Dynatrace Inc
For the period ended Dec 31, 2024. Filed Jan 30, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed Jan 30, 2025
DT$43.44-0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001773383-24-000217
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-01-30.
0001773383-25-000009
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 141 previous paragraphs and 146 current paragraphs.
91 unchanged; 43 reworded; 12 added; 4 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 18 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
Third-Quarter 2025 Financial Highlights
Current report
Amortization of acquired technology. Amortization of acquired technology includes amortization expense for technology acquired when our former controlling stockholder (the Thoma Bravo Funds) acquired our company in 2014 and from business combinations and asset acquisitions. During the three months ended December 31, 2024, the acquired technology from the Thoma Bravo Funds' acquisition of our company became fully amortized, therefore we expect amortization expense to decrease as compared to historical periods.
Current report
Income Tax Benefit (Expense)
Current report
During the three months ended December 31, 2024, we completed an intra-entity asset transfer of the global economic rights of our IP from a wholly-owned U.S. subsidiary to a wholly-owned Swiss subsidiary, more closely aligning our intellectual property rights with our business operations (the “IP Transfer”). The transaction is taxable in the U.S. over a 20-year period. In Switzerland, the transaction resulted in a step-up of tax-deductible basis in the transferred assets, and accordingly, created a temporary difference where the tax basis exceeded the financial statement basis of such intangible assets, which resulted in the recognition of a discrete tax benefit and related deferred tax asset of $320.9 million. We determined the estimated value of the transferred IP based principally on the present value of projected income related to the IP, requiring management to make significant assumptions related to the discount rate and the forecast of future revenues and expenses. The tax-deductible amortization related to the transferred IP rights will be recognized over 10 years. The deferred tax asset and tax benefit were measured based on the enacted tax rates expected to apply in the years the asset is expected to be realized. We expect to realize the deferred tax asset resulting from the IP Transfer.
Current report
Amortization of acquired technology decreased by $0.5 million, or 11%, for the three months ended December 31, 2024 compared to the three months ended December 31, 2023. The decrease was primarily the result of certain acquired technology becoming fully amortized during the three months ended December 31, 2024.
Current report
Sales and marketing expenses increased by $21.7 million, or 16%, for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023. The increase was primarily due to increased personnel costs of $12.9 million, inclusive of a $4.8 million increase in share-based compensation, marketing program and partner costs of $3.1 million and travel and entertainment expenses of $1.9 million.
Current report
Amortization of other intangibles decreased by $1.5 million, or 27%, for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023. The decrease was primarily the result of certain intangible assets becoming fully amortized during the three months ended December 31, 2024.
Current report
Income Tax Benefit
Current report
Sales and marketing expenses increased by $58.4 million, or 15%, for the nine months ended December 31, 2024, as compared to the nine months ended December 31, 2023. The increase was primarily the result of increased personnel costs of $36.3 million, inclusive of an $8.7 million increase in share-based compensation, marketing program and partner costs of $6.8 million and travel and entertainment expenses of $3.3 million.
Current report
Income Tax Benefit (Expense)
Current report
During the three months ended December 31, 2024, we completed an intra-entity asset transfer of the global economic rights of our IP from a wholly-owned U.S. subsidiary to a wholly-owned Swiss subsidiary, which requires management to make significant estimates and assumptions on the valuation of the IP transferred.
Current report
The assessment of the estimated value of the IP transferred is based on the U.S. transfer pricing regulations as described in section 482 of the IRC and the Treasury Department regulations promulgated thereunder, and the OECD Transfer Pricing guidelines. We determined the estimated value of the transferred IP based principally on the present value of projected income related to the IP, requiring management to make significant assumptions related to the discount rates and the forecast of future revenue and expenses. While we employ experts to assist in the determination of the estimated value of the IP, its value is based on significant management assumptions and estimates, which are inherently uncertain and highly subjective and as a result, actual results may differ from estimates. If different assumptions were to be used, it could materially impact the IP valuation.
Removed paragraphs (4)
Previous report
Second-Quarter 2025 Financial Highlights
Previous report
Amortization of acquired technology. Amortization of acquired technology includes amortization expense for technology acquired in the Thoma Bravo Funds’ acquisition of our company in 2014, business combinations and asset acquisitions. To the extent significant future acquisitions are consummated, we expect that our amortization of acquired technologies may increase due to additional non-cash charges associated with the amortization of intangible assets acquired.
