Exhibit 99.1
Dynatrace Reports Fourth Quarter and Full Year Fiscal 2023 Financial Results
Adjusted ARR growth of 29% year-over-year
WALTHAM, Mass., May 17, 2023 - Dynatrace (NYSE: DT), the leader in unified observability and security, today announced financial results for the fourth quarter and full year ended March 31, 2023.
“Dynatrace delivered a great finish to the year with strong fourth quarter results that exceeded expectations across the board, demonstrating the durability of our business model,” said Rick McConnell, Chief Executive Officer. “Observability is quickly moving from optional to mandatory as customers look to tame the explosion of data and increased complexity that's driven by their cloud migration and digital transformation initiatives. As we begin fiscal 2024, we remain focused on driving innovation to meet customers' evolving needs, managing the business prudently, and investing thoughtfully in strategic priorities to capture the substantial opportunities we see ahead.”
All growth rates are compared to the fourth quarter and full year of fiscal 2022 unless otherwise noted.
Fourth Quarter Fiscal 2023 Financial Highlights:
•Total ARR of $1,247 million, Adjusted ARR growth of 29% year-over-year
•Total Revenue of $314 million, up 27% on a constant currency basis
•Subscription Revenue of $293 million, up 28% on a constant currency basis
•GAAP Operating Income of $19 million and Non-GAAP Operating Income of $78 million
•GAAP EPS of $0.27 and non-GAAP EPS of $0.31, on a dilutive basis
Full Year Fiscal 2023 Financial Highlights:
•Total Revenue of $1,159 million, up 29% on a constant currency basis
•Subscription Revenue of $1,083 million, up 29% on a constant currency basis
•GAAP Operating Income of $93 million and Non-GAAP Operating Income of $292 million
•GAAP EPS of $0.37 and non-GAAP EPS of $0.97, on a dilutive basis
•GAAP Operating Cash Flow of $355 million and Free Cash Flow of $333 million
Business Highlights:
•Platform Expansion: Innovations from the last quarter include an expanded GrailTM data lakehouse and a new user experience for Dynatrace products, both designed to enable exploratory analytics and deliver precise answers and intelligent automation from petabytes of unified observability and security data. In addition, the new Dynatrace AutomationEngine and AppEngine allow customers to automate nearly unlimited BizDevSecOps workflows and easily build custom, compliant, and data-driven apps and integrations.
•Analyst Recognition: The 2023 GigaOm Radar for Cloud Observability Solutions recently named Dynatrace a "Leader" and positioned the company as the closest of all vendors to the center of the radar. Enterprise Management Associates (EMA) recognized Dynatrace as one of the top ten leading security visionaries exhibiting at the 2023 RSA Conference.
•Expanded Partnerships: In fiscal 2023, business transacted through hyperscaler partners, including AWS, Google Cloud, and Microsoft Azure, led to several seven-figure deals in the fourth quarter. New business transacted through our largest hyperscaler partner grew by more than 80% compared to last year. In addition, we commenced the rollout of Dynatrace to DXC PlatformX customers, with many expected to migrate within the next 12 months. In Q4, we also saw continued expansion of our customer relationship with a major global system integrator (GSI). In addition to using the Dynatrace platform to power its observability practice, this GSI also uses Dynatrace for its internal observability and digital transformation initiatives.
