• | Subscription and Services revenue of $139.4 million, a year-over-year increase of 36% |
• | Annualized recurring revenue "ARR" of $534.5 million, a year-over-year increase of 44% |
• | GAAP EPS of $0.01 and non-GAAP EPS of $0.10 |
• | Total Revenue of $143.3 million, an increase of 25% compared to $114.7 million in Q3 2019 |
• | Total ARR of $534.5 million, an increase of 44% compared to $372.3 million at the end of Q3 2019 |
• | Subscription and Services revenue of $139.4 million, an increase of 36% compared to $102.6 million in Q3 2019, and representing 97% of total revenue |
• | GAAP Operating Income of $7.6 million and Non-GAAP Operating Income of $37.5 million |
• | GAAP EPS of $0.01 and non-GAAP EPS of $0.10 |
• | Ended the quarter with 2,208 Dynatrace customers, a sequential increase of 380 from the end of Q2 2020 |
• | Dynatrace Net Expansion rate at or above 120% for the 7th consecutive quarter |
• | Dynatrace ARR represents 87% of total ARR, increasing from 80% of total ARR at the end of Q2 2020 |
• | Extended AI-powered software intelligence to AWS hybrid clouds through our unique SaaS architecture allowing Dynatrace to support AWS hybrid clouds with greater ease and data security than alternative approaches. |
• | Paved the way to the autonomous cloud by releasing Keptn, an open source control plane to simplify IT’s journey to NoOps for cloud native environments. |
• | Announced the contributions of transaction tracing knowhow and manpower to the OpenTelemetry project to shape the future of open standards-based observability and extend the reach of the Dynatrace Software Intelligence Platform. |
Three Months Ended December 31, | |||||||
2019 | 2018 | ||||||
Annualized recurring revenue | $ | 534,490 | $ | 372,317 | |||
Year-over-Year Increase | 44 | % | |||||
Revenues: | |||||||
Total revenue | $ | 143,298 | $ | 114,690 | |||
Year-over-Year Increase | 25 | % | |||||
Subscription and services revenue | $ | 139,403 | $ | 102,626 | |||
Year-over-Year Increase | 36 | % | |||||
Non-GAAP operating income (*) | $ | 37,514 | $ | 23,713 | |||
Non-GAAP operating margin (*) | 26 | % | 21 | % | |||
Non-GAAP net income (*) | $ | 26,695 | $ | 3,582 | |||
Non-GAAP net income per share | $ | 0.10 | $ | 0.02 | |||
Non-GAAP shares outstanding - diluted | 280,156 | 237,468 | |||||
Unlevered Free Cash Flow (*) | $ | 13,287 | $ | 26,033 |
• | Total revenue is expected to be in the range of $147.0 million to $148.0 million |
• | Non-GAAP operating income is expected to be in the range of $33.5 million to $34.5 million |
• | Non-GAAP net income is expected to be in the range of $21.5 million to $22.5 million |
• | Non-GAAP net income per diluted share is expected to be $0.08, based on approximately 284 million diluted weighted-average shares |
• | Total revenue is expected to be in the range of $542.2 million to $543.2 million |
• | Total ARR is expected to be in the range of $563 million to $566 million |
• | Non-GAAP operating income is expected to be in the range of $127.5 million to $128.5 million |
• | Non-GAAP net income is expected to be in the range of $74.8 million to $75.8 million |
• | Non-GAAP net income per diluted share is expected to be $0.28, based on approximately 272 million diluted weighted-average shares |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenue: | |||||||||||||||
