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Dynatrace Reports Second Quarter of Fiscal Year 2022 Financial Results

  • ARR of $864 million, up 35% year-over-year, or 34% on a constant currency basis
  • Subscription revenue of $213 million, up 35% year-over-year, or 33% on a constant currency basis
  • GAAP EPS of $0.08 and non-GAAP EPS of $0.18, on a dilutive basis

Software intelligence company Dynatrace (NYSE: DT) today released financial results for the second quarter of its fiscal 2022 ended September 30, 2021.

"I am extremely proud of our team’s performance, once again exceeding guidance across all our key operating metrics. ARR, our leading indicator for growth, was up 35% year-over-year, and Subscription Revenue was up 35% year-over-year,” said John Van Siclen, Dynatrace’s CEO. “We continue to see robust investment in digital transformation across all industries and all geographies. And our unique approach unifying AIOps capabilities with observability and application security continues to provide us with a powerful value advantage.”

Second Quarter Fiscal 2022 and Other Recent Business Highlights:

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

Financial Highlights:

  • Total ARR of $864 million, an increase of 35%, or 34% on a constant currency basis
  • Total Revenue of $226 million, an increase of 34%, or 33% on a constant currency basis
  • Subscription revenue of $213 million, an increase of 35%, or 33% 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 $0.08 and non-GAAP EPS of $0.18, on a dilutive basis

Business Highlights:

  • Deepened strategic partnerships with Microsoft and Google, making Dynatrace® available natively across all three hyperscale platforms - Microsoft Azure, Google Cloud Platform, and Amazon Web Services.
  • Broadened Dynatrace® Application Security coverage to include applications running on .NET, in addition to Kubernetes, Java, and Node.js, allowing more organizations to use Dynatrace to gain precise answers about the source, nature, and severity of vulnerabilities in their production and pre-production environments.
  • Completed acquisition of SpectX, a high-speed parsing and query analytics company, to help accelerate the convergence of observability and security.
  • Continued recognition for superior product differentiation and value: ISG named Dynatrace the leader in cloud-native observability in the 2021 Provider Lens, Container Services and Solutions Report; GigaOm named Dynatrace “Leader and Outperformer” in the 2021 Radar for AIOps Solutions; Gartner rated Dynatrace highest in the 2021 Peer Insights Customers’ Choice for Application Performance Monitoring[1].

[1] Gartner Peer Insights ‘Voice of the Customer’: Application Performance Monitoring, 9 September 2021. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

Gartner Peer Insights Customers’ Choice constitute the subjective opinions of individual end-user reviews, ratings, and data applied against a documented methodology; they neither represent the views of, nor constitute an endorsement by, Gartner or its affiliates.

 

Second Quarter 2022 Financial Highlights

(Unaudited – in thousands, except per share data)

 

 

Three Months Ended September 30,

 

2021

 

2020

Key Operating Metric:

 

 

 

Annualized recurring revenue

$

863,863

 

 

$

638,063

 

Year-over-Year Increase

35

%

 

 

 

 

 

 

Annualized recurring revenue - constant currency (*)

$

856,146

 

 

$

638,063

 

Year-over-Year Increase

34

%

 

 

 

 

 

 

Revenue:

 

 

 

Total revenue

$

226,354

 

 

$

168,586

 

Year-over-Year Increase

34

%

 

 

 

 

 

 

Total revenue - constant currency (*)

$

223,576

 

 

$

168,586

 

Year-over-Year Increase

33

%

 

 

 

 

 

 

Subscription revenue

$

212,601

 

 

$

157,673

 

Year-over-Year Increase

35

%

 

 

 

 

 

 

Subscription revenue - constant currency (*)

$

209,995

 

 

$

157,673

 

Year-over-Year Increase

33

%

 

 

 

 

 

 

Non-GAAP Financial Measures:

 

 

 

Non-GAAP operating income (*)

$

61,468

 

 

$

53,259

 

Non-GAAP operating margin (*)

27

%

 

32

%

 

 

 

 

Non-GAAP net income (*)

$

52,165

 

 

$

46,313

 

 

 

 

 

Non-GAAP net income per share - diluted

$

0.18

 

 

$

0.16

 

 

 

 

 

Non-GAAP shares outstanding - diluted

291,177

 

