WALTHAM, Mass.–(BUSINESS WIRE)–Dynatrace (NYSE: DT), the leader in unified observability and security, today announced financial results for the fourth quarter and full year ended March 31, 2024.
“Dynatrace delivered a strong finish to fiscal 2024. Our fourth quarter results exceeded guidance across all key operating metrics, fueled in part by a record number of 7-figure deals closed in the quarter,” said Rick McConnell, Chief Executive Officer. “We continue to see a growing number of companies looking to consolidate often ineffective and costly monitoring tools into a unified observability platform. We believe that our contextual analytics, AI leadership, and automation differentiate us in the market and empower us to capture this opportunity.”
Dynatrace also announced today that its Board of Directors has authorized a share repurchase program for up to $500 million of common stock.
“The share repurchase program demonstrates our confidence in the business and conviction in our future growth prospects,” said Jim Benson, Chief Financial Officer. “While investing in the business is our foremost priority, this program allows us to leverage our strong balance sheet and cash flow opportunistically to drive shareholder return while also allowing us the flexibility to consider strategic acquisitions to accelerate growth and deliver business value for our customers.”
All growth rates are compared to the fourth quarter and full year of fiscal 2023 unless otherwise noted.
Fourth Quarter Fiscal 2024 Financial Highlights:
- Total ARR of $1,504 million, an increase of 21%, or 20% on a constant currency basis
- Total Revenue of $381 million, an increase of 21%, or 21% on a constant currency basis
- Subscription Revenue of $360 million, an increase of 23%, or 22% on a constant currency basis
- GAAP Income from Operations of $23 million and Non-GAAP Income from Operations of $95 million
- GAAP EPS of $0.13 and non-GAAP EPS of $0.30, on a dilutive basis
Full Year Fiscal 2024 Financial Highlights:
- Total Revenue of $1,431 million, an increase of 23%, or 22% on a constant currency basis
- Subscription Revenue of $1,359 million, an increase of 25%, or 24% on a constant currency basis
- GAAP Income from Operations of $128 million and Non-GAAP Income from Operations of $398 million
- GAAP EPS of $0.52 and non-GAAP EPS of $1.20, on a dilutive basis
- GAAP Operating Cash Flow of $378 million and Free Cash Flow of $346 million
Business Highlights:
- Go-to-market traction: We closed a record 18 deals greater than $1 million in annual contract value (ACV) in the quarter. Fifteen of these deals were in collaboration with partners, including our first-ever 9-figure total contract value (TCV) deal, which was an expansion deal closed in conjunction with Accenture. We also closed our largest new logo win, a nearly 8-figure ACV deal.
- Industry recognition: We were named a Leader in the 2024 GigaOm Radar Report for Cloud Observability Solutions, positioned as the vendor closest to the center of the radar, reflecting Dynatrace’s industry-leading innovation and ability to deliver the highest impact for customers.
- Customer recognition: Dynatrace was also recognized as a Customers’ Choice in the 2024 Gartner® Peer Insights™ Voice of the Customer for Digital Experience Monitoring report, the only vendor with this distinction.1
- Runecast acquisition: We successfully closed the acquisition of Runecast, an AI-powered security and compliance solution provider. We are integrating Runecast technology into the Dynatrace platform to enable customers to prevent cloud misconfigurations and compliance issues proactively with automated, AI-driven, real-time vulnerability assessments.
Share Repurchase Program
Share repurchases under the new $500 million program may be made from time to time on the open market, pursuant to Rule 10b5-1 trading plans, or other legally permissible means. The share repurchase program has no time limit, does not obligate Dynatrace to acquire a specified number of shares, and may be suspended, modified, or terminated at any time, without prior notice. The number of shares to be repurchased will depend on market conditions and other factors. Repurchases under the program are expected to be funded from a combination of existing cash balances and future cash flow.
