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DYNATRACE, INC.

(DT)
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Delayed Nyse  -  04:01 2022-09-23 pm EDT
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DYNATRACE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

08/03/2022 | 06:54am EDT
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 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

We offer the market-leading software intelligence platform, purpose-built for
dynamic hybrid, multicloud environments. As enterprises and public sector
institutions embrace the cloud to effect their digital transformation, we
designed our unified platform to address the growing complexity faced by IT,
development, security, and business operations teams. With automation and
intelligence at its core, our platform delivers precise answers about the
performance and security of applications, the underlying infrastructure and the
experience of all users to enable teams to innovate faster, simplify cloud
complexity, collaborate more efficiently, and secure cloud-native applications.
We designed our platform to allow our customers to modernize and automate IT
operations, develop and release high quality software faster, and improve user
experiences for consistently better business outcomes. As a result, as of June
30, 2022, our products are trusted by more than 3,300 Dynatrace customers in
over 90 countries in diverse industries such as banking, insurance, retail,
manufacturing, travel and software.

We market Dynatrace® through a combination of our global direct sales team and a
network of partners, including cloud service providers (Amazon, Microsoft, and
Google), resellers, and system integrators. We target the largest 15,000 global
accounts, which generally have annual revenues in excess of $1 billion.

We generate revenue primarily by selling subscriptions, which we define as (i)
Software-as-a-service ("SaaS") agreements, (ii) Dynatrace® term-based licenses,
for which revenue is recognized ratably over the contract term, (iii) Dynatrace®
perpetual licenses, which are recognized ratably over the term of the expected
optional maintenance renewals, which is generally three years, and (iv)
maintenance and support agreements.

We deploy our platform as a SaaS solution, with the option of retaining the data
in the cloud, or at the edge in customer-provisioned infrastructure, which we
refer to as Dynatrace® Managed. The Dynatrace® Managed offering allows customers
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 functionality automatically upgrades all Dynatrace® instances and offers
on-premise cluster customers auto-deployment options that suit their specific
enterprise management processes.

Dynatrace® is an all-in-one platform, which is typically purchased by our
customers with the full-stack Application Performance Module and extended with
our Infrastructure Monitoring, Digital Experience Monitoring, Digital Business
Analytics, Application Security, or Cloud Automation Modules. Customers also
have the option to purchase the infrastructure monitoring module where the
full-stack APM is not required, with the ability to upgrade to the full-stack
APM when necessary. Our Dynatrace® platform has been commercially available
since 2016 and is the primary offering we sell. Dynatrace® customers increased
to more than 3,300 as of June 30, 2022 from approximately 3,000 as of June 30,
2021.

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COVID-19 Update


We continue to monitor, analyze, and respond to evolving developments regarding
the ongoing COVID-19 pandemic which has had significant impacts around the globe
and in many locations in which we operate. While the impacts have not caused a
material adverse financial impact to our business to date, the future impacts
remain uncertain. The extent to which the COVID-19 pandemic may impact our
business going forward will depend on numerous evolving factors that we cannot
reliably predict. These factors may adversely impact business spending on
technology as well as customers' ability to pay for our products and services on
an ongoing basis.

While our revenue, customer retention, and earnings are relatively predictable
as a result of our subscription-based business model, the effect, if any, of the
ongoing COVID-19 pandemic would not be fully reflected in our results of
operations and overall financial performance until future periods.

Throughout the pandemic we have continued to make investments to support
business growth and product development, including investments in research and
development as we continue to introduce new products and applications to extend
the functionality of our products, sales and marketing to support customer
growth, and other critical functions to ensure the highest levels of customer
service and support as well as ensuring that we maintain the required
infrastructure to be a public company. We expect to continue to make these
investments.

See the section titled "Risk Factors" included under Part II, Item 1A for further discussion of the possible impact of the ongoing COVID-19 pandemic on our business.

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 software intelligence platform through increased
investment in research and development and continued innovation. We expect to
focus on expanding the functionality of Dynatrace® and investing in capabilities
that address new market opportunities. 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 accounts, which
generally have annual revenues in excess of $1 billion. In addition, we expect
to leverage our global partner ecosystem to add new customers in geographies
where we have direct coverage and work jointly with our partners. In other
geographies, such as Africa, Japan, the Middle East, and South Korea, we utilize
a multi-tier "master reseller" model.

•Increase penetration within existing customers. We plan to continue to increase
penetration within our existing customers by 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 customers, across new
customer applications, and into additional business units or divisions. We
sustained our Dynatrace® net expansion rate at or above 120% for seventeen
consecutive quarters.

