Dynatrace Reports Third Quarter of Fiscal Year 2021 Financial Results

WALTHAM, Mass.–(BUSINESS WIRE)–Software intelligence company Dynatrace (NYSE: DT) today released financial results for the third…

WALTHAM, Mass.–(BUSINESS WIRE)–Software intelligence company Dynatrace (NYSE: DT) today released financial results for the third quarter of its fiscal 2021 ended December 31, 2020.

“The third quarter marked another strong performance for Dynatrace across all of our key operating metrics led by ARR growth of 35% year-over-year,” stated John Van Siclen, Chief Executive Officer. “The value of the Dynatrace platform is resonating with customers, evidenced by strong new logo growth and net expansion rate again above 120%. The acceleration of digital transformation is driving the scale and complexity of the modern multicloud beyond the level that digital teams can handle efficiently. We believe the automation and AI capabilities embedded in our unified platform solve the challenges inherent in these ever-changing multicloud environments and positions us well for strong and sustained ARR growth.”

Third Quarter Fiscal 2021 and Other Recent Business Highlights:

All growth rates are compared to the third quarter of fiscal 2020 unless otherwise noted.

Financial Highlights:

  • Total ARR of $722.0 million, an increase of 35% as reported, and 32% on a constant currency basis
  • Total Revenue of $182.9 million, an increase of 28% as reported, and 25% on a constant currency basis
  • Subscription revenue of $170.3 million, an increase of 33% as reported, and 30% on a constant currency basis, and representing 93% of total revenue
  • GAAP Operating Income of $24.1 million and Non-GAAP Operating Income of $53.4 million
  • GAAP EPS of $0.06 and non-GAAP EPS of $0.17, on a dilutive basis

Business Highlights:

  • Released Dynatrace’s 4th generation of PurePath, providing the deepest, most complete distributed tracing for modern cloud environments. Extended support for OpenTelemetry and OpenTrace frameworks to provide advanced levels of distributed tracing and immediate actionability for troubleshooting, optimization and proactive remediation for the latest cloud-native architectures.
  • Entered the Cloud Application Security market, extending the automation, AI and enterprise-grade robustness of the Dynatrace® Software Intelligence Platform to production and preproduction security use cases. The company estimates the cloud application security market TAM to be $18 billion over time.
  • Expanded strategic partnerships with Google Cloud Platform and Microsoft Azure with collaborative go-to market-motions and co-selling arrangements creating frictionless buying experiences and enabling customers to leverage their pre-committed cloud spend. Dynatrace is now part of the co-development program for Microsoft Azure console integration and is the only observability platform with a private offering in the GCP, Microsoft Azure and AWS marketplace listings.

Third Quarter 2021 Financial Highlights

(Unaudited – in thousands, except per share amounts)

 

 

Three Months Ended December 31,

 

2020

 

2019

Key Operating Metric:

 

 

 

Annualized recurring revenue

$

721,995

 

 

$

534,490

 

Year-over-Year Increase

35

%

 

 

 

 

 

 

Annualized recurring revenue – constant currency (*)

$

703,621

 

 

$

534,490

 

Year-over-Year Increase

32

%

 

 

 

 

 

 

Revenues:

 

 

 

Total revenue

$

182,911

 

 

$

143,298

 

Year-over-Year Increase

28

%

 

 

 

 

 

 

Total revenue – constant currency (*)

$

179,494

 

 

$

143,298

 

Year-over-Year Increase

25

%

 

 

 

 

 

 

Subscription revenue

$

170,308

 

 

$

128,518

 

Year-over-Year Increase

33

%

 

 

 

 

 

 

Subscription revenue – constant currency (*)

$

167,201

 

 

$

128,518

 

Year-over-Year Increase

30

%

 

 

 

 

 

 

Non-GAAP Financial Measures:

 

 

 

Non-GAAP operating income (*)

$

53,401

 

 

$

37,720

 

Non-GAAP operating margin (*)

29

%

 

26

%

 

 

 

 

