Dynatrace, Inc.

(Unaudited)

1. Description of the Business

Business

Dynatrace, Inc. (“Dynatrace” or the “Company”) is advancing observability for today’s digital businesses, helping to transform the complexity of modern digital ecosystems into powerful business assets. By leveraging artificial intelligence (“AI”)-powered insights, Dynatrace enables organizations to analyze, automate, and innovate faster to drive their business forward. The Company’s comprehensive solution combines broad and deep observability, continuous runtime application security, and advanced AI to support IT operations, development, security, and business teams, enabling organizations to optimize cloud and IT operations, accelerate secure software delivery, and improve digital performance.

Fiscal year

The Company’s fiscal year ends on March 31. References to fiscal 2026, for example, refer to the fiscal year ending March 31, 2026.

2. Significant Accounting Policies

Basis of presentation and consolidation

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

Unaudited interim consolidated financial information

The accompanying interim condensed consolidated balance sheet as of December 31, 2025 and the interim condensed consolidated statements of operations, statements of comprehensive income, and statements of shareholders’ equity for the three and nine months ended December 31, 2025 and 2024, statements of cash flows for the nine months ended December 31, 2025 and 2024, and the related disclosures are unaudited. In management’s opinion, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all normal and recurring adjustments necessary for the fair presentation of the Company’s financial position as of December 31, 2025, its results of operations for the three and nine months ended December 31, 2025 and 2024, and its cash flows for the nine months ended December 31, 2025 and 2024 are in accordance with GAAP. The results for the three and nine months ended December 31, 2025 are not necessarily indicative of the results to be expected for the full fiscal year or any other interim period.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (the “Annual Report”).

Use of estimates

The preparation of unaudited condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the condensed consolidated financial statements and accompanying notes. Management evaluates such estimates and assumptions for continued reasonableness. In particular, the Company makes estimates with respect to revenue recognition, the allowance for credit losses, the fair value of assets acquired and liabilities assumed in business combinations, the valuation of long-lived assets, the valuation of intellectual property (“IP”), the period of benefit for deferred commissions, income taxes, share-based compensation expense, and the determination of the incremental borrowing rate used for operating lease liabilities, among other things. Management bases these estimates on historical experiences and on various other assumptions that the Company believes are reasonable. Actual results could differ from those estimates.

Significant accounting policies

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

Recently adopted accounting pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and application of all segment disclosure requirement to entities with a single reportable segment. ASU 2023-07 was effective for the Company’s annual periods beginning fiscal 2025 and interim periods beginning the first quarter of fiscal 2026. Effective March 31, 2025, the Company adopted the new standard on a retrospective basis. For further information, refer to Note 13, Segment and Geographic Information.

Recently issued accounting pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in the income tax rate reconciliation table and disaggregates the income taxes paid by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, which is the Company’s fiscal 2026. The Company is currently evaluating the impact ASU 2023-09 will have on its financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires the disclosure of more detailed information on commonly presented expenses. ASU 2024-03 will be effective for the Company’s annual periods beginning fiscal 2028 and interim periods beginning the first quarter of fiscal 2029. The Company is currently evaluating the impact ASU 2024-03 will have on its financial statement disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40); Targeted Improvements to the Accounting for Internal-Use Software, which removes all references to software development project stages in the capitalization guidance and provides new guidance on how to evaluate the “probable-to-complete recognition threshold.” ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods, which is the Company’s fiscal 2029. The Company is currently evaluating the impact ASU 2025-06 will have on its consolidated financial statements and disclosures.

3. Revenue Recognition

Disaggregation of revenue

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

Effective April 1, 2025, the Company evaluates total revenue by geographic region based on the location of the customer (or end-customer under partner transactions) per the executed contract, rather than based on the location of the Company’s contracting entity. Prior period amounts have been recast to conform to the current period presentation.

For thethree and nine months ended December 31, 2025 and 2024, the United States was the only country that represented more than 10% of the Company’s revenue, constituting $231.0 million and 45% and $201.7 million and 46% of total revenue during the three months ended December 31, 2025 and 2024, respectively, and $666.4 million and 45% and $582.8 million and 46% of total revenue during the nine months ended December 31, 2025 and 2024, respectively.

Revenue recognized during the three months ended December 31, 2025 and 2024, which was included in the deferred revenue balance at the beginning of each respective period, was $429.0 million and $347.4 million, respectively. Revenue recognized during the nine months ended December 31, 2025 and 2024, which was included in the deferred revenue balance at the beginning of each respective period, was $987.8 million and $880.4 million, respectively.