•Enhance our strategic partner ecosystem. Our strategic partners include
industry-leading global system integrators, software vendors, and cloud and
technology providers. We intend to continue to invest in our partner ecosystem,
with a particular emphasis on expanding our strategic alliances and
cloud-focused partnerships with global system integrators, including Deloitte
and DXC, and hyperscaler cloud providers, including AWS, Microsoft, Azure,
Google Cloud Platform, and Red Hat.

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:

                                                          June 30,
                                                    2022            2021
               Total ARR (in thousands)         $ 1,031,284      $ 823,222
               Dynatrace® Net Expansion Rate            120%+          120%+


Annual Recurring Revenue "ARR": We define annual recurring revenue ("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

                                       15
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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.


Dynatrace® Net Expansion Rate: We define the Dynatrace® net expansion rate as
the ARR derived from the Dynatrace® platform 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. We present Dynatrace® net expansion rate on a
constant currency basis to provide a framework for assessing how our business
performed excluding the effects of foreign currency rate fluctuations.

                    Key Components of Results of Operations

Revenue

Revenue includes subscriptions, licenses 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. Over
time, we expect subscription revenue will increase as a percentage of total
revenue as we continue to focus on increasing subscription revenue as a key
strategic priority.

License. License revenue reflects the revenues recognized from sales of perpetual and term-based licenses of our Classic products that are sold only to existing customers. Our Classic products were sunset as of April 1, 2021.


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 business combinations
and the Thoma Bravo Funds' acquisition of the Company in 2014. 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, services and
other 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.

                                       16

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Research and development. Research and development expenses primarily consists
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 consists 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 of 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 consists 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.

Other Expense, Net

Other expense, net consists primarily of interest expense and foreign currency
realized and unrealized gains and losses related to the impact of transactions
denominated in a foreign currency, including balances between subsidiaries.
Interest expense, net of interest income, consists primarily of interest on our
term loan facility, and amortization of debt issuance costs.

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) foreign earnings taxed at rates higher than the U.S. statutory tax rate, (2)
the inability to realize certain tax benefits subject to a valuation allowance
in the U.S., (3) foreign withholding taxes, partially offset by (4) the foreign
derived intangibles deduction, and (5) the utilization of U.S. foreign tax
credits generated in the current year. 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 ("TCJA") eliminates 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. Although Congress is considering legislation that would repeal or
defer this capitalization and amortization requirement, it is not certain that
this provision will be repealed or otherwise modified. If the requirement is not
repealed or replaced, it will increase our U.S. federal and state cash taxes and
reduce cash flows in fiscal year 2023 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.

                                       17

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                             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 June 30, 2022 and 2021

                                                         Three Months Ended June 30,
                                                      2022                              2021
                                               Amount             Percent       Amount        Percent
                                                     (in thousands, except percentages)
Revenue:
Subscription                           $     249,558                 93  %    $ 196,520          94  %
License                                            -                  -  %           50           -  %
Service                                       17,715                  7  %       13,170           6  %
Total revenue                                267,273                100  %      209,740         100  %
Cost of revenue:
Cost of subscription                          32,738                 12  %       24,982          12  %
Cost of service                               15,168                  6  %       10,021           5  %
Amortization of acquired technology            3,892                  1  %        3,830           2  %
Total cost of revenue (1)                     51,798                 19  %       38,833          19  %
Gross profit                                 215,475                 81  %      170,907          81  %

Operating expenses:
Research and development (1)                  48,482                 18  %       34,725          17  %
Sales and marketing (1)                      105,015                 39  %       80,482          38  %
General and administrative (1)                36,321                 14  %       26,922          13  %
Amortization of other intangibles              6,573                  2  %        7,540           4  %
Restructuring and other                          (10)                                26
Total operating expenses                     196,381                            149,695
Income from operations                        19,094                             21,212
Other expense, net                            (4,425)                            (1,546)
Income before income taxes                    14,669                             19,666
Income tax expense                           (12,555)                            (6,372)
Net income                             $       2,114                          $  13,294

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

                                        Three Months Ended June 30,
                                            2022                   2021
                                              (in thousands)
Cost of revenue                  $        3,890                 $  2,652
Research and development                  7,285                    3,967
Sales and marketing                      10,076                    7,608
General and administrative                7,444                    5,025
Total share-based compensation   $       28,695                 $ 19,252


                                       18

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Revenue

                      Three Months Ended June 30,                   Change
                          2022                  2021          Amount       Percent
                                (in thousands, except percentages)
Subscription    $      249,558               $ 196,520      $ 53,038         27  %
License                      -                      50           (50)      (100  %)
Service                 17,715                  13,170         4,545         35  %
Total revenue   $      267,273               $ 209,740      $ 57,533         27  %


Subscription

Subscription revenue increased by $53.0 million, or 27%, for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021, 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 increased by $4.5 million, or 35%, for the three months ended
June 30, 2022 as compared to the three months ended June 30, 2021. We generally
recognize the revenues associated with professional services as we deliver the
services.