Non-GAAP net income (*)

$

47,645

 

 

$

26,901

 

 

 

 

 

Non-GAAP net income per share – diluted

$

0.17

 

 

$

0.10

 

 

 

 

 

Non-GAAP shares outstanding – diluted

286,427

 

 

280,156

 

 

 

 

 

Unlevered Free Cash Flow (*)

$

73,989

 

 

$

13,287

 

* 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 3, 2021, Dynatrace is issuing guidance for the fourth quarter and raising guidance for full year fiscal 2021 as follows:

Fourth Quarter of Fiscal Year 2021:

  • Total revenue is expected to be in the range of $190 million to $192 million, 26% to 28% growth as reported, and 23% to 24% on a constant currency basis
  • Subscription revenue is expected to be in the range of $178 million to $180 million, 32% to 33% growth as reported, 28% to 29% on a constant currency basis
  • Non-GAAP operating income is expected to be in the range of $44 million to $46 million
  • Non-GAAP net income is expected to be in the range of $38 million to $40 million
  • Non-GAAP net income per diluted share is expected to be in the range of $0.13 to $0.14, based on a range of 288 million to 289 million diluted weighted-average shares outstanding

Full Year Fiscal 2021:

  • Total ARR is expected to be in the range of $756 million to $760 million, 32% to 33% growth as reported, and 29% on a constant currency basis
  • Total revenue is expected to be in the range of $697 million to $699 million, 28% growth as reported, and 27% growth on a constant currency basis
  • Subscription revenue is expected to be in the range of $650 million to $652 million, 33% to 34% growth as reported, and 32% growth on a constant currency basis
  • Non-GAAP operating income is expected to be in the range of $202 million to $204 million
  • Non-GAAP net income is expected to be in the range of $175 million to $178 million
  • Non-GAAP net income per diluted share is expected to be in the range of $0.61 to $0.62, based on a range of 287 million to 288 million diluted weighted-average shares outstanding
  • Total unlevered free cash flow is expected to be in the range of $220 million to $225 million, 32% of revenue

Our guidance is based on foreign exchange rates as of December 31, 2020.

While we believe we are in a strong financial position to weather the impact to our business from COVID-19, many of our customers and prospects are operating under very challenging circumstances and may reduce or re-evaluate their spend. As such, in our fourth quarter and fiscal 2021 guidance we factor in the expected impacts of COVID‑19 on our business and results of operations based on information available to us today. Our outlook assumes a continued challenging economic environment and incorporates a wider range of outcomes for the remainder of the fiscal year. Significant variation from these assumptions could cause us to raise, lower or modify our expectations and our guidance, and we undertake no obligation to update our assumptions, expectations or our guidance. These statements are forward-looking, and actual results may differ materially, as further discussed below under the heading “Cautionary Language Concerning Forward-Looking Statements”.

Reconciliation of non-GAAP operating income, non-GAAP net income, non-GAAP net income per 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 3, 2021. To access the conference call from the U.S. and Canada, dial (866) 405-1247, or internationally, dial (201) 689-8045 with conference ID # 13714690. 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 18, 2021, by dialing (877) 660-6853 from the U.S. or Canada, or for international callers by dialing (201) 612-7415 and entering conference ID # 13714690. 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. As of the second quarter of Fiscal Year 2021, we adjusted certain of our non-GAAP metrics for employer payroll tax expense related to equity incentive plans, as the amount of employer payroll tax expense is dependent on our stock price and other factors that are beyond our control and does not correlate to the operation of our business. Our historical presentation of these metrics has been updated in the tables below to reflect these adjustments for consistency.

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.

Adjusted EBITDA is defined as Net Income (loss) adjusted by removing the impact of our capital structure (net interest income or expense from our outstanding debt), asset base (depreciation and amortization), tax consequences, restructuring and other gains and losses, transaction and sponsor related costs, gains and losses on foreign currency, stock-based compensation and employer payroll tax expense related equity incentive plans.

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.

