Dynatrace IPO Prospectus: 10 Things for APM Partners, Investors to Know
As Dynatrace prepares for a potential IPO (initial public offering), the company’s latest SEC filing provides clues about the health of multiple IT management market segments — including application performance monitoring (APM), cloud infrastructure monitoring, and much more.
Updated details, July 23, 2019: Dynatrace is seeking to raise $427 million by offering 35.6 million shares (4% insider) at a price range of $11 to $13. Investment firm Dragoneer Investment Group intends to purchase $75 million worth of shares in the offering. At the midpoint of the proposed range, Dynatrace Holdings would command a fully diluted market value of $3.5 billion. Source: Nasdaq.com.
Original ChannelE2E article from July 12, 2019, continues below.
Here are 10 key takeaways from the Dynatrace IPO prospectus and their potential implications for partners.
1. Key Market Segments and Competition: The company, currently owned by private equity firm Thoma Bravo, says it competes directly or indirectly with:
- APM vendors, such as Cisco AppDynamics, Broadcom, and New Relic;
- Infrastructure monitoring vendors, such as BMC, Datadog, and Nagios;
- DEM (digital experience monitoring) vendors such as Akamai and Catchpoint;
- Point solutions from public cloud providers; and
- IT operations management, AIOps, and business intelligence providers.
2. Headcount: As of June 30, 2019, the company had 1,981 full-time employees, including 647 in sales and marketing, 631 in research and development, 203 in administrative functions, 224 in services, and 276 in customer support. Among full-time employees as of June 30, 2019:
- 799 were in North America;
- 940 were in EMEA;
- 183 were in Asia Pacific; and
- 59 were in Latin America.
3. Blended Enterprise Sales Model: Dynatrace has global direct sales team and a network of partners, including resellers, system integrators, and managed service providers (MSPs). The company targets the largest 15,000 global enterprise accounts, which generally have annual revenues in excess of $750 million, Dynatrace says. Side note: The company makes no mention of any potential small business customer or partner push.
4. Partners – A Closer Look: The company’s partner network spans:
- Cloud providers: The company’s software integrates with Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform (GCP). Customers can also procure Dynatrace’s software through such marketplaces as AWS, Azure, SAP and IBM.
- Resellers: Resellers market and sell Dynatrace products throughout the world, and provide a go-to-market channel in regions where the company does not have a direct presence — such as Africa, Japan, the Middle East, Russia, and South Korea.
- Technology alliance partners: Here, key integration partners include Red Hat, Pivotal, VMWare and Atlassian, the company notes.
- Systems integrators: The company has a network of systems integrators, both global and regional, that help joint customers integrate our products into their enterprise cloud ecosystems.
5. Installed Base: Dynatrace had 1,364 customers as of March 31, 2019 — up from 574 as of March 31, 2018, representing year-over-year growth of 138 percent, the company says.
6. Subscription Revenue: For the years ended March 31, 2017, 2018 and 2019, subscription revenue was:
- 2017: $232.8 million
- 2018: $257.6 million
- 2019: $349.8 million
7. Total Revenue: For the years ended March 31, 2017, 2018, and 2019, Dynatrace revenue was:
- 2017: $406.4 million
- 2018: $398.0 million
- 2019: $431.0 million
8. Net Income: For the years ended March 31, 2017, 2018, and 2019, Dynatrace net income was:
- 2017: $0.8 million profit
- 2018: $9.2 million profit
- 2019: $116.2 million loss
9. Adjusted EBITDA: For the years ended March 31, 2017, 2018, and 2019, adjusted EBITDA was:
- 2017: $108.3 million
- 2018: $92.8 million
- 2019: $92.9 million
10. IPO Goal: The company is seeking to raise $300 million from the IPO.