Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 001-39010

Dynatrace, Inc.

(Exact name of Registrant as specified in its charter)


Delaware		47-2386428
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1601 Trapelo Road, Suite 116
Waltham,	Massachusetts	02451
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (781) 530-1000

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.001 per share

New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The Registrant had 295,999,246 shares of common stock outstanding as of February 6, 2024.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding:

•our future financial performance, including our expectations regarding key factors driving future performance, our revenue, annual recurring revenue, gross profit or gross margin, operating expenses, ability to generate cash flow, and billing/revenue mix;

•our ability to navigate the current macroeconomic environment;

•anticipated trends in our business and in the markets in which we operate;

•our ability to anticipate market needs and successfully develop new and enhanced solutions to meet those needs;

•the evolution of technology affecting our offerings, platform and markets, including our plans to continue evolving our technology capabilities;

•our plans to continue investing in research and development and driving innovation to meet customers’ needs and grow our customer base;

•our ability to maintain and expand our customer base and our partner ecosystem;

•our expectations regarding the evolving competitive environment;

•our plans to invest in future growth opportunities that we expect will drive long-term value;

•our ability to sell our offerings and expand internationally;

•our ability to hire and retain necessary qualified employees to grow our business and expand our operations; and

•our ability to adequately protect our intellectual property.

These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this Quarterly Report that are not historical facts and statements identified by words such as “will,” “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 risks set forth in the summary below, in Part II, Item 1A. entitled “Risk Factors” in this Quarterly Report, and in our other SEC filings. We assume no obligation to update any forward-looking statements contained in this Quarterly Report as a result of new information, future events or otherwise.

SUMMARY OF THE MATERIAL RISKS ASSOCIATED WITH OUR BUSINESS

Our business is subject to numerous risks and uncertainties that you should be aware of in evaluating our business. Please see Part II, Item 1A. entitled “Risk Factors” in this Quarterly Report for a discussion of risks that we believe are material. These risks and uncertainties include, but are not limited to, the following:

•We have experienced rapid revenue growth in recent periods, which may not be indicative of our future growth.

•Our quarterly and annual operating results may be adversely affected due to a variety of factors, which could make our future results difficult to predict.

•Market adoption of the solutions that we offer is relatively new and may not grow as we expect, which may harm our business and prospects.

•Our business is dependent on overall demand for observability and security solutions and therefore reduced spending on those solutions or overall adverse economic conditions may negatively affect our business, operating results, and financial condition.

•If we fail to innovate and do not continue to develop and effectively market solutions that anticipate and respond to the needs of our customers, our business, operating results, and financial condition may suffer.

•If our platform and solutions do not effectively interoperate with our customers’ existing or future IT infrastructures, installations of our solutions could be delayed or canceled, which would harm our business.

•If we are unable to acquire new customers or retain and expand our relationships with existing customers, our future revenues and operating results will be harmed.

•Failure to effectively expand our sales and marketing capabilities could harm our ability to execute on our business plan, increase our customer base, and achieve broader market acceptance of our applications.

•We face significant competition, which may adversely affect our ability to add new customers, retain existing customers, and grow our business.

•If we are unable to maintain successful relationships with our partners, or if our partners fail to perform, our ability to market, sell, and distribute our applications and services will be limited, and our business, operating results, and financial condition could be harmed.

•Security breaches, computer malware, computer hacking attacks and other security incidents could harm our business, reputation, brand and operating results.

•Real or perceived errors, failures, defects, or vulnerabilities in our solutions could adversely affect our financial results and growth prospects.

•Failure to protect and enforce our proprietary technology and intellectual property rights could substantially harm our business, operating results, and financial condition.

•Thoma Bravo has significant influence over matters requiring stockholder approval, which may have the effect of delaying or preventing changes of control, or limiting the ability of other stockholders to approve transactions they deem to be in their best interest.


PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of December 31, 2023 and March 31, 2023	2
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2023 and 2022	3
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended December 31, 2023 and 2022	4
	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended December 31, 2023 and 2022	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2023 and 2022	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 3.	Default Upon Senior Securities	57
Item 4.	Mine Safety Disclosures	57
Item 5.	Other Information	57
Item 6.	Exhibits	58
Signatures		59

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

DYNATRACE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	December 31, 2023		March 31, 2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	782,649	$	555,348
Accounts receivable, net	361,653		442,518
Deferred commissions, current	90,059		83,029
Prepaid expenses and other current assets	52,301		37,289
Total current assets	1,286,662		1,118,184
Property and equipment, net	49,408		53,576
Operating lease right-of-use assets, net	65,895		68,074
Goodwill	1,312,691		1,281,812
Other intangible assets, net	54,118		63,599
Deferred tax assets, net	129,119		79,822
Deferred commissions, non-current	79,724		86,232
Other assets	21,596		14,048
Total assets	$	2,999,213	$	2,765,347

Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	13,230	$	21,953
Accrued expenses, current	171,929		188,380

Deferred revenue, current	757,141		811,058
Operating lease liabilities, current	16,288		15,652
Total current liabilities	958,588		1,037,043
Deferred revenue, non-current	38,508		34,423
Accrued expenses, non-current	29,918		29,212
Operating lease liabilities, non-current	58,002		59,520
Deferred tax liabilities	321		280

Total liabilities	1,085,337		1,160,478
Commitments and contingencies (Note 9)
Shareholders' equity:
Common shares, $0.001 par value, 600,000,000 shares authorized, 295,777,477 and 290,411,108 shares issued and outstanding at December 31, 2023 and March 31, 2023, respectively	296		290
Additional paid-in capital	2,186,766		1,989,797
Accumulated deficit	(236,701)		(353,389)
Accumulated other comprehensive loss	(36,485)		(31,829)
Total shareholders' equity	1,913,876		1,604,869
Total liabilities and shareholders' equity	$	2,999,213	$	2,765,347

The accompanying notes are an integral part of these condensed consolidated financial statements.

DYNATRACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited – In thousands, except per share data)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Revenue:
Subscription	$	348,294	$	279,152	$	999,245	$	790,016
Service	16,802		18,304		50,437		54,039
Total revenue	365,096		297,456		1,049,682		844,055
Cost of revenue:
Cost of subscription	46,888		36,891		134,584		105,393
Cost of service	16,744		15,044		47,961		46,264
Amortization of acquired technology	4,237		3,889		12,035		11,669
Total cost of revenue	67,869		55,824		194,580		163,326
Gross profit	297,227		241,632		855,102		680,729

Operating expenses:
Research and development	80,102		54,531		220,468		156,847
Sales and marketing	132,723		112,292		385,445		323,313
General and administrative	43,232		34,354		127,075		107,485
Amortization of other intangibles	5,451		6,573		16,838		19,719
Restructuring and other	(1)		(5)		(1)		(15)
Total operating expenses	261,507		207,745		749,825		607,349
Income from operations	35,720		33,887		105,277		73,380
Interest income (expense), net	10,605		(4,787)		26,260		(7,475)
Other (expense) income, net	(3,901)		1,617		(6,724)		(1,847)
Income before income taxes	42,424		30,717		124,813		64,058
Income tax benefit (expense)	267		(15,691)		(8,125)		(36,392)
Net income	$	42,691	$	15,026	$	116,688	$	27,666
Net income per share:
Basic	$	0.14	$	0.05	$	0.40	$	0.10
Diluted	$	0.14	$	0.05	$	0.39	$	0.10
Weighted average shares outstanding:
Basic	294,869		287,957		293,295		287,120
Diluted	299,246		291,228		298,335		290,803

The accompanying notes are an integral part of these condensed consolidated financial statements.

DYNATRACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited - In thousands)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Net income	$	42,691	$	15,026	$	116,688	$	27,666
Other comprehensive loss
Foreign currency translation adjustment	(2,765)		(5,133)		(4,656)		(2,835)
Total other comprehensive loss	(2,765)		(5,133)		(4,656)		(2,835)
Comprehensive income	$	39,926	$	9,893	$	112,032	$	24,831

The accompanying notes are an integral part of these condensed consolidated financial statements.

DYNATRACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited - In thousands)


	Three Months Ended December 31, 2023
	Common Shares			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Shareholders' Equity
	Shares	Amount
Balance, September 30, 2023	294,294	$	294	$	2,114,472	$	(279,392)	$	(33,720)	$	1,801,654
Foreign currency translation								(2,765)		(2,765)
Restricted stock units vested	864	1		(1)						—

Issuance of common stock related to employee stock purchase plan	221	1		9,887						9,888
Exercise of stock options	398	—		7,586						7,586
Share-based compensation				54,822						54,822

Net income						42,691				42,691
Balance, December 31, 2023	295,777	$	296	$	2,186,766	$	(236,701)	$	(36,485)	$	1,913,876



	Three Months Ended December 31, 2022
	Common Shares			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Shareholders’ Equity
	Shares	Amount
Balance, September 30, 2022	287,813	$	288	$	1,874,488	$	(448,708)	$	(24,391)	$	1,401,677
Foreign currency translation								(5,133)		(5,133)
Restricted stock units vested	463	—		—						—

Restricted stock awards forfeited	(1)	—								—
Issuance of common stock related to the employee stock purchase plan	287	—		9,179						9,179
Exercise of stock options	399	1		10,769						10,770
Share-based compensation				35,504						35,504


Net income						15,026				15,026
Balance, December 31, 2022	288,961	$	289	$	1,929,940	$	(433,682)	$	(29,524)	$	1,467,023

The accompanying notes are an integral part of these condensed consolidated financial statements.

DYNATRACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited - In thousands)


	Nine Months Ended December 31, 2023
	Common Shares			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Shareholders' Equity
	Shares	Amount
Balance, March 31, 2023	290,411	$	290	$	1,989,797	$	(353,389)	$	(31,829)	$	1,604,869
Foreign currency translation								(4,656)		(4,656)
Restricted stock units vested	3,644	4		(4)						—

Issuance of common stock related to employee stock purchase plan	534	1		19,471						19,472
Exercise of stock options	1,188	1		24,204						24,205
Share-based compensation				153,298						153,298

Net income						116,688				116,688
Balance, December 31, 2023	295,777	$	296	$	2,186,766	$	(236,701)	$	(36,485)	$	1,913,876



	Nine Months Ended December 31, 2022
	Common Shares			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Shareholders’ Equity
	Shares	Amount
Balance, March 31, 2022	286,053	$	286	$	1,792,197	$	(461,348)	$	(26,689)	$	1,304,446
Foreign currency translation								(2,835)		(2,835)
Restricted stock units vested	1,727	2		(2)						—
Restricted stock awards forfeited	(15)	—								—
Issuance of common stock related to employee stock purchase plan	553	—		17,806						17,806
Exercise of stock options	643	1		15,101						15,102
Share-based compensation				104,853						104,853
Equity repurchases				(15)						(15)

Net income						27,666				27,666
Balance, December 31, 2022	288,961	$	289	$	1,929,940	$	(433,682)	$	(29,524)	$	1,467,023

The accompanying notes are an integral part of these condensed consolidated financial statements.

DYNATRACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited – In thousands)


	Nine Months Ended December 31,
	2023		2022
Cash flows from operating activities:
Net income	$	116,688	$	27,666
Adjustments to reconcile net income to cash provided by operations:
Depreciation	11,781		9,012
Amortization	29,067		31,566
Share-based compensation	153,298		104,853
Deferred income taxes	(49,579)		2,057
Loss on extinguishment of debt	—		5,925
Other	7,016		3,114
Net change in operating assets and liabilities:
Accounts receivable	83,444		40,314
Deferred commissions	874		(17,198)
Prepaid expenses and other assets	(27,437)		29,616
Accounts payable and accrued expenses	(24,022)		19,365
Operating leases, net	1,253		(36)
Deferred revenue	(55,946)		(21,796)
Net cash provided by operating activities	246,437		234,458

Cash flows from investing activities:
Purchase of property and equipment	(16,662)		(15,625)
Capitalized software additions	(4,655)		—
Acquisition of a business, net of cash acquired	(32,297)		—
Net cash used in investing activities	(53,614)		(15,625)

Cash flows from financing activities:
Repayment of term loans	—		(281,125)
Debt issuance costs	—		(1,949)
Proceeds from employee stock purchase plan	19,472		17,806
Proceeds from exercise of stock options	24,205		15,102
Equity repurchases	—		(15)
Net cash provided by (used in) financing activities	43,677		(250,181)

Effect of exchange rates on cash and cash equivalents	(9,199)		(9,168)

Net increase (decrease) in cash and cash equivalents	227,301		(40,516)

Cash and cash equivalents, beginning of period	555,348		462,967
Cash and cash equivalents, end of period	$	782,649	$	422,451

Supplemental cash flow data:
Cash paid for interest	$	656	$	6,867
Cash paid for (received from) tax, net	$	61,758	$	(20,335)

Non-cash investing and financing activities:
Capitalized software additions in accounts payable and accrued expenses	$	6,686	$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

DYNATRACE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Description of the Business

Business

Dynatrace, Inc. (“Dynatrace”, or the “Company”) designed its unified observability and security platform with analytics and automation at its core to address the growing complexity faced by technology and digital business teams as these enterprises further embrace the cloud to effect their digital transformation. Artificial intelligence and continuous automation deliver precise answers about the performance and security of applications, the underlying infrastructure, and the experience of its customers’ users that enable organizations to innovate faster, operate more efficiently, and improve user experiences for consistently better business outcomes.

Fiscal year

The Company’s fiscal year ends on March 31. References to fiscal 2024, for example, refer to the fiscal year ending March 31, 2024.

2. Significant Accounting Policies

Basis of presentation and consolidation

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. All intercompany balances and transactions have been eliminated in the accompanying condensed consolidated financial statements.

Unaudited interim consolidated financial information

The accompanying interim condensed consolidated balance sheet as of December 31, 2023 and the interim condensed consolidated statements of operations, statements of comprehensive income, and statements of shareholders’ equity for the three and nine months ended December 31, 2023 and 2022, statements of cash flows for the nine months ended December 31, 2023 and 2022, and the related disclosures, are unaudited. In management’s opinion, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all normal and recurring adjustments necessary for the fair presentation of the Company’s financial position as of December 31, 2023, its results of operations for the three and nine months ended December 31, 2023 and 2022, and its cash flows for the nine months ended December 31, 2023 and 2022 in accordance with U.S. GAAP. The results for the three and nine months ended December 31, 2023 are not necessarily indicative of the results to be expected for the full fiscal year or any other interim period.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023 (the “Annual Report”).

Reclassification

During the fourth quarter of fiscal 2023, the Company refined its methodology used to allocate depreciation expense for certain property and equipment to better align the expense with the related use of property and equipment. This change in allocating depreciation expense has been applied retrospectively to April 1, 2022, and had no impact on the Company’s income from operations and net income. Prior period amounts have been reclassified to conform to the current period presentation.

The following table presents the effect of the reclassification and the impact on the Company’s condensed consolidated statements of operations (in thousands):


	Three Months Ended December 31, 2022						Nine Months Ended December 31, 2022
	Previous Method		Current Method		Effect of Change		Previous Method		Current Method		Effect of Change
Research and development	$	53,411	$	54,531	$	1,120	$	153,800	$	156,847	$	3,047
Sales and marketing	111,524		112,292		768		321,208		323,313		2,105
General and administrative	36,242		34,354		(1,888)		112,637		107,485		(5,152)

Net income	15,026		15,026		—		27,666		27,666		—

Use of estimates

The preparation of unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Management periodically evaluates such estimates and assumptions for continued reasonableness. In particular, the Company makes estimates with respect to the stand-alone selling price for each distinct performance obligation in customer contracts with multiple performance obligations, the allowance for credit losses, the fair value of tangible and intangible assets acquired, the valuation of long-lived assets, the period of benefit for deferred commissions and material rights, income taxes, equity-based compensation expense, and the determination of the incremental borrowing rate used for operating lease liabilities, among other things. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. Actual results could differ from those estimates.

Significant accounting policies

The Company’s significant accounting policies are discussed in Note 2, Significant Accounting Policies, to the audited consolidated financial statements in the Company’s Annual Report. There have been no changes to the Company’s significant accounting policies described in the Company’s Annual Report that have had a material impact on its condensed consolidated financial statements and related notes.

Recently issued accounting pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in the income tax rate reconciliation table and disaggregates the income taxes paid by jurisdiction. ASU 2023-09 will be effective for annual periods beginning after December 15, 2024, which will be the Company’s fiscal 2026. The Company is currently evaluating the impact of the ASU on its income tax disclosures within the consolidated financial statements and related disclosures.

3. Revenue Recognition

Disaggregation of revenue

The following table is a summary of the Company’s total revenue by geographic region (in thousands, except percentages):


	Three Months Ended December 31,								Nine Months Ended December 31,
	2023				2022				2023				2022
	Amount		%		Amount		%		Amount		%		Amount		%
North America	$	217,661	60	%	$	179,438	60	%	$	625,166	60	%	$	503,942	60	%
Europe, Middle East and Africa	89,816		25	%	73,182		25	%	260,729		25	%	212,927		25	%
Asia Pacific	33,943		9	%	28,311		9	%	94,940		9	%	81,852		10	%
Latin America	23,676		6	%	16,525		6	%	68,847		6	%	45,334		5	%
Total revenue	$	365,096			$	297,456			$	1,049,682			$	844,055

For the three and nine months ended December 31, 2023 and 2022, the United States was the only country that represented more than 10% of the Company’s revenue in any period, constituting $206.1 million and 56% and $169.7 million and 57% of total revenue during the three months ended December 31, 2023 and 2022, respectively, and $591.9 million and 56% and $475.5 million and 56% of total revenue during the nine months ended December 31, 2023 and 2022, respectively.

Deferred revenue

Revenue recognized during the three months ended December 31, 2023 and 2022, which was included in the deferred revenue balance at the beginning of each respective period, was $311.5 million and $253.1 million, respectively. Revenue recognized during the nine months ended December 31, 2023 and 2022, which was included in the deferred revenue balance at the beginning of each respective period, was $712.3 million and $569.3 million, respectively.

Remaining performance obligations

As of December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $1,956.4 million, which consists of both billed consideration in the amount of $795.6 million and unbilled consideration in the amount of $1,160.8 million that the Company expects to recognize as subscription and service revenue. The Company expects to recognize 60% of the total remaining performance obligations as revenue over the next 12 months and the remainder thereafter.

Contract assets

As of December 31, 2023 and March 31, 2023, contract assets of $11.5 million and $0.4 million, respectively, are included in accounts receivable, net, on the Company’s condensed consolidated balance sheets.

4. Acquisitions

On August 31, 2023, the Company acquired 100% of the outstanding equity of Rookout, Ltd. (“Rookout”). Rookout is a provider of enterprise-ready and privacy-aware solutions that enable developers to troubleshoot and debug actively running code in Kubernetes-hosted cloud-native applications. This acquisition expands the Company’s unified observability and security platform from the addition of Rookout’s technology and experienced team.

The preliminary purchase consideration of Rookout was $33.4 million, after considering certain adjustments, and was paid from cash on hand. The preliminary purchase consideration is subject to a final post-closing adjustment.

The acquisition of Rookout has been accounted for as a business combination under the acquisition method of accounting, which results in acquired assets and assumed liabilities being measured at their estimate fair value as of the acquisition date. The purchase consideration was allocated to the tangible assets and liabilities acquired as of the acquisition date, with the excess recorded to goodwill as shown below (in thousands).


Assets acquired:
Cash and cash equivalents	$	1,152
Accounts receivable, prepaid and other assets	342
Property and equipment	46
Intangible asset	7,800
Total assets acquired	$	9,340

Liabilities assumed:
Accounts payable, accrued and other liabilities	2,242
Deferred revenue	1,064
Total liabilities assumed	$	3,306

Net assets acquired	6,034
Fair value of consideration transferred	33,414
Goodwill	$	27,380

The fair value of assets and liabilities acquired may change as additional information is received during the measurement period. The Company expects to finalize the valuation as soon as practicable, but no later than one year from the acquisition date.

Goodwill is primarily attributable to expected synergies and acquired skilled workforce. The goodwill was allocated to the Company’s one reporting unit. The Company identified developed technology as the sole acquired intangible asset. The estimated fair value of the developed technology was $7.8 million, which was based on a valuation using the income approach and is classified as capitalized software on the condensed consolidated balance sheet. The estimated useful life of the developed technology is seven years. The acquired goodwill and intangible asset were not deductible for tax purposes.

The operating results of Rookout from the date of acquisition, which are not material, have been included in the Company’s condensed consolidated statements of operations. The transaction costs related to the Rookout acquisition were $0.1 million and $2.5 million for the three and nine months ended December 31, 2023, respectively, and are included in general and administrative expense on the condensed consolidated statements of operations.

5. Goodwill and Other Intangible Assets, Net

Changes in the carrying amount of goodwill for the nine months ended December 31, 2023 consists of the following (in thousands):


	December 31, 2023
Balance, beginning of period	$	1,281,812
Goodwill from Rookout acquisition	27,380
Foreign currency impact	3,499
Balance, end of period	$	1,312,691

Other intangible assets, net, excluding goodwill, consists of the following (in thousands):


	Weighted Average Useful Life (in months)
		December 31, 2023		March 31, 2023
Capitalized software	107	$	211,643	$	191,863
Customer relationships	120	351,555		351,555
Trademarks and tradenames	120	55,003		55,003
Total intangible assets		618,201		598,421
Less: accumulated amortization		(564,083)		(534,822)
Total other intangible assets, net		$	54,118	$	63,599

Amortization of other intangible assets totaled $9.9 million and $10.5 million for the three months ended December 31, 2023 and 2022, respectively, and $29.1 million and $31.6 million for the nine months ended December 31, 2023 and 2022, respectively.

On November 9, 2023, the Company entered into a license agreement with an application security provider for certain software and developed technology for $10.0 million, of which $3.4 million was paid at closing and the remainder is to be paid over 12 quarterly installments of $0.6 million. Additionally, the Company capitalized $0.3 million in related transaction costs for a total consideration of $10.3 million, which is classified as capitalized software on the condensed consolidated balance sheet. As of December 31, 2023, the Company has paid $3.7 million for the licensed software and developed technology. The licensed software and developed technology will be amortized over its useful life.

6. Income Taxes

The Company computes its interim provision for income taxes by applying the estimated annual effective tax rate to income from operations and adjusts the provision for discrete tax items occurring in the period. The Company’s effective tax rate for the three months ended December 31, 2023 was (0.6)% compared to 51.1% for the three months ended December 31, 2022. The Company’s effective tax rate for the nine months ended December 31, 2023 was 6.5% compared to 56.8% for the nine months ended December 31, 2022. The decrease in the effective tax rate for both the three months ended December 31, 2023 and the nine months ended December 31, 2023 was primarily due to an increase in share-based compensation windfall benefits, additional tax benefits related to the deferred tax asset resulting from capitalized research and development expenses under Section 174 of the Internal Revenue Code recognized in the current year due to the reversal of the U.S. valuation allowance as of March 31, 2023, and the reversal of an unrecognized tax benefit in the U.S.

7. Long-term Debt

On December 2, 2022, the Company entered into a Credit Agreement for a senior secured revolving credit facility (the “Credit Facility”) in an aggregate amount of $400.0 million. The Credit Facility has sublimits for swing line loans up to $30.0 million and for the issuance of standby letters of credit in a face amount up to $45.0 million. The Credit Facility will mature on December 2, 2027. As of December 31, 2023 and March 31, 2023, there were no amounts outstanding under the Credit Facility. There were $12.1 million and $15.5 million of letters of credit issued as of December 31, 2023 and March 31, 2023, respectively. The Company had $387.9 million and $384.5 million of availability under the Credit Facility as of December 31, 2023 and March 31, 2023, respectively.

Borrowings under the Credit Facility are available in U.S. dollars, Euros, Pounds Sterling and Canadian Dollars, with a sublimit of $100.0 million for non-U.S. dollar-denominated borrowings. Borrowings under the Credit Agreement currently bear interest at (i) the Term Secured Overnight Financing Rate plus 0.10%, (ii) the Adjusted Euro Interbank Offer Rate, (iii) the Canadian Dollar Offered Rate, (iv) the Base Rate, as defined per the Credit Agreement, or (v) the Sterling Overnight Index Average, in each case plus an applicable margin as defined per the Credit Agreement. Interest payments are due quarterly, or more frequently, based on the terms of the Credit Agreement.

The Company incurs fees with respect to the Credit Facility, including (i) a commitment fee ranging from 0.175% to 0.35% per annum, dependent on the Company’s leverage ratio, as defined per the Credit Agreement, of the unused commitment under the Credit Facility, (ii) a fronting fee of 0.125% per annum of the face amount of each letter of credit, (iii) a participation fee equal to the applicable margin, as defined per the Credit Agreement, applied to the daily average face amount of letters of credit, and (iv) customary administrative fees.

Debt issuance costs of $1.9 million were incurred in connection with the Credit Facility. The debt issuance costs are included within “Other assets” in the condensed consolidated balance sheets and are being amortized into interest expense over the contractual term of the Credit Facility. There were $1.5 million and $1.8 million of unamortized debt issuance costs as of December 31, 2023 and March 31, 2023, respectively.

Pursuant to the Credit Agreement, obligations owed under the Credit Facility are secured by a first priority security interest on substantially all assets of Dynatrace LLC, a wholly owned subsidiary of the Company, including a pledge of the capital stock and other interests of certain subsidiaries. Under certain circumstances, the guarantees may be released without action by, or consent of, the holder of the Credit Facility. The Credit Agreement contains customary affirmative and negative covenants, including financial covenants that require the Company to maintain specified financial ratios. At December 31, 2023, the Company was in compliance with all applicable covenants.

First lien credit facilities

The Company’s former First Lien Credit Agreement, as amended, provided for a term loan facility (the “First Lien Term Loan”) in an aggregate principal amount of $950.0 million and a senior secured revolving credit facility (the “Revolving Facility”), in an aggregate amount of $60.0 million. The Revolving Facility included a $25.0 million letter of credit sub-facility. Borrowings under the First Lien Term Loan and Revolving Facility bore interest, at the Company’s election, at either (i) the Alternative Base Rate, as defined per the credit agreement, plus 1.25% per annum, or (ii) LIBOR plus 2.25% per annum. The maturity date on the First Lien Term Loan and Revolving Facility was August 23, 2025 and August 23, 2023, respectively, with payment due in full on the maturity date. Interest payments were due quarterly, or more frequently, based on the terms of the credit agreement.

During the three months ended December 31, 2022, the Company terminated the First Lien Credit Agreement and repaid all outstanding borrowings, including accrued interest. The Company recognized a loss on debt extinguishment of $5.9 million within “Interest expense, net” in the condensed consolidated statements of operations for the three and nine months ended December 31, 2022.

8. Leases

The Company leases office space under non-cancelable operating leases which expire at various dates from fiscal 2024 to 2033. As of December 31, 2023, the weighted average remaining lease term was 5.9 years and the weighted average discount rate was 4.5%. The Company did not have any finance leases as of December 31, 2023.

The Company has a sublease of a former office which expires in fiscal 2025. Sublease income from operating leases, which is recorded as a reduction of rental expense, was $0.6 million for the three months ended December 31, 2023 and 2022, and $1.7 million for the nine months ended December 31, 2023 and 2022.

The following table presents information about leases on the condensed consolidated statements of operations (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Operating lease expense (1)	$	3,911	$	3,246	$	11,511	$	9,241
Short-term lease expense	$	505	$	450	$	1,550	$	1,299
Variable lease expense	$	410	$	281	$	1,103	$	659

_________________

(1) Presented gross of sublease income.

The following table presents supplemental cash flow information about the Company’s leases (in thousands):


	Nine Months Ended December 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities	$	13,935	$	11,590
Operating lease assets obtained in exchange for new operating lease liabilities (1)	$	9,973	$	20,656

_________________

(1) Includes the impact of new leases as well as remeasurements and modifications of existing leases.

As of December 31, 2023, remaining maturities of lease liabilities were as follows (in thousands):


Fiscal Years Ending March 31,	Amount
2024	$	5,023
2025	17,976
2026	14,610
2027	13,331
2028	8,961
Thereafter	23,618
Total operating lease payments (1)	83,519
Less: imputed interest	(9,229)
Total operating lease liabilities	$	74,290

_________________

(1) Presented gross of sublease income.

As of December 31, 2023, the Company had commitments of $78.8 million for operating leases that have not yet commenced and therefore are not included in the right-of-use assets or operating lease liabilities. These operating leases are expected to commence during fiscal 2025 through 2026 with a weighted average lease term of 10 years.

9. Commitments and Contingencies

Legal matters

The Company is, from time to time, party to legal proceedings and subject to claims in the ordinary course of business. Although the outcome of legal proceedings and claims cannot be predicted with certainty, the Company currently believes that the resolution of any such matters will not have a material adverse effect on its business, operating results, financial condition, or cash flows.

10. Share-based Compensation

Amended and Restated 2019 Equity Incentive Plan

In July 2019, the Company’s board of directors (the “Board”), upon the recommendation of the compensation committee of the Board, adopted the 2019 Equity Incentive Plan (the “2019 Plan”), which was subsequently approved by the Company’s stockholders and was later amended and restated by the Board in January 2021.

The Company initially reserved 52,000,000 shares of common stock for the issuance of awards under the 2019 Plan. The 2019 Plan provides that the number of shares reserved and available for issuance under the plan automatically increases each April 1, beginning on April 1, 2020, by 4% of the outstanding number of shares of the Company’s common stock on the immediately preceding March 31 or such lesser number determined by the compensation committee. This number is subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. As of December 31, 2023, 50,228,181 shares of common stock were available for future issuance under the 2019 Plan.

Stock options

The following table summarizes activity for stock options during the nine months ended December 31, 2023:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in thousands)	(per share)		(years)	(in thousands)
Balance, March 31, 2023	4,636	$	22.25	6.5	$	94,565

Exercised	(1,188)	20.38
Forfeited or expired	(67)	39.49
Balance, December 31, 2023	3,381	$	22.57	5.8	$	108,627
Options vested and expected to vest at December 31, 2023	3,381	$	22.57	5.8	$	108,627
Options vested and exercisable at December 31, 2023	3,162	$	21.49	5.7	$	104,987

As of December 31, 2023, the total unrecognized compensation expense related to non-vested stock options was $2.6 million and is expected to be recognized over a weighted average period of 0.6 years. The Company recognized $1.3 million and $4.6 million of share-based compensation expense related to stock options for the three months ended December 31, 2023 and 2022, respectively, and $7.0 million and $13.8 million of share-based compensation expense related to stock options for the nine months ended December 31, 2023 and 2022, respectively.

Restricted shares and units

The following table provides a summary of the changes in the number of restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) for the nine months ended December 31, 2023:


	Number of RSAs	Weighted Average Grant Date Fair Value		Number of RSUs	Weighted Average Grant Date Fair Value
	(in thousands)	(per share)		(in thousands)	(per share)
Balance, March 31, 2023	4	$	16.00	8,836	$	41.76
Granted	—	—		5,732	51.78
Vested	(4)	16.00		(3,644)	40.43
Forfeited	—	—		(589)	44.32
Balance, December 31, 2023	—	$	—	10,335	$	47.65

RSUs outstanding as of December 31, 2023 were comprised of 9.3 million RSUs with only service conditions and 1.0 million RSUs with both service and performance conditions (“PSUs”).

During the nine months ended December 31, 2023, the Company granted PSUs to certain key employees that generally vest 33% one year after the grant date and the remaining 67% vest ratably on a quarterly basis over the following two years (the “Annual PSUs”). The number of shares that may be earned pursuant to the Annual PSUs is based on specific company metrics related to the Company’s fiscal year ending March 31, 2024. No Annual PSUs will be earned with respect to any metric if the applicable “threshold” percentage of the specific metric is not achieved, and the overall number of shares that may be earned shall not exceed 200% of the target award. Once the Annual PSUs are earned, they are then also subject to time-based vesting, with 33% of the earned Annual PSUs vesting on the first anniversary of the grant date, and with the remaining 67% vesting in eight equal quarterly installments over the following two years, and provided that the key employee remains employed by the Company through the applicable vesting date.

As of December 31, 2023, the total unrecognized compensation expense related to unvested restricted stock units was $413.7 million and is to be recognized over a weighted average period of 2.2 years. The Company recognized $52.1 million and $29.0 million of share-based compensation expense related to restricted shares and units for the three months ended December 31, 2023 and 2022, respectively, and $141.4 million and $85.7 million of share-based compensation expense related to restricted shares and units for the nine months ended December 31, 2023 and 2022, respectively.

Employee Stock Purchase Plan

In July 2019, the Board adopted, and the Company’s stockholders approved, the 2019 Employee Stock Purchase Plan (“ESPP”). The Company offers, sells and issues shares of common stock under this ESPP from time to time based on various factors and conditions, although the Company is under no obligation to sell any shares under this ESPP. The ESPP provides for six-month offering periods and each offering period consists of six-month purchase periods. On each purchase date, eligible employees purchase shares of the Company’s common stock at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s common stock on the offering date or (2) the fair market value of the Company’s common stock on the purchase date. For the nine months ended December 31, 2023, 534,022 shares of common stock were purchased under the ESPP. As of December 31, 2023, 15,864,787 shares of common stock were available for future issuance under the ESPP.

As of December 31, 2023, there was $2.9 million of unrecognized share-based compensation related to the ESPP that is expected to be recognized over the remaining term of the current offering period. The Company recognized $1.5 million and $1.9 million of share-based compensation expense related to the ESPP for the three months ended December 31, 2023 and 2022, respectively, and $4.9 million and $5.4 million of share-based compensation expense related to the ESPP for the nine months ended December 31, 2023 and 2022, respectively.

Share-based compensation

The following table summarizes the components of total share-based compensation expense included in the condensed consolidated financial statements for each period presented (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Cost of revenue	$	6,975	$	4,285	$	19,660	$	13,410
Research and development	18,678		11,057		50,119		29,339
Sales and marketing	15,947		13,385		48,823		37,399
General and administrative	13,222		6,777		34,696		24,705
Total share-based compensation	$	54,822	$	35,504	$	153,298	$	104,853

11. Net Income Per Share

Basic net income per share is calculated by dividing the net income for the period by the weighted-average number of common shares outstanding during the period, without consideration of potentially dilutive securities. Diluted net income per share includes the dilutive effect of common share equivalents and is calculated using the weighted-average number of common shares and the common share equivalents outstanding during the reporting period. The dilutive effect of stock-based awards is calculated by application of the treasury stock method. An anti-dilutive impact is an increase in net income per share or a reduction in net loss per share resulting from the conversion, exercise, or contingent issuance of certain securities.

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share data):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Numerator:
Net income	$	42,691	$	15,026	$	116,688	$	27,666
Denominator:
Weighted average shares outstanding, basic	294,869		287,957		293,295		287,120
Dilutive effect of stock-based awards	4,377		3,271		5,040		3,683
Weighted average shares outstanding, diluted	299,246		291,228		298,335		290,803

Net income per share, basic	$	0.14	$	0.05	$	0.40	$	0.10
Net income per share, diluted	$	0.14	$	0.05	$	0.39	$	0.10

The effect of certain common share equivalents were excluded from the computation of weighted-average diluted shares outstanding for the three and nine months ended December 31, 2023 and 2022 as inclusion would have resulted in anti-dilution. A summary of these weighted-average anti-dilutive common share equivalents is provided in the table below (in thousands):


	Three Months Ended December 31,		Nine Months Ended December 31,
	2023	2022	2023	2022
Stock options	123	1,613	144	1,785
Unvested RSAs and RSUs	265	2,316	446	1,197
Shares committed under ESPP	10	10	12	1

12. Geographic Information

Revenue

Revenues by geography are based on legal jurisdiction. See Note 3, Revenue Recognition, for a disaggregation of revenue by geographic region.

Property and equipment, net

The following table presents net property and equipment by geographic region for the periods presented (in thousands):


	December 31, 2023		March 31, 2023
North America	$	16,237	$	22,124
Europe, Middle East and Africa	31,310		29,142
Asia Pacific	1,672		2,194
Latin America	189		116
Total property and equipment, net	$	49,408	$	53,576

13. Subsequent Events

On January 26, 2024, the Company entered into a definitive agreement to acquire a 100% equity interest in Runecast Solutions Limited (“Runecast”) for $37.5 million of preliminary consideration, subject to customary post-closing adjustments. The Company intends to acquire Runecast utilizing a combination of cash on hand and common stock. Runecast is a provider of software solutions that provide insights for security compliance, vulnerability assessment, and configuration management for complex, on-premises, hybrid and multi-cloud IT environments. Closing of the proposed transaction is subject to customary closing conditions.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business. In particular, we encourage you to review the risks and uncertainties described in the section titled “Risk Factors” included elsewhere in this Form 10-Q and in our Annual Report on Form 10-K. These risks and uncertainties could cause actual results to differ materially from those projected in forward-looking statements contained in this report or implied by past results and trends. Our fiscal year ends on March 31. Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full fiscal year or any other period.

