 398,239 Operating margin 9 % 28 % Year Ended March 31, 2023 GAAP Share-based compensation Employer payroll taxes on employee stock transactions Amortization of intangibles Restructuring & other Non-GAAP Non-GAAP income from operations: Cost of revenue $ 222,891 $ (18,383 ) $ (798 ) $ (15,564 ) $ (380 ) $ 187,766 Gross profit 935,639 18,383 798 15,564 380 970,764 Gross margin 81 % 84 % Research and development 218,349 (41,406 ) (1,704 ) — — 175,239 Sales and marketing 448,015 (51,147 ) �� (2,338 ) — (1,332 ) 393,198 General and administrative 150,172 (35,938 ) (1,351 ) — (2,347 ) 110,536 Amortization of other intangibles 26,292 — — (26,292 ) — — Income from operations $ 92,811 $ 146,874 $ 6,191 $ 41,856 $ 4,059 $ 291,791 Operating margin 8 % 25 % DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands, except per share data) Year Ended March 31, 2024 2023 Non-GAAP net income: Net income $ 154,632 $ 107,959 Income tax expense (benefit) 283 (17,992 ) Non-GAAP effective cash tax (75,604 ) (13,370 ) Interest (income) expense, net (37,284 ) 3,409 Cash received from interest, net 35,482 3,803 Share-based compensation 208,896 146,874 Employer payroll taxes on employee stock transactions 13,988 6,191 Amortization of other intangibles 22,293 26,292 Amortization of acquired technology 16,265 15,564 Transaction, restructuring, and other 8,397 4,059 Loss (gain) on currency translation 10,769 (565 ) Non-GAAP net income $ 358,117 $ 282,224 Share count: Weighted-average shares outstanding - basic 294,051 287,700 Weighted-average shares outstanding - diluted 299,280 291,617 Shares used in non-GAAP per share calculations: Weighted-average shares outstanding - basic 294,051 287,700 Weighted-average shares outstanding - diluted 299,280 291,617 Non-GAAP net income per share: Net income per share - basic $ 0.53 $ 0.38 Net income per share - diluted $ 0.52 $ 0.37 Non-GAAP net income per share - basic $ 1.22 $ 0.98 Non-GAAP net income per share - diluted $ 1.20 $ 0.97 Year Ended March 31, 2024 2023 Free Cash Flow: Net cash provided by operating activities $ 378,109 $ 354,885 Purchase of property and equipment (26,459 ) (21,540 ) Capitalized software additions (5,268 ) — Free Cash Flow 346,382 333,345 View source version on businesswire.com: https://www.businesswire.com/news/home/20240515870566/en/Contacts Investor Contact: Noelle Faris VP, Investor Relations Noelle.Faris@dynatrace.com Media Relations: Jerome Stewart VP, Marketing Jerome.Stewart@dynatrace.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Dynatrace Reports Fourth Quarter and Full Year Fiscal 2024 Financial Results By: Dynatrace via Business Wire May 15, 2024 at 06:30 AM EDT Exceeds high end of guidance across all FY24 metrics Delivers ARR growth of 20% year-over-year on a constant currency basis Achieves FY24 GAAP Operating Margin of 9% and Non-GAAP Operating Margin of 28% Announces $500 million share repurchase program Dynatrace (NYSE: DT), the leader in unified observability and security, today announced financial results for the fourth quarter and full year ended March 31, 2024. “Dynatrace delivered a strong finish to fiscal 2024. Our fourth quarter results exceeded guidance across all key operating metrics, fueled in part by a record number of 7-figure deals closed in the quarter,” said Rick McConnell, Chief Executive Officer. “We continue to see a growing number of companies looking to consolidate often ineffective and costly monitoring tools into a unified observability platform. We believe that our contextual analytics, AI leadership, and automation differentiate us in the market and empower us to capture this opportunity.” Dynatrace also announced today that its Board of Directors has authorized a share repurchase program for up to $500 million of common stock. “The share repurchase program demonstrates our confidence in the business and conviction in our future growth prospects,” said Jim Benson, Chief Financial Officer. “While investing in the business is our foremost priority, this program allows us to leverage our strong balance sheet and cash flow opportunistically to drive shareholder return while also allowing us the flexibility to consider strategic acquisitions to accelerate growth and deliver business value for our customers.” All growth rates are compared to the fourth quarter and full year of fiscal 2023 unless otherwise noted. Fourth Quarter Fiscal 2024 Financial Highlights: Total ARR of $1,504 million, an increase of 21%, or 20% on a constant currency basis Total Revenue of $381 million, an increase of 21%, or 21% on a constant currency basis Subscription Revenue of $360 million, an increase of 23%, or 22% on a constant currency basis GAAP Income from Operations of $23 million and Non-GAAP Income from Operations of $95 million GAAP EPS of $0.13 and non-GAAP EPS of $0.30, on a dilutive basis Full Year Fiscal 2024 Financial Highlights: Total Revenue of $1,431 million, an increase of 23%, or 22% on a constant currency basis Subscription Revenue of $1,359 million, an increase of 25%, or 24% on a constant currency basis GAAP Income from Operations of $128 million and Non-GAAP Income from Operations of $398 million GAAP EPS of $0.52 and non-GAAP EPS of $1.20, on a dilutive basis GAAP Operating Cash Flow of $378 million and Free Cash Flow of $346 million Business Highlights: Go-to-market traction: We closed a record 18 deals greater than $1 million in annual contract value (ACV) in the