Adjusted EBITDA/Net Debt Leverage Ratio is defined as our Net Debt divided by our trailing twelve month Adjusted EBITDA. Net Debt is defined as total principal less cash and cash equivalents.

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 2021, 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-Q filed on October 28, 2020 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 amounts)

 

 

Three Months Ended

December 31,

 

Nine Months Ended

December 31,

 

2020

 

2019

 

2020

 

2019

Revenue:

 

 

 

 

 

 

 

Subscription

$

170,308

 

 

 

$

128,518

 

 

 

$

472,338

 

 

 

$

352,451

 

 

License

257

 

 

 

3,895

 

 

 

1,337

 

 

 

10,424

 

 

Service

12,346

 

 

 

10,885

 

 

 

33,330

 

 

 

32,351

 

 

Total revenue

182,911

 

 

 

143,298

 

 

 

507,005

 

 

 

395,226

 

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of subscription

20,382

 

 

 

16,297

 

 

 

55,415

 

 

 

55,930

 

 

Cost of service

8,907

 

 

 

8,584

 

 

 

25,471

 

 

 

29,240

 

 

Amortization of acquired technology

3,831

 

 

 

3,824

 

 

 

11,487

 

 

 

12,624

 

 

Total cost of revenue

33,120

 

 

 

28,705

 

 

 

92,373

 

 

 

97,794

 

 

Gross profit

149,791

 

 

 

114,593

 

 

 

414,632

 

 

 

297,432

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

28,730

 

 

 

22,517

 

 

 

79,747

 

 

 

94,772

 

 

Sales and marketing

64,829

 

 

 

52,400

 

 

 

170,682

 

 

 

210,581

 

 

General and administrative

23,442

 

 

 

21,883

 

 

 

67,079

 

 

 

140,718

 

 

Amortization of other intangibles

8,685

 

 

 

10,039

 

 

 

26,057

 

 

 

30,242

 

 

Restructuring and other

(2

)

 

 

199

 

 

 

23

 

 

 

1,093

 

 

Total operating expenses

125,684

 

 

 

107,038

 

 

 

343,588

 

 

 

477,406

 

 

Income (loss) from operations

24,107

 

 

 

7,555

 

 

 

71,044

 

 

 

(179,974

)

 

Interest expense, net

(3,455

)

 

 

(5,995

)

 

 

(11,170

)

 

 

(39,715

)

 

Other income, net

2,526

 

 

 

67

 

 

 

2,744

 

 

 

307

 

 

Income (loss) before income taxes

23,178

 

 

 

1,627

 

 

 

62,618

 

 

 

(219,382

)

 

Income tax (expense) benefit

(4,762

)

 

 

136

 

 

 

(13,858

)

 

 

(245,344

)

 

Net income (loss)

$

18,416

 

 

 

$

1,763

 

 

 

$

48,760

 

 

 

$

(464,726

)

 

Net income (loss) per share:

 

 

 

 

 

 

 

Basic

$

0.07

 

 

 

$

0.01

 

 

 

$

0.17

 

 

 

$

(1.78

)

 

Diluted

$

0.06

 

 

 

$

0.01

 

 

 

$

0.17

 

 

 

$

(1.78

)

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

281,010

 

 

 

277,926

 

 

 

280,057

 

 

 

260,383

 

 

Diluted

286,427

 

 

 

280,156

 

 

 

285,884

 

 

 

260,383

 

 

UNAUDITED SHARE-BASED COMPENSATION

 

 

Three Months Ended

December 31,

 

Nine Months Ended

December 31,

 

2020

 

2019

 

2020

 

2019

Cost of revenue

$

2,066

 

 

$

1,317

 

 

$

5,430

 

 

$

17,346

 

Research and development

3,259

 

 

2,173

 

 

8,666

 

 

36,679

 

Sales and marketing

6,480

 

 

6,707

 

 

18,007

 

 

78,592

 

General and administrative

3,783

 

 

3,316

 

 

10,988

 

 

77,067

 

Total share-based compensation expense

$

15,588

 

 