 

286,252

 

 

 

 

 

Unlevered Free Cash Flow (*)

$

11,682

 

 

$

33,004

 

* 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 October 27, 2021, Dynatrace is issuing guidance for the third quarter and raising guidance for full year fiscal 2022 as follows:

Third Quarter of Fiscal Year 2022:

  • Total revenue is expected to be in the range of $233 to $235 million, 27% to 28% growth as reported, or 28% to 29% on a constant currency basis
  • Subscription revenue is expected to be in the range of $219.5 to $221 million, 29% to 30% growth as reported, or 30% to 31% on a constant currency basis
  • Non-GAAP operating income is expected to be in the range of $54 to $56 million
  • Non-GAAP net income is expected to be in the range of $45.5 to $47.5 million
  • Non-GAAP net income per diluted share is expected to be $0.16, based on a range of 292 to 293 million diluted weighted-average shares outstanding

Full Year Fiscal 2022:

  • Total ARR is expected to be in the range of $986 to $996 million, 27% to 29% growth as reported, or 29% to 30% growth on a constant currency basis, an increase of 250 basis points from prior midpoint guidance
  • Total revenue is expected to be in the range of $913 to $919 million, 30% to 31% growth as reported, 29% to 30% growth on a constant currency basis, an increase of 250 basis points from prior midpoint guidance
  • Subscription revenue is expected to be in the range of $857.5 to $862.5 million, 31% to 32% growth as reported, 30% to 31% growth on a constant currency basis, an increase of 250 basis points from prior midpoint guidance
  • Non-GAAP operating income is expected to be in the range of $219 to $226 million
  • Non-GAAP net income is expected to be in the range of $185 to $191 million
  • Non-GAAP net income per diluted share is expected to be in the range of $0.63 to $0.65, based on a range of 292 to 293 million diluted weighted-average shares outstanding
  • Total unlevered free cash flow is expected to be in the range of $263 to $275 million, or 29% to 30% of revenue

Our guidance is based on foreign exchange rates as of September 30, 2021.

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, October 27, 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 # 13723986. 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 November 10, 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 # 13723986. 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 third 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 September 30,

 

Six Months Ended September 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

Subscription

$

212,601

 

 

 

$

157,673

 

 

 

$

409,121

 

 

 

$

302,030

 

 

License

 

 

 

442

 

 

 

50

 

 

 

1,080

 

 

Service

13,753

 

 

 

10,471

 

 

 

26,923

 

 

 

20,984

 

 

Total revenue

226,354

 

 

 

168,586

 

 

 

436,094

 

 

 

324,094

 

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of subscription

27,135

 

 

 

18,327

 

 

 

52,117

 

 

 

35,033

 

 

Cost of service

10,668

 

 

 

8,554

 

 

 

20,689

 

 

 

16,564

 

 

Amortization of acquired technology

3,864

 

 

 

3,830

 

 

 

7,694

 

 

 

7,656

 

 

Total cost of revenue

41,667

 

 

 

30,711

 

 

 

80,500

 

 

 

59,253

 

 

Gross profit

184,687

 

 

 

137,875

 

 

 

355,594

 

 

 

264,841

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

37,908

 

 

 

27,512

 

 

 

72,633

 

 

 

51,017

 

 

Sales and marketing

86,301

 

 

 

56,690

 

 

 

166,783

 

 

 

105,853

 

 

General and administrative

31,689

 

 

 

22,110

 

 

 

58,611

 

 

 

43,637

 

 

Amortization of other intangibles

7,539

 

 

 

8,686

 

 

 

15,079

 

 

 

17,372

 

 

Restructuring and other

(1

)

 

 

46

 

 

 

25

 

 

 

25

 

 

Total operating expenses

163,436

 

 

 

115,044

 

 

 

313,131

 

 

 

217,904

 

 

Income from operations

21,251

 

 

 

22,831

 

 

 

42,463

 

 

 

46,937

 

 

Interest expense, net

(2,651

)

 

 

(3,602

)

 

 

(5,508

)

 

 

(7,715

)

 

Other (expense) income, net

(1,299

)

 

 

199

 

 

 

12

 

 

 

218

 

 

Income before income taxes

17,301

 

 

 

19,428

 

 

 

