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Dynatrace Reports Fourth Quarter and Full Year Fiscal 2022 Financial Results

Delivers Adjusted ARR growth of 35% year-over-year

Software intelligence company Dynatrace (NYSE: DT) today released financial results for the fourth quarter and full year fiscal 2022 ended March 31, 2022. Dynatrace also announced today that Kevin Burns, its Chief Financial Officer, will be leaving at the end of calendar year 2022. Dynatrace has initiated a search for a new CFO, and Mr. Burns will work to ensure a smooth transition of his duties once a new CFO is appointed.

“Dynatrace delivered an extremely strong fourth quarter, closing out fiscal 2022 with 35% Adjusted ARR growth for the second straight year,” said Rick McConnell, Chief Executive Officer. “I am proud of the Dynatrace team for having now crossed the $1 billion dollar threshold in annualized revenue during the quarter, all while delivering strong profitability and free cash flow. Digital transformation and cloud migration trends continue to grow at a rapid pace and serve as the foundation for significant future growth. The combination of our material ongoing innovation coupled with expanding routes to market with key partnerships provides Dynatrace with strong momentum to capture the sizable market opportunity ahead of us.”

All growth rates are compared to the fourth quarter and full year of fiscal 2021 unless otherwise noted.

Fourth Quarter Fiscal 2022 Financial Highlights:

  • Total ARR of $995 million, Adjusted ARR growth of 35% year-over-year
  • Total Revenue of $253 million, up 31% on a constant currency basis
  • Subscription Revenue of $235 million, up 31% on a constant currency basis
  • GAAP Operating Income of $18 million and Non-GAAP Operating Income of $58 million
  • GAAP EPS of $0.00 and non-GAAP EPS of $0.17, on a dilutive basis

Full Year Fiscal 2022 Financial Highlights:

  • Total Revenue of $929 million, up 32% on a constant currency basis
  • Subscription Revenue of $870 million, 32% on a constant currency basis
  • GAAP Operating Income of $81 million and Non-GAAP Operating Income of $234 million
  • GAAP EPS of $0.18 and non-GAAP EPS of $0.68, on a dilutive basis
  • Unlevered Free Cash Flow of $234 million, or 25% of revenue

Business Highlights:

  • Platform innovation: Delivered general availability of the Dynatrace® platform as native SaaS on Microsoft Azure and Google Cloud Platform in addition to existing availability through Amazon Web Services. Enhanced the Dynatrace® Application Security Module with real-time attack blocking capabilities. Enabled development teams to bring higher quality, more secure code to market faster by making Dynatrace observability, application security, and advanced AIOps capabilities available as code.
  • Go-to-market momentum: Grew new logos by 21% in fiscal 2022, adding 205 new logos to the Dynatrace® platform in the fourth quarter, for a total of 706 new logos added this year. Sustained a net expansion rate at or above 120% for the sixteenth consecutive quarter.
  • Partnership expansion: New ARR transacted through hyperscaler partnerships, including AWS, Google, Microsoft, more than tripled compared to the same period last year. Deloitte selected the Dynatrace platform to power its expanded observability practice (announced today). Enhanced Dynatrace Partner Program with new DevSecOps Automation Partner Program, enabling partners to extend the value of their solutions through seamless integrations with the Dynatrace® platform and providing DevSecOps teams with easy access to the industry’s leading solutions.

Executive Leadership Update

"On behalf of the entire Dynatrace team, I’d like to thank Kevin for his many contributions since joining the company in 2016,” said Rick McConnell, Chief Executive Officer. “He has played an integral role in positioning Dynatrace for long term success, including the transformation of our business model and successful IPO. We are fortunate to have a strong and deep finance team, and we are intent on the successful recruitment of a world-class CFO. I very much appreciate Kevin’s commitment to a smooth transition over the coming months.”

"The past six years at Dynatrace have been an incredible experience. It has been a privilege to work alongside this very talented group of people to grow this company into a billion-dollar business," said Burns. "Heading into fiscal 2023, Dynatrace’s position in the market has never been stronger. I am very proud of Dynatrace’s accomplishments and believe it is well positioned to continue to deliver significant growth and profitability in the future."