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Fourth Quarter 2023 Financial Highlights
(Unaudited – In thousands, except per share data)
| Three Months Ended March 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Key Operating Metric: | |||||||||||
| Annualized recurring revenue (ARR) | $ | 1,246,681 | $ | 995,121 | |||||||
| Year-over-Year Increase | 25 | % | |||||||||
| Year-over-Year Increase - constant currency | 28 | % | |||||||||
| Adjusted ARR Growth | 29 | % | |||||||||
| Revenue: | |||||||||||
| Total revenue | $ | 314,475 | $ | 252,585 | |||||||
| Year-over-Year Increase | 25 | % | |||||||||
Year-over-Year Increase - constant currency (*) | 27 | % | |||||||||
| Subscription revenue | $ | 293,314 | $ | 234,976 | |||||||
| Year-over-Year Increase | 25 | % | |||||||||
Year-over-Year Increase - constant currency (*) | 28 | % | |||||||||
| GAAP Financial Measures: | |||||||||||
| GAAP operating income | $ | 19,431 | $ | 17,629 | |||||||
| GAAP operating margin | 6 | % | 7 | % | |||||||
| GAAP net income | $ | 80,293 | $ | 929 | |||||||
| GAAP net income per share - diluted | $ | 0.27 | $ | 0.00 | |||||||
| GAAP shares outstanding - diluted | 293,917 | 290,339 | |||||||||
| Net cash provided by operating activities | $ | 120,427 | $ | 88,305 | |||||||
| Non-GAAP Financial Measures: | |||||||||||
Non-GAAP operating income (*) | $ | 77,935 | $ | 57,656 | |||||||
Non-GAAP operating margin (*) | 25 | % | 23 | % | |||||||
Non-GAAP net income (*) | $ | 92,459 | $ | 48,287 | |||||||
Non-GAAP net income per share - diluted (*) | $ | 0.31 | $ | 0.17 | |||||||
Non-GAAP shares outstanding - diluted (*) | 293,917 | 290,339 | |||||||||
Free Cash Flow (*) | $ | 114,512 | $ | 82,378 | |||||||
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Full Year 2023 Financial Highlights
(Unaudited – In thousands, except per share data)
| Year Ended March 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Revenue: | |||||||||||
| Total revenue | $ | 1,158,530 | $ | 929,445 | |||||||
| Year-over-Year Increase | 25 | % | |||||||||
Year-over-Year Increase - constant currency (*) | 29 | % | |||||||||
| Subscription revenue | $ | 1,083,330 | $ | 870,439 | |||||||
| Year-over-Year Increase | 24 | % | |||||||||
Year-over-Year Increase - constant currency (*) | 29 | % | |||||||||
| GAAP Financial Measures: | |||||||||||
| GAAP operating income | $ | 92,811 | $ | 81,307 | |||||||
| GAAP operating margin | 8 | % | 9 | % | |||||||
| GAAP net income | $ | 107,959 | $ | 52,451 | |||||||
| GAAP net income per share - diluted | $ | 0.37 | $ | 0.18 | |||||||
| GAAP shares outstanding - diluted | 291,617 | 290,903 | |||||||||
| Net cash provided by operating activities | $ | 354,885 | $ | 250,917 | |||||||
| Non-GAAP Financial Measures: | |||||||||||
Non-GAAP operating income (*) | $ | 291,791 | $ | 233,766 | |||||||
Non-GAAP operating margin (*) | 25 | % | 25 | % | |||||||
Non-GAAP net income (*) | $ | 282,224 | $ | 197,502 | |||||||
Non-GAAP net income per share - diluted (*) | $ | 0.97 | $ | 0.68 | |||||||
Non-GAAP shares outstanding - diluted (*) | 291,617 | 290,903 | |||||||||
Free Cash Flow (*) | 333,345 | 233,222 | |||||||||
* 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 https://ir.dynatrace.com.
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Financial Outlook
Based on information available as of May 17, 2023, Dynatrace is issuing guidance for the first quarter and full year fiscal 2024 in the table below. This guidance is based on foreign exchange rates as of April 28, 2023. The total foreign exchange tailwind for fiscal 2024 is expected to be approximately $10 million on ARR and $13 million on 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 2023 unless otherwise noted.
| (In millions, except per share data) | First Quarter Fiscal 2024 | Full Year Fiscal 2024 | |||||||||
| ARR | - | $1,475 - $1,490 | |||||||||
| As reported | - | 18% - 20% | |||||||||
| Constant currency | - | 18% - 19% | |||||||||
| Total revenue | $325 - $328 | $1,388 - $1,406 | |||||||||
| As reported | 22% - 23% | 20% - 21% | |||||||||
| Constant currency | 22% - 23% | 19% - 20% | |||||||||
| Subscription revenue | $306 - $309 | $1,311 - $1,327 | |||||||||
| As reported | 23% - 24% | 21% - 22% | |||||||||
| Constant currency | 23% - 24% | 20% - 21% | |||||||||
| Non-GAAP operating income | $76.5 - $78.5 | $348 - $358 | |||||||||
| Non-GAAP operating margin | 23.5% - 24% | 25% - 25.5% | |||||||||
| Non-GAAP net income | $64 - $66 | $295 - $307 | |||||||||
| Non-GAAP net income per diluted share | $0.22 | $0.98 - $1.02 | |||||||||
| Diluted weighted average shares outstanding | 296 - 297 | 300 - 301 | |||||||||
| Free cash flow | - | $303 - $312 | |||||||||
| Free cash flow margin | - | 22% | |||||||||
Reconciliation of non-GAAP operating income, non-GAAP net income, non-GAAP net income per share and free cash flow guidance to the most directly comparable GAAP measures is 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.