36,967

 

 

 

39,440

 

 

Income tax benefit (expense)

6,340

 

 

 

(1,949

)

 

 

(32

)

 

 

(9,096

)

 

Net income

$

23,641

 

 

 

$

17,479

 

 

 

$

36,935

 

 

 

$

30,344

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.08

 

 

 

$

0.06

 

 

 

$

0.13

 

 

 

$

0.11

 

 

Diluted

$

0.08

 

 

 

$

0.06

 

 

 

$

0.13

 

 

 

$

0.11

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

283,923

 

 

 

280,077

 

 

 

283,295

 

 

 

279,577

 

 

Diluted

291,177

 

 

 

286,252

 

 

 

290,254

 

 

 

285,423

 

 

UNAUDITED SHARE-BASED COMPENSATION

 

Three Months Ended September 30,

 

Six Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

Cost of revenue

$

3,485

 

 

$

1,866

 

 

$

6,137

 

 

$

3,364

 

Research and development

5,456

 

 

2,989

 

 

9,423

 

 

5,407

 

Sales and marketing

9,612

 

 

6,122

 

 

17,220

 

 

11,527

 

General and administrative

7,022

 

 

3,854

 

 

12,047

 

 

7,205

 

Total share-based compensation expense

$

25,575

 

 

$

14,831

 

 

$

44,827

 

 

$

27,503

 

 

DYNATRACE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

 

September 30, 2021

 

March 31, 2021

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

370,319

 

 

 

$

324,962

 

 

Accounts receivable, net

149,801

 

 

 

242,079

 

 

Deferred commissions, current

52,525

 

 

 

48,986

 

 

Prepaid expenses and other current assets

80,065

 

 

 

64,255

 

 

Total current assets

652,710

 

 

 

680,282

 

 

Property and equipment, net

40,197

 

 

 

36,916

 

 

Operating lease right-of-use assets, net

60,473

 

 

 

42,959

 

 

Goodwill

1,282,631

 

 

 

1,271,195

 

 

Other intangible assets, net

128,514

 

 

 

149,484

 

 

Deferred tax assets, net

16,492

 

 

 

16,811

 

 

Deferred commissions, non-current

50,766

 

 

 

48,638

 

 

Other assets

11,114

 

 

 

9,933

 

 

Total assets

$

2,242,897

 

 

 

$

2,256,218

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

16,013

 

 

 

$

9,621

 

 

Accrued expenses, current

105,423

 

 

 

119,527

 

 

Deferred revenue, current

461,443

 

 

 

509,272

 

 

Operating lease liabilities, current

11,214

 

 

 

9,491

 

 

Total current liabilities

594,093

 

 

 

647,911

 

 

Deferred revenue, non-current

22,630

 

 

 

47,504

 

 

Accrued expenses, non-current

16,533

 

 

 

16,072

 

 

Operating lease liabilities, non-current

54,371

 

 

 

38,203

 

 

Deferred tax liabilities

1,361

 

 

 

1,014

 

 

Long-term debt

332,907

 

 

 

391,913

 

 

Total liabilities

1,021,895

 

 

 

1,142,617

 

 

 

 

 

 

Shareholders' equity:

 

 

 

Common shares, $0.001 par value, 600,000,000 shares authorized, 285,025,237 and 283,130,238 shares issued and outstanding at September 30, 2021 and March 31, 2021, respectively

285

 

 

 

283

 

 

Additional paid-in capital

1,723,056

 

 

 

1,653,328

 

 

Accumulated deficit

(476,864

)

 

 

(513,799

)

 

Accumulated other comprehensive loss

(25,475

)

 

 

(26,211

)

 

Total shareholders' equity

1,221,002

 

 

 

1,113,601

 

 

Total liabilities and shareholders' equity

$

2,242,897

 

 

 

$

2,256,218

 

 

 

DYNATRACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited – In thousands)

 

 

Six Months Ended September 30,

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

Net income

$

36,935

 

 

 

$

30,344

 

 

Adjustments to reconcile net income to cash provided by operations:

 

 

 

Depreciation

5,049

 

 

 

3,797

 

 

Amortization

23,057

 

 

 

26,032

 

 

Share-based compensation

44,827

 

 

 

27,503

 

 

Deferred income taxes

3

 