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Fourth Quarter 2024 Financial Highlights (Unaudited – In thousands, except per share data) |
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Three Months Ended March 31, |
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2024 |
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2023 |
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Key Operating Metric: |
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Annual recurring revenue (ARR) |
$ |
1,503,819 |
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$ |
1,246,681 |
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Year-over-Year Increase |
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21 |
% |
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Year-over-Year Increase – constant currency (*) |
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20 |
% |
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Total revenue |
$ |
380,848 |
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$ |
314,475 |
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Year-over-Year Increase |
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21 |
% |
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Year-over-Year Increase – constant currency (*) |
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21 |
% |
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Subscription revenue |
$ |
360,109 |
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$ |
293,314 |
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Year-over-Year Increase |
|
23 |
% |
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Year-over-Year Increase – constant currency (*) |
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22 |
% |
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GAAP Financial Measures: |
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GAAP income from operations |
$ |
23,123 |
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$ |
19,431 |
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GAAP operating margin |
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6 |
% |
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6 |
% |
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GAAP net income |
$ |
37,944 |
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$ |
80,293 |
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GAAP net income per share – diluted |
$ |
0.13 |
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$ |
0.27 |
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GAAP shares outstanding – diluted |
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300,867 |
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293,917 |
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Net cash provided by operating activities |
$ |
131,672 |
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$ |
120,427 |
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Non-GAAP Financial Measures: |
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Non-GAAP income from operations (*) |
$ |
95,093 |
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$ |
77,935 |
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Non-GAAP operating margin (*) |
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25 |
% |
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25 |
% |
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Non-GAAP net income (*) |
$ |
89,401 |
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$ |
92,459 |
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Non-GAAP net income per share – diluted (*) |
$ |
0.30 |
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$ |
0.31 |
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Non-GAAP shares outstanding – diluted (*) |
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300,867 |
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293,917 |
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Free Cash Flow (*) |
$ |
121,262 |
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$ |
114,512 |
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Full Year 2024 Financial Highlights (Unaudited – In thousands, except per share data) |
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Year Ended March 31, |
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2024 |
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2023 |
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Revenue: |
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Total revenue |
$ |
1,430,530 |
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$ |
1,158,530 |
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Year-over-Year Increase |
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23 |
% |
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Year-over-Year Increase – constant currency (*) |
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22 |
% |
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Subscription revenue |
$ |
1,359,354 |
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$ |
1,083,330 |
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Year-over-Year Increase |
|
25 |
% |
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Year-over-Year Increase – constant currency (*) |
|
24 |
% |
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GAAP Financial Measures: |
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GAAP income from operations |
$ |
128,400 |
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$ |
92,811 |
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GAAP operating margin |
|
9 |
% |
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8 |
% |
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GAAP net income |
$ |
154,632 |
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$ |
107,959 |
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GAAP net income per share – diluted |
$ |
0.52 |
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$ |
0.37 |
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GAAP shares outstanding – diluted |
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299,280 |
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|
291,617 |
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Net cash provided by operating activities |
$ |
378,109 |
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$ |
354,885 |
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Non-GAAP Financial Measures: |
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Non-GAAP income from operations (*) |
$ |
398,239 |
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$ |
291,791 |
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Non-GAAP operating margin (*) |
|
28 |
% |
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25 |
% |
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Non-GAAP net income (*) |
$ |
358,117 |
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$ |
282,224 |
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Non-GAAP net income per share – diluted (*) |
$ |
1.20 |
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$ |
0.97 |
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Non-GAAP shares outstanding – diluted (*) |
|
299,280 |
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291,617 |
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Free Cash Flow (*) |
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346,382 |
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333,345 |
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* 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 Investor Relations section of our website at ir.dynatrace.com.
Financial Outlook
Based on information available as of May 15, 2024, Dynatrace is issuing guidance for the first quarter and full year fiscal 2025 in the table below. This guidance is based on foreign exchange rates as of April 30, 2024. The total foreign exchange headwind for fiscal 2025 is expected to be approximately $10 million on ARR and revenue.
Growth rates for ARR, Total revenue, and Subscription revenue are presented in constant currency to provide better visibility into the underlying growth of the business.
All growth rates are compared to the first quarter and full year of fiscal 2024 unless otherwise noted.
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(In millions, except per share data) |
First Quarter Fiscal 2025 |
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Full Year Fiscal 2025* |
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ARR |
– |
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$1,720 – $1,735 |
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As reported |
– |
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14% – 15% |
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Constant currency |
– |
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15% – 16% |
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Total revenue |
$391 – $393 |
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$1,644 – $1,658 |
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As reported |
17% – 18% |
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15% – 16% |
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Constant currency |
18% – 19% |
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16% – 17% |
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Subscription revenue |
$374 – $376 |
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$1,571 – $1,585 |
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As reported |
18% – 19% |
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16% – 17% |
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Constant currency |
19% |
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16% – 17% |
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Non-GAAP income from operations |
$105 – $108 |
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$459 – $467 |
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Non-GAAP operating margin |
27% – 27.5% |
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28% |
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Non-GAAP net income |
$86 – $89 |
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$383 – $392 |
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Non-GAAP net income per diluted share |
$0.29 – $0.30 |
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$1.26 – $1.29 |
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Diluted weighted average shares outstanding |
301 – 302 |
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303 – 305 |
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Free cash flow |
– |
|
$386 – $398 |
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Free cash flow margin |
– |
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23.5% – 24% |
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*Guidance growth rates rounded to the nearest percentage point. |
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Reconciliations of non-GAAP income from operations, non-GAAP net income, non-GAAP net income per diluted share and free cash flow guidance to the most directly comparable GAAP measures are 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.
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.
Constant Currency amounts for ARR, Total Revenue and Subscription Revenue are presented to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign exchange 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 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.
Free Cash Flow is defined as net cash provided by (used in) operating activities less capital expenditures (reflected as “purchase of property and equipment” and “capitalized software additions” in our financial statements).
About Dynatrace
Dynatrace (NYSE: DT) exists to make the world’s software work perfectly. Our unified platform combines broad and deep observability and continuous runtime application security with Davis® hypermodal AI to provide answers and intelligent automation from data at an enormous scale. This enables innovators to modernize and automate cloud operations, deliver software faster and more securely, and ensure flawless digital experiences. That’s why the world’s largest organizations trust the Dynatrace® platform to accelerate digital transformation.