quarter. Fifteen of these deals were in collaboration with partners, including our first-ever 9-figure total contract value (TCV) deal, which was an expansion deal closed in conjunction with Accenture. We also closed our largest new logo win, a nearly 8-figure ACV deal. Industry recognition: We were named a Leader in the 2024 GigaOm Radar Report for Cloud Observability Solutions, positioned as the vendor closest to the center of the radar, reflecting Dynatrace's industry-leading innovation and ability to deliver the highest impact for customers. Customer recognition: Dynatrace was also recognized as a Customers' Choice in the 2024 Gartner® Peer Insights™ Voice of the Customer for Digital Experience Monitoring report, the only vendor with this distinction.1 Runecast acquisition: We successfully closed the acquisition of Runecast, an AI-powered security and compliance solution provider. We are integrating Runecast technology into the Dynatrace platform to enable customers to prevent cloud misconfigurations and compliance issues proactively with automated, AI-driven, real-time vulnerability assessments. Share Repurchase Program Share repurchases under the new $500 million program may be made from time to time on the open market, pursuant to Rule 10b5-1 trading plans, or other legally permissible means. The share repurchase program has no time limit, does not obligate Dynatrace to acquire a specified number of shares, and may be suspended, modified, or terminated at any time, without prior notice. The number of shares to be repurchased will depend on market conditions and other factors. Repurchases under the program are expected to be funded from a combination of existing cash balances and future cash flow. _____________________ 1 Gartner, Peer Insights Voice of the Customer: Digital Experience Monitoring, 24 April 2024. 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. Fourth Quarter 2024 Financial Highlights (Unaudited – In thousands, except per share data) Three Months Ended March 31, 2024 2023 Key Operating Metric: Annual recurring revenue (ARR) $ 1,503,819 $ 1,246,681 Year-over-Year Increase 21 % Year-over-Year Increase - constant currency (*) 20 % Total revenue $ 380,848 $ 314,475 Year-over-Year Increase 21 % Year-over-Year Increase - constant currency (*) 21 % Subscription revenue $ 360,109 $ 293,314 Year-over-Year Increase 23 % Year-over-Year Increase - constant currency (*) 22 % GAAP Financial Measures: GAAP income from operations $ 23,123 $ 19,431 GAAP operating margin 6 % 6 % GAAP net income $ 37,944 $ 80,293 GAAP net income per share - diluted $ 0.13 $ 0.27 GAAP shares outstanding - diluted 300,867 293,917 Net cash provided by operating activities $ 131,672 $ 120,427 Non-GAAP Financial Measures: Non-GAAP income from operations (*) $ 95,093 $ 77,935 Non-GAAP operating margin (*) 25 % 25 % Non-GAAP net income (*) $ 89,401 $ 92,459 Non-GAAP net income per share - diluted (*) $ 0.30 $ 0.31 Non-GAAP shares outstanding - diluted (*) 300,867 293,917 Free Cash Flow (*) $ 121,262 $ 114,512 Full Year 2024 Financial Highlights (Unaudited – In thousands, except per share data) Year Ended March 31, 2024 2023 Revenue: Total revenue $ 1,430,530 $ 1,158,530 Year-over-Year Increase 23 % Year-over-Year Increase - constant currency (*) 22 % Subscription revenue $ 1,359,354 $ 1,083,330 Year-over-Year Increase 25 % Year-over-Year Increase - constant currency (*) 24 % GAAP Financial Measures: GAAP income from operations $ 128,400 $ 92,811 GAAP operating margin 9 % 8 % GAAP net income $ 154,632 $ 107,959 GAAP net income per share - diluted $ 0.52 $ 0.37 GAAP shares outstanding - diluted 299,280 291,617 Net cash provided by operating activities $ 378,109 $ 354,885 Non-GAAP Financial Measures: Non-GAAP income from operations (*) $ 398,239 $ 291,791 Non-GAAP operating margin (*) 28 % 25 % Non-GAAP net income (*) $ 358,117 $ 282,224 Non-GAAP net income per share - diluted (*) $ 1.20 $ 0.97 Non-GAAP shares outstanding - diluted (*) 299,280 291,617 Free Cash Flow (*) 346,382 333,345 * 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 May 15, 2024, Dynatrace is issuing guidance for the first quarter and full year fiscal 2025 in the table below. This guidance is based on foreign exchange rates as of April 30, 2024. The total foreign exchange headwind for fiscal 2025 is expected to be approximately $10 million on ARR and revenue. 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 are compared to the first quarter and full year of fiscal 2024 unless otherwise noted. (In millions, except per share data) First Quarter Fiscal 2025 Full Year Fiscal 2025* ARR - $1,720 - $1,735 As reported - 14% - 15% Constant currency - 15% - 16% Total revenue $391 - $393 $1,644 - $1,658 As reported 17% - 18% 15% - 16% Constant currency 18% - 19% 16% - 17% Subscription revenue $374 - $376 $1,571 - $1,585 As reported 18% - 19% 16% - 17% Constant currency 19% 16% - 17% Non-GAAP income from operations $105 - $108 $459 - $467 Non-GAAP operating margin 27% - 27.5% 28% Non-GAAP net income $86 - $89 $383 - $392 Non-GAAP net income per diluted share $0.29 - $0.30 $1.26 - $1.29 Diluted weighted average shares outstanding 301 - 302 303 - 305 Free cash flow - $386 - $398 Free cash flow margin - 23.5% - 24% *Guidance growth rates rounded to the nearest percentage point. 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 at 8:00 a.m. Eastern Time today, May 15, 2024. To access the conference call from the U.S. and Canada, dial (866) 405-1247, or internationally, dial (201) 689-8045 with event confirmation #: 13746345. 