$

13,513

 

 

$

43,091

 

 

$

209,684

 

DYNATRACE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

 

December 31,

2020

 

March 31,

2020

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

299,505

 

 

 

$

213,170

 

 

Accounts receivable, net

200,849

 

 

 

157,058

 

 

Deferred commissions, current

45,645

 

 

 

38,509

 

 

Prepaid expenses and other current assets

28,505

 

 

 

61,188

 

 

Total current assets

574,504

 

 

 

469,925

 

 

Property and equipment, net

35,384

 

 

 

31,508

 

 

Operating lease right-of-use asset, net

43,530

 

 

 

 

 

Goodwill

1,272,574

 

 

 

1,270,733

 

 

Other intangible assets, net

162,882

 

 

 

201,592

 

 

Deferred tax assets, net

25,259

 

 

 

20,460

 

 

Deferred commissions, non-current

43,575

 

 

 

39,736

 

 

Other assets

8,850

 

 

 

8,126

 

 

Total assets

$

2,166,558

 

 

 

$

2,042,080

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

12,146

 

 

 

$

11,112

 

 

Accrued expenses, current

104,788

 

 

 

93,728

 

 

Deferred revenue, current

424,001

 

 

 

384,060

 

 

Operating lease liabilities, current

9,368

 

 

 

 

 

Total current liabilities

550,303

 

 

 

488,900

 

 

Deferred revenue, non-current

47,849

 

 

 

60,711

 

 

Accrued expenses, non-current

18,408

 

 

 

20,987

 

 

Operating lease liabilities, non-current

38,829

 

 

 

 

 

Long-term debt

451,427

 

 

 

509,985

 

 

Total liabilities

1,106,816

 

 

 

1,080,583

 

 

Commitments and contingencies

 

 

 

Shareholders’ equity:

 

 

 

Common shares, $0.001 par value, 600,000,000 shares authorized, 282,542,649 and 280,853,040 shares issued and outstanding at December 31, 2020 and March 31, 2020, respectively

281

 

 

 

281

 

 

Additional paid-in capital

1,632,446

 

 

 

1,573,347

 

 

Accumulated deficit

(544,960

)

 

 

(594,026

)

 

Accumulated other comprehensive loss

(28,025

)

 

 

(18,105

)

 

Total shareholders’ equity

1,059,742

 

 

 

961,497

 

 

Total liabilities and shareholders’ equity

$

2,166,558

 

 

 

$

2,042,080

 

 

DYNATRACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited – In thousands)

 

 

Nine Months Ended

December 31,

 

2020

 

2019

Cash flows from operating activities:

 

 

 

Net income (loss)

$

48,760

 

 

 

$

(464,726

)

 

Adjustments to reconcile net income (loss) to cash provided by (used in) operations:

 

 

 

Depreciation

6,589

 

 

 

5,977

 

 

Amortization

39,046

 

 

 

44,098

 

 

Share-based compensation

43,091

 

 

 

209,684

 

 

Deferred income taxes

(3,014

)

 

 

(45,686

)

 

Other

(1,240

)

 

 

4,006

 

 

Net change in operating assets and liabilities:

 

 

 

Accounts receivable

(37,693

)

 

 

(49,022

)

 

Deferred commissions

(6,380

)

 

 

(13,484

)

 

Prepaid expenses and other assets

25,920

 

 

 

(244

)

 

Accounts payable and accrued expenses

14,891

 

 

 

37,396

 

 

Operating leases, net

599

 

 

 

 

 

Deferred revenue

3,996

 

 

 

64,905

 

 

Net cash provided by (used in) operating activities

134,565

 

 

 

(207,096

)

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Purchase of property and equipment

(8,868

)

 

 

(15,143

)

 

Capitalized software additions

(248

)

 

 

(729

)

 

Net cash used in investing activities

(9,116

)

 

 

(15,872

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

Proceeds from initial public offering, net of underwriters’ discounts and commissions

 

 

 

590,297

 

 

Settlement of deferred offering costs

 