Remaining performance obligations

As of December 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $3,203.2 million, which consists of both billed consideration in the amount of $977.5 million and unbilled consideration in the amount of $2,225.7 million that the Company expects to recognize as subscription and service revenue. The Company expects to recognize 53% of the total remaining performance obligations as revenue over the next 12 months and the remainder thereafter.

Variable consideration

The Company’s subscriptions include a minimum commitment with variable on-demand consumption fees for excess usage, representing a form of variable consideration. The transaction price is determined based on the consideration to which the Company expects to be entitled in exchange for providing services to the customer. The Company estimates variable consideration based on the historical prevalence of on-demand consumption fees. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.

Contract assets

As of December 31, 2025 and March 31, 2025, contract assets of $31.8 million and $1.6 million, respectively, were included in accounts receivable, net, on the Company’s condensed consolidated balance sheets.

4. Investments and Fair Value Measurements

The following table summarizes the amortized cost, unrealized gains and losses, and fair value of the Company’s available-for-sale investments, including those securities classified within “Cash and cash equivalents” in the condensed consolidated balance sheets (in thousands):

Unrealized gains and losses on available-for-sale investments, net of tax, are included within accumulated other comprehensive loss in the condensed consolidated balance sheets. The Company regularly reviews the securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as credit ratings, issuer-specific factors, current economic conditions, and reasonable and supportable forecasts. The Company does not intend to sell these investments and it is more likely than not that the Company will not be required to sell these investments before recovery of their amortized cost basis. Based on the evaluation of available evidence, the Company does not believe any unrealized losses on its investments as of December 31, 2025 represent credit losses.

As of December 31, 2025, the fair values of available-for-sale investments, excluding those securities classified within “Cash and cash equivalents” in the condensed consolidated balance sheets, are as follows by remaining contractual maturity (in thousands):

The Company offers a non-qualified deferred compensation plan to eligible U.S. employees and directors. The Company held $1.9 million and $0.7 million of investments in mutual funds that are associated with this plan and were classified as restricted trading securities as of December 31, 2025 and March 31, 2025, respectively. These securities are not included in the tables above but are included as investments in the condensed consolidated balance sheets.

The following tables present the Company’s financial assets that have been measured at fair value on a recurring basis as of December 31, 2025 and March 31, 2025 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):

The Company recorded interest income from its cash, cash equivalents, and investments of $12.3 million and $12.0 million for the three months ended December 31, 2025 and 2024, respectively, and $38.3 million and $38.2 million for the nine months ended December 31, 2025 and 2024, respectively.

5. Goodwill and Other Intangible Assets, Net

Changes in the carrying amount of goodwill for the nine months ended December 31, 2025 consist of the following (in thousands):

Intangible assets, net, excluding goodwill, consist of the following (in thousands):

Amortization of intangible assets totaled $1.4 million and $8.2 million for the three months ended December 31, 2025 and 2024, respectively, and $4.1 million and $27.6 million for the nine months ended December 31, 2025 and 2024, respectively.

As of December 31, 2025, the estimated future amortization expense of the Company’s intangible assets is as follows (in thousands):

6. Income Taxes

The Company computes its interim provision for income taxes by applying the estimated annual effective tax rate to income from operations and adjusts the provision for discrete tax items occurring in the period. The Company’s effective tax rate for the three months ended December 31, 2025 was 52.6% compared to (533.3)% for the three months ended December 31, 2024. The Company’s effective tax rate for the nine months ended December 31, 2025 was 42.6% compared to (164.9)% for the nine months ended December 31, 2024. The increase in the effective tax rate for both the three months ended December 31, 2025 and the nine months ended December 31, 2025 was primarily due to a $320.9 million discrete tax benefit recognized in fiscal 2025 on the IP Transfer (as defined below) of the global economic rights of the Company’s IP to Switzerland. The IP Transfer also impacted fiscal 2026 resulting in an increase to the global intangible low-taxed income (“GILTI”) inclusion, primarily due to an increase in capitalized foreign research and development expenses within GILTI and a decrease to the foreign-derived intangible income deduction. Dynatrace elects to treat GILTI as a period cost for GAAP purposes.

During the three months ended December 31, 2024, the Company completed an intra-entity asset transfer of the global economic rights of Dynatrace IP from a wholly-owned U.S. subsidiary to a wholly-owned Swiss subsidiary, more closely aligning the Company’s IP rights with its business operations (the “IP Transfer”). The transaction is taxable in the U.S. through 2044. 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 tax benefit and related deferred tax asset of $320.9 million. The Company 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 through 2035. The deferred tax asset and the tax benefit were measured based on the enacted tax rates expected to apply in the years the asset is expected to be realized. The Company expects to realize the deferred tax asset resulting from the IP Transfer.

