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Form 8-K Dynatrace, Inc. For: May 12

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May 12, 2021 6:37 AM EDT
Exhibit 99.1
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Dynatrace Reports Fourth Quarter and Full Year Fiscal 2021 Financial Results

•ARR of $774 million, up 35% year-over-year, 32% on a constant currency basis
•Subscription revenue of $183 million, up 35% year-over-year, 32% on a constant currency basis
•GAAP EPS of $0.09 and non-GAAP EPS of $0.15, on a dilutive basis

WALTHAM, Mass, May 12, 2021 (Business Wire) - Software intelligence company Dynatrace (NYSE: DT) today released financial results for the fourth quarter of its fiscal 2021 ended March 31, 2021.
“Dynatrace’s strong fourth quarter performance capped off an excellent year exceeding guidance across all our key operating metrics led by ARR growth of 35% year-over-year” stated John Van Siclen, Chief Executive Officer. “As digital transformation and cloud-first initiatives continue to accelerate, our unique value proposition combining modern cloud observability with powerful AIOps capabilities continues to resonate with customers. Looking forward to fiscal 2022, we will continue to invest in growth to take advantage of the large and growing market opportunity we have in front of us.”

Fourth Quarter Fiscal 2021 and Other Recent Business Highlights:
All growth rates are compared to the fourth quarter and full year of fiscal 2020 unless otherwise noted.

Fourth Quarter Fiscal 2021 Financial Highlights:
•Total ARR of $774 million, an increase of 35%, and 32% on a constant currency basis
•Total Revenue of $197 million, an increase of 31%, and 27% on a constant currency basis
•Subscription Revenue of $183 million, an increase of 35%, and 32% on a constant currency basis, and representing 93% of total revenue
•GAAP Operating Income of $21 million and Non-GAAP Operating Income of $49 million
•GAAP EPS of $0.09 and non-GAAP EPS of $0.15, on a dilutive basis

Full Year Fiscal 2021 Financial Highlights:
•Total Revenue of $704 million, an increase of 29%, and 28% on a constant currency basis
•Subscription Revenue of $655 million, an increase of 34%, and 33% on a constant currency basis, and representing 93% of total revenue
•GAAP Operating Income of $92 million and Non-GAAP Operating Income of $207 million
•GAAP EPS of $0.26 and non-GAAP EPS of $0.63, on a dilutive basis
•Unlevered Free Cash Flow of $237 million, or 34% of revenue


Business Highlights:
•Released additional enhancements across multiple modules during our annual Perform User Conference including enhanced log analytics, session replay for mobile, enhanced AI support for Kubernetes, and node.js support for the recently introduced Cloud Application Security Module.

•Released the 6th Module to our platform, the Cloud Automation Module, which provides DevOps teams automated AI-powered continuous delivery for consistent, high-quality, and highly efficient release cycles.

•Announced that AWS awarded Dynatrace Machine Learning Competency status for experience and expertise in Applied AI for AWS offerings. This adds to our AWS competencies already awarded for DevOps, Containers, and Cloud Migration.

•Recognized by Gartner as a leader in its recent 2021 Magic Quadrant for Application Performance Monitoring (APM) for the 11th consecutive time. In addition, Dynatrace was scored highest in 4 of 5 Use Cases in the accompanying 2021 Critical Capabilities for APM report.




Fourth Quarter 2021 Financial Highlights
(Unaudited – in thousands, except per share amounts)
Three Months Ended March 31,
20212020
Key Operating Metric:
Annualized recurring revenue$774,090 $572,759 
Year-over-Year Increase35 %
Annualized recurring revenue - constant currency (*)
$755,065 $572,759 
Year-over-Year Increase32 %
Revenue:
Total revenue$196,504 $150,577 
Year-over-Year Increase31 %
Total revenue - constant currency (*)
$191,818 $150,577 
Year-over-Year Increase27 %
Subscription revenue$182,842 $135,366 
Year-over-Year Increase35 %
Subscription revenue - constant currency (*)
$178,561 $135,366 
Year-over-Year Increase32 %
Non-GAAP Financial Measures:
Non-GAAP operating income (*)
$49,478 $36,156 
Non-GAAP operating margin (*)
25 %24 %
Non-GAAP net income (*)
$43,371 $28,117 
Non-GAAP net income per share - diluted$0.15 $0.10 
Non-GAAP shares outstanding - diluted288,067 283,302 
Unlevered Free Cash Flow (*)
$85,602 $63,302 