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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 17, 2023. To access the conference call from the U.S. and Canada, dial (866) 405-1247, or internationally, dial (201) 689-8045 with event confirmation #: 13737836. 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 May 31, 2023, by dialing (877) 660-6853 from the U.S. or Canada, or for international callers by dialing (201) 612-7415 and entering event confirmation #: 13737836. In addition, an archived webcast will be available at ir.dynatrace.com.
The company has used, and intends to continue to use, the investor relations portion of its website as a means of disclosing material non-public information and for complying with 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.
Adjusted ARR is defined as ARR excluding the impact of foreign exchange rate fluctuations that occurred over the trailing twelve month period. This calculation also excludes the headwind associated with the Dynatrace® perpetual license ARR that rolled off in the trailing twelve month period.
Adjusted ARR Growth is defined as year-over-year growth in Adjusted ARR divided by ARR as reported.
Constant Currency amounts for ARR, Total Revenue and Subscription Revenue are presented to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign exchange rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year.
Dollar-Based Gross Retention Rate is defined as the ARR from all customers as of one year prior, less contraction and customer churn, divided by the total ARR from one year prior. This metric reflects the percentage of ARR from all customers as of the year prior that has been retained.
Dollar-Based Net Retention Rate is defined as the Dynatrace® ARR at the end of a reporting period for the cohort of Dynatrace® accounts as of one year prior to the date of calculation, divided by the Dynatrace® ARR one year prior to the date of calculation for that same cohort. Our dollar-based net retention rate reflects customer renewals, expansion, contraction and churn, and excludes the benefit of Dynatrace® ARR resulting from the conversion of Classic products to the Dynatrace® platform. Effective the first quarter of fiscal year 2023, we began to exclude the headwind associated with the Dynatrace perpetual license ARR given diminishing impact of perpetual license ARR. We believe that eliminating the perpetual license headwind results in a dollar-based net retention rate metric that better reflects Dynatrace’s ability to expand existing customer relationships. Dollar-based net retention rate is presented on a constant currency basis.
Dynatrace Customers are defined as accounts, as identified by a unique account identifier, that generate at least $10,000 of Dynatrace® ARR as of the reporting date. In infrequent cases, a single large organization may comprise multiple customer accounts when there are distinct divisions, departments or subsidiaries that operate and make purchasing decisions independently from the parent organization. In cases where multiple customer accounts exist under a single organization, each customer account is counted separately based on a mutually exclusive accounting of ARR.
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Free Cash Flow is defined as net cash provided by (used in) operating activities less capital expenditures (reflected as "purchase of property and equipment" in our financial statements).
About Dynatrace
Dynatrace exists to make the world’s software work perfectly. Our unified platform combines broad and deep observability and continuous runtime application security with the most advanced AIOps to provide answers and intelligent automation from data at an enormous scale. This enables innovators to modernize and automate cloud operations, deliver software faster and more securely, and ensure flawless digital experiences. That is why the world’s largest organizations trust Dynatrace® 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 Mr. McConnell's remarks and statements regarding management’s expectations of future financial and operational performance and operational expenditures, expected growth, and business outlook, including our financial outlook for the first quarter and full year of fiscal 2024. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as “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; the ability of our platform and solutions to effective 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; 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 most recent Form 10-Q filed on February 1, 2023 and our other SEC filings, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, 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, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Subscription | $ | 293,314 | $ | 234,976 | $ | 1,083,330 | $ | 870,439 | |||||||||||||||
