Cover
Cover - shares | 9 Months Ended | |
Dec. 31, 2019 | Jan. 29, 2020 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Dec. 31, 2019 | |
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, Postal Zip Code | 02451 | |
Entity Address, City or Town | Waltham | |
Entity Address, State or Province | MA | |
City Area Code | 617 | |
Local Phone Number | 530-1000 | |
Title of 12(b) Security | Common stock, par value $0.001 per share | |
Trading Symbol | DT | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 280,802,381 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001773383 | |
Current Fiscal Year End Date | --03-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Mar. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 188,555 | $ 51,314 |
Accounts receivable, net of allowance for doubtful accounts | 166,481 | 115,431 |
Deferred commissions, current | 36,343 | 27,705 |
Prepaid expenses and other current assets | 20,065 | 18,768 |
Total current assets | 411,444 | 213,218 |
Property and equipment, net | 28,030 | 17,925 |
Goodwill | 1,270,650 | 1,270,120 |
Other intangible assets, net | 215,784 | 259,123 |
Deferred tax assets, net | 10,714 | 10,678 |
Deferred commissions, non-current | 36,727 | 31,545 |
Other assets | 8,981 | 7,649 |
Receivable from related party | 5,977 | 1,108 |
Total assets | 1,988,307 | 1,811,366 |
Current liabilities: | ||
Accounts payable | 10,832 | 6,559 |
Accrued expenses, current | 86,194 | 64,920 |
Current portion of long-term debt | 0 | 9,500 |
Deferred revenue, current | 352,207 | 272,772 |
Payable to related party | 0 | 597,150 |
Total current liabilities | 449,233 | 950,901 |
Deferred revenue, non-current | 79,111 | 92,973 |
Accrued expenses, non-current | 18,048 | 98,359 |
Deferred tax liabilities | 2,489 | 47,598 |
Long-term debt, net of current portion | 540,236 | 1,011,793 |
Total liabilities | 1,089,117 | 2,201,624 |
Commitments and contingencies (Note 9) | ||
Shareholders' equity / member's deficit: | ||
Common shares, $0.001 par value, 600,000,000 shares authorized, 280,784,786 shares issued and outstanding at December 31, 2019 | 281 | 0 |
Common units, no par value, 100 units authorized, issued and outstanding at March 31, 2019 | 0 | |
Additional paid-in capital | 1,560,559 | (184,546) |
Accumulated deficit | (640,728) | (176,002) |
Accumulated other comprehensive loss | (20,922) | (29,710) |
Total shareholders' equity / member's deficit | 899,190 | (390,258) |
Total liabilities and shareholders' equity / member's deficit | $ 1,988,307 | $ 1,811,366 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) | Mar. 31, 2019shares |
Statement of Financial Position [Abstract] | |
Common units, authorized (in shares) | 100 |
Common units, issued (in shares) | 100 |
Common units, outstanding (in shares) | 100 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue: | ||||
Total revenue | $ 143,298 | $ 114,690 | $ 395,226 | $ 314,798 |
Cost of revenue: | ||||
Amortization of acquired technology | 3,824 | 4,558 | 12,624 | 13,780 |
Total cost of revenue | 28,705 | 25,823 | 97,794 | 76,850 |
Gross profit | 114,593 | 88,867 | 297,432 | 237,948 |
Operating expenses: | ||||
Research and development | 22,517 | 17,643 | 94,772 | 55,229 |
Sales and marketing | 52,400 | 43,275 | 210,581 | 130,667 |
General and administrative | 21,883 | 19,672 | 140,718 | 64,764 |
Amortization of other intangibles | 10,039 | 11,879 | 30,242 | 35,892 |
Restructuring and other | 199 | (24) | 1,093 | 459 |
Total operating expenses | 107,038 | 92,445 | 477,406 | 287,011 |
Income (loss) from operations | 7,555 | (3,578) | (179,974) | (49,063) |
Interest expense, net | (5,995) | (21,060) | (39,715) | (49,242) |
Other income (expense), net | 67 | (146) | 307 | 2,278 |
Income (loss) before income taxes | 1,627 | (24,784) | (219,382) | (96,027) |
Income tax benefit (expense) | 136 | 2,682 | (245,344) | 10,431 |
Net income (loss) | $ 1,763 | $ (22,102) | $ (464,726) | $ (85,596) |
Net income (loss) per share: | ||||
Basic (in dollars per share) | $ 0.01 | $ (1.78) | ||
Basic (in dollars per share) | $ (0.09) | $ (0.36) | ||
Diluted (in dollars per share) | $ 0.01 | $ (1.78) | ||
Diluted (in dollars per share) | $ (0.09) | $ (0.36) | ||
Weighted average shares outstanding: | ||||
Basic (in shares) | 277,926 | 260,383 | ||
Basic (in shares) | 236,024 | 235,648 | ||
Diluted (in shares) | 280,156 | 260,383 | ||
Diluted (in shares) | 236,024 | 235,648 | ||
Subscription | ||||
Revenue: | ||||
Total revenue | $ 128,518 | $ 91,661 | $ 352,451 | $ 251,974 |
Cost of revenue: | ||||
Cost of revenues | 16,297 | 13,534 | 55,930 | 40,922 |
License | ||||
Revenue: | ||||
Total revenue | 3,895 | 12,064 | 10,424 | 32,805 |
Service | ||||
Revenue: | ||||
Total revenue | 10,885 | 10,965 | 32,351 | 30,019 |
Cost of revenue: | ||||
Cost of revenues | $ 8,584 | $ 7,731 | $ 29,240 | $ 22,148 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 1,763 | $ (22,102) | $ (464,726) | $ (85,596) |
Other comprehensive (loss) income | ||||
Foreign currency translation adjustment, net of tax | (2,363) | 521 | 2,165 | (298) |
Change of ownership interest in subsidiary | 0 | 0 | 6,623 | 0 |
Total other comprehensive (loss) income | (2,363) | 521 | 8,788 | (298) |
Comprehensive loss | $ (600) | $ (21,581) | $ (455,938) | $ (85,894) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity / Member's (Deficit) - USD ($) $ in Thousands | Total | Common Shares | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss |
Beginning balance (in shares) at Mar. 31, 2018 | 0 | ||||
Beginning balance at Mar. 31, 2018 | $ (268,690) | $ 0 | $ (183,084) | $ (59,808) | $ (25,798) |
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Foreign currency translation, net of tax | (298) | (298) | |||
Transfers to related parties | (860) | (860) | |||
Equity repurchases | (649) | (649) | |||
Net income (loss) | (85,596) | (85,596) | |||
Ending balance (in shares) at Dec. 31, 2018 | 0 | ||||
Ending balance at Dec. 31, 2018 | (356,093) | $ 0 | (184,593) | (145,404) | (26,096) |
Beginning balance (in shares) at Sep. 30, 2018 | 0 | ||||
Beginning balance at Sep. 30, 2018 | (291,750) | $ 0 | (141,831) | (123,302) | (26,617) |
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Foreign currency translation, net of tax | 521 | 521 | |||
Transfers to related parties | (42,760) | (42,760) | |||
Equity repurchases | (2) | (2) | |||
Net income (loss) | (22,102) | (22,102) | |||
Ending balance (in shares) at Dec. 31, 2018 | 0 | ||||
Ending balance at Dec. 31, 2018 | (356,093) | $ 0 | (184,593) | (145,404) | (26,096) |
Beginning balance (in shares) at Mar. 31, 2019 | 0 | ||||
Beginning balance at Mar. 31, 2019 | (390,258) | $ 0 | (184,546) | (176,002) | (29,710) |
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Foreign currency translation, net of tax | 2,165 | 2,165 | |||
Reclassification of related party payable upon reorganization | 600,622 | 600,622 | |||
Issuance of common stock in connection with initial public offering, net of underwriters' discounts and commissions and issuance costs (in shares) | 38,873,000 | ||||
Issuance of common stock in connection with initial public offering, net of underwriters' discounts and commissions and issuance costs | 585,297 | $ 39 | 585,258 | ||
Effect or reorganization (in shares) | 241,547,000 | ||||
Effect of reorganization | 278,248 | $ 242 | 271,383 | 6,623 | |
Contribution for taxes associated with reorganization | 265,000 | 265,000 | |||
Restricted stock units vested (in shares) | 393,000 | ||||
Restricted stock units vested | 0 | ||||
Restricted stock awards forfeited (in shares) | (28,000) | ||||
Share-based compensation | 22,992 | 22,992 | |||
Equity repurchases | (150) | (150) | |||
Net income (loss) | $ (464,726) | (464,726) | |||
Ending balance (in shares) at Dec. 31, 2019 | 280,784,786 | 280,785,000 | |||
Ending balance at Dec. 31, 2019 | $ 899,190 | $ 281 | 1,560,559 | (640,728) | (20,922) |
Beginning balance (in shares) at Sep. 30, 2019 | 280,509,000 | ||||
Beginning balance at Sep. 30, 2019 | 886,282 | $ 281 | 1,547,051 | (642,491) | (18,559) |
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||
Foreign currency translation, net of tax | (2,363) | (2,363) | |||
Restricted stock units vested (in shares) | 304,000 | ||||
Restricted stock units vested | 0 | ||||
Restricted stock awards forfeited (in shares) | (28,000) | ||||
Restricted stock awards forfeited | 0 | ||||
Share-based compensation | 13,513 | 13,513 | |||
Equity repurchases | (5) | (5) | |||
Net income (loss) | $ 1,763 | 1,763 | |||
Ending balance (in shares) at Dec. 31, 2019 | 280,784,786 | 280,785,000 | |||
Ending balance at Dec. 31, 2019 | $ 899,190 | $ 281 | $ 1,560,559 | $ (640,728) | $ (20,922) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (464,726) | $ (85,596) |
Adjustments to reconcile net loss to cash (used in) provided by operations: | ||
Depreciation | 5,977 | 5,425 |
Amortization | 44,098 | 54,852 |
Share-based compensation | 209,684 | 42,285 |
Deferred income taxes | (45,686) | (15,979) |
Other | 4,313 | 661 |
Net change in operating assets and liabilities: | ||
Accounts receivable | (49,022) | (19,290) |
Deferred commissions | (13,484) | (7,445) |
Prepaid expenses and other assets | (692) | (814) |
Accounts payable and accrued expenses | 37,537 | 21,222 |
Deferred revenue | 64,905 | 89,612 |
Net cash (used in) provided by operating activities | (207,096) | 84,933 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (15,143) | (4,866) |
Capitalized software additions | (729) | (790) |
Net cash used in investing activities | (15,872) | (5,656) |
Cash flows from financing activities: | ||
Proceeds from initial public offering, net of underwriters' discounts and commissions | 590,297 | 0 |
Settlement of deferred offering costs | (5,000) | 0 |
Proceeds from term loans | 0 | 1,120,000 |
Debt issuance costs | 0 | (16,288) |
Repayment of term loans | (485,189) | (25,856) |
Payments to related parties | 0 | (1,177,021) |
Contribution for tax associated with reorganization | 265,000 | 0 |
Equity repurchases | (150) | (649) |
Installments related to acquisition | (4,694) | (3,653) |
Net cash provided by (used in) financing activities | 360,264 | (103,467) |
Effect of exchange rates on cash and cash equivalents | (55) | (2,535) |
Net increase (decrease) in cash and cash equivalents | 137,241 | (26,725) |
Cash and cash equivalents, beginning of period | 51,314 | 77,581 |
Cash and cash equivalents, end of period | 188,555 | 50,856 |
Supplemental cash flow data: | ||
Cash paid for interest | 34,001 | 24,647 |
Cash paid for tax | 268,281 | 3,451 |
Non-cash financing activities: | ||
Transactions with related parties | 0 | (82,217) |
Reclassification of related party payable upon reorganization | $ (600,622) | $ 0 |
Description of the Business
Description of the Business | 9 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business | Description of the Business Business Dynatrace, Inc. (“Dynatrace”, or the “Company”) offers a software intelligence platform, purpose-built for the enterprise cloud. As enterprises embrace the cloud as the means for digital transformation, the Company’s all-in-one intelligence platform addresses the growing complexity that technology and digital business teams face. The Company’s platform does so by utilizing artificial intelligence and advanced automation to provide answers, not just data, about the performance of applications, the underlying hybrid cloud infrastructure, and the experience of its customers’ users. The Company designed its software intelligence platform to allow its customers to modernize and automate IT operations, develop and release higher quality software faster, and deliver superior user experiences. Thoma Bravo (“TB”), a private equity investment firm, completed its acquisition of Compuware Corporation on December 15, 2014. Following the acquisition, Compuware Corporation was restructured following which Compuware Parent, LLC became the owner of Dynatrace Holding Corporation (“DHC”), under which the Compuware and Dynatrace businesses were separated, establishing Dynatrace as a standalone business. Following the corporate reorganization described below, Dynatrace became wholly owned by Dynatrace, Inc. (formerly Dynatrace Holdings LLC). Fiscal year The Company’s fiscal year ends on March 31. References to fiscal 2020 , for example, refer to the fiscal year ended March 31, 2020 . |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Basis of presentation and consolidation Prior to July 30, 2019, Dynatrace Holdings LLC, a Delaware limited liability company, was an indirect equity holder of DHC that indirectly and wholly owned Dynatrace, LLC. On July 31, 2019, Dynatrace Holdings LLC (i) converted into a Delaware corporation with the name Dynatrace, Inc. and (ii) through a series of corporate reorganization steps, became the parent company of DHC. Additionally, as part of the reorganization, two wholly owned subsidiaries of DHC, Compuware Corporation (“Compuware”) and SIGOS LLC (“SIGOS”), were spun out from the corporate structure to the DHC shareholders. As a result of these transactions, DHC is a wholly owned indirect subsidiary of Dynatrace, Inc. These reorganization steps are collectively referred to as the “reorganization.” In connection with the reorganization, the equity holders of Compuware Parent, LLC received 222,021,708 units of Dynatrace Holdings LLC in exchange for their equity interests in Compuware Parent, LLC based on the fair value of a unit of Dynatrace Holdings LLC on July 30, 2019, which was determined to be $16.00 per unit by a committee of the board of managers of Dynatrace Holdings LLC, and all of the outstanding units of Dynatrace Holdings LLC then converted into shares of Dynatrace, Inc. Additionally, 19,525,510 units of Dynatrace Holdings LLC were issued upon exchange of Dynatrace, LLC Management Incentive Units (“MIUs”) and Appreciation Units (“AUs”) for a total of 241,547,218 outstanding units in Dynatrace Holdings LLC immediately prior to the closing of the Company’s initial public offering (“IPO”). The reorganization was completed between entities that have been under common control since December 15, 2014. Therefore, these financial statements retroactively reflect DHC and Dynatrace, Inc. on a consolidated basis for the periods presented. The spin-offs of Compuware Corporation and SIGOS LLC from DHC have been accounted for retroactively as a change in reporting entity and accordingly, these financial statements exclude their accounts and results. 