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Dynatrace Reports Third Quarter of Fiscal Year 2022 Financial Results

  • ARR of $930 million, up 29% year-over-year, or 32% on a constant currency basis
  • Subscription revenue of $226 million, up 33% year-over-year, or 34% on a constant currency basis
  • GAAP EPS of $0.05 and non-GAAP EPS of $0.18, on a dilutive basis

Software intelligence company Dynatrace (NYSE: DT) today released financial results for the third quarter of its fiscal 2022 ended December 31, 2021.

"Having completed my first quarter as CEO, I am very pleased with our third quarter performance, beating the high end of guidance across our key operating metrics driven by new logo additions and continued net expansion rate above 120%,” said Rick McConnell, Chief Executive Officer. “Our strong performance fuels our belief that customers increasingly view our software intelligence platform as an indispensable part of their digital transformation ecosystem. Looking ahead, we plan to further increase investments to capture the tremendous market opportunity ahead of us with the objective of accelerating growth as we scale to build a multibillion-dollar business.”

Third Quarter Fiscal 2022 and Other Recent Business Highlights:

All growth rates are compared to the third quarter of fiscal 2021 unless otherwise noted.

Financial Highlights:

  • ARR of $930 million, an increase of 29%, or 32% on a constant currency basis
  • Total Revenue of $241 million, an increase of 32%, or 33% on a constant currency basis
  • Subscription revenue of $226 million, an increase of 33% as reported, or 34% on a constant currency basis, and representing 94% of total revenue
  • GAAP Operating Income of $21 million and non-GAAP Operating Income of $61 million
  • GAAP EPS of $0.05 and non-GAAP EPS of $0.18, on a dilutive basis

Business Highlights:

  • Go-to-market momentum: Added 206 new logos in the quarter for a total of 501 new logos added to the Dynatrace platform on a year-to-date basis, an increase of 22% compared to the same period last year, with more than 44% of new customers landing with three or more modules, compared to 33% for the same period last year.
  • Managed security vulnerabilities at scale: Log4j vulnerability accelerated interest in Dynatrace® for application security and highlighted our unique ability to instantly identify and prioritize security vulnerabilities in production, driving a 10x increase in POCs in the quarter ending December 31, 2021, up from dozens in the previous quarter ending September 30, 2021.
  • Partnership expansion: Accelerated traction with partners influencing more than 50% of new transactions closed in the third quarter. New ARR transacted through hyperscaler partnerships more than tripled compared to the same period last year.
 

Third Quarter 2022 Financial Highlights

(Unaudited – In thousands, except per share data)

 

 

Three Months Ended December 31,

 

 

2021

 

 

 

2020

 

Key Operating Metric:

 

 

 

Annualized recurring revenue

$

929,906

 

 

$

721,995

 

Year-over-Year Increase

 

29

%

 

 

 

 

 

 

Annualized recurring revenue - constant currency (*)

$

951,056

 

 

$

721,995

 

Year-over-Year Increase

 

32

%

 

 

 

 

 

 

Revenue:

 

 

 

Total revenue

$

240,766

 

 

$

182,911

 

Year-over-Year Increase

 

32

%

 

 

 

 

 

 

Total revenue - constant currency (*)

$

242,928

 

 

$

182,911

 

Year-over-Year Increase

 

33

%

 

 

 

 

 

 

Subscription revenue

$

226,290

 

 

$

170,308

 

Year-over-Year Increase

 

33

%

 

 

 

 

 

 

Subscription revenue - constant currency (*)

$

228,339

 

 

$

170,308

 

Year-over-Year Increase

 

34

%

 

 

 

 

 

 

Non-GAAP Financial Measures:

 

 

 

Non-GAAP operating income (*)

$

61,102

 

 

$

53,401

 

Non-GAAP operating margin (*)

 

25

%

 

 

29

%

 

 

 

 

Non-GAAP net income (*)

$

52,020

 

 

$

46,600

 

 

 

 

 

Non-GAAP net income per share - diluted

$

0.18

 

 

$

0.16

 

 

 

 

 

Non-GAAP shares outstanding - diluted

 

291,845

 

 

 

286,427

 

 

 

 

 

Unlevered Free Cash Flow (*)

$

59,186

 

 

$

73,989

 

* 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 Investors section of our website at https://ir.dynatrace.com.