| Service | 21,161 | 17,609 | 75,200 | 59,006 | |||||||||||||||||||
| Total revenue | 314,475 | 252,585 | 1,158,530 | 929,445 | |||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
| Cost of subscription | 39,052 | 31,245 | 144,445 | 111,646 | |||||||||||||||||||
| Cost of service | 16,618 | 12,796 | 62,882 | 45,717 | |||||||||||||||||||
| Amortization of acquired technology | 3,895 | 3,875 | 15,564 | 15,513 | |||||||||||||||||||
| Total cost of revenue | 59,565 | 47,916 | 222,891 | 172,876 | |||||||||||||||||||
| Gross profit | 254,910 | 204,669 | 935,639 | 756,569 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
Research and development (1) | 61,502 | 42,833 | 218,349 | 156,342 | |||||||||||||||||||
Sales and marketing (1) | 124,702 | 101,300 | 448,015 | 362,116 | |||||||||||||||||||
General and administrative (1) | 42,546 | 35,368 | 150,031 | 126,622 | |||||||||||||||||||
| Amortization of other intangibles | 6,573 | 7,539 | 26,292 | 30,157 | |||||||||||||||||||
| Restructuring and other | 156 | — | 141 | 25 | |||||||||||||||||||
| Total operating expenses | 235,479 | 187,040 | 842,828 | 675,262 | |||||||||||||||||||
| Income from operations | 19,431 | 17,629 | 92,811 | 81,307 | |||||||||||||||||||
| Interest income (expense), net | 4,066 | (2,234) | (3,409) | (10,192) | |||||||||||||||||||
| Other income, net | 2,412 | 1,889 | 565 | 544 | |||||||||||||||||||
| Income before income taxes | 25,909 | 17,284 | 89,967 | 71,659 | |||||||||||||||||||
| Income tax benefit (expense) | 54,384 | (16,355) | 17,992 | (19,208) | |||||||||||||||||||
| Net income | $ | 80,293 | $ | 929 | $ | 107,959 | $ | 52,451 | |||||||||||||||
| Net income per share: | |||||||||||||||||||||||
Basic | $ | 0.28 | $ | 0.00 | $ | 0.38 | $ | 0.18 | |||||||||||||||
Diluted | $ | 0.27 | $ | 0.00 | $ | 0.37 | $ | 0.18 | |||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||
Basic | 289,751 | 285,349 | 287,700 | 284,161 | |||||||||||||||||||
Diluted | 293,917 | 290,339 | 291,617 | 290,903 | |||||||||||||||||||
(1) During the three months ended March 31, 2023, we began allocating depreciation expense to operating expenses based upon location and headcount, whereas previously it was included primarily in general and administrative expense. This has been retrospectively applied to the twelve months ended March 31, 2023.
SHARE-BASED COMPENSATION
| Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Cost of revenue | $ | 4,973 | $ | 3,321 | $ | 18,383 | $ | 12,863 | |||||||||||||||
| Research and development | 12,067 | 5,985 | 41,406 | 21,316 | |||||||||||||||||||
| Sales and marketing | 13,748 | 9,470 | 51,147 | 35,957 | |||||||||||||||||||
| General and administrative | 11,233 | 8,810 | 35,938 | 29,400 | |||||||||||||||||||
| Total share-based compensation expense | $ | 42,021 | $ | 27,586 | $ | 146,874 | $ | 99,536 | |||||||||||||||
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DYNATRACE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| March 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 555,348 | $ | 462,967 | |||||||
| Accounts receivable, net | 442,518 | 350,666 | |||||||||
| Deferred commissions, current | 83,029 | 62,601 | |||||||||
| Prepaid expenses and other current assets | 37,289 | 72,188 | |||||||||
| Total current assets | 1,118,184 | 948,422 | |||||||||
| Property and equipment, net | 53,576 | 45,271 | |||||||||
| Operating lease right-of-use asset, net | 68,074 | 58,849 | |||||||||
| Goodwill | 1,281,812 | 1,281,876 | |||||||||
| Other intangible assets, net | 63,599 | 105,736 | |||||||||
| Deferred tax assets, net | 79,822 | 28,106 | |||||||||
| Deferred commissions, non-current | 86,232 | 63,435 | |||||||||
| Other assets | 14,048 | 9,615 | |||||||||
| Total assets | $ | 2,765,347 | $ | 2,541,310 | |||||||
| Liabilities and shareholders' equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 21,953 | $ | 22,715 | |||||||
| Accrued expenses, current | 188,380 | 141,556 | |||||||||
| Deferred revenue, current | 811,058 | 688,554 | |||||||||