Subscription | $ | 128,518 | $ | 91,661 | $ | 352,451 | $ | 251,974 | |||||||
License | 3,895 | 12,064 | 10,424 | 32,805 | |||||||||||
Service | 10,885 | 10,965 | 32,351 | 30,019 | |||||||||||
Total revenue | 143,298 | 114,690 | 395,226 | 314,798 | |||||||||||
Cost of revenue: | |||||||||||||||
Cost of subscription | 16,297 | 13,534 | 55,930 | 40,922 | |||||||||||
Cost of service | 8,584 | 7,731 | 29,240 | 22,148 | |||||||||||
Amortization of acquired technology | 3,824 | 4,558 | 12,624 | 13,780 | |||||||||||
Total cost of revenue | 28,705 | 25,823 | 97,794 | 76,850 | |||||||||||
Gross profit | 114,593 | 88,867 | 297,432 | 237,948 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 22,517 | 17,643 | 94,772 | 55,229 | |||||||||||
Sales and marketing | 52,400 | 43,275 | 210,581 | 130,667 | |||||||||||
General and administrative | 21,883 | 19,672 | 140,718 | 64,764 | |||||||||||
Amortization of other intangibles | 10,039 | 11,879 | 30,242 | 35,892 | |||||||||||
Restructuring and other | 199 | (24 | ) | 1,093 | 459 | ||||||||||
Total operating expenses | 107,038 | 92,445 | 477,406 | 287,011 | |||||||||||
Income (loss) from operations | 7,555 | (3,578 | ) | (179,974 | ) | (49,063 | ) | ||||||||
Interest expense, net | (5,995 | ) | (21,060 | ) | (39,715 | ) | (49,242 | ) | |||||||
Other income (expense), net | 67 | (146 | ) | 307 | 2,278 | ||||||||||
Income (loss) before income taxes | 1,627 | (24,784 | ) | (219,382 | ) | (96,027 | ) | ||||||||
Income tax benefit (expense) | 136 | 2,682 | (245,344 | ) | 10,431 | ||||||||||
Net income (loss) | $ | 1,763 | $ | (22,102 | ) | $ | (464,726 | ) | $ | (85,596 | ) | ||||
Net income (loss) per share: | |||||||||||||||
Basic | $ | 0.01 | $ | (0.09 | ) | $ | (1.78 | ) | $ | (0.36 | ) | ||||
Diluted | $ | 0.01 | $ | (0.09 | ) | $ | (1.78 | ) | $ | (0.36 | ) | ||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 277,926 | 236,024 | 260,383 | 235,648 | |||||||||||
Diluted | 280,156 | 236,024 | 260,383 | 235,648 |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Cost of revenues | $ | 1,317 | $ | 476 | $ | 17,346 | $ | 3,466 | |||||||
Research and development | 2,173 | 1,009 | 36,679 | 7,590 | |||||||||||
Sales and marketing | 6,707 | 2,179 | 78,592 | 14,640 | |||||||||||
General and administrative | 3,316 | 2,393 | 77,067 | 16,589 | |||||||||||
Total share-based compensation expense | $ | 13,513 | $ | 6,057 | $ | 209,684 | $ | 42,285 |
December 31, 2019 | March 31, 2019 | ||||||
(unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 188,555 | $ | 51,314 | |||
Accounts receivable, net of allowance for doubtful accounts | 166,481 | 115,431 | |||||
Deferred commissions, current | 36,343 | 27,705 | |||||
Prepaid expenses and other current assets | 20,065 | 18,768 | |||||
Total current assets | 411,444 | 213,218 | |||||
Property and equipment, net | 28,030 | 17,925 | |||||
Goodwill | 1,270,650 | 1,270,120 | |||||
Other intangible assets, net | 215,784 | 259,123 | |||||
Deferred tax assets, net | 10,714 | 10,678 | |||||
Deferred commissions, non-current | 36,727 | 31,545 | |||||
Other assets | 8,981 | 7,649 | |||||
Receivable from related party | 5,977 | 1,108 | |||||
Total assets | $ | 1,988,307 | $ | 1,811,366 | |||
Liabilities and shareholders' equity / member's deficit | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 10,832 | $ | 6,559 | |||