Financial Outlook

Based on information available, as of February 2, 2022, Dynatrace is issuing guidance for the fourth quarter and raising guidance for full year fiscal 2022 as follows:

(In millions, except per share data))

Q4 Fiscal 2022

Guidance

 

Total revenue

$245 - $247

 

As reported

25% - 26%

 

Constant currency

27% - 28%

 

Subscription revenue

$230.5 - $232

 

As reported

26% - 27%

 

Constant currency

29% - 30%

 

Non-GAAP operating income

$51.5 - $53.5

 

Non-GAAP net income

$44 - $45.5

 

Non-GAAP net income per diluted share

$0.15 - $0.16

 

Diluted weighted average shares outstanding

292 - 292.5

 

 

 

 

 

 

 

(In millions, except per share data)

Current Guidance

Fiscal 2022

 

Prior Guidance

Fiscal 2022

 

Guidance Change

at Midpoint

Total ARR

$990 - $996

 

$986 - $996

 

$2

As reported

28% - 29%

 

27% - 29%

 

50 bps

Constant currency

30% - 31%

 

29% - 30%

 

100 bps

Total revenue

$922 - $924

 

$913 - $919

 

$7

As reported

31%

 

30% - 31%

 

100 bps

Constant currency

30% - 31%

 

29% - 30%

 

100 bps

Subscription revenue

$866 - $867.5

 

$857.5 - $862.5

 

$7

As reported

32%

 

31% - 32%

 

100 bps

Constant currency

32%

 

30% - 31%

 

150 bps

Non-GAAP operating income

$228 - $230

 

$219 - $226

 

$7

Non-GAAP net income

$193 - $195

 

$185 - $191

 

$6

Non-GAAP net income per diluted share

$0.66 - $0.67

 

$0.63 - $0.65

 

$0.02

Diluted weighted average shares outstanding

291 - 291.5

 

292 - 293

 

(1.3)

Unlevered free cash flow

$268 - $275

 

$263 - $275

 

$2.5

Unlevered free cash flow margin

29% - 30%

 

29% - 30%

 

unchanged

 

 

 

Our guidance is based on foreign exchange rates as of December 31, 2021.

Reconciliation of non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share and unlevered 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.

Conference Call and Webcast Information

Dynatrace will host a conference call and live webcast to discuss its results and business outlook for investors and analysts at 8:00 a.m. Eastern Time today, February 2, 2022. To access the conference call from the U.S. and Canada, dial (866) 405-1247, or internationally, dial (201) 689-8045 with conference ID # 13726069. The call will also be available live via webcast on the company’s website, ir.dynatrace.com.

An audio replay of the call will also be available until 11:59 p.m. Eastern Time on February 16, 2022, by dialing (877) 660-6853 from the U.S. or Canada, or for international callers by dialing (201) 612-7415 and entering conference ID # 13726069. 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.

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. 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 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.

Dynatrace Net Expansion 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. This calculation excludes the benefit of Dynatrace ARR resulting from the conversion of Classic products to the Dynatrace platform.

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.

Unlevered Free Cash Flow is defined as net cash provided by (used in) operating activities and adjusted to exclude cash paid for interest (net of tax), non-recurring restructuring and acquisition related costs, along with costs associated with one-time offerings and filings, less cash used in investing activities for acquisition of property and equipment. However, given our debt obligations, unlevered free cash flow does not represent residual cash flow available for discretionary expenses.

About Dynatrace

Dynatrace provides software intelligence to simplify cloud complexity and accelerate digital transformation. With automatic and intelligent observability at scale, our all-in-one platform delivers precise answers about the performance and security of applications, the underlying infrastructure, and the experience of all users to enable organizations to innovate faster, collaborate more efficiently, and deliver more value with dramatically less effort. That’s why many of the world’s largest enterprises trust Dynatrace® to modernize and automate cloud operations, release better software faster, and deliver unrivalled digital experiences.