Previous report
General and administrative expenses increased $4.2 million, or 9%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The increase was primarily the result of increased personnel costs of $4.2 million, inclusive of a $0.9 million increase in share-based compensation.
Previous report
General and administrative expenses increased $10.1 million, or 12%, for the six months ended September 30, 2024, as compared to the six months ended September 30, 2023. The increase was primarily the result of increased personnel costs of $12.4 million, inclusive of a $5.5 million increase in share-based compensation.
Reworded paragraphs (43)
Previous wording
•Our annual recurring revenue (“ARR”) was $1,617 million as of September 30, 2024, which reflected 20% growth year-over-year;
Current wording
•Our annual recurring revenue (“ARR”) was $1,647 million as of December 31, 2024, which reflected 16% growth year-over-year;
Previous wording
•Total revenue and subscription revenue was $418 million and $400 million, respectively;
Current wording
•Total revenue and subscription revenue was $436 million and $417 million, respectively;
Previous wording
•Our net cash provided by operating activities and free cash flow(1) was $24 million and $20 million, respectively.
Current wording
•Our net cash provided by operating activities and free cash flow(1) was $42 million and $38 million, respectively.
Previous wording
Amortization of other intangibles. Amortization of other intangibles primarily consists of amortization of customer relationships and tradenames.
Current wording
Amortization of other intangibles. Amortization of other intangibles primarily consists of amortization of customer relationships and tradenames acquired when our former controlling stockholder (the Thoma Bravo Funds) acquired our company in 2014 and from business combinations. During the three months ended December 31, 2024, the customer relationships and tradenames acquired from the Thoma Bravo Funds' acquisition of our company became fully amortized, therefore we expect amortization expense to decrease as compared to historical periods.
Previous wording
Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in determining the consolidated income tax expense.
Current wording
Our income tax benefit (expense), deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in determining the consolidated income tax benefit (expense).
Previous wording
Our income tax rate varies from the U.S. federal statutory rate mainly due to (1) the foreign derived intangibles deduction and, (2) the generation of U.S. foreign tax credits, partially offset by (3) foreign withholding taxes, (4) nondeductible executive compensation, and (5) foreign earnings taxed at rates higher than the U.S. statutory tax rate. We expect this fluctuation in income tax rates, as well as its potential impact on our results of operations, to continue.
Current wording
Our income tax rate varies from the U.S. federal statutory rate mainly due to (1) recognition of a deferred tax benefit for the IP Transfer (as defined below), (2) the foreign derived intangibles deduction, and (3) the generation of U.S. foreign tax credits, partially offset by (4) foreign withholding taxes and (5) nondeductible executive compensation. We expect these items to continue to affect our income tax rate and income tax expense, except for the impact of recognizing the deferred tax benefit for the IP Transfer.
Previous wording
Many countries have enacted or are in the process of enacting laws based on the Pillar Two proposal relating to a 15% global minimum tax issued by the Organization for Economic Cooperation and Development (“OECD”). For fiscal year 2025, we expect to meet the Transitional Country-by-Country (CbCR) Safe Harbor rules for most, if not all, the jurisdictions that have adopted the rules.
Current wording
Many countries have enacted or are in the process of enacting laws based on the Pillar Two proposal relating to a 15% global minimum tax issued by the Organization for Economic Cooperation and Development (“OECD”). For fiscal year 2025, we expect to meet the Transitional Country-by-Country (CbCR) Safe Harbor rules for most, if not all, the jurisdictions that have adopted the rules. Based on the guidance available thus far, we do not expect these provisions to have a material impact on our consolidated financial statements. We will continue to monitor ongoing developments and evaluate any potential impact on future periods.
Previous wording
Subscription revenue increased by $65.3 million, or 20%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to the growth of the Dynatrace platform by adding new customers combined with existing customers expanding their use of our solutions.
Current wording
Subscription revenue increased by $68.9 million, or 20%, for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023, primarily due to the growth of the Dynatrace platform by adding new customers combined with existing customers expanding their use of our solutions.
Previous wording
Service revenue increased by $1.1 million, or 6%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The increase was primarily due to timing of delivery of services.
Current wording
Service revenue increased by $2.2 million, or 13%, for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023. The increase was primarily due to timing of delivery of services.