Full Year 2021 Financial Highlights
(Unaudited – in thousands, except per share amounts)
Year Ended March 31,
20212020
Revenue:
Total revenue$703,509 $545,803 
Year-over-Year Increase29 %
Total revenue - constant currency (*)
$698,006 $545,803 
Year-over-Year Increase
28 %
Subscription revenue$655,180 $487,817 
Year-over-Year Increase34 %
Subscription revenue - constant currency (*)
$650,219 $487,817 
Year-over-Year Increase33 %
Non-GAAP Financial Measures:
Non-GAAP operating income (*)
$207,251 $130,775 
Non-GAAP operating margin (*)
29 %24 %
Non-GAAP net income (*)
$180,056 $83,835 
Non-GAAP net income per share - diluted$0.63 $0.31 
Non-GAAP shares outstanding - diluted286,509 269,271 
Unlevered Free Cash Flow (*)
$237,055 $149,547 
* 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.













3


Financial Outlook
Based on information available, as of May 12, 2021, Dynatrace is issuing guidance for the first quarter fiscal 2022 and full year fiscal 2022 as follows:

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

First Quarter of Fiscal Year 2022:
•Total revenue is expected to be in the range of $202 to $204 million, 30% to 31% growth as reported, and 25% to 26% on a constant currency basis
•Subscription revenue is expected to be in the range of $190.5 to $192 million, 32% to 33% growth as reported, 27% to 28% on a constant currency basis
•Non-GAAP operating income is expected to be in the range of $49 to $51 million
•Non-GAAP net income is expected to be in the range of $41 to $43 million
•Non-GAAP net income per diluted share is expected to be in the range of $0.14 to $0.15, based on a range of 291 to 292 million diluted weighted-average shares outstanding

Full Year Fiscal 2022:
•Total ARR is expected to be in the range of $975 to $990 million, 26% to 28% growth as reported, and 25% to 27% on a constant currency basis
•Total revenue is expected to be in the range of $885 to $900 million, 26% to 28% growth as reported, and 24% to 26% on a constant currency basis
•Subscription revenue is expected to be in the range of $834 to $848 million, 27% to 29% growth as reported, and 25% to 27% on a constant currency basis
•Non-GAAP operating income is expected to be in the range of $203 to $216 million
•Non-GAAP net income is expected to be in the range of $171 to $183 million
•Non-GAAP net income per diluted share is expected to be in the range of $0.59 to $0.62, 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 $256 to $268 million, 29% to 30% of revenue

Our guidance is based on foreign exchange rates as of April 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.


4

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 12, 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 # 13718082. 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 conference ID # 13718082. 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.
5


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.
6

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 first quarter and full year of fiscal 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 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 February 3, 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.

Gartner Disclaimer
Gartner, Magic Quadrant for Application Performance Monitoring, Federico De Silva, Padraig Byrne, and John Chessman, 9 April 2021. Before 2015, Dynatrace was listed as Compuware. Dynatrace was spun off from Compuware following the privatization of Compuware in December 2014. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
7