Overview

Dynatrace offers a unified observability and security platform with analytics and automation at its core, purpose-built for dynamic, hybrid, multicloud environments. Our comprehensive solutions help global organizations simplify cloud complexity, innovate faster, and do more with less in the modern cloud.

As enterprises and public sector institutions embrace modern cloud environments as the underlying foundation of their digital transformations, we believe that the scale, growing complexity, and dynamic nature of these environments are rapidly making solutions such as the Dynatrace® platform mandatory instead of optional for many organizations. Our Dynatrace platform combines the only fully unified end-to-end solution for comprehensive observability and continuous runtime application security together with advanced artificial intelligence for IT operations (“AIOps”) to provide answers and intelligent automation from data at enormous scale. This approach enables IT, development, security, and business operations teams to modernize and automate operations, deliver software faster and more securely, and provide better digital experiences.

We take Dynatrace to market through a combination of our global direct sales team and a network of partners, including global system integrators (“GSIs”), cloud providers (such as Amazon Web Services (“AWS”), Microsoft Azure (“Azure”), and Google Cloud Platform “GCP”)), resellers and technology alliance partners. We target the largest 15,000 global enterprise accounts, which generally have annual revenues in excess of $1 billion, which we believe see more value from our integrated full-stack platform.

All of our offerings leverage the Dynatrace observability and security platform to provide application performance monitoring (“APM”), runtime application security, infrastructure monitoring, log management and analytics, digital experience monitoring (“DEM”), digital business analytics, and cloud automation in an easy-to-use, highly automated, all-in-one solution.

We generate revenue primarily by selling subscriptions, which we define as Software-as-a-Service (“SaaS”) agreements, Dynatrace term-based licenses, Dynatrace perpetual licenses, and maintenance and support agreements.

The majority of our customers deploy Dynatrace as a SaaS solution to get the latest Dynatrace features and updates with greatly reduced administrative effort. Our SaaS solution provides customers with the ability to scale up and down rapidly, without having to purchase, provision, and manage their hardware. We also provide options to deploy our platform at the edge in customer-provisioned infrastructure, which we refer to as Dynatrace Managed. This offering allows customers the flexibility to maintain control of the environment where their data resides, whether in the cloud or on-premises, combining the simplicity of SaaS with the ability to adhere to their own data security and sovereignty requirements. Our Mission Control center automatically upgrades all Dynatrace instances and offers on-premises cluster customers auto-deployment options that suit their specific enterprise management processes.

Our Dynatrace platform has been commercially available since 2016 and is the primary offering we sell.

Third-Quarter 2024 Financial Highlights

Our financial results for the three months ended December 31, 2023 show balanced growth and profitability, reflecting our continued ability to execute successfully in a dynamic market environment and demonstrating the durability of our business model.

•Our annual recurring revenue (“ARR”) was $1,425 million as of December 31, 2023, which reflected 23% growth year-over-year;

•Total revenue and subscription revenue for the three months ended December 31, 2023 was $365 million and $348 million, respectively; and

•We delivered an operating margin of 10% for the three months ended December 31, 2023.

We believe in a disciplined and balanced approach to operating our business. We plan to continue driving innovation to meet customers’ needs and grow our customer base. We also plan to invest in future growth opportunities that we expect will drive long-term value, while leveraging our global partner ecosystem, optimizing costs, and improving efficiency and profitability.

We believe this approach is even more important at this time as we navigate a rapidly evolving and uncertain macroeconomic environment, which can include geopolitical considerations, fluctuations in credit, equity, and foreign currency markets, changes in inflation, interest rates, consumer confidence and spending, and other factors that may affect the buying patterns of our customers and prospective customers, including the size of transactions and length of sales cycles. Although macroeconomic uncertainty persists, we remain confident in our ability to execute in this environment. Please see the section titled “Risk Factors” included under Part II, Item 1A for further discussion of the possible impact of macroeconomic conditions on our business and regarding fluctuations in our annual and quarterly operating results.

Key Factors Affecting Our Performance

Our historical financial performance has been, and we expect our financial performance in the future to be, driven by our ability to:

•Extend our technology and market leadership position. We intend to maintain our position as the market-leading unified observability and security platform that utilizes analytics and automation at its core through increased investment in research and development and continued innovation. We expect to focus on expanding the functionality of our unified Dynatrace platform and investing in capabilities that address new market opportunities. We also plan to continue evolving our predictive, causal, and generative AI capabilities to drive differentiation through precise answers and broad-based automation. We believe this strategy will enable new growth opportunities and allow us to continue to deliver differentiated high-value outcomes to our customers.

•Grow our customer base. We intend to drive new customer growth by expanding our direct sales force focused on the largest 15,000 global enterprise accounts, which generally have annual revenues in excess of $1 billion. In addition, we plan to leverage our global partner ecosystem to add new customers in geographies where we have direct coverage and work jointly with our partners.

•Increase penetration within existing customers. We plan to continue to increase the penetration within our existing customers by establishing new and deeper relationships within our customers’ organizations and expanding the breadth of our platform capabilities to provide for continued cross-selling opportunities. In addition, we believe the ease of implementation for Dynatrace provides us the opportunity to expand adoption within our existing enterprise customers, across new customer applications, and into additional business units or divisions. Once customers are on the Dynatrace platform, we have seen dollar-based net retention rate expansion due to the ease of use and power of our platform.

•Enhance our strategic partner ecosystem. We intend to continue to invest in our strategic partner ecosystem, with a particular emphasis on cloud-focused partnerships with GSIs and hyperscaler cloud providers. These strategic partners continually work with their customers to help them digitally transform their businesses and reduce cloud complexity. By working more closely with strategic partners, our objective is to participate in digital transformation projects earlier in the purchasing cycle and enable customers to establish more resilient cloud deployments from the start.

Key Metrics

In addition to our U.S. GAAP financial information, we monitor the following key metrics to help us measure and evaluate the effectiveness of our operations:


	As of December 31,
	2023		2022
Total ARR (in thousands)	1,425,284		1,162,591
Dollar-based Net Retention Rate	113	%	119	%

Annual Recurring Revenue: We define ARR 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 ARR any revenues derived from month-to-month agreements and/or product usage overage billings, where customers are billed in arrears based on product usage.

Dollar-based Net Retention Rate: We define the dollar-based net retention rate 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. Our dollar-based net retention rate reflects customer renewals, expansion, contraction and churn, and excludes the benefit of Dynatrace ARR resulting from the conversion of Classic products to the Dynatrace platform. Dollar-based net retention rate is presented on a constant currency basis.

Key Components of Results of Operations

Revenue

Revenue includes subscriptions and services.

Subscription. Our subscription revenue consists of (i) SaaS agreements, (ii) Dynatrace term-based licenses which are recognized ratably over the contract term, (iii) Dynatrace perpetual licenses that are recognized ratably over the term of the expected optional maintenance renewals, which is generally three years, and (iv) maintenance and support agreements. We typically invoice SaaS subscription fees and term licenses annually in advance and recognize subscription revenue ratably over the term of the applicable agreement, provided that all other revenue recognition criteria have been satisfied. Fees for our Dynatrace perpetual licenses are generally billed up front. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates-Revenue Recognition” included in Part II, Item 7 of our Annual Report for more information.

Service. Service revenue consists of revenue from helping our customers deploy our software in highly complex operational environments and training their personnel. We recognize the revenues associated with these professional services on a time and materials basis as we deliver the services or provide the training. We generally recognize the revenues associated with our services in the period the services are performed, provided that collection of the related receivable is reasonably assured.

Cost of Revenue

Cost of subscription. Cost of subscription revenue includes all direct costs to deliver and support our subscription products, including salaries, benefits, share-based compensation and related expenses such as employer taxes, third-party hosting fees related to our cloud services, allocated overhead for facilities, IT, and amortization of internally developed capitalized software technology. We recognize these expenses as they are incurred.

Cost of service. Cost of service revenue includes salaries, benefits, share-based compensation and related expenses, such as employer taxes for our services organization, allocated overhead for depreciation of equipment, facilities and IT. We recognize these expenses as they are incurred.

Amortization of acquired technology. Amortization of acquired technology includes amortization expense for technology acquired in the Thoma Bravo Funds’ acquisition of our company in 2014, business combinations and asset acquisitions. To the extent significant future acquisitions are consummated, we expect that our amortization of acquired technologies may increase due to additional non-cash charges associated with the amortization of intangible assets acquired.

Gross Profit and Gross Margin

Gross profit is revenue less cost of revenue, and gross margin is gross profit as a percentage of revenue. Gross profit has been and will continue to be affected by various factors, including the mix of our subscription and service revenue, the costs associated with third-party cloud-based hosting services for our cloud-based subscriptions, and the extent to which we expand our customer support and services organizations. We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors.

Operating Expenses

Personnel costs, which consist of salaries, benefits, bonuses, share-based compensation and, with regard to sales and marketing expenses, sales commissions, are the most significant component of our operating expenses. We also incur other non-personnel costs, such as an allocation of our general overhead expenses, including facilities, IT, and other costs.

During the fourth quarter of fiscal 2023, we refined our methodology used to allocate depreciation expense for certain property and equipment to better align the expense with the related use of the property and equipment. This has been retrospectively applied to periods beginning on April 1, 2022. See Note 2, Significant Accounting Policies, of our condensed consolidated financial statements included in this Quarterly Report for a description of the reclassification.

Research and development. Research and development expenses primarily consist of the cost of programming personnel. We focus our research and development efforts on developing new solutions, core technologies, and to further enhance the functionality, reliability, performance, and flexibility of existing solutions. We believe that our software development teams and our core technologies represent a significant competitive advantage for us, and we expect that our research and development expenses will continue to increase in absolute dollars as we invest in research and development headcount to further strengthen and enhance our solutions.

Sales and marketing. Sales and marketing expenses primarily consist of personnel and facility-related costs for our sales, marketing, and business development personnel, commissions earned by our sales personnel, and the cost of marketing and business development programs. We expect that sales and marketing expenses will continue to increase in absolute dollars as we continue to hire additional sales and marketing personnel and invest in marketing programs.

General and administrative. General and administrative expenses primarily consist of the personnel and facility-related costs for our executive, finance, legal, human resources and administrative personnel, and other corporate expenses, including those associated with our ongoing public reporting obligations. We anticipate continuing to incur additional expenses as we continue to invest in the growth of our operations, as well as incur ongoing costs primarily associated with other transactional activities and compliance associated with being a publicly traded company.

Amortization of other intangibles. Amortization of other intangibles primarily consists of amortization of customer relationships and capitalized software and tradenames.

Restructuring and other. Restructuring and other expenses primarily consist of various restructuring activities we have undertaken to achieve strategic and financial objectives. Restructuring activities include, but are not limited to, product offering cancellation and termination of related employees, office relocation, administrative cost of structure realignment and consolidation of resources.

Interest Income (Expense), Net

Interest income (expense), net consists primarily of interest income primarily from money market funds, bank deposits, and certificates of deposits, interest expense on our former term loan facility, fees on our revolving credit facility, loss on debt extinguishment and amortization of debt issuance costs.

Other (Expense) Income, Net

Other (expense) income, net, consists primarily of foreign currency realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency, including balances between subsidiaries.

Income Tax Expense

Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in determining the consolidated income tax expense.

Our income tax rate varies from the U.S. federal statutory rate mainly due to (1) the foreign derived intangibles deduction, (2) the generation of U.S. foreign tax credits, and (3) share-based compensation windfalls, partially offset by (4) foreign withholding taxes, (5) nondeductible executive compensation, and (6) foreign earnings taxed at rates higher than the U.S. statutory tax rate. We expect this fluctuation in income tax rates, as well as its potential impact on our results of operations, to continue.

Internal Revenue Code (“IRC”) Section 174

For tax years beginning on or after January 1, 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to currently deduct research and development expenses and requires taxpayers to capitalize and amortize them over five years for research activities performed in the United States and 15 years for research activities performed outside the United States pursuant to IRC Section 174. This law change increases our U.S. federal and state cash taxes and reduces cash flows in fiscal year 2024 and future years.

Share-based compensation

The tax effects of the accounting for share-based compensation may significantly impact our effective tax rate from period to period. In periods in which our share price differs from the grant price of the share-based awards vesting or exercised in that period, we will recognize excess tax benefits or deficiencies that will impact our effective tax rate. The amount and value of share-based compensation issued relative to our earnings in a particular period will also affect the magnitude of the impact of share-based compensation on our effective tax rate. These tax effects are dependent on our share price, which we do not control, and a decline in our share price could significantly increase our effective tax rate and adversely affect our financial results.

Results of Operations

The following tables set forth our results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods.

Comparison of the Three Months Ended December 31, 2023 and 2022


	Three Months Ended December 31,
	2023				2022
	Amount		Percent		Amount		Percent
	(in thousands, except percentages)
Revenue:
Subscription	$	348,294	95	%	$	279,152	94	%
Service	16,802		5	%	18,304		6	%
Total revenue	365,096		100	%	297,456		100	%
Cost of revenue:
Cost of subscription	46,888		13	%	36,891		13	%
Cost of service	16,744		5	%	15,044		5	%
Amortization of acquired technology	4,237		1	%	3,889		1	%
Total cost of revenue (1)	67,869		19	%	55,824		19	%
Gross profit	297,227		81	%	241,632		81	%

Operating expenses:
Research and development (1)	80,102		22	%	54,531		18	%
Sales and marketing (1)	132,723		36	%	112,292		38	%
General and administrative (1)	43,232		12	%	34,354		12	%
Amortization of other intangibles	5,451		1	%	6,573		2	%
Restructuring and other	(1)				(5)
Total operating expenses	261,507				207,745
Income from operations	35,720				33,887
Interest income (expense), net	10,605				(4,787)
Other (expense) income, net	(3,901)				1,617
Income before income taxes	42,424				30,717
Income tax benefit (expense)	267				(15,691)
Net income	$	42,691			$	15,026

(1) Includes share-based compensation expense as follows:


	Three Months Ended December 31,
	2023		2022
	(in thousands)
Cost of revenue	$	6,975	$	4,285
Research and development	18,678		11,057
Sales and marketing	15,947		13,385
General and administrative	13,222		6,777
Total share-based compensation	$	54,822	$	35,504

Revenue


	Three Months Ended December 31,				Change
	2023		2022		Amount		Percent
	(in thousands, except percentages)
Subscription	$	348,294	$	279,152	$	69,142	25	%
Service	16,802		18,304		(1,502)		(8	%)
Total revenue	$	365,096	$	297,456	$	67,640	23	%

Subscription

Subscription revenue increased by $69.1 million, or 25%, for the three months ended December 31, 2023 as compared to the three months ended December 31, 2022, primarily due to the growth of the Dynatrace platform by adding new customers combined with existing customers expanding their use of our solutions.

Service

Service revenue decreased by $1.5 million, or 8%, for the three months ended December 31, 2023 as compared to the three months ended December 31, 2022. The decrease was primarily due to timing of delivery of services.

Cost of Revenue


	Three Months Ended December 31,				Change
	2023		2022		Amount		Percent
	(in thousands, except percentages)
Cost of subscription	$	46,888	$	36,891	$	9,997	27	%
Cost of service	16,744		15,044		1,700		11	%
Amortization of acquired technology	4,237		3,889		348		9	%
Total cost of revenue	$	67,869	$	55,824	$	12,045	22	%

Cost of subscription

Cost of subscription increased by $10.0 million, or 27%, for the three months ended December 31, 2023 compared to the three months ended December 31, 2022. The increase was primarily due to higher personnel costs of $4.0 million to support the growth of our subscription cloud-based offering and higher share-based compensation of $2.0 million. Also contributing to the increase were increased overhead costs of $2.0 million and higher cloud-based hosting costs and subscriptions of $2.0 million.

Cost of service

Cost of service increased by $1.7 million, or 11%, for the three months ended December 31, 2023 as compared to the three months ended December 31, 2022. The increase was primarily the result of higher share-based compensation of $0.7 million and higher professional fees of $0.7 million.

Amortization of acquired technology

For the three months ended December 31, 2023 and 2022, amortization of acquired technology was primarily related to amortization expense for technology acquired in connection with Thoma Bravo’s acquisition of our company in 2014.

Gross Profit and Gross Margin


	Three Months Ended December 31,						Change
	2023			2022			Amount		Percent
	(in thousands, except percentages)
Gross profit:
Subscription	$	301,406		$	242,261		$	59,145	24	%
Service	58			3,260			(3,202)		(98	%)
Amortization of acquired technology	(4,237)			(3,889)			(348)		9	%
Total gross profit	$	297,227		$	241,632		$	55,595	23	%
Gross margin:
Subscription	87		%	87		%
Service	—		%	18		%
Amortization of acquired technology	(100		%)	(100		%)
Total gross margin	81		%	81		%

Subscription

Subscription gross profit increased by $59.1 million, or 24%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022 and subscription gross margin remained consistent at 87%. The increase in gross profit was primarily due to subscription revenue growth.

Service

Service gross profit decreased by $3.2 million, or 98%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022. Service gross margin was nearly zero for the three months ended December 31, 2023 compared to 18% for the three months ended December 31, 2022. The decreases in gross profit and gross margin were primarily due to timing of delivery of services.

Operating Expenses


	Three Months Ended December 31,				Change
	2023		2022		Amount		Percent
	(in thousands, except percentages)
Operating expenses:
Research and development	$	80,102	$	54,531	$	25,571	47	%
Sales and marketing	132,723		112,292		20,431		18	%
General and administrative	43,232		34,354		8,878		26	%
Amortization of other intangibles	5,451		6,573		(1,122)		(17	%)
Restructuring and other	(1)		(5)		4		(80	%)
Total operating expenses	$	261,507	$	207,745	$	53,762	26	%

Research and development

Research and development expenses increased by $25.6 million, or 47%, for the three months ended December 31, 2023 as compared to the three months ended December 31, 2022. The increase was due to increased personnel and other costs of $11.5 million to expand our product offerings and higher share-based compensation of $7.6 million. Also contributing were higher overhead costs of $4.8 million and higher cloud-based hosting costs and subscriptions of $0.8 million.

Sales and marketing

Sales and marketing expenses increased by $20.4 million, or 18%, for the three months ended December 31, 2023 as compared to the three months ended December 31, 2022, primarily driven by an increase in personnel costs of $12.6 million and higher share-based compensation of $2.6 million. Further contributing to the increase were higher commissions of $3.0 million and increased overhead costs of $2.5 million.

General and administrative

General and administrative expenses increased $8.9 million, or 26%, for the three months ended December 31, 2023 as compared to the three months ended December 31, 2022, primarily due to an increase in share-based compensation of $6.4 million and other personnel costs of $5.8 million. Further contributing to this increase were increased cloud-based hosting costs and subscriptions of $1.7 million, higher IT and facility expenses of $1.3 million, primarily related to new offices and expansions, and higher professional fees of $1.2 million. Partially offsetting this increase were overhead costs of $8.9 million.

Amortization of other intangibles

Amortization of other intangibles decreased by $1.1 million, or 17%, for the three months ended December 31, 2023 as compared to the three months ended December 31, 2022. The decrease was primarily the result of lower amortization for certain intangible assets that are amortized on a systematic basis that reflects the pattern in which the economic benefits of the intangible assets are estimated to be realized and the completion of amortization on certain intangibles.

Interest Income (Expense), Net

Interest income, net of $10.6 million for the three months ended December 31, 2023 compared to an expense of $4.8 million for the three months ended December 31, 2022. The change was primarily the result of higher interest income on cash and cash equivalents and lower interest expense due to the reduction in debt.

Other (Expense) Income, Net

Other expense, net, of $3.9 million for the three months ended December 31, 2023 compared to income of $1.6 million for the three months ended December 31, 2022. The change was primarily the result of foreign currency realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency, including balances between subsidiaries.

Income Tax Benefit (Expense)

Income tax benefit of $0.3 million for the three months ended December 31, 2023 represented a $16.0 million decrease as compared to an expense of $15.7 million for the three months ended December 31, 2022. This decrease was primarily due to an increase in share-based compensation windfall benefits; additional tax benefits related to the deferred tax asset resulting from capitalized research and development expenses under Section 174 of the IRC, recognized in the current year due to the reversal of the U.S. valuation allowance as of March 31, 2023; and the reversal of an unrecognized tax benefit in the U.S.

Comparison of the Nine Months Ended December 31, 2023 and 2022


	Nine Months Ended December 31,
	2023				2022
	Amount		Percent		Amount		Percent
	(in thousands, except percentages)
Revenue:
Subscription	$	999,245	95	%	$	790,016	94	%
Service	50,437		5	%	54,039		6	%
Total revenue	1,049,682		100	%	844,055		100	%
Cost of revenue:
Cost of subscription	134,584		13	%	105,393		13	%
Cost of service	47,961		5	%	46,264		5	%
Amortization of acquired technology	12,035		1	%	11,669		1	%
Total cost of revenue (1)	194,580		19	%	163,326		19	%
Gross profit	855,102		81	%	680,729		81	%

Operating expenses:
Research and development (1)	220,468		21	%	156,847		19	%
Sales and marketing (1)	385,445		37	%	323,313		38	%
General and administrative (1)	127,075		12	%	107,485		13	%
Amortization of other intangibles	16,838		2	%	19,719		2	%
Restructuring and other	(1)				(15)
Total operating expenses	749,825				607,349
Income from operations	105,277				73,380
Interest income (expense), net	26,260				(7,475)
Other expense, net	(6,724)				(1,847)
Income before income taxes	124,813				64,058
Income tax expense	(8,125)				(36,392)
Net income	$	116,688			$	27,666

(1) Includes share-based compensation expense as follows:


	Nine Months Ended December 31,
	2023		2022
	(in thousands)
Cost of revenue	$	19,660	$	13,410
Research and development	50,119		29,339
Sales and marketing	48,823		37,399
General and administrative	34,696		24,705
Total share-based compensation	$	153,298	$	104,853

Revenue


	Nine Months Ended December 31,				Change
	2023		2022		Amount		Percent
	(in thousands, except percentages)
Subscriptions	$	999,245	$	790,016	$	209,229	26	%
Services	50,437		54,039		(3,602)		(7	%)
Total revenue	$	1,049,682	$	844,055	$	205,627	24	%

Subscription

Subscription revenue increased by $209.2 million, or 26%, for the nine months ended December 31, 2023, as compared to the nine months ended December 31, 2022, primarily due to the growing adoption of the Dynatrace platform by new customers combined with existing customers expanding their use of our solutions.

Service

Service revenue decreased by $3.6 million, or 7%, for the nine months ended December 31, 2023 as compared to the nine months ended December 31, 2022. The decrease was primarily due to timing of delivery of services.

Cost of Revenue


	Nine Months Ended December 31,				Change
	2023		2022		Amount		Percent
	(in thousands, except percentages)
Cost of subscription	$	134,584	$	105,393	$	29,191	28	%
Cost of service	47,961		46,264		1,697		4	%
Amortization of acquired technology	12,035		11,669		366		3	%
Total cost of revenue	$	194,580	$	163,326	$	31,254	19	%

Cost of subscription

Cost of subscription increased $29.2 million, or 28%, for the nine months ended December 31, 2023 as compared to the nine months ended December 31, 2022. The increase was primarily due to higher personnel costs of $12.8 million to support the growth of our subscription cloud-based offering and higher share-based compensation of $5.4 million. Also contributing to the increase were increased cloud-based hosting costs and subscriptions of $5.8 million and increased overhead costs of $5.4 million to support the growth of the business and related infrastructure.

Cost of service

Cost of service increased $1.7 million, or 4%, for the nine months ended December 31, 2023 as compared to the nine months ended December 31, 2022, primarily due to increased professional fees of $1.8 million and higher share-based compensation of $0.9 million. Partially offsetting this increase were lower personnel costs of $1.0 million.

Amortization of acquired technologies

For the nine months ended December 31, 2023 and 2022, amortization of acquired technologies was primarily related to amortization expense for technology acquired in connection with Thoma Bravo’s acquisition of our company in 2014.

Gross Profit and Gross Margin


	Nine Months Ended December 31,						Change
	2023			2022			Amount		Percent
	(in thousands, except percentages)
Gross profit:
Subscription	$	864,661		$	684,623		$	180,038	26	%
Services	2,476			7,775			(5,299)		(68	%)
Amortization of acquired technology	(12,035)			(11,669)			(366)		3	%
Total gross profit	$	855,102		$	680,729		$	174,373	26	%
Gross margin:
Subscription	87		%	87		%
Services	5		%	14		%
Amortization of acquired technology	(100		%)	(100		%)
Total gross margin	81		%	81		%

Subscription

Subscription gross profit increased by $180.0 million, or 26%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022 and subscription gross margin remained consistent at 87%. The increase in gross profit was primarily due to subscription revenue growth.

Services

Services gross profit decreased by $5.3 million, or 68%, during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022. Services gross margin decreased from 14% to 5% during the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022. The decreases in gross profit and gross margin were primarily due to timing of delivery of services.

Operating Expenses


	Nine Months Ended December 31,				Change
	2023		2022		Amount		Percent
	(in thousands, except percentages)
Operating expenses:
Research and development	$	220,468	$	156,847	$	63,621	41	%
Sales and marketing	385,445		323,313		62,132		19	%
General and administrative	127,075		107,485		19,590		18	%
Amortization of other intangibles	16,838		19,719		(2,881)		(15	%)
Restructuring and other	(1)		(15)		14		(93	%)
Total operating expenses	$	749,825	$	607,349	$	142,476	23	%

Research and development

Research and development expenses increased $63.6 million, or 41%, for the nine months ended December 31, 2023 as compared to the nine months ended December 31, 2022. The increase was primarily attributable to increased personnel and other costs of $34.2 million to expand our product offerings and higher share-based compensation of $20.8 million. The increase was also attributable to higher overhead costs of $11.8 million to support the growth of the business and related infrastructure. Slightly offsetting this were decreases to other miscellaneous and employee-related expenses of $3.4 million.

Sales and marketing

Sales and marketing expenses increased $62.1 million, or 19%, for the nine months ended December 31, 2023, as compared to the nine months ended December 31, 2022, primarily driven by an increase of $34.7 million in personnel costs and higher share-based

compensation of $11.4 million. Further contributing to the increase were higher commissions of $9.6 million and increased advertising costs of $5.1 million.

General and administrative

General and administrative expenses increased $19.6 million, or 18%, for the nine months ended December 31, 2023, as compared to the nine months ended December 31, 2022, primarily due to an increase in personnel costs of $14.7 million and higher share-based compensation of $10.0 million. Further contributing to this increase were higher professional fees of $6.8 million, IT and facility expenses of $4.2 million, primarily related to new offices and expansions, and cloud-based hosting costs and subscriptions of $3.8 million. Partially offsetting this increase were overhead costs of $22.4 million.

Amortization of other intangibles

Amortization of other intangibles decreased by $2.9 million, or 15%, for the nine months ended December 31, 2023 as compared to the nine months ended December 31, 2022. The decline was primarily the result of lower amortization for certain intangible assets that are amortized on a systematic basis that reflects the pattern in which the economic benefits of the intangible assets are estimated to be realized and the completion of amortization on certain intangibles.

Interest Income (Expense), Net

Interest income, net, was $26.3 million for the nine months ended December 31, 2023 as compared to an expense of $7.5 million for the nine months ended December 31, 2022. The change was primarily the result of higher interest income on cash and cash equivalents and lower interest expense due to a reduction in debt.

Other Expense, Net

Other expense, net, was $6.7 million for the nine months ended December 31, 2023 as compared to $1.8 million for the nine months ended December 31, 2022. The change was primarily the result of foreign currency realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency, including balances between subsidiaries.

Income Tax Expense

Income tax expense of $8.1 million for the nine months ended December 31, 2023 represented a $28.3 million decrease as compared to an expense of $36.4 million for the nine months ended December 31, 2022. This decrease was primarily driven by an increase in share-based compensation tax windfall benefits; additional tax benefits related to the deferred tax asset resulting from capitalized research and development expenses under Section 174 of the IRC, recognized in the current year due to the reversal of the U.S. valuation allowance as of March 31, 2023; and the reversal of an unrecognized tax benefit in the U.S.

Liquidity and Capital Resources

As of December 31, 2023, we had $782.6 million of cash and cash equivalents and $387.9 million available under our revolving credit facility.

We have historically financed our operations primarily through payments by our customers for use of our product offerings and related services and, to a lesser extent, the net proceeds we have received from sales of equity securities.

Over the past three years, cash flows from customer collections have increased. However, operating expenses have also increased as we have invested in growing our business. Our operating cash requirements may increase in the future as we continue to invest in the strategic growth of our company.

Our billings and revenue mix may vary over time due to a number of factors, including the mix of subscriptions and services and the contract length of our customer agreements. Such variability in the timing and amounts of our billings could impact the timing of our cash collections from period to period.

Our material cash requirements from known contractual and other obligations consist of our rent payments required under operating lease agreements and non-cancelable purchase obligations for cloud hosting support. As of December 31, 2023, total contractual commitments were $343.1 million, with $39.0 million committed within the next 12 months.

Cash from operations could be affected by various risks and uncertainties, including, but not limited to, the risks detailed in the section titled “Risk Factors” under Part II, Item 1A in this Quarterly Report and our Annual Report. However, we believe that our existing cash, cash equivalents, funds available under our revolving credit facility, and cash generated from operations, will be sufficient to meet our cash requirements for at least the next 12 months. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the continued expansion of sales and marketing activities, the introduction of new and enhanced products, seasonality of our billing activities, timing and extent of spending to support our growth strategy, and the continued market acceptance of our products. In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results, and financial condition would be adversely affected.

Our Credit Facilities

In December 2022, we entered into a senior secured revolving credit facility in an aggregate amount of $400.0 million (the “Credit Facility”). As of December 31, 2023, we had $387.9 million available under the Credit Facility with $12.1 million of letters of credit outstanding. As of December 31, 2023, we were in compliance with all applicable covenants pertaining to the Credit Facility. The Credit Facility is discussed further in Note 7, Long-term Debt, of the condensed consolidated financial statements in this Quarterly Report.

Summary of Cash Flows


	Nine Months Ended December 31,
	2023		2022
	(in thousands)
Cash provided by operating activities (1)	$	246,437	$	234,458
Cash used in investing activities	(53,614)		(15,625)
Cash provided by (used in) financing activities	43,677		(250,181)
Effect of exchange rate changes on cash and cash equivalents	(9,199)		(9,168)
Net increase (decrease) in cash and cash equivalents	$	227,301	$	(40,516)

(1) Net cash provided by operating activities includes cash payments for interest and tax as follows:


	Nine Months Ended December 31,
	2023		2022
	(in thousands)
Cash paid for interest	$	656	$	6,867
Cash paid for (received from) tax, net	$	61,758	$	(20,335)

Operating Activities

For the nine months ended December 31, 2023, cash provided by operating activities was $246.4 million as a result of net income of $116.7 million, and adjusted by non-cash charges of $151.6 million and a change of $21.8 million in our operating assets and liabilities. The non-cash charges were primarily comprised of share-based compensation of $153.3 million and depreciation and amortization of $40.8 million, partially offset by deferred income taxes of $49.6 million. The change in our net operating assets and liabilities was primarily the result of a decrease in deferred revenue of $55.9 million due to seasonality in our sales cycle, which is higher in the third and fourth quarters of our fiscal year, a decrease in accounts payable and accrued expenses of $24.0 million driven by timing of payments, and an increase in prepaid expenses and other assets of $27.4 million driven by the timing of payments in advance of future services. Partially offsetting this was a decrease in accounts receivable of $83.4 million due to the timing of receipts of payments from customers.

For the nine months ended December 31, 2022, cash provided by operating activities was $234.5 million as a result of net income of $27.7 million, and adjusted by non-cash charges of $156.5 million and a change of $50.3 million in our operating assets and liabilities. The non-cash charges were primarily comprised of share-based compensation of $104.9 million, depreciation and amortization of $40.6 million, and a loss on extinguishment of debt of $5.9 million. The change in our net operating assets and liabilities was primarily the result of a decrease in accounts receivable of $40.3 million due to the timing of receipts of payments from customers, a decrease in prepaid expenses and other assets of $29.6 million driven by the receipt of an income tax refund and timing of payments in advance of future services, and an increase in accounts payable and accrued expenses of $19.4 million driven by timing of payments. Partially offsetting this was a decrease in deferred revenue of $21.8 million due to seasonality in our sales cycle, which is higher in the third and fourth quarters of our fiscal year, and an increase in deferred commissions of $17.2 million due to commissions paid on new bookings.

Investing Activities

Cash used in investing activities during the nine months ended December 31, 2023 was $53.6 million as a result of the Rookout acquisition of $32.3 million, purchases of property and equipment of $16.7 million, and capitalized software additions of $4.7 million. For additional information about the Rookout acquisition, please see Note 4, Acquisitions, of the condensed consolidated financial statements in this Quarterly Report.

Cash used in investing activities during the nine months ended December 31, 2022 was $15.6 million as a result of purchases of property and equipment.

Financing Activities

Cash provided by financing activities during the nine months ended December 31, 2023 was $43.7 million as a result of proceeds from the exercise of our stock options of $24.2 million and proceeds from our employee stock purchase plan of $19.5 million.

Cash used in financing activities during the nine months ended December 31, 2022 was $250.2 million as a result of repayments of our term loan of $281.1 million, partially offset by proceeds from our employee stock purchase plan of $17.8 million and proceeds from the exercise of our stock options of $15.1 million.

Critical Accounting Policies and Estimates

We prepare our condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States. The preparation of condensed consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

There have been no significant changes in our critical accounting policies and estimates during the nine months ended December 31, 2023 as compared to the critical accounting policies and estimates disclosed in our Annual Report. For a full discussion of these estimates and policies, see “Critical Accounting Policies and Estimates” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, if any, and the impact of these pronouncements on our consolidated financial statements, if any, see Note 2, Significant Accounting Policies, of our condensed consolidated financial statements included elsewhere in this Quarterly Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates and interest rates. We do not hold or issue financial instruments for trading purposes.

Foreign Currency Exchange Risk

Our international operations have provided and are expected to continue to provide a significant portion of our consolidated revenues and expenses that we report in U.S. dollars. We do not believe that an immediate 10% increase or decrease in the relative value of the U.S. dollar to other currencies would have a material effect on our results of operations or cash flows, and to date, we have not engaged in any hedging strategies with respect to foreign currency transactions. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates, and we may choose to engage in the hedging of foreign currency transactions in the future.

Translation exposure

Our reporting currency is the U.S. dollar, and the functional currency of each of our subsidiaries is either its local currency or the U.S. dollar, depending on the circumstances. As a result, our consolidated revenues and expenses are affected and will continue to be affected by changes in the U.S. dollar against major foreign currencies, particularly the Euro. Fluctuations in foreign currencies impact the amount of total assets, liabilities, earnings and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into U.S. dollars. In particular, the strengthening of the U.S. dollar generally will reduce the reported amount of our foreign-denominated cash and cash equivalents, total revenues and total expenses that we translate into U.S. dollars and report in our condensed consolidated financial statements. These gains or losses are recorded as a component of accumulated other comprehensive loss within shareholders’ equity.

Transaction exposure

We transact business in multiple currencies. As a result, our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates on transactions denominated in currencies other than the functional currencies of our subsidiaries. These gains or losses are recorded within “Other (expense) income, net” in our condensed consolidated statements of operations.

Interest Rate Risk

We had cash and cash equivalents of $782.6 million and $555.3 million as of December 31, 2023 and March 31, 2023, respectively, consisting primarily of money market funds, bank deposits, and certificates of deposits. These interest-earning instruments carry a degree of interest rate risk. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our condensed consolidated financial statements.