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 July 15, 2024, by dialing (877) 660-6853 from the U.S. or Canada, or for international callers by dialing (201) 612-7415 and entering event confirmation #: 13746345. 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. 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 (NYSE: DT) exists to make the world’s software work perfectly. Our unified platform combines broad and deep observability and continuous runtime application security with Davis® hypermodal AI 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 industry trends, future financial and operational performance and operational expenditures and investments, the share repurchase program and sources and uses of capital, expected growth, and business outlook, including our financial outlook for the first quarter and full year of fiscal 2025. 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, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, which we plan to file later this month. 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. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended March 31, Twelve Months Ended March 31, 2024 2023 2024 2023 (unaudited) Revenue: Subscription $ 360,109 $ 293,314 $ 1,359,354 $ 1,083,330 Service 20,739 21,161 71,176 75,200 Total revenue 380,848 314,475 1,430,530 1,158,530 Cost of revenue: Cost of subscription 50,181 39,052 184,765 144,445 Cost of service 17,462 16,618 65,423 62,882 Amortization of acquired technology 4,230 3,895 16,265 15,564 Total cost of revenue 71,873 59,565 266,453 222,891 Gross profit 308,975 254,910 1,164,077 935,639 Operating expenses: Research and development 84,271 61,502 304,739 218,349 Sales and marketing 148,788 124,702 534,233 448,015 General and administrative 47,338 42,702 174,412 150,172 Amortization of other intangibles 5,455 6,573 22,293 26,292 Total operating expenses 285,852 235,479 1,035,677 842,828 Income from operations 23,123 19,431 128,400 92,811 Interest income (expense), net 11,024 4,066 37,284 (3,409 ) Other (expense) income, net (4,045 ) 2,412 (10,769 ) 565 Income before income taxes 30,102 25,909 154,915 89,967 Income tax benefit (expense) 7,842 54,384 (283 ) 17,992 Net income $ 37,944 $ 80,293 $ 154,632 $ 107,959 Net income per share: Basic $ 0.13 $ 0.28 $ 0.53 $ 0.38 Diluted $ 0.13 $ 0.27 $ 0.52 $ 0.37 Weighted average shares outstanding: Basic 296,264 289,751 294,051 287,700 Diluted 300,867 293,917 299,280 291,617 SHARE-BASED COMPENSATION Three Months Ended March 31, Twelve Months Ended March 31, 2024 2023 2024 2023 (unaudited) Cost of revenue $ 6,962 $ 4,973 $ 26,622 $ 18,383 Research and development 19,424 12,067 69,543 41,406 Sales and marketing 16,939 13,748 65,762 51,147 General and administrative 12,273 11,233 46,969 35,938 Total share-based compensation expense $ 55,598 $ 42,021 $ 208,896 $ 146,874 DYNATRACE, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) March 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 778,983 $ 555,348 Short-term investments 57,891 — Accounts receivable, net 602,739 442,518 Deferred commissions, current 98,935 83,029 Prepaid expenses and other current assets 66,749 37,289 Total current assets 1,605,297 1,118,184 Long-term investments 46,350 — Property and equipment, net 53,325 53,576 Operating lease right-of-use asset, net 61,390 68,074 Goodwill 1,335,494 1,281,812 Intangible assets, net 50,995 63,599 Deferred tax assets, net 138,836 79,822 Deferred commissions, non-current 93,310 86,232 Other assets 24,782 14,048 Total assets $ 3,409,779 $ 2,765,347 Liabilities and shareholders' equity Current liabilities: Accounts payable $ 21,410 $ 21,953 Accrued expenses, current 233,675 188,380 Deferred revenue, current 987,953 811,058 Operating lease liabilities, current 15,513 15,652 Total current liabilities 1,258,551 1,037,043 Deferred revenue, non-current 62,308 34,423 Accrued expenses, non-current 18,404 29,212 Operating lease liabilities, non-current 54,013 59,520 Deferred tax liabilities 1,013 280 Total liabilities 1,394,289 1,160,478 Shareholders' equity: Common shares, $0.001 par value, 600,000,000 shares authorized, 296,962,547 and 290,411,108 shares issued and outstanding at March 31, 2024 and 2023, respectively 297 290 Additional paid-in capital 2,249,349 1,989,797 Accumulated deficit (198,757 ) (353,389 ) Accumulated other comprehensive loss (35,399 ) (31,829 ) Total shareholders' equity 2,015,490 1,604,869 Total liabilities and shareholders' equity $ 3,409,779 $ 2,765,347 DYNATRACE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended March 31, 2024 2023 Cash flows from operating activities: Net income $ 154,632 $ 107,959 Adjustments to reconcile net income to cash provided by operations: Depreciation 15,499 12,541 Amortization 39,441 42,070 Share-based compensation 208,896 146,874 Loss on extinguishment of debt — 5,925 Deferred income taxes (59,915 ) (53,534 ) Other 11,216 988 Net change in operating assets and liabilities: Accounts receivable (161,888 ) (94,910 ) Deferred commissions (23,520 ) (45,191 ) Prepaid expenses and other assets (47,401 ) 26,753 Accounts payable and accrued expenses 37,896 58,680 Operating leases, net 1,026 1,186 Deferred revenue 202,227 145,544 Net cash provided by operating activities 378,109 354,885 Cash flows from investing activities: Purchase of property