Fourth Quarter 2022 Financial Highlights

(Unaudited – In thousands, except per share data)

 

 

Three Months Ended March 31,

 

 

2022

 

 

 

2021

 

Key Operating Metric:

 

 

 

Annualized recurring revenue

$

995,121

 

 

$

774,090

 

Year-over-Year Increase

 

29

%

 

 

Adjusted ARR Growth

 

35

%

 

 

 

 

 

 

Revenue:

 

 

 

Total revenue

$

252,585

 

 

$

196,504

 

Year-over-Year Increase

 

29

%

 

 

 

 

 

 

Total revenue - constant currency (*)

$

257,911

 

 

$

196,504

 

Year-over-Year Increase

 

31

%

 

 

 

 

 

 

Subscription revenue

$

234,974

 

 

$

182,842

 

Year-over-Year Increase

 

29

%

 

 

 

 

 

 

Subscription revenue - constant currency (*)

$

239,937

 

 

$

182,842

 

Year-over-Year Increase

 

31

%

 

 

 

 

 

 

Non-GAAP Financial Measures:

 

 

 

Non-GAAP operating income (*)

$

57,656

 

 

$

49,478

 

Non-GAAP operating margin (*)

 

23

%

 

 

25

%

 

 

 

 

Non-GAAP net income (*)

$

48,287

 

 

$

43,371

 

 

 

 

 

Non-GAAP net income per share - diluted

$

0.17

 

 

$

0.15

 

 

 

 

 

Non-GAAP shares outstanding - diluted

 

290,339

 

 

 

288,067

 

 

 

 

 

Unlevered Free Cash Flow (*)

$

82,306

 

 

$

85,602

 

Full Year 2022 Financial Highlights

(Unaudited – In thousands, except per share data)

 

 

Year Ended March 31,

 

 

2022

 

 

 

2021

 

Revenue:

 

 

 

Total revenue

$

929,445

 

 

$

703,509

 

Year-over-Year Increase

 

32

%

 

 

 

 

 

 

Total revenue - constant currency (*)

$

925,281

 

 

$

703,509

 

Year-over-Year Increase

 

32

%

 

 

 

 

 

 

Subscription revenue

$

870,385

 

 

$

655,180

 

Year-over-Year Increase

 

33

%

 

 

 

 

 

 

Subscription revenue - constant currency (*)

$

866,533

 

 

$

655,180

 

Year-over-Year Increase

 

32

%

 

 

 

 

 

 

Non-GAAP Financial Measures:

 

 

 

Non-GAAP operating income (*)

$

233,766

 

 

$

207,251

 

Non-GAAP operating margin (*)

 

25

%

 

 

29

%

 

 

 

 

Non-GAAP net income (*)

$

197,502

 

 

$

180,056

 

 

 

 

 

Non-GAAP net income per share - diluted

$

0.68

 

 

$

0.63

 

 

 

 

 

Non-GAAP shares outstanding - diluted

 

290,903

 

 

 

286,509

 

 

 

 

 

Unlevered Free Cash Flow (*)

$

234,265

 

 

$

237,055

 

* 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

Our guidance is based on foreign exchange rates as of April 30, 2022. Since March 31, 2022, the U.S. dollar has continued to strengthen, which results in a sizeable foreign exchange ("FX") headwind. For fiscal 2023, we expect a total FX headwind to be approximately $20 million dollars on ARR and revenue.

In addition, on March 8, 2022, we announced that we suspended business in Russia and Belarus which results in a headwind of approximately $6 million dollars on ARR and revenue for fiscal 2023.

Growth rates for Adjusted ARR, Total revenue, and Subscription revenue are presented in constant currency in the table below to provide better visibility into the underlying growth of the business.

Based on information available, as of May 18, 2022, Dynatrace is issuing guidance for the first quarter fiscal 2023 and full year fiscal 2023 as follows:

All growth rates are compared to the first quarter and full year of fiscal 2022 unless otherwise noted.

(In millions, except per share data)

First Quarter

Fiscal 2023

 

Full Year

Fiscal 2023

Total ARR

 

 

$1,250 - $1,265

As reported

 

 

26% - 27%

Constant currency

 

 

28% - 29%

Adjusted ARR growth

 

 

29% - 30%

Total revenue

$261 - $263.5

 

$1,142 - $1,158

As reported

24% - 26%

 

23% - 25%

Constant currency

29% - 31%

 

27% - 28%

Subscription revenue

$244.5 - $246.5

 

$1,071 - $1,086

As reported

24% - 25%

 

23% - 25%

Constant currency

29% - 30%

 

27% - 28%

Non-GAAP operating income

$60 - $62

 

$257 - $266

Non-GAAP net income

$50 - $52

 

$216 - $225

Non-GAAP net income per diluted share

$0.17 - $0.18

 

$0.74 - $0.77

Diluted weighted average shares outstanding

291 - 292

 

292 - 294

Free cash flow

 

 

$330 - $345

Free cash flow margin

 

 

29% - 30%

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.