Previous wording
Cost of subscription increased by $11.0 million, or 25%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily due to increased cloud-based hosting costs of $4.2 million related to our growing cloud-based subscription revenue and increased personnel costs of $5.0 million, inclusive of a $1.8 million increase in share-based compensation, largely due to headcount growth to support our growing customer base.
Current wording
Cost of subscription increased by $13.8 million, or 29%, for the three months ended December 31, 2024 compared to the three months ended December 31, 2023. The increase was primarily due to increased cloud-based hosting costs of $6.9 million related to our growing cloud-based subscription revenue and increased personnel costs of $5.1 million, inclusive of a $2.1 million increase in share-based compensation, largely due to headcount growth to support our growing customer base.
Previous wording
Cost of service increased by $1.9 million, or 12%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The increase was primarily the result of increased personnel costs of $1.0 million, inclusive of a $0.7 million increase in share-based compensation.
Current wording
Cost of service increased by $1.4 million, or 8%, for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023. The increase was primarily the result of increased share-based compensation of $0.8 million.
Previous wording
Subscription gross profit increased by $54.3 million, or 19%, during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Subscription gross margin decreased from 87% to 86% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease in gross margin was primarily due to increased cloud-based hosting costs to support the growth of our subscription cloud-based offerings.
Current wording
Subscription gross profit increased by $55.1 million, or 18%, during the three months ended December 31, 2024 compared to the three months ended December 31, 2023. Subscription gross margin decreased from 87% to 85% for the three months ended December 31, 2024 compared to the three months ended December 31, 2023. The decrease in gross margin was primarily due to increased cloud-based hosting costs to support the growth of our subscription cloud-based offerings.
Previous wording
Service gross profit decreased by $0.8 million, or 53%, during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Service gross margin decreased from 9% to 4% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease in gross profit and gross margin was primarily due to increased personnel costs and share-based compensation expense.
Current wording
Service gross profit increased by $0.8 million during the three months ended December 31, 2024 compared to the three months ended December 31, 2023. Service gross margin increased to 4% for the three months ended December 31, 2024 compared to the three months ended December 31, 2023.
Previous wording
Research and development expenses increased by $21.3 million, or 29%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The increase was primarily the result of increased personnel costs of $18.8 million, inclusive of a $8.4 million increase in share-based compensation, largely due to headcount growth to support the continued expansion of functionality and capabilities of the Dynatrace platform.
Current wording
Research and development expenses increased by $18.2 million, or 23%, for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023. The increase was primarily the result of increased personnel costs of $14.8 million, inclusive of a $7.9 million increase in share-based compensation, largely due to headcount growth to support the continued expansion of functionality and capabilities of the Dynatrace platform.
Previous wording
Sales and marketing expenses increased by $36.6 million, or 14%, for the six months ended September 30, 2024, as compared to the six months ended September 30, 2023. The increase was primarily the result of increased personnel costs of $23.4 million, inclusive of a $3.9 million increase in share-based compensation. Further contributing to the increase was increased partner costs and professional fees of $5.9 million.
Current wording
General and administrative expenses increased $6.1 million, or 14%, for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023. The increase was primarily the result of increased personnel costs of $4.7 million, inclusive of a $1.8 million increase in share-based compensation.
Previous wording
Interest income, net, was $12.9 million for the three months ended September 30, 2024 compared to $8.5 million for the three months ended September 30, 2023. The increase in interest income was primarily the result of higher interest rates on our cash, cash equivalents, and investments.
Current wording
Interest income, net, was $11.7 million for the three months ended December 31, 2024 compared to $10.6 million for the three months ended December 31, 2023. The increase in interest income was primarily the result of increased cash, cash equivalent, and investment balances.
Previous wording
Other expense, net, was $2.0 million for the three months ended September 30, 2024 compared to $3.1 million for the three months ended September 30, 2023. The change was primarily the result of foreign currency realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency, including balances between subsidiaries.
Current wording
Other expense, net, was $2.1 million for the three months ended December 31, 2024 compared to $3.9 million for the three months ended December 31, 2023. The change was primarily the result of foreign currency realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency, including balances between subsidiaries.
Previous wording
Income tax expense increased by $8.9 million resulting in an expense of $13.8 million for the three months ended September 30, 2024 as compared to an expense of $4.9 million for the three months ended September 30, 2023. This increase was primarily due to an increase in pre-tax income, a non-recurring discrete benefit recognized in the prior year related to a tax law change, and a decrease in share-based compensation tax benefits.