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 financial statements. As described in Note 14 , prior to the reorganization the condensed consolidated financial statements reflected the debt and debt service associated with subordinated demand promissory notes payable to a related party. The financial statements also reflect certain expenses incurred by the Company for certain functions including shared services for the periods prior to the reorganization, which are immaterial to these financial statements. These expenses were allocated to Dynatrace on the basis of direct usage when identifiable, and for resources indirectly used by Dynatrace. Allocations were based on a proportional cost allocation methodology to reflect estimated usage by Dynatrace. Management considers the allocation methodology and results to be reasonable for all periods presented. However, the financial information presented in these financial statements may not reflect the consolidated financial position, operating results and cash flows of Dynatrace had the Dynatrace business been a separate stand-alone entity during all of the periods presented. Actual costs that would have been incurred if Dynatrace had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas. Initial Public Offering On August 1, 2019 , the Company completed its initial public offering, in which it sold and issued 38,873,174 shares of common stock, inclusive of the underwriters’ option to purchase additional shares that was exercised in full, at an issue price of $16.00 per share. The Company received a total of $622.0 million in gross proceeds from the offering, or approximately $585.3 million in net proceeds after deducting approximately $36.7 million for underwriting discounts, commissions and offering-related expenses. The IPO also included the sale of 2.1 million shares of common stock, by selling stockholders, inclusive of the underwriters’ option to purchase additional shares that was exercised in full. The Company did not receive any proceeds from the sale of common stock by the selling stockholders. Prior to the closing of the IPO, the 241,547,218 outstanding units of Dynatrace Holdings, LLC were converted on a one -for-one basis into shares of common stock in accordance with the terms of the certificate of incorporation. Follow-on offering by selling stockholders On December 10, 2019, the Company completed a follow-on offering for the sale of 31,625,000 shares of common stock by selling stockholders, inclusive of the underwriters’ option to purchase additional shares that was exercised in full, at an offering price of $24.75 per share. The Company did not receive any proceeds from the sale of common stock by the selling stockholders. Unaudited interim consolidated financial information The accompanying interim condensed consolidated balance sheet as of December 31, 2019 and the interim condensed consolidated statements of operations, statements of shareholders’ equity / member’s deficit for the three and nine months ended December 31, 2019 and 2018 , statements of cash flows for the nine months ended December 31, 2019 and 2018 , and the related disclosures, are unaudited. In management’s opinion, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of December 31, 2019 , its results of operations for the three and nine months ended December 31, 2019 and 2018 , and its cash flows for the nine months ended December 31, 2019 and 2018 in accordance with U.S. GAAP. The results for the three and nine months ended December 31, 2019 are not necessarily indicative of the results to be expected for the full fiscal year or any other interim period. The accompanying interim unaudited condensed consolidated financial statements have been prepared in a manner consistent with the accounting principles included in the Company’s prospectus dated December 5, 2019 (“Prospectus”) and as filed with the SEC on December 6, 2019 pursuant to Rule 424(b) under the Securities Act of 1933, as amended. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes as of March 31, 2019 and 2018 included in the Prospectus. There have been no changes to the Company’s significant accounting policies described in the Company’s Prospectus that have had a material impact on its condensed consolidated financial statements and related notes, except for the share-based compensation accounting policy noted below. Accounts receivable and allowance for doubtful accounts The Company continuously assesses the collectability of outstanding customer invoices and in doing so, assesses the need to maintain an allowance for estimated losses resulting from the non-collection of customer receivables. In estimating this allowance, the Company considers factors such as: historical collection experience, a customer’s current creditworthiness, customer concentrations, age of outstanding balances, both individually and in the aggregate, and existing economic conditions. Actual customer collections could differ from the Company’s estimates. Allowance for doubtful accounts totaled $2.6 million and $3.4 million , and is classified as “Accounts receivable, net of allowance for doubtful accounts” in the condensed consolidated balance sheets as of December 31, 2019 and March 31, 2019 , respectively. Share-based compensation Prior to the IPO, the fair value of the equity units associated with Dynatrace Holdings, LLC underlying the Management Incentive Units and Appreciation Units was determined by the board of managers as there was no public market for the equity units. The board of managers determined the fair value of the Company’s equity units by considering a number of objective and subjective factors including: the valuation of comparable companies, the Company’s operating and financial performance, the lack of liquidity of common stock, and general and industry specific economic outlook, amongst other factors. After the IPO, the Company uses the publicly quoted price as reported on the New York Stock Exchange as the fair value of its common stock. The Company measures the cost of employee services received in exchange for an award of equity instruments, including stock options, restricted stock, restricted stock units (“RSUs”), and the purchase rights under the employee stock purchase plan (the “ESPP”), based on the estimated grant-date fair value of the award. The fair value is recognized as an expense following the straight-line attribution method over the requisite service period of the entire award for stock options, restricted stock, and RSUs; and over the offering period for the purchase rights issued under the ESPP. The Company calculates the fair value of stock options and the purchase rights under the ESPP using the Black-Scholes option-pricing model. This requires the input of highly subjective assumptions, including the fair value of the Company’s underlying common stock, the expected term of stock options and purchase rights, the expected volatility of the price of the Company’s common stock, risk-free interest rates, and the expected dividend yield of the Company’s common stock. The assumptions used in the Company’s option-pricing model represent its best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, the Company’s stock-based compensation expense could be materially different in the future. The resulting fair value, net of actual forfeitures, is recognized on a straight-line basis over the period during which an employee is required to provide service in exchange for the award. Reclassification Certain reclassifications of prior period amounts have been made in the Company’s condensed consolidated balance sheets and notes to the condensed consolidated financial statements to conform to the current period presentation. These reclassifications had no effect on the reported results of operations. Recently adopted accounting pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition and establishes a new revenue standard. This new standard is based on the principle that revenue is recognized to depict the transfer of control of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The standard also requires additional disclosures about the nature, amount, timing and uncertainty of revenues and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The FASB has also issued several amendments to the new standard which were designed to clarify and simplify the adoption process. In preparation for adoption of the new standard, the Company updated its accounting policies, systems, internal controls and processes. The Company adopted Topic 606 as of April 1, 2018 using the full retrospective method, which required adjustments to the historical financial information for fiscal years 2017 and 2018 to be consistent with the new standard. The Company recorded a net decrease to member’s accumulated deficit of $25.9 million as of April 1, 2016 as a result of the transition. The most significant impacts of the standard relate to the timing of revenue recognition for arrangements involving licenses and sales commissions. Under the new revenue standard, term licenses of the Company’s Classic products and the associated maintenance are considered separate performance obligations. This results in revenue associated with these term licenses being recognized upon delivery of the license rather than over the contractual term. Perpetual licenses and term license related to Dynatrace Software and the associated maintenance which includes when-and-if-available updates have been determined to be combined performance obligations and are recognized ratably over the useful life of the perpetual license or the length of the term license. Additionally, some deferred revenue, primarily from arrangements involving term licenses of the Company’s Classic products, was never recognized as revenue and instead is now a part of the cumulative effect adjustment within accumulated deficit. Finally, the Company is required to capitalize and amortize incremental costs of obtaining a contract, such as certain sales commission costs, over the remaining contractual term or over an expected period of benefit, which the Company has determined to be approximately three years . The Company applied the following practical expedients permitted under Topic 606: for all reporting periods presented before the date of initial adoption, the Company has elected not to disclose the amount of the transaction price allocated to the remaining performance obligations or provide an explanation of when the Company expects to recognize that amount as revenue. Additionally, the Company has also elected not to separately evaluate each contract modification that occurred before the initial adoption date. The Company has elected not to assess whether a contract has a significant financing component if it expects at contract inception that the period between payment and the transfer of products or services will be one year or less. Recently issued accounting pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The amendments supersede current lease requirements in Topic 840 which require lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. This new guidance is effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those periods, except for emerging growth companies who may elect to adopt the standard for annual reporting periods beginning after December 15, 2019. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements that allows entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company plans to elect this new transition guidance upon adoption of the standard on April 1, 2020. The Company will use the package of practical expedients which allows Dynatrace to not (1) reassess whether any expired or existing contracts are considered or contain leases; (2) reassess the lease classification for any expired or existing leases; and (3) reassess the initial direct costs for any existing leases. The Company expects that this standard will have a material effect on its consolidated balance sheets. While the Company continues to assess all of the effects of adoption, the Company currently believes the most significant effects relate to the recognition of new right-of-use assets and lease liabilities on the balance sheet for the Company’s office space operating leases. The right-of-use assets and corresponding lease liabilities will be based on the present value of future minimum lease payments. The adoption is not expected to have a material impact on the condensed consolidated statements of operations. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. ASU 2016-13 is effective for annual periods, and interim periods within those years, beginning after December 15, 2019. The Company does not expect the standard to have a material impact on its condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract; Disclosures for Implementation Costs Incurred for Internal-Use Software and Cloud Computing Arrangements, which aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software under ASC 350-40, in order to determine which costs to capitalize and recognize as an asset. ASU 2018-15 is effective for annual periods, and interim periods within those years, beginning after December 15, 2020, and can be applied either prospectively to implementation costs incurred after the date of adoption or retrospectively to all arrangements. The Company is currently evaluating the effects the standard will have on its condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. ASU 2019-12 is effective for annual periods, and interim periods within those years, beginning after December 15, 2020. The Company is currently evaluating the effects the standard will have on its condensed consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition The Company elected to early adopt ASC Topic 606 (“ASC 606”), Revenue from Contracts with Customers, effective April 1, 2018, using the full retrospective transition method. The Company derives revenue from sales of software licenses, subscriptions, maintenance and support, and professional services together in contracts with its customers, which include end-customers and channel partners. Revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for these services. Certain of the Company’s software license agreements provide customers with a right to use software perpetually or for a defined term. As required under applicable accounting principles, the goods and services that the Company promises to transfer to a customer are accounted for separately if they are distinct from one another. Promised items that are not distinct are bundled with other promised items until the bundle is distinct from other promised items in the contract. The transaction price is allocated to the separate performance obligations based on the relative estimated standalone selling prices of those performance obligations. Contract modifications are assessed to determine (i) if the additional goods and services are distinct from the goods and services in the original arrangement; and (ii) if the amount of the consideration expected for the added goods and services reflects the stand-alone selling price of those goods and services, as adjusted for contract-specific circumstances. A contract modification meeting both criteria is accounted for as a separate contract. A contract modification not meeting both criteria is considered a change to the original contract, which the Company accounts for on a prospective basis as a termination for contract specific circumstances. The Company’s additional goods and services offered have historically been distinct. If such additional goods and services reflect their stand-alone selling price, the Company accounts for the modification as a separate contract. If such additional goods and services do not reflect their stand-alone selling price, the Company accounts for the modification prospectively as a termination of the existing contract and the creation of a new contract. Disaggregation of revenue The following table is a summary of the Company’s total revenues by geographic region (in thousands, except percentages): Three Months Ended December 31, Nine Months Ended December 31, 2019 2018 2019 2018 Amount % Amount % Amount % Amount % North America $ 82,946 58 % $ 64,744 56 % $ 231,388 59 % $ 179,952 57 % Europe, Middle East and Africa 39,676 28 % 34,262 30 % 107,494 27 % 91,641 29 % Asia Pacific 16,231 11 % 12,601 11 % 44,414 11 % 34,686 11 % Latin America 4,445 3 % 3,083 3 % 11,930 3 % 8,519 3 % Total revenue $ 143,298 $ 114,690 $ 395,226 $ 314,798 For the three and nine months ended December 31, 2019 and 2018 , the United States was the only country that represented more than 10% of the Company’s revenues in any period, constituting $77.7 million and 54% , and $61.0 million and 53% of total revenue during the three months ended December 31, 2019 and 2018 , respectively, and $218.1 million and 55% , and $169.7 million and 54% of total revenue for the nine months ended December 31, 2019 and 2018 , respectively. Deferred revenue Revenues recognized from amounts included in deferred revenue as of March 31, 2019 were $60.7 million and $233.7 million during the three and nine months ended December 31, 2019 , respectively. Revenues recognized from amounts included in deferred revenue as of March 31, 2018 were $48.4 million and $183.6 million during the three and nine months ended December 31, 2018 , respectively. Remaining performance obligations As of December 31, 2019 , the aggregate amount of the transaction price allocated to remaining performance obligations was $800.3 million , which consists of both billed consideration in the amount of $431.3 million and unbilled consideration in the amount of $369.0 million that the Company expects to recognize as subscription and service revenue. The Company expects to recognize 57% of this amount as revenue over the next twelve months and the remainder thereafter. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Dec. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): December 31, 2019 March 31, 2019 Prepaid expenses $ 16,064 $ 13,334 Income taxes refundable 3,919 4,078 Other 82 1,356 Prepaid expenses and other current assets $ 20,065 $ 18,768 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets, net | 9 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets, net | Goodwill and Other Intangible Assets, net Changes in the carrying amount of goodwill on a consolidated basis for the nine months ended December 31, 2019 consist of the following (in thousands): December 31, 2019 Balance, beginning of period $ 1,270,120 Foreign currency impact 530 Balance, end of period $ 1,270,650 Intangible assets, net excluding goodwill consist of (in thousands): Weighted Average Useful Life (in months) December 31, 2019 March 31, 2019 Capitalized software 109 $ 189,384 $ 188,608 Customer relationships 120 351,555 351,555 Trademarks and tradenames 120 55,003 55,003 Total intangible assets 595,942 595,166 Less: accumulated amortization (380,158 ) (336,043 ) Total intangible assets, net $ 215,784 $ 259,123 Amortization of other intangible assets totaled $14.3 million and $18.2 million for the three months ended December 31, 2019 and 2018 , respectively, and $44.1 million and $54.9 million for the nine months ended December 31, 2019 and 2018 |
Income Taxes
Income Taxes | 9 Months Ended |
Dec. 31, 2019 | |
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 (loss) 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, 2019 was negative 8% compared to 11% for the three months ended December 31, 2018 . The effective tax rate was lower than the U.S. statutory tax rate for the three months ended December 31, 2019 primarily due to tax credits and incentives. The Company’s effective tax rate for the nine months ended December 31, 2019 was negative 112% compared to 11% for the nine months ended December 31, 2018 . The effective tax rate was higher than the U.S. statutory tax rate for the nine months ended December 31, 2019 because of the $255.8 million incurred upon the reorganization transactions described in Note 2 as well as non-deductible share-based compensation. Based on the Company’s review of both positive and negative evidence regarding the realizability of deferred tax assets at December 31, 2019 , a valuation allowance continues to be recorded against certain deferred tax assets based upon the conclusion that it was more likely than not they would not be realized. The valuation allowance at December 31, 2019 relates primarily to foreign tax credits and net operating losses. The reorganization triggered a short tax period in the U.S. which gave rise to the acceleration of deferred revenue for tax purposes and a corresponding reduction in the net deferred tax liability during the period of acceleration. Other matters The Tax Cuts and Jobs Act (the “Tax Act”) was signed into law on December 22, 2017. The Tax Act changed many aspects of U.S. corporation income taxation and include reduction of the corporate income tax rate from 35% to 21%, implementation of a territorial tax system and imposition of a tax on deemed repatriated earnings of foreign subsidiaries (“Transition Tax”). The Company recognized the tax effects of the Tax Act in the fiscal year ended 2018 and recorded $50.0 million in tax benefit which relates almost entirely to the remeasurement of deferred tax liabilities to the 21% tax rate. The effects of ongoing provisions of the Tax Act, including global intangible low-taxed income (GILTI) and base-erosion and anti-abuse tax (BEAT), are accounted for in the income tax provision. |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses, current consisted of the following (in thousands): December 31, 2019 March 31, 2019 Accrued employee - related expenses $ 36,352 $ 35,192 Accrued tax liabilities 13,364 6,274 Accrued restructuring 1,864 1,488 Accrued professional fees 3,826 3,440 Accrued installments for acquisition — 4,832 Income taxes payable 18,154 3,811 Other 12,634 9,883 Total accrued expenses, current $ 86,194 $ 64,920 Accrued expenses, non-current consisted of the following (in thousands): December 31, 2019 March 31, 2019 Share-based compensation $ — $ 92,047 Income tax reserve 14,356 2,876 Other 3,692 3,436 Total accrued expenses, non-current $ 18,048 $ 98,359 |
Long-term Debt
Long-term Debt | 9 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt On August 23, 2018, the Company entered into the First Lien Credit Agreement (the “First Lien Term Loan”) in which the Company borrowed an aggregate principal amount of $950.0 million , which matures on August 23, 2025 . Borrowings under the First Lien Term Loan currently bear interest, at the Company’s election, at either (i) the Alternative Base Rate, as defined per the credit agreement, plus 1.75% per annum, or (ii) LIBOR plus 2.75% per annum, if the net leverage ratio remains below 4.35 to 1.00 and are subject to an increase if the net leverage ratio is higher than 4.35 to 1.00. Interest payments are due quarterly, or more frequently, based on the terms of the credit agreement. As of December 31, 2019 , the Company has satisfied all required principal payments under the First Lien Term Loan and the remainder is due at maturity. The First Lien Term Loan requires prepayments in the case of certain events including: property or asset sale in excess of $5.0 million , proceeds in excess of $5.0 million from an insurance settlement, or proceeds from a new debt agreement. An additional prepayment may be required under the First Lien Term Loan related to excess cash flow for the respective measurement periods. All of the indebtedness under the First Lien Term Loan is and will be guaranteed by the Company’s existing and future material domestic subsidiaries and is and will be secured by substantially all of the assets of the Company and such guarantors. The First Lien Term Loan contains customary negative covenants. At December 31, 2019 , the Company was in compliance with all applicable covenants. On August 23, 2018, the Company entered into the Second Lien Credit Agreement (the “Second Lien Term Loan”) in which the Company borrowed an aggregate principal amount of $170.0 million . Borrowings under the Second Lien Term Loan bore interest, at the Company’s election, at either (i) the Alternative Base Rate, as defined per the credit agreement, plus 6.00% per annum, or (ii) LIBOR plus 7.00% per annum. The maturity date on the Second Lien Term Loan was August 23, 2026 , with principal 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 second quarter of fiscal 2020, the Company repaid all outstanding borrowings, including accrued interest, under the Second Lien Term Loan and recognized a loss on debt extinguishment of $2.7 million within “Interest expense, net” in the condensed consolidated statement of operations for the nine months ended December 31, 2019 . The First Lien Term Loan and Second Lien Term Loan are collectively referred to as the “Term Loans”. Debt issuance costs and original issuance discount of $15.5 million were incurred in connection with the Term Loans. These debt issuance costs and original issuance discount will be amortized into interest expense over the contractual term of the Term Loans. During the three and nine months ended December 31, 2019 , the Company recognized approximately $0.4 million and $1.3 million of amortization of debt issuance costs and original issuance discount which is included in the accompanying condensed consolidated statements of operations. During the three and nine months ended December 31, 2018 , the Company recognized $0.5 million and $0.7 million , respectively, of amortization of debt issuance costs and original issuance discount which is included in the accompanying condensed consolidated statements of operations. At December 31, 2019 , the Company had an aggregate principal amount outstanding of $551.1 million for the First Lien Term Loan bearing interest at 4.5% . At March 31, 2019 , the Company had an aggregate principal amount outstanding of $947.6 million and $88.7 million for the First Lien Term Loan and Second Lien Term Loan, respectively, bearing interest at 5.7% and 9.5% , respectively. At December 31, 2019 and March 31, 2019 , the Company had $10.3 million and $14.3 million , respectively, of unamortized debt issuance costs and original issuance discount which is recorded as a reduction of the debt balance on the Company’s condensed consolidated balance sheets. Revolving Facility The First Lien Credit Agreement further provided for a revolving credit facility (the “Revolving Facility”) in an aggregate amount of $60.0 million , which matures on August 23, 2023 . Borrowings under the Revolving Facility currently bear interest, at the Company’s election, at either (i) the Alternative Base Rate, as defined per the credit agreement, plus 1.50% per annum, or (ii) LIBOR plus 2.50% per annum, if the net leverage ratio remains below 3.85 to 1.00 and are subject to an increase if the net leverage ratio is higher than 3.85 to 1.00. The Revolving Facility includes a $15.0 million letter of credit sub-facility. The Company incurs fees with respect to the Revolving Facility, including (i) a commitment fee of 0.25% per annum of unused commitments under the Revolving Facility, subject to an adjustment based on the First Lien Term Loan net leverage ratio, (ii) facility fees equal to the applicable margin in effect for Eurodollar Rate Loans, as defined per the credit agreement, times the average daily stated amount of letters of credit, (iii) a fronting fee equal to either (a) 0.125% per annum on the stated amount of each letter of credit or (b) such other rate per annum as agreed to by the parties subject to the letters of credit, and (iv) customary administrative fees. All of the indebtedness under the Revolving Facility is and will be guaranteed by the Company’s existing and future material domestic subsidiaries and is and will be secured