 

 

(3,160

)

 

Other

1,007

 

 

 

802

 

 

Net change in operating assets and liabilities:

 

 

 

Accounts receivable

92,314

 

 

 

49,353

 

 

Deferred commissions

(6,347

)

 

 

1,250

 

 

Prepaid expenses and other assets

(16,456

)

 

 

(4,944

)

 

Accounts payable and accrued expenses

(9,118

)

 

 

(7,862

)

 

Operating leases, net

401

 

 

 

523

 

 

Deferred revenue

(69,904

)

 

 

(62,789

)

 

Net cash provided by operating activities

101,768

 

 

 

60,849

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Purchase of property and equipment

(7,612

)

 

 

(6,400

)

 

Capitalized software additions

 

 

 

(184

)

 

Acquisition of businesses, net of cash acquired

(13,004

)

 

 

 

 

Net cash used in investing activities

(20,616

)

 

 

(6,584

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

Repayment of term loans

(60,000

)

 

 

(30,000

)

 

Proceeds from employee stock purchase plan

6,593

 

 

 

3,592

 

 

Proceeds from exercise of stock options

18,339

 

 

 

4,829

 

 

Equity repurchases

(30

)

 

 

(25

)

 

Net cash used in financing activities

(35,098

)

 

 

(21,604

)

 

 

 

 

 

Effect of exchange rates on cash and cash equivalents

(697

)

 

 

2,606

 

 

 

 

 

 

Net increase in cash and cash equivalents

45,357

 

 

 

35,267

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

324,962

 

 

 

213,170

 

 

Cash and cash equivalents, end of period

$

370,319

 

 

 

$

248,437

 

 

 

 

 

 

Supplemental cash flow data:

 

 

 

Cash paid for interest

$

4,560

 

 

 

$

6,923

 

 

Cash paid for tax, net

$

8,431

 

 

 

$

22,545

 

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands, except percentages)

 

 

Three Months Ended September 30, 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

$

41,667

 

 

 

$

(3,485

)

 

 

$

(452

)

 

 

$

(3,864

)

 

 

$

 

 

 

$

33,866

 

Gross profit

184,687

 

 

 

3,485

 

 

 

452

 

 

 

3,864

 

 

 

 

 

 

192,488

 

Gross margin

82

 

%

 

 

 

 

 

 

 

 

 

85

%

Research and development

37,908

 

 

 

(5,456

)

 

 

(501

)

 

 

 

 

 

 

 

 

31,951

 

Sales and marketing

86,301

 

 

 

(9,612

)

 

 

(785

)

 

 

 

 

 

 

 

 

75,904

 

General and administrative

31,689

 

 

 

(7,022

)

 

 

(253

)

 

 

 

 

 

(1,249

)

 

 

23,165

 

Amortization of other intangibles

7,539

 

 

 

 

 

 

 

 

 

(7,539

)

 

 

 

 

 

 

Restructuring and other

(1

)

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

Operating income

$

21,251

 

 

 

$

25,575

 

 

 

$

1,991

 

 

 

$

11,403

 

 

 

$

1,248

 

 

 

$

61,468

 

Operating margin

9

 

%

 

 

 

 

 

 

 

 

 

27

%

 

Three Months Ended September 30, 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

$

30,711

 

 

$

(1,866

)

 

 

$

(359

)

 

 

$

(3,830

)

 

 

$

 

 

 

$

24,656

 

Gross profit

137,875

 

 

1,866

 

 

 

359

 

 

 

3,830

 

 

 

 

 

 

143,930

 

Gross margin

82

%

 

 

 

 

 

 

 

 

 

85

%

Research and development

27,512

 

 

(2,989

)

 

 

(592

)

 

 

 

 

 

 

 

 

23,931

 

Sales and marketing

56,690

 

 

(6,122

)

 

 

(578

)

 

 

 

 

 

 

 

 

49,990

 

General and administrative

22,110

 

 

(3,854

)

 

 

(167

)

 

 

 

 

 

(1,339

)

 

 

16,750

 

Amortization of other intangibles

8,686

 

 

 

 

 

 

 

 

(8,686

)

 

 

 

 

 

 

Restructuring and other

46

 

 

 

 

 

 

 

 

 

 

 