| Operating lease liabilities, current | 15,652 | 12,774 | |||||||||
| Total current liabilities | 1,037,043 | 865,599 | |||||||||
| Deferred revenue, non-current | 34,423 | 25,783 | |||||||||
| Accrued expenses, non-current | 29,212 | 19,409 | |||||||||
| Operating lease liabilities, non-current | 59,520 | 52,070 | |||||||||
| Deferred tax liabilities | 280 | 85 | |||||||||
| Long-term debt, net | — | 273,918 | |||||||||
| Total liabilities | 1,160,478 | 1,236,864 | |||||||||
| Shareholders' equity: | |||||||||||
Common shares, $0.001 par value, 600,000,000 shares authorized, 290,411,108 and 286,053,276 shares issued and outstanding at March 31, 2023 and 2022, respectively | 290 | 286 | |||||||||
| Additional paid-in capital | 1,989,797 | 1,792,197 | |||||||||
| Accumulated deficit | (353,389) | (461,348) | |||||||||
| Accumulated other comprehensive loss | (31,829) | (26,689) | |||||||||
| Total shareholders' equity | 1,604,869 | 1,304,446 | |||||||||
| Total liabilities and shareholders' equity | $ | 2,765,347 | $ | 2,541,310 | |||||||
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DYNATRACE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Year Ended March 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 107,959 | $ | 52,451 | |||||||
| Adjustments to reconcile net income to cash provided by operations: | |||||||||||
| Depreciation | 12,541 | 10,638 | |||||||||
| Amortization | 42,070 | 46,238 | |||||||||
| Share-based compensation | 146,874 | 99,536 | |||||||||
| Loss on extinguishment of debt | 5,925 | — | |||||||||
| Deferred income taxes | (53,534) | (12,401) | |||||||||
| Other | 988 | 1,486 | |||||||||
| Net change in operating assets and liabilities: | |||||||||||
| Accounts receivable | (94,910) | (108,848) | |||||||||
| Deferred commissions | (45,191) | (29,533) | |||||||||
| Prepaid expenses and other assets | 26,753 | (8,108) | |||||||||
| Accounts payable and accrued expenses | 58,680 | 35,946 | |||||||||
| Operating leases, net | 1,186 | 1,353 | |||||||||
| Deferred revenue | 145,544 | 162,159 | |||||||||
| Net cash provided by operating activities | 354,885 | 250,917 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of property and equipment | (21,540) | (17,695) | |||||||||
| Acquisition of businesses, net of cash acquired | — | (13,195) | |||||||||
| Net cash used in investing activities | (21,540) | (30,890) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repayment of term loans | (281,125) | (120,000) | |||||||||
| Debt issuance costs | (1,949) | — | |||||||||
| Proceeds from employee stock purchase plan | 17,806 | 13,913 | |||||||||
| Proceeds from exercise of stock options | 32,939 | 25,489 | |||||||||
| Equity repurchases | (15) | (66) | |||||||||
| Net cash used in financing activities | (232,344) | (80,664) | |||||||||
| Effect of exchange rates on cash and cash equivalents | (8,620) | (1,358) | |||||||||
| Net increase in cash and cash equivalents | 92,381 | 138,005 | |||||||||
| Cash and cash equivalents, beginning of year | 462,967 | 324,962 | |||||||||
| Cash and cash equivalents, end of year | $ | 555,348 | $ | 462,967 | |||||||
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DYNATRACE, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited - In thousands)
| Three Months Ended March 31, 2023 | |||||||||||||||||||||||||||||||||||
| GAAP | Share-based compensation | Employer payroll taxes on employee stock transactions | Amortization of other intangibles | Restructuring & other | Non-GAAP | ||||||||||||||||||||||||||||||
| Non-GAAP operating income: | |||||||||||||||||||||||||||||||||||
| 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 | 42,546 | (11,233) | (841) | — | (1,826) | 28,646 | |||||||||||||||||||||||||||||
| Amortization of other intangibles | 6,573 | — | — | (6,573) | — | — | |||||||||||||||||||||||||||||
| Restructuring and other | 156 | — | — | — | (156) | — | |||||||||||||||||||||||||||||
| Operating income | $ | 19,431 | $ | 42,021 | $ | 2,701 | $ | 10,468 | $ | 3,314 | $ | 77,935 | |||||||||||||||||||||||
| Operating margin | 6 | % | 25 | % | |||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||
| GAAP | Share-based compensation | Employer payroll taxes on employee stock transactions | Amortization of other intangibles | Restructuring & other | Non-GAAP | ||||||||||||||||||||||||||||||