DYNATRACE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended March 31,Twelve Months Ended March 31,
2021202020212020
(unaudited)
Revenue:
Subscription$182,842 $135,366 $655,180 $487,817 
License109 2,262 1,446 12,686 
Service13,553 12,949 46,883 45,300 
Total revenue196,504 150,577 703,509 545,803 
Cost of revenue:
Cost of subscription22,073 17,263 77,488 73,193 
Cost of service9,432 10,049 34,903 39,289 
Amortization of acquired technology3,830 3,825 15,317 16,449 
Total cost of revenue35,335 31,137 127,708 128,931 
Gross profit161,169 119,440 575,801 416,872 
Operating expenses:
Research and development31,668 24,509 111,415 119,281 
Sales and marketing74,805 55,594 245,487 266,175 
General and administrative25,140 21,265 92,219 161,983 
Amortization of other intangibles8,687 10,038 34,744 40,280 
Restructuring and other17 (1)40 1,092 
Total operating expenses140,317 111,405 483,905 588,811 
Income (loss) from operations
20,852 8,035 91,896 (171,939)
Interest expense, net(3,035)(5,682)(14,205)(45,397)
Other (expense) income, net(2,582)(1,504)162 (1,197)
Income (loss) before income taxes15,235 849 77,853 (218,533)
Income tax benefit (expense) 11,719 50,060 (2,139)(195,284)
Net income (loss)$26,954 $50,909 $75,714 $(413,817)
Net income (loss) per share:
Basic
$0.10 $0.18 $0.27 $(1.56)
Diluted
$0.09 $0.18 $0.26 $(1.56)
Weighted average shares outstanding:
Basic
281,726 278,665 280,469 264,933 
Diluted
288,067 283,302 286,509 264,933 
SHARE-BASED COMPENSATION
Three Months Ended March 31,Twelve Months Ended March 31,
2021202020212020
(unaudited)
Cost of revenues$1,877 $1,339 $7,307 $18,685 
Research and development3,018 1,991 11,684 38,670 
Sales and marketing6,146 6,106 24,153 84,698 
General and administrative3,652 3,358 14,640 80,425 
Total share-based compensation expense$14,693 $12,794 $57,784 $222,478 
8

DYNATRACE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31,
20212020
Assets
Current assets:
Cash and cash equivalents$324,962 $213,170 
Accounts receivable, net242,079 157,058 
Deferred commissions, current48,986 38,509 
Prepaid expenses and other current assets64,255 79,040 
Total current assets680,282 487,777 
Property and equipment, net36,916 31,508 
Operating lease right-of-use asset, net42,959 — 
Goodwill1,271,195 1,270,733 
Other intangible assets, net149,484 201,592 
Deferred tax assets, net16,811 7,405 
Deferred commissions, non-current48,638 39,736 
Other assets9,933 8,126 
Total assets$2,256,218 $2,046,877 
Liabilities and shareholders' equity
Current liabilities:
Accounts payable$9,621 $11,112 
Accrued expenses, current119,527 95,011 
Deferred revenue, current509,272 384,060 
Operating lease liabilities, current9,491 — 
Total current liabilities647,911 490,183 
Deferred revenue, non-current47,504 60,711 
Accrued expenses, non-current16,072 20,294 
Operating lease liabilities, non-current38,203 — 
Deferred tax liabilities1,014 — 
Long-term debt391,913 509,985 
Total liabilities1,142,617 1,081,173 
Commitments and contingencies
Shareholders' equity:
Common shares, $0.001 par value, 600,000,000 shares authorized, 283,130,238 and 280,853,040 shares issued and outstanding at March 31, 2021 and March 31, 2020, respectively283 281 
Additional paid-in capital1,653,328 1,573,347 
Accumulated deficit(513,799)(589,819)
Accumulated other comprehensive loss(26,211)(18,105)
Total shareholders' equity1,113,601 965,704 
Total liabilities and shareholders' equity$2,256,218 $2,046,877 
9

DYNATRACE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended March 31,
20212020
Cash flows from operating activities:
Net income (loss)$75,714 $(413,817)
Adjustments to reconcile net income (loss) to cash provided by (used in) operations:
Depreciation9,022 7,864 
Amortization51,942 58,457 
Share-based compensation57,784 222,478 
Deferred income taxes(7,036)(46,221)
Other1,845 6,129 
Net change in operating assets and liabilities:
Accounts receivable(81,992)(44,021)
Deferred commissions(16,323)(20,107)
Prepaid expenses and other assets5,669 (57,588)
Accounts payable and accrued expenses26,592 53,004 
Operating leases, net731 — 
Deferred revenue96,488 91,367 
Net cash provided by (used in) operating activities220,436 (142,455)
Cash flows from investing activities:
Purchase of property and equipment(14,076)(19,721)
Capitalized software costs197 (892)
Net cash used in investing activities(13,879)(20,613)
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)
Debt issuance costs— (866)
Repayment of term loans(120,000)(515,189)
Contribution for tax associated with reorganization— 265,000 
Proceeds from employee stock purchase plan9,195 — 
Proceeds from exercise of stock options13,052 — 
Equity repurchases(49)(156)
Installments related to acquisitions— (4,694)
Net cash (used in) provided by financing activities(97,802)329,392 
Effect of exchange rates on cash and cash equivalents3,037 (4,468)
Net increase in cash and cash equivalents111,792 161,856 
Cash and cash equivalents, beginning of year213,170 51,314 
Cash and cash equivalents, end of year$324,962 $213,170 
10

