EX-99.1
Published on May 15, 2024
Exhibit 99.1
Dynatrace Reports Fourth Quarter and Full Year Fiscal 2024 Financial Results
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
WALTHAM, Mass., May 15, 2024 - 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.
1
•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.
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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 | |||||||
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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.
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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.
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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.
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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.
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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 | |||||||||||||||
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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 | |||||||
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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 | |||||||
10
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 | % | |||||||||||||||||||||||||||||||
11
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 | |||||||
12
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 | % | |||||||||||||||||||||||||||||||
13
DYNATRACE, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited - In thousands, except per share data)
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 | |||||||||
14
Contacts
Investor Contact:
Noelle Faris
VP, Investor Relations
Noelle.Faris@dynatrace.com
Media Relations:
Jerome Stewart
VP, Marketing
Jerome.Stewart@dynatrace.com
15