(46

)

 

 

 

Operating income

$

22,831

 

 

$

14,831

 

 

 

$

1,696

 

 

 

$

12,516

 

 

 

$

1,385

 

 

 

$

53,259

 

Operating margin

14

%

 

 

 

 

 

 

 

 

 

32

%

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands, except per share data)

 

 

Three Months Ended September 30,

 

2021

 

2020

Non-GAAP net income:

 

 

 

Net income

$

23,641

 

 

 

$

17,479

 

 

Income tax (benefit) expense

(6,340

)

 

 

1,949

 

 

Non-GAAP effective cash tax

(7,113

)

 

 

(3,786

)

 

Interest expense, net

2,651

 

 

 

3,602

 

 

Cash paid for interest

(2,190

)

 

 

(3,160

)

 

Share-based compensation

25,575

 

 

 

14,831

 

 

Employer payroll taxes on employee stock transactions

1,991

 

 

 

1,696

 

 

Amortization of other intangibles

7,539

 

 

 

8,686

 

 

Amortization of acquired technology

3,864

 

 

 

3,830

 

 

Transaction, restructuring, and other

1,248

 

 

 

1,385

 

 

Loss (gain) on currency translation

1,299

 

 

 

(199

)

 

Non-GAAP net income

$

52,165

 

 

 

$

46,313

 

 

 

 

 

 

Share count:

 

 

 

Weighted-average shares outstanding - basic

283,923

 

 

 

280,077

 

 

Weighted-average shares outstanding - diluted

291,177

 

 

 

286,252

 

 

 

 

 

 

Shares used in non-GAAP per share calculations:

 

 

 

Weighted-average shares outstanding - basic

283,923

 

 

 

280,077

 

 

Weighted-average shares outstanding - diluted

291,177

 

 

 

286,252

 

 

 

 

 

 

Net income per share:

 

 

 

Net income per share - basic

$

0.08

 

 

 

$

0.06

 

 

Net income per share - diluted

$

0.08

 

 

 

$

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 September 30,

 

2021

 

 

2020 (1)

Unlevered Free Cash Flow ("uFCF"):

 

 

 

Net cash provided by operating activities

$

18,296

 

 

 

$

23,841

 

 

Cash paid for interest expense

2,190

 

 

 

3,160

 

 

Restructuring and other

(1

)

 

 

46

 

 

Purchase of property, plant, and equipment

(4,658

)

 

 

(1,982

)

 

Transaction and sponsor related costs

249

 

 

 

1,339

 

 

Discrete tax items

(3,846

)

 

 

7,390

 

 

Total uFCF

12,230

 

 

 

33,794

 

 

Interest tax adjustment

(548

)

 

 

(790

)

 

uFCF

$

11,682

 

 

 

$

33,004

 

 

(1) Previously reported Unlevered Free Cash Flow for the three months ended September 30, 2020 included $7,510 of cash tax payments made in the first quarter of fiscal 2021 that were related to the reorganization. Prior period results have been updated to exclude these cash tax payments made in the first quarter of fiscal 2021.

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands, except percentages)

 

 

Six Months Ended September 30, 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

$

80,500

 

 

$

(6,137

)

 

 

$

(767

)

 

 

$

(7,694

)

 

 

$

 

 

 

$

65,902

 

Gross profit

355,594

 

 

6,137

 

 

 

767

 

 

 

7,694

 

 

 

 

 

 

370,192

 

Gross margin

82

%

 

 

 

 

 

 

 

 

 

85

%

Research and development

72,633

 

 

(9,423

)

 

 

(1,127

)

 

 

 

 

 

 

 

 

62,083

 

Sales and marketing

166,783

 

 

(17,220

)

 

 

(1,370

)

 

 

 

 

 

 

 

 

148,193

 

General and administrative

58,611

 

 

(12,047

)

 

 

(454

)

 

 

 

 

 

(1,202

)

 

 

44,908

 

Amortization of other intangibles

15,079

 

 

 

 

 

 

 

 

(15,079

)

 

 

 

 

 

 

Restructuring and other

25

 

 

 

 

 

 

 

 

 

 

 

(25

)

 

 

 

Operating income

$

42,463

 

 

$

44,827

 

 

 

$

3,718

 

 

 