| Non-GAAP operating income: | |||||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 47,916 | $ | (3,321) | $ | (143) | $ | (3,875) | $ | — | $ | 40,577 | |||||||||||||||||||||||
| Gross profit | 204,669 | 3,321 | 143 | 3,875 | — | 212,008 | |||||||||||||||||||||||||||||
| Gross margin | 81 | % | 84 | % | |||||||||||||||||||||||||||||||
| Research and development | 42,833 | (5,985) | (259) | — | — | 36,589 | |||||||||||||||||||||||||||||
| Sales and marketing | 101,300 | (9,470) | (424) | — | — | 91,406 | |||||||||||||||||||||||||||||
| General and administrative | 35,368 | (8,810) | (123) | — | (78) | 26,357 | |||||||||||||||||||||||||||||
| Amortization of other intangibles | 7,539 | — | — | (7,539) | — | — | |||||||||||||||||||||||||||||
| Restructuring and other | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Operating income | $ | 17,629 | $ | 27,586 | $ | 949 | $ | 11,414 | $ | 78 | $ | 57,656 | |||||||||||||||||||||||
| Operating margin | 7 | % | 23 | % | |||||||||||||||||||||||||||||||
11
DYNATRACE, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited - In thousands, except per share data)
| Three Months Ended March 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Non-GAAP net income: | |||||||||||
| Net income | $ | 80,293 | $ | 929 | |||||||
| Income tax (benefit) expense | (54,384) | 16,355 | |||||||||
| Non-GAAP effective cash tax | 10,084 | (7,543) | |||||||||
| Interest (income) expense, net | (4,066) | 2,234 | |||||||||
| Cash received from (paid for) interest, net | 4,440 | (1,826) | |||||||||
| Share-based compensation | 42,021 | 27,586 | |||||||||
| Employer payroll taxes on employee stock transactions | 2,701 | 949 | |||||||||
| Amortization of other intangibles | 6,573 | 7,539 | |||||||||
| Amortization of acquired technology | 3,895 | 3,875 | |||||||||
| Transaction, restructuring, and other | 3,314 | 78 | |||||||||
| Gain on currency translation | (2,412) | (1,889) | |||||||||
| Non-GAAP net income | $ | 92,459 | $ | 48,287 | |||||||
| Share count: | |||||||||||
| Weighted-average shares outstanding - basic | 289,751 | 285,349 | |||||||||
| Weighted-average shares outstanding - diluted | 293,917 | 290,339 | |||||||||
| Shares used in non-GAAP per share calculations: | |||||||||||
| Weighted-average shares outstanding - basic | 289,751 | 285,349 | |||||||||
| Weighted-average shares outstanding - diluted | 293,917 | 290,339 | |||||||||
| Net income per share: | |||||||||||
| Net income per share - basic | $ | 0.28 | $ | 0.00 | |||||||
| Net income per share - diluted | $ | 0.27 | $ | 0.00 | |||||||
| Non-GAAP net income per share - basic | $ | 0.32 | $ | 0.17 | |||||||
| Non-GAAP net income per share - diluted | $ | 0.31 | $ | 0.17 | |||||||
| Three Months Ended March 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Free Cash Flow ("FCF"): | |||||||||||
| Net cash provided by operating activities | $ | 120,427 | $ | 88,305 | |||||||
| Purchase of property and equipment | (5,915) | (5,927) | |||||||||
| FCF | $ | 114,512 | $ | 82,378 | |||||||
12
DYNATRACE, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited - In thousands)
| Year Ended March 31, 2023 | |||||||||||||||||||||||||||||||||||
| GAAP | Share-based compensation | Employer payroll taxes on employee stock transactions | Amortization of other intangibles | Restructuring & other | Non-GAAP | ||||||||||||||||||||||||||||||
| Non-GAAP operating income: | |||||||||||||||||||||||||||||||||||
| 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 (1) | 218,349 | (41,406) | (1,704) | — | — | 175,239 | |||||||||||||||||||||||||||||
Sales and marketing (1) | 448,015 | (51,147) | (2,338) | — | (1,332) | 393,198 | |||||||||||||||||||||||||||||
General and administrative (1) | 150,031 | (35,938) | (1,351) | — | (2,206) | 110,536 | |||||||||||||||||||||||||||||
| Amortization of other intangibles | 26,292 | — | — | (26,292) | — | — | |||||||||||||||||||||||||||||
| Restructuring and other | 141 | — | — | — | (141) | — | |||||||||||||||||||||||||||||
| Operating income | $ | 92,811 | $ | 146,874 | $ | 6,191 | $ | 41,856 | $ | 4,059 | $ | 291,791 | |||||||||||||||||||||||
| Operating margin | 8 | % | 25 | % | |||||||||||||||||||||||||||||||
(1) During the three months ended March 31, 2023, we began allocating depreciation expense to operating expenses based upon location and headcount, whereas previously it was included primarily in general and administrative expense. This has been retrospectively applied to the year ended March 31, 2023.
