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Dynatrace, Inc. (DT) SEC Filing 8-K Material Event for the period ending Wednesday, July 28, 2021

Dynatrace, Inc.

CIK: 1773383 Ticker: DT
Exhibit 99.1
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Dynatrace Reports First Quarter of Fiscal Year 2022 Financial Results

ARR of $823 million, up 37% year-over-year, or 32% on a constant currency basis
Subscription revenue of $197 million, up 36% year-over-year, or 30% on a constant currency basis
GAAP EPS of $0.05 and non-GAAP EPS of $0.16, on a dilutive basis

WALTHAM, Mass, July 28, 2021 (Business Wire) - Software intelligence company Dynatrace (NYSE: DT) today released financial results for the first quarter of its fiscal 2022 ended June 30, 2021.
“We are pleased with our strong first quarter results, once again exceeding guidance across all our key metrics, led by ARR growth of 37% year-over-year,” said John Van Siclen, Dynatrace’s CEO. “The unique value of combining the broadest cloud observability with powerful automation and AIOps capabilities continues to resonate with customers as they accelerate their digital transformation and modern cloud initiatives.”

First Quarter Fiscal 2022 and Other Recent Business Highlights:
All growth rates are compared to the first quarter of fiscal 2021 unless otherwise noted.

Financial Highlights:
Total ARR of $823 million, an increase of 37%, or 32% on a constant currency basis
Total Revenue of $210 million, an increase of 35%, or 29% on a constant currency basis
Subscription revenue of $197 million, an increase of 36%, or 30% on a constant currency basis, and representing 94% of total revenue
GAAP Operating Income of $21 million and Non-GAAP Operating Income of $54 million
GAAP EPS of $0.05 and non-GAAP EPS of $0.16, on a dilutive basis

Business Highlights:
Enhanced Application Security Module with Davis Security Advisor, which provides continuous and intelligent vulnerability scoring to address the most critical issues with greater confidence and efficiency, and preserves more time to drive innovation.

Awarded the AWS Government Competency, recognizing Dynatrace’s experience and success enabling civilian agencies, the national defense and intelligence communities, and state and local governments around the world to accelerate digital innovation on AWS.

Expanded support for OpenTelemetry to enable data ingest both with and without agents, providing developers and SREs flexibility to use OpenTel with any data source or use case and leverage Dynatrace’s AIOps capabilities to efficiently integrate, analyze and manage cloud environments.







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First Quarter 2022 Financial Highlights
(Unaudited – in thousands, except per share data)
Three Months Ended June 30,
20212020
Key Operating Metric:
Annualized recurring revenue$823,222 $601,376 
Year-over-Year Increase
37 %
Annualized recurring revenue - constant currency (*)
$793,675 $601,376 
Year-over-Year Increase32 %
Revenue:
Total revenue$209,740 $155,508 
Year-over-Year Increase
35 %
Total revenue - constant currency (*)
$200,865 $155,508 
Year-over-Year Increase29 %
Subscription revenue
$196,520 $144,357 
Year-over-Year Increase
36 %
Subscription revenue - constant currency (*)
$188,262 $144,357 
Year-over-Year Increase
30 %
Non-GAAP Financial Measures:
Non-GAAP operating income (*)
$53,540 $51,113 
Non-GAAP operating margin (*)
26 %33 %
Non-GAAP net income (*)
$45,030 $43,772 
Non-GAAP net income per share - diluted$0.16 $0.15 
Non-GAAP shares outstanding - diluted288,988 284,309 
Unlevered Free Cash Flow (*)
$81,091 $44,460 
* 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.
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Financial Outlook
Based on information available, as of July 28, 2021, Dynatrace is issuing guidance for the second quarter and raising guidance for full year fiscal 2022 as follows:

Second Quarter of Fiscal Year 2022:
Total revenue is expected to be in the range of $219 to $221 million, 30% to 31% growth as reported, or 28% to 29% on a constant currency basis
Subscription revenue is expected to be in the range of $206.5 to $208 million, 31% to 32% growth as reported, or 29% to 30% on a constant currency basis
Non-GAAP operating income is expected to be in the range of $53 to $55 million
Non-GAAP net income is expected to be in the range of $44.5 to $46.5 million
Non-GAAP net income per diluted share is expected to be in the range of $0.15 to $0.16, based on a range of 290 to 291 million diluted weighted-average shares outstanding

Full Year Fiscal 2022:
Total ARR is expected to be in the range of $984 to $996 million, 27% to 29% growth as reported, or 26% to 28% on a constant currency basis
Total revenue is expected to be in the range of $902 to $914 million, 28% to 30% growth as reported, or 26% to 28% growth on a constant currency basis
Subscription revenue is expected to be in the range of $848 to $856 million, 29% to 31% growth as reported, or 27% to 29% growth on a constant currency basis
Non-GAAP operating income is expected to be in the range of $208 to $218 million
Non-GAAP net income is expected to be in the range of $175 to $184 million
Non-GAAP net income per diluted share is expected to be in the range of $0.60 to $0.63, based on a range of 291 to 292 million diluted weighted-average shares outstanding
Total unlevered free cash flow is expected to be in the range of $262 to $274 million, or 29% to 30% of revenue

Our guidance is based on foreign exchange rates as of June 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, July 28, 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 # 13720878. 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 August 11, 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 # 13720878. In addition, an archived webcast will be available at https://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.
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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.
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.