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 of future financial and operational performance and operational expenditures, expected growth, and business outlook, including our financial guidance for the fourth fiscal quarter and full year 2022, and statements regarding the size of our market and our positioning for capturing a larger share of our market. 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, the effect of the COVID-19 pandemic on our business operations and demand for our products as well as its impact on general economic and financial market conditions, our ability to maintain our subscription revenue growth rates in future periods, our ability to service our substantial level of indebtedness, market adoption of software intelligence solutions for application performance monitoring, digital experience monitoring, infrastructure monitoring, AIOps, business intelligence and analytics and application security, continued spending on and demand for software intelligence solutions, our ability to maintain and acquire new customers, our ability to differentiate our platform from competing products and technologies; our ability to successfully recruit and retain highly-qualified personnel; the price volatility of our common stock, and other risks set forth under the caption “Risk Factors” in our Form 10-K filed on May 28, 2021 and our other SEC filings. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

 

DYNATRACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited – In thousands, except per share data)

 

 

Three Months Ended

December 31,

 

Nine Months Ended

December 31,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

Subscription

$

226,290

 

 

$

170,308

 

 

$

635,411

 

 

$

472,338

 

License

 

2

 

 

 

257

 

 

 

52

 

 

 

1,337

 

Service

 

14,474

 

 

 

12,346

 

 

 

41,397

 

 

 

33,330

 

Total revenue

 

240,766

 

 

 

182,911

 

 

 

676,860

 

 

 

507,005

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of subscription

 

28,284

 

 

 

20,382

 

 

 

80,401

 

 

 

55,415

 

Cost of service

 

12,232

 

 

 

8,907

 

 

 

32,921

 

 

 

25,471

 

Amortization of acquired technology

 

3,944

 

 

 

3,831

 

 

 

11,638

 

 

 

11,487

 

Total cost of revenue

 

44,460

 

 

 

33,120

 

 

 

124,960

 

 

 

92,373

 

Gross profit

 

196,306

 

 

 

149,791

 

 

 

551,900

 

 

 

414,632

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

40,876

 

 

 

28,730

 

 

 

113,509

 

 

 

79,747

 

Sales and marketing

 

94,033

 

 

 

64,829

 

 

 

260,816

 

 

 

170,682

 

General and administrative

 

32,643

 

 

 

23,442

 

 

 

91,254

 

 

 

67,079

 

Amortization of other intangibles

 

7,539

 

 

 

8,685

 

 

 

22,618

 

 

 

26,057

 

Restructuring and other

 

 

 

 

(2

)

 

 

25

 

 

 

23

 

Total operating expenses

 

175,091

 

 

 

125,684

 

 

 

488,222

 

 

 

343,588

 

Income from operations

 

21,215

 

 

 

24,107

 

 

 

63,678

 

 

 

71,044

 

Interest expense, net

 

(2,450

)

 

 

(3,455

)

 

 

(7,958

)

 

 

(11,170

)

Other (expense) income, net

 

(1,357

)

 

 

2,526

 

 

 

(1,345

)

 

 

2,744

 

Income before income taxes

 

17,408

 

 

 

23,178

 

 

 

54,375

 

 

 

62,618

 

Income tax expense

 

(2,821

)

 

 

(4,762

)

 

 

(2,853

)

 

 

(13,858

)

Net income

$

14,587

 

 

$

18,416

 

 

$

51,522

 

 

$

48,760

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.05

 

 

$

0.07

 

 

$

0.18

 

 

$

0.17

 

Diluted

$

0.05

 

 

$

0.06

 

 

$

0.18

 

 

$

0.17

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

284,722

 

 

 

281,010

 

 

 

283,773

 

 

 

280,057

 

Diluted

 

291,845

 

 

 

286,427

 

 

 

290,895

 