and equipment (26,459 ) (21,540 ) Capitalized software additions (5,268 ) — Acquisition of businesses, net of cash acquired (57,111 ) — Purchases of investments (104,210 ) — Net cash used in investing activities (193,048 ) (21,540 ) 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 31,191 32,939 Equity repurchases — (15 ) Net cash used in financing activities 50,663 (232,344 ) Effect of exchange rates on cash and cash equivalents (12,089 ) (8,620 ) Net increase in cash and cash equivalents 223,635 92,381 Cash and cash equivalents, beginning of year 555,348 462,967 Cash and cash equivalents, end of year $ 778,983 $ 555,348 DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands) Three Months Ended March 31, 2024 GAAP Share-based compensation Employer payroll taxes on employee stock transactions Amortization of intangibles Restructuring & other Non-GAAP Non-GAAP income from operations: Cost of revenue $ 71,873 $ (6,962 ) $ (542 ) $ (4,230 ) $ — $ 60,139 Gross profit 308,975 6,962 542 4,230 — 320,709 Gross margin 81 % 84 % Research and development 84,271 (19,424 ) (1,055 ) — (26 ) 63,766 Sales and marketing 148,788 (16,939 ) (1,626 ) — (615 ) 129,608 General and administrative 47,338 (12,273 ) (392 ) — (2,431 ) 32,242 Amortization of other intangibles 5,455 — — (5,455 ) — — Income from operations $ 23,123 $ 55,598 $ 3,615 $ 9,685 $ 3,072 $ 95,093 Operating margin 6 % 25 % Three Months Ended March 31, 2023 GAAP Share-based compensation Employer payroll taxes on employee stock transactions Amortization of intangibles Restructuring & other Non-GAAP Non-GAAP income from operations: Cost of revenue $ 59,565 $ (4,973 ) $ (272 ) $ (3,895 ) $ — $ 50,425 Gross profit 254,910 4,973 272 3,895 — 264,050 Gross margin 81 % 84 % Research and development 61,502 (12,067 ) (445 ) — — 48,990 Sales and marketing 124,702 (13,748 ) (1,143 ) — (1,332 ) 108,479 General and administrative 42,702 (11,233 ) (841 ) — (1,982 ) 28,646 Amortization of other intangibles 6,573 — — (6,573 ) — — Income from operations $ 19,431 $ 42,021 $ 2,701 $ 10,468 $ 3,314 $ 77,935 Operating margin 6 % 25 % DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands, except per share data) Three Months Ended March 31, 2024 2023 Non-GAAP net income: Net income $ 37,944 $ 80,293 Income tax benefit (7,842 ) (54,384 ) Non-GAAP effective cash tax (16,618 ) 10,084 Interest income, net (11,024 ) (4,066 ) Cash received from interest, net 10,926 4,440 Share-based compensation 55,598 42,021 Employer payroll taxes on employee stock transactions 3,615 2,701 Amortization of other intangibles 5,455 6,573 Amortization of acquired technology 4,230 3,895 Transaction, restructuring, and other 3,072 3,314 Loss (gain) on currency translation 4,045 (2,412 ) Non-GAAP net income $ 89,401 $ 92,459 Share count: Weighted-average shares outstanding - basic 296,264 289,751 Weighted-average shares outstanding - diluted 300,867 293,917 Shares used in non-GAAP per share calculations: Weighted-average shares outstanding - basic 296,264 289,751 Weighted-average shares outstanding - diluted 300,867 293,917 Non-GAAP net income per share: Net income per share - basic $ 0.13 $ 0.28 Net income per share - diluted $ 0.13 $ 0.27 Non-GAAP net income per share - basic $ 0.30 $ 0.32 Non-GAAP net income per share - diluted $ 0.30 $ 0.31 Three Months Ended March 31, 2024 2023 Free Cash Flow: Net cash provided by operating activities $ 131,672 $ 120,427 Purchase of property and equipment (9,797 ) (5,915 ) Capitalized software additions (613 ) — Free Cash Flow $ 121,262 $ 114,512 DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands) Year Ended March 31, 2024 GAAP Share-based compensation Employer payroll taxes on employee stock transactions Amortization of intangibles Restructuring & other Non-GAAP Non-GAAP income from operations: Cost of revenue $ 266,453 $ (26,622 ) $ (2,058 ) $ (16,265 ) $ — $ 221,508 Gross profit 1,164,077 26,622 2,058 16,265 — 1,209,022 Gross margin 81 % 85 % Research and development (1) 304,739 (69,543 ) (5,446 ) — (26 ) 229,724 Sales and marketing (1) 534,233 (65,762 ) (4,967 ) — (216 ) 463,288 General and administrative (1) 174,412 (46,969 ) (1,517 ) — (8,155 ) 117,771 Amortization of other intangibles 22,293 — — (22,293 ) — — Income from operations $ 128,400 $ 208,896 $ 13,988 $ 38,558 $ 8,397 $ 398,239 Operating margin 9 % 28 % Year Ended March 31, 2023 GAAP Share-based compensation Employer payroll taxes on employee stock transactions Amortization of intangibles Restructuring & other Non-GAAP Non-GAAP income from operations: Cost of revenue $ 222,891 $ (18,383 ) $ (798 ) $ (15,564 ) $ (380 ) $ 187,766 Gross profit 935,639 18,383 798 15,564 380 970,764 Gross margin 81 % 84 % Research and development 218,349 (41,406 ) (1,704 ) — — 175,239 Sales and marketing 448,015 (51,147 ) �� (2,338 ) — (1,332 ) 393,198 General and administrative 150,172 (35,938 ) (1,351 ) — (2,347 ) 110,536 Amortization of other intangibles 26,292 — — (26,292 ) — — Income from operations $ 92,811 $ 146,874 $ 6,191 $ 41,856 $ 4,059 $ 291,791 Operating margin 8 % 25 % DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands, except per share data) Year Ended March 31, 2024 2023 Non-GAAP net income: Net income $ 154,632 $ 107,959 Income tax expense (benefit) 283 (17,992 ) Non-GAAP effective cash tax (75,604 ) (13,370 ) Interest (income) expense, net (37,284 ) 3,409 Cash received from interest, net 35,482 3,803 Share-based compensation 208,896 