by substantially all of the assets of the Company and such guarantors. Debt issuance costs of $0.8 million were incurred in connection with the entry into the Revolving Facility. These debt issuance costs are amortized into interest expense over the contractual term of the loan. The Company recognized an immaterial amount of amortization of debt issuance costs for the three months ended December 31, 2019 and $0.1 million of amortization of debt issuance costs for the nine months ended December 31, 2019 which is included in the accompanying condensed consolidated statements of operations. There was an immaterial amount of amortization of debt issuance costs and original issuance discount for the three and nine months ended December 31, 2018 which is included in the accompanying condensed consolidated statements of operations. There were $0.6 million and $0.7 million of unamortized debt issuance costs included as a reduction of the debt balance on the accompanying condensed consolidated balance sheets as of December 31, 2019 and March 31, 2019 , respectively. The Revolving Facility contains customary negative covenants and does not include any financial maintenance covenants other than a springing minimum net leverage ratio not exceeding 7.50 to 1.00 on the last day of any fiscal quarter, which will be tested only upon the occurrence of an event of default or certain other conditions as specified in the agreement. At December 31, 2019 , the Company was in compliance with all applicable covenants pertaining to the Revolving Facility. As of December 31, 2019 and March 31, 2019 , there were no amounts outstanding under the Revolving Facility, and there were $11.8 million and $0.5 million letters of credit issued, respectively. The Company had $48.2 million and $59.5 million of availability under the Revolving Facility as of December 31, 2019 and March 31, 2019 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Tax liability In connection with the initial public offering completed in the second quarter of fiscal 2020, the Company undertook a series of transactions to spin out two wholly owned businesses from the corporate structure. These transactions generated a taxable gain upon their occurrence which will be reported on tax returns for the year ended March 31, 2020. On July 31, 2019, Compuware Corporation distributed $265 million to the Company to partially or wholly fund the tax liability pursuant to an agreement with the Company which is recorded as a contribution within “Additional paid-in capital” on the condensed consolidated statements of shareholders’ equity / member’s deficit. The Company has estimated an expense of $255.8 million and made estimated tax payments to the relevant taxing authorities. Commitment for operating leases The Company’s commitments for various operating lease agreements related to office space for various periods that extend through as late as fiscal 2030. Total rent payments under these agreements were approximately $3.5 million and $2.7 million for the three months ended December 31, 2019 and 2018 , respectively, and $10.2 million and $8.2 million for the nine months ended December 31, 2019 and 2018 , respectively. Certain of these lease agreements contain provisions for renewal options and escalation clauses. Legal matters From time to time, the Company may be a party to lawsuits and legal proceedings arising in the ordinary course of business. In the opinion of the Company’s management, these matters, individually and in the aggregate, will not have a material adverse effect on the financial condition and results of the future operations of the Company. |
Shareholder's Equity
Shareholder's Equity | 9 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Shareholder's Equity | Shareholders’ Equity The Company is authorized to issue 600,000,000 shares of common stock, par value of $0.001 per share. Dynatrace Holdings LLC was reorganized on April 1, 2015 and had 100 common units as of March 31, 2019 . In connection with the reorganization transactions described in Note 2, an additional 241,547,118 common units of Dynatrace Holdings LLC were issued and subsequently exchanged for 241,547,218 shares of common stock in Dynatrace, Inc. during the second quarter of fiscal 2020. This amount of additional common units includes 16,687,436 common units issued upon the exchange of vested Management Incentive Units (“MIUs”) and Appreciation Units (“AUs”). At December 31, 2019 , there were 280,784,786 shares of common stock issued and outstanding. |
Share-based Compensation
Share-based Compensation | 9 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Share-based Compensation | Share-based Compensation Management Incentive Unit program Under the Management Incentive Unit program, or the MIU Plan, Compuware Parent LLC’s board of managers had authorized the issuance of MIUs and AUs to certain executive officers and key employees. The MIUs and AUs consisted of two types of units which were classified as performance-vested units and time-vested units. In connection with the reorganization transactions occurring in the second quarter of fiscal 2020, as described in Note 2, outstanding awards granted under the MIU Plan were converted into shares of common stock, restricted stock, and restricted stock units which were granted under the 2019 Plan as defined below. Upon conversion, the MIUs and AUs were modified and ceased to be classified as liability awards. This modification impacted 306 participants and resulted in the recognition of incremental stock compensation expense of $145.3 million during the nine months ended December 31, 2019 to record the liability awards at fair value immediately prior to the modification. Upon modification, the liability balance of $278.2 million related to these MIUs and AUs was reclassified into additional paid-in capital. 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 of directors, adopted the 2019 Equity Incentive Plan, or the 2019 Plan, which was subsequently approved by the Company’s shareholders. The 2019 Plan became effective on July 30, 2019 and serves as the successor to the Company’s MIU Plan. The Company initially reserved 52,000,000 shares of common stock, or the Initial Limit, 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 will automatically increase 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. Stock options The following table summarizes activity for stock options during the period ended December 31, 2019 : 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, 2019 — $ — Granted 7,252 16.18 Exercised — — Forfeited (23 ) 16.42 Balance, December 31, 2019 7,229 $ 16.17 9.5 $ 65,980 Options vested and expected to vest at December 31, 2019 7,229 $ 16.17 9.5 $ 65,980 Options vested and exercisable at December 31, 2019 — $ — 0.0 $ — As of December 31, 2019 , the total unrecognized compensation expense related to non-vested stock options granted is $41.7 million and is expected to be recognized over a weighted average period of 3.6 years. For the three and nine months ended December 31, 2019 , the Company recognized $2.7 million and $4.5 million of share-based compensation expense related to stock options, respectively. The fair value for the Company’s stock options granted during the period ended December 31, 2019 was estimated at the date of grant using a Black-Scholes option-pricing model using the following weighted average assumptions: December 31, 2019 Expected dividend yield — Expected volatility 37.7 % Expected term (years) 6.1 Risk-free interest rate 1.9 % The Company has not paid and does not expect to pay dividends. Consequently, the Company uses an expected dividend yield of zero. The computation of expected volatility is based on a calculation using the historical volatility of a group of publicly traded peer companies. The Company expects to continue to do so until such time as it has adequate historical data regarding the volatility of the Company’s traded stock price. The computation of expected term was based on the average period the stock options are expected to remain outstanding, generally calculated as the midpoint of the stock options’ remaining vesting term and contractual expiration period, as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected life of the award. Restricted shares and units During the first nine months of fiscal 2020 , the Company granted an aggregate of 6,490,283 restricted shares to certain key employees and non-employee directors. The total grants consisted of: (i) 3,379,170 time-based restricted shares that vest 25% after the grant date (or one year after the vesting start date, if different) and the remaining 75% vest ratably over a 36 -month period; (ii) 696,873 performance-based restricted shares; (iii) 2,364,240 time-based restricted shares that vest 25% one year after the grant date and the remaining 75% vest ratably on a quarterly basis over 3 years, and (iv) 50,000 time-based restricted shares that vest on August 15, 2020 or upon Board approval at the annual shareholder meeting, if earlier. The performance criteria for the performance-based shares include four performance targets which vest 25% after each fiscal year end, upon the Board’s confirmation that the performance target was met for such fiscal year. These shares have a requisite service period that varies based on the grant date, but the service period begins on the grant date and ends on achievement of the final fiscal year performance target. The performance criterion for vesting of performance shares has been based on an adjusted EBITDA metric compared to the target established and approved by the Company’s board of directors for each fiscal year. Shares that are vested based upon performance for any given year for which the target was not met shall not vest; provided, that if the target is not met for a given year, but the target for the subsequent year is met, the unvested performance-based shares for the previous year shall become vested when the target for the subsequent year was met. The restricted shares are generally subject to forfeiture if employment terminates prior to the vesting date. The Company expenses the cost of the restricted shares, which is determined to be the fair market value of the shares of common stock underlying the restricted shares on the date of grant, ratably over the period during which the vesting restrictions lapse. The following table provides a summary of the changes in the number of restricted shares for the period ended December 31, 2019 : Number of Shares of Restricted Stock Awards Weighted Average Grant Date Fair Value Number of Restricted Stock Units Weighted Average Grant Date Fair Value (in thousands) (per share) (in thousands) (per share) Balance, March 31, 2019 — $ — — $ — Granted 2,854 16.00 3,636 16.16 Vested (494 ) 16.00 (393 ) 16.00 Forfeited (45 ) 16.00 (29 ) 16.39 Balance, December 31, 2019 2,315 $ 16.00 3,214 $ 16.18 As of December 31, 2019 , the total unrecognized compensation expense related to unvested restricted stock is $28.9 million and is expected to be recognized over a weighted average period of 1.8 years. As of December 31, 2019 , the total unrecognized compensation expense related to unvested restricted stock units is $47.6 million and is expected to be recognized over a weighted average period of 3.2 years. For the three and nine months ended December 31, 2019 , the Company recognized $10.6 million and $18.3 million , respectively, of share-based compensation expense related to restricted shares and units. Employee Stock Purchase Plan In July 2019, the board of directors adopted, and the Company’s shareholders approved, the 2019 Employee Stock Purchase Plan for the issuance of up to a total of 6,250,000 shares of common stock, subject to automatic annual increases. The Company expects to offer, sell and issue 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 initial offering period began on November 29, 2019 and will end on May 28, 2020. Except for the initial offering period, the ESPP provides for 6 -month offering periods beginning May 15 and November 15 of each year, and each offering period will consist of six-month purchase periods. On each purchase date, eligible employees will 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. As of December 31, 2019 , there was approximately $0.9 million of unrecognized stock-based compensation related to the ESPP that is expected to be recognized over the remaining term of the initial offering period. The Company estimated the fair value of ESPP purchase rights using a Black-Scholes option pricing model with the following assumptions: December 31, 2019 Expected dividend yield — Expected volatility 35.9 % Expected term (years) 0.5 Risk-free interest rate 1.6 % The Company has not paid and does not expect to pay dividends. Consequently, the Company uses an expected dividend yield of zero. The computation of expected volatility is based on a calculation using the historical volatility of a group of publicly traded peer companies. The Company expects to continue to do so until such time as it has adequate historical data regarding the volatility of the Company’s traded stock price. The computation of expected term was based on the offering period, which is six months. The risk-free interest rate is based on the U.S. Treasury yield curve that corresponds with the expected term at the time of grant. Share-based compensation The following table summarizes the components of total share-based compensation expense included the condensed consolidated financial statements for each period presented (in thousands): Three Months Ended December 31, Nine Months Ended December 31, 2019 2018 2019 2018 Cost of revenues $ 1,317 $ 476 $ 17,346 $ 3,466 Research and development 2,173 1,009 36,679 7,590 Sales and marketing 6,707 2,179 78,592 14,640 General and administrative 3,316 2,393 77,067 16,589 Total share-based compensation expense $ 13,513 $ 6,057 $ 209,684 $ 42,285 |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Net Income (Loss) Per Share On August 1, 2019 , the Company completed its IPO in which the Company issued and sold 38,873,174 shares of