Accrued expenses, current | 86,194 | 64,920 | |||||
Current portion of long-term debt | — | 9,500 | |||||
Deferred revenue, current | 352,207 | 272,772 | |||||
Payable to related party | — | 597,150 | |||||
Total current liabilities | 449,233 | 950,901 | |||||
Deferred revenue, non-current | 79,111 | 92,973 | |||||
Accrued expenses, non-current | 18,048 | 98,359 | |||||
Deferred tax liabilities | 2,489 | 47,598 | |||||
Long-term debt, net of current portion | 540,236 | 1,011,793 | |||||
Total liabilities | 1,089,117 | 2,201,624 | |||||
Commitments and contingencies | |||||||
Shareholders' equity / member's deficit: | |||||||
Common shares, $0.001 par value, 600,000,000 shares authorized, 280,784,786 shares issued and outstanding at December 31, 2019 | 281 | — | |||||
Common units, no par value, 100 units authorized, issued and outstanding at March 31, 2019 | — | — | |||||
Additional paid-in capital | 1,560,559 | (184,546 | ) | ||||
Accumulated deficit | (640,728 | ) | (176,002 | ) | |||
Accumulated other comprehensive loss | (20,922 | ) | (29,710 | ) | |||
Total shareholders' equity / member's deficit | 899,190 | (390,258 | ) | ||||
Total liabilities and shareholders' equity / member's deficit | $ | 1,988,307 | $ | 1,811,366 |
Nine Months Ended December 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (464,726 | ) | $ | (85,596 | ) | |
Adjustments to reconcile net loss to cash (used in) provided by operations: | |||||||
Depreciation | 5,977 | 5,425 | |||||
Amortization | 44,098 | 54,852 | |||||
Share-based compensation | 209,684 | 42,285 | |||||
Deferred income taxes | (45,686 | ) | (15,979 | ) | |||
Other | 4,313 | 661 | |||||
Net change in operating assets and liabilities: | |||||||
Accounts receivable | (49,022 | ) | (19,290 | ) | |||
Deferred commissions | (13,484 | ) | (7,445 | ) | |||
Prepaid expenses and other assets | (692 | ) | (814 | ) | |||
Accounts payable and accrued expenses | 37,537 | 21,222 | |||||
Deferred revenue | 64,905 | 89,612 | |||||
Net cash (used in) provided by operating activities | (207,096 | ) | 84,933 | ||||
Cash flows from investing activities: | |||||||
Purchase of property and equipment | (15,143 | ) | (4,866 | ) | |||
Capitalized software additions | (729 | ) | (790 | ) | |||
Net cash used in investing activities | (15,872 | ) | (5,656 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from initial public offering, net of underwriters' discounts and commissions | 590,297 | — | |||||
Settlement of deferred offering costs | (5,000 | ) | — | ||||
Proceeds from term loans | — | 1,120,000 | |||||
Debt issuance costs | — | (16,288 | ) | ||||
Repayment of term loans | (485,189 | ) | (25,856 | ) | |||
Payments to related parties | — | (1,177,021 | ) | ||||
Contribution for tax associated with reorganization | 265,000 | — | |||||
Equity repurchases | (150 | ) | (649 | ) | |||
Installments related to acquisition | (4,694 | ) | (3,653 | ) | |||
Net cash provided by (used in) financing activities | 360,264 | (103,467 | ) | ||||
Effect of exchange rates on cash and cash equivalents | (55 | ) | (2,535 | ) | |||
Net increase (decrease) in cash and cash equivalents | 137,241 | (26,725 | ) | ||||
Cash and cash equivalents, beginning of period | 51,314 | 77,581 | |||||