146,874 Employer payroll taxes on employee stock transactions 13,988 6,191 Amortization of other intangibles 22,293 26,292 Amortization of acquired technology 16,265 15,564 Transaction, restructuring, and other 8,397 4,059 Loss (gain) on currency translation 10,769 (565 ) Non-GAAP net income $ 358,117 $ 282,224 Share count: Weighted-average shares outstanding - basic 294,051 287,700 Weighted-average shares outstanding - diluted 299,280 291,617 Shares used in non-GAAP per share calculations: Weighted-average shares outstanding - basic 294,051 287,700 Weighted-average shares outstanding - diluted 299,280 291,617 Non-GAAP net income per share: Net income per share - basic $ 0.53 $ 0.38 Net income per share - diluted $ 0.52 $ 0.37 Non-GAAP net income per share - basic $ 1.22 $ 0.98 Non-GAAP net income per share - diluted $ 1.20 $ 0.97 Year Ended March 31, 2024 2023 Free Cash Flow: Net cash provided by operating activities $ 378,109 $ 354,885 Purchase of property and equipment (26,459 ) (21,540 ) Capitalized software additions (5,268 ) — Free Cash Flow 346,382 333,345 View source version on businesswire.com: https://www.businesswire.com/news/home/20240515870566/en/Contacts Investor Contact: Noelle Faris VP, Investor Relations Noelle.Faris@dynatrace.com Media Relations: Jerome Stewart VP, Marketing Jerome.Stewart@dynatrace.com
Exceeds high end of guidance across all FY24 metrics Delivers ARR growth of 20% year-over-year on a constant currency basis Achieves FY24 GAAP Operating Margin of 9% and Non-GAAP Operating Margin of 28% Announces $500 million share repurchase program
Dynatrace (NYSE: DT), the leader in unified observability and security, today announced financial results for the fourth quarter and full year ended March 31, 2024. “Dynatrace delivered a strong finish to fiscal 2024. Our fourth quarter results exceeded guidance across all key operating metrics, fueled in part by a record number of 7-figure deals closed in the quarter,” said Rick McConnell, Chief Executive Officer. “We continue to see a growing number of companies looking to consolidate often ineffective and costly monitoring tools into a unified observability platform. We believe that our contextual analytics, AI leadership, and automation differentiate us in the market and empower us to capture this opportunity.” Dynatrace also announced today that its Board of Directors has authorized a share repurchase program for up to $500 million of common stock. “The share repurchase program demonstrates our confidence in the business and conviction in our future growth prospects,” said Jim Benson, Chief Financial Officer. “While investing in the business is our foremost priority, this program allows us to leverage our strong balance sheet and cash flow opportunistically to drive shareholder return while also allowing us the flexibility to consider strategic acquisitions to accelerate growth and deliver business value for our customers.” All growth rates are compared to the fourth quarter and full year of fiscal 2023 unless otherwise noted. Fourth Quarter Fiscal 2024 Financial Highlights: Total ARR of $1,504 million, an increase of 21%, or 20% on a constant currency basis Total Revenue of $381 million, an increase of 21%, or 21% on a constant currency basis Subscription Revenue of $360 million, an increase of 23%, or 22% on a constant currency basis GAAP Income from Operations of $23 million and Non-GAAP Income from Operations of $95 million GAAP EPS of $0.13 and non-GAAP EPS of $0.30, on a dilutive basis Full Year Fiscal 2024 Financial Highlights: Total Revenue of $1,431 million, an increase of 23%, or 22% on a constant currency basis Subscription Revenue of $1,359 million, an increase of 25%, or 24% on a constant currency basis GAAP Income from Operations of $128 million and Non-GAAP Income from Operations of $398 million GAAP EPS of $0.52 and non-GAAP EPS of $1.20, on a dilutive basis GAAP Operating Cash Flow of $378 million and Free Cash Flow of $346 million Business Highlights: Go-to-market traction: We closed a record 18 deals greater than $1 million in annual contract value (ACV) in the quarter. Fifteen of these deals were in collaboration with partners, including our first-ever 9-figure total contract value (TCV) deal, which was an expansion deal closed in conjunction with Accenture. We also closed our largest new logo win, a nearly 8-figure ACV deal. Industry recognition: We were named a Leader in the 2024 GigaOm Radar Report for Cloud Observability Solutions, positioned as the vendor closest to the center of the radar, reflecting Dynatrace's industry-leading innovation and ability to deliver the highest impact for customers. Customer recognition: Dynatrace was also recognized as a Customers' Choice in the 2024 Gartner® Peer Insights™ Voice of the Customer for Digital Experience Monitoring report, the only vendor with this distinction.1 Runecast acquisition: We successfully closed the acquisition of Runecast, an AI-powered security and compliance solution provider. We are integrating Runecast technology into the Dynatrace platform to enable customers to prevent cloud misconfigurations and compliance issues proactively with automated, AI-driven, real-time vulnerability assessments. Share Repurchase Program Share repurchases under the new $500 million program may be made from time to time on the open market, pursuant to Rule 10b5-1 trading plans, or other legally permissible means. The share repurchase program has no time limit, does not obligate Dynatrace to acquire a specified number of shares, and may be suspended, modified, or terminated at any time, without prior notice. The number of shares to be repurchased will depend on market conditions and other factors. Repurchases under the program are expected to be funded from a combination of existing cash balances and future cash flow. _____________________ 1 Gartner, Peer Insights Voice of the Customer: Digital Experience Monitoring, 24 April 2024. 