DYNATRACE, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited - In thousands)
Three Months Ended March 31, 2021
GAAPShare-based compensationEmployer payroll taxes on employee stock transactionsAmortization of other intangiblesRestructuring & otherNon-GAAP
Non-GAAP operating income:
Cost of revenue$35,335 $(1,877)$(224)$(3,830)$— $29,404 
Gross profit161,169 1,877 224 3,830 — 167,100 
Gross margin82 %85 %
Research and development31,668 (3,018)(378)— — 28,272 
Sales and marketing74,805 (6,146)(637)— — 68,022 
General and administrative25,140 (3,652)(202)— 42 21,328 
Amortization of other intangibles8,687 — — (8,687)— — 
Restructuring and other17 — — — (17)— 
Operating income (loss)$20,852 $14,693 $1,441 $12,517 $(25)$49,478 
Operating margin11 %25 %

Three Months Ended March 31, 2020 (1)
GAAPShare-based compensationEmployer payroll taxes on employee stock transactionsAmortization of other intangiblesRestructuring & otherNon-GAAP
Non-GAAP operating income:
Cost of revenue$31,137 $(1,339)$(39)$(3,825)$— $25,934 
Gross profit119,440 1,339 39 3,825 — 124,643 
Gross margin79 %83 %
Research and development24,509 (1,991)(89)— — 22,429 
Sales and marketing55,594 (6,106)(54)— — 49,434 
General and administrative21,265 (3,358)(2)— (1,281)16,624 
Amortization of other intangibles10,038 — — (10,038)— — 
Restructuring and other(1)— — — 1 — 
Operating income$8,035 $12,794 $184 $13,863 $1,280 $36,156 
Operating margin5 %24 %
(1) Prior period results have been updated to include the employer payroll taxes on employee stock transactions.



11

DYNATRACE, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited - In thousands, except per share data)
Three Months Ended March 31,
20212020
Non-GAAP net income:
Net income$26,954 $50,909 
Income tax benefit(11,719)(50,060)
Non-GAAP effective cash tax(3,546)(2,472)
Interest expense, net3,035 5,682 
Cash paid for interest(2,561)(5,567)
Share-based compensation14,693 12,794 
Employer payroll taxes on employee stock transactions1,441 184 
Amortization of other intangibles8,687 10,038 
Amortization of acquired technology3,830 3,825 
Transaction and sponsor related costs(42)1,281 
Restructuring and other17 (1)
Loss on currency translation2,582 1,504 
Non-GAAP net income$43,371 $28,117 
Share count:
Weighted-average shares outstanding - basic281,726278,665
Weighted-average shares outstanding - diluted288,067283,302
Shares used in non-GAAP per share calculations:
Weighted-average shares outstanding - basic281,726 278,665
Weighted-average shares outstanding - diluted288,067 283,302
Net income per share:
Net income per share - basic$0.10 $0.18 
Net income per share - diluted$0.09 $0.18 
Non-GAAP net income per share - basic$0.15 $0.10 
Non-GAAP net income per share - diluted$0.15 $0.10 



12

DYNATRACE, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited - In thousands)
Three Months Ended March 31,
20212020
Adjusted EBITDA:
Net income$26,954 $50,909 
Income tax benefit(11,719)(50,060)
Interest expense, net3,035 5,682 
Amortization12,896 14,359 
Depreciation2,433 1,887 
Restructuring and other17 (1)
Transaction and sponsor related costs(42)1,281 
Loss on currency translation2,582 1,504 
Share-based compensation14,693 12,794 
Employer payroll taxes on employee stock transactions1,441 184 
Adjusted EBITDA$52,290 $38,539 
Three Months Ended March 31,
20212020
Unlevered Free Cash Flow ("uFCF") (After tax adjustment):
Net cash provided by operating activities$85,871 $64,641 
Cash paid for interest expense2,561 5,567 
Restructuring and other17 (1)
Purchase of property, plant, and equipment(5,208)(4,578)
Transaction and sponsor related costs(42)1,281 
Discrete tax items3,043 (2,216)
Total uFCF86,242 64,694 
Interest tax adjustment(640)(1,392)
uFCF (After tax adjustment)$85,602 $63,302 
13