Current wording
Income tax benefit increased by $304.4 million resulting in a benefit of $304.6 million for the three months ended December 31, 2024 as compared to a benefit of $0.3 million for the three months ended December 31, 2023. This increase was primarily due to a $320.9 million discrete tax benefit from the IP Transfer, partially offset by additional tax expense due to an increase in pre-tax income.
Previous wording
Comparison of the Six Months Ended September 30, 2024 and 2023
Current wording
Comparison of the Nine Months Ended December 31, 2024 and 2023
Previous wording
Subscription revenue increased by $130.4 million, or 20%, for the six months ended September 30, 2024, as compared to the six months ended September 30, 2023, primarily due to the growth of the Dynatrace platform by adding new customers combined with existing customers expanding their use of our solutions.
Current wording
Subscription revenue increased by $199.3 million, or 20%, for the nine months ended December 31, 2024, as compared to the nine months ended December 31, 2023, primarily due to the growth of the Dynatrace platform by adding new customers combined with existing customers expanding their use of our solutions.
Previous wording
Service revenue increased by $2.3 million, or 7%, for the six months ended September 30, 2024 as compared to the six months ended September 30, 2023. The increase was primarily due to timing of delivery of services.
Current wording
Service revenue increased by $4.5 million, or 9%, for the nine months ended December 31, 2024 as compared to the nine months ended December 31, 2023. The increase was primarily due to timing of delivery of services.
Previous wording
Cost of subscription increased $21.7 million, or 25%, for the six months ended September 30, 2024 as compared to the six months ended September 30, 2023. The increase was primarily due to increased cloud-based hosting costs of $7.4 million related to our growing cloud based subscription revenue and increased personnel costs of $10.2 million, inclusive of a $3.6 million increase in share-based compensation largely due to headcount growth to support our growing customer base.
Current wording
Cost of subscription increased $35.5 million, or 26%, for the nine months ended December 31, 2024 as compared to the nine months ended December 31, 2023. The increase was primarily due to increased personnel costs of $15.3 million, inclusive of a $5.7 million increase in share-based compensation, largely due to headcount growth to support our growing customer base and increased cloud-based hosting costs of $14.3 million related to our growing cloud-based subscription revenue.
Previous wording
Cost of service increased $3.2 million, or 10%, for the six months ended September 30, 2024 as compared to the six months ended September 30, 2023. The increase was primarily the result of increased personnel cost of $1.7 million, inclusive of a $1.2 million increase in share-based compensation.
Current wording
Cost of service increased $4.6 million, or 10%, for the nine months ended December 31, 2024 as compared to the nine months ended December 31, 2023. The increase was primarily the result of increased personnel cost of $2.6 million, inclusive of a $1.9 million increase in share-based compensation.
Previous wording
Amortization of acquired technology increased by $0.5 million, or 13%, and includes amortization expense for technology acquired in the Thoma Bravo Funds’ acquisition of our company in 2014, business combinations, and asset acquisitions. The increase was driven by the amortization of acquired technology associated with our acquisitions of Rookout, Ltd. in August 2023 and Runecast Solutions Limited in March 2024.
Current wording
Amortization of acquired technology increased by $0.5 million, or 4%, for the nine months ended December 31, 2024 as compared to the nine months ended December 31, 2023. The increase was driven by the amortization of acquired technology associated with our acquisitions of Rookout, Ltd. in August 2023 and Runecast Solutions Limited in March 2024, partially offset by a decrease due to certain acquired technology becoming fully amortized during the nine months ended December 31, 2024.
Previous wording
Subscription gross profit increased by $108.8 million, or 19%, during the six months ended September 30, 2024 compared to the six months ended September 30, 2023. Subscription gross margin decreased from 87% to 86% for the six months ended September 30, 2024 compared to the six months ended September 30, 2023. The decrease in gross margin was primarily due to increased cloud-based hosting costs to support the growth of our subscription cloud-based offerings.
Current wording
Subscription gross profit increased by $163.9 million, or 19%, during the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023. Subscription gross margin decreased from 87% to 86% for the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023. The decrease in gross margin was primarily due to increased cloud-based hosting costs to support the growth of our subscription cloud-based offerings.