As of December 31, 2023, we also had the Credit Facility in place, with availability of $387.9 million. The Credit Facility bears interest based on (i) the Term Secured Overnight Financing Rate plus 0.10%, (ii) the Adjusted Euro Interbank Offer Rate, (iii) the Canadian Dollar Offered Rate, (iv) the Base Rate, as defined per the Credit Facility, or (v) the Sterling Overnight Index Average, in each case plus an applicable margin, as defined in the Credit Agreement. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our condensed consolidated financial statements.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures, as of December 31, 2023, were effective and provided reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitation in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are, from time to time, party to legal proceedings and subject to claims in the ordinary course of business. Although the outcome of legal proceedings and claims cannot be predicted with certainty, we currently believe that the resolution of any such matters will not have a material adverse effect on our business, operating results, financial condition, or cash flows. Regardless of the outcome, legal proceedings and claims can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

ITEM 1A. RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our condensed consolidated financial statements and related notes, before making a decision to invest in our common stock. The risks and uncertainties described below may not be the only ones we face. If any of the risks actually occur, our business, operating results, financial condition and prospects could be materially and adversely affected. In that event, the market price of our common stock could decline, and you could lose all or part of your investment.

Risks Related to Our Business and Industry

We have experienced rapid revenue growth in recent periods, which may not be indicative of our future growth.

We have experienced rapid revenue growth in recent periods. Our annual revenue grew 25% in the year ended March 31, 2023 compared to the prior year. Our revenue for the nine months ended December 31, 2023 grew 24% compared to the prior-year period. This revenue growth may not be indicative of our future revenue growth, and we may not be able to sustain revenue growth consistent with recent history, or at all. We believe our ability to continue to increase our revenue depends on several factors, including, but not limited to:

•our ability to attract new customers and retain and increase sales to existing customers;

•our ability to continue to expand customer adoption and usage of our Dynatrace platform;

•our ability to develop our existing platform, introduce new solutions, and enhance and improve existing solutions on our platform;

•continued growth of cloud-based services and solutions;

•our ability to continue to develop offerings and solutions that our customers prefer over those of our competitors;

•our ability to hire and retain sufficient numbers of sales and marketing, research and development, and general and administrative personnel; and

•our ability to expand into new geographies and markets, including the business intelligence, data analytics, and application security markets, and expand our global operations.

If we are unable to achieve any of these, our revenue growth could be adversely affected.

Our quarterly and annual operating results may be adversely affected due to a variety of factors, which could make our future results difficult to predict.

Our annual and quarterly revenue and operating results have fluctuated significantly in the past and may vary significantly in the future due to a variety of factors, many of which are outside of our control. Our financial results in any one quarter may not be meaningful and should not be relied upon as indicative of future performance. If our revenues, earnings, or operating results fall below the expectations of investors or securities analysts in a particular quarter, or below any guidance that we may provide, the price of our common stock could decline. We may not be able to accurately predict our future billings, revenues, earnings, or operating results. Some of the important factors that may cause our operating results to fluctuate from quarter to quarter or year to year include:

•fluctuations in the demand for our solutions, the timing of purchases by our customers, and the length of the sales cycles, particularly for larger purchases;

•fluctuations in the rate of utilization by customers of the cloud to manage their business needs, or a slowdown in the migration of enterprise systems to the cloud;

•the impact of recessionary pressures or uncertainties in the global economy, or in the economies of the countries in which we operate, on our customers’ purchasing decisions and the length of our sales cycles;

•our ability to attract new customers and retain existing customers;

•our ability to expand into new geographies and markets, including the business intelligence, data analytics, and application security markets;

•the budgeting cycles and internal purchasing priorities of our customers;

•changes in customer renewal rates, churn, and our ability to cross-sell additional solutions to our existing customers and our ability to up-sell additional quantities of previously purchased offerings to existing customers;

•the seasonal buying patterns of our customers;

•the payment terms and contract term length associated with our product sales and their effect on our billings and free cash flow;

•changes in customer requirements or market needs;

•the emergence of significant privacy, data protection, systems and application security or other threats, regulations, or requirements applicable to the use of enterprise systems or cloud-based systems that we are not prepared to meet or that require additional investment by us;

•changes in the demand and growth rate of the market for observability, application security, and analytics solutions;

•our ability to anticipate or respond to changes in the competitive landscape, or improvements in the functionality of competing solutions that reduce or eliminate one or more of our competitive advantages;

•our ability to timely develop, introduce, and gain market acceptance for new solutions and product enhancements;

•our ability to adapt and update our offerings and solutions on an ongoing and timely basis in order to maintain compatibility and efficacy with the frequently changing and expanding variety of software and systems that our offerings are designed to monitor;

•our ability to maintain and expand our relationships with strategic technology partners who own, operate, and offer the major platforms on which applications operate, with which we must interoperate and remain compatible, and from which we must obtain certifications and endorsements in order to maintain credibility and momentum in the market;

•our ability to control costs, including our operating expenses;

•our ability to efficiently complete and integrate any acquisitions or business combinations that we may undertake in the future;

•general economic, industry, and market conditions, both domestically and in our foreign markets, including regional or geopolitical conflicts or other disruptions to commerce;

•the emergence of new technologies or trends in the marketplace, or a change in the trends that are important to our strategy and the value of our platform in the marketplace;

•foreign currency exchange rate fluctuations;

•the timing of revenue recognition for our customer transactions, and the effect of the mix of subscriptions and services on the timing of revenue recognition;

•extraordinary expenses, such as litigation or other dispute-related settlement payments; and

•future accounting pronouncements or changes in our accounting policies.

Any one of the factors referred to above or the cumulative effect of some of the factors referred to above may result in our operating results being below our expectations and the expectations of securities analysts and investors and any guidance that we may provide, or may result in significant fluctuations in our quarterly and annual operating results, including fluctuations in our key performance indicators. This variability and unpredictability could result in our failure to meet our business plan or the expectations of securities analysts or investors for any period. In addition, a significant percentage of our operating expenses are fixed in nature in the short term and based on forecasted revenue trends. Accordingly, in the event of revenue shortfalls, we are generally unable to mitigate the negative impact on margins in the short term.

Market adoption of the solutions that we offer is relatively new and may not grow as we expect, which may harm our business and prospects.

The utilization of solutions that we offer on the Dynatrace platform is relatively new. We believe our future success will depend in large part on the growth, if any, in the demand for observability and security solutions that utilize analytics and automation at their core, particularly the demand for enterprise-wide solutions and our ability to provide solutions that meet such ever-evolving needs. We currently target the markets for observability, APM, application security, infrastructure monitoring, log management and analytics, DEM, digital business analytics, and automation. It is difficult to predict customer demand, adoption, churn, and renewal rates for our new and existing solutions, the rate at which existing customers expand their usage of our solutions, and the size and growth rate of the market for our solutions. Expansion in our addressable market depends on a number of factors, including the continued and growing reliance of enterprises on software applications to manage and drive critical business functions and customer interactions, increased use of microservices and containers, as well as the continued proliferation of mobile applications, large data sets, cloud computing, and the Internet of Things. If our solutions do not achieve widespread adoption, we are not able to develop new solutions that meet customer needs, or there is a reduction in demand for observability and security solutions generally, it could result in reduced customer purchases, reduced renewal rates, and decreased revenue, any of which will adversely affect our business, operating results and financial condition.

Our business is dependent on overall demand for observability and security solutions and therefore reduced spending on those solutions or overall adverse economic conditions may negatively affect our business, operating results, and financial condition.

Our business depends on the overall demand for observability and security solutions, particularly demand from mid- to large-sized accounts worldwide, and the purchase of our solutions by such organizations is often discretionary. In the last several months, we have observed continued economic uncertainty in the United States and abroad and lengthening sales cycles. In an economic downturn or during periods of economic or political instability, we believe that our customers or prospects may reduce their operating or IT budgets, which could cause them to defer or forego purchases of observability and security solutions, including ours. Customers may delay or cancel IT projects or seek to lower their costs by renegotiating vendor contracts or renewals. To the extent purchases of observability and security solutions are perceived by existing customers and potential customers to be discretionary, our revenue may be disproportionately affected by delays or reductions in general IT spending. Weak or turbulent global economic conditions or a reduction in observability and security spending, even if general economic conditions remain unaffected, could adversely impact our business, operating results and financial condition in a number of ways, including longer sales cycles, lower prices for our solutions, reduced subscription renewals, and lower revenue. In addition, any negative economic effects or instability resulting from changes in the political environment and international relations in the United States or other key markets as well as resulting regulatory or tax policy changes may adversely affect our business and financial results.

As the market for observability and security solutions is new and continues to develop, trends in spending remain unpredictable and subject to reductions due to the changing technology environment and customer needs as well as uncertainties about the future.

If we fail to innovate and do not continue to develop and effectively market solutions that anticipate and respond to the needs of our customers, our business, operating results, and financial condition may suffer.

The markets for observability and security solutions are characterized by constant change and innovation, and we expect them to continue to rapidly evolve. Moreover, many of our customers operate in industries characterized by changing technologies and business models, which require them to develop and manage increasingly complex software application and IT infrastructure environments. Our future success, if any, will be based on our ability to consistently provide our customers with a unified, real-time view into the performance of their software applications and IT infrastructure, provide notification and prioritization of degradations and failures, perform root cause analysis of performance issues, and analyze the quality of their end users’ experiences and the resulting impact on their businesses and brands. If we do not respond to the rapidly changing needs of our customers by developing and making available new solutions and solution enhancements that can address evolving customer needs on a timely basis, our competitive position and business prospects will be harmed, and our revenue growth and margins could decline.

In addition, the process of developing new technology is complex and uncertain, and if we fail to accurately predict customers’ changing needs and emerging technological trends, our business could be harmed. We believe that we must continue to dedicate significant resources to our research and development efforts, including significant resources to developing new solutions and solution enhancements before knowing whether the market will accept them. For example, we have made significant investments in our new application security offering and in developing our GrailTM core technology, AutomationEngine, and AppEngine. In July 2023, we announced that we are expanding our Davis® artificial intelligence (“AI”) engine to create the observability and security industry’s first hypermodal AI, converging fact-based, predictive, and causal AI insights with new generative AI capabilities. Our new solutions and solution enhancements could fail to attain sufficient market acceptance for many reasons, including:

•delays in developing and releasing new solutions or enhancements to the market;

•delays or failures to provide updates to customers to maintain compatibility between Dynatrace and the various applications and platforms being used in the customers’ applications and multicloud environments;

•failures to accurately predict market or customer demands, priorities, and practices, including other technologies utilized by customers in their environments and partners that they prefer to work with;

•the introduction or anticipated introduction of competing products by existing and emerging competitors;

•the inability of our sales and marketing teams or those of our partners to sell solutions for new markets and product categories;

•defects, errors, or failures in the design or performance of our new solutions or solution enhancements;

•negative publicity about the performance or effectiveness of our solutions; and

•the perceived value of our solutions or enhancements relative to their cost.

In addition to developing new solutions or enhancements using internal resources, we may acquire technologies from a third party, or acquire another company. Any acquisition of this type could be unsuccessful for a variety of reasons, require significant management attention, disrupt our business, dilute stockholder value, and adversely affect our results of operations. For a description of some of the risks related to potential acquisitions, please see the risk below entitled “We may acquire other businesses, products or technologies in the future which could require significant management attention, disrupt our business or result in operating difficulties, dilute stockholder value, and adversely affect our results of operations.”

To the extent that we are not able to continue to execute on our business model to timely and effectively develop or acquire and market applications to address these challenges and attain market acceptance, our business, operating results, and financial condition will be adversely affected.

Further, we may make changes to our solutions that our customers do not value or find useful. We may also discontinue certain features, begin to charge for certain features that are currently free, or increase fees for any of our features or usage of our solutions. If our new solutions, enhancements, or pricing strategies do not achieve adequate acceptance in the market, our competitive position will be impaired, our revenue may decline or grow more slowly than expected and the negative impact on our operating results may be particularly acute, and we may not receive a return on our investment in the upfront research and development, sales and marketing, and other expenses that we incur in connection with new solutions or solution enhancements.

If our platform and solutions do not effectively interoperate with our customers’ existing or future IT infrastructures, installations of our solutions could be delayed or canceled, which would harm our business.

Our success depends on the interoperability of our platform and solutions with third-party operating systems, applications, cloud platforms, data, and devices that we have not developed and do not control. Any third-party changes that degrade the functionality of our platform or solutions or give preferential treatment to competitive software could adversely affect the adoption and usage of our platform. We may not be successful in adapting our platform or solutions to operate effectively with these systems, applications, cloud platforms, data, or devices. If it is difficult for our customers to access and use our platform or solutions, or if our platform or solutions cannot connect a broadening range of systems, applications, cloud platforms, data, and devices, then our customer growth and retention may be harmed, and our business and operating results could be adversely affected.

Multicloud deployments utilize multiple third-party platforms and technologies, and these technologies are updated to new versions at a rapid pace. As a result, we deliver frequent updates to our solutions designed to maintain compatibility and support for our customers’ changing technology environments and ensure our solutions’ ability to continue to monitor customers’ applications. If our solutions fail to work with any one or more of these technologies or applications, or if our customers fail to install the most recent updates and versions of our solutions that we offer, our solutions will be unable to continuously monitor our customers’ critical business applications.

Ensuring that our solutions are up-to-date and compatible with the technology and multicloud platforms utilized by our customers is critical to our success. We have formed alliances with many technology and cloud platform providers to provide updates to our solutions to maintain compatibility. We work with technology and cloud platform providers to understand and align updates to their product roadmaps and engage in early access and other programs to ensure compatibility of our solutions with the technology vendor’s generally available release. If our relations with our technology partners degrades or ceases, we may be unable to deliver these updates, or if our customers fail to install the most recent updates and versions of our solutions that we offer, then our customers’ ability to benefit from our solution may decrease significantly and, in some instances, may require the customer to de-install our solution due to the incompatibility of our solution with the customer’s applications.

If we are unable to acquire new customers or retain and expand our relationships with existing customers, our future revenues and operating results will be harmed.

To continue to grow our business, we need to attract new customers and increase deployment, usage, and consumption of our solutions by existing customers. Our success in attracting new customers and expanding our relationships with existing customers depends on numerous factors, including our ability to:

•offer a compelling, unified observability and security platform, together with advanced AIOps, that provides answers and intelligent automation from data at an enormous scale;

•execute our sales and marketing strategy;

•effectively identify, attract, onboard, train, develop, motivate, and retain new sales, marketing, professional services, and support personnel in the markets we pursue;

•develop or expand relationships with technology partners, systems integrators, resellers, online marketplaces, and other partners, including strategic alliances and cloud-focused partnerships with GSIs, including Deloitte and DXC, and hyperscalers such as AWS, GCP, Azure, IBM Red Hat, and others, some of which may also compete with us;

•expand into new geographies and markets, including the business intelligence and data analytics market;

•deploy our platform and solutions for new customers; and

•provide quality customer support and professional services.

Our customers have no obligation to renew their agreements, and our customers may decide not to renew these agreements with a similar contract period, at the same prices and terms or with the same or a greater number of licenses. Although our customer retention rate has historically been strong, some of our customers have elected not to renew their agreements with us, and it is difficult to accurately predict long-term customer retention, churn and expansion rates. Our customer retention and expansion rates may decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our solutions platform, our customer support and professional services, our prices and pricing plans, the competitiveness of other software products and services, reductions in our customers’ spending levels, customer concerns about macroeconomic trends, user adoption of our solutions, deployment success, utilization rates by our customers, new product releases, and changes to our product offerings. If our customers do not renew their agreements, or renew on less favorable terms, our business, financial condition, and operating results may be adversely affected.

Our ability to increase sales to existing customers depends on several factors, including their experience with implementing and using our platform and the existing solutions they have implemented, their ability to integrate our solutions with existing technologies, and our pricing model. A failure to increase sales to existing customers could adversely affect our business, operating results, and financial condition.

Failure to effectively expand our sales and marketing capabilities could harm our ability to execute on our business plan, increase our customer base, and achieve broader market acceptance of our applications.

Our ability to increase our customer base and achieve broader market acceptance of our solutions will depend to a significant extent on the ability of our sales and marketing organizations to work together to drive our sales pipeline and cultivate customer and partner relationships to drive revenue growth. We have invested in and plan to continue expanding our sales and marketing organizations, both in the United States and internationally. We also plan to dedicate significant resources to sales and marketing programs, including lead generation activities and brand awareness campaigns, such as our industry events, webinars, and user events with an increased investment in digital or online activities. If we are unable to effectively identify, hire, onboard, train, develop, motivate, and retain talented sales personnel or marketing personnel or if our new sales personnel or marketing personnel or online investments are unable to achieve desired productivity levels in a reasonable period of time, our ability to increase our customer base and achieve broader market acceptance of our offerings could be harmed.

We face significant competition, which may adversely affect our ability to add new customers, retain existing customers, and grow our business.

The markets in which we compete are highly competitive, fragmented, evolving, complex and defined by rapidly changing technology (including, without limitation, the use of AI) and customer demands, and we expect competition to continue to increase in the future. A number of companies, some of which are larger and have more resources than we do, have developed or are developing products and services that currently, or in the future may, compete with some or all of our solutions. We have also been expanding the scope of our solutions to include new offerings and we increasingly compete with other companies in new and adjacent markets. Competition could result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses and our failure to increase, or loss of, market share, any of which could adversely affect our business, operating results, and financial condition.

We compete either directly or indirectly with APM vendors, infrastructure monitoring vendors, log management vendors, DEM vendors, security vendors, open source and commercial open source vendors, point solutions from public cloud providers, and IT operations management, AIOps and business intelligence providers with offerings that cover some portion of the capabilities that we provide. Further, to the extent that one of our competitors establishes or strengthens a cooperative relationship with, or acquires one or more software APM, data analytics, compliance, or network visibility vendors, it could adversely affect our ability to compete. We may also face competition from companies entering our market, which has a relatively low barrier to entry in some segments, including large technology companies that could expand their platforms or acquire one of our competitors. For example, in September 2023, Cisco announced that it signed a definitive agreement to acquire Splunk.

Many existing and potential competitors enjoy substantial competitive advantages, such as:

•greater brand recognition and longer operating histories;

•longer-term and more extensive relationships with existing and potential customers, and access to larger customer bases, which often provide incumbency advantages;

•broader global distribution and presence;

•larger sales and marketing budgets and resources;

•the ability to integrate or bundle competitive offerings with other products, offerings, and services;

•lower labor and development costs;

•greater resources to make acquisitions;

•larger and more mature intellectual property portfolios; and

•substantially greater financial, technical, management and other resources.

Additionally, in certain circumstances, and particularly among large technology companies that have complex and large software application and IT infrastructure environments, customers may elect to build in-house solutions to address their observability and security needs. Any such in-house solutions could leverage open source software, and therefore be made generally available at little or no cost.

These competitive pressures in our markets or our failure to compete effectively may result in fewer customers, price reductions, fewer orders, reduced revenue and gross profit, and loss of market share. Any failure to meet and address these factors could materially and adversely affect our business, operating results, and financial condition.

If the prices we charge for our solutions and services are unacceptable to our customers, our operating results will be harmed.

As the market for our solutions matures, or as new or existing competitors introduce new products, offerings or services that compete with ours, we may experience pricing pressure and be unable to renew our agreements with existing customers or attract new customers at prices that are consistent with our current pricing model and operating budget. If this were to occur, it is possible that we would have to change our pricing model or reduce our prices, which could harm our revenue, gross margin, and operating results. Pricing decisions may also impact the mix of adoption among our licensing and subscription models, and negatively impact our overall revenue. Moreover, large global accounts, which we expect will account for a large portion of our business in the future, may demand substantial price concessions. If we are, for any reason, required to reduce our prices, our revenue, gross margin, profitability, financial position, and cash flow may be adversely affected.

We expect our billings and revenue mix to vary over time, which could harm our gross margin, cash flows, and operating results.

Our billings and revenue mix may vary over time due to a number of factors, including the mix of subscriptions and services and the contract length of our customer agreements. Our gross margins, cash flows, and operating results could also be harmed by further changes in billings and revenue mix and costs, together with numerous other factors, including entry into new lower margin markets or growth in lower margin markets, entry into markets with different pricing and cost structures, pricing discounts, increased price competition, and in response to macroeconomic conditions. Any one of these factors or the cumulative effects of certain of these factors may result in significant fluctuations in our revenues, billings, gross margin, and operating results. This variability and unpredictability could result in our failure to meet internal expectations or those of securities analysts or investors for a particular period. If we fail to meet or exceed such expectations for these or any other reasons, the market price of our common stock could decline.

If we are unable to maintain successful relationships with our partners, or if our partners fail to perform, our ability to market, sell, and distribute our applications and services will be limited, and our business, operating results, and financial condition could be harmed.

In addition to our sales force, we rely on partners, including our strategic partners, to increase our sales and distribution of our software and services. We also have independent software vendor partners whose integrations may increase the breadth of the ecosystem in which our solutions can operate, and the size of the market that our solutions can address. We also have partnerships with GSIs, including Deloitte and DXC, and hyperscalers such as AWS, GCP, Azure, IBM Red Hat, and others, on which many of our customers depend, and through which our customers may be able to procure and deploy our solutions. We are dependent on these partner relationships to contribute to enabling our sales growth. We expect that our future growth will be increasingly dependent on the success of our partners and our partner relationships, and if those partnerships do not provide such benefits, our ability to grow our business will be harmed. If we are unable to scale our partner relationships effectively, or if our partners are unable to serve our customers effectively, we may need to expand our services organization, which could adversely affect our results of operations.

Our agreements with our partners are generally non-exclusive, meaning our partners may offer products from several different companies to their customers or have their products or technologies also interoperate with products and technologies of other companies, including products that compete with our offerings. Moreover, some of our partners also compete with us, and if our partners do not effectively market and sell our offerings, choose to use greater efforts to market and sell their own products or those of our competitors or fail to meet the needs of our customers, our ability to grow our business and sell our offerings will be harmed. Many of our customers are also customers of hyperscalers such as AWS, GCP, Azure, or IBM Red Hat. If our solutions fail to interoperate effectively with the hyperscalers’ products, or if our partnerships with one or more of these hyperscalers are not successful or are terminated, our ability to sell additional products or offerings to these customers and our ability to grow our business will be harmed. Furthermore, our partners may cease marketing our offerings with limited or no notice and with little or no penalty, and new partners could require extensive training and may take several months or more to achieve productivity. The loss of a substantial number of our partners, our possible inability to replace them or our failure to recruit additional partners could harm our results of operations. Our partner structure could also subject us to lawsuits or reputational harm if, for example, a partner misrepresents the functionality of our offerings to customers or violates applicable laws or our corporate policies.

We believe the Dynatrace brand is integral to our future success and if we fail to cost effectively maintain and enhance our brand, our business and competitive position may be harmed.

We believe that maintaining and enhancing the Dynatrace brand and increasing market awareness of our company and our solutions are critical to achieving broad market acceptance of our existing and future solutions and are important elements in attracting and retaining customers, partners, and employees, particularly as we continue to expand internationally and introduce new capabilities and enhancements. In addition, independent industry analysts, such as Gartner and Forrester, often provide reviews of our solutions, as well as those of our competitors, and perception of our solutions in the marketplace may be significantly influenced by these reviews. We have no control over what these or other industry analysts report, and because industry analysts may influence current and potential customers, our brand could be harmed if they do not provide a positive review of our solutions or view us as a market leader.

The successful promotion of the Dynatrace brand and the market’s awareness of our solutions and platform will depend largely upon our ability to continue to offer enterprise-grade observability and security solutions, our ability to be thought leaders in application intelligence, our marketing efforts, and our ability to successfully differentiate our solutions from those of our competitors. We have invested, and expect to continue to invest, substantial resources to promote and maintain our brand and generate sales leads, both in the United States and internationally, but there is no guarantee that our brand development strategies will enhance the recognition of our brand or lead to increased sales. If our efforts to promote and maintain our brand are not cost effective or successful, our operating results and our ability to attract and retain customers, partners, and employees may be adversely affected. In addition, even if our brand recognition and customer loyalty increase, this may not result in increased sales of our solutions or higher revenue.

Our sales cycles can be long, unpredictable and vary seasonally, which can cause significant variation in the number and size of transactions that close in a particular quarter.

Many of our customers are large enterprises, whose purchasing decisions, budget cycles and constraints, and evaluation processes are unpredictable and out of our control. During recessionary times, or when there is volatility or uncertainty in the global economy or in the economies of the countries in which we operate, our sales cycles may be elongated and our customers’ purchasing decisions may be delayed or cancelled. In addition, we are experiencing, and we may continue to experience, an increase in the number of large, strategic deals where customers are looking to make broader observability architecture decisions. These deals can also entail less predictable, longer sales cycles, greater uncertainty of completing the sale, and specially negotiated terms. The length of our sales cycle, from initial evaluation to payment for our subscriptions, can range from several months to over a year and can vary substantially from customer to customer. Our sales efforts involve significant investment of resources in field sales, partner development, marketing, and educating our customers about the use, technical capabilities, and benefits of our platform and services. Customers often undertake a prolonged evaluation process, which frequently involves not only our platform, but also those of other companies or the consideration of internally developed alternatives, including those using open source software. Some of our customers initially deploy our platform on a limited basis, with no guarantee that they will deploy our platform widely enough across their organization to justify our substantial pre-sales investment. As a result, it is difficult to predict exactly when, or even if, we will make a sale to a potential customer or if we can increase sales to our existing customers.

We have experienced seasonal and end-of-quarter concentration of our transactions and variations in the number and size of transactions that close in a particular quarter, which impacts our ability to grow revenue over the long term and plan and manage cash flows and other aspects of our business and cost structure. Our transactions vary by quarter, with the third and fourth fiscal quarters typically being our largest. In addition, within each quarter, a significant portion of our transactions occur in the last two weeks of that quarter. Large individual sales may also occur in quarters subsequent to those we anticipate, which may make it difficult to forecast our expected sales cycle. If expectations for our business turn out to be inaccurate, our revenue growth may be adversely affected over time and we may not be able to adjust our cost structure on a timely basis and our cash flows and results of operations may suffer.

Any failure to offer high-quality customer support and professional services may adversely affect our relationships with our customers and our financial results.

We typically bundle customer support with arrangements for our solutions and offer professional services for implementation and training. In deploying and using our platform and solutions, our customers may require the assistance of our services teams to resolve complex technical and operational issues. Increased customer demand for support, without corresponding revenue, could increase costs and adversely affect our operating results. We may also be unable to respond quickly enough to accommodate short-term increases in customer demand for support. If we fail to meet our service level commitments, which relate to uptime or response times, or if we suffer extended periods of unavailability for our solutions, we may be contractually obligated to provide these customers with service credits or we could face contract terminations and be required to provide refunds of prepaid unused fees. Our sales are highly dependent on our reputation and on positive recommendations from our existing customers. Any failure to maintain high-quality customer support and professional services, or a market perception that we do not maintain high-quality product support or services, could adversely affect our reputation, and our ability to sell our solutions to existing and new customers.

Our ability to succeed depends on the experience and expertise of our senior management team. If we are unable to attract, retain, and motivate our leadership team, our business, operating results, and prospects may be harmed.

Our ability to succeed depends in significant part on the experience and expertise of our senior management team. From time to time, there may be changes in our senior management team resulting from the hiring or departure of executives. In the last two years, we hired a new Chief Financial Officer, General Counsel, Chief People Officer, Chief Revenue Officer, Chief Accounting Officer, and Chief Marketing Officer, among other leadership changes.

All members of our senior management team are employed on an at-will basis, which means that they are not contractually obligated to remain employed with us and could terminate their employment with us at any time (subject to any applicable notice periods). Accordingly, and despite our efforts to retain our senior management team, they could terminate their employment with us at any time, which could disrupt our operations and negatively impact employee morale and our culture. After their termination, such person could

go to work for one of our competitors after the expiration of any applicable non-compete period, and the restrictions on non-competition may in any case be difficult to enforce depending on the circumstances. The loss of members of our senior management team, particularly if closely grouped, could disrupt our operations, negatively impact employee morale and our culture, and adversely affect our ability to formulate and execute our business plan and thus, our business, operating results, and prospects could be adversely affected. If we fail to develop effective succession plans for our senior management team, and to identify, recruit, onboard, train and integrate strategic hires, our business, operating results, and financial condition could be adversely affected.

We rely on highly skilled personnel and if we are unable to attract, retain, or motivate substantial numbers of qualified personnel or expand and train our sales force, we may not be able to grow effectively.

Our success largely depends on the talents and efforts of key technical, sales, and marketing employees and our future success depends on our continuing ability to efficiently and effectively identify, hire, onboard, train, develop, motivate, and retain highly skilled personnel for all areas of our organization. Competition in our industry is intense, and often leads to significant increased compensation and other personnel costs. In addition, competition for employees with experience in our industry can be intense, particularly in Europe, where our research and development operations are concentrated and where other technology companies compete for management and engineering talent. Our continued ability to compete and grow effectively depends on our ability to attract substantial numbers of qualified new employees and to retain and motivate our existing employees.

We believe that our corporate culture has contributed to our success, and if we cannot successfully maintain our culture as we grow, we could lose the innovation, creativity, and teamwork fostered by our culture.

We believe that a critical component to our success has been a focus on maintaining an entrepreneurial and innovative corporate culture. We believe our culture has contributed significantly to our abilities to innovate and develop new technologies, and attract and retain employees. We have spent substantial time and resources in building our team while maintaining this corporate culture. Over our last two fiscal years ended March 31, 2023, our total employee headcount increased approximately 51% and we also expanded our international employee presence. The rapid influx of large numbers of people from different business backgrounds in different geographic locations, and the significant number of employees who work either on a hybrid or remote basis may make it difficult for us to maintain our corporate culture. If our culture is negatively affected, our ability to support our growth and innovation may diminish.

Our credit facility contains restrictions that impact our business and expose us to risks that could adversely affect our liquidity and financial condition.

In 2022, we entered into a senior secured revolving credit facility in the aggregate amount of $400.0 million. As of December 31, 2023, we had $387.9 million available under the credit facility with $12.1 million of letters of credit outstanding. The actual amounts of our debt servicing payments vary based on the amounts of indebtedness outstanding, the applicable interest accrual periods and the applicable interest rates and fee margins, which vary based on prescribed formulas. The credit facility contains various customary covenants (including a financial covenant requiring compliance with a maximum leverage ratio) that are operative so long as our credit facility remains outstanding.

If we are unable to generate sufficient cash flow or otherwise to obtain the funds necessary to make required payments under our credit facility, or if we fail to comply with the various covenants and other requirements of our set forth in the credit facility, we could default under our credit facility. Our credit facility also contains provisions that trigger repayment obligations or an event of default upon a change of control, as well as various representations and warranties which, if breached, could lead to an event of default. Any such default that is not cured or waived could result in an acceleration of indebtedness then outstanding under our credit facility, an increase in the applicable interest rates under our credit facility, and a requirement that our subsidiaries that have guaranteed our credit facility pay the obligations in full, and would permit the lenders to exercise remedies with respect to all of the collateral that is securing our credit facility, including substantially all of our and the subsidiary guarantors’ assets. We cannot be certain that our future operating results will be sufficient to ensure compliance with the covenants in our credit facility or to remedy any defaults under our credit facility. In the event of any default and related acceleration, we may not have or be able to obtain sufficient funds to make any accelerated payments. Any such default could have a material adverse effect on our liquidity, financial condition, and results of operations.

Risks Related to Information Technology, Intellectual Property, and Data Security and Privacy

Security breaches, computer malware, computer hacking attacks, and other security incidents could harm our business, reputation, brand, and operating results.

We have in the past been, and may in the future be, the target and victim of cybersecurity attacks, including email phishing and other types of attacks. In general, security incidents have increased in sophistication and have become more prevalent across industries and may occur on our systems, or on the systems of third parties we use to host our solutions or SaaS solutions that we use in the operation of our business, or on those third party hosting platforms on which our customers’ host their systems. These security incidents may be caused by, or result in, but are not limited to, security breaches, computer malware or malicious software, ransomware, phishing attacks, computer hacking, denial of service attacks, security system control failures in our own systems or from vendors that we or our customers use, software vulnerabilities, social engineering, sabotage, malicious downloads, and the errors or malfeasance of our own or our customers’ or vendors’ employees. Although we have taken significant measures to detect, effectively remediate, and prevent future phishing and other attacks and security threats, we cannot be certain that our efforts will be effective to prevent and remediate all attacks and security threats. As a result, unauthorized access to, security breaches of, or denial-of-service attacks against our platform could result in the unauthorized access to, or use of, and/or loss of, such data, as well as loss of intellectual property, customer data, employee data, trade secrets, or other confidential or proprietary information. In particular, because we utilize a multi-tenant platform, any security breach could potentially affect a significant amount of our customers.

The consequences of a security incident may be more severe if customers have chosen to configure our platform to collect and store confidential, personal, sensitive, or proprietary information. Our customers determine, through their configuration, the nature of the customer data processed by Dynatrace, and accordingly the content of the notices that they provide to data subjects as well as the consents that they obtain, if they do in fact, obtain consent. As such, our risks are also affected by how our customers obtain consent or provide transparency to the individuals whose data is provided by the customer to Dynatrace. If our customers fail to comply with applicable law or fail to provide adequate notice or to obtain consent, we could be exposed to a risk of loss, litigation or regulatory action, and possible liability, some or all of which may not be covered by insurance, and our ability to operate our business may be impaired.

We and certain of our service providers have experienced and may in the future experience disruptions, outages, and other performance problems on our internal systems due to service attacks, unauthorized access, or other security related incidents affecting personal information. Any security breach or loss of system control caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss, modification, or corruption of data, software, hardware or other computer equipment and the inadvertent transmission of computer malware could harm our business, operating results, and financial condition, and expose us to claims arising from loss or unauthorized disclosure of confidential or personal information or data and the related breach of our contracts with customers or others, or of privacy or data security laws. If an actual or perceived security incident occurs, the market perception of the effectiveness of our security controls could be harmed, our brand and reputation could be damaged, we could lose customers, and we could suffer financial exposure due to such events or in connection with remediation efforts, investigation costs, regulatory fines, including fines assessed under the European General Data Protection Regulation (“GDPR”) or other privacy laws, private lawsuits and changed security control, system architecture, and system protection measures.

We have administrative, technical, and physical security measures in place, as well as policies and procedures in place to contractually require third parties to whom we transfer data to implement and maintain appropriate security measures. We also proactively employ multiple methods at different layers of our systems to defend against intrusion and attack and to protect our data. However, because the techniques used to obtain unauthorized access or to compromise or sabotage systems change frequently and generally are not identified until they are launched against or even penetrate a target, we may be unable to anticipate these techniques or to implement adequate preventative measures that will be sufficient to counter all current and emerging technology threats. We may therefore experience security breaches that may remain undetected for extended periods of time. Vendors’ or suppliers’ software or systems may be susceptible or vulnerable to breaches and attacks, which could compromise our systems. For example, in December 2020, it was widely reported that SolarWinds, an information technology company, was the subject of a cyberattack earlier in September 2019 where the SUNBURST malicious code was injected into builds of their Orion software platform that created security vulnerabilities to customers who use Orion. We used SolarWinds Orion software and upon learning of the incident, we took recommended actions to detect any unauthorized access as well as mitigate the compromised system. More recently, SolarWinds provided an update from its investigations regarding the deployment of the malicious tool into its build environment. While we do not believe at this time that the SolarWinds matter had a material impact on our systems or operations, should new or different information come to light establishing that the intrusion is broader than now known, it could have a broader impact on our systems and operations and we could incur significant costs in responding to such intrusion. This is likewise true in the event SolarWinds has an impact on our supply chain or vendors in ways that are not yet known. A vendor or other supply chain-related breach could spread to our own systems or affect our operations or financial systems in material ways that we cannot yet anticipate.

A majority of our employees have the ability to work either partially or fully remote. Certain security systems in homes or other remote workplaces may be less secure than those used in our offices, which may subject us to increased security risks, including cybersecurity-related events, and expose us to risks of data or financial loss and associated disruptions to our business operations. We may also be exposed to risks associated with the locations of remote workers, including exposure to compromised Internet infrastructure. If we are unable to effectively manage the cybersecurity and other risks of remote work, our business could be harmed or otherwise negatively impacted.

Because data security is a critical competitive factor in our industry, we make statements in our privacy policies, our online product documentation and in our marketing materials describing the security of our platform, including descriptions of certain security measures we employ or security features embedded within our offerings. In addition, our customer contracts include commitments related to security measures and data protection. Should any of these statements be untrue, become untrue, or be perceived to be untrue, even if through circumstances beyond our reasonable control, or if any of these security measures or features prove to be ineffective or are perceived to be ineffective, we may face claims, including claims of unfair or deceptive trade practices or breach of regulations including GDPR, brought by the U.S. Federal Trade Commission, state, local, or foreign regulators (e.g., a European Union-based data protection authority) or private litigants, and breach of contract.