Cost of Revenue

                                                   Three Months Ended June 30,                         Change
                                                     2022                 2021             Amount              Percent
                                                                    (in thousands, except percentages)
Cost of subscription                           $       32,738          $ 24,982          $  7,756                     31  %
Cost of service                                        15,168            10,021             5,147                     51  %
Amortization of acquired technology                     3,892             3,830                62                      2  %
Total cost of revenue                          $       51,798          $ 38,833          $ 12,965                     33  %


Cost of subscription

Cost of subscription increased by $7.8 million, or 31%, for the three months
ended June 30, 2022 compared to the three months ended June 30, 2021. The
increase is primarily due to higher personnel costs to support the growth of our
subscription cloud-based offering of $3.5 million and increased cloud-based
hosting costs of $1.7 million. Also contributing to this increase were increased
allocated overhead costs of $1.0 million, higher travel costs of $0.8 million,
as well as higher share-based compensation of $0.4 million.

Cost of service


Cost of service increased by $5.1 million, or 51%, for the three months ended
June 30, 2022 as compared to the three months ended June 30, 2021. The increase
is primarily the result of higher personnel costs of $2.9 million and higher
share-based compensation of $0.8 million. Also contributing to this increase
were increased travel costs of $0.5 million.

Amortization of acquired technologies

For the three months ended June 30, 2022 and 2021, amortization of acquired technologies is primarily related to amortization expense for technology acquired in connection with Thoma Bravo's acquisition of us in 2014.

                                       19

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Gross Profit and Gross Margin

                                                   Three Months Ended June 30,                          Change
                                                     2022                 2021              Amount              Percent
                                                                    (in thousands, except percentages)
Gross profit:
Subscription                                   $        216,820       $     171,538       $ 45,282                    26  %
License                                                       -                  50            (50)                 (100  %)
Service                                                   2,547               3,149           (602)                  (19  %)
Amortization of acquired technology                     (3,892)             (3,830)            (62)                    2  %
Total gross profit                             $        215,475       $     170,907       $ 44,568                    26  %
Gross margin:
Subscription                                             87  %               87  %
License                                                   -  %              100  %
Service                                                  14  %               24  %
Amortization of acquired technology                    (100  %)            (100  %)
Total gross margin                                       81  %               81  %


Subscription

Subscription gross profit increased by $45.3 million, or 26%, during the three
months ended June 30, 2022 compared to the three months ended June 30, 2021.
Subscription gross margin remained consistent at 87% during the three months
ended June 30, 2022 and the three months ended June 30, 2021. The increase in
gross profit is primarily due to the growth of the Dynatrace® platform by new
customers combined with existing customers expanding their use of our solutions.

Service


Service gross profit decreased by $0.6 million, or 19%, during the three months
ended June 30, 2022 compared to the three months ended June 30, 2021. Service
gross margin was 14% for the three months ended June 30, 2022 compared to 24%
for the three months ended June 30, 2021. The decrease in gross profit and gross
margin is primarily due to higher share-based compensation of $0.8 million.

Operating Expenses

                                                    Three Months Ended June 30,                          Change
                                                      2022                  2021             Amount              Percent
                                                                     (in thousands, except percentages)
Operating expenses:
Research and development                        $       48,482          $  34,725          $ 13,757                    40  %
Sales and marketing                                    105,015             80,482            24,533                    30  %
General and administrative                              36,321             26,922             9,399                    35  %
Amortization of other intangibles                        6,573              7,540              (967)                  (13  %)
Restructuring and other                                    (10)                26               (36)                 (138  %)
Total operating expenses                        $      196,381          $ 149,695          $ 46,686                    31  %


Research and development

Research and development expenses increased by $13.8 million, or 40%, for the
three months ended June 30, 2022 as compared to the three months ended June 30,
2021. The increase is due to a 27% increase in headcount, resulting in increased
personnel and other costs of $5.4 million to expand our product offerings and
higher share-based compensation of $3.3 million. Further contributing to the
increase were increased allocated overhead costs of $2.3 million to support the
growth of the business and related infrastructure, higher travel expenses of
$0.9 million, and higher cloud-based hosting costs and subscriptions of
$0.8 million.