common stock at a price to the public of $16.00 per share. These shares are included in the common stock outstanding as of that date. For the three and nine months ended December 31, 2019 and 2018 , basic and diluted net income (loss) per share have been retrospectively adjusted to reflect the conversion of equity in connection with the reorganization transactions described in Note 2. Basic and diluted net income (loss) per share was derived from a unit conversion factor of $16.00 per share as determined by the board of managers of Dynatrace Holdings LLC on July 30, 2019. The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share data): Three Months Ended December 31, Nine Months Ended December 31, 2019 2018 2019 2018 Numerator: Net income (loss) $ 1,763 $ (22,102 ) $ (464,726 ) $ (85,596 ) Denominator: Weighted average shares outstanding, basic 277,926 236,024 260,383 235,648 Dilutive effect of stock-based awards 2,230 — — — Weighted average shares outstanding, diluted 280,156 236,024 260,383 235,648 Net income (loss) per share, basic $ 0.01 $ (0.09 ) $ (1.78 ) $ (0.36 ) Net income (loss) per share, diluted $ 0.01 $ (0.09 ) $ (1.78 ) $ (0.36 ) 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, 2019 and 2018 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, 2019 2018 2019 2018 Stock options 79 — 3,970 — Unvested restricted stock and RSUs 10 — 3,334 — Shares committed under ESPP 15 — 21 — Unvested equity awards — 6,272 — 6,605 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company had agreements with Thoma Bravo, LLC for financial and management advisory services. The Company did no t incur any expense related to these services during the three months ended December 31, 2019 and incurred $1.2 million during the three months ended December 31, 2018 . The Company incurred $1.6 million and $3.7 million during the nine months ended December 31, 2019 and 2018 , respectively. The related expense is reflected in “General and administrative” expense in the condensed consolidated statements of operations. Upon completion of the Company’s initial public offering, these agreements were terminated. During the nine months ended December 31, 2019 , Compuware distributed $265.0 million to the Company to partially or wholly fund a tax liability incurred in connection with the reorganization transactions described in Note 2. As of December 31, 2019 , the Company had a receivable from Compuware of $6.0 million primarily due to estimated taxes paid by the Company for taxable income realized by Compuware. These amounts are reimbursable under the Tax Sharing Agreement entered into between Compuware and the Company in connection with the reorganization. During the three and nine months ended December 31, 2018 , the Company had transfers from related parties of $42.8 million and $0.9 million , respectively, which are included in “Additional paid-in capital” in the condensed consolidated balance sheets. During the nine months ended December 31, 2018 , the Company transferred cash to related parties of $1,177.0 million related to debt service and shared costs. Other related party settlements resulted in a decrease in payables to related parties of $82.2 million for the nine months ended December 31, 2018 . On April 1, 2015, the Company entered into $1.8 billion in subordinated demand promissory notes payable to Compuware, a related party. The promissory notes were established in connection with Compuware’s external debt financing. All payments of principal and interest were payable on the earliest to occur of (i) demand by the holder, (ii) June 1, 2023 and (iii) the date of acceleration of the promissory notes as a result of the occurrence of an event of default. As a result of the August 23, 2018 financing transaction, as described in Note 8 , “Long-term Debt”, the amount was reduced by the net proceeds of the financing obtained by Dynatrace LLC, leaving $478.5 million in principal and accrued interest of $118.7 million , at a rate of 2.72% per annum, which is included in “Payable to related party” in the condensed consolidated balance sheets at March 31, 2019 . Interest expense on the promissory notes was zero and $4.1 million for the three and nine months ended December 31, 2019 , respectively, and $3.3 million and $24.1 million for the three and nine months ended December 31, 2018 , respectively, and is included in the condensed consolidated statements of operations in “Interest expense, net.” In connection with the reorganization during the second quarter of fiscal 2020, the corresponding receivable at Compuware was contributed to the Company and the payable to related party was eliminated. |
Related Party Debt
Related Party Debt | 9 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Debt | Related Party Transactions The Company had agreements with Thoma Bravo, LLC for financial and management advisory services. The Company did no t incur any expense related to these services during the three months ended December 31, 2019 and incurred $1.2 million during the three months ended December 31, 2018 . The Company incurred $1.6 million and $3.7 million during the nine months ended December 31, 2019 and 2018 , respectively. The related expense is reflected in “General and administrative” expense in the condensed consolidated statements of operations. Upon completion of the Company’s initial public offering, these agreements were terminated. During the nine months ended December 31, 2019 , Compuware distributed $265.0 million to the Company to partially or wholly fund a tax liability incurred in connection with the reorganization transactions described in Note 2. As of December 31, 2019 , the Company had a receivable from Compuware of $6.0 million primarily due to estimated taxes paid by the Company for taxable income realized by Compuware. These amounts are reimbursable under the Tax Sharing Agreement entered into between Compuware and the Company in connection with the reorganization. During the three and nine months ended December 31, 2018 , the Company had transfers from related parties of $42.8 million and $0.9 million , respectively, which are included in “Additional paid-in capital” in the condensed consolidated balance sheets. During the nine months ended December 31, 2018 , the Company transferred cash to related parties of $1,177.0 million related to debt service and shared costs. Other related party settlements resulted in a decrease in payables to related parties of $82.2 million for the nine months ended December 31, 2018 . On April 1, 2015, the Company entered into $1.8 billion in subordinated demand promissory notes payable to Compuware, a related party. The promissory notes were established in connection with Compuware’s external debt financing. All payments of principal and interest were payable on the earliest to occur of (i) demand by the holder, (ii) June 1, 2023 and (iii) the date of acceleration of the promissory notes as a result of the occurrence of an event of default. As a result of the August 23, 2018 financing transaction, as described in Note 8 , “Long-term Debt”, the amount was reduced by the net proceeds of the financing obtained by Dynatrace LLC, leaving $478.5 million in principal and accrued interest of $118.7 million , at a rate of 2.72% per annum, which is included in “Payable to related party” in the condensed consolidated balance sheets at March 31, 2019 . Interest expense on the promissory notes was zero and $4.1 million for the three and nine months ended December 31, 2019 , respectively, and $3.3 million and $24.1 million for the three and nine months ended December 31, 2018 , respectively, and is included in the condensed consolidated statements of operations in “Interest expense, net.” In connection with the reorganization during the second quarter of fiscal 2020, the corresponding receivable at Compuware was contributed to the Company and the payable to related party was eliminated. |
Geographic Information
Geographic Information | 9 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Geographic Information | Geographic Information Revenue Revenues by geography are based on legal jurisdiction. Refer to Note 3 , “Revenue Recognition” for a disaggregation of revenue by geographic region. Property and equipment, net The following tables present property and equipment by geographic region for the periods presented (in thousands): December 31, 2019 March 31, 2019 North America $ 8,440 $ 10,036 Europe, Middle East and Africa 17,878 7,347 Asia Pacific 1,590 376 Latin America 122 166 Total property and equipment, net $ 28,030 $ 17,925 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Fiscal year | The Company’s fiscal year ends on March 31. References to fiscal 2020 , for example, refer to the fiscal year ended March 31, 2020 . |
Consolidation | Prior to July 30, 2019, Dynatrace Holdings LLC, a Delaware limited liability company, was an indirect equity holder of DHC that indirectly and wholly owned Dynatrace, LLC. On July 31, 2019, Dynatrace Holdings LLC (i) converted into a Delaware corporation with the name Dynatrace, Inc. and (ii) through a series of corporate reorganization steps, became the parent company of DHC. Additionally, as part of the reorganization, two wholly owned subsidiaries of DHC, Compuware Corporation (“Compuware”) and SIGOS LLC (“SIGOS”), were spun out from the corporate structure to the DHC shareholders. As a result of these transactions, DHC is a wholly owned indirect subsidiary of Dynatrace, Inc. These reorganization steps are collectively referred to as the “reorganization.” In connection with the reorganization, the equity holders of Compuware Parent, LLC received 222,021,708 units of Dynatrace Holdings LLC in exchange for their equity interests in Compuware Parent, LLC based on the fair value of a unit of Dynatrace Holdings LLC on July 30, 2019, which was determined to be $16.00 per unit by a committee of the board of managers of Dynatrace Holdings LLC, and all of the outstanding units of Dynatrace Holdings LLC then converted into shares of Dynatrace, Inc. Additionally, 19,525,510 units of Dynatrace Holdings LLC were issued upon exchange of Dynatrace, LLC Management Incentive Units (“MIUs”) and Appreciation Units (“AUs”) for a total of 241,547,218 outstanding units in Dynatrace Holdings LLC immediately prior to the closing of the Company’s initial public offering (“IPO”). The reorganization was completed between entities that have been under common control since December 15, 2014. Therefore, these financial statements retroactively reflect DHC and Dynatrace, Inc. on a consolidated basis for the periods presented. The spin-offs of Compuware Corporation and SIGOS LLC from DHC have been accounted for retroactively as a change in reporting entity and accordingly, these financial statements exclude their accounts and results. As described in Note 14 , prior to the reorganization the condensed consolidated financial statements reflected the debt and debt service associated with subordinated demand promissory notes payable to a related party. The financial statements also reflect certain expenses incurred by the Company for certain functions including shared services for the periods prior to the reorganization, which are immaterial to these financial statements. These expenses were allocated to Dynatrace on the basis of direct usage when identifiable, and for resources indirectly used by Dynatrace. Allocations were based on a proportional cost allocation methodology to reflect estimated usage by Dynatrace. Management considers the allocation methodology and results to be reasonable for all periods presented. However, the financial information presented in these financial statements may not reflect the consolidated financial position, operating results and cash flows of Dynatrace had the Dynatrace business been a separate stand-alone entity during all of the periods presented. Actual costs that would have been incurred if Dynatrace had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas. |
Basis of presentation | 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 financial statements. The accompanying interim condensed consolidated balance sheet as of December 31, 2019 and the interim condensed consolidated statements of operations, statements of shareholders’ equity / member’s deficit for the three and nine months ended December 31, 2019 and 2018 , statements of cash flows for the nine months ended December 31, 2019 and 2018 , and the related disclosures, are unaudited. In management’s opinion, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of December 31, 2019 , its results of operations for the three and nine months ended December 31, 2019 and 2018 , and its cash flows for the nine months ended December 31, 2019 and 2018 in accordance with U.S. GAAP. The results for the three and nine months ended December 31, 2019 are not necessarily indicative of the results to be expected for the full fiscal year or any other interim period. The accompanying interim unaudited condensed consolidated financial statements have been prepared in a manner consistent with the accounting principles included in the Company’s prospectus dated December 5, 2019 (“Prospectus”) and as filed with the SEC on December 6, 2019 pursuant to Rule 424(b) under the Securities Act of 1933, as amended. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes as of March 31, 2019 and 2018 included in the Prospectus. There have been no changes to the Company’s significant accounting policies described in the Company’s Prospectus that have had a material impact on its condensed consolidated financial statements and related notes, except for the share-based compensation accounting policy noted below. |