While we believe that we maintain a sufficient amount of insurance to cover certain data security-related risks and incidents, our insurance coverage may not always cover all costs or losses. In addition, we cannot be certain that sufficient insurance will continue to be available to us on commercially acceptable terms in the future. Any large, successful claim that exceeds our insurance coverage or any changes in insurance availability and requirements could have a material adverse impact on our financial condition and reputation.

Interruptions or disruptions with the delivery of our SaaS solutions, or third-party cloud-based systems that we depend on in our operations, may adversely affect our business, operating results, and financial condition.

Our business and continued growth depends on the ability of our customers to access our platform and solutions, particularly our cloud-based solutions, at any time and within an acceptable amount of time. In addition, our ability to access certain third-party SaaS solutions is important to our operations and the delivery of our customer support and professional services, as well as our sales operations.

We have experienced, and may in the future experience, service disruptions, outages, and other performance problems both in the delivery of our SaaS solutions, and in third-party SaaS solutions we use due to a variety of factors, including infrastructure changes, malicious actors including disgruntled employees, human or software errors, or capacity constraints. We have experienced disruptions, outages, or performance problems in the past causing some of our services to be unavailable for a limited period of time. While none of these occurrences have been material to our business, future events could be more impactful. We utilize a multi-tenant structure, meaning that generally, our customers are hosted on a shared platform. As such, any interruption in service could affect a significant number of our customers. In some instances, we or our third-party service providers may not be able to identify the cause or causes of these performance problems within an acceptable period of time. It may become increasingly difficult to maintain and improve the performance of our SaaS solutions as they become more complex. If our SaaS solutions are unavailable or degraded or if our customers are unable to access features of our SaaS solutions within a reasonable amount of time or at all, our business would be adversely affected. In addition, if any of the third-party SaaS solutions that we use were to experience a significant or prolonged outage or security breach, our business could be adversely affected.

We currently host our Dynatrace solutions on cloud infrastructure hyperscaler providers, such as AWS, Azure and GCP. Our Dynatrace solutions reside on hardware operated by these providers. Our operations depend on protecting the virtual cloud infrastructure hosted by a hyperscaler by maintaining its configuration, architecture, features, and interconnection specifications, as well as the information stored in these virtual data centers and which third-party Internet service providers transmit. Although we have disaster recovery plans, including the use of multiple hyperscaler locations, any incident affecting a hyperscaler’s infrastructure that may be caused by fire, flood, severe storm, earthquake, or other natural disasters, actual or threatened public health emergencies, cyber-attacks, terrorist or other attacks, and other similar events beyond our control could negatively affect our platform and our ability to deliver our solutions to our customers. A prolonged hyperscaler service disruption affecting our SaaS platform for any of the foregoing reasons would negatively impact our ability to serve our customers and could damage our reputation with current and potential customers, expose us to liability, cause us to lose customers, or otherwise harm our business. We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the hyperscaler services we use.

Hyperscalers have the right to terminate our agreements with them upon material uncured breach following prior written notice. If any of our hyperscaler service agreements are terminated, or there is a lapse of service, we would experience interruptions in access to our platform as well as significant delays and additional expense in arranging new facilities and services and/or re-architecting our solutions for deployment on a different cloud infrastructure, which would adversely affect our business, operating results, and financial condition.

Real or perceived errors, failures, defects, or vulnerabilities in our solutions could adversely affect our financial results and growth prospects.

Our solutions and underlying platform are complex, and in the past, we or our customers have discovered software errors, failures, defects, and vulnerabilities in our solutions after they have been released, including after new versions or updates are released. Our solutions and our platform are frequently deployed and used in large-scale computing environments with different operating systems, system management software and equipment and networking configurations, which have in the past, and may in the future, cause errors in, or failures of, our solutions or other aspects of the computing environment into which they are deployed. In addition, deployment of our solutions into complicated, large-scale computing environments have in the past exposed, and may, in the future, expose undetected errors, failures, defects, or vulnerabilities in our solutions. Despite testing by us, errors, failures, defects, or vulnerabilities may not be found in our solutions until they are released to our customers or thereafter. Real or perceived errors, failures, defects, or vulnerabilities in our solutions (in particular, any failure of our application security offering to perform as warranted) could result in, among other things, negative publicity and damage to our reputation, lower renewal rates, loss of or delay in market acceptance of our solutions, loss of competitive position, or claims by customers for losses sustained by them or expose us to breach of contract claims, regulatory fines, and related liabilities. If vulnerabilities in our solutions are exploited by adversaries, our customers could experience damages or losses for which our customers seek to hold us accountable. In the case of real or perceived errors, failures, defects, or vulnerabilities in our solutions giving rise to claims by customers, we may be required, or may choose, for regulatory, contractual, customer relations, or other reasons, to expend additional resources in order to help correct the problem.

Assertions by third parties of infringement or other violations by us of their intellectual property rights, or other lawsuits brought against us, could result in significant costs and substantially harm our business, operating results, and financial condition.

Patent and other intellectual property disputes are common in the markets in which we compete. Some companies in the markets in which we compete, including some of our competitors, own large numbers of patents, copyrights, trademarks, and trade secrets, which they may use to assert claims of infringement, misappropriation, or other violations of intellectual property rights against us, our partners, our technology partners, or our customers. As the number of patents and competitors in our market increase, allegations of infringement, misappropriation, and other violations of intellectual property rights may also increase. Our broad solution portfolio and the competition in our markets further exacerbate the risk of additional third-party intellectual property claims against us in the future. Any allegation of infringement, misappropriation, or other violation of intellectual property rights by a third party, even those without merit, could cause us to incur substantial costs and resources defending against the claim, could distract our management from our business, and could cause uncertainty among our customers or prospective customers, all of which could have an adverse effect on our business, operating results, and financial condition. We cannot assure you that we are not infringing or otherwise violating any third-party intellectual property rights.

Furthermore, companies that bring allegations against us may have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend against similar allegations that may be brought against them than we do. We have received, and may in the future receive, notices alleging that we have misappropriated, misused, or infringed other parties’ intellectual property rights, including allegations made by our competitors, and, to the extent we gain greater market visibility, we face a higher risk of being the subject of intellectual property infringement assertions. There also is a market for acquiring third-party intellectual property rights and a competitor, or other entity, could acquire third-party intellectual property rights and pursue similar assertions based on the acquired intellectual property. They may also make such assertions against our customers or partners.

An adverse outcome of a dispute may require us to take several adverse steps, such as pay substantial damages, including potentially treble damages, if we are found to have willfully infringed a third party’s patents or copyrights; cease making, using, selling, licensing, importing, or otherwise commercializing solutions that are alleged to infringe or misappropriate the intellectual property of others; expend additional development resources to attempt to redesign our solutions or otherwise to develop non-infringing technology, which may not be successful; enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies or intellectual property rights or have royalty obligations imposed by a court; or indemnify our customers, partners, and other third parties. Any damages or royalty obligations we may become subject to, or any prohibition against our commercializing our solutions as a result of an adverse outcome, could harm our business and operating results.

Additionally, our agreements with customers and partners include indemnification provisions, under which we agree to indemnify them for losses suffered or incurred as a result of allegations of intellectual property infringement and, in some cases, for damages caused by us to property or persons or other third-party allegations. Furthermore, we have agreed in certain instances to defend our partners against third-party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks, or trade secrets, and to pay judgments entered on such assertions. Large indemnity payments could harm our business, operating results, and financial condition.

Failure to protect and enforce our proprietary technology and intellectual property rights could substantially harm our business, operating results, and financial condition.

The success of our business depends on our ability to protect and enforce our proprietary rights, including our patents, trademarks, copyrights, trade secrets, and other intellectual property rights, throughout the world. We attempt to protect our intellectual property under patent, trademark, copyright, and trade secret laws, and through a combination of confidentiality procedures, contractual provisions, internal policies and other methods, all of which offer only limited protection. However, the steps we take to protect our intellectual property may be inadequate. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Despite our precautions, it may be possible for unauthorized third parties to copy our technology and use information that we regard as proprietary to create products, offerings and services that compete with ours. In the past, we have been made aware of public postings of portions of our source code. It is possible that released source code could reveal some of our trade secrets and impact our competitive advantage. Some license provisions protecting against unauthorized use, copying, transfer, reverse engineering, and disclosure of our technology may be unenforceable under the laws of certain jurisdictions and foreign countries. Further, the laws of some countries do not protect proprietary rights to the same extent as the laws of the United States, and in some countries, there may not be sufficient legal processes available to us, in a timely fashion or at all, to enable us to effectively protect our intellectual property. In expanding our international activities, our exposure to unauthorized copying and use of our technology and proprietary information may increase. In addition, the use of other companies’ generative AI tools by our employees or contractors in a manner that violates our internal policies may compromise some of our proprietary or intellectual property rights.

The process of obtaining patent protection is expensive and time consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. We may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions. Furthermore, it is possible that our patent applications may not result in issued patents, that the scope of the claims in our issued patents will be insufficient or not have the coverage originally sought, that our issued patents will not provide us with any competitive advantages, and that our issued patents and other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. In addition, issuance of a patent does not guarantee that we have an absolute right to practice our patented technology, or that we have the right to exclude others from practicing our patented technology. As a result, we may not be able to obtain adequate patent protection or to enforce our issued patents effectively.

In addition to patented technology, we rely on our unpatented proprietary technology and trade secrets. Despite our efforts to protect our proprietary technology and trade secrets, unauthorized parties may attempt to misappropriate, reverse engineer, or otherwise obtain and use them. The contractual provisions that we enter into with employees, consultants, partners, vendors, and customers may not prevent unauthorized use or disclosure of our proprietary technology or trade secrets and may not provide an adequate remedy in the event of unauthorized use or disclosure of our proprietary technology or trade secrets.

Moreover, policing unauthorized use of our technologies, solutions and intellectual property is difficult, expensive, and time consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights as those in the United States and where mechanisms for enforcement of intellectual property rights may be weak. We may be unable to determine the extent of any unauthorized use or infringement of our solutions, technologies, or intellectual property rights.

From time to time, legal action by us may be necessary to enforce our patents and other intellectual property rights, to protect our trade secrets, to determine the validity and scope of the intellectual property rights of others, or to defend against allegations of infringement or invalidity. Such litigation could result in substantial costs and diversion of resources and could negatively affect our business, operating results, financial condition, and cash flows. If we are unable to protect our intellectual property rights, our business, operating results and financial condition will be harmed.

Our use of open source technology could impose limitations on our ability to commercialize our solutions and platform.

We use open source software in our solutions and platform and expect to continue to use open source software in the future. Although we monitor our use of open source software to avoid subjecting our solutions and platform to conditions we do not intend, we may face allegations from others alleging ownership of, or seeking to enforce the terms of, an open source license, including by demanding release of the open source software, derivative works, or our proprietary source code that was developed using such software. These allegations could also result in litigation. The terms of many open source licenses have not been interpreted by U.S. courts. As a result, there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our solutions. In such an event, we could be required to seek licenses from third parties to continue offering our solutions, to make our proprietary code generally available in source code form, to re-engineer our solutions, or to discontinue the sale of our solutions if re-engineering could not be accomplished on a timely basis, any of which could adversely affect our business, operating results, and financial condition.

Our participation in open source initiatives may limit our ability to enforce our intellectual property rights in certain circumstances.

As part of our strategy to broaden our target markets and accelerate adoption of our offerings, we contribute software program code to certain open source projects managed by organizations such as Microsoft, Google, and Cloud Native Computing Foundation. We also undertake our own open source initiatives to promote “open innovation” and “enterprise openness,” meaning that we make technologies available under open source licenses with the goal of exchanging insights and experience with other experts in the community, broadening the adoption of our platform by our customers, and providing our partners with the ability to leverage their own technologies through the Dynatrace platform. In some cases, we accept contributions of code from the community, our customers, and partners.

When we contribute to a third-party managed open source project, the copyrights, patent rights, and other proprietary rights in and to the technologies, including software program code owned by us that we contribute to these projects, are often licensed to the project managers and to all other contributing parties without material restriction on further use or distribution. If and to the extent that any of the technologies that we contribute, either alone or in combination with the technologies that may be contributed by others, practice any inventions that are claimed under our patents or patent applications, then we may be unable to enforce those claims or prevent others from practicing those inventions, regardless of whether such other persons also contributed to the open source project (even if we were to conclude that their use infringes our patents with competing offerings), unless any such third party asserts its patent rights against us. This limitation on our ability to assert our patent rights against others could harm our business and ability to compete. In addition, if we were to attempt to enforce our patent rights, we could suffer reputational injury among our customers and the open source community.

Any actual or perceived failure by us to comply with stringent and evolving privacy laws or regulatory requirements in one or multiple jurisdictions, privacy, and information security policies and/or contractual obligations could result in proceedings, actions, or penalties against us.

We are subject to U.S. federal, state, and international laws, regulations, and standards relating to the collection, use, disclosure, retention, security, transfer, and other processing of personal data. The legal and regulatory frameworks for privacy, data protection and security issues worldwide are rapidly evolving and as a result, implementation standards, potential fines, enforcement practices, and litigation risks are likely to remain uncertain for the foreseeable future.

•In the United States, state legislatures continue to propose and pass comprehensive privacy legislation, including data breach notification laws, personal data privacy laws, and consumer protection laws. For example, the California Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act in November 2020, effective on January 1, 2023, gives California residents rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA also provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. It is not yet fully clear how the CCPA will be interpreted. The effects of the CCPA are potentially significant and may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses to comply and increase our potential exposure to regulatory enforcement and/or litigation. Certain other state laws impose similar privacy obligations and we also anticipate that more states will increasingly enact legislation similar to the CCPA. The CCPA has prompted a number of proposals for new federal and state-level privacy legislation, and in some states, efforts to pass comprehensive privacy laws have been successful. The existence of comprehensive privacy laws in different states in the country, if enacted, will add additional complexity, variation in requirements, restrictions, and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data, and has resulted in and will result in increased compliance costs and/or changes in business practices and policies.

•Outside of the United States, virtually every jurisdiction in which we operate has established its own privacy, data protection and/or data security legal framework with which we or our customers must comply, including, but not limited to, the European Union (“EU”).

◦In the EU, data protection laws are stringent and continue to evolve, resulting in possible significant operational costs for internal compliance and risk to our business. The EU has adopted the GDPR, which imposes robust obligations upon covered companies, including heightened notice and consent requirements, greater rights of data subjects (e.g., the “right to be forgotten”), increased data portability for EU consumers, additional data breach notification and data security requirements, requirements for engaging third-party processors, and increased fines for non-compliance. Serious breaches of the GDPR (and similar data protection regulations in the United Kingdom) may result in monetary penalties of up to 4% of worldwide annual revenue and fines up to 2% of annual worldwide revenue can be imposed for other violations. In addition to the GDPR, other European legislative proposals and current laws and regulations apply to cookies and similar tracking technologies, electronic communications, and marketing, with an increased focus on online behavioral advertising. The EU also is considering the Regulation on

Privacy and Electronic Communications (“ePrivacy Regulation”) which would replace an existing ePrivacy Directive. The ePrivacy Regulation is focused on privacy regarding electronic communications services and data processed by electronic communications services. The ePrivacy Regulation may require us to further modify some of our data practices and compliance could result in additional costs for our company. In addition, the EU Digital Services Act (“DSA”) and Digital Markets Act (“DMA”) add further complexity and increased consumer protection and technology regulation.

◦Many jurisdictions outside of Europe where we do business directly or through resellers today and may seek to expand our business in the future, are also considering and/or have enacted comprehensive data protection and/or cybersecurity legislation. These include Australia, Brazil, China, Japan, Mexico, and Singapore.

•We are subject to various data transfer rules related to our ability to transfer data from one country to another. This may limit our ability to transfer certain data or require us to guarantee a certain level of protection when transferring data from one country to another.

•We are also subject to data localization laws in certain countries that may, for example, require personal information of citizens to be collected, stored, and modified only within that country. These and similar regulations may interfere with our intended business activities, inhibit our ability to expand into those markets, require modifications to our offerings or services, or prohibit us from continuing to offer services in those markets without significant additional costs.

•Current or future laws, regulations, and ethical considerations related to the use of AI technology and machine learning may impact our ability to provide insights from data and use certain data to develop our offerings. Increased focus on online tracking of behavioral advertising may also result in increased regulation on our operations. These factors may also impose burdensome and costly requirements on our ability to utilize data in innovative ways. For example, the EU has proposed a new, comprehensive AI Act and in the United States, a host of new AI-related rulemaking is being proposed at the federal level and is being proposed and adopted at the state and city level.

The regulatory framework both in the United States and internationally governing the collection, processing, storage, use and sharing of certain information, particularly financial and other personal information, is rapidly evolving and is likely to continue to be subject to uncertainty and varying interpretations. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with laws in other jurisdictions or which our existing data management practices or the features of our services and platform capabilities. We therefore cannot yet fully determine the impact these or future laws, rules, regulations, and industry standards may have on our business or operations.

In addition to the laws and regulations to which we are subject regarding the collection, processing, storage, use, and sharing of certain information, our contracts with customers include specific obligations regarding the protection of confidentiality and the permitted uses of personally identifiable and other proprietary information. We also publicly post documentation regarding our practices concerning the collection, processing, use, and disclosure of data. Although we endeavor to comply with our published policies and documentation and the various laws and regulations that we are subject to, we may at times fail to do so or be alleged to have failed to do so. Any failure or perceived failure by us, or any third parties with which we do business, to comply with our posted privacy policies and product documentation or privacy laws or regulations, changing consumer expectations, evolving laws, rules and regulations, industry standards, or contractual obligations to which we or such third parties are or may become subject, may result in actions or other claims against us by governmental entities or private actors, the expenditure of substantial costs, time and other resources or the imposition of significant fines, penalties or other liabilities, which could, individually or in the aggregate, materially and adversely affect our business, financial condition, and results of operations. In addition, any such action, particularly to the extent we were found to be guilty of violations or otherwise liable for damages, would damage our reputation and adversely affect our business, financial condition, and results of operations.

Additionally, our customers may be subject to differing privacy laws, rules, and legislation, which may mean that they require us to be bound by varying contractual requirements applicable to certain other jurisdictions. Adherence to such contractual requirements may impact our collection, use, processing, storage, sharing, and disclosure of various types of information, including financial information and other personal information, and may mean we become bound by, or voluntarily comply with, self-regulatory or other industry standards relating to these matters that may further change as laws, rules, and regulations evolve. Complying with these requirements and changing our policies and practices may be onerous and costly, and we may not be able to respond quickly or effectively to regulatory, legislative, and other developments. These changes may in turn impair our ability to offer our existing or planned features, products, and services and/or increase our cost of doing business. As we expand our customer base, these requirements may vary from customer to customer, further increasing the cost of compliance and doing business.

Risks Related to Legal, Regulatory, Accounting, and Tax Matters

Tax matters, including changes in tax laws, rules, regulations, and treaties, could impact our effective tax rate and our results of operations.

We operate in over 30 countries around the world and, as a multinational corporation, we are subject to income and non-income-based taxes, including payroll, sales, use, value-added, net worth, property, and goods and services taxes, in both the United States and various non-U.S. jurisdictions.

Our effective tax rate has fluctuated in the past and is likely to fluctuate in the future. Our effective tax rate is affected by the allocation of revenues and expenses to different jurisdictions and the timing of recognizing revenues and expenses. In addition, in the ordinary course of our global business, there are many intercompany transactions and calculations where the ultimate tax determination is uncertain.

The amount of taxes that we pay is subject to our interpretation of applicable tax laws in the jurisdictions in which we file and changes to tax laws. Significant judgment is required in determining our worldwide provision for income taxes and other tax liabilities, and in determining the realizability of tax attributes such as foreign tax credits and other domestic deferred tax assets. From time to time, we are subject to regular tax audits, examinations, and reviews in the ordinary course of business. While we believe that our tax estimates are reasonable and we have complied with all applicable income tax laws, there can be no assurance that a governing tax authority will not have a different interpretation and require us to pay additional taxes. If any amounts that we ultimately pay to a tax authority differ materially from amounts that we previously recorded, it could negatively affect our financial results and operations for the period at issue and on an ongoing basis.

We do not collect sales and use, value added, and similar taxes in all jurisdictions in which we have sales, based on our belief that such taxes are not applicable in certain of those jurisdictions. Sales and use, value added, and similar tax laws and rates vary greatly by jurisdiction. Certain jurisdictions in which we do not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties, and interest, and we may be required to collect such taxes in the future. Such tax assessments, penalties, and interest or future requirements may adversely affect our results of operations.

Tax laws, rules, and regulations are constantly under review by persons involved in the legislative process and by tax authorities. Changes to tax laws (which may have retroactive application) could adversely affect us or holders of our common stock. For example, changes in tax laws, rules, regulations, treaties, rates, changing interpretation of existing laws or regulations, the impact of accounting for share-based compensation, the impact of accounting for business combinations, changes in our international organization, and changes in overall levels of income before tax, can impact our tax liability. In recent years, many changes have been made to applicable tax laws and changes are likely to continue to occur in the future.

The spin-offs of Compuware and SIGOS in 2019 were taxable transactions for us, and we are subject to tax liabilities in connection with such transactions.

In 2019, as part of a corporate reorganization, Compuware and SIGOS were spun out of our corporate structure. Neither spin-off qualified as a tax-free spin-off under Section 355 or other provisions of the IRC. Corporate-level U.S. federal, state, and local taxes were paid by us in connection with the Compuware spin-off and in connection therewith, Compuware distributed to us $265.0 million pursuant to a structuring agreement. These taxes were generally based upon the gain computed as the difference between the fair market value of the Compuware assets distributed and the adjusted tax basis in such assets. The actual amount of our tax liability relating to the Compuware spin-off included on the filed tax returns was $231.8 million. We did not have sufficient losses available to fully offset the gain we realized as a result of the Compuware spin-off. We do not believe we incurred any material tax liabilities in connection with the SIGOS spin-off because the estimated fair market value of the SIGOS assets was materially similar to the adjusted tax basis in such assets.

If the Internal Revenue Service or other taxing authorities were to successfully challenge in an audit or other tax dispute the amount of taxes owed in connection with either the Compuware or SIGOS spin-off, we could be liable for additional taxes, including interest and penalties. We would be responsible for any such additional amounts, and for the costs of responding to such challenge, which would not be reimbursed to us by Compuware. While we have obtained an insurance policy that provides coverage if the Internal Revenue Service or other taxing authorities assert that additional taxes are owed in connection with the Compuware spin-off, such policy is subject to certain limitations and exclusions, and we cannot offer any assurances that such policy will fully cover any additional taxes owed by us. We did not obtain a tax insurance policy relating to the SIGOS spin-off. Any tax liabilities determined to be owed by us relating to either spin-off following an audit or other tax dispute may adversely affect our results of operations.

Federal and state fraudulent transfer laws may permit a court to void Compuware’s distribution to us to partially satisfy the estimated tax liability incurred by us from the Compuware spin-off.

As mentioned in the risk factor immediately above, Compuware distributed $265.0 million to us in 2019 to partially or wholly satisfy the estimated tax liability incurred by us in connection with the Compuware spin-off. This distribution might be subject to challenge under federal and state fraudulent conveyance laws even if the distribution was completed. Under applicable laws, the distribution could be voided as a fraudulent transfer or conveyance if, among other things, the transferor received less than reasonably equivalent value or fair consideration in return for, and was insolvent or rendered insolvent by reason of, the transfer.

We cannot be certain as to the standards that a court would use to determine whether or not Compuware was insolvent at the relevant time. In general, however, a court would look at various facts and circumstances related to the entity in question, including evaluation of whether or not (i) the sum of its debts, including contingent and unliquidated liabilities, was greater than the fair market value of all of its assets; (ii) the present fair market value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or (iii) it could pay its debts as they become due.

If a court were to find that the distribution was a fraudulent transfer or conveyance, the court could void the distribution. In addition, the distribution could also be voided if a court were to find that it is not a legal distribution or dividend under applicable corporate law. The resulting complications, costs, and expenses of either finding could materially adversely affect our financial condition and results of operations.

We are subject to a number of risks associated with global sales and operations.

Revenue from customers located outside of the United States represented 44% and 43% for the nine months ended December 31, 2023 and 2022, respectively. As a result, our global sales and operations are subject to a number of risks and additional costs, including the following:

•increased expenses associated with international sales and operations, including establishing and maintaining office space and equipment for our international operations;

•fluctuations in exchange rates between the U.S. dollar and other currencies in the markets where we do business, and other controls, regulations, and orders that might restrict our ability to repatriate cash;

•volatility, uncertainties, and recessionary pressures in the global economy or in the economies of the countries in which we operate;

•difficulties in penetrating new markets due to existing competition or local lack of recognition of the Dynatrace brand;

•risks associated with trade restrictions and additional legal requirements, including the exportation of our technology or source code that is required in many of the countries in which we operate;

•greater risk of unexpected changes in regulatory rules, regulations and practices, tariffs and tax laws and treaties;

•compliance with United States and foreign import and export control and economic sanctions laws and regulations, including the Export Administration Regulations administered by the U.S. Department of Commerce’s Bureau of Industry and Security and the executive orders and laws implemented by the U.S. Department of the Treasury’s Office of Foreign Asset Controls;

•compliance with anti-bribery laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”) and the U.K. Anti-Bribery Act, and a heightened risk of unfair or corrupt business practices in certain geographies, and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;

•compliance with privacy, data protection, and data security laws of many countries and jurisdictions, including the EU’s GDPR and the CCPA;

•limited or uncertain protection of intellectual property rights in some countries and the risks and costs associated with monitoring and enforcing intellectual property rights abroad;

•greater difficulty in enforcing contracts and managing collections in certain jurisdictions, as well as longer collection periods;

•management communication and integration problems resulting from cultural and geographic dispersion;

•difficulties hiring local staff, differing employer/employee relationships, and the potential need for country-specific benefits, programs, and systems;

•social, economic, and political instability, epidemics and pandemics, terrorist attacks, wars, geopolitical conflicts, disputes, and security concerns in general; and

•potentially adverse tax consequences.

These and other factors could harm our ability to generate future global revenue and, consequently, materially impact our business, results of operations, and financial condition.

Continued uncertainty in the U.S. and global economies, particularly Europe, along with uncertain geopolitical conditions, could negatively affect sales of our offerings and services and could harm our operating results.

As our business has grown, we have become increasingly subject to the risks arising from adverse changes in the domestic and global economies. Uncertainty in the macroeconomic environment and associated global economic conditions, as well as geopolitical disruption, may result in extreme volatility in credit, equity, and foreign currency markets. These conditions, including changes in inflationary pressures, rising interest rates, lower consumer confidence or uneven or lower spending, volatile capital markets, financial and credit market fluctuations, political turmoil, natural catastrophes, epidemics, warfare (including the ongoing conflicts in Ukraine and in Israel and surrounding areas), and terrorist attacks on the United States or elsewhere, may also adversely affect the buying patterns of our customers and prospective customers, including the size of transactions and length of sales cycles, which would adversely affect our overall pipeline as well as our revenue growth expectations. For example, we have seen lengthening sales cycles, which may affect our future revenues and results of operations. In addition, increased economic uncertainty in the United States and abroad could lead to periods of economic slowdown or recession, continued inflation and higher interest rates, and the occurrence of such events, or public perception that any of these events may occur, could result in a general decrease in spending on technology or other business interruptions. We cannot predict the timing, strength, or duration of any economic slowdown, instability, or recovery, generally or within the technology industry. If macroeconomic or geopolitical conditions deteriorate or if the pace of recovery slows or is uneven, our overall results of operations could be adversely affected.

We continue to invest in our international operations. There are significant risks with overseas investments, and our growth prospects in these regions are uncertain. Increased volatility, further declines in the European credit, equity, and foreign currency markets or geopolitical disruptions (including the ongoing conflicts in Ukraine and in Israel and surrounding areas) could cause delays in or cancellations of orders or have other negative impacts on our business operations in Europe (where a significant amount of our research and development operations are concentrated) and other regions throughout the world. If tensions between the United States, members of NATO and other countries continue to escalate and create global security concerns, it may result in an increased adverse impact on regional and global economies and increase the likelihood of cyber-attacks. Deterioration of economic or geopolitical conditions in the countries in which we do business could also cause slower or impaired collections on accounts receivable. In addition, we could experience delays in the payment obligations of our worldwide reseller customers if they experience weakness in the end-user market, which would increase our credit risk exposure and harm our financial condition.

In March 2022, we announced that we suspended all business in Russia and Belarus. Although we do not have material operations in Ukraine, Russia, or Belarus, geopolitical instability in the region, new sanctions, and enhanced export controls has and may continue to impact our ability to sell or export our platform in Ukraine, Russia, Belarus and surrounding countries. Similarly, our operations in Israel and the surrounding areas are not material to our business results, though geopolitical instability in the region may impact our ability to sell or export our platform there. While we do not believe the overall impact to be material to our business results, if these conflicts and the scope of sanctions expand further or persist for an extended period of time, our business could be harmed.

Because we recognize revenue from our SaaS subscriptions and term licenses over the subscription or license term, downturns or upturns in new sales and renewals may not be immediately reflected in our operating results and may be difficult to discern.

For customers who purchase a subscription to our Dynatrace platform, whether they purchase a SaaS subscription, or a term license, we generally recognize revenue ratably over the term of their subscription. For customers who purchase a perpetual license, we generally recognize the license revenue ratably over three years. Thus, substantially all of the revenue we report in each quarter from the Dynatrace platform, which constituted over 90% of our total revenue reported for the quarter ended December 31, 2023, is derived from the recognition of revenue relating to contracts entered into during previous quarters. Consequently, a decline in new or renewed customer contracts in any single quarter may have a small impact on our revenue for that quarter. However, such a decline will negatively affect our revenue in future quarters. Accordingly, the effect of significant downturns in sales and market acceptance of our solutions, and potential changes in our rate of renewals, may not be fully reflected in our results of operations until future periods. In addition, a significant majority of our costs are expensed as incurred, while revenue is recognized over the life of the agreement with our customer. As a result, increased growth in the number of our customers could continue to result in our recognition of more costs than revenue in the earlier periods of the terms of our agreements.

Our revenue recognition policy and other factors may distort our financial results in any given period and make them difficult to predict.

Under accounting standards update No. 2014-09 (Topic 606), Revenue from Contracts with Customers (“ASC 606”), we recognize revenue when our customer obtains control of goods or services in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. Our subscription revenue consists of (i) SaaS agreements, (ii) term-based licenses for the Dynatrace platform which are recognized ratably over the contract term, (iii) Dynatrace perpetual license revenue that is recognized ratably or over the term of the expected optional maintenance renewals, which is generally three years, and (iv) maintenance and support agreements. A significant increase or decline in our subscription contracts in any one quarter may not be fully reflected in the results for that quarter, but will affect our revenue in future quarters.

Furthermore, the presentation of our financial results requires us to make estimates and assumptions that may affect revenue recognition. In some instances, we could reasonably use different estimates and assumptions, and changes in estimates are likely to occur from period to period. For a full discussion of these estimates and policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” included in our Annual Report.

Given the foregoing factors, our actual results could differ significantly from our estimates, comparing our revenue and operating results on a period-to-period basis may not be meaningful, and our past results may not be indicative of our future performance.

Changes in existing financial accounting standards or practices may harm our operating results.

Changes in existing accounting rules or practices, new accounting pronouncements, or varying interpretations of current accounting pronouncements or practice could harm our operating results or result in changes to the manner in which we conduct our business. Further, such changes could potentially affect our reporting of transactions completed and reported before such changes are effective.

U.S. Generally Accepted Accounting Principles (“GAAP”) are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the Securities and Exchange Commission, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or a change in these interpretations could have a significant effect on our reported financial results and could affect the reporting of transactions completed before the announcement of a change. For example, FASB’s Emerging Issues Task Force has taken up certain topics which may result in further guidance which we would need to consider in our related accounting policies.

We may face exposure to foreign currency exchange rate fluctuations.

We have transacted in foreign currencies and expect to transact in foreign currencies in the future. In addition, we maintain assets and liabilities that are denominated in currencies other than the functional operating currencies of our global entities. Accordingly, changes in the value of foreign currencies relative to the U.S. dollar will affect our revenue and operating results due to transactional and translational remeasurement that is reflected in our earnings. As a result of such foreign currency exchange rate fluctuations, which have been prevalent over recent periods, it could be more difficult to detect underlying trends in our business and results of operations. In addition, to the extent that fluctuations in currency exchange rates cause our results of operations to differ from our expectations or the expectations of our investors, the trading price of our common stock could be adversely affected. We do not currently maintain a program to hedge transactional exposures in foreign currencies. However, in the future, we may use derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates. The use of such hedging activities may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place. Moreover, the use of hedging instruments may introduce additional risks if we are unable to structure effective hedges with such instruments.

Our sales to government entities are subject to a number of challenges and risks.

We sell our solutions to U.S. federal and state and foreign governmental agency customers, often through our resellers, and we may increase sales to government entities in the future. Sales to government entities are subject to a number of challenges and risks, including constraints on the budgetary process, including changes in the policies and priorities of the particular government, continuing resolutions, adherence to government audit and certification requirements, debt ceiling disruptions, deficit-reduction legislation, and any shutdown or default of the particular government. Selling to government entities can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale. Contracts and subcontracts with government agency customers are subject to procurement laws and regulations relating to the award, administration, and performance of those contracts. Government demand and payment for our solutions are affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our solutions. We may be subject to audit or investigations relating to our sales to government entities, and any violations could result in various civil and criminal penalties and administrative sanctions, including termination of contracts, refunds of fees received, forfeiture of profits, suspension of payments, fines, and suspension or debarment from future government business including business with governmental agencies across the country involved. Government entities may have statutory, contractual, or other legal rights to terminate contracts with our distributors and resellers for convenience, non-appropriation, or due to a default. Any of these risks relating to our sales to governmental entities could adversely impact our future sales and operating results.

We may acquire other businesses, products, or technologies in the future which could require significant management attention, disrupt our business or result in operating difficulties, dilute stockholder value, and adversely affect our results of operations.

Our growth depends upon our ability to enhance our existing offerings and our ability to introduce new offerings on a timely basis. We intend to continue to address the need to develop new offerings and enhance existing offerings both through internal research and development, and also through the acquisition of other companies, product lines, technologies, and personnel. For example, in August 2023, we acquired Rookout, a provider of enterprise-ready and privacy-aware solutions that enable developers to quickly troubleshoot and debug actively running code in Kubernetes-hosted cloud-native applications. In January 2024, we announced that we agreed to acquire Runecast, a provider of software solutions that provide insights for security compliance, vulnerability assessment, and configuration management for complex, on-premises, hybrid and multi-cloud IT environment. We expect to continue to consider and evaluate a wide array of potential acquisitions as part of our overall business strategy, including, but not limited to, acquisitions of certain businesses, technologies, services, products, and other assets and revenue streams. At any given time, we may be engaged in discussions or negotiations with respect to one or more acquisitions, any of which could, individually or in the aggregate, be material to our financial condition and results of operations. There can be no assurance that we will be successful in identifying, negotiating, and consummating favorable acquisition opportunities, and we may not be able to complete such acquisitions on favorable terms. If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, and any acquisitions we complete could be viewed negatively by our customers, securities analysts, and investors, and could be disruptive to our operations.

Acquisitions may involve additional significant challenges, uncertainties, and risks, including, but not limited to:

•challenges, difficulties, or increased costs associated with integrating new employees, systems, technologies, and business cultures;

•failure of the acquisition to advance our business strategy and failure to achieve the acquisition’s anticipated benefits or synergies;

•disruption of our ongoing operations, diversion of our management’s attention, and increased costs and expenses associated with pursuing acquisition opportunities;

•inadequate data security, cybersecurity, and operational and information technology compliance and resilience;

•failure to identify, or our underestimation of, commitments, liabilities, deficiencies, and other risks associated with acquired businesses or assets;

•inconsistency between the business models of our company and the acquired company, and potential exposure to new or increased regulatory oversight and uncertain or evolving legal, regulatory, and compliance requirements;

•the potential loss of key management, other employees, or customers of the acquired business;

•potential reputational risks that could arise from transactions with, or investments in, companies involved in new or developing businesses or markets, which may be subject to uncertain or evolving legal, regulatory, and compliance requirements;

•potential impairment of goodwill or other acquisition-related intangible assets; and

•the potential for acquisitions to result in dilutive issuances of our equity securities or significant additional debt.