 

 

285,884

 

 

UNAUDITED SHARE-BASED COMPENSATION

 

 

Three Months Ended

December 31,

 

Nine Months Ended

December 31,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

Cost of revenue

$

3,405

 

$

2,066

 

$

9,542

 

$

5,430

Research and development

 

5,908

 

 

3,259

 

 

15,331

 

 

8,666

Sales and marketing

 

9,267

 

 

6,480

 

 

26,487

 

 

18,007

General and administrative

 

8,543

 

 

3,783

 

 

20,590

 

 

10,988

Total share-based compensation

$

27,123

 

$

15,588

 

$

71,950

 

$

43,091

 

DYNATRACE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

 

December 31,

2021

 

March 31,

2021

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

408,723

 

 

$

324,962

 

Accounts receivable, net

 

264,293

 

 

 

242,079

 

Deferred commissions, current

 

57,978

 

 

 

48,986

 

Prepaid expenses and other current assets

 

81,326

 

 

 

64,255

 

Total current assets

 

812,320

 

 

 

680,282

 

Property and equipment, net

 

41,984

 

 

 

36,916

 

Operating lease right-of-use assets, net

 

59,306

 

 

 

42,959

 

Goodwill

 

1,281,764

 

 

 

1,271,195

 

Other intangible assets, net

 

117,908

 

 

 

149,484

 

Deferred tax assets, net

 

16,390

 

 

 

16,811

 

Deferred commissions, non-current

 

58,086

 

 

 

48,638

 

Other assets

 

10,003

 

 

 

9,933

 

Total assets

$

2,397,761

 

 

$

2,256,218

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

22,256

 

 

$

9,621

 

Accrued expenses, current

 

116,154

 

 

 

119,527

 

Deferred revenue, current

 

563,045

 

 

 

509,272

 

Operating lease liabilities, current

 

11,700

 

 

 

9,491

 

Total current liabilities

 

713,155

 

 

 

647,911

 

Deferred revenue, non-current

 

30,937

 

 

 

47,504

 

Accrued expenses, non-current

 

20,046

 

 

 

16,072

 

Operating lease liabilities, non-current

 

52,976

 

 

 

38,203

 

Deferred tax liabilities

 

1,217

 

 

 

1,014

 

Long-term debt

 

303,415

 

 

 

391,913

 

Total liabilities

 

1,121,746

 

 

 

1,142,617

 

 

 

 

 

Shareholders' equity:

 

 

 

Common shares, $0.001 par value, 600,000,000 shares authorized, 285,701,744 and 283,130,238 shares issued and outstanding at December 31, 2021 and March 31, 2021, respectively

 

286

 

 

 

283

 

Additional paid-in capital

 

1,762,789

 

 

 

1,653,328

 

Accumulated deficit

 

(462,277

)

 

 

(513,799

)

Accumulated other comprehensive loss

 

(24,783

)

 

 

(26,211

)

Total shareholders' equity

 

1,276,015

 

 

 

1,113,601

 

Total liabilities and shareholders' equity

$

2,397,761

 

 

$

2,256,218

 

 

DYNATRACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited – In thousands)

 

 

Nine Months Ended

December 31,

 

 

2021

 

 

 

2020

 

Cash flows from operating activities:

 

 

 

Net income

$

51,522

 

 

$

48,760

 

Adjustments to reconcile net income to cash provided by operations:

 

 

 

Depreciation

 

7,788

 

 

 

6,589

 

Amortization

 

34,682

 

 

 

39,046

 

Share-based compensation

 

71,950

 

 

 

43,091

 

Deferred income taxes

 

34

 

 

 

(3,014

)

Other

 

2,872

 

 

 

(1,240

)

Net change in operating assets and liabilities:

 

 

 

Accounts receivable

 

(22,362

)

 

 

(37,693

)

Deferred commissions

 

(19,581

)

 

 

(6,380

)

Prepaid expenses and other assets

 

(17,508

)

 

 

25,920

 

Accounts payable and accrued expenses

 