Accounts receivable and allowance for doubtful accounts | Accounts receivable and allowance for doubtful accounts The Company continuously assesses the collectability of outstanding customer invoices and in doing so, assesses the need to maintain an allowance for estimated losses resulting from the non-collection of customer receivables. In estimating this allowance, the Company considers factors such as: historical collection experience, a customer’s current creditworthiness, customer concentrations, age of outstanding balances, both individually and in the aggregate, and existing economic conditions. Actual customer collections could differ from the Company’s estimates. Allowance for doubtful accounts totaled $2.6 million and $3.4 million , and is classified as “Accounts receivable, net of allowance for doubtful accounts” in the condensed consolidated balance sheets as of December 31, 2019 and March 31, 2019 , respectively. |
Share-based compensation | Share-based compensation Prior to the IPO, the fair value of the equity units associated with Dynatrace Holdings, LLC underlying the Management Incentive Units and Appreciation Units was determined by the board of managers as there was no public market for the equity units. The board of managers determined the fair value of the Company’s equity units by considering a number of objective and subjective factors including: the valuation of comparable companies, the Company’s operating and financial performance, the lack of liquidity of common stock, and general and industry specific economic outlook, amongst other factors. After the IPO, the Company uses the publicly quoted price as reported on the New York Stock Exchange as the fair value of its common stock. The Company measures the cost of employee services received in exchange for an award of equity instruments, including stock options, restricted stock, restricted stock units (“RSUs”), and the purchase rights under the employee stock purchase plan (the “ESPP”), based on the estimated grant-date fair value of the award. The fair value is recognized as an expense following the straight-line attribution method over the requisite service period of the entire award for stock options, restricted stock, and RSUs; and over the offering period for the purchase rights issued under the ESPP. The Company calculates the fair value of stock options and the purchase rights under the ESPP using the Black-Scholes option-pricing model. This requires the input of highly subjective assumptions, including the fair value of the Company’s underlying common stock, the expected term of stock options and purchase rights, the expected volatility of the price of the Company’s common stock, risk-free interest rates, and the expected dividend yield of the Company’s common stock. The assumptions used in the Company’s option-pricing model represent its best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, the Company’s stock-based compensation expense could be materially different in the future. The resulting fair value, net of actual forfeitures, is recognized on a straight-line basis over the period during which an employee is required to provide service in exchange for the award. |
Reclassification | Reclassification Certain reclassifications of prior period amounts have been made in the Company’s condensed consolidated balance sheets and notes to the condensed consolidated financial statements to conform to the current period presentation. These reclassifications had no effect on the reported results of operations. |
Recently adopted and recently issued accounting pronouncements | Recently adopted accounting pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition and establishes a new revenue standard. This new standard is based on the principle that revenue is recognized to depict the transfer of control of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The standard also requires additional disclosures about the nature, amount, timing and uncertainty of revenues and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The FASB has also issued several amendments to the new standard which were designed to clarify and simplify the adoption process. In preparation for adoption of the new standard, the Company updated its accounting policies, systems, internal controls and processes. The Company adopted Topic 606 as of April 1, 2018 using the full retrospective method, which required adjustments to the historical financial information for fiscal years 2017 and 2018 to be consistent with the new standard. The Company recorded a net decrease to member’s accumulated deficit of $25.9 million as of April 1, 2016 as a result of the transition. The most significant impacts of the standard relate to the timing of revenue recognition for arrangements involving licenses and sales commissions. Under the new revenue standard, term licenses of the Company’s Classic products and the associated maintenance are considered separate performance obligations. This results in revenue associated with these term licenses being recognized upon delivery of the license rather than over the contractual term. Perpetual licenses and term license related to Dynatrace Software and the associated maintenance which includes when-and-if-available updates have been determined to be combined performance obligations and are recognized ratably over the useful life of the perpetual license or the length of the term license. Additionally, some deferred revenue, primarily from arrangements involving term licenses of the Company’s Classic products, was never recognized as revenue and instead is now a part of the cumulative effect adjustment within accumulated deficit. Finally, the Company is required to capitalize and amortize incremental costs of obtaining a contract, such as certain sales commission costs, over the remaining contractual term or over an expected period of benefit, which the Company has determined to be approximately three years . The Company applied the following practical expedients permitted under Topic 606: for all reporting periods presented before the date of initial adoption, the Company has elected not to disclose the amount of the transaction price allocated to the remaining performance obligations or provide an explanation of when the Company expects to recognize that amount as revenue. Additionally, the Company has also elected not to separately evaluate each contract modification that occurred before the initial adoption date. The Company has elected not to assess whether a contract has a significant financing component if it expects at contract inception that the period between payment and the transfer of products or services will be one year or less. Recently issued accounting pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The amendments supersede current lease requirements in Topic 840 which require lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. This new guidance is effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those periods, except for emerging growth companies who may elect to adopt the standard for annual reporting periods beginning after December 15, 2019. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements that allows entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company plans to elect this new transition guidance upon adoption of the standard on April 1, 2020. The Company will use the package of practical expedients which allows Dynatrace to not (1) reassess whether any expired or existing contracts are considered or contain leases; (2) reassess the lease classification for any expired or existing leases; and (3) reassess the initial direct costs for any existing leases. The Company expects that this standard will have a material effect on its consolidated balance sheets. While the Company continues to assess all of the effects of adoption, the Company currently believes the most significant effects relate to the recognition of new right-of-use assets and lease liabilities on the balance sheet for the Company’s office space operating leases. The right-of-use assets and corresponding lease liabilities will be based on the present value of future minimum lease payments. The adoption is not expected to have a material impact on the condensed consolidated statements of operations. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. ASU 2016-13 is effective for annual periods, and interim periods within those years, beginning after December 15, 2019. The Company does not expect the standard to have a material impact on its condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract; Disclosures for Implementation Costs Incurred for Internal-Use Software and Cloud Computing Arrangements, which aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the accounting for implementation costs incurred to develop or obtain internal-use software under ASC 350-40, in order to determine which costs to capitalize and recognize as an asset. ASU 2018-15 is effective for annual periods, and interim periods within those years, beginning after December 15, 2020, and can be applied either prospectively to implementation costs incurred after the date of adoption or retrospectively to all arrangements. The Company is currently evaluating the effects the standard will have on its condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. ASU 2019-12 is effective for annual periods, and interim periods within those years, beginning after December 15, 2020. The Company is currently evaluating the effects the standard will have on its condensed consolidated financial statements. |
Revenue recognition | The Company elected to early adopt ASC Topic 606 (“ASC 606”), Revenue from Contracts with Customers, effective April 1, 2018, using the full retrospective transition method. The Company derives revenue from sales of software licenses, subscriptions, maintenance and support, and professional services together in contracts with its customers, which include end-customers and channel partners. Revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for these services. Certain of the Company’s software license agreements provide customers with a right to use software perpetually or for a defined term. As required under applicable accounting principles, the goods and services that the Company promises to transfer to a customer are accounted for separately if they are distinct from one another. Promised items that are not distinct are bundled with other promised items until the bundle is distinct from other promised items in the contract. The transaction price is allocated to the separate performance obligations based on the relative estimated standalone selling prices of those performance obligations. Contract modifications are assessed to determine (i) if the additional goods and services are distinct from the goods and services in the original arrangement; and (ii) if the amount of the consideration expected for the added goods and services reflects the stand-alone selling price of those goods and services, as adjusted for contract-specific circumstances. A contract modification meeting both criteria is accounted for as a separate contract. A contract modification not meeting both criteria is considered a change to the original contract, which the Company accounts for on a prospective basis as a termination for contract specific circumstances. The Company’s additional goods and services offered have historically been distinct. If such additional goods and services reflect their stand-alone selling price, the Company accounts for the modification as a separate contract. If such additional goods and services do not reflect their stand-alone selling price, the Company accounts for the modification prospectively as a termination of the existing contract and the creation of a new contract. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table is a summary of the Company’s total revenues by geographic region (in thousands, except percentages): Three Months Ended December 31, Nine Months Ended December 31, 2019 2018 2019 2018 Amount % Amount % Amount % Amount % North America $ 82,946 58 % $ 64,744 56 % $ 231,388 59 % $ 179,952 57 % Europe, Middle East and Africa 39,676 28 % 34,262 30 % 107,494 27 % 91,641 29 % Asia Pacific 16,231 11 % 12,601 11 % 44,414 11 % 34,686 11 % Latin America 4,445 3 % 3,083 3 % 11,930 3 % 8,519 3 % Total revenue $ 143,298 $ 114,690 $ 395,226 $ 314,798 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Dec. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following (in thousands): December 31, 2019 March 31, 2019 Prepaid expenses $ 16,064 $ 13,334 Income taxes refundable 3,919 4,078 Other 82 1,356 Prepaid expenses and other current assets $ 20,065 $ 18,768 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets, net (Tables) | 9 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes in the carrying amount of goodwill on a consolidated basis for the nine months ended December 31, 2019 consist of the following (in thousands): December 31, 2019 Balance, beginning of period $ 1,270,120 Foreign currency impact 530 Balance, end of period $ 1,270,650 |
Schedule of Intangible Assets | Intangible assets, net excluding goodwill consist of (in thousands): Weighted Average Useful Life (in months) December 31, 2019 March 31, 2019 Capitalized software 109 $ 189,384 $ 188,608 Customer relationships 120 351,555 351,555 Trademarks and tradenames 120 55,003 55,003 Total intangible assets 595,942 595,166 Less: accumulated amortization (380,158 ) (336,043 ) Total intangible assets, net $ 215,784 $ 259,123 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses, current consisted of the following (in thousands): December 31, 2019 March 31, 2019 Accrued employee - related expenses $ 36,352 $ 35,192 Accrued tax liabilities 13,364 6,274 Accrued restructuring 1,864 1,488 Accrued professional fees 3,826 3,440 Accrued installments for acquisition — 4,832 Income taxes payable 18,154 3,811 Other 12,634 9,883 Total accrued expenses, current $ 86,194 $ 64,920 Accrued expenses, non-current consisted of the following (in thousands): December 31, 2019 March 31, 2019 Share-based compensation $ — $ 92,047 Income tax reserve 14,356 2,876 Other 3,692 3,436 Total accrued expenses, non-current $ 18,048 $ 98,359 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 9 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Activity for Stock Options | The following table summarizes activity for stock options during the period ended December 31, 2019 : 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, 2019 — $ — Granted 7,252 16.18 Exercised — — Forfeited (23 ) 16.42 Balance, December 31, 2019 7,229 $ 16.17 9.5 $ 65,980 Options vested and expected to vest at December 31, 2019 7,229 $ 16.17 9.5 $ 65,980 Options vested and exercisable at December 31, 2019 — $ — 0.0 $ — |