 

 

(5,000

)

 

Repayment of term loans

(60,000

)

 

 

(485,189

)

 

Contribution for tax associated with reorganization

 

 

 

265,000

 

 

Proceeds from employee stock purchase plan

9,195

 

 

 

 

 

Proceeds from exercise of stock options

6,849

 

 

 

 

 

Equity repurchases

(36

)

 

 

(150

)

 

Installments related to acquisition

 

 

 

(4,694

)

 

Net cash (used in) provided by financing activities

(43,992

)

 

 

360,264

 

 

 

 

 

 

Effect of exchange rates on cash and cash equivalents

4,878

 

 

 

(55

)

 

 

 

 

 

Net increase in cash and cash equivalents

86,335

 

 

 

137,241

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

213,170

 

 

 

51,314

 

 

Cash and cash equivalents, end of period

$

299,505

 

 

 

$

188,555

 

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited – In thousands, except percentages)

 

 

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

%

 

Three Months Ended December 31, 2019(1)

 

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

$

28,705

 

 

$

(1,317

)

 

 

$

(37

)

 

 

$

(3,824

)

 

 

$

 

 

 

$

23,527

 

Gross profit

114,593

 

 

1,317

 

 

 

37

 

 

 

3,824

 

 

 

 

 

 

119,771

 

Gross margin

80

%

 

 

 

 

 

 

 

 

 

84

%

Research and development

22,517

 

 

(2,173

)

 

 

(115

)

 

 

 

 

 

 

 

 

20,229

 

Sales and marketing

52,400

 

 

(6,707

)

 

 

(51

)

 

 

 

 

 

 

 

 

45,642

 

General and administrative

21,883

 

 

(3,316

)

 

 

(3

)

 

 

 

 

 

(2,384

)

 

 

16,180

 

Amortization of other intangibles

10,039

 

 

 

 

 

 

 

 

(10,039

)

 

 

 

 

 

 

Restructuring and other

199

 

 

 

 

 

 

 

 

 

 

 

(199

)

 

 

 

Operating income

$

7,555

 

 

$

13,513

 

 

 

$

206

 

 

 

$

13,863

 

 

 

$

2,583

 

 

 

$

37,720

 

Operating margin

5

%

 

 

 

 

 

 

 

 

 

26

%

(1) Prior period results have been updated to include the employer payroll taxes on employee stock transactions.

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited – In thousands, except per share amounts)

 

 

Three Months Ended

December 31,

 

2020

 

2019

Non-GAAP net income:

 

 

 

Net income

$

18,416

 

 

 

$

1,763

 

 

Income tax expense (benefit)

4,762

 

 

 

(136

)

 

Cash received from (paid for) tax

37,017

 

 

 

(4,209

)

 

Discrete tax items

(39,782

)

 

 

 

 

Interest expense, net

3,455

 

 

 

5,995

 

 

Cash paid for interest

(2,991

)

 

 

(6,610

)

 

Share-based compensation

15,588

 

 

 

13,513

 

 

Employer payroll taxes on employee stock transactions

692

 

 

 

206

 

 

Amortization of other intangibles

8,685

 

 

 

10,039

 

 

Amortization of acquired technology

3,831

 

 

 

3,824

 

 

Transaction and sponsor related costs

500

 

 

 

2,384

 

 

Restructuring and other

(2

)

 

 

199

 

 

Gain on currency translation

(2,526

)

 

 

(67

)

 

Non-GAAP net income

$

47,645

 

 

 

$

26,901

 

 

 

 

 

 

Share count:

 

 

 

Weighted-average shares outstanding – basic

281,010

 

 

 

277,926

 

 

Weighted-average shares outstanding – diluted

286,427

 

 

 

280,156

 

 

 

 

 

 

Shares used in non-GAAP per share calculations:

 

 

 

Weighted-average shares outstanding – basic

281,010

 

 

 

277,926

 

 

Weighted-average shares outstanding – diluted

286,427

 

 

 

280,156

 