Cash and cash equivalents, end of period | $ | 188,555 | $ | 50,856 |
Three Months Ended December 31, 2019 | |||||||||||||||||||
GAAP | Share-based compensation | Amortization of other intangibles | Restructuring & other | Non-GAAP | |||||||||||||||
Non-GAAP operating income: | |||||||||||||||||||
Cost of revenues | $ | 28,705 | $ | (1,317 | ) | $ | (3,824 | ) | $ | — | $ | 23,564 | |||||||
Gross profit | 114,593 | 1,317 | 3,824 | — | 119,734 | ||||||||||||||
Gross margin | 80 | % | 84 | % | |||||||||||||||
Research and development | 22,517 | (2,173 | ) | — | — | 20,344 | |||||||||||||
Sales and marketing | 52,400 | (6,707 | ) | — | — | 45,693 | |||||||||||||
General and administrative | 21,883 | (3,316 | ) | — | (2,384 | ) | 16,183 | ||||||||||||
Amortization of other intangibles | 10,039 | — | (10,039 | ) | — | — | |||||||||||||
Restructuring and other | 199 | — | — | (199 | ) | — | |||||||||||||
Operating income | 7,555 | 13,513 | 13,863 | 2,583 | 37,514 | ||||||||||||||
Operating margin | 5 | % | 26 | % |
Three Months Ended December 31, 2018 | |||||||||||||||||||
GAAP | Share-based compensation | Amortization of other intangibles | Restructuring & other | Non-GAAP | |||||||||||||||
Non-GAAP operating income: | |||||||||||||||||||
Cost of revenues | $ | 25,823 | $ | (476 | ) | $ | (4,558 | ) | $ | — | $ | 20,789 | |||||||
Gross profit | 88,867 | 476 | 4,558 | — | 93,901 | ||||||||||||||
Gross margin | 77 | % | 82 | % | |||||||||||||||
Research and development | 17,643 | (1,009 | ) | — | — | 16,634 | |||||||||||||
Sales and marketing | 43,275 | (2,179 | ) | — | — | 41,096 | |||||||||||||
General and administrative | 19,672 | (2,393 | ) | — | (4,821 | ) | 12,458 | ||||||||||||
Amortization of other intangibles | 11,879 | — | (11,879 | ) | — | — | |||||||||||||
Restructuring and other | (24 | ) | — | — | 24 | — | |||||||||||||
Operating (loss) income | (3,578 | ) | 6,057 | 16,437 | 4,797 | 23,713 | |||||||||||||
Operating margin | (3 | )% | 21 | % |
Three Months Ended December 31, | |||||||
2019 | 2018 | ||||||
Non-GAAP net income: | |||||||
Net income (loss) | $ | 1,763 | $ | (22,102 | ) | ||
Income tax benefit | (136 | ) | (2,682 | ) | |||
Cash paid for tax | (4,209 | ) | (1,374 | ) | |||
Tax associated with reorganization | 1,558 | — | |||||
Related party tax | (1,558 | ) | — | ||||
Interest expense, net | 5,995 | 21,060 | |||||
Cash paid for interest | (6,610 | ) | (18,757 | ) | |||
Share-based compensation | 13,513 | 6,057 | |||||
Amortization of other intangibles | 10,039 | 11,879 | |||||
Amortization of acquired technology | 3,824 | 4,558 | |||||
Transaction and sponsor related costs | 2,384 | 4,821 | |||||
Restructuring and other | 199 | (24 | ) | ||||
(Gain) loss on currency translation | (67 | ) | 146 | ||||
Non-GAAP net income | $ | 26,695 | $ | 3,582 | |||
Share count: | |||||||
Weighted-average shares outstanding - basic | 277,926 | 236,024 | |||||
Weighted-average shares outstanding - diluted | 280,156 | 236,024 | |||||
Shares used in non-GAAP per share calculations: | |||||||
Weighted-average shares outstanding - basic | 277,926 | 236,024 | |||||
Weighted-average shares outstanding - diluted | 280,156 | 237,468 | |||||
Net income (loss) per share: | |||||||
Net income (loss) per share - basic | $ | 0.01 | $ | (0.09 | ) | ||