The integration process for an acquired business may require significant time and resources, and we may not be able to manage the process successfully. We may not successfully evaluate or utilize the acquired technology or personnel, or accurately forecast the financial impact of an acquired business, including accounting charges. We may have to pay cash, incur debt, or issue equity securities to pay for any such acquisitions, each of which could adversely affect our financial condition or the value of our common stock. The sale of equity or issuance of debt to finance any such acquisitions could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.

Acquisitions may also heighten many of the risks described in this “Risk Factors” section. Acquisitions are inherently risky, may not be successful, and may harm our business, results of operations, and financial condition.

Our business is subject to a wide range of laws and regulations and our failure to comply with those laws and regulations could harm our business, operating results, and financial condition.

Our business is subject to regulation by various U.S. federal, state, local, and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, product safety, environmental laws, consumer protection laws, privacy, cybersecurity and data protection laws, anti-bribery laws, import and export controls, federal acquisition regulations and guidelines, federal securities laws, and tax laws and regulations. In certain foreign jurisdictions, these regulatory requirements may be more stringent than those in the United States. These laws and regulations are subject to change over time and we must continue to monitor and dedicate resources to ensure continued compliance. We also anticipate continued changes in the laws and regulations governing the use of AI. Non-compliance with applicable regulations or requirements could subject us to litigation, investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties, or injunctions. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, operating results, and financial condition could be materially adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could harm our business, operating results, and financial condition.

We are subject to governmental export, import, and sanctions controls that could impair our ability to compete in international markets and subject us to liability if we are not in compliance with applicable laws.

Our solutions are subject to export control and economic sanctions laws and regulations, including the U.S. Export Administration Regulations administered by the U.S. Commerce Department’s Bureau of Industry and Security and the economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control. Exports, re-exports, and transfers of our software and services must be made in compliance with these laws and regulations. Obtaining the necessary authorizations, including any required license for a particular sale, may be time-consuming, is not guaranteed and may result in the delay or loss of sales opportunities.

Various countries regulate the import of encryption technology. Changes in the encryption or other technology incorporated into our solutions or in applicable export or import laws and regulations may delay the introduction and sale of our solutions in international markets, prevent customers from deploying our solutions or, in some cases, prevent the export or import of our solutions to certain countries, regions, governments, or persons altogether.

Changes in sanctions, export, or import laws and regulations, in the enforcement or scope of existing laws and regulations, or in the countries, regions, governments, persons, or technologies targeted by such laws and regulations, could also result in decreased use of our solutions or in our ability to sell our solutions in certain countries.

Even though we take precautions to prevent our solutions from being provided to restricted countries or persons, our solutions could be provided to those targets by our resellers or customers despite such precautions, and our customers may choose to host their systems including the Dynatrace platform using a hosting vendor that is a restricted person. The decreased use of our solutions or limitation on our ability to export or sell our solutions could adversely affect our business, while violations of these export and import control and economic sanctions laws and regulations could have negative consequences for us and our personnel, including government investigations, administrative fines, civil and criminal penalties, denial of export privileges, incarceration, and reputational harm.

Due to the global nature of our business, we could be adversely affected by violations of anti-bribery, anti-money laundering and similar laws in other jurisdictions in which we operate.

We are subject to the FCPA, the U.K. Bribery Act and other anti-corruption and anti-money laundering laws in other jurisdictions. These laws generally prohibit companies, their employees, and their intermediaries from making or offering improper payments or other benefits to government officials and others in the private sector.

As we increase our sales and operations outside of the United States and increase our use of third parties, such as partners, resellers, agents and other intermediaries, our risks under these laws increases. Although we take steps to ensure compliance by adopting policies and conducting training, we cannot guarantee that our employees, partners, resellers, agents, or other intermediaries will not engage in prohibited conduct that could render us responsible under these laws. Non-compliance with these laws could subject us to investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with specified persons, the loss of export privileges, reputational harm, adverse media coverage, and other collateral consequences. Any investigations, actions and/or sanctions could have a material negative impact on our business, financial condition, and results of operations.

Risks Related to Our Common Stock

The trading price of our common stock has been, and may continue to be, volatile and you could lose all or part of your investment.

Technology stocks have historically experienced high levels of volatility. The trading price of our common stock has fluctuated substantially and will likely continue to be volatile, ranging from an intraday low of $17.05 to an intraday high of $80.13 between our initial public offering in 2019 through February 6, 2024. Factors that could cause fluctuations in the trading price of our common stock include the following:

•announcements of new products, offerings or technologies, commercial relationships, acquisitions, or other events by us or our competitors;

•changes in how customers perceive the benefits of our platform;

•shifts in the mix of billings and revenue attributable to SaaS subscriptions, licenses and services from quarter to quarter;

•departures of our Chief Executive Officer, Chief Financial Officer, other executive officers, senior management or other key personnel;

•price and volume fluctuations in the overall stock market from time to time;

•fluctuations in the trading volume of our shares or the size of our public float;

•sales of large blocks of our common stock, including by the Thoma Bravo Funds;

•actual or anticipated changes or fluctuations in our operating results;

•whether our operating results meet the expectations of securities analysts or investors;

•changes in actual or future expectations of investors or securities analysts;

•litigation, data breaches, or security incidents involving us, our industry or both;

•regulatory developments in the United States, foreign countries or both;

•general economic conditions and trends; and

•major catastrophic events in our domestic and foreign markets.

In addition, if the market for technology stocks or the stock market in general experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, operating results, or financial condition. The trading price of our common stock might also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us. In the past, following periods of volatility in the trading price of a company’s securities, securities class action litigation has often been brought against that company.

If our internal controls over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.

As a public company, we are required to maintain internal control over financial reporting and disclosure controls and procedures. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting and provide a management report on our internal control over financial reporting. Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses. If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we or our accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock would likely decline and we could be subject to lawsuits, sanctions, or investigations by regulatory authorities, including SEC enforcement actions, and we could be required to restate our financial results, any of which would require additional financial and management resources.

If material weaknesses in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results, which could materially and adversely affect our business, results of operations, and financial condition, restrict our ability to access the capital markets, require us to expend significant resources to correct the material weakness, subject us to fines, penalties or judgments, harm our reputation, or otherwise cause a decline in investor confidence.

Sales of substantial amounts of our common stock in the public markets, or the perception that such sales could occur, could reduce the market price of our common stock.

Sales of a substantial number of shares of our common stock in the public market, or the perception that such sales could occur, could adversely affect the market price of our common stock and may make it more difficult for you to sell your common stock at a time and price that you deem appropriate. Our largest shareholder, the Thoma Bravo Funds, sold approximately 53.9 million shares of our common stock in 2023. As of February 6, 2024, the Thoma Bravo Funds beneficially owned approximately 10.3% of our common stock. Under applicable federal securities laws, the Thoma Bravo Funds may sell additional shares in the public market without our advance knowledge or participation. If Thoma Bravo were to dispose of a substantial portion of our shares in the public market, whether in a single transaction or a series of transactions, it could reduce the trading price of our common stock. In addition, any such sales, or the possibility that these sales may occur, could make it more difficult for us to sell shares of our common stock in the public market in the future.

Our issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans, or otherwise will dilute all other stockholders.

We may issue additional capital stock in the future that will result in dilution to all other stockholders. We may also raise capital through equity financings in the future. As part of our business strategy, we may acquire or make investments in complementary companies, products, offerings or technologies and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional capital stock may cause stockholders to experience significant dilution of their ownership interests and the per share value of our common stock to decline.

Thoma Bravo has significant influence over matters requiring stockholder approval, which may have the effect of delaying or preventing changes of control, or limiting the ability of other stockholders to approve transactions they deem to be in their best interest.

Thoma Bravo, as the ultimate general partner of the Thoma Bravo Funds, beneficially owned in the aggregate approximately 10.3% of our issued and outstanding shares of common stock as of February 6, 2024. As a result, Thoma Bravo will continue to be able to exert significant influence over our operations and business strategy as well as matters requiring stockholder approval. These matters may include:

•the composition of our board of directors, which has the authority to direct our business and to appoint and remove our officers;

•approving or rejecting a merger, consolidation, or other business combination;

•raising future capital; and

•amending our charter and bylaws, which govern the rights attached to our common stock.

Based on Thoma Bravo’s current beneficial ownership of our company, our charter provides that for so long as Thoma Bravo beneficially owns (i) at least 10% (but less than 20%) of our outstanding shares of common stock, Thoma Bravo will have the right to nominate a number of directors to our board of directors equal to the lowest whole number that is greater than 20% of the total number of directors (but in no event fewer than one director); and (ii) at least 5% (but less than 10%) of our outstanding shares of common stock, Thoma Bravo will have the right to nominate one director to our board of directors. If Thoma Bravo’s beneficial ownership were to increase to at least 20% of our outstanding shares of common stock, it would have additional director nomination rights, as set forth in our charter.

This concentration of ownership of our common stock could delay or prevent proxy contests, mergers, tender offers, open-market purchase programs, or other purchases of our common stock that might otherwise result in the opportunity for stockholders to realize a premium over the then-prevailing market price of our common stock. This concentration of ownership may also adversely affect our share price.

Thoma Bravo may pursue corporate opportunities independent of us that could present conflicts with our and our stockholders’ interests.

Thoma Bravo is in the business of making or advising on investments in companies and holds (and may from time to time in the future acquire) interests in or provides advice to businesses that may directly or indirectly compete with our business or be suppliers or customers of ours. Thoma Bravo may also pursue acquisitions that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.

Our charter provides that none of our officers or directors who are also an officer, director, employee, partner, managing director, principal, independent contractor, or other affiliate of Thoma Bravo will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such individual pursues or acquires a corporate opportunity for its own account or the account of an affiliate, as applicable, instead of us, directs a corporate opportunity to any other person, instead of us or does not communicate information regarding a corporate opportunity to us.

We do not intend to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.

We have never declared or paid any dividends on our common stock. We intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. As a result, you may only receive a return on your investment in our common stock if the market price of our common stock increases. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

Our charter and bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders may consider favorable.

Our charter and bylaws contain provisions that could delay or prevent a change in control of our company. These provisions could also make it difficult for stockholders to elect directors who are not nominated by the current members of our board of directors or take other corporate actions, including effecting changes in our management. These provisions include:

•a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;

•directors may only be removed for cause, and subject to the affirmative vote of the holders of 66 2/3% or more of our outstanding shares of capital stock then entitled to vote at a meeting of our stockholders called for that purpose;

•the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

•allowing only our board of directors to fill vacancies on our board of directors, which prevents stockholders from being able to fill vacancies on our board of directors;

•a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

•the requirement that a special meeting of stockholders may be called only by our board of directors, the chair of our board of directors, our Chief Executive Officer or our president (in the absence of a Chief Executive Officer), which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;

•the requirement for the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend the provisions of our charter relating to the management of our business (including our classified board structure) or certain provisions of our bylaws, which may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt;

•the ability of our board of directors to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt;

•advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us; and

•a prohibition of cumulative voting in the election of our board of directors, which would otherwise allow less than a majority of stockholders to elect director candidates.

Our charter also contains a provision that provides us with protections similar to Section 203 of the Delaware General Corporation Law, and prevents us from engaging in a business combination, such as a merger, with an interested stockholder (i.e., a person or group who acquires at least 15% of our voting stock) for a period of three years from the date such person became an interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. However, our charter also provides that transactions with Thoma Bravo, including the Thoma Bravo Funds, and any persons to whom any Thoma Bravo Fund sells its common stock, will be deemed to have been approved by our board of directors.

We may issue preferred stock, the terms of which could adversely affect the voting power or value of our common stock.

Our charter authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, preferences, limitations and relative rights, including preferences over our common stock respecting dividends and distributions, as our board of directors may determine. The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our common stock. For example, we might grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of our common stock.

Our bylaws designate certain specified courts as the sole and exclusive forum for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Pursuant to our bylaws, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for state law claims for (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim of, or a claim based on, a breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders; (3) any action asserting a claim pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws; (4) any action to interpret, apply, enforce, or determine the validity of our certificate of incorporation or bylaws; or (5) any action asserting a claim governed by the internal affairs doctrine (collectively, the “Delaware Forum Provision”). The Delaware Forum Provision does not apply to any causes of action arising under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act. Our bylaws further provide that, unless we consent in writing to the selection of an alternative forum, the U.S. federal district courts will be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act (the “Federal Forum Provision”). In addition, our bylaws provide that any person or entity purchasing or otherwise acquiring any interest in shares of our common stock is deemed to have notice of and consented to the foregoing provisions; provided, however, that stockholders cannot and will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

The Delaware Forum Provision and the Federal Forum Provision may impose additional litigation costs on stockholders in pursuing the claims identified above. Additionally, the Delaware Forum Provision and the Federal Forum Provision in our bylaws may limit our stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage the filing of lawsuits against us and our directors, officers, and employees, even though an action, if successful, might benefit our stockholders. In addition, while the Delaware Supreme Court and other state courts have upheld the validity of federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court, there is uncertainty as to whether courts in other states will enforce our Federal Forum Provision. If the Federal Forum Provision is found to be unenforceable in an action, we may incur additional costs associated with resolving such an action. The Federal Forum Provision may also impose additional litigation costs on stockholders who assert that the provision is not enforceable or invalid. The Court of Chancery of the State of Delaware or the U.S. federal district courts may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our stockholders.

General Risk Factors

A pandemic, epidemic or outbreak of an infectious disease, such as the COVID-19 pandemic, may materially affect how we and our customers are operating our businesses and our financial results.

We are subject to risks related to public health crises such as the COVID-19 pandemic. The COVID-19 pandemic and policies and regulations implemented by governments in response to the COVID-19 pandemic, most of which have been lifted, have had a significant impact, both directly and indirectly, on global businesses and commerce and indirect effects such as worker shortages and supply chain constraints continue to impact segments of the economy. Future global health concerns could also result in social, economic, and labor instability in the countries in which we or the third parties with whom we engage operate.

The impact to our business from any future pandemics or health epidemics depends on multiple factors that cannot be accurately predicted, such as its duration and scope, the extent and effectiveness of containment actions, the disruption caused by such actions, and the efficacy and rates of vaccines. Future pandemics or health epidemics could have severe impacts on our business and our customers’ and prospective customers’ businesses, for example, by adversely impacting their timing, ability, or willingness to spend on software platforms or purchase our offerings. Negative effects of pandemics, health epidemics, or infectious disease outbreaks on our customers or prospective customers could lead to pricing discounts or extended payment terms, reductions in the amount or duration of customers’ subscription contracts or term licenses, or increase customer attrition rates. Any of the foregoing could adversely affect our productivity, employee morale, future sales, operating results, and overall financial performance. Pandemics,

health epidemics, or outbreaks of infectious diseases may also have the effect of heightening many of the other risks described in this “Risk Factors” section.

Climate change may have a long-term negative impact on our business.

The long-term effects of climate change on the global economy and the technology industry in particular are unclear. However, there are inherent climate-related risks such as natural disasters, floods, fire, infrastructure disruptions, and geopolitical instability that have the potential to disrupt and impact our business and the third parties with which we conduct business.

In addition, changes in federal and state legislation and regulation on climate change could result in increased capital expenditures to comply with these new laws. Numerous treaties, laws, and regulations have been enacted or proposed in an effort to regulate climate change, including regulations aimed at limiting greenhouse gas emissions and the implementation of “green” building codes. These laws and regulations may result in increased operating costs across various levels of our supply chain, which could cause us to increase costs to satisfy service obligations to our customers. We may also incur costs associated with increased regulations or investor requirements for increased environmental, social and governance disclosures and reporting, including reporting requirements and standards or expectations regarding the environmental impacts of our business. The cost of compliance with, or failure to comply with, such laws and regulations could result in increased compliance costs, and any untimely or inaccurate disclosure could adversely affect our reputation, business, or financial performance.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

During the three months ended December 31, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act), except as described below. The trading arrangements described below are both intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.

On December 12, 2023, Dan Zugelder, Senior Vice President, Chief Revenue Officer, adopted a Rule 10b5-1 trading arrangement that contemplates the sale of the net amount of shares of the Company’s common stock issuable to him after the vesting of 86,343 RSUs and PSUs (as applicable) on March 5, 2024, June 5, 2024, September 5, 2024 and December 5, 2024. The number of PSUs reflected in the total in the previous sentence is based on the Company achieving target performance relative to certain financial performance metrics. The number of shares that Mr. Zugelder receives and may subsequently sell under the trading arrangement following the vesting of his PSUs may increase or decrease based on the Company’s actual achievement against the financial performance metrics relative to target. The duration of the trading arrangement is from March 12, 2024 through December 12, 2024 (or earlier, if all transactions under the trading arrangement are completed).

On December 15, 2023, Rick McConnell, Chief Executive Officer and a director, adopted a Rule 10b5-1 trading arrangement that contemplates the sales of (i) up to 40,000 shares of the Company’s common stock previously issued to him after the vesting of RSUs and PSUs in June 2023; and (ii) up to 35,000 shares of the Company’s common stock issuable to him after the vesting of RSUs and PSUs in June 2024. The duration of the trading arrangement is from March 15, 2024 through December 16, 2024 (or earlier, if all transactions under the trading arrangement are completed).

ITEM 6. EXHIBITS

The exhibits listed below are filed or incorporated by reference into this Report.


Exhibit Number						Exhibit Title

3.1						Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form S-1/A, filed with the SEC on July 22, 2019)

3.2						Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 21, 2023)

4.1						Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1/A, filed with the SEC on July 22, 2019)

10.1*						English translation of Second Amendment Agreement dated as of December 21 , 2023 to the Supplementary Agreement dated as of March 29, 2023 to the Lease Agreement dated as of March 28, 2017 by and between Neunteufel GmbH and Dynatrace Austria GmbH

10.2*						Deferred Compensation Plan

10.3*						Deferred Compensation Plan Adoption Agreement

31.1*						Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2*						Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

32.1**						Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act

101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

_________________

* Filed herewith.

** The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DYNATRACE, INC.

Date:

February 8, 2024

By:

/s/ Rick McConnell

Rick McConnell

Chief Executive Officer

(Principal Executive Officer)

Date:

February 8, 2024

By:

/s/ James Benson

James Benson

Senior Vice President, Chief Financial Officer & Treasurer

(Principal Financial Officer)

EXHIBIT 10.1

SECOND AMENDMENT AGREEMENT

TO THE SUPPLEMENTARY AGREEMENT OF 29 MARCH 2023 TO THE LEASE AGREEMENT OF 28 MARCH 2017

entered into between

Neunteufel GmbH, FN 131077 k
Zollamtstraße 7, 4020 Linz
(hereinafter referred to as NTG)
as party of the first part,

and

Dynatrace Austria GmbH, FN 91482 h
Am Fünfundzwanziger Turm 20, 4020 Linz
(hereinafter referred to as Dynatrace)
as party of the second part

(NTG and DYNATRACE are together hereinafter referred to as the CONTRACTING PARTIES)

as follows:

1.RECITALS

1.1On 29 March 2023, NTG and DYNATRACE entered into that certain

Supplementary Agreement to the Lease Agreement of 28 March 2017 (hereinafter referred to as the SUPPLEMENTARY AGREEMENT);

1.2The coming into legal effect of the SUPPLEMENTARY AGREEMENT is subject to conditions precedent. Under the SUPPLEMENTARY AGREEMENT as originally entered into, if the conditions precedents had not been fulfilled by 30 September 2023 (hereinafter referred to as the LONG-STOP DATE) at the latest, the SUPPLEMENTARY AGREEMENT would have become null and void. By mutual amendment agreement signed on 2 August 2023, the CONTRACTING PARTIES pushed back the LONG-STOP DATE to 31 December 2023.

1.3By entering into this amendment agreement, the CONTRACTING PARTIES agree to once again push back the LONG-STOP DATE to 15 February 2024 in the SUPPLEMENTARY AGREEMENT. Except as set forth in Section 2. below, all other provisions in the SUPPLEMENTARY AGREEMENT shall remain in full force and effect and shall not be affected by this agreement.

1.4All definitions used in the SUPPLEMENTARY AGREEMENT shall apply to this agreement as well.

2.AGREEMENT

2.1The CONTRACTING PARTIES agree to amend the SUPPLEMENTARY AGREEMENT as follows (all changes or additions are shown underlined and in italics):

Clause C. Paragraph 2. of the SUPPLEMENTARY AGREEMENT shall read as follows: “Should the condition precedent as set out in Clause C. (1) not have been fulfilled by 15 February 2024 at the latest, and the lease agreement between the Landlord and the Tenant regarding a childcare facility/parking spaces located on plot no. 1154/4, located within EZ 541, KG Lustenau, which is subject to conditions precedent, not have come into legal force by 15 February 2024 at the latest, this Supplementary Agreement shall become null and void. In such an event, the Landlord undertakes to refund to the Tenant, by 29 February 2024, half of the stamp duties paid for setting up this Supplementary Agreement under the Austrian Fees Act [Gebührengesetz].

Should the condition precedent as set out in Clause C. (1), second indent, have been fulfilled in due time, the Landlord shall have the right to waive, by means of a unilateral declaration made prior to 15 February 2024, compliance with the condition precedent as set out in Clause C. (1), first indent, thereby making this Agreement come into legal effect.”

2.2The CONTRACTING PARTIES agree upon that Schedule ./2 of the SUPPLEMENTARY AGREEMENT shall be replaced by Schedule ./2 as attached to this Second Amendment Agreement. For clarification, the CONTRACTING PARTIES agree that for the purposes of possible adjustment of the lease payments according to Clause B.2. [I. A) (4)] of the SUPPLEMENTARY AGREEMENT, the rental space according to Clause B.1. [I. A) (1)] of the SUPPLEMENTARY AGREEMENT shall be relevant and not the space according to Schedule ./2 to this Second Amendment Agreement.

2.3All other provisions in the SUPPLEMENTARY AGREEMENT shall remain in full force and effect and shall not be affected by this agreement.

Linz, 21 December 2023

Location Date


/s/ Hans Neunteufel Neunteufel GmbH FN 131077 k			/s/ Sandra Escher Dynatrace Austria GmbH FN 91482 h

EXHIBIT 10.2

Dynatrace Deferred Compensation Plan

Effective as of January 1, 2024

Table of Contents


Preamble			1
Article 1 - General			1-1
1.1. Plan			1-1
1.2. Effective Dates			1-1
Article 2 - Definitions			2-1
2.1. Account			2-1
2.2. Administrator			2-1
2.3. Adoption Agreement			2-1
2.4. Beneficiary			2-1
2.5. Board or Board of Directors			2-1
2.6. Bonus			2-1
2.7. Change in Control			2-1
2.8. Code			2-1
2.9. Compensation			2-1
2.10. Director			2-2
2.11. Disability			2-2
2.12. Eligible Employee			2-2
2.13. Employer			2-2
2.14. ERISA			2-2
2.15. Identification Date			2-2
2.16. Key Employee			2-2
2.17. Participant			2-2
2.18. Plan			2-2
2.19. Plan Sponsor			2-2
2.20. Plan Year			2-2
2.21. Related Employer			2-3
2.22. Retirement			2-3
2.23. Separation from Service			2-3
2.24. Unforeseeable Emergency			2-4
2.25. Valuation Date			2-4
2.26. Years of Service			2-4
Article 3 - Participation			3-1
3.1. Participation			3-1
3.2. Termination of Participation			3-1
Article 4 - Participant Elections			4-1
4.1. Deferral Agreement			4-1
4.2. Amount of Deferral			4-1

Dynatrace Deferred Compensation Plan TOC-i


4.3. Timing of Election to Defer			4-1
4.4. Election of Payment Schedule and Form of Payment			4-2
Article 5 - Employer Contributions			5-1
5.1. Matching Contributions			5-1
5.2. Other Contributions			5-1
Article 6 - Accounts and Credits			6-1
6.1. Establishment of Account			6-1
6.2. Credits to Account			6-1
Article 7 - Investment of Contributions			7-1
7.1. Investment Options			7-1
7.2. Adjustment of Accounts			7-1
Article 8 - Right to Benefits			8-1
8.1. Vesting			8-1
8.2. Death			8-1
8.3. Disability			8-1
Article 9 - Distribution of Benefits			9-1
9.1. Amount of Benefits			9-1
9.2. Method and Timing of Distributions			9-1
9.3. Unforeseeable Emergency			9-1
9.4. Payment Election Overrides			9-2
9.5. Cashouts of Amounts Not Exceeding Stated Limit			9-2
9.6. Required Delay in Payment to Key Employees			9-2
9.7. Change in Control			9-3
9.8. Permissible Delays in Payment			9-6
9.9. Permitted Acceleration of Payment			9-7
Article 10 - Amendment and Termination			10-1
10.1. Amendment by Plan Sponsor			10-1
10.2. Plan Termination Following Change in Control or Corporate Dissolution			10-1
10.3. Other Plan Terminations			10-1
Article 11 - The Trust			11-1
11.1. Establishment of Trust			11-1
11.2. Trust			11-1
11.3. Investment of Trust Funds			11-1
Article 12 - Plan Administration			12-1
12.1. Powers and Responsibilities of the Administrator			12-1
12.2. Claims and Review Procedures			12-2
12.3. Plan Administrative Costs			12-3
Article 13 - Miscellaneous			13-1
13.1. Unsecured General Creditor of the Employer			13-1

Dynatrace Deferred Compensation Plan TOC-ii


13.2. Employer’s Liability			13-1
13.3. Limitation of Rights			13-1
13.4. Anti-Assignment			13-1
13.5. Facility of Payment			13-2
13.6. Notices			13-2
13.7. Tax Withholding			13-2
13.8. Indemnification			13-3
13.9. Successors			13-4
13.10. Disclaimer			13-4
13.11. Governing Law			13-4

Dynatrace Deferred Compensation Plan TOC-iii

Preamble

The Plan is intended to be a “plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended, or an “excess benefit plan” within the meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended, or a combination of both. The Plan is further intended to conform with the requirements of Internal Revenue Code Section 409A and the final regulations issued thereunder and shall be interpreted, implemented, and administered in a manner consistent therewith.

Dynatrace Deferred Compensation Plan Preamble 1

Article 1 - General

1.1.Plan

The Plan will be referred to by the name specified in the Adoption Agreement.

1.2.Effective Dates

(a)Original Effective Date. The Original Effective Date is the date as of which the Plan was initially adopted.

(b)Amendment Effective Date. The Amendment Effective Date is the date specified in the Adoption Agreement as of which the Plan is amended and restated. Except as otherwise provided in the Adoption Agreement, all amounts deferred under the Plan prior to the Amendment Effective Date shall be governed by the terms of the Plan as in effect on the day before the Amendment Effective Date.

(c)Special Effective Date. A Special Effective Date may apply to any given provision if so specified in Appendix A of the Adoption Agreement. A Special Effective Date will control over the Original Effective Date or Amendment Effective Date, whichever is applicable, with respect to such provision of the Plan.

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Article 2 - Definitions

Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

2.1 Account

“Account” means an account and any subaccounts established for the purpose of recording amounts credited on behalf of a Participant and any earnings, expenses, gains, losses, or distributions included thereon. The Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant or to the Participant’s Beneficiary pursuant to the Plan.

2.2 Administrator

“Administrator” means the person or persons designated by the Plan Sponsor in Section 1.05 of the Adoption Agreement to be responsible for the administration of the Plan. If no Administrator is designated in the Adoption Agreement, the Administrator is the Plan Sponsor.

2.3 Adoption Agreement

“Adoption Agreement” means the agreement adopted by the Plan Sponsor that establishes the Plan.

2.4 Beneficiary

“Beneficiary” means the persons, trusts, estates, or other entities entitled under Section 8.2 to receive benefits under the Plan upon the death of a Participant.

2.5 Board or Board of Directors

“Board” or “Board of Directors” means the Board of Directors or Managers of the Plan Sponsor unless such reference is to the Board or Board of Directors or Managers of a Related Employer that is listed in Section 1.04 of the Adoption Agreement.

2.6 Bonus

“Bonus” means an amount of incentive remuneration payable by the Employer to a Participant. A commission is not considered a Bonus for purposes of this Plan.

2.7 Change in Control

“Change in Control” means the occurrence of an event involving the Plan Sponsor that is described in Section 9.7.

2.8 Code

“Code” means the Internal Revenue Code of 1986, as amended.

2.9 Compensation

“Compensation” has the meaning specified in Section 3.01 of the Adoption Agreement.

2.10 Director

“Director” means a U.S. non-employee member of the Board of the Plan Sponsor or a Related Employer that is listed in Section 1.04 of the Adoption Agreement who has been designated by the Employer as eligible to participate in the Plan.

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2.11 Disability

“Disability” means that a Participant is disabled as defined in Section 6.01(i) of the Adoption Agreement.

2.12 Eligible Employee

“Eligible Employee” means an employee of the Employer on the U.S. payroll who satisfies the requirements in Section 2.01 of the Adoption Agreement.

2.13 Employer

“Employer” means the Plan Sponsor and any other Related Employer that is listed in Section 1.04 of the Adoption Agreement and which is authorized by the Plan Sponsor to participate in and, in fact, does adopt the Plan.

2.14 ERISA

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

2.15 Identification Date

“Identification Date” means the date as of which Key Employees are determined which is specified in Section 1.06 of the Adoption Agreement.

2.16 Key Employee

“Key Employee” means an employee who satisfies the conditions set forth in Section 9.6.

2.17 Participant

“Participant” means an Eligible Employee or Director who commences participation in the Plan in accordance with Article 3.

2.18 Plan

“Plan” means the unfunded plan of deferred compensation set forth herein, including the Adoption Agreement and any trust agreement, as adopted by the Plan Sponsor, and as amended from time to time.

2.19 Plan Sponsor

“Plan Sponsor” means the entity identified in Section 1.03 of the Adoption Agreement or any successor by merger, consolidation or otherwise.

2.20 Plan Year

“Plan Year” means the period identified in Section 1.02 of the Adoption Agreement.

2.21 Related Employer

“Related Employer” means the Plan Sponsor and (a) any corporation that is a member of a controlled group of corporations as defined in Code Section 414(b) that includes the Plan Sponsor and (b) any trade or business that is under common control as defined in Code Section 414(c) that includes the Plan Sponsor.

2.22 Retirement

“Retirement” has the meaning specified in 6.01(f) of the Adoption Agreement.

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2.23 Separation from Service

“Separation from Service” means the date that the Participant dies, retires, or otherwise has a termination of employment with respect to all entities comprising the Related Employer. A Separation from Service does not occur if the Participant is on military leave, sick leave or other bona fide leave of absence if the period of leave does not exceed six months or such longer period during which the Participant’s right to re-employment is provided by statute or contract. If the period of leave exceeds six months and the Participant’s right to re-employment is not provided either by statute or contract, a Separation from Service will be deemed to have occurred on the first day following the six-month period. If the period of leave is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where the impairment causes the Participant to be unable to perform the duties of their position of employment or any substantially similar position of employment, a 29 month period of absence may be substituted for the six month period.

Whether a termination of employment has occurred is based on whether the facts and circumstances indicate that the Related Employer and the Participant reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Participant would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36 month period (or the full period of services to the Related Employer if the employee has been providing services to the Related Employer for less than 36 months).

An independent contractor is considered to have experienced a Separation from Service with the Related Employer upon the expiration of the contract (or, in the case of more than one contract, all contracts) under which services are performed for the Related Employer if the expiration constitutes a good-faith and complete termination of the contractual relationship.

If a Participant provides services as both an employee and an independent contractor of the Related Employer, the Participant must separate from service both as an employee and as an independent contractor to be treated as having incurred a Separation from Service. If a Participant ceases providing services as an independent contractor and begins providing services as an employee, or ceases providing services as an employee and begins providing services as an independent contractor, the Participant will not be considered to have experienced a Separation from Service until the Participant has ceased providing services in both capacities.

If a Participant provides services both as an employee and as a member of the Board of Directors of a corporate Related Employer (or an analogous position with respect to a noncorporate Related Employer), the services provided as a Director are not taken into account in determining whether the Participant has incurred a Separation from Service as an employee for purposes of a nonqualified deferred compensation plan in which the Participant participates as an employee that is not aggregated under Code Section 409A with any plan in which the Participant participates as a Director.

If a Participant provides services both as an employee and as a member of the Board of Directors of a corporate related Employer (or an analogous position with respect to a noncorporate Related Employer), the services provided as an employee are not taken into account in determining whether the Participant has experienced a Separation from Service as a Director for purposes of a nonqualified deferred compensation plan in which the Participant participates as a Director that is not aggregated under Code Section 409A with any plan in which the Participant participates as an employee.

A Non-Employee Director is deemed to have incurred a Separation from Service upon ceasing of all services as a director constituting a “separation from service” (as that term is defined at Treas. Reg. § 1.409A-1(h)) from the Company and any Related Employer.

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All determinations of whether a Separation from Service has occurred will be made in a manner consistent with Code Section 409A and the final regulations thereunder.

2.24 Unforeseeable Emergency

“Unforeseeable Emergency” means a severe financial hardship of the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary, or the Participant’s dependent (as defined in Code Section 152, without regard to Code section 152(b)(1), (b)(2) and (d)(1)(B); loss of the Participant’s property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

2.25 Valuation Date

“Valuation Date” means each business day of the Plan Year that the New York Stock Exchange is open.

2.26 Years of Service

“Years of Service” means each one-year period for which the Participant receives service credit in accordance with the provisions of Section 7.01(d) of the Adoption Agreement.

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Article 3 - Participation

3.1 Participation

The Participants in the Plan shall be those Eligible Employees and Directors of the Employer who satisfy the requirements of Section 2.01 of the Adoption Agreement.

3.2 Termination of Participation

The Administrator may terminate a Participant’s participation in the Plan in a manner consistent with Code Section 409A. If the Employer terminates a Participant’s participation before the Participant experiences a Separation from Service, the Participant’s vested Accounts shall be paid in accordance with the provisions of Article 9.

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Article 4 - Participant Elections

4.1 Deferral Agreement

If permitted by the Plan Sponsor in accordance with Section 4.01 of the Adoption Agreement, each Eligible Employee and Director may elect to defer their Compensation within the meaning of Section 3.01 of the Adoption Agreement by executing in writing or electronically, a deferral agreement in accordance with rules and procedures established by the Administrator and the provisions of this Article 4.

A new deferral agreement must be timely executed for each Plan Year during which the Eligible Employee or Director desires to defer Compensation. An Eligible Employee or Director who does not timely execute a deferral agreement shall be deemed to have elected zero deferrals of Compensation for such Plan Year.

A deferral agreement may be changed or revoked during the period specified by the Administrator. Except as provided in Section 9.3, a deferral agreement becomes irrevocable at the close of the specified period.

4.2 Amount of Deferral

An Eligible Employee or Director may elect to defer Compensation in any amount permitted by Section 4.01(a) of the Adoption Agreement.

4.3 Timing of Election to Defer

Each Eligible Employee or Director who desires to defer Compensation otherwise payable during a Plan Year must execute a deferral agreement within the period preceding the Plan Year specified by the Administrator. Each Eligible Employee who desires to defer Compensation that is a Bonus must execute a deferral agreement within the period preceding the Plan Year during which the Bonus is earned that is specified by the Administrator, except that if the Bonus can be treated as performance based compensation as described in Code Section 409A(a)(4)(B)(iii), the deferral agreement may be executed within the period specified by the Administrator, which period, in no event, shall end after the date which is six months prior to the end of the period during which the Bonus is earned, provided the Participant has performed services continuously from the later of the beginning of the performance period or the date the performance criteria are established through the date the Participant executed the deferral agreement and provided further that the compensation has not yet become ‘readily ascertainable’ within the meaning of Treas. Reg. § 1.409A-2(a)(8). In addition, if the Compensation qualifies as ‘fiscal year compensation’ within the meaning of Treas. Reg. § 1.409A-2(a)(6), the deferral agreement may be made not later than the end of the Employer’s taxable year immediately preceding the first taxable year of the Employer in which any services are performed for which such Compensation is payable.

Except as otherwise provided below, an employee who is classified or designated as an Eligible Employee during a Plan Year or a Director who is designated as eligible to participate during a Plan Year may elect to defer Compensation otherwise payable during the remainder of such Plan Year in accordance with the rules of this Section 4.3 by executing a deferral agreement within the thirty (30) day period beginning on the date the employee is classified or designated as an Eligible Employee or the date the Director is designated as eligible, whichever is applicable, if permitted by Section 4.01(b)(ii) of the Adoption Agreement. If Compensation is based on a specified performance period that begins before the Eligible Employee or Director executes their deferral agreement, the election will be deemed to apply to the portion of such Compensation equal to the total amount of Compensation for the performance period multiplied by the ratio of the number of days remaining in the performance period after the election becomes irrevocable and effective over the total number of days in the performance period. The rules of this paragraph shall not apply unless the Eligible Employee or Director can be treated as initially eligible in accordance with Treas. Reg. § 1.409A-2(a)(7).