 

 

 

 

 

Net income per share:

 

 

 

Net income per share – basic

$

0.07

 

 

 

$

0.01

 

 

Net income per share – diluted

$

0.06

 

 

 

$

0.01

 

 

Non-GAAP net income per share – basic

$

0.17

 

 

 

$

0.10

 

 

Non-GAAP net income per share – diluted

$

0.17

 

 

 

$

0.10

 

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited – In thousands)

 

 

Three Months Ended December 31,

 

Trailing Twelve

Months Ended

December 31,

2020

 

2020

 

2019

 

Adjusted EBITDA:

 

 

 

 

 

Net income

$

18,416

 

 

 

$

1,763

 

 

 

$

95,462

 

 

Income tax expense (benefit)

4,762

 

 

 

(136

)

 

 

(31,995

)

 

Interest expense, net

3,455

 

 

 

5,995

 

 

 

16,852

 

 

Amortization

13,014

 

 

 

14,288

 

 

 

53,405

 

 

Depreciation

2,792

 

 

 

2,006

 

 

 

8,476

 

 

Restructuring and other

(2

)

 

 

199

 

 

 

22

 

 

Transaction and sponsor related costs

500

 

 

 

2,384

 

 

 

4,679

 

 

Gain on currency translation

(2,526

)

 

 

(67

)

 

 

(1,240

)

 

Share-based compensation

15,588

 

 

 

13,513

 

 

 

55,885

 

 

Employer payroll taxes on employee stock transactions

692

 

 

 

206

 

 

 

2,857

 

 

Adjusted EBITDA

$

56,691

 

 

 

$

40,151

 

 

 

$

204,403

 

 

Three Months Ended December 31,

 

2020

 

2019

Unlevered Free Cash Flow (“uFCF”) (After tax adjustment):

 

 

 

Net cash provided by operating activities

$

73,716

 

 

 

$

11,132

 

 

Cash paid for interest expense

2,991

 

 

 

6,610

 

 

Restructuring and other

(2

)

 

 

199

 

 

Purchase of property, plant, and equipment

(2,468

)

 

 

(5,385

)

 

Transaction and sponsor related costs

500

 

 

 

2,384

 

 

Total uFCF

74,737

 

 

 

14,940

 

 

Interest tax adjustment

(748

)

 

 

(1,653

)

 

uFCF (After tax adjustment)

$

73,989

 

 

 

$

13,287

 

 

 

December 31,

2020

Adjusted EBITDA/Net Debt Leverage Ratio:

Long-term debt

$

451,427

Cash

299,505

Net debt

151,922

 

TTM Adjusted EBITDA

$

204,403

Leverage Ratio

0.7

x

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited – In thousands, except percentages)

 

 

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

%

 

Nine Months Ended December 31, 2019(1)

 

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

$

97,794

 

 

 

$

(17,346

)

 

 

$

(65

)

 

 

$

(12,624

)

 

 

$

 

 

 

$

67,759

 

Gross profit

297,432

 

 

 

17,346

 

 

 

65

 

 

 

12,624

 

 

 

 

 

 

327,467

 

Gross margin

75

%

 

 

 

 

 

 

 

 

 

83

%

Research and development

94,772

 

 

 

(36,679

)

 

 

(145

)

 

 

 

 

 

 

 

 

57,948

 

Sales and marketing

210,581

 

 

 

(78,592

)

 

 

(398

)

 

 

 

 

 

 

 

 

131,591

 

General and administrative

140,718

 

 

 

(77,067

)

 

 

(4

)

 

 

 

 

 

(20,338

)

 

 

43,309

 

Amortization of other intangibles

30,242

 

 

 

 

 

 

 

 

 

(30,242

)

 

 

 

 

 

 

Restructuring and other

1,093

 

 

 

 

 

 

 

 

 

 

 

 

(1,093

)

 

 

 

Operating (loss) income

$

(179,974

)

 

 

$

209,684

 

 

 

$

612

 

 

 

$

42,866

 

 

 

$

21,431

 

 

 

$

94,619

 

Operating margin

(46

%)

 

 

 

 

 

 

 

 

 

 

24

%

(1) Prior period results have been updated to include the employer payroll taxes on employee stock transactions.