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 18, 2022. To access the conference call from the U.S. and Canada, dial (866) 405-1247, or internationally, dial (201) 689-8045 with event confirmation #: 13728998. 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 26, 2021, by dialing (877) 660-6853 from the U.S. or Canada, or for international callers by dialing (201) 612-7415 and entering event confirmation #: 13728998. 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 business 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 prior 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.

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.

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. Given that perpetual license ARR continues to diminish, we will begin to exclude the headwind associated with the Dynatrace perpetual license ARR effective the first quarter of fiscal year 2023. We believe that eliminating the perpetual license headwind will result in a Net Expansion Rate metric that better reflects Dynatrace’s ability to expand existing customer relationships.

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.

Free Cash Flow is defined as net cash provided by (used in) operating activities less capital expenditures.

About Dynatrace

Dynatrace exists to make the world’s software work perfectly. Our unified software intelligence 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 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 first quarter and full year of fiscal 2023, 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 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 most recently filed Form 10-Q filed on February 2, 2022 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.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

 

Three Months Ended

March 31,

 

Twelve Months Ended

March 31,

 

2022

 

2021

 

2022

 

2021

 

(unaudited)

 

 

 

 

Revenue:

 

 

 

 

 

 

 

Subscription

$

234,974

 

 

$

182,842

 

 

$

870,385

 

 

$

655,180

 

License

 

2

 

 

 

109

 

 

 

54

 

 

 

1,446

 

Service

 

17,609

 

 

 

13,553

 

 

 

59,006

 

 

 

46,883

 

Total revenue

 

252,585

 

 

 

196,504

 

 

 

929,445

 

 

 

703,509

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of subscription

 

31,245

 

 

 

22,073

 

 

 

111,646

 

 

 

77,488

 

Cost of service

 

12,796

 

 

 

9,432

 

 

 

45,717

 

 

 

34,903

 

Amortization of acquired technology

 

3,875

 

 

 

3,830

 

 

 

15,513

 

 

 

15,317

 

Total cost of revenue

 

47,916

 

 

 

35,335

 

 

 

172,876

 

 

 

127,708

 

Gross profit

 

204,669

 

 

 

161,169

 

 

 

756,569

 

 

 

575,801

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

42,833

 

 

 

31,668

 

 

 

156,342

 

 

 

111,415

 

Sales and marketing

 

101,300

 

 

 

74,805

 

 

 

362,116

 

 

 

245,487

 

General and administrative

 

35,368

 

 

 

25,140

 

 

 

126,622

 

 

 

92,219

 

Amortization of other intangibles

 

7,539

 

 

 

8,687

 

 

 

30,157

 

 

 

34,744

 

Restructuring and other

 

 

 

 

17

 

 

 

25

 

 

 

40

 

Total operating expenses

 

187,040

 

 

 

140,317

 

 

 

675,262

 

 

 

483,905

 

Income from operations

 

17,629

 

 

 

20,852

 

 

 

81,307

 

 

 

91,896

 

Interest expense, net

 

(2,234

)

 

 

(3,035

)

 

 

(10,192

)

 

 

(14,205

)

Other income (expense), net

 

1,889

 

 

 

(2,582

)

 

 

544

 

 

 

162

 

Income before income taxes

 

17,284

 

 

 

15,235

 

 

 

71,659

 

 

 

77,853

 

Income tax (expense) benefit

 

(16,355

)

 

 

11,719

 

 

 

(19,208

)

 

 

(2,139

)

Net income

$

929

 

 

$

26,954

 

 

$

52,451

 

 

$

75,714

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.00

 

 

$

0.10

 

 

$

0.18

 

 

$

0.27

 

Diluted

$

0.00

 

 

$

0.09

 

 

$

0.18

 

 

$

0.26

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

285,349

 

 

 

281,726

 

 

 

284,161

 

 

 

280,469

 

Diluted

 

290,339

 

 

 

288,067

 

 

 

290,903

 

 

 

286,509

 

SHARE-BASED COMPENSATION

     

 