                                       20

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Sales and marketing


Sales and marketing expenses increased by $24.5 million, or 30%, for the three
months ended June 30, 2022 as compared to the three months ended June 30, 2021,
driven by a 30% increase in headcount, which resulted in an increase in
personnel costs of $12.2 million and related share-based compensation of
$2.5 million. Further contributing to the increase were $6.1 million of travel
expenses primarily related to our annual sales kick-off event held in person,
higher costs related to partner fees and enablement of $2.3 million, increased
allocated overhead costs of $1.3 million to support the growth of the business
and related infrastructure, and higher information technology costs of $1.0
million.

General and administrative


General and administrative expenses increased $9.4 million, or 35%, for the
three months ended June 30, 2022 as compared to the three months ended June 30,
2021, primarily due to a 37% increase in headcount, which resulted in an
increase in personnel costs of $4.5 million, as well as share-based compensation
of $2.4 million. Further contributing to the increase were higher professional
fees of $1.9 million, higher IT and facility expenses of $1.9 million primarily
related to new offices and expansions, increased cloud-based hosting costs and
subscriptions of $1.2 million, other employee-related expenses of $1.2 million,
and increased travel expenses of $0.5 million.

Amortization of other intangibles


Amortization of other intangibles decreased by $1.0 million, or 13%, for the
three months ended June 30, 2022 as compared to the three months ended June 30,
2021. The decrease is 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.

Other Expense, Net


Other expense, net increased by $2.9 million, or 186%, for the three months
ended June 30, 2022 as compared to the three months ended June 30, 2021. The
increase is primarily the result of foreign currency transactions, partially
offset by lower interest expense on our term loan as we had less principal
outstanding compared to the same quarter last fiscal year.

Income Tax Expense


Income tax expense for the three months ended June 30, 2022 of $12.6 million
represented a $6.2 million increase as compared to an expense of $6.4 million
for the three months ended June 30, 2021. This increase was primarily due to
effects of the new requirement under Section 174 of the IRC to capitalize and
amortize research and development expenses in the U.S., generating current tax
expense with no offsetting deferred tax benefit due to our valuation allowance
position.

                        Liquidity and Capital Resources

As of June 30, 2022, we had $571.3 million of cash and cash equivalents and
$44.6 million available under our revolving credit facility. Since inception, we
have 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 and borrowings on our
term loan facilities. 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 historical expansion with customers has typically been achieved by executing
additional contracts, each with unique pricing and anniversary dates. We are
transitioning to a program that combines these contracts into one single, often
multi-year contract per customer with one single anniversary date, which may
result in variability in the timing and amounts of our billings which 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 long-term debt agreements, rent payments required under operating
lease agreements, and interest obligations on our term loan. As of June 30,
2022, total contractual commitments were $349.2 million, with $21.2 million
committed within the next twelve months. For further information see Notes 6 and
7 of the notes to the condensed consolidated financial statements in this
Quarterly Report.

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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 debt agreement, and cash generated from operations, will be sufficient
to meet our cash requirements for at least the next twelve 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


As of June 30, 2022, the balance outstanding under our first lien term loan was
$251.1 million and is included in long-term debt on our condensed consolidated
balance sheets. We had $44.6 million available under the revolving credit
facility after considering $15.4 million of letters of credit outstanding. All
of our obligations under our term loans are guaranteed by our existing and
future domestic subsidiaries and, subject to certain exceptions, secured by a
security interest in substantially all of our tangible and intangible assets. At
June 30, 2022, we were in compliance with all applicable covenants pertaining to
the First Lien Credit Agreement. Our credit facilities are discussed further in
Note 6 of the notes to the condensed consolidated financial statements in this
Quarterly Report.

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09/23Credit Suisse Initiates Coverage of 18 Stocks in SMID Software Sector, Notes Increasing..
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09/22MoffettNathanson Initiates Coverage of Software Stocks, Separates 'Winners' From the Re..
MT
09/22MoffettNathanson Initiates Coverage on Dynatrace With Hold Rating, $52 Price Target
MT
09/21Baird Assumes Dynatrace at Outperform with $49 Price Target
MT
09/19DYNATRACE, INC.(NYSE : DT) added to S&P 1000
CI
09/19DYNATRACE, INC.(NYSE : DT) added to S&P 400 Information Technology
CI
09/19DYNATRACE, INC.(NYSE : DT) added to S&P 400 Application Software (Sub Ind)
CI
09/19DYNATRACE, INC.(NYSE : DT) added to S&P Composite 1500
CI
09/19DYNATRACE, INC.(NYSE : DT) added to S&P 400
CI
09/15Global CIO Report Reveals the Challenges Organizations Face as Cloud Complexity Rises
BU
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