$

22,773

 

 

 

$

1,227

 

 

 

$

115,008

 

Operating margin

10

%

 

 

 

 

 

 

 

 

 

26

%

 

Six Months Ended September 30, 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

$

59,253

 

 

$

(3,364

)

 

 

$

(412

)

 

 

$

(7,656

)

 

 

$

 

 

 

$

47,821

 

Gross profit

264,841

 

 

3,364

 

 

 

412

 

 

 

7,656

 

 

 

 

 

 

276,273

 

Gross margin

82

%

 

 

 

 

 

 

 

 

 

85

%

Research and development

51,017

 

 

(5,407

)

 

 

(690

)

 

 

 

 

 

 

 

 

44,920

 

Sales and marketing

105,853

 

 

(11,527

)

 

 

(705

)

 

 

 

 

 

 

 

 

93,621

 

General and administrative

43,637

 

 

(7,205

)

 

 

(174

)

 

 

 

 

 

(2,898

)

 

 

33,360

 

Amortization of other intangibles

17,372

 

 

 

 

 

 

 

 

(17,372

)

 

 

 

 

 

 

Restructuring and other

25

 

 

 

 

 

 

 

 

 

 

 

(25

)

 

 

 

Operating (loss) income

$

46,937

 

 

$

27,503

 

 

 

$

1,981

 

 

 

$

25,028

 

 

 

$

2,923

 

 

 

$

104,372

 

Operating margin

14

%

 

 

 

 

 

 

 

 

 

32

%

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands, except per share data)

 

 

Six Months Ended September 30,

 

2021

 

2020

Non-GAAP net income:

 

 

 

Net income

$

36,935

 

 

 

$

30,344

 

 

Income tax expense

32

 

 

 

9,096

 

 

Non-GAAP effective cash tax

(13,254

)

 

 

(7,365

)

 

Interest expense, net

5,508

 

 

 

7,715

 

 

Cash paid for interest

(4,560

)

 

 

(6,923

)

 

Share-based compensation

44,827

 

 

 

27,503

 

 

Employer payroll taxes on employee stock transactions

3,718

 

 

 

1,981

 

 

Amortization of other intangibles

15,079

 

 

 

17,372

 

 

Amortization of acquired technology

7,694

 

 

 

7,656

 

 

Transaction, restructuring, and other

1,227

 

 

 

2,923

 

 

Gain on currency translation

(12

)

 

 

(218

)

 

Non-GAAP net income

$

97,194

 

 

 

$

90,084

 

 

 

 

 

 

Share count:

 

 

 

Weighted-average shares outstanding - basic

283,295

 

 

 

279,577

 

 

Weighted-average shares outstanding - diluted

290,254

 

 

 

285,423

 

 

 

 

 

 

Shares used in non-GAAP per share calculations:

 

 

 

Weighted-average shares outstanding - basic

283,295

 

 

 

279,577

 

 

Weighted-average shares outstanding - diluted

290,254

 

 

 

285,423

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

Net income (loss) per share - basic

$

0.13

 

 

 

$

0.11

 

 

Net income (loss) per share - diluted

$

0.13

 

 

 

$

0.11

 

 

Non-GAAP net income per share - basic

$

0.34

 

 

 

$

0.32

 

 

Non-GAAP net income per share - diluted

$

0.33

 

 

 

$

0.32

 

 

 

DYNATRACE, INC.

GAAP to Non-GAAP Reconciliations

(Unaudited - In thousands)

 

 

Six Months Ended September 30,

 

2021

 

2020

Unlevered Free Cash Flow ("uFCF"):

 

 

 

Net cash provided by operating activities

$

101,768

 

 

 

$

60,849

 

 

Cash paid for interest expense

4,560

 

 

 

6,923

 

 

Restructuring and other

25

 

 

 

25

 

 

Purchase of property, plant, and equipment

(7,612

)

 

 

(6,400

)

 

Transaction and sponsor related costs

202

 

 

 

2,898

 

 

Discrete tax items

(5,029

)

 

 

14,900

 

 

Total uFCF

93,914

 

 

 

79,195

 

 

Interest tax adjustment

(1,141

)

 

 

(1,731

)

 

uFCF

$

92,773

 

 

 

$

77,464

 

 

 

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