Previous wording
Services gross profit decreased by $0.9 million, or 35%, during the six months ended September 30, 2024 compared to the six months ended September 30, 2023. Services gross margin decreased from 7% to 4% for the six months ended September 30, 2024 compared to the six months ended September 30, 2023. The decreases in gross profit and gross margin was primarily due to increased personnel costs and share-based compensation expense.
Current wording
Services gross profit decreased by $0.1 million, or 4%, during the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023. Services gross margin decreased from 5% to 4% for the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023.
Previous wording
Research and development expenses increased by $42.6 million, or 30%, for the six months ended September 30, 2024 as compared to the six months ended September 30, 2023. The increase was primarily the result of increased personnel costs of $38.2 million, inclusive of a $16.7 million increase in share-based compensation largely due to headcount growth to support the continued expansion of functionality and capabilities of the Dynatrace platform.
Current wording
Research and development expenses increased by $60.8 million, or 28%, for the nine months ended December 31, 2024 as compared to the nine months ended December 31, 2023. The increase was primarily the result of increased personnel costs of $53.1 million, inclusive of a $24.7 million increase in share-based compensation, largely due to headcount growth to support the continued expansion of functionality and capabilities of the Dynatrace platform.
Previous wording
Sales and marketing expenses increased by $16.6 million, or 13%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The increase was primarily due to increased personnel costs of $10.9 million, inclusive of a $1.9 million increase in share-based compensation. Further contributing to the increase was increased marketing program costs and partner cost of $2.0 million.
Current wording
General and administrative expenses increased $16.2 million, or 13%, for the nine months ended December 31, 2024, as compared to the nine months ended December 31, 2023. The increase was primarily the result of increased personnel costs of $17.1 million, inclusive of a $7.3 million increase in share-based compensation.
Previous wording
Amortization of other intangibles decreased by $0.9 million, or 15%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The decrease was primarily the result of lower amortization for certain intangible assets that are amortized on a systematic basis that reflects the pattern in which the economic benefits of the intangible assets are estimated to be realized and the completion of amortization on certain intangibles.
Current wording
Amortization of other intangibles decreased by $3.3 million, or 20%, for the nine months ended December 31, 2024 as compared to the nine months ended December 31, 2023. The decrease was primarily the result of decreased amortization for certain intangible assets that are amortized on a systematic basis that reflects the pattern in which the economic benefits of the intangible assets are estimated to be realized and the result of certain intangible assets becoming fully amortized during the nine months ended December 31, 2024.
Previous wording
Interest income, net, was $25.6 million for the six months ended September 30, 2024 as compared to $15.7 million for the six months ended September 30, 2023. The increase in interest income was primarily the result of higher interest rates on cash, cash equivalents, and investments.
Current wording
Interest income, net, was $37.4 million for the nine months ended December 31, 2024 as compared to $26.3 million for the nine months ended December 31, 2023. The increase in interest income was primarily the result of increased cash, cash equivalents, and investments balances.
Previous wording
Other expense, net, was $4.1 million for the six months ended September 30, 2024 as compared to $2.8 million for the six months ended September 30, 2023. The change was primarily the result of foreign currency realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency, including balances between subsidiaries.
Current wording
Other expense, net, was $6.1 million for the nine months ended December 31, 2024 as compared to $6.7 million for the nine months ended December 31, 2023. The change was primarily the result of foreign currency realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency, including balances between subsidiaries.
Previous wording
Income tax expense of $28.0 million for the six months ended September 30, 2024 represented a $19.6 million increase as compared to an expense of $8.4 million for the six months ended September 30, 2023. This increase was primarily due to an increase in pre-tax income, a non-recurring discrete benefit recognized in the prior year related to a tax law change, and a decrease in share-based compensation tax benefits.
Current wording
Income tax benefit of $276.7 million for the nine months ended December 31, 2024 represented a $284.8 million increase as compared to an expense of $8.1 million for the nine months ended December 31, 2023. This increase was primarily due to a $320.9 million discrete tax benefit from the IP Transfer, partially offset by additional tax expense due to an increase in pre-tax income and a decrease in share-based compensation windfall benefits.
Previous wording
We have historically maintained a disciplined and balanced approach to optimizing costs and improving the efficiency and profitability of our business, while continuing to invest in future growth opportunities that we expect will drive long-term value. Our principal sources of liquidity are cash and cash equivalents, marketable securities (investments) and cash provided by operating activities. From time to time, we may borrow under our Credit Facility. As of September 30, 2024, we had $907.2 million of cash and cash equivalents, $146.1 million of investments, consisting of U.S. Treasury securities, corporate debt securities, commercial paper, and U.S. agency securities, that have maturities between one and 27 months, and $399.2 million available under our Credit Facility.