| Year Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||
| GAAP | Share-based compensation | Employer payroll taxes on employee stock transactions | Amortization of other intangibles | Restructuring & other | Non-GAAP | ||||||||||||||||||||||||||||||
| Non-GAAP operating income: | |||||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 172,876 | $ | (12,863) | $ | (1,059) | $ | (15,513) | $ | — | $ | 143,441 | |||||||||||||||||||||||
| Gross profit | 756,569 | 12,863 | 1,059 | 15,513 | — | 786,004 | |||||||||||||||||||||||||||||
| Gross margin | 81 | % | 85 | % | |||||||||||||||||||||||||||||||
| Research and development | 156,342 | (21,316) | (1,879) | — | — | 133,147 | |||||||||||||||||||||||||||||
| Sales and marketing | 362,116 | (35,957) | (2,305) | — | — | 323,854 | |||||||||||||||||||||||||||||
| General and administrative | 126,622 | (29,400) | (701) | — | (1,284) | 95,237 | |||||||||||||||||||||||||||||
| Amortization of other intangibles | 30,157 | — | — | (30,157) | — | — | |||||||||||||||||||||||||||||
| Restructuring and other | 25 | — | — | — | (25) | — | |||||||||||||||||||||||||||||
| Operating income | $ | 81,307 | $ | 99,536 | $ | 5,944 | $ | 45,670 | $ | 1,309 | $ | 233,766 | |||||||||||||||||||||||
| Operating margin | 9 | % | 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, | |||||||||||
| 2023 | 2022 | ||||||||||
| Non-GAAP net income: | |||||||||||
| Net income | $ | 107,959 | $ | 52,451 | |||||||
| Income tax (benefit) expense | (17,992) | 19,208 | |||||||||
| Non-GAAP effective cash tax | (13,370) | (27,889) | |||||||||
| Interest expense, net | 3,409 | 10,192 | |||||||||
| Cash received from (paid for) interest, net | 3,803 | (8,375) | |||||||||
| Share-based compensation | 146,874 | 99,536 | |||||||||
| Employer payroll taxes on employee stock transactions | 6,191 | 5,944 | |||||||||
| Amortization of other intangibles | 26,292 | 30,157 | |||||||||
| Amortization of acquired technology | 15,564 | 15,513 | |||||||||
| Transaction, restructuring, and other | 4,059 | 1,309 | |||||||||
| Gain on currency translation | (565) | (544) | |||||||||
| Non-GAAP net income | $ | 282,224 | $ | 197,502 | |||||||
| Share count: | |||||||||||
| Weighted-average shares outstanding - basic | 287,700 | 284,161 | |||||||||
| Weighted-average shares outstanding - diluted | 291,617 | 290,903 | |||||||||
| Shares used in non-GAAP per share calculations: | |||||||||||
| Weighted-average shares outstanding - basic | 287,700 | 284,161 | |||||||||
| Weighted-average shares outstanding - diluted | 291,617 | 290,903 | |||||||||
| Net income per share: | |||||||||||
| Net income per share - basic | $ | 0.38 | $ | 0.18 | |||||||
| Net income per share - diluted | $ | 0.37 | $ | 0.18 | |||||||
| Non-GAAP net income per share - basic | $ | 0.98 | $ | 0.70 | |||||||
| Non-GAAP net income per share - diluted | $ | 0.97 | $ | 0.68 | |||||||
| Year Ended March 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Free Cash Flow ("FCF"): | |||||||||||
| Net cash provided by operating activities | $ | 354,885 | $ | 250,917 | |||||||
| Purchase of property and equipment | (21,540) | (17,695) | |||||||||
| FCF | 333,345 | 233,222 | |||||||||
14
Contacts
Investor Contact:
Noelle Faris
VP, Investor Relations
Noelle.Faris@dynatrace.com
Media Relations:
Jerome Stewart
VP, Communications
Jerome.Stewart@dynatrace.com
15