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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 second 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.


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DYNATRACE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited – In thousands, except per share data)
Three Months Ended
June 30,
20212020
Revenue:
Subscription$196,520 $144,357 
License50 638 
Service13,170 10,513 
Total revenue209,740 155,508 
Cost of revenue:
Cost of subscription24,982 16,706 
Cost of service10,021 8,010 
Amortization of acquired technology3,830 3,826 
Total cost of revenue38,833 28,542 
Gross profit170,907 126,966 
Operating expenses:
Research and development34,725 23,505 
Sales and marketing80,482 49,163 
General and administrative26,922 21,527 
Amortization of other intangibles7,540 8,686 
Restructuring and other26 (21)
Total operating expenses149,695 102,860 
Income from operations21,212 24,106 
Interest expense, net(2,857)(4,113)
Other income, net1,311 19 
Income before income taxes19,666 20,012 
Income tax expense
(6,372)(7,147)
Net income$13,294 $12,865 
Net income per share:
Basic$0.05 $0.05 
Diluted$0.05 $0.05 
Weighted average shares outstanding:
Basic282,661 279,069 
Diluted288,988 284,309 
UNAUDITED SHARE-BASED COMPENSATION
Three Months Ended
June 30,
20212020
Cost of revenue$2,652 $1,498 
Research and development3,967 2,418 
Sales and marketing7,608 5,405 
General and administrative5,025 3,351 
Total share-based compensation expense$19,252 $12,672 
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DYNATRACE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 30, 2021March 31, 2021
(unaudited)
Assets
Current assets:
Cash and cash equivalents$387,218 $324,962 
Accounts receivable, net134,003 242,079 
Deferred commissions, current50,987 48,986 
Prepaid expenses and other current assets65,838 64,255 
Total current assets638,046 680,282 
Property and equipment, net37,841 36,916 
Operating lease right-of-use asset, net48,338 42,959 
Goodwill1,275,133 1,271,195 
Other intangible assets, net137,993 149,484 
Deferred tax assets, net17,012 16,811 
Deferred commissions, non-current50,001 48,638 
Other assets9,735 9,933 
Total assets$2,214,099 $2,256,218 
Liabilities and shareholders' equity
Current liabilities:
Accounts payable$3,431 $9,621 
Accrued expenses, current98,955 119,527 
Deferred revenue, current486,066 509,272 
Operating lease liabilities, current10,420 9,491 
Total current liabilities598,872 647,911 
Deferred revenue, non-current33,683 47,504 
Accrued expenses, non-current16,349 16,072 
Operating lease liabilities, non-current42,823 38,203 
Deferred tax liabilities1,014 1,014 
Long-term debt362,404 391,913 
Total liabilities1,055,145 1,142,617 
Commitments and contingencies
Shareholders' equity:
Common shares, $0.001 par value, 600,000,000 shares authorized, 284,217,750 and 283,130,238 shares issued and outstanding at June 30, 2021 and March 31, 2021, respectively
284 283 
Additional paid-in capital1,687,044 1,653,328 
Accumulated deficit(500,505)(513,799)
Accumulated other comprehensive loss(27,869)(26,211)
Total shareholders' equity1,158,954 1,113,601 
Total liabilities and shareholders' equity$2,214,099 $2,256,218 
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DYNATRACE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited – In thousands)
Three Months Ended
June 30,
20212020
Cash flows from operating activities:
Net income$13,294 $12,865 
Adjustments to reconcile net income to cash provided by operations:
Depreciation
2,475 1,590 
Amortization
11,512 13,019 
Share-based compensation
19,252 12,672 
Deferred income taxes
(2)(175)
Other
(794)466 
Net change in operating assets and liabilities:
Accounts receivable
110,079 64,265 
Deferred commissions
(2,631)2,229 
Prepaid expenses and other assets
(1,453)275 
Accounts payable and accrued expenses
(27,376)(23,212)
Operating leases, net
131 311 
Deferred revenue
(41,015)(47,297)
Net cash provided by operating activities
83,472 37,008 
Cash flows from investing activities:
Purchase of property and equipment
(2,954)(4,418)
Capitalized software additions
— (131)
Acquisition of business, net of cash acquired(3,543)— 
Net cash used in investing activities
(6,497)(4,549)
Cash flows from financing activities:
Repayment of term loans
(30,000)— 
Proceeds from employee stock purchase plan
6,593 3,592 
Proceeds from exercise of stock options7,886 — 
Equity repurchases
(14)(13)
Net cash (used in) provided by financing activities
(15,535)3,579 
Effect of exchange rates on cash and cash equivalents816 1,169 
Net increase in cash and cash equivalents62,256 37,207 
Cash and cash equivalents, beginning of period324,962 213,170 
Cash and cash equivalents, end of period$387,218 $250,377 
Supplemental cash flow data:
Cash paid for interest$2,370 $3,763 
Cash paid for tax, net$5,403 $10,127 
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DYNATRACE, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited - In thousands, except percentages)
Three Months Ended June 30, 2021
GAAPShare-based compensationEmployer payroll taxes on employee stock transactionsAmortization of other intangiblesRestructuring & otherNon-GAAP
Non-GAAP operating income:
Cost of revenue$38,833 $(2,652)$(315)$(3,830)$— $32,036 
Gross profit170,907 2,652 315 3,830 — 177,704 
Gross margin81 %85 %
Research and development34,725 (3,967)(627)— — 30,131 
Sales and marketing80,482 (7,608)(585)— — 72,289 
General and administrative26,922 (5,025)(200)— 47 21,744 
Amortization of other intangibles7,540 — — (7,540)— — 
Restructuring and other26 — — — (26)— 
Operating income$21,212 $19,252 $1,727 $11,370 $(21)$53,540 
Operating margin10 %26 %