On July 4, 2025, the “One Big Beautiful Bill Act” (the “OBBBA”) was enacted into law. The OBBBA contains a broad range of tax reform provisions including immediate expensing of domestic research and development expenditures, the reinstatement of 100% bonus depreciation, and modifications to the international tax framework. The OBBBA has multiple effective dates, with certain provisions effective in fiscal 2026 and other provisions effective in subsequent years. The OBBBA does not have a material impact on fiscal 2026. The Company is evaluating the potential impact of the provisions effective in future years and does not currently anticipate the OBBBA will have a material impact.

7. Long-term Debt

In December 2022, the Company entered into a Credit Agreement for a senior secured revolving credit facility (as amended to date, the “Credit Facility”) in an aggregate amount of $400.0 million. The Credit Facility has sublimits for swing line loans up to $30.0 million and for the issuance of standby letters of credit in a face amount up to $45.0 million. The Credit Facility will mature on December 2, 2027. As of December 31, 2025 and March 31, 2025, there wereno amounts outstanding under the Credit Facility. There were $1.0 million and $0.8 million of letters of credit issued as of December 31, 2025 and March 31, 2025, respectively. The Company had $399.0 million and $399.2 million of availability under the Credit Facility as of December 31, 2025 and March 31, 2025, respectively.

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

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

Debt issuance costs of $1.9 million were incurred in connection with the Credit Facility. The debt issuance costs are included within “Other assets” in the condensed consolidated balance sheets and are being amortized into interest expense over the contractual term of the Credit Facility. There were $0.7 million and $1.0 million of unamortized debt issuance costs as of December 31, 2025 and March 31, 2025, respectively.

Pursuant to the Credit Facility, obligations owed under the Credit Facility are secured by a first priority security interest on substantially all assets of Dynatrace LLC and other wholly owned subsidiaries of the Company, including a pledge of the capital stock and other equity interests of certain subsidiaries. Under certain circumstances, the guarantees may be released without action by, or consent of, the administrative agent of the Credit Facility. The Credit Facility contains customary affirmative and negative covenants, including financial covenants that require the Company to maintain specified financial ratios. At December 31, 2025, the Company was in compliance with all applicable covenants.

Interest expense

Interest expense, including amortization of debt issuance costs and original issuance discount, was $0.2 million and $0.3 million for the three months ended December 31, 2025 and 2024, respectively, and $0.7 million and $0.8 million for the nine months ended December 31, 2025 and 2024, respectively.

8. Leases

The Company leases office space under non-cancelable operating leases which expire at various dates from fiscal 2026 to 2036. As of December 31, 2025, the weighted average remaining lease term was 5.9 years and the weighted average discount rate was 4.3%. The Company did not have any finance leases as of December 31, 2025.

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

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

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

As of December 31, 2025, remaining maturities of lease liabilities were as follows (in thousands):

As of December 31, 2025, the Company had commitments of $91.9 million for operating leases that have not yet commenced, and therefore are not included in the right-of-use assets or operating lease liabilities. These operating leases are expected to commence during fiscal year 2026 with lease terms ranging from 3 years to 10 years.

9. Commitments and Contingencies

Legal matters

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

10. Shareholders’ Equity

Share Repurchase Program

In May 2024, the Company announced a share repurchase program for up to $500 million of common stock, which was substantially completed as of February 9, 2026. This share repurchase program does not have a time limit, does not obligate the Company to acquire a specific number of shares, and may be suspended, modified, or terminated at any time, without prior notice. Under this program, the Company has the ability to repurchase shares from time to time on the open market, pursuant to 10b5-1 trading plans, or by other legally permissible means.

For the three months ended December 31, 2025 and 2024, the Company repurchased and retired 3.5 million and 0.7 million shares of its common stock for a total of $160.0 million and $40.0 million, respectively. For the nine months ended December 31, 2025 and 2024, the Company repurchased and retired 5.4 million and 2.7 million shares of its common stock for a total of $255.0 million and $130.1 million, respectively. As of December 31, 2025, $72.3 million remained available for future repurchases.

On February 9, 2026, the Company announced that its Board of Directors (the “Board”) authorized a new share repurchase program for up to $1 billion of common stock. The $1 billion share repurchase program does not have a time limit, does not obligate the Company to acquire a specified number of shares, and may be suspended, modified, or terminated at any time, without prior notice.