10,987

 

 

 

14,891

 

Operating leases, net

 

683

 

 

 

599

 

Deferred revenue

 

41,545

 

 

 

3,996

 

Net cash provided by operating activities

 

162,612

 

 

 

134,565

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Purchase of property and equipment

 

(11,768

)

 

 

(8,868

)

Capitalized software additions

 

 

 

 

(248

)

Acquisition of businesses, net of cash acquired

 

(13,195

)

 

 

 

Net cash used in investing activities

 

(24,963

)

 

 

(9,116

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Repayment of term loans

 

(90,000

)

 

 

(60,000

)

Proceeds from employee stock purchase plan

 

13,913

 

 

 

9,195

 

Proceeds from exercise of stock options

 

23,650

 

 

 

6,849

 

Equity repurchases

 

(51

)

 

 

(36

)

Net cash used in financing activities

 

(52,488

)

 

 

(43,992

)

 

 

 

 

Effect of exchange rates on cash and cash equivalents

 

(1,400

)

 

 

4,878

 

 

 

 

 

Net increase in cash and cash equivalents

 

83,761

 

 

 

86,335

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

324,962

 

 

 

213,170

 

Cash and cash equivalents, end of period

$

408,723

 

 

$

299,505

 

 

 

 

 

Supplemental cash flow data:

 

 

 

Cash paid for interest

$

6,549

 

 

$

9,914

 

Cash paid for (received from) tax, net

$

12,902

 

 

$

(14,472

)

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands, except percentages)

 

 

Three Months Ended December 31, 2021

 

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

$

44,460

 

 

$

(3,405

)

 

$

(149

)

 

$

(3,944

)

 

$

 

 

$

36,962

 

Gross profit

 

196,306

 

 

 

3,405

 

 

 

149

 

 

 

3,944

 

 

 

 

 

 

203,804

 

Gross margin

 

82

%

 

 

 

 

 

 

 

 

 

 

85

%

Research and development

 

40,876

 

 

 

(5,908

)

 

 

(493

)

 

 

 

 

 

 

 

 

34,475

 

Sales and marketing

 

94,033

 

 

 

(9,267

)

 

 

(511

)

 

 

 

 

 

 

 

 

84,255

 

General and administrative

 

32,643

 

 

 

(8,543

)

 

 

(124

)

 

 

 

 

 

(4

)

 

 

23,972

 

Amortization of other intangibles

 

7,539

 

 

 

 

 

 

 

 

 

(7,539

)

 

 

 

 

 

 

Restructuring and other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

21,215

 

 

$

27,123

 

 

$

1,277

 

 

$

11,483

 

 

$

4

 

 

$

61,102

 

Operating margin

 

9

%

 

 

 

 

 

 

 

 

 

 

25

%

 

Three Months Ended December 31, 2020

 

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

$

33,120

 

 

$

(2,066

)

 

$

(82

)

 

$

(3,831

)

 

$

 

 

$

27,141

 

Gross profit

 

149,791

 

 

 

2,066

 

 

 

82

 

 

 

3,831

 

 

 

 

 

 

155,770

 

Gross margin

 

82

%

 

 

 

 

 

 

 

 

 

 

85

%

Research and development

 

28,730

 

 

 

(3,259

)

 

 

(288

)

 

 

 

 

 

 

 

 

25,183

 

Sales and marketing

 

64,829

 

 

 

(6,480

)

 

 

(288

)

 

 

 

 

 

 

 

 

58,061

 

General and administrative

 

23,442

 

 

 

(3,783

)

 

 

(34

)

 

 

 

 

 

(500

)

 

 

19,125

 

Amortization of other intangibles

 

8,685

 

 

 

 

 

 

 

 

 

(8,685

)

 

 

 

 

 

 

Restructuring and other

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

Operating income

$

24,107

 

 

$

15,588

 

 

$

692

 

 

$

12,516

 

 

$

498

 

 

$

53,401

 

Operating margin

 

13

%

 

 

 

 

 

 

 

 