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited – In thousands, except per share amounts)

 

 

Nine Months Ended December 31,

 

2020

 

2019

Non-GAAP net income:

 

 

 

Net income (loss)

$

48,760

 

 

 

$

(464,726

)

 

Income tax expense

13,858

 

 

 

245,344

 

 

Cash received from (paid for) tax

14,472

 

 

 

(268,281

)

 

Discrete tax items

(24,882

)

 

 

261,552

 

 

Interest expense, net

11,170

 

 

 

39,715

 

 

Cash paid for interest

(9,914

)

 

 

(34,001

)

 

Share-based compensation

43,091

 

 

 

209,684

 

 

Employer payroll taxes on employee stock transactions

2,673

 

 

 

612

 

 

Amortization of other intangibles

26,057

 

 

 

30,242

 

 

Amortization of acquired technology

11,487

 

 

 

12,624

 

 

Transaction and sponsor related costs

3,398

 

 

 

20,338

 

 

Restructuring and other

23

 

 

 

1,093

 

 

Gain on currency translation

(2,744

)

 

 

(307

)

 

Non-GAAP net income

$

137,449

 

 

 

$

53,889

 

 

 

 

 

 

Share count:

 

 

 

Weighted-average shares outstanding – basic

280,057

 

 

 

260,383

 

 

Weighted-average shares outstanding – diluted

285,884

 

 

 

260,383

 

 

 

 

 

 

Shares used in non-GAAP per share calculations:

 

 

 

Weighted-average shares outstanding – basic

280,057

 

 

 

260,383

 

 

Weighted-average shares outstanding – diluted

285,884

 

 

 

265,112

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

Net income (loss) per share – basic

$

0.17

 

 

 

$

(1.78

)

 

Net income (loss) per share – diluted

$

0.17

 

 

 

$

(1.78

)

 

Non-GAAP net income per share – basic

$

0.49

 

 

 

$

0.21

 

 

Non-GAAP net income per share – diluted

$

0.48

 

 

 

$

0.20

 

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited – In thousands)

 

 

Nine Months Ended December 31,

 

2020

 

2019

Adjusted EBITDA:

 

 

 

Net income (loss)

$

48,760

 

 

 

$

(464,726

)

 

Income tax expense

13,858

 

 

 

245,344

 

 

Interest expense, net

11,170

 

 

 

39,715

 

 

Amortization

39,046

 

 

 

44,098

 

 

Depreciation

6,589

 

 

 

5,977

 

 

Restructuring and other

23

 

 

 

1,093

 

 

Transaction and sponsor related costs

3,398

 

 

 

20,338

 

 

Gain on currency translation

(2,744

)

 

 

(307

)

 

Share-based compensation

43,091

 

 

 

209,684

 

 

Employer payroll taxes on employee stock transactions

2,673

 

 

 

612

 

 

Adjusted EBITDA

$

165,864

 

 

 

$

101,828

 

 

 
 

 

Nine Months Ended December 31,

 

2020

 

2019

Unlevered Free Cash Flow (“uFCF”) (After tax adjustment):

 

 

 

Net cash provided by (used in) operating activities

$

134,565

 

 

 

$

(207,096

)

 

Cash paid for interest expense

9,914

 

 

 

34,001

 

 

Restructuring and other

23

 

 

 

1,093

 

 

Purchase of property, plant, and equipment

(8,868

)

 

 

(15,143

)

 

Transaction and sponsor related costs

3,398

 

 

 

20,338

 

 

Discrete tax items

14,900

 

 

 

261,552

 

 

Total uFCF

153,932

 

 

 

94,745

 

 

Interest tax adjustment

(2,479

)

 

 

(8,500

)

 

uFCF (After tax adjustment)

$

151,453

 

 

 

$

86,245