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4.4 Election of Payment Schedule and Form of Payment

All elections of a payment schedule and a form of payment will be made in accordance with rules and procedures established by the Administrator and the provisions of this Section 4.4.

(a)If the Plan Sponsor has elected to permit annual distribution elections in accordance with Section 6.01(h) of the Adoption Agreement, the following rules apply. At the time an Eligible Employee or Director completes a deferral agreement, the Eligible Employee or Director must elect a distribution event (which includes a specified time) and a form of payment for the Compensation subject to the deferral agreement from among the options the Plan Sponsor has made available for this purpose and which are specified in 6.01(b) of the Adoption Agreement. Prior to the time required by Treas. Reg. § 1.409A-2, the Eligible Employee or Director shall elect a distribution event (which includes a specified time) and a form of payment for any Employer contributions that may be credited to the Participant’s Account during the Plan Year. If an Eligible Employee or Director fails to elect a distribution event, they shall be deemed to have elected Separation from Service as the distribution event. If they fails to elect a form of payment, they shall be deemed to have elected a lump sum form of payment.

(b)If the Plan Sponsor has elected not to permit annual distribution elections in accordance with Section 6.01(h) of the Adoption Agreement, the following rules apply. At the time an Eligible Employee or Director first completes a deferral agreement but in no event later than the time required by Treas. Reg. § 1.409A-2, the Eligible Employee or Director must elect a distribution event (which includes a specified time) and a form of payment for amounts credited to their Account from among the options the Plan Sponsor has made available for this purpose and which are specified in Section 6.01(b) of the Adoption Agreement. If an Eligible Employee or Director fails to elect a distribution event, they shall be deemed to have elected Separation from Service in the distribution event. If the Participant fails to elect a form of payment, they shall be deemed to have elected a lump sum form of payment.

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Article 5 - Employer Contributions

5.1 Matching Contributions

If elected by the Plan Sponsor in Section 5.01(a) of the Adoption Agreement, the Employer will credit the Participant’s Account with a matching contribution determined in accordance with the formula specified in Section 5.01(a) of the Adoption Agreement. The matching contribution will be treated as allocated to the Participant’s Account at the time specified in Section 5.01(a)(iii) of the Adoption Agreement.

5.2 Other Contributions

If elected by the Plan Sponsor in Section 5.01(b) of the Adoption Agreement, the Employer will credit the Participant’s Account with a contribution or contributions determined in accordance with the formula or method specified in Section 5.01(b) of the Adoption Agreement. These contributions will be treated as allocated to the Participant’s Account at the time specified in Section 5.01(b)(iii) of the Adoption Agreement.

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Article 6 - Accounts and Credits

6.1 Establishment of Account

For accounting and computational purposes only, the Administrator will establish and maintain an Account on behalf of each Participant which will reflect the credits made pursuant to Section 6.2, distributions or withdrawals, along with the earnings, expenses, gains and losses allocated thereto, attributable to the hypothetical investments made with the amounts in the Account as provided in Article 7. The Administrator may establish and maintain such other records and accounts, as it decides in its discretion to be reasonably required or appropriate to discharge its duties under the Plan.

6.2 Credits to Account

A Participant’s Account will be credited for each Plan Year with the amount of their elective deferrals under Section 4.1 at the time the amount subject to the deferral election would otherwise have been payable to the Participant and the amount of Employer contributions, if any, treated as allocated on their behalf under Article 5.

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Article 7 - Investment of Contributions

7.1 Investment Options

The amount credited to each Account shall be treated as invested in the investment options designated for this purpose by the Administrator.

7.2 Adjustment of Accounts

The amount credited to each Account shall be adjusted for hypothetical investment earnings, expenses, gains or losses in an amount equal to the earnings, expenses, gains or losses attributable to the investment options selected by the party designated in Section 9.01 of the Adoption Agreement from among the investment options provided in Section 7.1. If permitted by Section 9.01 of the Adoption Agreement, a Participant (or the Participant’s Beneficiary after the death of the Participant) may, in accordance with rules and procedures established by the Administrator, select the investments from among the options provided in Section 7.1 to be used for the purpose of calculating future hypothetical investment adjustments to the Account or to future credits to the Account under Section 6.2 effective as of the Valuation Date coincident with or next following notice to the Administrator. Each Account shall be adjusted as of each Valuation Date to reflect: (a) the hypothetical earnings, expenses, gains, and losses described above; (b) amounts credited pursuant to Section 6.2; and (c) distributions or withdrawals. In addition, each Account may be adjusted for its allocable share of the hypothetical costs and expenses associated with the maintenance of the hypothetical investments provided in Section 7.1.

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Article 8 - Right to Benefits

8.1 Vesting

A Participant, at all times, has a 100% nonforfeitable interest in the amounts credited to their Account attributable to their elective deferrals made in accordance with Section 4.1.

A Participant’s right to the amounts credited to their Account attributable to Employer contributions made in accordance with Article 5 shall be determined in accordance with the relevant schedule and provisions in Section 7.01 of the Adoption Agreement. Upon a Separation from Service and after application of the provisions of Section 7.01 of the Adoption Agreement, the Participant shall forfeit the nonvested portion of their Account.

8.2 Death

The Plan Sponsor may elect to accelerate vesting upon the death of the Participant in accordance with Section 7.01(c) of the Adoption Agreement and/or to accelerate distributions upon death in accordance with Section 6.01(b) or Section 6.01(d) of the Adoption Agreement. If the Plan Sponsor does not elect to accelerate distributions upon death in accordance with Section 6.01(b) or Section 6.01(d) of the Adoption Agreement, the vested amount credited to the Participant’s Account will be paid in accordance with the provisions of Article 9.

A Participant may designate a Beneficiary or Beneficiaries, or change any prior designation of Beneficiary or Beneficiaries in accordance with rules and procedures established by the Administrator. Whenever a Participant designates a new Beneficiary, all former Beneficiary designations by such Participant shall be revoked automatically. If a Participant and the Participant’s spouse divorce, any designations of the spouse as Beneficiary shall become null and void. The former spouse shall be treated as the Beneficiary under the Plan only if after the divorce is final, the Participant expressly re-designates the former spouse as the Participant’s Beneficiary.

A copy of the death notice or other sufficient documentation must be filed with and approved by the Administrator. If upon the death of the Participant there is, in the opinion of the Administrator, no designated Beneficiary for part or all of the Participant’s vested Account, such amount will be paid to their estate (such estate shall be deemed to be the Beneficiary for purposes of the Plan) in accordance with the provisions of Article 9.

8.3 Disability

If the Plan Sponsor has elected to accelerate vesting upon the occurrence of a Disability in accordance with Section 7.01(c) of the Adoption Agreement and/or to permit distributions upon Disability in accordance with Section 6.01(b) or Section 6.01(d) of the Adoption Agreement, the determination of whether a Participant has incurred a Disability shall be based on the definition of Disability in Section 6.01(i) of the Adoption Agreement and in a manner consistent with the requirements of Code Section 409A.

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Article 9 - Distribution of Benefits

9.1 Amount of Benefits

The vested amount credited to a Participant’s Account as determined under Articles 6, 7 and 8 shall determine and constitute the basis for the value of benefits payable to the Participant under the Plan.

9.2 Method and Timing of Distributions

Except as otherwise provided in this Article 9, distributions under the Plan shall be made in accordance with the elections made or deemed made by the Participant under Article 4. Subject to the provisions of Section 9.6 requiring a six-month delay for certain distributions to Key Employees, distributions following a payment event shall commence at the time specified in Section 6.01(a) of the Adoption Agreement. If permitted by Section 6.01(g) of the Adoption Agreement, a Participant may elect, at least 12 months before a scheduled distribution event, to delay the payment date for a minimum period of 60 months from the originally scheduled date of payment, provided the election does not take effect for at least 12 months from the date on which the election is made. The distribution election change must be made in accordance with procedures and rules established by the Administrator. The Participant may, at the same time the date of payment is deferred, change the form of payment but such change in the form of payment may not effect an acceleration of payment in violation of Code Section 409A or the provisions of Treas. Reg. § 1.409A-2(b). For purposes of this Section 9.2, a series of installment payments is always treated as a single payment and not as a series of separate payments.

9.3 Unforeseeable Emergency

A Participant may request a distribution due to an Unforeseeable Emergency if the Plan Sponsor has elected to permit Unforeseeable Emergency withdrawals under Section 8.01(a) of the Adoption Agreement. The request must be in writing and must be submitted to the Administrator along with evidence that the circumstances constitute an Unforeseeable Emergency. The Administrator has the discretion to require whatever evidence it deems necessary to determine whether a distribution is warranted, and may require the Participant to certify that the need cannot be met from other sources reasonably available to the Participant. Whether a Participant has incurred an Unforeseeable Emergency will be determined by the Administrator on the basis of the relevant facts and circumstances in its sole discretion, but, in no event, will an Unforeseeable Emergency be deemed to exist if the hardship can be relieved: (a) through reimbursement or compensation by insurance or otherwise, (b) by liquidation of the Participant’s assets to the extent such liquidation would not itself cause severe financial hardship, or (c) by cessation of deferrals under the Plan. A distribution due to an Unforeseeable Emergency must be limited to the amount reasonably necessary to satisfy the emergency need and may include any amounts necessary to pay any federal, state, foreign or local income taxes and penalties reasonably anticipated to result from the distribution. The distribution will be made in the form of a single lump sum cash payment. If permitted by Section 8.01(b) of the Adoption Agreement, a Participant’s deferral elections for the remainder of the Plan Year will be cancelled upon a withdrawal due to an Unforeseeable Emergency. If the payment of all or any portion of the Participant’s vested Account is being delayed in accordance with Section 9.6 at the time they experience an Unforeseeable Emergency, the amount being delayed shall not be subject to the provisions of this Section 9.3 until the expiration of the six month period of delay required by section 9.6.

9.4 Payment Election Overrides

If the Plan Sponsor has elected one or more payment election overrides in accordance with Section 6.01(d) of the Adoption Agreement, the following provisions apply. Upon the occurrence of the first event selected by the Plan Sponsor, the remaining vested amount credited to the Participant’s Account shall be paid in the form designated to the Participant or their Beneficiary regardless of whether the Participant had made different elections of time and/or form of payment or whether the Participant was receiving installment payments at the time of the event.

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9.5 Cashouts of Amounts Not Exceeding Stated Limit

If the vested amount credited to the Participant’s Account does not exceed the limit established for this purpose by the Plan Sponsor in Section 6.01(e) of the Adoption Agreement at the time they incur a Separation from Service for any reason, the Employer shall distribute such amount to the Participant at the time specified in Section 6.01(a) of the Adoption Agreement in a single lump sum cash payment following such Separation from Service regardless of whether the Participant had made different elections of time or form of payment as to the vested amount credited to their Account or whether the Participant was receiving installments at the time of such termination. A Participant’s Account, for purposes of this Section 9.5, shall include any amounts described in Section 1.3.

9.6 Required Delay in Payment to Key Employees

Except as otherwise provided in this Section 9.6, a distribution made on account of Separation from Service (or Retirement, if applicable) to a Participant who is a Key Employee as of the date of their Separation from Service (or Retirement, if applicable) shall not be made before the date which is six months after the Separation from Service (or Retirement, if applicable).

(a)A Participant is treated as a Key Employee if: (i) they are employed by a Related Employer any of whose stock is publicly traded on an established securities market, and (ii) they satisfy the requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii), determined without regard to Code Section 416(i)(5), at any time during the 12 month period ending on the Identification Date.

(b)A Participant who is a Key Employee on an Identification Date shall be treated as a Key Employee for purposes of the six month delay in distributions for the 12 month period beginning on the first day of a month no later than the fourth month following the Identification Date. The Identification Date and the effective date of the delay in distributions shall be determined in accordance with Section 1.06 of the Adoption Agreement.

(c)The Plan Sponsor may elect to apply an alternative method to identify Participants who will be treated as Key Employees for purposes of the six month delay in distributions if the method satisfies each of the following requirements: (i) is reasonably designed to include all Key Employees, (ii) is an objectively determinable standard providing no direct or indirect election to any Participant regarding its application, and (iii) results in either all Key Employees or no more than 200 Key Employees being identified in the class as of any date. Use of an alternative method that satisfies the requirements of this Section 9.6(c) will not be treated as a change in the time and form of payment for purposes of Treas. Reg. § 1.409A-2(b).

(d)The six-month delay does not apply to payments described in Section 9.9(a), (b) or (d) or to payments that occur after the death of the Participant. If the payment of all or any portion of the Participant’s vested Account is being delayed in accordance with this Section 9.6 at the time they incurs a Disability which would otherwise require a distribution under the terms of the Plan, no amount shall be paid until the expiration of the six month period of delay required by this Section 9.6.

9.7 Change in Control

If the Plan Sponsor has elected to permit distributions upon a Change in Control, the following provisions shall apply. A distribution made upon a Change in Control will be made at the time specified in Section 6.01(a) of the Adoption Agreement in the form elected by the Participant in accordance with the procedures described in Article 4. Alternatively, if the Plan Sponsor has elected in accordance with Section 11.02 of the Adoption Agreement to require distributions upon a Change in Control, the Participant’s remaining vested Account shall be paid to the Participant or the Participant’s Beneficiary at the time specified in Section 6.01(a) of the Adoption Agreement as a single lump sum payment. A Change in Control, for purposes of the Plan, will occur upon a change in the ownership of the Plan

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Sponsor, a change in the effective control of the Plan Sponsor or a change in the ownership of a substantial portion of the assets of the Plan Sponsor, but only if elected by the Plan Sponsor in Section 11.03 of the Adoption Agreement. The Plan Sponsor, for this purpose, includes any corporation identified in this Section 9.7. All distributions made in accordance with this Section 9.7 are subject to the provisions of Section 9.6.

If a Participant continues to make deferrals in accordance with Article 4 after they have received a distribution due to a Change in Control, the residual amount payable to the Participant shall be paid at the time and in the form specified in the elections they make in accordance with Article 4 or upon their death or Disability as provided in Article 8.

Whether a Change in Control has occurred will be determined by the Administrator in accordance with the rules and definitions set forth in this Section 9.7. A distribution to the Participant will be treated as occurring upon a Change in Control if the Plan Sponsor terminates the Plan in accordance with Section 10.2 and distributes the Participant’s benefits within 12 months of a Change in Control as provided in Section 10.3.

(a)Relevant Corporations. To constitute a Change in Control for purposes of the Plan, the event must relate to: (i) the corporation for whom the Participant is performing services at the time of the Change in Control, (ii) the corporation that is liable for the payment of the Participant’s benefits under the Plan (or all corporations liable if more than one corporation is liable) but only if either the deferred compensation is attributable to the performance of services by the Participant for such corporation (or corporations) or there is a bona fide business purpose for such corporation (or corporations) to be liable for such payment and, in either case, no significant purpose of making such corporation (or corporations) liable for such payment is the avoidance of federal income tax, or (iii) a corporation that is a majority shareholder of a corporation identified in (i) or (ii), or any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending in a corporation identified in (i) or (ii). A majority shareholder is defined as a shareholder owning more than fifty percent (50%) of the total fair market value and voting power of such corporation.

(b)Stock Ownership. Code Section 318(a) applies for purposes of determining stock ownership. Stock underlying a vested option is considered owned by the individual who owns the vested option (and the stock underlying an unvested option is not considered owned by the individual who holds the unvested option). If, however, a vested option is exercisable for stock that is not substantially vested (as defined by Treas. Reg. § 1.83-3(b) and (j)) the stock underlying the option is not treated as owned by the individual who holds the option.

(c)Change in the Ownership of a Corporation. A change in the ownership of a corporation occurs on the date that any one person or more than one person acting as a group, acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of such corporation. If any one person or more than one person acting as a group is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of a corporation, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the corporation (or to cause a change in the effective control of the corporation as discussed below in Section 9.7(d)). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the corporation acquires its stock in exchange for property will be treated as an acquisition of stock. Section 9.7(c) applies only when there is a transfer of stock of a corporation (or issuance of stock of a corporation) and stock in such corporation remains outstanding after the transaction. For purposes of this Section 9.7(c), persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time or as a result of a public offering. Persons will, however, be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase, or acquisition of stock, or similar business

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transaction with the corporation. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation only with respect to ownership in that corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.

(d)Change in the Effective Control of a Corporation. A change in the effective control of a corporation occurs on the date that either (i) any one person, or more than one person acting as a group, acquires (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing thirty percent (30%) or more of the total voting power of the stock of such corporation, or (ii) a majority of members of the corporation’s Board of Directors is replaced during any twelve month period by Directors whose appointment or election is not endorsed by a majority of the members of the corporation’s Board of Directors prior to the date of the appointment or election, provided that for purposes of this paragraph (ii), the term corporation refers solely to the relevant corporation identified in Section 9.7(a) for which no other corporation is a majority shareholder for purposes of Section 9.7(a). In the absence of an event described in Section 9.7(d)(i) or (ii), a change in the effective control of a corporation will not have occurred. A change in effective control may also occur in any transaction in which either of the two corporations involved in the transaction has a change in the ownership of such corporation as described in Section 9.7(c) or a change in the ownership of a substantial portion of the assets of such corporation as described in Section 9.7(e). If any one person, or more than one person acting as a group, is considered to effectively control a corporation within the meaning of this Section 9.7(d), the acquisition of additional control of the corporation by the same person or persons is not considered to cause a change in the effective control of the corporation or to cause a change in the ownership of the corporation within the meaning of Section 9.7(c). For purposes of this Section 9.7(d), persons will or will not be considered to be acting as a group in accordance with rules similar to those set forth in Section 9.7(c) with the following exception. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation only with respect to the ownership in that corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.

Dynatrace Deferred Compensation Plan

(e)Change in the Ownership of a Substantial Portion of a Corporation’s Assets. A change in the ownership of a substantial portion of a corporation’s assets occurs on the date that any one person, or more than one person acting as a group (as determined in accordance with rules similar to those set forth in Section 9.7(d)), acquires (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation or the value of the assets being disposed of determined without regard to any liabilities associated with such assets. There is no Change in Control event under this Section 9.7(e) when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer. A transfer of assets by a corporation is not treated as a change in ownership of such assets if the assets are transferred to (i) a shareholder of the corporation (immediately before the asset transfer) in exchange for or with respect to its stock, (ii) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the corporation, (iii) a person, or more than one person acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the corporation, or (iv) an entity, at least fifty (50%) of the total value or voting power of which is owned, directly or indirectly, by a person described in Section 9.7(e)(iii). For purposes of the foregoing, and except as otherwise provided, a person’s status is determined immediately after the transfer of assets.

9.8 Permissible Delays in Payment

Distributions may be delayed beyond the date payment would otherwise occur in accordance with the provisions of Articles 8 and 9 in any of the following circumstances (as long as the Employer treats all payments to similarly situated Participants on a reasonably consistent basis):

(a)The Employer may delay payment if it reasonably anticipates that its deduction with respect to such payment would be limited or eliminated by the application of Code Section 162(m). Payment must be made during the Participant’s first taxable year in which the Employer reasonably anticipates, or should reasonably anticipate, that if the payment is made during such year the deduction of such payment will not be barred by the application of Code Section 162(m) or during the period beginning with the Participant’s Separation from Service and ending on the later of the last day of the Employer’s taxable year in which the Participant separates from service or the 15th day of the third month following the Participant’s Separation from Service. If a scheduled payment to a Participant is delayed in accordance with this Section 9.8(a), all scheduled payments to the Participant that could be delayed in accordance with this Section 9.8(a) will also be delayed.

(b)The Employer may also delay payment if it reasonably anticipates that the making of the payment will violate federal securities laws or other applicable laws provided payment is made at the earliest date on which the Employer reasonably anticipates that the making of the payment will not cause such violation.

(c)The Employer reserves the right to amend the Plan to provide for a delay in payment upon such other events and conditions as the Secretary of the Treasury may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

9.9 Permitted Acceleration of Payment

The Employer may permit acceleration of the time or schedule of any payment or amount scheduled to be paid pursuant to a payment under the Plan, provided such acceleration

Dynatrace Deferred Compensation Plan

would be permitted by the provisions of Treas. Reg. § 1.409A-3(j)(4), including the following events:

(a)Domestic Relations Order. A payment may be accelerated if such payment is made to an alternate payee pursuant to and following the receipt and qualification of a domestic relations order as defined in Code Section 414(p).

(b)Compliance with Ethics Agreement and Legal Requirements. A payment may be accelerated as may be necessary to comply with ethics agreements with the Federal government or as may be reasonably necessary to avoid the violation of Federal, state, local or foreign ethics law or conflicts of laws, in accordance with the requirements of Code Section 409A.

(c)De Minimis Amounts. A payment may be accelerated if (i) the amount of the payment is not greater than the applicable dollar amount under Code Section 402(g)(1)(B), and (ii) at the time the payment is made the amount constitutes the Participant’s entire interest under the Plan and all other plans that are aggregated with the Plan under Treas. Reg. § 1.409A-1(c)(2).

(d)FICA Tax. A payment may be accelerated to the extent required to pay the Federal Insurance Contributions Act tax imposed under Code Sections 3101, 3121(a) and 3121(v)(2) of the Code with respect to compensation deferred under the Plan (the “FICA Amount”). Additionally, a payment may be accelerated to pay the income tax on wages imposed under Code Section 3401 of the Code on the FICA Amount and to pay the additional income tax at source on wages attributable to the pyramiding Code Section 3401 wages and taxes. The total payment under this subsection (d) may not exceed the aggregate of the FICA Amount and the income tax withholding related to the FICA Amount.

(e)Section 409A Additional Tax. A payment may be accelerated if the Plan fails to meet the requirements of Code Section 409A; provided that such payment may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Code Section 409A.

(f)Offset. A payment may be accelerated in the Employer’s discretion as satisfaction of a debt of the Participant to the Employer, where such debt is incurred in the ordinary course of the service relationship between the Participant and the Employer, the entire amount of the reduction in any of the Employer’s taxable years does not exceed $5,000, and the reduction is made at the same time and in the same amount as the debt otherwise would have been due and collected from the Participant.

(g)Other Events. A payment may be accelerated in the Administrator’s discretion in connection with such other events and conditions as permitted by Code Section 409A.

Dynatrace Deferred Compensation Plan

Article 10 - Amendment and Termination

10.1 Amendment by Plan Sponsor

The Plan Sponsor reserves the right to amend the Plan (for itself and each Employer) through action of its Board of Directors or other authorized person. Any amendments to the Plan shall also require the approval of the Compensation Committee of the Board of Directors of Dynatrace, Inc. (unless such approval is not required under an applicable delegation of authority). No amendment can directly or indirectly deprive any current or former Participant or Beneficiary of all or any portion of their Account which had accrued and vested prior to the amendment.

10.2 Plan Termination Following Change in Control or Corporate Dissolution

If so elected by the Plan Sponsor in 11.01 of the Adoption Agreement, the Plan Sponsor reserves the right to terminate the Plan and distribute all amounts credited to all Participant Accounts within the 30 days preceding or the 12 months following a Change in Control as determined in accordance with the rules set forth in Section 9.7. For this purpose, the Plan will be treated as terminated only if all agreements, methods, programs and other arrangements sponsored by the Related Employer immediately after the Change in Control which are treated as a single plan under Treas. Reg. § 1.409A-1(c)(2) are also terminated so that all Participants under the Plan and all similar arrangements are required to receive all amounts deferred under the terminated arrangements within 12 months of the date the Plan Sponsor irrevocably takes all necessary action to terminate the arrangements. In addition, the Plan Sponsor reserves the right to terminate the Plan within 12 months of a corporate dissolution taxed under Code Section 331 or with the approval of a bankruptcy court pursuant to 11 U. S. C. Section 503(b)(1)(A) provided that amounts deferred under the Plan are included in the gross incomes of Participants in the latest of (a) the calendar year in which the termination and liquidation occurs, (b) the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture, or (c) the first calendar year in which payment is administratively practicable.

10.3 Other Plan Terminations

The Plan Sponsor retains the discretion to terminate the Plan if (a) all arrangements sponsored by the Plan Sponsor that would be aggregated with any terminated arrangement under Code Section 409A and Treas. Reg. § 1.409A-1(c)(2) are terminated, (b) no payments other than payments that would be payable under the terms of the arrangements if the termination had not occurred are made within 12 months of the termination of the arrangements, (c) all payments are made within 24 months of the date the Plan Sponsor takes all necessary action to irrevocably terminate and liquidate the arrangements, (d) the Plan Sponsor does not adopt a new arrangement that would be aggregated with any terminated arrangement under Code Section 409A and the regulations thereunder at any time within the three year period following the date of termination of the arrangement, and (e) the termination does not occur proximate to a downturn in the financial health of the Plan Sponsor. The Plan Sponsor also reserves the right to amend the Plan to provide that termination of the Plan will occur under such conditions and events as may be prescribed by the Secretary of the Treasury in generally applicable guidance published in the Internal Revenue Bulletin.

Dynatrace Deferred Compensation Plan

Article 11 - The Trust

11.1 Establishment of Trust

The Plan Sponsor may but is not required to establish a trust to hold amounts which the Plan Sponsor may contribute from time to time to correspond to some or all amounts credited to Participants under Section 6.2. In the event that the Plan Sponsor wishes to establish a trust to provide a source of funds for the payment of Plan benefits, any such trust shall be constructed to constitute an unfunded arrangement that does not affect the status of the Plan as an unfunded plan for purposes of Title I of ERISA and the Code. If the Plan Sponsor elects to establish a trust in accordance with Section 10.01 of the Adoption Agreement, the provisions of Sections 11.2 and 11.3 shall become operative.

11.2 Trust

Any trust established by the Plan Sponsor shall be between the Plan Sponsor and a trustee pursuant to a separate written agreement under which assets are held, administered and managed, subject to the claims of the Plan Sponsor’s creditors in the event of the Plan Sponsor’s insolvency. The Plan Sponsor must notify the trustee in the event of a bankruptcy or insolvency.

11.3 Investment of Trust Funds

Any amounts contributed to the trust by the Plan Sponsor shall be invested by the trustee in accordance with the provisions of the trust and the instructions of the Administrator. Trust investments need not reflect the hypothetical investments selected by Participants under Section 7.1 for the purpose of adjusting Accounts and the earnings or investment results of the trust need not affect the hypothetical investment adjustments to Participant Accounts under the Plan.

Dynatrace Deferred Compensation Plan

Article 12 - Plan Administration

12.1 Powers and Responsibilities of the Administrator

The Administrator has the full power and the full responsibility to administer the Plan in all of its details; subject, however, to the applicable requirements of ERISA. The Administrator’s powers and responsibilities include, but are not limited to, the following:

(a)To make and enforce such rules and procedures as it deems necessary or proper for the efficient administration of the Plan;

(b)To interpret the Plan, its interpretation thereof to be final, except as provided in Section 12.2, on all persons claiming benefits under the Plan;

(c)To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;

(d)To administer the claims and review procedures specified in Section 12.2;

(e)To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisions of the Plan;

(f)To determine the person or persons to whom such benefits will be paid;

(g)To authorize the payment of benefits;

(h)To make corrections and recover the overpayment of any benefits;

(i)To comply with the reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA;

(j)To appoint such agents, counsel, accountants, and consultants as may be required to assist in administering the Plan;

(k)By written instrument, to allocate and delegate its responsibilities, including the formation of an Administrative Committee to administer the Plan.

Dynatrace Deferred Compensation Plan

12.2 Claims and Review Procedures

(a)Claims Procedure. If any person believes they are being denied any rights or benefits under the Plan, such person may file a claim in writing with the Administrator. If any such claim is wholly or partially denied, the Administrator will notify such person of its decision in writing. Such notification will contain (i) specific reasons for the denial, (ii) specific reference to pertinent Plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (iv) a description of the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the person’s right to bring a civil action following an adverse decision on review. If the claim involves a Disability, the denial must also include the standards that governed the decision, including the basis for disagreeing with any health care professionals, vocational professionals or the Social Security Administration as well as an explanation of the scientific or clinical judgement underlying the denial. Such notification will be given within 90 days (45 days in the case of a claim regarding Disability) after the claim is received by the Administrator. The Administrator may extend the period for providing the notification by 90 days (30 days in the case of a claim regarding Disability, which may be extended an additional 30 days) if special circumstances require an extension of time for processing the claim and if written notice of such extension and circumstance is given to such person within the initial 90 day period (45 day period in the case of a claim regarding Disability). If such notification is not given within such period, the claim will be considered denied as of the last day of such period and such person may request a review of their claim.

(b)Review Procedure. Within 60 days (180 days in the case of a claim regarding Disability) after the date on which a person receives a written notification of denial of claim (or, if written notification is not provided, within 60 days (180 days in the case of a claim regarding Disability) of the date denial is considered to have occurred), such person (or their duly authorized representative) may (i) file a written request with the Administrator for a review of their denied claim and of pertinent documents and (ii) submit written issues and comments to the Administrator. The Administrator will notify such person of its decision in writing. Such notification will be written in a manner calculated to be understood by such person and will contain specific reasons for the decision as well as specific references to pertinent Plan provisions. The notification will explain that the person is entitled to receive, upon request and free of charge, reasonable access to and copies of all pertinent documents and has the right to bring a civil action following an adverse decision on review. The decision on review will be made within 60 days (45 days in the case of a claim regarding Disability). The Administrator may extend the period for making the decision on review by 60 days (45 days in the case of a claim regarding Disability) if special circumstances require an extension of time for processing the request such as an election by the Administrator to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial 60-day period (45 days in the case of a claim regarding Disability). If the decision on review is not made within such period, the claim will be considered denied.

If the claim is regarding Disability, and the determination of Disability has not been made by the Social Security Administration, the Railroad Retirement Board, or under the Plan Sponsor’s long-term disability plan, the person may, upon written request and free of charge, also receive the identification of medical or vocational experts whose advice was obtained in connection with the denial of a claim regarding Disability, even if the advice was not relied upon.

Before issuing any decision with respect to a claim involving Disability, the Administrator will provide to the person, free of charge, the following information as soon as possible and sufficiently in advance of the date on which the response is required to be provided to the person to allow the person a reasonable opportunity to respond prior to the due date of the response:

Dynatrace Deferred Compensation Plan

(i)Any new or additional evidence considered, relied upon, or generated by the Administrator or other person making the decision; and

(ii)A new or addition rationale if the decision will be based on that rationale.

(c)Exhaustion of Claims Procedures and Right to Bring Legal Claim. No action at law or equity shall be brought more than one year after the Administrator’s affirmation of a denial of a claim, or, if earlier, more than four years after the facts or events giving rising to the claimant’s allegation(s) or claim(s) first occurred.

12.3 Plan Administrative Costs

All reasonable costs and expenses (including legal, accounting, and employee communication fees) incurred by the Administrator in administering the Plan shall be paid by the Plan to the extent not paid by the Employer.

Dynatrace Deferred Compensation Plan

Article 13 - Miscellaneous

13.1 Unsecured General Creditor of the Employer

Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, interests or claims in any property or assets of the Employer. For purposes of the payment of benefits under the Plan, any and all of the Employer’s assets shall be, and shall remain, the general, unpledged, unrestricted assets of the Employer. Each Employer's obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.

13.2 Employer’s Liability

Each Employer’s liability for the payment of benefits under the Plan shall be defined only by the Plan and by the deferral agreements entered into between a Participant and the Employer. An Employer shall have no obligation or liability to a Participant under the Plan, except as provided by the Plan and a deferral agreement or agreements. An Employer shall have no liability to Participants employed by other Employers.

13.3 Limitation of Rights

Neither the establishment of the Plan, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits, will be construed as giving to the Participant or any other person any legal or equitable right against the Employer, the Plan or the Administrator, except as provided herein; and in no event will the terms of employment or service of the Participant be modified or in any way affected hereby.

13.4 Anti-Assignment

Except as may be necessary to fulfill a domestic relations order within the meaning of Code Section 414(p), none of the benefits or rights of a Participant or any Beneficiary of a Participant shall be subject to the claim of any creditor. In particular, to the fullest extent permitted by law, all such benefits and rights shall be free from attachment, garnishment, or any other legal or equitable process available to any creditor of the Participant and their Beneficiary. Neither the Participant nor their Beneficiary shall have the right to alienate, anticipate, commute, pledge, encumber, or assign any of the payments which they may expect to receive, contingently or otherwise, under the Plan, except the right to designate a Beneficiary to receive death benefits provided hereunder. Notwithstanding the preceding, the benefit payable from a Participant’s Account may be reduced, at the discretion of the Administrator, to satisfy any debt or liability to the Employer.

13.5 Facility of Payment

If the Administrator determines, on the basis of medical reports or other evidence satisfactory to the Administrator, that the recipient of any benefit payments under the Plan is incapable of handling their affairs by reason of minority, illness, infirmity or other incapacity, the Administrator may direct the Employer to disburse such payments to a person or institution designated by a court which has jurisdiction over such recipient or a person or institution otherwise having the legal authority under State law for the care and control of such recipient. The receipt by such person or institution of any such payments therefore, and any such payment to the extent thereof, shall discharge the liability of the Employer, the Plan and the Administrator for the payment of benefits hereunder to such recipient.

13.6 Notices

Any notice or other communication to the Employer or Administrator in connection with the Plan shall be deemed delivered in writing if addressed to the Plan Sponsor at the address specified in Section 1.03 of the Adoption Agreement and if either actually delivered at said address or, in the case or a letter, five business days shall have elapsed after the

Dynatrace Deferred Compensation Plan

same shall have been deposited in the United States mails, first-class postage prepaid and registered or certified.

13.7 Tax Withholding

If the Employer concludes that tax is owing with respect to any deferral or payment hereunder, the Employer shall withhold such amounts from any payments due the Participant or from amounts deferred, as permitted by law, or otherwise make appropriate arrangements with the Participant or their Beneficiary for satisfaction of such obligation. Tax, for purposes of this Section 13.7 means any federal, state, local or any other governmental income tax, employment or payroll tax, excise tax, or any other tax or assessment owing with respect to amounts deferred, any earnings thereon, and any payments made to Participants under the Plan.

13.8 Indemnification

(a)Each Indemnitee (as defined in Section 13.8(e)) shall be indemnified and held harmless by the Employer for all actions taken by them and for all failures to take action (regardless of the date of any such action or failure to take action), to the fullest extent permitted by the law of the jurisdiction in which the Employer is incorporated, against all expense, liability, and loss (including, without limitation, attorneys’ fees, judgments, fines, taxes, penalties, and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Indemnitee in connection with any Proceeding (as defined in subsection (e)). No indemnification pursuant to this Section shall be made, however, in any case where (1) the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness or (2) there is a settlement to which the Employer does not consent.

(b)The right to indemnification provided in this Section shall include the right to have the expenses incurred by the Indemnitee in defending any Proceeding paid by the Employer in advance of the final disposition of the Proceeding, to the fullest extent permitted by the law of the jurisdiction in which the Employer is incorporated; provided that, if such law requires, the payment of such expenses incurred by the Indemnitee in advance of the final disposition of a Proceeding shall be made only on delivery to the Employer of an undertaking, by or on behalf of the Indemnitee, to repay all amounts so advanced without interest if it shall ultimately be determined that the Indemnitee is not entitled to be indemnified under this Section or otherwise.

(c)Indemnification pursuant to this Section shall continue as to an Indemnitee who has ceased to be such and shall inure to the benefit of their heirs, executors, and administrators. The Employer agrees that the undertakings made in this Section shall be binding on its successors or assigns and shall survive the termination, amendment, or restatement of the Plan.

(d)The foregoing right to indemnification shall be in addition to such other rights as the Indemnitee may enjoy as a matter of law or by reason of insurance coverage of any kind and is in addition to and not in lieu of any rights to indemnification to which the Indemnitee may be entitled pursuant to the by-laws of the Employer.

(e)For the purposes of this Section, the following definitions shall apply:

(i)“Indemnitee” shall mean each person serving as an Administrator (or any other person who is an employee, Director, or officer of the Employer) who was or is a party to, or is threatened to be made a party to, or is otherwise involved in, any Proceeding, by reason of the fact that they are or were performing administrative functions under the Plan.

(ii)“Proceeding” shall mean any threatened, pending, or completed action, suit, or proceeding (including, without limitation, an action, suit, or proceeding

Dynatrace Deferred Compensation Plan

by or in the right of the Employer), whether civil, criminal, administrative, investigative, or through arbitration.