Current wording
We have historically maintained a disciplined and balanced approach to optimizing costs and improving the efficiency and profitability of our business, while continuing to invest in future growth opportunities that we expect will drive long-term value. Our principal sources of liquidity are cash and cash equivalents, marketable securities (investments) and cash provided by operating activities. From time to time, we may borrow under our Credit Facility (as defined below). As of December 31, 2024, we had $907.5 million of cash and cash equivalents, $146.5 million of investments, consisting of U.S. Treasury securities, corporate debt securities, commercial paper, and U.S. agency securities, that have maturities between one and 36 months, and $399.2 million available under our Credit Facility.
Previous wording
Our material cash requirements from known contractual and other obligations consist of our rent payments required under operating lease agreements and non-cancelable purchase obligations for cloud hosting support. As of September 30, 2024, total contractual commitments were $363.5 million, with $91.9 million committed within the next 12 months.
Current wording
Our material cash requirements from known contractual and other obligations consist of our rent payments required under operating lease agreements and non-cancelable purchase obligations for cloud hosting support. As of December 31, 2024, total contractual commitments were $326.9 million, with $63.7 million committed within the next 12 months.
Previous wording
We announced a share repurchase program for up to $500.0 million of common stock on May 15, 2024. For the three and six months ended September 30, 2024, we repurchased and retired 0.8 million and 1.9 million shares of our common stock for a total of $40.0 million and $90.1 million, respectively. As of September 30, 2024, $409.9 million remained available for future repurchases. For additional information, please see Part II, Item 2 of this Quarterly Report.
Current wording
We announced a share repurchase program for up to $500.0 million of common stock on May 15, 2024. For the three and nine months ended December 31, 2024, we repurchased and retired 0.7 million and 2.7 million shares of our common stock for a total of $40.0 million and $130.1 million, respectively. As of December 31, 2024, $369.9 million remained available for future repurchases. For additional information, please see Part II, Item 2 of this Quarterly Report.
Previous wording
For the six months ended September 30, 2024, cash provided by operating activities was $254.4 million as a result of net income of $82.6 million, and adjusted by non-cash charges of $121.4 million and a change of $50.3 million in our operating assets and liabilities. The non-cash charges were primarily comprised of share-based compensation of $129.4 million and depreciation and amortization of $28.0 million, partially offset by deferred income taxes of $39.1 million. The change in our net operating assets and liabilities was primarily the result of a decrease in accounts receivable of $300.1 million due to the timing of receipts of payments from customers, partially offset by a decrease in deferred revenue of $199.5 million due to seasonality in our sales cycle, which is higher in the third and fourth quarters of our fiscal year, a decrease in accounts payable and accrued expenses of $30.5 million driven by timing of payments, including the payments of our annual bonus plans and year-end commissions, and an increase in prepaid expenses and other assets of $14.1 million driven by the timing of payments in advance of future services.
Current wording
For the nine months ended December 31, 2024, cash provided by operating activities was $296.6 million as a result of net income of $444.4 million, reduced by non-cash charges of $131.7 million and a change of $16.0 million in our operating assets and liabilities. The non-cash charges were primarily comprised of deferred income taxes of $378.8 million, partially offset by share-based compensation of $201.5 million and depreciation and amortization of $41.5 million. The change in our net operating assets and liabilities was primarily the result of a decrease in deferred revenue of $168.5 million due to seasonality in our sales cycle, which is higher in the third and fourth quarters of our fiscal year, a decrease in accounts payable and accrued expenses of $27.6 million driven by timing of payments, including the payments of our annual bonus plans and year-end commissions, and an increase in prepaid expenses and other assets of $21.6 million driven by the timing of payments in advance of future services. Partially offset this was a decrease in accounts receivable of $204.3 million due to the timing of receipts of payments from customers.