Schedule of Fair Value Assumptions for Stock Options | The fair value for the Company’s stock options granted during the period ended December 31, 2019 was estimated at the date of grant using a Black-Scholes option-pricing model using the following weighted average assumptions: December 31, 2019 Expected dividend yield — Expected volatility 37.7 % Expected term (years) 6.1 Risk-free interest rate 1.9 % |
Summary of Activity for Restricted Shares | The following table provides a summary of the changes in the number of restricted shares for the period ended December 31, 2019 : Number of Shares of Restricted Stock Awards Weighted Average Grant Date Fair Value Number of Restricted Stock Units Weighted Average Grant Date Fair Value (in thousands) (per share) (in thousands) (per share) Balance, March 31, 2019 — $ — — $ — Granted 2,854 16.00 3,636 16.16 Vested (494 ) 16.00 (393 ) 16.00 Forfeited (45 ) 16.00 (29 ) 16.39 Balance, December 31, 2019 2,315 $ 16.00 3,214 $ 16.18 |
Schedule of Fair Value Assumptions | The Company estimated the fair value of ESPP purchase rights using a Black-Scholes option pricing model with the following assumptions: December 31, 2019 Expected dividend yield — Expected volatility 35.9 % Expected term (years) 0.5 Risk-free interest rate 1.6 % |
Schedule of Share-based Compensation Expense | The following table summarizes the components of total share-based compensation expense included the condensed consolidated financial statements for each period presented (in thousands): Three Months Ended December 31, Nine Months Ended December 31, 2019 2018 2019 2018 Cost of revenues $ 1,317 $ 476 $ 17,346 $ 3,466 Research and development 2,173 1,009 36,679 7,590 Sales and marketing 6,707 2,179 78,592 14,640 General and administrative 3,316 2,393 77,067 16,589 Total share-based compensation expense $ 13,513 $ 6,057 $ 209,684 $ 42,285 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Summary of Basic and Diluted Net Loss Per Share | The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share data): Three Months Ended December 31, Nine Months Ended December 31, 2019 2018 2019 2018 Numerator: Net income (loss) $ 1,763 $ (22,102 ) $ (464,726 ) $ (85,596 ) Denominator: Weighted average shares outstanding, basic 277,926 236,024 260,383 235,648 Dilutive effect of stock-based awards 2,230 — — — Weighted average shares outstanding, diluted 280,156 236,024 260,383 235,648 Net income (loss) per share, basic $ 0.01 $ (0.09 ) $ (1.78 ) $ (0.36 ) Net income (loss) per share, diluted $ 0.01 $ (0.09 ) $ (1.78 ) $ (0.36 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per 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, 2019 2018 2019 2018 Stock options 79 — 3,970 — Unvested restricted stock and RSUs 10 — 3,334 — Shares committed under ESPP 15 — 21 — Unvested equity awards — 6,272 — 6,605 |
Geographic Information (Tables)
Geographic Information (Tables) | 9 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Summary of Property and Equipment by Geographical Region | The following tables present property and equipment by geographic region for the periods presented (in thousands): December 31, 2019 March 31, 2019 North America $ 8,440 $ 10,036 Europe, Middle East and Africa 17,878 7,347 Asia Pacific 1,590 376 Latin America 122 166 Total property and equipment, net $ 28,030 $ 17,925 |
Significant Accounting Polici_3
Significant Accounting Policies - Basis of Presentation and Consolidation (Details) | Jul. 31, 2019subsidiary | Jul. 30, 2019$ / sharesshares | Sep. 30, 2019shares | Mar. 31, 2019shares |
Class of Stock [Line Items] | ||||
Number of wholly owned subsidiaries | subsidiary | 2 | |||
Share of equity interest (per unit) | $ / shares | $ 16 | |||
Common units, outstanding (in shares) | 100 | |||
Dynatrace Holdings LLC | ||||
Class of Stock [Line Items] | ||||
Common units, issued in the period (in shares) | 19,525,510 | |||
Common units, outstanding (in shares) | 241,547,218 | 241,547,118 | ||
Compuware Parent, LLC, Equity Holders | Dynatrace Holdings LLC | ||||
Class of Stock [Line Items] | ||||
Common units, issued in the period (in shares) | 222,021,708 |
Significant Accounting Polici_4
Significant Accounting Policies - Initial Public Offering and Follow-Up Offering By Selling Stockholders (Details) $ / shares in Units, $ in Thousands | Dec. 10, 2019$ / sharesshares | Aug. 01, 2019USD ($)$ / sharesshares | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Jul. 31, 2019shares |
Subsidiary, Sale of Stock [Line Items] | |||||
Gross proceeds received in public offering | $ 590,297 | $ 0 | |||
Payment of underwriting discounts, commissions and estimated offering related expense | $ 5,000 | $ 0 | |||
IPO | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Number of shares sold and issued (in shares) | shares | 38,873,174 | ||||
Sale of stock price per share (USD per share) | $ / shares | $ 16 | ||||
Gross proceeds received in public offering | $ 622,000 | ||||
Proceeds from sale of stock, net of offering costs | 585,300 | ||||
Payment of underwriting discounts, commissions and estimated offering related expense | $ 36,700 | ||||
IPO, Sale of Stockholders | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Number of shares sold and issued (in shares) | shares | 31,625,000 | 2,100,000 | |||
Sale of stock price per share (USD per share) | $ / shares | $ 24.75 | ||||
Common Class A | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Conversion of stock, conversion ratio | 1 | ||||
Dynatrace Holdings LLC | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock, issued during the exchange (in shares) | shares | 241,547,218 |
Significant Accounting Polici_5
Significant Accounting Policies - Accounts receivable and allowance for doubtful accounts (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Mar. 31, 2019 |
Accounting Policies [Abstract] | ||
Allowance for doubtful accounts | $ 2.6 | $ 3.4 |
Significant Accounting Polici_6
Significant Accounting Policies - Recently Adopted Accounting Pronouncements (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Mar. 31, 2019 | Apr. 01, 2016 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accumulated deficit | $ (640,728) | $ (176,002) | |
Remaining contractual term | 3 years | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accumulated deficit | $ 25,900 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Amount | $ 143,298 | $ 114,690 | $ 395,226 | $ 314,798 |
North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Amount | 82,946 | 64,744 | 231,388 | 179,952 |
Europe, Middle East and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Amount | 39,676 | 34,262 | 107,494 | 91,641 |
Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Amount | 16,231 | 12,601 | 44,414 | 34,686 |
Latin America | ||||
Disaggregation of Revenue [Line Items] | ||||
Amount | 4,445 | 3,083 | 11,930 | 8,519 |
Geographic Concentration Risk | Revenue Benchmark | ||||
Disaggregation of Revenue [Line Items] | ||||
Amount | $ 77,700 | $ 61,000 | $ 218,100 | $ 169,700 |
% | 54.00% | 53.00% | 55.00% | 54.00% |
Geographic Concentration Risk | Revenue Benchmark | North America | ||||
Disaggregation of Revenue [Line Items] | ||||
% | 58.00% | 56.00% | 59.00% | 57.00% |
Geographic Concentration Risk | Revenue Benchmark | Europe, Middle East and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
% | 28.00% | 30.00% | 27.00% | 29.00% |
Geographic Concentration Risk | Revenue Benchmark | Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
% | 11.00% | 11.00% | 11.00% | 11.00% |
Geographic Concentration Risk | Revenue Benchmark | Latin America | ||||
Disaggregation of Revenue [Line Items] | ||||
% | 3.00% | 3.00% | 3.00% | 3.00% |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue and Deferred Revenue Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 143,298 | $ 114,690 | $ 395,226 | $ 314,798 |
Revenue recognized | 60,700 | 48,400 | 233,700 | 183,600 |
Remaining performance obligation, amount | 800,300 | 800,300 | ||
Revenue Benchmark | Geographic Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 77,700 | $ 61,000 | $ 218,100 | $ 169,700 |
Concentration risk percentage | 54.00% | 53.00% | 55.00% | 54.00% |
Billed consideration | ||||
Disaggregation of Revenue [Line Items] | ||||
Remaining performance obligation, amount | $ 431,300 | $ 431,300 | ||
Unbilled consideration | ||||
Disaggregation of Revenue [Line Items] | ||||
Remaining performance obligation, amount | $ 369,000 | $ 369,000 |
Revenue Recognition - Remaining
Revenue Recognition - Remaining Performance Obligations (Narrative) (Details) | Dec. 31, 2019 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 57.00% |
Remaining performance obligation, expected timing of satisfaction, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 43.00% |
Remaining performance obligation, expected timing of satisfaction, period |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Mar. 31, 2019 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 16,064 | $ 13,334 |
Income taxes refundable | 3,919 | 4,078 |
Other | 82 | 1,356 |
Prepaid expenses and other current assets | $ 20,065 | $ 18,768 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets, net - Schedule of Goodwill (Details) $ in Thousands | 9 Months Ended |
Dec. 31, 2019USD ($) | |
Goodwill [Roll Forward] | |
Balance, beginning of period | $ 1,270,120 |
Foreign currency impact | 530 |
Balance, end of period | $ 1,270,650 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets, net - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Dec. 31, 2019 | Mar. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets | $ 595,942 | $ 595,166 |
Less: accumulated amortization | (380,158) | (336,043) |
Total intangible assets, net | $ 215,784 | 259,123 |
Capitalized software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Useful Life (in months) | 109 months | |
Total intangible assets | $ 189,384 | 188,608 |
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_5
Goodwill and Other Intangible Assets, net - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of other intangibles | $ 14,300 | $ 18,200 | $ 44,098 | $ 54,852 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||||
Effective tax rate | 8.00% | (11.00%) | 112.00% | (11.00%) | |
Income tax (expense) benefit | $ 255.8 | ||||
Tax Act, income tax benefit | $ 50 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Mar. 31, 2019 |
Accrued Expenses, Current | ||
Accrued employee - related expenses | $ 36,352 | $ 35,192 |
Accrued tax liabilities | 13,364 | 6,274 |
Accrued restructuring | 1,864 | 1,488 |
Accrued professional fees | 3,826 | 3,440 |
Accrued installments for acquisition | 0 | 4,832 |
Income taxes payable | 18,154 | 3,811 |
Other | 12,634 | 9,883 |
Total accrued expenses, current | 86,194 | 64,920 |
Accrued Expenses, Non-Current | ||
Share-based compensation | 0 | 92,047 |
Income tax reserve | 14,356 | 2,876 |
Other | 3,692 | 3,436 |
Total accrued expenses, non-current | $ 18,048 | $ 98,359 |
Long-term Debt - Term Loans (De
Long-term Debt - Term Loans (Details) - Secured Debt - USD ($) | Aug. 23, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2019 |
First Lien Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 950,000,000 | |||||
Maximum net leverage ratio before change in basis spread on variable rate | 435.00% | |||||
Aggregate principal amount outstanding | $ 551,100,000 | $ 551,100,000 | $ 947,600,000 | |||
Interest rate | 5.70% | |||||
First Lien Term Loan, 4.5% Interest Rate | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate | 4.50% | 4.50% | ||||
Second Lien Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 170,000,000 | |||||
Loss on debt extinguishment | $ 2,700,000 | |||||
Aggregate principal amount outstanding | $ 88,700,000 | |||||
Interest rate | 9.50% | |||||
First And Second Lien Term Loans | ||||||
Debt Instrument [Line Items] | ||||||
Threshold of sale of property or assets that requires loan prepayments | 5,000,000 | |||||
Threshold of proceeds received from insurance settlement or new debt agreements that require loan prepayments | 5,000,000 | |||||
Debt issuance costs and original issuance discount | $ 15,500,000 | $ 10,300,000 | 10,300,000 | $ 14,300,000 | ||
Amortization of debt issuance costs and original issuance discount | $ 400,000 | $ 500,000 | $ 1,300,000 | $ 700,000 | ||
Alternative Base Rate | First Lien Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable interest rate | 1.75% | |||||
Alternative Base Rate | Second Lien Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable interest rate | 6.00% | |||||
London Interbank Offered Rate (LIBOR) | First Lien Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable interest rate | 2.75% | |||||
London Interbank Offered Rate (LIBOR) | Second Lien Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable interest rate | 7.00% |
Long-term Debt - Revolving Faci
Long-term Debt - Revolving Facility (Details) - USD ($) | Aug. 23, 2018 | Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2019 |
Line of Credit Facility [Line Items] | |||||
Amortization of debt issuance costs | $ 100,000 | ||||
Line of Credit | Revolving Facility | Revolving Credit Facility | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 60,000,000 | ||||
Maximum net leverage ratio before change in basis spread on variable rate | 385.00% | ||||
Commitment fee percentage | 0.25% | ||||
Fronting fee percentage | 0.125% | ||||
Line of credit, debt issuance costs incurred | $ 800,000 | ||||
Amortization of debt issuance costs | $ 0 | $ 0 | |||
Debt issuance costs, net | 600,000 | 600,000 | $ 700,000 | ||
Covenant, maximum net leverage ratio | 750.00% | ||||
Aggregate principal amount outstanding | 0 | 0 | 0 | ||
Available borrowing capacity | 48,200,000 | 48,200,000 | 59,500,000 | ||
Line of Credit | Revolving Facility | Letter of Credit | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 15,000,000 | ||||