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. Fourth Quarter 2024 Financial Highlights (Unaudited – In thousands, except per share data) Three Months Ended March 31, 2024 2023 Key Operating Metric: Annual recurring revenue (ARR) $ 1,503,819 $ 1,246,681 Year-over-Year Increase 21 % Year-over-Year Increase - constant currency (*) 20 % Total revenue $ 380,848 $ 314,475 Year-over-Year Increase 21 % Year-over-Year Increase - constant currency (*) 21 % Subscription revenue $ 360,109 $ 293,314 Year-over-Year Increase 23 % Year-over-Year Increase - constant currency (*) 22 % GAAP Financial Measures: GAAP income from operations $ 23,123 $ 19,431 GAAP operating margin 6 % 6 % GAAP net income $ 37,944 $ 80,293 GAAP net income per share - diluted $ 0.13 $ 0.27 GAAP shares outstanding - diluted 300,867 293,917 Net cash provided by operating activities $ 131,672 $ 120,427 Non-GAAP Financial Measures: Non-GAAP income from operations (*) $ 95,093 $ 77,935 Non-GAAP operating margin (*) 25 % 25 % Non-GAAP net income (*) $ 89,401 $ 92,459 Non-GAAP net income per share - diluted (*) $ 0.30 $ 0.31 Non-GAAP shares outstanding - diluted (*) 300,867 293,917 Free Cash Flow (*) $ 121,262 $ 114,512 Full Year 2024 Financial Highlights (Unaudited – In thousands, except per share data) Year Ended March 31, 2024 2023 Revenue: Total revenue $ 1,430,530 $ 1,158,530 Year-over-Year Increase 23 % Year-over-Year Increase - constant currency (*) 22 % Subscription revenue $ 1,359,354 $ 1,083,330 Year-over-Year Increase 25 % Year-over-Year Increase - constant currency (*) 24 % GAAP Financial Measures: GAAP income from operations $ 128,400 $ 92,811 GAAP operating margin 9 % 8 % GAAP net income $ 154,632 $ 107,959 GAAP net income per share - diluted $ 0.52 $ 0.37 GAAP shares outstanding - diluted 299,280 291,617 Net cash provided by operating activities $ 378,109 $ 354,885 Non-GAAP Financial Measures: Non-GAAP income from operations (*) $ 398,239 $ 291,791 Non-GAAP operating margin (*) 28 % 25 % Non-GAAP net income (*) $ 358,117 $ 282,224 Non-GAAP net income per share - diluted (*) $ 1.20 $ 0.97 Non-GAAP shares outstanding - diluted (*) 299,280 291,617 Free Cash Flow (*) 346,382 333,345 * 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 May 15, 2024, Dynatrace is issuing guidance for the first quarter and full year fiscal 2025 in the table below. This guidance is based on foreign exchange rates as of April 30, 2024. The total foreign exchange headwind for fiscal 2025 is expected to be approximately $10 million on ARR and revenue. 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 are compared to the first quarter and full year of fiscal 2024 unless otherwise noted. (In millions, except per share data) First Quarter Fiscal 2025 Full Year Fiscal 2025* ARR - $1,720 - $1,735 As reported - 14% - 15% Constant currency - 15% - 16% Total revenue $391 - $393 $1,644 - $1,658 As reported 17% - 18% 15% - 16% Constant currency 18% - 19% 16% - 17% Subscription revenue $374 - $376 $1,571 - $1,585 As reported 18% - 19% 16% - 17% Constant currency 19% 16% - 17% Non-GAAP income from operations $105 - $108 $459 - $467 Non-GAAP operating margin 27% - 27.5% 28% Non-GAAP net income $86 - $89 $383 - $392 Non-GAAP net income per diluted share $0.29 - $0.30 $1.26 - $1.29 Diluted weighted average shares outstanding 301 - 302 303 - 305 Free cash flow - $386 - $398 Free cash flow margin - 23.5% - 24% *Guidance growth rates rounded to the nearest percentage point. 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 at 8:00 a.m. Eastern Time today, May 15, 2024. To access the conference call from the U.S. and Canada, dial (866) 405-1247, or internationally, dial (201) 689-8045 with event confirmation #: 13746345. 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 July 15, 2024, by dialing (877) 660-6853 from the U.S. or Canada, or for international callers by dialing (201) 612-7415 and entering event confirmation #: 13746345. 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. 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 (NYSE: DT) exists to make the world’s software work perfectly. Our unified platform combines broad and deep observability and continuous runtime application security with Davis® hypermodal AI 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 industry trends, future financial and operational performance and operational expenditures and investments, the share repurchase program and sources and uses of capital, expected growth, and business outlook, including our financial outlook for the first quarter and full year of fiscal 2025. 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, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, which we plan to file later this month. 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. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended March 31, Twelve Months Ended March 31, 2024 2023 2024 2023 (unaudited) Revenue: Subscription $ 360,109 $ 293,314 $ 1,359,354 $ 1,083,330 Service 20,739 21,161 71,176 75,200 Total revenue 380,848 314,475 1,430,530 1,158,530 Cost of revenue: Cost of subscription 50,181 39,052 184,765 144,445 Cost of service 17,462 16,618 65,423 62,882 Amortization of acquired technology 4,230 3,895 16,265 15,564 Total cost of revenue 71,873 59,565 266,453 222,891 Gross profit 308,975 254,910 1,164,077 935,639 Operating expenses: Research and development 84,271 61,502 304,739 218,349 Sales and marketing 148,788 124,702 534,233 448,015 General and administrative 47,338 42,702 174,412 150,172 Amortization of other intangibles 5,455 6,573 22,293 26,292 Total operating expenses 285,852 235,479 1,035,677 842,828 Income from operations 23,123 19,431 128,400 92,811 Interest income (expense), net 11,024 4,066 37,284 (3,409 ) Other (expense) income, net (4,045 ) 2,412 (10,769 ) 565 Income before income taxes 30,102 25,909 154,915 89,967 Income tax benefit (expense) 7,842 54,384 (283 ) 17,992 Net income $ 37,944 $ 80,293 $ 154,632 $ 107,959 Net income per share: Basic $ 0.13 $ 0.28 $ 0.53 $ 0.38 Diluted $ 0.13 $ 0.27 $ 0.52 $ 0.37 Weighted average shares outstanding: Basic 296,264 289,751 294,051 287,700 Diluted 300,867 293,917 299,280 291,617 SHARE-BASED COMPENSATION Three Months Ended March 31, Twelve Months Ended March 31, 2024 2023 2024 2023 (unaudited) Cost of revenue $ 6,962 $ 4,973 $ 26,622 $ 18,383 Research and development 19,424 12,067 69,543 41,406 Sales and marketing 16,939 13,748 65,762 51,147 General and administrative 12,273 11,233 46,969 35,938 Total share-based compensation expense $ 55,598 $ 42,021 $ 208,896 $ 146,874 DYNATRACE, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) March 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 778,983 $ 555,348 Short-term investments 57,891 — Accounts receivable, net 602,739 442,518 Deferred commissions, current 98,935 83,029 Prepaid expenses and other current assets 66,749 37,289 Total current assets 1,605,297 1,118,184 Long-term investments 46,350 — Property and equipment, net 53,325 53,576 Operating lease right-of-use asset, net 61,390 68,074 Goodwill 1,335,494 1,281,812 Intangible assets, net 50,995 63,599 Deferred tax assets, net 138,836 79,822 Deferred commissions, non-current 93,310 86,232 Other assets 24,782 14,048 Total assets $ 3,409,779 $ 2,765,347 Liabilities and shareholders' equity Current liabilities: Accounts payable $ 21,410 $ 21,953 Accrued expenses, current 233,675 188,380 Deferred revenue, current 987,953 811,058 Operating lease liabilities, current 15,513 15,652 Total current liabilities 1,258,551 1,037,043 Deferred revenue, non-current 62,308 34,423 Accrued expenses, non-current 18,404 29,212 Operating lease liabilities, non-current 54,013 59,520 Deferred tax liabilities 1,013 280 Total liabilities 1,394,289 1,160,478 Shareholders' equity: Common shares, $0.001 par value, 600,000,000 shares authorized, 296,962,547 and 290,411,108 shares issued and outstanding at March 31, 2024 and 2023, respectively 297 290 Additional paid-in capital 2,249,349 1,989,797 Accumulated deficit (198,757 ) (353,389 ) Accumulated other comprehensive loss (35,399 ) (31,829 ) Total shareholders' equity 2,015,490 1,604,869 Total liabilities and shareholders' equity $ 3,409,779 $ 2,765,347 DYNATRACE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended March 31, 2024 2023 Cash flows from operating activities: Net income $ 154,632 $ 107,959 Adjustments to reconcile net income to cash provided by operations: Depreciation 15,499 12,541 Amortization 39,441 42,070 Share-based compensation 208,896 146,874 Loss on extinguishment of debt — 5,925 Deferred income taxes (59,915 ) (53,534 ) Other 11,216 988 Net change in operating assets and liabilities: Accounts receivable (161,888 ) (94,910 ) Deferred commissions (23,520 ) (45,191 ) Prepaid expenses and other assets (47,401 ) 26,753 Accounts payable and accrued expenses 37,896 58,680 Operating leases, net 1,026 1,186 Deferred revenue 202,227 145,544 Net cash provided by operating activities 378,109 354,885 Cash flows from investing activities: Purchase of property and equipment (26,459 ) (21,540 ) Capitalized software additions (5,268 ) — Acquisition of businesses, net of cash acquired (57,111 ) — Purchases of investments (104,210 ) — Net cash used in investing activities (193,048 ) (21,540 ) 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 31,191 32,939 Equity repurchases — (15 ) Net cash used in financing activities 50,663 (232,344 ) Effect of exchange rates on cash and cash equivalents (12,089 ) (8,620 ) Net increase in cash and cash equivalents 223,635 92,381 Cash and cash equivalents, beginning of year 555,348 462,967 Cash and cash equivalents, end of year $ 778,983 $ 555,348 DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands) Three Months Ended March 31, 2024 GAAP Share-based compensation Employer payroll taxes on employee stock transactions Amortization of intangibles Restructuring & other Non-GAAP Non-GAAP income from operations: Cost of revenue $ 71,873 $ (6,962 ) $ (542 ) $ (4,230 ) $ — $ 60,139 Gross profit 308,975 6,962 542 4,230 — 320,709 Gross margin 81 % 84 % Research and development 84,271 (19,424 ) (1,055 ) — (26 ) 63,766 Sales and marketing 148,788 (16,939 ) (1,626 ) — (615 ) 129,608 General and administrative 47,338 (12,273 ) (392 ) — (2,431 ) 32,242 Amortization of other intangibles 5,455 — — (5,455 ) — — Income from operations $ 23,123 $ 55,598 $ 3,615 $ 9,685 $ 3,072 $ 95,093 Operating margin 6 % 25 % Three Months Ended March 31, 2023 GAAP Share-based compensation Employer payroll taxes on employee stock transactions Amortization of intangibles Restructuring & other Non-GAAP Non-GAAP income from operations: Cost of revenue $ 59,565 $ (4,973 ) $ (272 ) $ (3,895 ) $ — $ 50,425 Gross profit 254,910 4,973 272 3,895 — 264,050 Gross margin 81 % 84 % Research and development 61,502 (12,067 ) (445 ) — — 48,990 Sales and marketing 124,702 (13,748 ) (1,143 ) — (1,332 ) 108,479 General and administrative 42,702 (11,233 ) (841 ) — (1,982 ) 28,646 Amortization of other intangibles 6,573 — — (6,573 ) — — Income from operations $ 19,431 $ 42,021 $ 2,701 $ 10,468 $ 3,314 $ 77,935 Operating margin 6 % 25 % DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands, except per share data) Three Months Ended March 31, 2024 2023 Non-GAAP net income: Net income $ 37,944 $ 80,293 Income tax benefit (7,842 ) (54,384 ) Non-GAAP effective cash tax (16,618 ) 10,084 Interest income, net (11,024 ) (4,066 ) Cash received from interest, net 10,926 4,440 Share-based compensation 55,598 42,021 Employer payroll taxes on employee stock transactions 3,615 2,701 Amortization of other intangibles 5,455 6,573 Amortization of acquired technology 4,230 3,895 Transaction, restructuring, and other 3,072 3,314 Loss (gain) on currency translation 4,045 (2,412 ) Non-GAAP net income $ 89,401 $ 92,459 Share count: Weighted-average shares outstanding - basic 296,264 289,751 Weighted-average shares outstanding - diluted 300,867 293,917 Shares used in non-GAAP per share calculations: Weighted-average shares outstanding - basic 296,264 289,751 Weighted-average shares outstanding - diluted 300,867 293,917 Non-GAAP net income per share: Net income per share - basic $ 0.13 $ 0.28 Net income per share - diluted $ 0.13 $ 0.27 Non-GAAP net income per share - basic $ 0.30 $ 0.32 Non-GAAP net income per share - diluted $ 0.30 $ 0.31 Three Months Ended March 31, 2024 2023 Free Cash Flow: Net cash provided by operating activities $ 131,672 $ 120,427 Purchase of property and equipment (9,797 ) (5,915 ) Capitalized software additions (613 ) — Free Cash Flow $ 121,262 $ 114,512 DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands) Year Ended March 31, 2024 GAAP Share-based compensation Employer payroll taxes on employee stock transactions Amortization of intangibles Restructuring & other Non-GAAP Non-GAAP income from operations: Cost of revenue $ 266,453 $ (26,622 ) $ (2,058 ) $ (16,265 ) $ — $ 221,508 Gross profit 1,164,077 26,622 2,058 16,265 — 1,209,022 Gross margin 81 % 85 % Research and development (1) 304,739 (69,543 ) (5,446 ) — (26 ) 229,724 Sales and marketing (1) 534,233 (65,762 ) (4,967 ) — (216 ) 463,288 General and administrative (1) 174,412 (46,969 ) (1,517 ) — (8,155 ) 117,771 Amortization of other intangibles 22,293 — — (22,293 ) — — Income from operations $ 128,400 $ 208,896 $ 13,988 $ 38,558 $ 8,397 $ 398,239 Operating margin 9 % 28 % Year Ended March 31, 2023 GAAP Share-based compensation Employer payroll taxes on employee stock transactions Amortization of intangibles Restructuring & other Non-GAAP Non-GAAP income from operations: Cost of revenue $ 222,891 $ (18,383 ) $ (798 ) $ (15,564 ) $ (380 ) $ 187,766 Gross profit 935,639 18,383 798 15,564 380 970,764 Gross margin 81 % 84 % Research and development 218,349 (41,406 ) (1,704 ) — — 175,239 Sales and marketing 448,015 (51,147 ) �� (2,338 ) — (1,332 ) 393,198 General and administrative 150,172 (35,938 ) (1,351 ) — (2,347 ) 110,536 Amortization of other intangibles 26,292 — — (26,292 ) — — Income from operations $ 92,811 $ 146,874 $ 6,191 $ 41,856 $ 4,059 $ 291,791 Operating margin 8 % 25 % DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands, except per share data) Year Ended March 31, 2024 2023 Non-GAAP net income: Net income $ 154,632 $ 107,959 Income tax expense (benefit) 283 (17,992 ) Non-GAAP effective cash tax (75,604 ) (13,370 ) Interest (income) expense, net (37,284 ) 3,409 Cash received from interest, net 35,482 3,803 Share-based compensation 208,896 146,874 Employer payroll taxes on employee stock transactions 13,988 6,191 Amortization of other intangibles 22,293 26,292 Amortization of acquired technology 16,265 15,564 Transaction, restructuring, and other 8,397 4,059 Loss (gain) on currency translation 10,769 (565 ) Non-GAAP net income $ 358,117 $ 282,224 Share count: Weighted-average shares outstanding - basic 294,051 287,700 Weighted-average shares outstanding - diluted 299,280 291,617 Shares used in non-GAAP per share calculations: Weighted-average shares outstanding - basic 294,051 287,700 Weighted-average shares outstanding - diluted 299,280 291,617 Non-GAAP net income per share: Net income per share - basic $ 0.53 $ 0.38 Net income per share - diluted $ 0.52 $ 0.37 Non-GAAP net income per share - basic $ 1.22 $ 0.98 Non-GAAP net income per share - diluted $ 1.20 $ 0.97 Year Ended March 31, 2024 2023 Free Cash Flow: Net cash provided by operating activities $ 378,109 $ 354,885 Purchase of property and equipment (26,459 ) (21,540 ) Capitalized software additions (5,268 ) — Free Cash Flow 346,382 333,345 View source version on businesswire.com: https://www.businesswire.com/news/home/20240515870566/en/
Investor Contact: Noelle Faris VP, Investor Relations Noelle.Faris@dynatrace.com Media Relations: Jerome Stewart VP, Marketing Jerome.Stewart@dynatrace.com