Three Months Ended

March 31,

 

Twelve Months

Ended March 31,

 

2022

 

2021

 

2022

 

2021

 

(unaudited)

 

 

 

 

Cost of revenue

$

3,321

 

 

$

1,877

 

 

$

12,863

 

 

$

7,307

 

Research and development

 

5,985

 

 

 

3,018

 

 

 

21,316

 

 

 

11,684

 

Sales and marketing

 

9,470

 

 

 

6,146

 

 

 

35,957

 

 

 

24,153

 

General and administrative

 

8,810

 

 

 

3,652

 

 

 

29,400

 

 

 

14,640

 

Total share-based compensation expense

$

27,586

 

 

$

14,693

 

 

$

99,536

 

 

$

57,784

 

DYNATRACE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

 

March 31,

 

 

2022

 

 

 

2021

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

462,967

 

 

$

324,962

 

Accounts receivable, net

 

350,666

 

 

 

242,079

 

Deferred commissions, current

 

62,601

 

 

 

48,986

 

Prepaid expenses and other current assets

 

72,188

 

 

 

64,255

 

Total current assets

 

948,422

 

 

 

680,282

 

Property and equipment, net

 

45,271

 

 

 

36,916

 

Operating lease right-of-use asset, net

 

58,849

 

 

 

42,959

 

Goodwill

 

1,281,876

 

 

 

1,271,195

 

Other intangible assets, net

 

105,736

 

 

 

149,484

 

Deferred tax assets, net

 

28,106

 

 

 

16,811

 

Deferred commissions, non-current

 

63,435

 

 

 

48,638

 

Other assets

 

9,615

 

 

 

9,933

 

Total assets

$

2,541,310

 

 

$

2,256,218

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

22,715

 

 

$

9,621

 

Accrued expenses, current

 

141,556

 

 

 

119,527

 

Deferred revenue, current

 

688,554

 

 

 

509,272

 

Operating lease liabilities, current

 

12,774

 

 

 

9,491

 

Total current liabilities

 

865,599

 

 

 

647,911

 

Deferred revenue, non-current

 

25,783

 

 

 

47,504

 

Accrued expenses, non-current

 

19,409

 

 

 

16,072

 

Operating lease liabilities, non-current

 

52,070

 

 

 

38,203

 

Deferred tax liabilities

 

85

 

 

 

1,014

 

Long-term debt

 

273,918

 

 

 

391,913

 

Total liabilities

 

1,236,864

 

 

 

1,142,617

 

Shareholders' equity:

 

 

 

Common shares, $0.001 par value, 600,000,000 shares authorized, 286,053,276 and 283,130,238 shares issued and outstanding at March 31, 2022 and 2021, respectively

 

286

 

 

 

283

 

Additional paid-in capital

 

1,792,197

 

 

 

1,653,328

 

Accumulated deficit

 

(461,348

)

 

 

(513,799

)

Accumulated other comprehensive loss

 

(26,689

)

 

 

(26,211

)

Total shareholders' equity

 

1,304,446

 

 

 

1,113,601

 

Total liabilities and shareholders' equity

$

2,541,310

 

 

$

2,256,218

 

DYNATRACE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

Year Ended March 31,

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

Net income

$

52,451

 

 

$

75,714

 

Adjustments to reconcile net income to cash provided by operations:

 

 

 

Depreciation

 

10,638

 

 

 

9,022

 

Amortization

 

46,238

 

 

 

51,942

 

Share-based compensation

 

99,536

 

 

 

57,784

 

Deferred income taxes

 

(12,401

)

 

 

(7,036

)

Other

 

1,486

 

 

 

1,845

 

Net change in operating assets and liabilities:

 

 

 

Accounts receivable

 

(108,848

)

 

 

(81,992

)

Deferred commissions

 

(29,533

)

 

 

(16,323

)

Prepaid expenses and other assets

 

(8,108

)

 

 

5,669

 

Accounts payable and accrued expenses

 

35,946

 

 

 

26,592

 

Operating leases, net

 

1,353

 

 

 

731

 

Deferred revenue

 

162,159

 

 

 

96,488

 

Net cash provided by operating activities

 

250,917

 

 

 

220,436

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Purchase of property and equipment

 

(17,695

)

 

 

(14,076

)

Capitalized software costs

 

 

 

 

197

 

Acquisition of businesses, net of cash acquired

 

(13,195

)

 

 

 

Net cash used in investing activities

 