Three Months Ended June 30, 2020(1)
GAAPShare-based compensationEmployer payroll taxes on employee stock transactionsAmortization of other intangiblesRestructuring & otherNon-GAAP
Non-GAAP operating income:
Cost of revenue$28,542 $(1,498)$(53)$(3,826)$— $23,165 
Gross profit126,966 1,498 53 3,826 — 132,343 
Gross margin82 %85 %
Research and development23,505 (2,418)(98)— — 20,989 
Sales and marketing49,163 (5,405)(127)— — 43,631 
General and administrative21,527 (3,351)(7)— (1,559)16,610 
Amortization of other intangibles8,686 — — (8,686)— — 
Restructuring and other(21)— — — 21 — 
Operating income$24,106 $12,672 $285 $12,512 $1,538 $51,113 
Operating margin16 %33 %

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




9


DYNATRACE, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited - In thousands, except per share data)
Three Months Ended June 30,
20212020
Non-GAAP net income:
Net income$13,294 $12,865 
Income tax expense6,372 7,147 
Non-GAAP effective cash tax(6,140)(3,578)
Interest expense, net2,857 4,113 
Cash paid for interest(2,370)(3,763)
Share-based compensation19,252 12,672 
Employer payroll taxes on employee stock transactions1,727 285 
Amortization of other intangibles7,540 8,686 
Amortization of acquired technology3,830 3,826 
Transaction and sponsor related costs(47)1,559 
Restructuring and other26 (21)
Gain on currency translation(1,311)(19)
Non-GAAP net income$45,030 $43,772 
Share count:
Weighted-average shares outstanding - basic282,661 279,069 
Weighted-average shares outstanding - diluted288,988 284,309 
Shares used in non-GAAP per share calculations:
Weighted-average shares outstanding - basic282,661 279,069 
Weighted-average shares outstanding - diluted288,988 284,309 
Net income per share:
Net income per share - basic$0.05 $0.05 
Net income per share - diluted$0.05 $0.05 
Non-GAAP net income per share - basic$0.16 $0.16 
Non-GAAP net income per share - diluted$0.16 $0.15 


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DYNATRACE, INC.
GAAP to Non-GAAP Reconciliations
(Unaudited - In thousands)
Three Months Ended June 30,
2021
2020 (1)
Unlevered Free Cash Flow ("uFCF"):
Net cash provided by operating activities$83,472 $37,008 
Cash paid for interest expense2,370 3,763 
Restructuring and other26 (21)
Purchase of property, plant, and equipment(2,954)(4,418)
Transaction and sponsor related costs(47)1,559 
Discrete tax items(1,183)7,510 
Total uFCF81,684 45,401 
Interest tax adjustment(593)(941)
uFCF$81,091 $44,460 
(1) Prior period results have been updated to include the discrete tax payments related to the reorganization.
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Contacts

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

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





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Dynatrace, Inc. provided additional information to their SEC Filing as exhibits

Ticker: DT
CIK: 1773383
Form Type: 8-K Corporate News
Accession Number: 0001773383-21-000081
Submitted to the SEC: Wed Jul 28 2021 6:40:10 AM EST
Accepted by the SEC: Wed Jul 28 2021
Period: Wednesday, July 28, 2021
Industry: Prepackaged Software
Events:
  1. Earnings Release
  2. Financial Exhibit

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