13.9 Successors

The provisions of the Plan shall bind and inure to the benefit of the Plan Sponsor, the Employer and their successors and assigns and the Participant and the Participant’s designated Beneficiaries.

13.10 Disclaimer

It is the Plan Sponsor’s intention that the Plan comply with the requirements of Code Section 409A. Neither the Plan Sponsor nor the Employer shall have any liability to any Participant should any provision of the Plan fail to satisfy the requirements of Code Section 409A.

13.11 Governing Law

The Plan will be construed, administered, and enforced according to the laws of the State specified by the Plan Sponsor in Section 12.01 of the Adoption Agreement.

Dynatrace Deferred Compensation Plan

EXHIBIT 10.3

Dynatrace Deferred Compensation Plan

Adoption Agreement

Table of Contents


1.01 Preamble			1
1.02 Plan			1
1.03 Plan Sponsor			1
1.04 Employer			2
1.05 Administrator			2
1.06 Key Employee Determination Dates			2
2.01 Participation			3
3.01 Compensation			4
3.02 Bonuses			5
4.01 Participant Contributions			6
5.01 Employer Contributions			9
6.01 Distributions			12
7.01 Vesting			18
8.01 Unforeseeable Emergency			22
9.01 Investment Decisions			23
10.01 Trust			24
11.01 Termination Upon Change In Control			25
11.02 Automatic Distribution Upon Change In Control			25
11.03 Change In Control			25
12.01 Governing State Law			26
Appendix A			28

Adoption Agreement

1.01 Preamble

By the execution of this Adoption Agreement, the Plan Sponsor hereby [complete (a) or (b)]

(a)☒ adopts a new plan as of January 1, 2024

(b)☐ amends and restates its existing plan as of [month, day, year] which is the Amendment Effective Date. Except as otherwise provided in Appendix A, all amounts deferred under the Plan prior to the Amendment Effective Date shall be governed by the terms of the Plan as in effect on the day before the Amendment Effective Date.

Original Effective Date: [month, day, year]

Pre-409A Grandfathering: ☐ Yes ☐ No

By executing this Adoption Agreement, the Plan Sponsor (as defined below) has adopted the Plan (as defined below) consisting of the Basic Plan Document along with this Adoption Agreement (and any exhibits or scheduled attached hereto). The Plan Sponsor, by completing this Adoption Agreement has made the specific choices regarding plan design as set forth in the Adoption Agreement together with the detailed additional provisions set out in the Basic Plan Document. All capitalized terms used in this Adoption Agreement have the same meaning given in the Basic Plan Document.

1.02 Plan


Plan Name:			Dynatrace Deferred Compensation Plan


Plan Year:			01/01 to 12/31

1.03 Plan Sponsor


Name:			Dynatrace LLC


Address:			1601 Trapelo Road, Suite 116, Waltham, MA 02451


Phone #:			(781) 530-1000


EIN #:			47-2362151


Fiscal Year:			04/01 to 03/31

Is stock of the Plan Sponsor, any Employer or any Related Employer publicly traded on an established securities market? ☒ Yes ☐ No

1.04 Employer

The following entities have been authorized by the Plan Sponsor to participate in and have adopted the Plan [insert “Not Applicable” if none have been authorized]:


Entity	Publicly Traded on Est. Securities Market
	Yes	No
Dynatrace, Inc. (EIN #47-2386428)	X	☐
	☐	☐
	☐	☐
	☐	☐
	☐	☐

1.05 Administrator

The Plan Sponsor has designated the following party or parties to be responsible for the administration of the Plan:


Name:			Persons delegated authority by the Board of Directors of the Plan Sponsor


Address:			1601 Trapelo Road, Suite 116, Waltham, MA 02451

Note: The Administrator is the person or persons designated by the Plan Sponsor to be responsible for the administration of the Plan. Neither Fidelity Employer Services Company nor any other Fidelity affiliate can be the Administrator.

1.06 Key Employee Determination Dates

The Employer has designated December 31 as the Identification Date for purposes of determining Key Employees.

In the absence of a designation, the Identification Date is December 31.

The Employer has designated April 1as the effective date for purposes of applying the six month delay in distributions to Key Employees.

In the absence of a designation, the effective date is the first day of the fourth month following the Identification Date.

2.01 Participation

(a)☒ Employees [complete (i), (ii) or (iii)]

(i)☒ Eligible Employees are selected by the Employer.

(ii)☐ Eligible Employees are those employees of the Employer who satisfy the following criteria:

(iii)☐ Employees are not eligible to participate.

(b)☒ Directors [complete (i), (ii) or (iii)]

(i)☒ All Directors are eligible to participate.

(ii)☐ Only Directors selected by the Employer are eligible to participate.

(iii)☐ Directors are not eligible to participate.

3.01 Compensation

For purposes of determining Participant contributions under Article 4 and Employer contributions under Article 5, Compensation shall be defined in the following manner [complete (a) or (b) and select (c) and/or (d), if applicable]:

(a)☐ Compensation is defined as:

(b)☒ Compensation as defined in the Dynatrace, Inc 401(k) Plan without regard to the limitation in Section 401(a)(17) of the Code for such Plan Year.

(c)☒ Director Compensation is defined as:


Cash retainer and fees

(d)☐ Compensation shall, for all Plan purposes, be limited to $.

(e)☐ Not Applicable.

3.02 Bonuses

Compensation, as defined in Section 3.01 of the Adoption Agreement, includes the following type of bonuses that will be the subject of a separate deferral election:


Type	[Will be treated as] Performance Based Compensation
	Yes	No
Fiscal Year Bonus	☒	☐
	☐	☐
	☐	☐
	☐	☐
	☐	☐

☐ Not Applicable.

4.01 Participant Contributions

If Participant contributions are permitted, complete (a), (b), and (c). Otherwise complete (d).

(a)Amount of Deferrals

A Participant may elect within the period specified in Section 4.01(b) of the Adoption Agreement to defer the following amounts of remuneration. For each type of remuneration listed, complete “dollar amount” and/or “percentage amount”.

(i)Compensation other than Bonuses [do not complete if you complete (iii)]


Type of Remuneration	Dollar Amount		% Amount		Increment
	Min	Max	Min	Max
Base Salary Deferrals			1%	75%	1%
Commissions			1%	100%	1%
			%	%	%

Note: The increment is required to determine the permissible deferral amounts. For example, a minimum of 0% and maximum of 20% with a 5% increment would allow an individual to defer 0%, 5%, 10%, 15% or 20%.

(ii)Bonuses [do not complete if you complete (iii)]


Type of Bonus	Dollar Amount		% Amount		Increment
	Min	Max	Min	Max
Fiscal Year Bonus			1%	100%	1%
			%	%	%
			%	%	%

(iii)Compensation [do not complete if you completed (i) and (ii)]

Dollar Amount

% Amount

Increment

Min

Max

Min

Max

April 2022 6

(iv)Director Compensation


Type of Compensation	Dollar Amount		% Amount		Increment
	Min	Max	Min	Max
Cash Retainer/Fees			1%	100%	1%
Other:			%	%	%
Other:			%	%	%
Other:			%	%	%

(b)Election Period

(i)Performance Based Compensation

A special election period

☒ Does

☐ Does Not

apply to each eligible type of performance based compensation referenced in Section 3.02 of the Adoption Agreement.

The special election period, if applicable, will be determined by the Employer.

(ii)Newly Eligible Participants

An employee or director who is classified or designated as an Eligible Employee or Director, respectively, during a Plan Year

☒ May

☐ May Not

elect to defer Base Salary Deferrals or Director cash retainer and fees, respectively, earned during the remainder of the Plan Year by completing a deferral agreement within the 30-day period beginning on the date he or she is eligible to participate in the Plan. Such newly Eligible Employee shall not be eligible to defer Commissions or Fiscal Year Bonus under this Section 4.01(b)(ii).

The special election period, if applicable, will be determined by the Employer.

April 2022 7

(c)No Participant Contributions

☐ Participant contributions are not permitted under the Plan.

April 2022 8

5.01 Employer Contributions

If Employer contributions are permitted, complete (a) and/or (b). Otherwise complete (c).

(a)Matching Contributions

(i)Amount

For each Plan Year, the Employer shall make a matching contribution on behalf of each Participant who defers Compensation for the Plan Year and satisfies the requirements of Section 5.01(a)(ii) of the Adoption Agreement equal to [complete the ones that are applicable]:

(A)☐ [insert percentage]% of the Compensation the Participant has elected to defer for the Plan Year

(B)☐ An amount determined by the Employer in its sole discretion

(C)☐ Matching contributions for each Participant shall be limited to $ and/or [insert percentage]% of Compensation

(D)☐ Other:

(E)☒ Not Applicable [Proceed to Section 5.01(b)]

(ii)Eligibility for matching contribution

A Participant who defers Compensation for the Plan Year shall receive an allocation of matching contributions determined in accordance with Section 5.01(a)(i) provided he or she satisfies the following requirements [complete the ones that are applicable]:

(A)☐ Describe requirements:

(B)☐ Is selected by the Employer in its sole discretion to receive an allocation of matching contributions

(C)☐ No requirements

(iii)Time of Allocation

Matching contributions, if made, shall be treated as allocated [select one]:

(A)☐ As of the last day of the Plan Year

(B)☐ At such times as the Employer shall determine in its sole discretion

(C)☐ At the time the Compensation on account of which the matching contribution is being made would otherwise have been paid to the Participant

(D)☐ Other:

(b)Other Contributions

(i)Amount

The Employer shall make a contribution on behalf of each Participant who satisfies the requirements of Section 5.01(b)(ii) equal to [complete the ones that are applicable]:

(A)☐ An amount equal to [insert percentage]% of the Participant’s Compensation

(B)☒ An amount determined by the Employer in its sole discretion

(C)☐ Contributions for each Participant shall be limited to $

(D)☐ Other:

(E)☐ Not Applicable [Proceed to Section 6.01]

(ii)Eligibility for Other Contribution

A Participant shall receive an allocation of other Employer contributions determined in accordance with Section 5.01(b)(i) for the Plan Year if he or she satisfies the following requirements [complete the one that is applicable]:

(A)☐ Describe requirements:

(B)☒ Is selected by the Employer in its sole discretion to receive an allocation of other Employer contributions

(C)☐ No requirements

(iii)Time of Allocation

Employer contributions, if made, shall be treated as allocated [select one]:

(A)☐ As of the last day of the Plan Year

(B)☒ At such times or times as the Employer shall determine in its sole discretion

(C)☐ Other:

(c)No Employer Contributions

☐ Employer contributions are not permitted under the Plan.

6.01 Distributions

The timing and form of payment of distributions made from the Participant’s vested Account shall be made in accordance with the elections made in this Section 6.01 of the Adoption Agreement except when Section 9.6 of the Plan requires a six month delay for certain distributions to Key Employees of publicly traded companies.

(a)Timing of Distributions

(i)All distributions shall commence in accordance with the following [choose one]:

(A)☒ As soon as administratively feasible following the distribution event but in no event later than the time prescribed by Treas. Reg. Sec. 1.409A-3(d).

(B)☐ Monthly on specified day [insert day]

(C)☐ Annually on specified month and day [insert month and day]

(D)☐ Calendar quarter on specified month and day [insert month and day] [insert numerical quarter 1, 2, 3, or 4]

(ii)The timing of distributions as determined in Section 6.01(a)(i) shall be modified by the adoption of:

(A)☐ Event Delay – Distribution events other than those based on Specified Date or Specified Age will be treated as not having occurred for [insert number of months] months

(B)☐ Hold Until Next Year – Distribution events other than those based on Specified Date or Specified Age will be treated as not having occurred for twelve months from the date of the event if payment pursuant to Section 6.01(a)(i) will thereby occur in the next calendar year or on the first payment date in the next calendar year in all other cases

(C)☐ Immediate Processing – The timing method selected by the Plan Sponsor under Section 6.01(a)(i) shall be overridden for the following distribution events [insert events]:

(D)☒ Not applicable

(b)Distribution Events

(i)Participant Contributions under Section 4.01(a)

Participants may elect the following payment events and the associated form or forms of payment. If multiple events for each year are selected, the earliest to occur will trigger payment. For installments, insert the range of available periods (e.g., 5-15) or insert the periods available (e.g., 5, 7, 9).

Notwithstanding the above, a Director may elect payments only upon Separation from Service or as of a Specified Date; and Eligible Employees may elect payments only upon Separation from Service plus 6 months or as of a Specified Date.


	Lump Sum	Installments
(A)☒ Specified Date	☒	3, 5 years
(A)☐ Specified Age	☐	years
(A)☒ Separation from Service (as to Directors only)	☒	2-10 years
(A)☒ Separation from Service plus 6 months (as to Eligible Employees only)	☒	2-10 years
(A)☐ Separation from Service plus months [not to exceed months]	☐	years
(A)☐ Retirement	☐	years
(A)☐ Retirement plus 6 months	☐	years
(A)☐ Retirement plus 12 months	☐	years
(A)☐ Disability	☐	years
(A)☐ Death	☐	years
(A)☐ Change in Control	☐	years

The minimum deferral period for Specified Date or Specified Age event shall be 3 years.

Installments may be paid [select each that applies]

☐ Monthly

☐ Quarterly

☐ Semi-Annually

☒ Annually

(ii)Employer Contributions under Section 5.01(a) and (b)

Notwithstanding the above, a Director may elect payments only upon Separation from Service; and Eligible Employees may elect payments only upon Separation from Service plus 6 months.


	Lump Sum	Installments
(A)☐ Specified Date	☐	years
(A)☐ Specified Age	☐	years
(A)☒ Separation from Service (as to Directors only)	☒	2-10 years
(A)☒ Separation from Service plus 6 months (as to Eligible Employees only)	☒	2-10 years
(A)☐ Separation from Service plus months [not to exceed months]	☐	years
(A)☐ Retirement	☐	years
(A)☐ Retirement plus 6 months	☐	years
(A)☐ Retirement plus 12 months	☐	years
(A)☐ Disability	☐	years
(A)☐ Death	☐	years
(A)☐ Change in Control	☐	years

The minimum deferral period for Specified Date or Specified Age event shall be N/A years.

Installments may be paid [select each that applies]

☐ Monthly

☐ Quarterly

☐ Semi-Annually

☒ Annually

(c)Specified Date and Specified Age elections may not extend beyond age Not Applicable.

(d)Payment Election Override

Payment of the remaining vested balance of the Participant’s Account will automatically occur at the time specified in Section 6.01(a) of the Adoption Agreement in the form indicated upon the earliest to occur of the following events [check each event that applies and for each event include only a single form of payment]:


Events	Form of Payment
	Lump Sum	Installments

☐ Separation from Service	☐

☐ Separation from Service before Retirement	☐

☒ Death	☒

☒ Disability	☒

☐ Not Applicable	☐

(e)Involuntary Cashouts

☒ If the Participant’s vested Account at the time of his or her Separation from Service does not exceed the applicable Code Section 402(g) limit, distribution of the vested Account shall automatically be made in the form of a single lump sum in accordance with Section 9.5 of the Plan.

☐ There are no involuntary cashouts.

(f)Retirement

☐ Retirement shall be defined as a Separation from Service that occurs on or after the Participant [insert description of requirements]:

☒ No special definition of Retirement applies.

(g)Distribution Election Change

A Participant

☒ Shall

☐ Shall Not

be permitted to modify a scheduled distribution date and/or payment option in accordance with Section 9.2 of the Plan.

A Participant shall generally be permitted to elect such modification _1_ number of times.

Administratively, allowable distribution events will be modified to reflect all options necessary to fulfill the distribution change election provision.

(h)Frequency of Elections

The Plan Sponsor

☒ Has

☐ Has Not

elected to permit annual elections of a time and form of payment for amounts deferred under the Plan. If a single election of a time and/or form of payment is required, the Participant will make such election at the time he or she first completes a deferral agreement which, in all cases, will be no later than the time required by Reg. Sec. 1.409A-2.

(i)Disability

For Purposes of Section 2.11 of the Plan, Disability shall be defined as

☐ Total disability as determined by the Social Security Administration or the Railroad Retirement Board.

☒ As determined by the Employer’s long term disability insurance policy.

☐ As follows [insert description of requirements]:

☐ Not applicable.

7.01 Vesting

(a)Matching Contributions

The Participant’s vested interest in the amount credited to his or her Account attributable to matching contributions shall be based on the following schedule:


☐	Years of Service	Vesting %

	0	%	[insert “100” if there is immediate vesting]

	1	%

	2	%

	3	%

	4	%

	5	%

	6	%

	7	%

	8	%

	9	%

☐ Other:

☐ Class year vesting applies:

☒ Not applicable.

(b)Other Employer Contributions

The Participant’s vested interest in the amount credited to his or her Account attributable to Employer contributions other than matching contributions shall be based on the following schedule:


☐	Years of Service	Vesting %

	0	%	[insert “100” if there is immediate vesting]

	1	%

	2	%

	3	%

	4	%

	5	%

	6	%

	7	%

	8	%

	9	%

☒ Other:


At the time of contribution, a decision will be made by the Administrator as to the vesting provisions that will apply.

☐ Class year vesting applies:

☐ Not applicable.

(c)Acceleration of Vesting

The Participant’s vested interest in his or her Account will automatically be 100% upon the occurrence of the following events [select the ones that are applicable]:

(i)☒ Death.

(ii)☒ Disability.

(iii)☐ Change in Control.

(iv)☐ Eligibility for Retirement.

(v)☐ Other:

(vi)☐ Not applicable.

(d)Years of Service

(i)A Participant’s Years of Service shall include all service performed for the Employer and

☒ Shall

☐ Shall Not

include service performed for the Related Employer.

(ii)Years of Service shall also include service performed for the following entities:

(iii)Years of Service shall be determined in accordance with [select one]:

(A)☒ The elapsed time method in Treas. Reg. Sec. 1.410(a)-7

(B)☐ The general method in DOL Reg. Sec. 2530.200b-1 through b-4

(C)☐ Participant’s Years of Service credited under:


[insert name of plan]

(D)☐ Other:

(iv)☐ Not applicable.

8.01 Unforeseeable Emergency

(a)A withdrawal due to an Unforeseeable Emergency as defined in Section 2.24:

☐ Will

☒ Will Not [if Unforeseeable Emergency withdrawals are not permitted, proceed to Section 9.01]

be allowed.

(b)Upon a withdrawal due to an Unforeseeable Emergency, a Participant’s deferral election for the remainder of the Plan Year:

☐ Will

☐ Will Not

be cancelled. If cancellation occurs, the Participant may resume participation in accordance with Article 4 of the Plan.

9.01 Investment Decisions

Investment decisions regarding the hypothetical amounts credited to a Participant’s Account shall be made by [select one]:

(a)☒ The Participant or his or her Beneficiary

(b)☐ The Employer

10.01 Trust

The Employer [select one]:

☒ Does

☐ Does Not

intend to establish a trust as provided in Article 11 of the Plan.

11.01 Termination Upon Change In Control

The Plan Sponsor

☒ Reserves

☐ Does Not Reserves

the right to terminate the Plan and distribute all vested amounts credited to Participant Accounts upon a Change in Control as described in Section 9.7.

11.02 Automatic Distribution Upon Change In Control

Distribution of the remaining vested balance of each Participant’s Account

☐ Shall

☒ Shall Not

automatically be paid as a lump sum payment upon the occurrence of a Change in Control as provided in Section 9.7.

11.03 Change In Control

A Change in Control for Plan purposes includes the following [select each definition that applies]:

(a)☒ A change in the ownership of the Employer as described in Section 9.7(c) of the Plan.

(b)☒ A change in the effective control of the Employer as described in Section 9.7(d) of the Plan.

(c)☒ A change in the ownership of a substantial portion of the assets of the Employer as described in Section 9.7(e) of the Plan.

(d)☐ Not Applicable.

12.01 Governing State Law

The laws of the State of Delaware shall apply in the administration of the Plan to the extent not preempted by ERISA.

Execution Page

The Plan Sponsor has caused this Adoption Agreement to be executed this 30th day of November 2023.


Plan Sponsor:			Dynatrace LLC
By:			/s/ Christina Brenner
Title:			Christina Brenner, Vice President, Total Rewards

Appendix A

Special Effective Dates

Not Applicable

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Rick McConnell, certify that:


1.			I have reviewed this Quarterly Report on Form 10-Q of Dynatrace, Inc.;


2.			Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.			Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.			The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.			designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.			designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.			evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.			disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.			The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a.			all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b.			any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:

February 8, 2024

By:

/s/ Rick McConnell

Rick McConnell

Chief Executive Officer

(Principal Executive Officer)

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James Benson, certify that:


1.			I have reviewed this Quarterly Report on Form 10-Q of Dynatrace, Inc.;


2.			Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.			Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.			The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.			designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.			designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.			evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.			disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.			The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a.			all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b.			any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:

February 8, 2024

By:

/s/ James Benson

James Benson

Senior Vice President, Chief Financial Officer & Treasurer

(Principal Financial Officer)

EXHIBIT 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Rick McConnell, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Quarterly Report on Form 10-Q of Dynatrace, Inc. for the period ended December 31, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Dynatrace, Inc.




Date:	February 8, 2024	By:	/s/ Rick McConnell
			Rick McConnell
			Chief Executive Officer
			(Principal Executive Officer)

I, James Benson, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Quarterly Report on Form 10-Q of Dynatrace, Inc. for the period ended December 31, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Dynatrace, Inc.




Date:	February 8, 2024	By:	/s/ James Benson
			James Benson
			Senior Vice President, Chief Financial Officer & Treasurer
			(Principal Financial Officer)

The foregoing certifications are not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are not to be incorporated by reference into any filing of Dynatrace, Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Cover - shares	9 Months Ended
Cover - shares	Dec. 31, 2023	Feb. 06, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Dec. 31, 2023
Document Transition Report	false
Entity File Number	001-39010
Entity Registrant Name	Dynatrace, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-2386428
Entity Address, Address Line One	1601 Trapelo Road, Suite 116
Entity Address, City or Town	Waltham,
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02451
City Area Code	781
Local Phone Number	530-1000
Title of 12(b) Security	Common stock, par value $0.001 per share
Trading Symbol	DT
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		295,999,246
Amendment Flag	false
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001773383
Current Fiscal Year End Date	--03-31

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2023	Mar. 31, 2023
Current assets:
Cash and cash equivalents	$ 782,649	$ 555,348
Accounts receivable, net	361,653	442,518
Deferred commissions, current	90,059	83,029
Prepaid expenses and other current assets	52,301	37,289
Total current assets	1,286,662	1,118,184
Property and equipment, net	49,408	53,576
Operating lease right-of-use assets, net	65,895	68,074
Goodwill	1,312,691	1,281,812
Other intangible assets, net	54,118	63,599
Deferred tax assets, net	129,119	79,822
Deferred commissions, non-current	79,724	86,232
Other assets	21,596	14,048
Total assets	2,999,213	2,765,347
Current liabilities:
Accounts payable	13,230	21,953
Accrued expenses, current	171,929	188,380
Deferred revenue, current	757,141	811,058
Operating lease liabilities, current	16,288	15,652
Total current liabilities	958,588	1,037,043
Deferred revenue, non-current	38,508	34,423
Accrued expenses, non-current	29,918	29,212
Operating lease liabilities, non-current	58,002	59,520
Deferred tax liabilities	321	280
Total liabilities	1,085,337	1,160,478
Commitments and contingencies
Shareholders' equity:
Common shares, $0.001 par value, 600,000,000 shares authorized, 295,777,477 and 290,411,108 shares issued and outstanding at December 31, 2023 and March 31, 2023, respectively	296	290
Additional paid-in capital	2,186,766	1,989,797
Accumulated deficit	(236,701)	(353,389)
Accumulated other comprehensive loss	(36,485)	(31,829)
Total shareholders' equity	1,913,876	1,604,869
Total liabilities and shareholders' equity	$ 2,999,213	$ 2,765,347

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2023	Mar. 31, 2023
Statement of Financial Position [Abstract]
Par value (in dollars per share)	$ 0.001	$ 0.001
Common shares, authorized (in shares)	600,000,000	600,000,000
Common shares, issued (in shares)	295,777,477	290,411,108
Common shares, outstanding (in shares)	295,777,477	290,411,108

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Revenue:
Total revenue	$ 365,096	$ 297,456	$ 1,049,682	$ 844,055
Cost of revenue:
Amortization of acquired technology	4,237	3,889	12,035	11,669
Total cost of revenue	67,869	55,824	194,580	163,326
Gross profit	297,227	241,632	855,102	680,729
Operating expenses:
Research and development	80,102	54,531	220,468	156,847
Sales and marketing	132,723	112,292	385,445	323,313
General and administrative	43,232	34,354	127,075	107,485
Amortization of other intangibles	5,451	6,573	16,838	19,719
Restructuring and other	(1)	(5)	(1)	(15)
Total operating expenses	261,507	207,745	749,825	607,349
Income from operations	35,720	33,887	105,277	73,380
Interest income (expense), net	10,605	(4,787)	26,260	(7,475)
Other (expense) income, net	(3,901)	1,617	(6,724)	(1,847)
Income before income taxes	42,424	30,717	124,813	64,058
Income tax benefit (expense)	267	(15,691)	(8,125)	(36,392)
Net income	$ 42,691	$ 15,026	$ 116,688	$ 27,666
Net income per share:
Basic (in dollars per share)	$ 0.14	$ 0.05	$ 0.40	$ 0.10
Diluted (in dollars per share)	$ 0.14	$ 0.05	$ 0.39	$ 0.10
Weighted average shares outstanding:
Basic (in shares)	294,869	287,957	293,295	287,120
Diluted (in shares)	299,246	291,228	298,335	290,803
Subscription
Revenue:
Total revenue	$ 348,294	$ 279,152	$ 999,245	$ 790,016
Cost of revenue:
Cost of revenues	46,888	36,891	134,584	105,393
Service
Revenue:
Total revenue	16,802	18,304	50,437	54,039
Cost of revenue:
Cost of revenues	$ 16,744	$ 15,044	$ 47,961	$ 46,264

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 42,691	$ 15,026	$ 116,688	$ 27,666
Other comprehensive loss
Foreign currency translation adjustment	(2,765)	(5,133)	(4,656)	(2,835)
Total other comprehensive loss	(2,765)	(5,133)	(4,656)	(2,835)
Comprehensive income	$ 39,926	$ 9,893	$ 112,032	$ 24,831

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands	Total	Common Shares	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss
Beginning balance (in shares) at Mar. 31, 2022		286,053,000
Beginning balance at Mar. 31, 2022	$ 1,304,446	$ 286	$ 1,792,197	$ (461,348)	$ (26,689)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Foreign currency translation	(2,835)				(2,835)
Restricted stock units vested (in shares)		1,727,000
Restricted stock units vested	0	$ 2	(2)
Restricted stock awards forfeited (in shares)		(15,000)
Issuance of common stock related to employee stock purchase plan (in shares)		553,000
Issuance of common stock related to employee stock purchase plan	17,806		17,806
Exercise of stock options (in shares)		643,000
Exercise of stock options	15,102	$ 1	15,101
Share-based compensation	104,853		104,853
Equity repurchases	(15)		(15)
Net income	27,666			27,666
Ending balance (in shares) at Dec. 31, 2022		288,961,000
Ending balance at Dec. 31, 2022	1,467,023	$ 289	1,929,940	(433,682)	(29,524)
Beginning balance (in shares) at Sep. 30, 2022		287,813,000
Beginning balance at Sep. 30, 2022	1,401,677	$ 288	1,874,488	(448,708)	(24,391)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Foreign currency translation	(5,133)				(5,133)
Restricted stock units vested (in shares)		463,000
Restricted stock awards forfeited (in shares)		(1,000)
Issuance of common stock related to employee stock purchase plan (in shares)		287,000
Issuance of common stock related to employee stock purchase plan	9,179		9,179
Exercise of stock options (in shares)		399,000
Exercise of stock options	10,770	$ 1	10,769
Share-based compensation	35,504		35,504
Net income	15,026			15,026
Ending balance (in shares) at Dec. 31, 2022		288,961,000
Ending balance at Dec. 31, 2022	$ 1,467,023	$ 289	1,929,940	(433,682)	(29,524)
Beginning balance (in shares) at Mar. 31, 2023	290,411,108	290,411,000
Beginning balance at Mar. 31, 2023	$ 1,604,869	$ 290	1,989,797	(353,389)	(31,829)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Foreign currency translation	(4,656)				(4,656)
Restricted stock units vested (in shares)		3,644,000
Restricted stock units vested	0	$ 4	(4)
Issuance of common stock related to employee stock purchase plan (in shares)		534,000
Issuance of common stock related to employee stock purchase plan	$ 19,472	$ 1	19,471
Exercise of stock options (in shares)	1,188,000	1,188,000
Exercise of stock options	$ 24,205	$ 1	24,204
Share-based compensation	153,298		153,298
Net income	$ 116,688			116,688
Ending balance (in shares) at Dec. 31, 2023	295,777,477	295,777,000
Ending balance at Dec. 31, 2023	$ 1,913,876	$ 296	2,186,766	(236,701)	(36,485)
Beginning balance (in shares) at Sep. 30, 2023		294,294,000
Beginning balance at Sep. 30, 2023	1,801,654	$ 294	2,114,472	(279,392)	(33,720)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Foreign currency translation	(2,765)				(2,765)
Restricted stock units vested (in shares)		864,000
Restricted stock units vested	0	$ 1	(1)
Issuance of common stock related to employee stock purchase plan (in shares)		221,000
Issuance of common stock related to employee stock purchase plan	9,888	$ 1	9,887
Exercise of stock options (in shares)		398,000
Exercise of stock options	7,586		7,586
Share-based compensation	54,822		54,822
Net income	$ 42,691			42,691
Ending balance (in shares) at Dec. 31, 2023	295,777,477	295,777,000
Ending balance at Dec. 31, 2023	$ 1,913,876	$ 296	$ 2,186,766	$ (236,701)	$ (36,485)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Cash flows from operating activities:
Net income	$ 116,688	$ 27,666
Adjustments to reconcile net income to cash provided by operations:
Depreciation	11,781	9,012
Amortization	29,067	31,566
Share-based compensation	153,298	104,853
Deferred income taxes	(49,579)	2,057
Loss on extinguishment of debt	0	5,925
Other	7,016	3,114
Net change in operating assets and liabilities:
Accounts receivable	83,444	40,314
Deferred commissions	874	(17,198)
Prepaid expenses and other assets	(27,437)	29,616
Accounts payable and accrued expenses	(24,022)	19,365
Operating leases, net	1,253	(36)
Deferred revenue	(55,946)	(21,796)
Net cash provided by operating activities	246,437	234,458
Cash flows from investing activities:
Purchase of property and equipment	(16,662)	(15,625)
Capitalized software additions	(4,655)	0
Acquisition of a business, net of cash acquired	(32,297)	0
Net cash used in investing activities	(53,614)	(15,625)
Cash flows from financing activities:
Repayment of term loans	0	(281,125)
Debt issuance costs	0	(1,949)
Proceeds from employee stock purchase plan	19,472	17,806
Proceeds from exercise of stock options	24,205	15,102
Equity repurchases	0	(15)
Net cash provided by (used in) financing activities	43,677	(250,181)
Effect of exchange rates on cash and cash equivalents	(9,199)	(9,168)
Net increase (decrease) in cash and cash equivalents	227,301	(40,516)
Cash and cash equivalents, beginning of period	555,348	462,967
Cash and cash equivalents, end of period	782,649	422,451
Supplemental cash flow data:
Cash paid for interest	656	6,867
Cash paid for (received from) tax, net	61,758	(20,335)
Non-cash investing and financing activities:
Capitalized software additions in accounts payable and accrued expenses	$ 6,686	$ 0

Description of the Business	9 Months Ended
Description of the Business	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of the Business	Description of the Business Business Dynatrace, Inc. (“Dynatrace”, or the “Company”) designed its unified observability and security platform with analytics and automation at its core to address the growing complexity faced by technology and digital business teams as these enterprises further embrace the cloud to effect their digital transformation. Artificial intelligence and continuous automation deliver precise answers about the performance and security of applications, the underlying infrastructure, and the experience of its customers’ users that enable organizations to innovate faster, operate more efficiently, and improve user experiences for consistently better business outcomes. Fiscal year The Company’s fiscal year ends on March 31. References to fiscal 2024, for example, refer to the fiscal year ending March 31, 2024.

Significant Accounting Policies

9 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Significant Accounting Policies

Basis of presentation and consolidation

Unaudited interim consolidated financial information

Reclassification

The following table presents the effect of the reclassification and the impact on the Company’s condensed consolidated statements of operations (in thousands):


	Three Months Ended December 31, 2022						Nine Months Ended December 31, 2022
	Previous Method		Current Method		Effect of Change		Previous Method		Current Method		Effect of Change
Research and development	$	53,411	$	54,531	$	1,120	$	153,800	$	156,847	$	3,047
Sales and marketing	111,524		112,292		768		321,208		323,313		2,105
General and administrative	36,242		34,354		(1,888)		112,637		107,485		(5,152)

Net income	15,026		15,026		—		27,666		27,666		—

Use of estimates

Significant accounting policies

Recently issued accounting pronouncements

Revenue Recognition

9 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Disaggregation of revenue

The following table is a summary of the Company’s total revenue by geographic region (in thousands, except percentages):


	Three Months Ended December 31,								Nine Months Ended December 31,
	2023				2022				2023				2022
	Amount		%		Amount		%		Amount		%		Amount		%
North America	$	217,661	60	%	$	179,438	60	%	$	625,166	60	%	$	503,942	60	%
Europe, Middle East and Africa	89,816		25	%	73,182		25	%	260,729		25	%	212,927		25	%
Asia Pacific	33,943		9	%	28,311		9	%	94,940		9	%	81,852		10	%
Latin America	23,676		6	%	16,525		6	%	68,847		6	%	45,334		5	%
Total revenue	$	365,096			$	297,456			$	1,049,682			$	844,055

Deferred revenue

Remaining performance obligations

Contract assets

Acquisitions

9 Months Ended

Dec. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Acquisitions


Assets acquired:
Cash and cash equivalents	$	1,152
Accounts receivable, prepaid and other assets	342
Property and equipment	46
Intangible asset	7,800
Total assets acquired	$	9,340

Liabilities assumed:
Accounts payable, accrued and other liabilities	2,242
Deferred revenue	1,064
Total liabilities assumed	$	3,306

Net assets acquired	6,034
Fair value of consideration transferred	33,414
Goodwill	$	27,380

Goodwill and Other Intangible Assets, Net

9 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets, Net

Changes in the carrying amount of goodwill for the nine months ended December 31, 2023 consists of the following (in thousands):


	December 31, 2023
Balance, beginning of period	$	1,281,812
Goodwill from Rookout acquisition	27,380
Foreign currency impact	3,499
Balance, end of period	$	1,312,691

Other intangible assets, net, excluding goodwill, consists of the following (in thousands):


	Weighted Average Useful Life (in months)
		December 31, 2023		March 31, 2023
Capitalized software	107	$	211,643	$	191,863
Customer relationships	120	351,555		351,555
Trademarks and tradenames	120	55,003		55,003
Total intangible assets		618,201		598,421
Less: accumulated amortization		(564,083)		(534,822)
Total other intangible assets, net		$	54,118	$	63,599

Income Taxes	9 Months Ended
Income Taxes	Dec. 31, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The Company computes its interim provision for income taxes by applying the estimated annual effective tax rate to income from operations and adjusts the provision for discrete tax items occurring in the period. The Company’s effective tax rate for the three months ended December 31, 2023 was (0.6)% compared to 51.1% for the three months ended December 31, 2022. The Company’s effective tax rate for the nine months ended December 31, 2023 was 6.5% compared to 56.8% for the nine months ended December 31, 2022. The decrease in the effective tax rate for both the three months ended December 31, 2023 and the nine months ended December 31, 2023 was primarily due to an increase in share-based compensation windfall benefits, additional tax benefits related to the deferred tax asset resulting from capitalized research and development expenses under Section 174 of the Internal Revenue Code recognized in the current year due to the reversal of the U.S. valuation allowance as of March 31, 2023, and the reversal of an unrecognized tax benefit in the U.S.