Letters of credit issued | $ 11,800,000 | $ 11,800,000 | $ 500,000 | ||
Alternative Base Rate | Line of Credit | Revolving Facility | Revolving Credit Facility | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable interest rate | 1.50% | ||||
London Interbank Offered Rate (LIBOR) | Line of Credit | Revolving Facility | Revolving Credit Facility | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable interest rate | 2.50% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Jul. 31, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2019USD ($)business | Dec. 31, 2018USD ($) |
Loss Contingencies [Line Items] | |||||
Number of wholly owned businesses spun out from the corporate structure | business | 2 | ||||
Income tax (expense) benefit | $ 255.8 | ||||
Operating lease agreement, rent payment | $ 3.5 | $ 2.7 | $ 10.2 | $ 8.2 | |
Compuware Corporation | |||||
Loss Contingencies [Line Items] | |||||
Payment for estimated tax liability | $ 265 |
Shareholder's Equity (Details)
Shareholder's Equity (Details) - $ / shares | Jul. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2019 | Jul. 31, 2019 | Mar. 31, 2019 |
Class of Stock [Line Items] | |||||
Common shares, authorized (in shares) | 600,000,000 | ||||
Par value (in dollars per share) | $ 0.001 | ||||
Common units, outstanding (in shares) | 100 | ||||
Common shares, issued (in shares) | 280,784,786 | ||||
Common shares, outstanding (in shares) | 280,784,786 | ||||
Dynatrace Holdings LLC | |||||
Class of Stock [Line Items] | |||||
Common units, outstanding (in shares) | 241,547,218 | 241,547,118 | |||
Dynatrace Holdings LLC common units exchanged for common stock in Dynatrace, Inc. (in shares) | 241,547,218 | ||||
Common units, issued in the period (in shares) | 19,525,510 | ||||
Management Incentive Units and Appreciation Units | |||||
Class of Stock [Line Items] | |||||
Common units, issued in the period (in shares) | 16,687,436 |
Share-based Compensation - Narr
Share-based Compensation - Narrative (Details) $ in Thousands | Jul. 30, 2019shares | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2019USD ($)participantaward_typeperformance_targetshares | Dec. 31, 2018USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock compensation expense | $ | $ 13,513 | $ 6,057 | $ 209,684 | $ 42,285 | |
Effect of reorganization | $ | 278,248 | ||||
Total unrecognized compensation cost | $ | 41,700 | $ 41,700 | |||
Management Incentive Units and Appreciation Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of award types | award_type | 2 | ||||
Number of participants | participant | 306 | ||||
Stock compensation expense | $ | $ 145,300 | ||||
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock compensation expense | $ | 2,700 | $ 4,500 | |||
Weighted average period of recognition | 3 years 7 months 6 days | ||||
Unvested restricted stock and RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock compensation expense | $ | 10,600 | $ 18,300 | |||
Number of units granted (in shares) | shares | 6,490,283 | ||||
Restricted Shares, Performance-Based | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of units granted (in shares) | shares | 696,873 | ||||
Vesting percentage | 25.00% | ||||
Number of performance targets | performance_target | 4 | ||||
Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Weighted average period of recognition | 1 year 9 months 18 days | ||||
Number of units granted (in shares) | shares | 2,854,000 | ||||
Total unrecognized compensation cost | $ | 28,900 | $ 28,900 | |||
Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Weighted average period of recognition | 3 years 2 months 12 days | ||||
Number of units granted (in shares) | shares | 3,636,000 | ||||
Total unrecognized compensation cost | $ | 47,600 | $ 47,600 | |||
Employee Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
ESPP offering period | 6 months | ||||
ESPP, purchase period | 6 months | ||||
Equity Incentive Plan 2019 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Units authorized for issuance (in shares) | shares | 52,000,000 | ||||
Annual increase in shares reserved for future issuance based off of shares outstanding | 4.00% | ||||
2019 Employee Stock Purchase Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total unrecognized compensation cost | $ | $ 900 | $ 900 | |||
Award Period One | Restricted Shares, Time-Based | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of units granted (in shares) | shares | 3,379,170 | ||||
Award Period One | Restricted Shares, Time-Based | Share-based Payment Arrangement, Tranche One | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting percentage | 25.00% | ||||
Award vesting period | 1 year | ||||
Award Period One | Restricted Shares, Time-Based | Share-based Payment Arrangement, Tranche Two | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting percentage | 75.00% | ||||
Award vesting period | 36 months | ||||
Award Period Two | Restricted Shares, Time-Based | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of units granted (in shares) | shares | 2,364,240 | ||||
Award Period Two | Restricted Shares, Time-Based | Share-based Payment Arrangement, Tranche One | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting percentage | 25.00% | ||||
Award vesting period | 1 year | ||||
Award Period Two | Restricted Shares, Time-Based | Share-based Payment Arrangement, Tranche Two | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting percentage | 75.00% | ||||
Award vesting period | 3 years | ||||
Award Period Three | Restricted Shares, Time-Based | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of units granted (in shares) | shares | 50,000 | ||||
Common Class A | Employee Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
ESPP, maximum percentage of the common stock available for purchase | 85.00% | ||||
Common Class A | 2019 Employee Stock Purchase Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Units authorized for issuance (in shares) | shares | 6,250,000 |
Share-based Compensation - Sche
Share-based Compensation - Schedule of Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended |
Dec. 31, 2019USD ($)$ / sharesshares | |
Number of Options | |
Beginning balance (in shares) | shares | 0 |
Granted (in shares) | shares | 7,252 |
Exercised (in shares) | shares | 0 |
Forfeited (in shares) | shares | (23) |
Ending balance (in shares) | shares | 7,229 |
Options vested and expected to vest at September 30, 2019 (in shares) | shares | 7,229 |
Options vested and exercisable at September 30, 2019 (in shares) | shares | 0 |
Weighted Average Exercise Price | |
Beginning balance (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 16.18 |
Exercised (in dollars per share) | $ / shares | 0 |
Forfeited (in dollars per share) | $ / shares | 16.42 |
Ending valance (in dollars per share) | $ / shares | 16.17 |
Options vested and expected to vest September 30, 2019 | $ / shares | 16.17 |
Options vested and exercisable at September 30, 2019 | $ / shares | $ 0 |
Weighted average remaining contractual term at September 30, 2019 | 9 years 6 months |
Weighted average remaining contractual term, options vested and expected to vest at September 30, 2019 | 9 years 6 months |
Weighted average remaining contractual term, options vested and exercisable at September 30, 2019 | 0 years |
Aggregate intrinsic value at September 30, 2019 | $ | $ 65,980 |
Aggregate intrinsic value, options vested and expected to vested at September 30, 2019 | $ | 65,980 |
Aggregate intrinsic value, options vested and exercisable at September 30, 2019 | $ | $ 0 |
Restricted Stock | |
Number of Restricted Shares | |
Balance, March 31, 2019 (in shares) | shares | 0 |
Granted (in shares) | shares | 2,854 |
Vested (in shares) | shares | (494) |
Forfeited (in shares) | shares | (45) |
Balance, September 30, 2019 (in shares) | shares | 2,315 |
Weighted Average Grant Date Fair Value | |
Balance, March 31, 2019 (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 16 |
Vested (in dollars per share) | $ / shares | 16 |
Forfeited (in dollars per share) | $ / shares | 16 |
Balance, September 30, 2019 (in dollars per share) | $ / shares | $ 16 |
Restricted Stock Units (RSUs) | |
Number of Restricted Shares | |
Balance, March 31, 2019 (in shares) | shares | 0 |
Granted (in shares) | shares | 3,636 |
Vested (in shares) | shares | (393) |
Forfeited (in shares) | shares | (29) |
Balance, September 30, 2019 (in shares) | shares | 3,214 |
Weighted Average Grant Date Fair Value | |
Balance, March 31, 2019 (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 16.16 |
Vested (in dollars per share) | $ / shares | 16 |
Forfeited (in dollars per share) | $ / shares | 16.39 |
Balance, September 30, 2019 (in dollars per share) | $ / shares | $ 16.18 |
Share-based Compensation - Sc_2
Share-based Compensation - Schedule of Fair Value Assumptions (Details) | 9 Months Ended |
Dec. 31, 2019USD ($) | |
2019 Employee Stock Purchase Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected dividend yield | $ 0 |
Expected volatility | 35.90% |
Expected term (years) | 15 days |
Risk-free interest rate | 1.60% |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected dividend yield | $ 0 |
Expected volatility | 37.70% |
Expected term (years) | 6 years 1 month 6 days |
Risk-free interest rate | 1.90% |
Share-based Compensation - Sc_3
Share-based Compensation - Schedule of Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | $ 13,513 | $ 6,057 | $ 209,684 | $ 42,285 |
Cost of revenues | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | 1,317 | 476 | 17,346 | 3,466 |
Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | 2,173 | 1,009 | 36,679 | 7,590 |
Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | 6,707 | 2,179 | 78,592 | 14,640 |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | $ 3,316 | $ 2,393 | $ 77,067 | $ 16,589 |
Net Income (Loss) Per Share - N
Net Income (Loss) Per Share - Narrative (Details) | Aug. 01, 2019$ / sharesshares |
Subsidiary, Sale of Stock [Line Items] | |
Conversion of stock, conversion price (in dollars per share) | $ 16 |
IPO | |
Subsidiary, Sale of Stock [Line Items] | |
Number of shares sold and issued (in shares) | shares | 38,873,174 |
Sale of stock price per share (USD per share) | $ 16 |
Net Income (Loss) Per Share - S
Net Income (Loss) Per Share - Summary 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, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Numerator: | ||||
Net income (loss) | $ 1,763 | $ (22,102) | $ (464,726) | $ (85,596) |
Denominator: | ||||
Weighted average shares outstanding, basic (in shares) | 277,926 | 260,383 | ||
Weighted average shares outstanding, basic (in shares) | 236,024 | 235,648 | ||
Dilutive effect of stock-based awards (in shares) | 2,230 | 0 | ||
Dilutive effect of stock-based awards (in shares) | 0 | 0 | ||
Weighted average shares outstanding, diluted (in shares) | 280,156 | 260,383 | ||
Weighted average shares outstanding, diluted (in shares) | 236,024 | 235,648 | ||
Net income (loss) per share, basic (in dollars per share) | $ 0.01 | $ (1.78) | ||
Net income (loss) per share, basic (in dollars per share) | $ (0.09) | $ (0.36) | ||
Net income (loss) per share, diluted (in dollars per share) | $ 0.01 | $ (1.78) | ||
Net income (loss) per share, diluted (in dollars per share) | $ (0.09) | $ (0.36) |
Net Income (Loss) Per Share - A
Net Income (Loss) Per Share - Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive common share equivalents (in shares) | 79 | 0 | 3,970 | 0 |
Unvested restricted stock and RSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive common share equivalents (in shares) | 10 | 0 | 3,334 | 0 |
Shares committed under ESPP | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive common share equivalents (in shares) | 15 | 0 | 21 | 0 |
Unvested equity awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive common share equivalents (in shares) | 0 | 6,272 | 0 | 6,605 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Related Party Transaction [Line Items] | ||||
Contribution for taxes associated with reorganization | $ 265,000,000 | |||
Receivable from Compuware | $ 6,000,000 | 6,000,000 | ||
Affiliated Entity | Financial And Management Advisory Services | ||||
Related Party Transaction [Line Items] | ||||
Transfers to related parties | $ 0 | $ 1,200,000 | 1,600,000 | $ 3,700,000 |
Affiliated Entity | Debt Service And Shared Costs | ||||
Related Party Transaction [Line Items] | ||||
Transfers to related parties | 1,177,000,000 | |||
Affiliated Entity | Other Related Party Settlements | ||||
Related Party Transaction [Line Items] | ||||
Transfers to related parties | 82,200,000 | |||
Additional Paid-In Capital | ||||
Related Party Transaction [Line Items] | ||||
Contribution for taxes associated with reorganization | $ 265,000,000 | |||
Additional Paid-In Capital | Affiliated Entity | Transfers To Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Transfers to related parties | $ 42,800,000 | $ 900,000 |
Related Party Debt (Details)
Related Party Debt (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2019 | Apr. 01, 2015 | |
Related Party Transaction [Line Items] | ||||||
Principal payable to related party | $ 0 | $ 0 | $ 597,150,000 | |||
Subordinated Debt | Subordinated Demand Promissory Notes | Affiliated Entity | ||||||
Related Party Transaction [Line Items] | ||||||
Debt instrument, face amount | $ 1,800,000,000 | |||||
Principal payable to related party | 478,500,000 | |||||
Accrued interest | $ 118,700,000 | |||||
Interest rate | 2.72% | |||||
Interest expense | $ 0 | $ 3,300,000 | $ 4,100,000 | $ 24,100,000 |
Geographic Information - Summar
Geographic Information - Summary of Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Mar. 31, 2019 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 28,030 | $ 17,925 |
North America | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 8,440 | 10,036 |
Europe, Middle East and Africa | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 17,878 | 7,347 |
Asia Pacific | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 1,590 | 376 |
Latin America | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 122 | $ 166 |