Previous wording
For the six months ended September 30, 2023, cash provided by operating activities was $170.8 million as a result of net income of $74.0 million, and adjusted by non-cash charges of $93.4 million and a change of $3.4 million in our operating assets and liabilities. The non-cash charges were primarily comprised of share-based compensation of $98.5 million, depreciation and amortization of $27.1 million, partially offset by deferred income taxes of $35.2 million. The change in our net operating assets and liabilities was primarily the result of a decrease in accounts receivable of $177.7 million due to the timing of receipts of payments from customers and a decrease in deferred commissions of $9.0 million due to commissions paid on new bookings. Partially offsetting this was a decrease in deferred revenue of $128.5 million due to seasonality in our sales cycle, which is higher in the third and fourth quarters of our fiscal year, a decrease in accounts payable and accrued expenses of $33.2 million driven by timing of payments, and an increase in prepaid expenses and other assets of $22.9 million driven by the timing of payments in advance of future services.
Current wording
For the nine months ended December 31, 2023, cash provided by operating activities was $246.4 million as a result of net income of $116.7 million, and adjusted by non-cash charges of $151.6 million and a change of $21.8 million in our operating assets and liabilities. The non-cash charges were primarily comprised of share-based compensation of $153.3 million and depreciation and amortization of $40.8 million, partially offset by deferred income taxes of $49.6 million. The change in our net operating assets and liabilities was primarily the result of a decrease in deferred revenue of $55.9 million due to seasonality in our sales cycle, which is higher in the third and fourth quarters of our fiscal year, a decrease in accounts payable and accrued expenses of $24.0 million driven by timing of payments, and an increase in prepaid expenses and other assets of $27.4 million driven by the timing of payments in advance of future services. Partially offsetting this was a decrease in accounts receivable of $83.4 million due to the timing of receipts of payments from customers.
Previous wording
Cash used in investing activities during the six months ended September 30, 2024 was $46.6 million, primarily as a result of purchases of investments, net of sales and maturities, of $39.6 million and purchases of property and equipment of $6.9 million.
Current wording
Cash used in investing activities during the nine months ended December 31, 2024 was $51.5 million, primarily as a result of purchases of investments, net of sales and maturities, of $39.8 million and purchases of property and equipment of $11.5 million.
Previous wording
Cash used in investing activities during the six months ended September 30, 2023 was $45.4 million as a result of the Rookout acquisition of $32.4 million and purchases of property and equipment of $13.0 million. For additional information about the Rookout acquisition, please see Note 4, Business Combinations of the condensed consolidated financial statements in this Quarterly Report.
Current wording
Cash used in investing activities during the nine months ended December 31, 2023 was $53.6 million as a result of the Rookout acquisition of $32.3 million and purchases of property and equipment of $16.7 million and capitalized software additions of $4.7 million. For additional information about the Rookout acquisition, please see Note 4, Business Combinations, of the condensed consolidated financial statements in this Quarterly Report.
Previous wording
Cash used in financing activities during the six months ended September 30, 2024 was $84.6 million, primarily as a result of repurchases of common stock of $90.1 million and taxes paid related to net share settlement of equity awards of $12.0 million, partially offset from proceeds from our employee stock purchase plan (“ESPP”) of $10.4 million and proceeds from the exercise of our stock options of $8.8 million.
Current wording
Cash used in financing activities during the nine months ended December 31, 2024 was $112.0 million, primarily as a result of repurchases of common stock of $130.1 million and taxes paid related to net share settlement of equity awards of $16.3 million, partially offset from proceeds from our employee stock purchase plan (“ESPP”) of $21.2 million and proceeds from the exercise of our stock options of $14.9 million.
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Previous report — wording carried elsewhere
Based on the guidance available thus far, we do not expect these provisions to have a material impact on our consolidated financial statements. We will continue to monitor ongoing developments and evaluate any potential impact on future periods.
Previous report — wording carried elsewhere
Amortization of acquired technology increased by $1.0 million, or 12%, and includes amortization expense for technology acquired in the Thoma Bravo Funds’ acquisition of our company in 2014, business combinations, and asset acquisitions. The increase was driven by the amortization of acquired technology associated with our acquisitions of Rookout, Ltd. in August 2023 and Runecast Solutions Limited in March 2024.
Previous report — wording carried elsewhere
Amortization of other intangibles decreased by $1.8 million, or 16%, for the six months ended September 30, 2024 as compared to the six months ended September 30, 2023. The decline was primarily the result of lower amortization for certain intangible assets that are amortized on a systematic basis that reflects the pattern in which the economic benefits of the intangible assets are estimated to be realized and the completion of amortization on certain intangibles.