 

 

29

%

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands, except per share data)

 

 

Three Months Ended

December 31,

 

 

2021

 

 

 

2020

 

Non-GAAP net income:

 

 

 

Net income

$

14,587

 

 

$

18,416

 

Income tax expense

 

2,821

 

 

 

4,762

 

Non-GAAP effective cash tax

 

(7,093

)

 

 

(3,810

)

Interest expense, net

 

2,450

 

 

 

3,455

 

Cash paid for interest

 

(1,989

)

 

 

(2,991

)

Share-based compensation

 

27,123

 

 

 

15,588

 

Employer payroll taxes on employee stock transactions

 

1,277

 

 

 

692

 

Amortization of other intangibles

 

7,539

 

 

 

8,685

 

Amortization of acquired technology

 

3,944

 

 

 

3,831

 

Transaction, restructuring, and other

 

4

 

 

 

498

 

Loss (gain) on currency translation

 

1,357

 

 

 

(2,526

)

Non-GAAP net income

$

52,020

 

 

$

46,600

 

 

 

 

 

Share count:

 

 

 

Weighted-average shares outstanding - basic

 

284,722

 

 

 

281,010

 

Weighted-average shares outstanding - diluted

 

291,845

 

 

 

286,427

 

 

 

 

 

Shares used in non-GAAP per share calculations:

 

 

 

Weighted-average shares outstanding - basic

 

284,722

 

 

 

281,010

 

Weighted-average shares outstanding - diluted

 

291,845

 

 

 

286,427

 

 

 

 

 

Net income per share:

 

 

 

Net income per share - basic

$

0.05

 

 

$

0.07

 

Net income per share - diluted

$

0.05

 

 

$

0.06

 

Non-GAAP net income per share - basic

$

0.18

 

 

$

0.17

 

Non-GAAP net income per share - diluted

$

0.18

 

 

$

0.16

 

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands)

 

 

Three Months Ended

December 31,

 

 

2021

 

 

 

2020

 

Unlevered Free Cash Flow ("uFCF"):

 

 

 

Net cash provided by operating activities

$

60,844

 

 

$

73,716

 

Cash paid for interest expense

 

1,989

 

 

 

2,991

 

Purchase of property and equipment

 

(4,156

)

 

 

(2,468

)

Transaction, restructuring, and other

 

1,004

 

 

 

498

 

Discrete tax items

 

1

 

 

 

 

Total uFCF

 

59,682

 

 

 

74,737

 

Interest tax adjustment

 

(496

)

 

 

(748

)

uFCF

$

59,186

 

 

$

73,989

 

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands, except percentages)

 

 

Nine Months Ended December 31, 2021

 

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

$

124,960

 

 

$

(9,542

)

 

$

(916

)

 

$

(11,638

)

 

$

 

 

$

102,864

 

Gross profit

 

551,900

 

 

 

9,542

 

 

 

916

 

 

 

11,638

 

 

 

 

 

 

573,996

 

Gross margin

 

82

%

 

 

 

 

 

 

 

 

 

 

85

%

Research and development

 

113,509

 

 

 

(15,331

)

 

 

(1,620

)

 

 

 

 

 

 

 

 

96,558

 

Sales and marketing

 

260,816

 

 

 

(26,487

)

 

 

(1,881

)

 

 

 

 

 

 

 

 

232,448

 

General and administrative

 

91,254

 

 

 

(20,590

)

 

 

(578

)

 

 

 

 

 

(1,206

)

 

 

68,880

 

Amortization of other intangibles

 

22,618

 

 

 

 

 

 

 

 

 

(22,618

)

 

 

 

 

 

 

Restructuring and other

 

25

 

 

 

 

 

 

 

 

 

 

 

 

(25

)

 

 

 

Operating income

$

63,678

 

 

$

71,950

 

 

$

4,995

 

 

$

34,256

 

 

$

1,231

 

 

$

176,110

 

Operating margin

 

9

%

 

 

 

 

 

 

 

 

 

 

26

%

 