DYNATRACE, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited - In thousands)
Year Ended March 31, 2021
GAAPShare-based compensationEmployer payroll taxes on employee stock transactionsAmortization of other intangiblesRestructuring & otherNon-GAAP
Non-GAAP operating income:
Cost of revenue$127,708 $(7,307)$(718)$(15,317)$— $104,366 
Gross profit575,801 7,307 718 15,317 — 599,143 
Gross margin82 %85 %
Research and development111,415 (11,684)(1,356)— — 98,375 
Sales and marketing245,487 (24,153)(1,630)— — 219,704 
General and administrative92,219 (14,640)(410)— (3,356)73,813 
Amortization of other intangibles34,744 — — (34,744)— — 
Restructuring and other40 — — — (40)— 
Operating income$91,896 $57,784 $4,114 $50,061 $3,396 $207,251 
Operating margin13 %29 %

Year Ended March 31, 2020 (1)
GAAPShare-based compensationEmployer payroll taxes on employee stock transactionsAmortization of other intangiblesRestructuring & otherNon-GAAP
Non-GAAP operating income:
Cost of revenue$128,931 $(18,685)$(104)$(16,449)$— $93,693 
Gross profit416,872 18,685 104 16,449 — 452,110 
Gross margin76 %83 %
Research and development119,281 (38,670)(234)— — 80,377 
Sales and marketing266,175 (84,698)(452)— — 181,025 
General and administrative161,983 (80,425)(6)— (21,619)59,933 
Amortization of other intangibles40,280 — — (40,280)— — 
Restructuring and other1,092 — — — (1,092)— 
Operating (loss) income$(171,939)$222,478 $796 $56,729 $22,711 $130,775 
Operating margin(32 %)24 %
(1) Prior period results have been updated to include the employer payroll taxes on employee stock transactions.

14

DYNATRACE, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited - In thousands, except per share data)
Year Ended March 31,
20212020
Non-GAAP net income:
Net income (loss)$75,714 $(413,817)
Income tax (benefit) expense2,139 195,284 
Non-GAAP effective cash tax(14,720)(7,372)
Interest expense, net14,205 45,397 
Cash paid for interest(12,475)(39,568)
Share-based compensation57,784 222,478 
Employer payroll taxes on employee stock transactions4,114 796 
Amortization of other intangibles34,744 40,280 
Amortization of acquired technology15,317 16,449 
Transaction and sponsor related costs3,356 21,619 
Restructuring and other40 1,092 
(Gain) loss on currency translation(162)1,197 
Non-GAAP net income$180,056 $83,835 
Share count:
Weighted-average shares outstanding - basic280,469 264,933 
Weighted-average shares outstanding - diluted286,509 264,933 
Shares used in non-GAAP per share calculations:
Weighted-average shares outstanding - basic280,469 264,933 
Weighted-average shares outstanding - diluted286,509 269,271 
Net income (loss) per share:
Net income (loss) per share - basic$0.27 $(1.56)
Net income (loss) per share - diluted$0.26 $(1.56)
Non-GAAP net income per share - basic$0.64 $0.32 
Non-GAAP net income per share - diluted$0.63 $0.31 

15

DYNATRACE, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited - In thousands)
Year Ended March 31,
20212020
Adjusted EBITDA:
Net income (loss)$75,714 $(413,817)
Income tax (benefit) expense2,139 195,284 
Interest expense, net14,205 45,397 
Amortization51,942 58,457 
Depreciation9,022 7,864 
Restructuring and other40 1,092 
Transaction and sponsor related costs3,356 21,619 
(Gain) loss on currency translation(162)1,197 
Share-based compensation57,784 222,478 
Employer payroll taxes on employee stock transactions4,114 796 
Adjusted EBITDA$218,154 $140,367 