Net income (loss) per share - diluted | $ | 0.01 | $ | (0.09 | ) | ||
Non-GAAP net income per share - basic | $ | 0.10 | $ | 0.02 | |||
Non-GAAP net income per share - diluted | $ | 0.10 | $ | 0.02 |
Three Months Ended December 31, | Trailing Twelve Months Ended December 31, 2019 | ||||||||||
2019 | 2018 | ||||||||||
Adjusted EBITDA: | |||||||||||
Net income (loss) | $ | 1,763 | $ | (22,102 | ) | $ | (495,324 | ) | |||
Income tax (benefit) expense | (136 | ) | (2,682 | ) | 232,058 | ||||||
Interest expense, net | 5,995 | 21,060 | 60,318 | ||||||||
Amortization | 14,288 | 18,155 | 62,038 | ||||||||
Depreciation | 2,006 | 1,840 | 7,871 | ||||||||
Restructuring and other | 199 | (24 | ) | 2,397 | |||||||
Transaction and sponsor related costs | 2,384 | 4,821 | 22,788 | ||||||||
(Gain) loss on currency translation | (67 | ) | 146 | (670 | ) | ||||||
Share-based compensation | 13,513 | 6,057 | 238,550 | ||||||||
Adjusted EBITDA | $ | 39,945 | $ | 27,271 | $ | 130,026 |
Three Months Ended December 31, | |||||||
2019 | 2018 | ||||||
Unlevered Free Cash Flow ("uFCF") (After tax adjustment): | |||||||
Net cash provided by operating activities | $ | 11,132 | $ | 8,773 | |||
Cash paid for interest expense | 6,610 | 18,757 | |||||
Restructuring and other | 199 | (24 | ) | ||||
Purchase of property, plant, and equipment | (5,385 | ) | (1,605 | ) | |||
Transaction and sponsor related costs | 2,384 | 4,821 | |||||
Tax associated with reorganization | 1,558 | — | |||||
Related party tax | (1,558 | ) | — | ||||
Total uFCF | 14,940 | 30,722 | |||||
Interest tax adjustment | (1,653 | ) | (4,689 | ) | |||
uFCF (After tax adjustment) | $ | 13,287 | $ | 26,033 |
December 31, 2019 | |||
Adjusted EBITDA/Net Debt Leverage Ratio: | |||
Long-term debt | $ | 540,236 | |
Cash | 188,555 | ||
Net debt | 351,681 | ||
TTM Adjusted EBITDA | $ | 130,026 | |
Leverage Ratio | 2.7 | x |
Nine Months Ended December 31, 2019 | |||||||||||||||||||
GAAP | Share-based compensation | Amortization of other intangibles | Restructuring & other | Non-GAAP | |||||||||||||||
Non-GAAP operating income: | |||||||||||||||||||
Cost of revenues | $ | 97,794 | $ | (17,346 | ) | $ | (12,624 | ) | $ | — | $ | 67,824 | |||||||
Gross profit | 297,432 | 17,346 | 12,624 | — | 327,402 | ||||||||||||||
Gross margin | 75 | % | 83 | % | |||||||||||||||
Research and development | 94,772 | (36,679 | ) | — | — | 58,093 | |||||||||||||
Sales and marketing | 210,581 | (78,592 | ) | — | — | 131,989 | |||||||||||||
General and administrative | 140,718 | (77,067 | ) | — | (20,338 | ) | 43,313 | ||||||||||||
Amortization of other intangibles | 30,242 | — | (30,242 | ) | — | — | |||||||||||||
Restructuring and other | 1,093 | — | — | (1,093 | ) | — | |||||||||||||
Operating (loss) income | (179,974 | ) | 209,684 | 42,866 | 21,431 | 94,007 | |||||||||||||
Operating margin | (46 | )% | 24 | % |
Nine Months Ended December 31, 2018 | |||||||||||||||||||
GAAP | Share-based compensation | Amortization of other intangibles | Restructuring & other | Non-GAAP | |||||||||||||||
Non-GAAP operating income: | |||||||||||||||||||
Cost of revenues | $ | 76,850 | $ | (3,466 | ) | $ | (13,780 | ) | $ | — | $ | 59,604 | |||||||
Gross profit | 237,948 | 3,466 | 13,780 | — | 255,194 | ||||||||||||||
Gross margin | 76 | % | 81 | % | |||||||||||||||