Nine Months Ended December 31, 2020

 

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

$

92,373

 

 

$

(5,430

)

 

$

(494

)

 

$

(11,487

)

 

$

 

 

$

74,962

 

Gross profit

 

414,632

 

 

 

5,430

 

 

 

494

 

 

 

11,487

 

 

 

 

 

 

432,043

 

Gross margin

 

82

%

 

 

 

 

 

 

 

 

 

 

85

%

Research and development

 

79,747

 

 

 

(8,666

)

 

 

(978

)

 

 

 

 

 

 

 

 

70,103

 

Sales and marketing

 

170,682

 

 

 

(18,007

)

 

 

(993

)

 

 

 

 

 

 

 

 

151,682

 

General and administrative

 

67,079

 

 

 

(10,988

)

 

 

(208

)

 

 

 

 

 

(3,398

)

 

 

52,485

 

Amortization of other intangibles

 

26,057

 

 

 

 

 

 

 

 

 

(26,057

)

 

 

 

 

 

 

Restructuring and other

 

23

 

 

 

 

 

 

 

 

 

 

 

 

(23

)

 

 

 

Operating income

$

71,044

 

 

$

43,091

 

 

$

2,673

 

 

$

37,544

 

 

$

3,421

 

 

$

157,773

 

Operating margin

 

14

%

 

 

 

 

 

 

 

 

 

 

31

%

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands, except per share data)

 
 

 

Nine Months Ended December 31,

 

 

2021

 

 

 

2020

 

Non-GAAP net income:

 

 

 

Net income

$

51,522

 

 

$

48,760

 

Income tax expense

 

2,853

 

 

 

13,858

 

Non-GAAP effective cash tax

 

(20,346

)

 

 

(11,174

)

Interest expense, net

 

7,958

 

 

 

11,170

 

Cash paid for interest

 

(6,549

)

 

 

(9,914

)

Share-based compensation

 

71,950

 

 

 

43,091

 

Employer payroll taxes on employee stock transactions

 

4,995

 

 

 

2,673

 

Amortization of other intangibles

 

22,618

 

 

 

26,057

 

Amortization of acquired technology

 

11,638

 

 

 

11,487

 

Transaction, restructuring, and other

 

1,231

 

 

 

3,421

 

Loss (gain) on currency translation

 

1,345

 

 

 

(2,744

)

Non-GAAP net income

$

149,215

 

 

$

136,685

 

 

 

 

 

Share count:

 

 

 

Weighted-average shares outstanding - basic

 

283,773

 

 

 

280,057

 

Weighted-average shares outstanding - diluted

 

290,895

 

 

 

285,884

 

 

 

 

 

Shares used in non-GAAP per share calculations:

 

 

 

Weighted-average shares outstanding - basic

 

283,773

 

 

 

280,057

 

Weighted-average shares outstanding - diluted

 

290,895

 

 

 

285,884

 

 

 

 

 

Net income per share:

 

 

 

Net income per share - basic

$

0.18

 

 

$

0.17

 

Net income per share - diluted

$

0.18

 

 

$

0.17

 

Non-GAAP net income per share - basic

$

0.53

 

 

$

0.49

 

Non-GAAP net income per share - diluted

$

0.51

 

 

$

0.48

 

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands)

 

 

Nine Months Ended December 31,

 

 

2021

 

 

 

2020

 

Unlevered Free Cash Flow ("uFCF"):

 

 

 

Net cash provided by operating activities

$

162,612

 

 

$

134,565

 

Cash paid for interest expense

 

6,549

 

 

 

9,914

 

Purchase of property and equipment

 

(11,768

)

 

 

(8,868

)

Transaction, restructuring, and other

 

1,231

 

 

 

3,421

 

Discrete tax items

 

(5,028

)

 

 

14,900

 

Total uFCF

 

153,596

 

 

 

153,932

 

Interest tax adjustment

 

(1,637

)

 

 

(2,479

)

uFCF

$

151,959

 

 

$

151,453

 

 

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