(30,890

)

 

 

(13,879

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Repayment of term loans

 

(120,000

)

 

 

(120,000

)

Proceeds from employee stock purchase plan

 

13,913

 

 

 

9,195

 

Proceeds from exercise of stock options

 

25,489

 

 

 

13,052

 

Equity repurchases

 

(66

)

 

 

(49

)

Net cash used in financing activities

 

(80,664

)

 

 

(97,802

)

 

 

 

 

Effect of exchange rates on cash and cash equivalents

 

(1,358

)

 

 

3,037

 

 

 

 

 

Net increase in cash and cash equivalents

 

138,005

 

 

 

111,792

 

 

 

 

 

Cash and cash equivalents, beginning of year

 

324,962

 

 

 

213,170

 

Cash and cash equivalents, end of year

$

462,967

 

 

$

324,962

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands)

 

 

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

%

 

Three Months Ended March 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

$

35,335

 

 

$

(1,877

)

 

$

(224

)

 

$

(3,830

)

 

$

 

 

$

29,404

 

Gross profit

 

161,169

 

 

 

1,877

 

 

 

224

 

 

 

3,830

 

 

 

 

 

 

167,100

 

Gross margin

 

82

%

 

 

 

 

 

 

 

 

 

 

85

%

Research and development

 

31,668

 

 

 

(3,018

)

 

 

(378

)

 

 

 

 

 

 

 

 

28,272

 

Sales and marketing

 

74,805

 

 

 

(6,146

)

 

 

(637

)

 

 

 

 

 

 

 

 

68,022

 

General and administrative

 

25,140

 

 

 

(3,652

)

 

 

(202

)

 

 

 

 

 

42

 

 

 

21,328

 

Amortization of other intangibles

 

8,687

 

 

 

 

 

 

 

 

 

(8,687

)

 

 

 

 

 

 

Restructuring and other

 

17

 

 

 

 

 

 

 

 

 

 

 

 

(17

)

 

 

 

Operating income (loss)

$

20,852

 

 

$

14,693

 

 

$

1,441

 

 

$

12,517

 

 

$

(25

)

 

$

49,478

 

Operating margin

 

11

%

 

 

 

 

 

 

 

 

 

 

25

%

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands, except per share data)

 

 

Three Months Ended March 31,

 

 

2022

 

 

 

2021

 

Non-GAAP net income:

 

 

 

Net income

$

929

 

 

$

26,954

 

Income tax expense (benefit)

 

16,355

 

 

 

(11,719

)

Non-GAAP effective cash tax

 

(7,543

)

 

 

(3,546

)

Interest expense, net

 

2,234

 

 

 

3,035

 

Cash paid for interest

 

(1,826

)

 

 

(2,561

)

Share-based compensation

 

27,586

 

 

 

14,693

 

Employer payroll taxes on employee stock transactions

 

949

 

 

 

1,441

 

Amortization of other intangibles

 

7,539

 

 

 

8,687

 

Amortization of acquired technology

 

3,875

 

 

 

3,830

 

Transaction, restructuring, and other

 

78

 

 

 

(25

)

(Gain) loss on currency translation

 

(1,889

)

 

 

2,582

 

Non-GAAP net income

$

48,287

 

 

$

43,371

 

 

 

 

 

Share count:

 

 

 

Weighted-average shares outstanding - basic

 

285,349

 

 

 

281,726

 

Weighted-average shares outstanding - diluted

 

290,339

 

 

 

288,067

 

 

 

 

 

Shares used in non-GAAP per share calculations:

 

 

 

Weighted-average shares outstanding - basic

 

285,349

 

 

 

281,726

 

Weighted-average shares outstanding - diluted

 

290,339

 

 

 

288,067

 

 

 

 

 

Net income per share:

 

 

 

Net income per share - basic

$

0.00

 

 

$

0.10

 

Net income per share - diluted

$

0.00

 

 

$

0.09

 

Non-GAAP net income per share - basic

$

0.17

 

 

$

0.15

 

Non-GAAP net income per share - diluted

$

0.17

 

 

$

0.15

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands)

 

 

Three Months Ended March 31,

 

 

2022

 

 

 

2021

 

Unlevered Free Cash Flow ("uFCF"):

 

 

 

Net cash provided by operating activities

$

88,305

 

 

$

85,871

 

Cash paid for interest expense

 

1,826

 

 

 

2,561

 