Research and development | 55,229 | (7,590 | ) | — | — | 47,639 | |||||||||||||
Sales and marketing | 130,667 | (14,640 | ) | — | — | 116,027 | |||||||||||||
General and administrative | 64,764 | (16,589 | ) | — | (10,093 | ) | 38,082 | ||||||||||||
Amortization of other intangibles | 35,892 | — | (35,892 | ) | — | — | |||||||||||||
Restructuring and other | 459 | — | — | (459 | ) | — | |||||||||||||
Operating (loss) income | (49,063 | ) | 42,285 | 49,672 | 10,552 | 53,446 | |||||||||||||
Operating margin | (16 | )% | 17 | % |
Nine Months Ended December 31, | |||||||
2019 | 2018 | ||||||
Non-GAAP net income: | |||||||
Net loss | $ | (464,726 | ) | $ | (85,596 | ) | |
Income tax expense (benefit) | 245,344 | (10,431 | ) | ||||
Cash paid for tax | (268,281 | ) | (3,451 | ) | |||
Tax associated with reorganization | 255,800 | — | |||||
Related party tax | 5,752 | — | |||||
Interest expense, net | 39,715 | 49,242 | |||||
Cash paid for interest | (34,001 | ) | (24,647 | ) | |||
Share-based compensation | 209,684 | 42,285 | |||||
Amortization of other intangibles | 30,242 | 35,892 | |||||
Amortization of acquired technology | 12,624 | 13,780 | |||||
Transaction and sponsor related costs | 20,338 | 10,093 | |||||
Restructuring and other | 1,093 | 459 | |||||
Gain on currency translation | (307 | ) | (2,278 | ) | |||
Non-GAAP net income | $ | 53,277 | $ | 25,348 | |||
Share count: | |||||||
Weighted-average shares outstanding - basic | 260,383 | 235,648 | |||||
Weighted-average shares outstanding - diluted | 260,383 | 235,648 | |||||
Shares used in non-GAAP per share calculations: | |||||||
Weighted-average shares outstanding - basic | 260,383 | 235,648 | |||||
Weighted-average shares outstanding - diluted | 265,112 | 236,374 | |||||
Net (loss) income per share: | |||||||
Net loss per share - basic | $ | (1.78 | ) | $ | (0.36 | ) | |
Net loss per share - diluted | $ | (1.78 | ) | $ | (0.36 | ) | |
Non-GAAP net income per share - basic | $ | 0.20 | $ | 0.11 | |||
Non-GAAP net income per share - diluted | $ | 0.20 | $ | 0.11 |
Nine Months Ended December 31, | |||||||
2019 | 2018 | ||||||
Adjusted EBITDA: | |||||||
Net loss | $ | (464,726 | ) | $ | (85,596 | ) | |
Income tax expense (benefit) | 245,344 | (10,431 | ) | ||||
Interest expense, net | 39,715 | 49,242 | |||||
Amortization | 44,098 | 54,852 | |||||
Depreciation | 5,977 | 5,425 | |||||
Restructuring and other | 1,093 | 459 | |||||
Transaction and sponsor related costs | 20,338 | 10,093 | |||||
Gain on currency translation | (307 | ) | (2,278 | ) | |||
Share-based compensation | 209,684 | 42,285 | |||||
Adjusted EBITDA | $ | 101,216 | $ | 64,051 |
Nine Months Ended December 31, | |||||||
2019 | 2018 | ||||||
Unlevered Free Cash Flow ("uFCF") (After tax adjustment): | |||||||
Net cash (used in) provided by operating activities | $ | (207,096 | ) | $ | 84,933 | ||
Cash paid for interest expense | 34,001 | 24,647 | |||||
Restructuring and other | 1,093 | 459 | |||||
Purchase of property, plant, and equipment | (15,143 | ) | (4,866 | ) | |||
Transaction and sponsor related costs | 20,338 | 10,093 | |||||
Tax associated with reorganization | 255,800 | — | |||||
Related party tax | 5,752 | — | |||||
Total uFCF | 94,745 | 115,266 | |||||
Interest tax adjustment | (8,500 | ) | (6,162 | ) | |||
uFCF (After tax adjustment) | $ | 86,245 | $ | 109,104 |