11. Share-based Compensation

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

Amended and Restated 2019 Equity Incentive Plan

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

The Company initially reserved 52,000,000 shares of common stock for the issuance of awards under the Equity Incentive Plan. The Equity Incentive Plan provides that the number of shares reserved and available for issuance under the plan automatically increases each April 1 by 4% of the outstanding number of shares of the Company’s common stock on the immediately preceding March 31 or such lesser number determined by the compensation committee. This number is subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. As of December 31, 2025,63,204,540 shares of common stock were available for future issuance under the Equity Incentive Plan.

Restricted shares and units

The following table provides a summary of the changes in the number of restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) for the nine months ended December 31, 2025:

RSUs outstanding as of December 31, 2025 were comprised of 10.1 million RSUs with only service conditions and 1.1 million RSUs with both service and performance or market-based conditions (“PSUs”).

During the nine months ended December 31, 2025, the Company granted PSUs that contain financial performance conditions (the “Financial PSUs”) and PSUs based on relative total stockholder return performance (the “rTSR PSUs”). Both the Financial PSUs and rTSR PSUs are not earned if the applicable threshold percentage of the specific metric is not achieved. The maximum number of shares that may be earned is 200% of the target award. The PSUs are also subject to time-based vesting and are contingent upon the employee remaining employed by the Company or one of its subsidiaries through the applicable vesting dates.

The Financial PSUs generally vest 33%one year after the grant date and the remaining 67% vest ratably on a quarterly basis over the followingtwo years. The number of shares that may be earned pursuant to the Financial PSUs granted in fiscal 2026 is based on specific Company metrics related to the Company’s fiscal year ending March 31, 2026.

The rTSR PSUs generally vest 33% annually after the grant date. The number of shares that may be earned pursuant to the rTSR PSUs granted in fiscal 2026 is based on the Company’s stock price performance relative to companies that are the constituents of the Russell 3000 index over performance periods of one, two, and three fiscal years that began on April 1, 2025.

As of December 31, 2025, the total unrecognized compensation expense related to unvested RSAs is $2.8 million and is to be recognized over a weighted average period of 1.0 years. As of December 31, 2025, the total unrecognized compensation expense related to unvested RSUs was $478.6 million and is expected to be recognized over a weighted average period of 2.1 years.

Stock options

The following table summarizes activity for stock options during the nine months ended December 31, 2025:

As of December 31, 2025, there was no unrecognized compensation expense related to non-vested stock options.

Employee Stock Purchase Plan

In July 2019, the Board adopted, and the Company’s stockholders approved, the 2019 Employee Stock Purchase Plan (the “ESPP”). The Company offers, sells and issues shares of common stock under this ESPP from time to time based on various factors and conditions, although the Company is under no obligation to sell any shares under this ESPP. The ESPP provides forsix-month offering periods and each offering period consists ofsix-month purchase periods. On each purchase date, eligible employees purchase shares of the Company’s common stock at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s common stock on the offering date or (2) the fair market value of the Company’s common stock on the purchase date. During the nine months ended December 31, 2025,585,348 shares of common stock were purchased under the ESPP. As of December 31, 2025,20,716,161 shares of common stock were available for future issuance under the ESPP.

As of December 31, 2025, there was approximately $3.4 million of unrecognized share-based compensation related to the ESPP that is expected to be recognized over the remaining term of the current offering period.

12. Net Income Per Share

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

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, 2025 and 2024 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):

13. Segment and Geographic Information

The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer. The CODM uses consolidated net income for purposes of making operating decisions, assessing financial performance and allocating resources in the budget and forecasting process and budget-to-actual reviews. As such, the Company has determined that it operates asone operating and reportable segment.

The CODM also utilizes expense information in order to assess the Company’s financial performance. The Company’s significant expenses and other segment items, as included in consolidated net income, are provided in the table below (in thousands):

(1) Excludes share-based compensation; employer payroll taxes on employee stock transactions; amortization of intangibles; and transaction, restructuring and other-non-recurring or unusual items, which are independently reviewed by the CODM.

(2)Other segment items primarily includes interest income, net; other (expense) income, net; and income tax (expense) benefit, as reported in the condensed consolidated statements of operations. Other segment items also includes $0.1 million of transaction, restructuring, and other non-recurring or unusual items for the three and nine months ended December 31, 2024. There wereno transaction, restructuring, and other non-recurring or unusual items for the three and nine months ended December 31, 2025.

Revenue

Revenues by geography are based on the location of the customer (or end-customer under partner transactions). Refer to Note 3, Revenue Recognition, for a disaggregation of revenue by geographic region.

Long-lived assets, net

The following table presents the Company’s long-lived assets, net, which consists of property and equipment, net, and operating lease right-of-use asset, net, by geographic region for the periods presented (in thousands):