Purchase of property and equipment

 

(5,927

)

 

 

(5,208

)

Transaction, restructuring, and other

 

78

 

 

 

(25

)

Discrete tax items

 

(1,519

)

 

 

3,043

 

Total uFCF

 

82,763

 

 

 

86,242

 

Interest tax adjustment

 

(457

)

 

 

(640

)

uFCF

$

82,306

 

 

$

85,602

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands)

 

 

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

%

 

Year Ended March 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

$

127,708

 

 

$

(7,307

)

 

$

(718

)

 

$

(15,317

)

 

$

 

 

$

104,366

 

Gross profit

 

575,801

 

 

 

7,307

 

 

 

718

 

 

 

15,317

 

 

 

 

 

 

599,143

 

Gross margin

 

82

%

 

 

 

 

 

 

 

 

 

 

85

%

Research and development

 

111,415

 

 

 

(11,684

)

 

 

(1,356

)

 

 

 

 

 

 

 

 

98,375

 

Sales and marketing

 

245,487

 

 

 

(24,153

)

 

 

(1,630

)

 

 

 

 

 

 

 

 

219,704

 

General and administrative

 

92,219

 

 

 

(14,640

)

 

 

(410

)

 

 

 

 

 

(3,356

)

 

 

73,813

 

Amortization of other intangibles

 

34,744

 

 

 

 

 

 

 

 

 

(34,744

)

 

 

 

 

 

 

Restructuring and other

 

40

 

 

 

 

 

 

 

 

 

 

 

 

(40

)

 

 

 

Operating income

$

91,896

 

 

$

57,784

 

 

$

4,114

 

 

$

50,061

 

 

$

3,396

 

 

$

207,251

 

Operating margin

 

13

%

 

 

 

 

 

 

 

 

 

 

29

%

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands, except per share data)

 

 

Year Ended March 31,

 

 

2022

 

 

 

2021

 

Non-GAAP net income:

 

 

 

Net income

$

52,451

 

 

$

75,714

 

Income tax expense

 

19,208

 

 

 

2,139

 

Non-GAAP effective cash tax

 

(27,889

)

 

 

(14,720

)

Interest expense, net

 

10,192

 

 

 

14,205

 

Cash paid for interest

 

(8,375

)

 

 

(12,475

)

Share-based compensation

 

99,536

 

 

 

57,784

 

Employer payroll taxes on employee stock transactions

 

5,944

 

 

 

4,114

 

Amortization of other intangibles

 

30,157

 

 

 

34,744

 

Amortization of acquired technology

 

15,513

 

 

 

15,317

 

Transaction, restructuring, and other

 

1,309

 

 

 

3,396

 

Gain on currency translation

 

(544

)

 

 

(162

)

Non-GAAP net income

$

197,502

 

 

$

180,056

 

 

 

 

 

Share count:

 

 

 

Weighted-average shares outstanding - basic

 

284,161

 

 

 

280,469

 

Weighted-average shares outstanding - diluted

 

290,903

 

 

 

286,509

 

 

 

 

 

Shares used in non-GAAP per share calculations:

 

 

 

Weighted-average shares outstanding - basic

 

284,161

 

 

 

280,469

 

Weighted-average shares outstanding - diluted

 

290,903

 

 

 

286,509

 

 

 

 

 

Net income (loss) per share:

 

 

 

Net income (loss) per share - basic

$

0.18

 

 

$

0.27

 

Net income (loss) per share - diluted

$

0.18

 

 

$

0.26

 

Non-GAAP net income per share - basic

$

0.70

 

 

$

0.64

 

Non-GAAP net income per share - diluted

$

0.68

 

 

$

0.63

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands)

 

 

Year Ended March 31,

 

 

2022

 

 

 

2021

 

Unlevered Free Cash Flow ("uFCF"):

 

 

 

Net cash provided by operating activities

$

250,917

 

 

$

220,436

 

Cash paid for interest expense

 

8,375

 

 

 

12,475

 

Purchase of property and equipment

 

(17,695

)

 

 

(14,076

)

Transaction, restructuring, and other

 

1,309

 

 

 

3,396

 

Discrete tax items

 

(6,547

)

 

 

17,943

 

Total uFCF

 

236,359

 

 

 

240,174

 

Interest tax adjustment

 

(2,094

)

 

 

(3,119

)

uFCF

$

234,265

 

 

$

237,055

 

 

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