Long-term Debt	9 Months Ended
Long-term Debt	Dec. 31, 2023
Debt Disclosure [Abstract]
Long-term Debt	Long-term Debt On December 2, 2022, the Company entered into a Credit Agreement for a senior secured revolving credit facility (the “Credit Facility”) in an aggregate amount of $400.0 million. The Credit Facility has sublimits for swing line loans up to $30.0 million and for the issuance of standby letters of credit in a face amount up to $45.0 million. The Credit Facility will mature on December 2, 2027. As of December 31, 2023 and March 31, 2023, there were no amounts outstanding under the Credit Facility. There were $12.1 million and $15.5 million of letters of credit issued as of December 31, 2023 and March 31, 2023, respectively. The Company had $387.9 million and $384.5 million of availability under the Credit Facility as of December 31, 2023 and March 31, 2023, respectively. Borrowings under the Credit Facility are available in U.S. dollars, Euros, Pounds Sterling and Canadian Dollars, with a sublimit of $100.0 million for non-U.S. dollar-denominated borrowings. Borrowings under the Credit Agreement currently bear interest at (i) the Term Secured Overnight Financing Rate plus 0.10%, (ii) the Adjusted Euro Interbank Offer Rate, (iii) the Canadian Dollar Offered Rate, (iv) the Base Rate, as defined per the Credit Agreement, or (v) the Sterling Overnight Index Average, in each case plus an applicable margin as defined per the Credit Agreement. Interest payments are due quarterly, or more frequently, based on the terms of the Credit Agreement. The Company incurs fees with respect to the Credit Facility, including (i) a commitment fee ranging from 0.175% to 0.35% per annum, dependent on the Company’s leverage ratio, as defined per the Credit Agreement, of the unused commitment under the Credit Facility, (ii) a fronting fee of 0.125% per annum of the face amount of each letter of credit, (iii) a participation fee equal to the applicable margin, as defined per the Credit Agreement, applied to the daily average face amount of letters of credit, and (iv) customary administrative fees. Debt issuance costs of $1.9 million were incurred in connection with the Credit Facility. The debt issuance costs are included within “Other assets” in the condensed consolidated balance sheets and are being amortized into interest expense over the contractual term of the Credit Facility. There were $1.5 million and $1.8 million of unamortized debt issuance costs as of December 31, 2023 and March 31, 2023, respectively. Pursuant to the Credit Agreement, obligations owed under the Credit Facility are secured by a first priority security interest on substantially all assets of Dynatrace LLC, a wholly owned subsidiary of the Company, including a pledge of the capital stock and other interests of certain subsidiaries. Under certain circumstances, the guarantees may be released without action by, or consent of, the holder of the Credit Facility. The Credit Agreement contains customary affirmative and negative covenants, including financial covenants that require the Company to maintain specified financial ratios. At December 31, 2023, the Company was in compliance with all applicable covenants. First lien credit facilities The Company’s former First Lien Credit Agreement, as amended, provided for a term loan facility (the “First Lien Term Loan”) in an aggregate principal amount of $950.0 million and a senior secured revolving credit facility (the “Revolving Facility”), in an aggregate amount of $60.0 million. The Revolving Facility included a $25.0 million letter of credit sub-facility. Borrowings under the First Lien Term Loan and Revolving Facility bore interest, at the Company’s election, at either (i) the Alternative Base Rate, as defined per the credit agreement, plus 1.25% per annum, or (ii) LIBOR plus 2.25% per annum. The maturity date on the First Lien Term Loan and Revolving Facility was August 23, 2025 and August 23, 2023, respectively, with payment due in full on the maturity date. Interest payments were due quarterly, or more frequently, based on the terms of the credit agreement. During the three months ended December 31, 2022, the Company terminated the First Lien Credit Agreement and repaid all outstanding borrowings, including accrued interest. The Company recognized a loss on debt extinguishment of $5.9 million within “Interest expense, net” in the condensed consolidated statements of operations for the three and nine months ended December 31, 2022.

Leases

9 Months Ended

Dec. 31, 2023

Leases [Abstract]

Leases

The following table presents information about leases on the condensed consolidated statements of operations (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Operating lease expense (1)	$	3,911	$	3,246	$	11,511	$	9,241
Short-term lease expense	$	505	$	450	$	1,550	$	1,299
Variable lease expense	$	410	$	281	$	1,103	$	659

_________________

(1) Presented gross of sublease income.

The following table presents supplemental cash flow information about the Company’s leases (in thousands):


	Nine Months Ended December 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities	$	13,935	$	11,590
Operating lease assets obtained in exchange for new operating lease liabilities (1)	$	9,973	$	20,656

_________________

(1) Includes the impact of new leases as well as remeasurements and modifications of existing leases.

As of December 31, 2023, remaining maturities of lease liabilities were as follows (in thousands):


Fiscal Years Ending March 31,	Amount
2024	$	5,023
2025	17,976
2026	14,610
2027	13,331
2028	8,961
Thereafter	23,618
Total operating lease payments (1)	83,519
Less: imputed interest	(9,229)
Total operating lease liabilities	$	74,290

_________________

(1) Presented gross of sublease income.

Leases

The following table presents information about leases on the condensed consolidated statements of operations (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Operating lease expense (1)	$	3,911	$	3,246	$	11,511	$	9,241
Short-term lease expense	$	505	$	450	$	1,550	$	1,299
Variable lease expense	$	410	$	281	$	1,103	$	659

_________________

(1) Presented gross of sublease income.

The following table presents supplemental cash flow information about the Company’s leases (in thousands):


	Nine Months Ended December 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities	$	13,935	$	11,590
Operating lease assets obtained in exchange for new operating lease liabilities (1)	$	9,973	$	20,656

_________________

(1) Includes the impact of new leases as well as remeasurements and modifications of existing leases.

As of December 31, 2023, remaining maturities of lease liabilities were as follows (in thousands):


Fiscal Years Ending March 31,	Amount
2024	$	5,023
2025	17,976
2026	14,610
2027	13,331
2028	8,961
Thereafter	23,618
Total operating lease payments (1)	83,519
Less: imputed interest	(9,229)
Total operating lease liabilities	$	74,290

_________________

(1) Presented gross of sublease income.

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Legal matters The Company is, from time to time, party to legal proceedings and subject to claims in the ordinary course of business. Although the outcome of legal proceedings and claims cannot be predicted with certainty, the Company currently believes that the resolution of any such matters will not have a material adverse effect on its business, operating results, financial condition, or cash flows.

Share-based Compensation

9 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Share-based Compensation

Amended and Restated 2019 Equity Incentive Plan

Stock options

The following table summarizes activity for stock options during the nine months ended December 31, 2023:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in thousands)	(per share)		(years)	(in thousands)
Balance, March 31, 2023	4,636	$	22.25	6.5	$	94,565

Exercised	(1,188)	20.38
Forfeited or expired	(67)	39.49
Balance, December 31, 2023	3,381	$	22.57	5.8	$	108,627
Options vested and expected to vest at December 31, 2023	3,381	$	22.57	5.8	$	108,627
Options vested and exercisable at December 31, 2023	3,162	$	21.49	5.7	$	104,987

Restricted shares and units

The following table provides a summary of the changes in the number of restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) for the nine months ended December 31, 2023:


	Number of RSAs	Weighted Average Grant Date Fair Value		Number of RSUs	Weighted Average Grant Date Fair Value
	(in thousands)	(per share)		(in thousands)	(per share)
Balance, March 31, 2023	4	$	16.00	8,836	$	41.76
Granted	—	—		5,732	51.78
Vested	(4)	16.00		(3,644)	40.43
Forfeited	—	—		(589)	44.32
Balance, December 31, 2023	—	$	—	10,335	$	47.65

RSUs outstanding as of December 31, 2023 were comprised of 9.3 million RSUs with only service conditions and 1.0 million RSUs with both service and performance conditions (“PSUs”).

Employee Stock Purchase Plan

Share-based compensation

The following table summarizes the components of total share-based compensation expense included in the condensed consolidated financial statements for each period presented (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Cost of revenue	$	6,975	$	4,285	$	19,660	$	13,410
Research and development	18,678		11,057		50,119		29,339
Sales and marketing	15,947		13,385		48,823		37,399
General and administrative	13,222		6,777		34,696		24,705
Total share-based compensation	$	54,822	$	35,504	$	153,298	$	104,853

Net Income Per Share

9 Months Ended

Dec. 31, 2023

Earnings Per Share [Abstract]

Net Income Per Share

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share data):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Numerator:
Net income	$	42,691	$	15,026	$	116,688	$	27,666
Denominator:
Weighted average shares outstanding, basic	294,869		287,957		293,295		287,120
Dilutive effect of stock-based awards	4,377		3,271		5,040		3,683
Weighted average shares outstanding, diluted	299,246		291,228		298,335		290,803

Net income per share, basic	$	0.14	$	0.05	$	0.40	$	0.10
Net income per share, diluted	$	0.14	$	0.05	$	0.39	$	0.10


	Three Months Ended December 31,		Nine Months Ended December 31,
	2023	2022	2023	2022
Stock options	123	1,613	144	1,785
Unvested RSAs and RSUs	265	2,316	446	1,197
Shares committed under ESPP	10	10	12	1

Geographic Information

9 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

Geographic Information

Revenue

Revenues by geography are based on legal jurisdiction. See Note 3, Revenue Recognition, for a disaggregation of revenue by geographic region.

Property and equipment, net

The following table presents net property and equipment by geographic region for the periods presented (in thousands):


	December 31, 2023		March 31, 2023
North America	$	16,237	$	22,124
Europe, Middle East and Africa	31,310		29,142
Asia Pacific	1,672		2,194
Latin America	189		116
Total property and equipment, net	$	49,408	$	53,576

Subsequent Events	9 Months Ended
Subsequent Events	Dec. 31, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events On January 26, 2024, the Company entered into a definitive agreement to acquire a 100% equity interest in Runecast Solutions Limited (“Runecast”) for $37.5 million of preliminary consideration, subject to customary post-closing adjustments. The Company intends to acquire Runecast utilizing a combination of cash on hand and common stock. Runecast is a provider of software solutions that provide insights for security compliance, vulnerability assessment, and configuration management for complex, on-premises, hybrid and multi-cloud IT environments. Closing of the proposed transaction is subject to customary closing conditions.

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Pay vs Performance Disclosure
Net income	$ 42,691	$ 15,026	$ 116,688	$ 27,666

Insider Trading Arrangements	3 Months Ended	9 Months Ended
Insider Trading Arrangements	Dec. 31, 2023 shares	Dec. 31, 2023 shares
Trading Arrangements, by Individual
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false
Dan Zugelder [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement		On December 12, 2023, Dan Zugelder, Senior Vice President, Chief Revenue Officer, adopted a Rule 10b5-1 trading arrangement that contemplates the sale of the net amount of shares of the Company’s common stock issuable to him after the vesting of 86,343 RSUs and PSUs (as applicable) on March 5, 2024, June 5, 2024, September 5, 2024 and December 5, 2024. The number of PSUs reflected in the total in the previous sentence is based on the Company achieving target performance relative to certain financial performance metrics. The number of shares that Mr. Zugelder receives and may subsequently sell under the trading arrangement following the vesting of his PSUs may increase or decrease based on the Company’s actual achievement against the financial performance metrics relative to target. The duration of the trading arrangement is from March 12, 2024 through December 12, 2024 (or earlier, if all transactions under the trading arrangement are completed).
Name	Dan Zugelder
Title	Senior Vice President, Chief Revenue Officer
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	December 12, 2023
Arrangement Duration	275 days
Aggregate Available	86,343	86,343
Rick McConnell [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement		On December 15, 2023, Rick McConnell, Chief Executive Officer and a director, adopted a Rule 10b5-1 trading arrangement that contemplates the sales of (i) up to 40,000 shares of the Company’s common stock previously issued to him after the vesting of RSUs and PSUs in June 2023; and (ii) up to 35,000 shares of the Company’s common stock issuable to him after the vesting of RSUs and PSUs in June 2024. The duration of the trading arrangement is from March 15, 2024 through December 16, 2024 (or earlier, if all transactions under the trading arrangement are completed).
Name	Rick McConnell
Title	Chief Executive Officer and a director
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	December 15, 2023
Arrangement Duration	276 days
Rick McConnell Trading Arrangement Vesting of RSUs And PSUs In June 2023 [Member] \| Rick McConnell [Member]
Trading Arrangements, by Individual
Aggregate Available	40,000	40,000
Rick McConnell Trading Arrangement Vesting of RSUs And PSUs In June 2024 [Member] \| Rick McConnell [Member]
Trading Arrangements, by Individual
Aggregate Available	35,000	35,000

Significant Accounting Policies (Policies)

9 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Fiscal year

The Company’s fiscal year ends on March 31. References to fiscal 2024, for example, refer to the fiscal year ending March 31, 2024.

Basis of presentation and consolidation

Unaudited interim consolidated financial information

Reclassification

The following table presents the effect of the reclassification and the impact on the Company’s condensed consolidated statements of operations (in thousands):


	Three Months Ended December 31, 2022						Nine Months Ended December 31, 2022
	Previous Method		Current Method		Effect of Change		Previous Method		Current Method		Effect of Change
Research and development	$	53,411	$	54,531	$	1,120	$	153,800	$	156,847	$	3,047
Sales and marketing	111,524		112,292		768		321,208		323,313		2,105
General and administrative	36,242		34,354		(1,888)		112,637		107,485		(5,152)

Net income	15,026		15,026		—		27,666		27,666		—

Use of estimates

Recently issued accounting pronouncements

Significant Accounting Policies (Tables)

9 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Schedule of Reclassification and the Impact on the Company’s Condensed Consolidated Statements of Operations

The following table presents the effect of the reclassification and the impact on the Company’s condensed consolidated statements of operations (in thousands):


	Three Months Ended December 31, 2022						Nine Months Ended December 31, 2022
	Previous Method		Current Method		Effect of Change		Previous Method		Current Method		Effect of Change
Research and development	$	53,411	$	54,531	$	1,120	$	153,800	$	156,847	$	3,047
Sales and marketing	111,524		112,292		768		321,208		323,313		2,105
General and administrative	36,242		34,354		(1,888)		112,637		107,485		(5,152)

Net income	15,026		15,026		—		27,666		27,666		—

Revenue Recognition (Tables)

9 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue

The following table is a summary of the Company’s total revenue by geographic region (in thousands, except percentages):


	Three Months Ended December 31,								Nine Months Ended December 31,
	2023				2022				2023				2022
	Amount		%		Amount		%		Amount		%		Amount		%
North America	$	217,661	60	%	$	179,438	60	%	$	625,166	60	%	$	503,942	60	%
Europe, Middle East and Africa	89,816		25	%	73,182		25	%	260,729		25	%	212,927		25	%
Asia Pacific	33,943		9	%	28,311		9	%	94,940		9	%	81,852		10	%
Latin America	23,676		6	%	16,525		6	%	68,847		6	%	45,334		5	%
Total revenue	$	365,096			$	297,456			$	1,049,682			$	844,055

Acquisitions (Tables)

9 Months Ended

Dec. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The purchase consideration was allocated to the tangible assets and liabilities acquired as of the acquisition date, with the excess recorded to goodwill as shown below (in thousands).


Assets acquired:
Cash and cash equivalents	$	1,152
Accounts receivable, prepaid and other assets	342
Property and equipment	46
Intangible asset	7,800
Total assets acquired	$	9,340

Liabilities assumed:
Accounts payable, accrued and other liabilities	2,242
Deferred revenue	1,064
Total liabilities assumed	$	3,306

Net assets acquired	6,034
Fair value of consideration transferred	33,414
Goodwill	$	27,380

Goodwill and Other Intangible Assets, Net (Tables)

9 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Carrying Amount of Goodwill

Changes in the carrying amount of goodwill for the nine months ended December 31, 2023 consists of the following (in thousands):


	December 31, 2023
Balance, beginning of period	$	1,281,812
Goodwill from Rookout acquisition	27,380
Foreign currency impact	3,499
Balance, end of period	$	1,312,691

Schedule of Other Intangible Assets, Net, Excluding Goodwill

Other intangible assets, net, excluding goodwill, consists of the following (in thousands):


	Weighted Average Useful Life (in months)
		December 31, 2023		March 31, 2023
Capitalized software	107	$	211,643	$	191,863
Customer relationships	120	351,555		351,555
Trademarks and tradenames	120	55,003		55,003
Total intangible assets		618,201		598,421
Less: accumulated amortization		(564,083)		(534,822)
Total other intangible assets, net		$	54,118	$	63,599

Leases (Tables)

9 Months Ended

Dec. 31, 2023

Leases [Abstract]

Schedule of Lease on Condensed Consolidated Statements of Operations and Supplemental Cash Flow Information

The following table presents information about leases on the condensed consolidated statements of operations (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Operating lease expense (1)	$	3,911	$	3,246	$	11,511	$	9,241
Short-term lease expense	$	505	$	450	$	1,550	$	1,299
Variable lease expense	$	410	$	281	$	1,103	$	659

_________________

(1) Presented gross of sublease income.

The following table presents supplemental cash flow information about the Company’s leases (in thousands):


	Nine Months Ended December 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities	$	13,935	$	11,590
Operating lease assets obtained in exchange for new operating lease liabilities (1)	$	9,973	$	20,656

_________________

(1) Includes the impact of new leases as well as remeasurements and modifications of existing leases.

Schedule of Maturities of Lease Liabilities

As of December 31, 2023, remaining maturities of lease liabilities were as follows (in thousands):


Fiscal Years Ending March 31,	Amount
2024	$	5,023
2025	17,976
2026	14,610
2027	13,331
2028	8,961
Thereafter	23,618
Total operating lease payments (1)	83,519
Less: imputed interest	(9,229)
Total operating lease liabilities	$	74,290

_________________

(1) Presented gross of sublease income.

Share-based Compensation (Tables)

9 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Activity for Stock Options

The following table summarizes activity for stock options during the nine months ended December 31, 2023:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in thousands)	(per share)		(years)	(in thousands)
Balance, March 31, 2023	4,636	$	22.25	6.5	$	94,565

Exercised	(1,188)	20.38
Forfeited or expired	(67)	39.49
Balance, December 31, 2023	3,381	$	22.57	5.8	$	108,627
Options vested and expected to vest at December 31, 2023	3,381	$	22.57	5.8	$	108,627
Options vested and exercisable at December 31, 2023	3,162	$	21.49	5.7	$	104,987

Schedule of Restricted Stock Awards (RSA) and Restricted Stock Units (RSU)

The following table provides a summary of the changes in the number of restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) for the nine months ended December 31, 2023:


	Number of RSAs	Weighted Average Grant Date Fair Value		Number of RSUs	Weighted Average Grant Date Fair Value
	(in thousands)	(per share)		(in thousands)	(per share)
Balance, March 31, 2023	4	$	16.00	8,836	$	41.76
Granted	—	—		5,732	51.78
Vested	(4)	16.00		(3,644)	40.43
Forfeited	—	—		(589)	44.32
Balance, December 31, 2023	—	$	—	10,335	$	47.65

Schedule of Share-Based Compensation Expense

The following table summarizes the components of total share-based compensation expense included in the condensed consolidated financial statements for each period presented (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Cost of revenue	$	6,975	$	4,285	$	19,660	$	13,410
Research and development	18,678		11,057		50,119		29,339
Sales and marketing	15,947		13,385		48,823		37,399
General and administrative	13,222		6,777		34,696		24,705
Total share-based compensation	$	54,822	$	35,504	$	153,298	$	104,853

Net Income Per Share (Tables)

9 Months Ended

Dec. 31, 2023

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Net Loss Per Share

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share data):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Numerator:
Net income	$	42,691	$	15,026	$	116,688	$	27,666
Denominator:
Weighted average shares outstanding, basic	294,869		287,957		293,295		287,120
Dilutive effect of stock-based awards	4,377		3,271		5,040		3,683
Weighted average shares outstanding, diluted	299,246		291,228		298,335		290,803

Net income per share, basic	$	0.14	$	0.05	$	0.40	$	0.10
Net income per share, diluted	$	0.14	$	0.05	$	0.39	$	0.10

Schedule of Weighted-Average Anti-dilutive Common Share

A summary of these weighted-average anti-dilutive common share equivalents is provided in the table below (in thousands):


	Three Months Ended December 31,		Nine Months Ended December 31,
	2023	2022	2023	2022
Stock options	123	1,613	144	1,785
Unvested RSAs and RSUs	265	2,316	446	1,197
Shares committed under ESPP	10	10	12	1

Geographic Information (Tables)

9 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

Schedule of Net Property and Equipment by Geographical Region

The following table presents net property and equipment by geographic region for the periods presented (in thousands):


	December 31, 2023		March 31, 2023
North America	$	16,237	$	22,124
Europe, Middle East and Africa	31,310		29,142
Asia Pacific	1,672		2,194
Latin America	189		116
Total property and equipment, net	$	49,408	$	53,576

Significant Accounting Policies - Schedule of Reclassification and the Impact on the Company’s Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Reclassification [Line Items]
Research and development	$ 80,102	$ 54,531	$ 220,468	$ 156,847
Sales and marketing	132,723	112,292	385,445	323,313
General and administrative	43,232	34,354	127,075	107,485
Net income	$ 42,691	15,026	$ 116,688	27,666
Previous Method
Reclassification [Line Items]
Research and development		53,411		153,800
Sales and marketing		111,524		321,208
General and administrative		36,242		112,637
Net income		15,026		27,666
Effect of Change
Reclassification [Line Items]
Research and development		1,120		3,047
Sales and marketing		768		2,105
General and administrative		(1,888)		(5,152)
Net income		$ 0		$ 0

Revenue Recognition - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Disaggregation of Revenue [Line Items]
Amount	$ 365,096	$ 297,456	$ 1,049,682	$ 844,055
North America
Disaggregation of Revenue [Line Items]
Amount	$ 217,661	$ 179,438	$ 625,166	$ 503,942
North America \| Revenue Benchmark \| Geographic Concentration Risk
Disaggregation of Revenue [Line Items]
Concentration risk percentage	60.00%	60.00%	60.00%	60.00%
Europe, Middle East and Africa
Disaggregation of Revenue [Line Items]
Amount	$ 89,816	$ 73,182	$ 260,729	$ 212,927
Europe, Middle East and Africa \| Revenue Benchmark \| Geographic Concentration Risk
Disaggregation of Revenue [Line Items]
Concentration risk percentage	25.00%	25.00%	25.00%	25.00%
Asia Pacific
Disaggregation of Revenue [Line Items]
Amount	$ 33,943	$ 28,311	$ 94,940	$ 81,852
Asia Pacific \| Revenue Benchmark \| Geographic Concentration Risk
Disaggregation of Revenue [Line Items]
Concentration risk percentage	9.00%	9.00%	9.00%	10.00%
Latin America
Disaggregation of Revenue [Line Items]
Amount	$ 23,676	$ 16,525	$ 68,847	$ 45,334
Latin America \| Revenue Benchmark \| Geographic Concentration Risk
Disaggregation of Revenue [Line Items]
Concentration risk percentage	6.00%	6.00%	6.00%	5.00%

Revenue Recognition - Disaggregation of Revenue and Deferred Revenue (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Disaggregation of Revenue [Line Items]
Total revenue	$ 365,096	$ 297,456	$ 1,049,682	$ 844,055
Revenue recognized	311,500	253,100	712,300	569,300
Revenue Benchmark \| Geographic Concentration Risk \| UNITED STATES
Disaggregation of Revenue [Line Items]
Total revenue	$ 206,100	$ 169,700	$ 591,900	$ 475,500
Concentration risk percentage	56.00%	57.00%	56.00%	56.00%

Revenue Recognition - Remaining Performance Obligations (Narrative) (Details) $ in Millions	Dec. 31, 2023 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, amount	$ 1,956.4
Billed consideration
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, amount	795.6
Unbilled consideration
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, amount	$ 1,160.8
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, percentage	60.00%
Remaining performance obligation, expected timing of satisfaction, period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, expected timing of satisfaction, period

Revenue Recognition - Contract Assets (Narrative) (Details) - USD ($) $ in Millions	Dec. 31, 2023	Mar. 31, 2023
Revenue from Contract with Customer [Abstract]
Contract assets	$ 11.5	$ 0.4

Acquisitions - Narrative (Details) $ in Thousands		3 Months Ended	9 Months Ended
Acquisitions - Narrative (Details) $ in Thousands	Aug. 31, 2023 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2023 USD ($) reporting_unit
Business Acquisition [Line Items]
Number of reporting units \| reporting_unit			1
Rookout
Business Acquisition [Line Items]
Equity interest acquired	100.00%
Preliminary purchase consideration	$ 33,400
Estimated fair value of intangible assets acquired	7,800
Transaction costs		$ 100	$ 2,500
Rookout \| Developed Technology
Business Acquisition [Line Items]
Estimated fair value of intangible assets acquired	$ 7,800
Estimated useful life of intangible assets acquired	7 years

Acquisitions - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Aug. 31, 2023	Mar. 31, 2023
Liabilities assumed:
Goodwill	$ 1,312,691		$ 1,281,812
Rookout
Assets acquired:
Cash and cash equivalents		$ 1,152
Accounts receivable, prepaid and other assets		342
Property and equipment		46
Intangible asset		7,800
Total assets acquired		9,340
Liabilities assumed:
Accounts payable, accrued and other liabilities		2,242
Deferred revenue		1,064
Total liabilities assumed		3,306
Net assets acquired		6,034
Fair value of consideration transferred		33,414
Goodwill		$ 27,380

Goodwill and Other Intangible Assets, Net - Schedule of Carrying Amount of Goodwill (Details) $ in Thousands	9 Months Ended
	Dec. 31, 2023 USD ($)
Goodwill [Roll Forward]
Balance, beginning of period	$ 1,281,812
Goodwill from Rookout acquisition	27,380
Foreign currency impact	3,499
Balance, end of period	$ 1,312,691

Goodwill and Other Intangible Assets, Net - Schedule of Other Intangible Assets, Net, Excluding Goodwill (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Mar. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Total intangible assets	$ 618,201	$ 598,421
Less: accumulated amortization	(564,083)	(534,822)
Total other intangible assets, net	$ 54,118	63,599
Capitalized software
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life (in months)	107 months
Total intangible assets	$ 211,643	191,863
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life (in months)	120 months
Total intangible assets	$ 351,555	351,555
Trademarks and tradenames
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Life (in months)	120 months
Total intangible assets	$ 55,003	$ 55,003

Goodwill and Other Intangible Assets, Net - Narrative (Details) $ in Millions		3 Months Ended		9 Months Ended
	Nov. 09, 2023 USD ($) installment	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Finite-Lived Intangible Assets [Line Items]
Amortization of other intangibles		$ 9.9	$ 10.5	$ 29.1	$ 31.6
Software and developed technology
Finite-Lived Intangible Assets [Line Items]
Payment for asset acquisition	$ 10.0
Payment for asset acquisition at closing	$ 3.4
Number of quarterly installments \| installment	12
Quarterly payments for asset acquisition	$ 0.6
Transaction related costs	0.3
Asset acquisition, consideration transferred	$ 10.3
Payment for acquired intangible assets				$ 3.7

Income Taxes (Details)	3 Months Ended		9 Months Ended
Income Taxes (Details)	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Effective tax rate	(0.60%)	51.10%	6.50%	56.80%

Long-term Debt (Details) - USD ($)		3 Months Ended	9 Months Ended
Long-term Debt (Details) - USD ($)	Dec. 02, 2022	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022	Mar. 31, 2023
Line of Credit Facility [Line Items]
Loss on extinguishment of debt			$ 0	$ 5,925,000
First Lien Term Loan \| Secured Debt
Line of Credit Facility [Line Items]
Debt instrument, face amount			$ 950,000,000
Loss on extinguishment of debt		$ 5,900,000		$ 5,900,000
First Lien Term Loan \| Secured Debt \| Alternative Base Rate
Line of Credit Facility [Line Items]
Basis spread on variable interest rate			1.25%
First Lien Term Loan \| Secured Debt \| London Interbank Offered Rate (LIBOR)
Line of Credit Facility [Line Items]
Basis spread on variable interest rate			2.25%
Revolving Credit Facility \| Credit Agreement \| Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 400,000,000
Long-term line of credit			$ 0		$ 0
Available borrowing capacity			387,900,000		384,500,000
Fronting fee percentage	0.125%
Debt issuance costs, gross	$ 1,900,000
Debt issuance costs			1,500,000		1,800,000
Revolving Credit Facility \| Credit Agreement \| Line of Credit \| Minimum
Line of Credit Facility [Line Items]
Commitment fee percentage	0.175%
Revolving Credit Facility \| Credit Agreement \| Line of Credit \| Maximum
Line of Credit Facility [Line Items]
Commitment fee percentage	0.35%
Revolving Credit Facility \| Credit Agreement \| Line of Credit \| Secured Overnight Financing Rate (SOFR)
Line of Credit Facility [Line Items]
Basis spread on variable interest rate	0.10%
Revolving Credit Facility \| Revolving Facility \| Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity			60,000,000
Bridge Loan \| Credit Agreement \| Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 30,000,000
Letter of Credit \| Credit Agreement \| Line of Credit
Line of Credit Facility [Line Items]
Debt instrument, face amount	45,000,000
Letters of credit issued			12,100,000		$ 15,500,000
Letter of Credit \| Revolving Facility \| Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity			$ 25,000,000
Foreign Line of Credit \| Credit Agreement \| Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 100,000,000

Leases - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
Leases - Narrative (Details) - USD ($) $ in Millions	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Leases [Abstract]
Weighted average remaining lease term	5 years 10 months 24 days		5 years 10 months 24 days
Weighted average discount rate	4.50%		4.50%
Sublease Income	$ 0.6	$ 0.6	$ 1.7	$ 1.7
Operating lease that has not yet commenced	$ 78.8		$ 78.8
Operating lease that has not yet commenced, term	10 years		10 years

Leases - Schedule of Lease on Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Leases [Abstract]
Operating lease expense	$ 3,911	$ 3,246	$ 11,511	$ 9,241
Short-term lease expense	505	450	1,550	1,299
Variable lease expense	$ 410	$ 281	$ 1,103	$ 659

Leases - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Leases [Abstract]
Cash paid for amounts included in the measurement of lease liabilities	$ 13,935	$ 11,590
Operating lease assets obtained in exchange for new operating lease liabilities	$ 9,973	$ 20,656

Leases - Schedule of Maturities of Lease Liabilities (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Leases [Abstract]
2024	$ 5,023
2025	17,976
2026	14,610
2027	13,331
2028	8,961
Thereafter	23,618
Total operating lease payments	83,519
Less: imputed interest	(9,229)
Total operating lease liabilities	$ 74,290

Share-based Compensation - Narrative (Details) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Jul. 31, 2019 shares	Dec. 31, 2023 USD ($) shares	Dec. 31, 2022 USD ($)	Dec. 31, 2023 USD ($) installment shares	Dec. 31, 2022 USD ($)	Mar. 31, 2023 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation cost		$ 2,600		$ 2,600
Stock compensation expense		54,822	$ 35,504	$ 153,298	$ 104,853
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average period of recognition				7 months 6 days
Stock compensation expense		$ 1,300	4,600	$ 7,000	13,800
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average period of recognition				2 years 2 months 12 days
Outstanding shares (in shares) \| shares		10,335,000		10,335,000		8,836,000
Total unrecognized compensation cost		$ 413,700		$ 413,700
Service Condition RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding shares (in shares) \| shares		9,300,000		9,300,000
Service and performance condition RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding shares (in shares) \| shares		1,000,000		1,000,000
Maximum percentage of shares issued based on performance target award				2
Service and performance condition RSUs \| Share-based Payment Arrangement, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage				33.00%
Award vesting period				1 year
Service and performance condition RSUs \| Share-based Payment Arrangement, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage				67.00%
Award vesting period				2 years
Number of equal installments \| installment				8
Unvested RSAs and RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense		$ 52,100	29,000	$ 141,400	85,700
Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
ESPP offering period	6 months
ESPP purchase period	6 months
Employee Stock \| Common Class A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
ESPP, maximum percentage of the common stock available for purchase	85.00%
2019 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units authorized for issuance (in shares) \| shares	52,000,000	50,228,181		50,228,181
Annual increase in shares reserved for future issuance based off of shares outstanding	4.00%
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense		$ 1,500	$ 1,900	$ 4,900	$ 5,400
Total unrecognized compensation cost		$ 2,900		$ 2,900
ESPP \| Common Class A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units authorized for issuance (in shares) \| shares		15,864,787		15,864,787
Issuance of common stock related to employee stock purchase plan (in shares) \| shares				534,022

Share-based Compensation - Schedule of Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended	12 Months Ended
	Dec. 31, 2023 USD ($) $ / shares shares	Mar. 31, 2023 USD ($) $ / shares shares
Number of Options
Beginning balance (in shares) \| shares	4,636
Exercised (in shares) \| shares	(1,188)
Forfeited or expired (in shares) \| shares	(67)
Ending balance (in shares) \| shares	3,381	4,636
Options vested and expected to vest (in shares) \| shares	3,381
Options vested and exercisable (in shares) \| shares	3,162
Weighted Average Exercise Price
Beginning balance (in dollars per share) \| $ / shares	$ 22.25
Exercised (in dollars per share) \| $ / shares	20.38
Forfeited or expired (in dollars per share) \| $ / shares	39.49
Ending valance (in dollars per share) \| $ / shares	22.57	$ 22.25
Weighted average exercise price, options vested and expected to vest (in dollars per share) \| $ / shares	22.57
Weighted average exercise price, options vested and exercisable (in dollars per share) \| $ / shares	$ 21.49
Weighted average remaining contractual term	5 years 9 months 18 days	6 years 6 months
Weighted average remaining contractual term, options vested and expected to vest	5 years 9 months 18 days
Weighted average remaining contractual term, options vested and exercisable	5 years 8 months 12 days
Aggregate intrinsic value \| $	$ 108,627	$ 94,565
Aggregate intrinsic value, options vested and expected to vest \| $	108,627
Aggregate intrinsic value, options vested and exercisable \| $	$ 104,987
Restricted Stock
Number of Restricted Shares
Beginning balance (in shares) \| shares	4
Granted (in shares) \| shares	0
Vested (in shares) \| shares	(4)
Forfeited (in shares) \| shares	0
Ending balance (in shares) \| shares	0	4
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share) \| $ / shares	$ 16.00
Granted (in dollars per share) \| $ / shares	0
Vested (in dollars per share) \| $ / shares	16.00
Forfeited (in dollars per share) \| $ / shares	0
Ending balance (in dollars per share) \| $ / shares	$ 0	$ 16.00
Restricted Stock Units (RSUs)
Number of Restricted Shares
Beginning balance (in shares) \| shares	8,836
Granted (in shares) \| shares	5,732
Vested (in shares) \| shares	(3,644)
Forfeited (in shares) \| shares	(589)
Ending balance (in shares) \| shares	10,335	8,836
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share) \| $ / shares	$ 41.76
Granted (in dollars per share) \| $ / shares	51.78
Vested (in dollars per share) \| $ / shares	40.43
Forfeited (in dollars per share) \| $ / shares	44.32
Ending balance (in dollars per share) \| $ / shares	$ 47.65	$ 41.76

Share-based Compensation - Schedule of Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total share-based compensation	$ 54,822	$ 35,504	$ 153,298	$ 104,853
Cost of revenue
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total share-based compensation	6,975	4,285	19,660	13,410
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total share-based compensation	18,678	11,057	50,119	29,339
Sales and marketing
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total share-based compensation	15,947	13,385	48,823	37,399
General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total share-based compensation	$ 13,222	$ 6,777	$ 34,696	$ 24,705

Net Income Per Share - Schedule of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Numerator:
Net income	$ 42,691	$ 15,026	$ 116,688	$ 27,666
Denominator:
Weighted average shares outstanding, basic (in shares)	294,869	287,957	293,295	287,120
Dilutive effect of stock-based awards (in shares)	4,377	3,271	5,040	3,683
Weighted average shares outstanding, diluted (in shares)	299,246	291,228	298,335	290,803
Net income per share, basic (in dollars per share)	$ 0.14	$ 0.05	$ 0.40	$ 0.10
Net income per share, diluted (in dollars per share)	$ 0.14	$ 0.05	$ 0.39	$ 0.10

Net Income Per Share - Schedule of Weighted-Average Anti-dilutive Common Share (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive common share equivalents (in shares)	123	1,613	144	1,785
Unvested RSAs and RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive common share equivalents (in shares)	265	2,316	446	1,197
Shares committed under ESPP
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive common share equivalents (in shares)	10	10	12	1

Geographic Information (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Mar. 31, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	$ 49,408	$ 53,576
North America
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	16,237	22,124
Europe, Middle East and Africa
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	31,310	29,142
Asia Pacific
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	1,672	2,194
Latin America
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	$ 189	$ 116