Year Ended March 31,
20212020
Unlevered Free Cash Flow ("uFCF") (After tax adjustment):
Net cash provided by (used in) operating activities$220,436 $(142,455)
Cash paid for interest expense12,475 39,568 
Restructuring and other40 1,092 
Purchase of property, plant, and equipment(14,076)(19,721)
Transaction and sponsor related costs3,356 21,619 
Discrete tax items17,943 259,336 
Total uFCF240,174 159,439 
Interest tax adjustment(3,119)(9,892)
uFCF (After tax adjustment)$237,055 $149,547 

March 31, 2021
Adjusted EBITDA/Net Debt Leverage Ratio:
Long-term debt$391,913 
Cash324,962 
Net debt66,951 
TTM Adjusted EBITDA$218,154 
Leverage Ratio0.3 x










16

DYNATRACE, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited - In thousands, except per share data)

Updated Non-GAAP Net Income Calculation
For each of the quarters ended June 30, 2019 through December 31, 2020, we have elected to update our non-GAAP net income calculations and non-GAAP net income per share to include a non-GAAP effective cash tax and the updated information is provided below. Aside from updates made in the calculation of non-GAAP net income to include the employer payroll taxes on employee stock transactions, which have been previously reported, no other updates have been made to any other adjustments in the calculation of non-GAAP net income or non-GAAP net income per share for such periods, and our consolidated financial results calculated under GAAP have not been affected.
Three months ended
6/30/199/30/1912/31/193/31/206/30/209/30/2012/31/20
Non-GAAP net income:
Net (loss) income$(49,155)$(417,334)$1,763 $50,909 $12,865 $17,479 $18,416 
Income tax (benefit) expense(2,943)248,423 (136)(50,060)7,147 1,949 4,762 
Non-GAAP effective cash tax(919)(1,466)(2,515)(2,472)(3,578)(3,786)(3,810)
Interest expense, net19,186 14,534 5,995 5,682 4,113 3,602 3,455 
Cash paid for interest(15,738)(11,653)(6,610)(5,567)(3,763)(3,160)(2,991)
Share-based compensation41,425 154,746 13,513 12,794 12,672 14,831 15,588 
Employer payroll taxes on employee stock transactions15 391 206 184 285 1,696 692 
Amortization of other intangibles10,142 10,061 10,039 10,038 8,686 8,686 8,685 
Amortization of acquired technology4,557 4,243 3,824 3,825 3,826 3,830 3,831 
Transaction and sponsor related costs3,864 14,090 2,384 1,281 1,559 1,339 500 
Restructuring and other115 779 199 (1)(21)46 (2)
(Gain) loss on currency translation(94)(146)(67)1,504 (19)(199)(2,526)
Non-GAAP net income(1)
$10,455 $16,668 $28,595 $28,117 $43,772 $46,313 $46,600 
Shares used in non-GAAP per share calculations:
Weighted-average shares outstanding - basic237,693 264,127 277,926 278,665 279,069 280,077 281,010 
Weighted-average shares outstanding - diluted238,619 269,985 280,156 283,302 284,309 286,252 286,427 
Net income per share:
Non-GAAP net income per share - basic(1)
$0.04 $0.06 $0.10 $0.10 $0.16 $0.17 $0.17 
Non-GAAP net income per share - diluted(1)
$0.04 $0.06 $0.10 $0.10 $0.15 $0.16 $0.16 
(1) We previously reported non-GAAP net income and non-GAAP net income per share of the following amounts:
Three months ended
6/30/199/30/1912/31/193/31/206/30/209/30/2012/31/20
Non-GAAP net income$9,322 $17,666 $26,901 $29,946 $37,223 $52,581 $47,645 
Net income per share:
Non-GAAP net income per share - basic$0.04 $0.07 $0.10 $0.11 $0.13 $0.19 $0.17 
Non-GAAP net income per share - diluted$0.04 $0.07 $0.10 $0.11 $0.13 $0.18 $0.17 
17

Contacts

Investor Contact:
Noelle Faris
VP, Investor Relations
Noelle.Faris@dynatrace.com

Media Relations:
Jerome Stewart
VP, Communications
Jerome.Stewart@dynatrace.com


18

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