{"url_path":"/sec/dt/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-05-20","source_url":"https://www.sec.gov/Archives/edgar/data/1773383/0001773383-26-000019-index.html","accession_number":"0001773383-26-000019","cik":"0001773383","ticker":"DT","issuer_name":"Dynatrace, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1773383/0001773383-26-000019-index.html","primary_entity_key":"0001773383","primary_entity_name":"Dynatrace, Inc."},"word_count":13346,"has_tables":true,"body_markdown":"ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA\n\nReport of Independent Registered Public Accounting Firm\n\nTo the Shareholders and the Board of Directors of Dynatrace, Inc.\n\nOpinion on the Financial Statements\n\nWe have audited the accompanying consolidated balance sheets of Dynatrace, Inc. (the Company) as of March 31, 2026 and 2025, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended March 31, 2026, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2026, in conformity with U.S. generally accepted accounting principles.\n\nWe also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2026, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated May 20, 2026 expressed an unqualified opinion thereon.\n\nBasis for Opinion\n\nThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\nCritical Audit Matter\n\nThe critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.\n\nRevenue Recognition – Determination of Distinct Performance Obligations\n\nDescription of the MatterAs described in Note 2 to the consolidated financial statements, the Company enters into contracts with customers that may include promises to transfer software licenses, subscription services, maintenance and support for software licenses, and professional services.\n\nGiven the nature of the Company’s product and service offerings, there is complexity in determining whether software licenses and services are considered performance obligations that should be accounted for separately or together. Auditing the Company’s determination of distinct performance obligations related to its various product and service offerings involved a high degree of judgment. Specifically, significant auditor judgment was required when assessing whether the when-and-if available updates included within the Company’s maintenance agreements and the related software licenses should be accounted for as separate performance obligations or as inputs to a combined performance obligation.\n\n56\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nHow We Addressed the Matter in Our AuditWe obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s processes as they relate to the determination of distinct performance obligations within contracts with customers.\n\nAmong other audit procedures, we evaluated management’s conclusion that when-and-if available updates included within the Company’s maintenance agreements are critical to the continued utility of the related software licenses such that they should be accounted together as inputs to a combined performance obligation by obtaining an understanding of the nature and importance of the updates, assessing the impact and frequency of updates, and reviewing information around the updates included on the Company’s website and marketing materials.\n\n/s/ Ernst & Young LLP\n\nWe have served as the Company’s auditor since 2022.\n\nDetroit, Michigan\n\nMay 20, 2026\n\n57\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nDYNATRACE, INC.\n\nCONSOLIDATED BALANCE SHEETS\n\n(In thousands, except share data)\n\nMarch 31,\n\n20262025\n\nAssets\n\nCurrent assets:\n\nCash and cash equivalents$1,097,220 $1,017,039 \n\nShort-term marketable securities74,881 96,189 \n\nAccounts receivable, net710,200 624,437 \n\nDeferred contract costs, current127,495 109,895 \n\nPrepaid expenses and other current assets113,651 83,901 \n\nTotal current assets2,123,447 1,931,461 \n\nLong-term marketable securities51,908 51,648 \n\nProperty and equipment, net72,993 61,522 \n\nOperating lease right-of-use asset, net139,285 67,479 \n\nGoodwill1,350,256 1,336,435 \n\nIntangible assets, net22,850 25,534 \n\nDeferred tax assets, net508,742 529,550 \n\nDeferred contract costs, non-current113,111 95,297 \n\nOther assets33,133 40,752 \n\nTotal assets$4,415,725 $4,139,678 \n\nLiabilities and shareholders' equity\n\nCurrent liabilities:\n\nAccounts payable$2,728 $27,286 \n\nAccrued expenses, current302,260 252,503 \n\nDeferred revenue, current1,241,488 1,087,518 \n\nOperating lease liabilities, current22,588 13,979 \n\nTotal current liabilities1,569,064 1,381,286 \n\nDeferred revenue, non-current53,387 50,989 \n\nAccrued expenses, non-current38,205 24,452 \n\nOperating lease liabilities, non-current141,736 61,384 \n\nDeferred tax liabilities1,943 419 \n\nTotal liabilities1,804,335 1,518,530 \n\nCommitments and contingencies (Note 13)\n\nShareholders' equity:\n\nCommon shares, $0.001 par value, 600,000,000 shares authorized, 294,652,951 and 299,813,048 shares issued and outstanding at March 31, 2026 and 2025, respectively\n295 300 \n\nAdditional paid-in capital2,199,494 2,370,563 \n\nRetained earnings447,596 284,927 \n\nAccumulated other comprehensive loss(35,995)(34,642)\n\nTotal shareholders' equity2,611,390 2,621,148 \n\nTotal liabilities and shareholders' equity$4,415,725 $4,139,678 \n\nSee accompanying notes to consolidated financial statements\n\n58\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nDYNATRACE, INC.\n\nCONSOLIDATED STATEMENTS OF OPERATIONS\n\n(In thousands, except per share data)\n\nFiscal Year Ended March 31,\n\n202620252024\n\nRevenue:\n\nSubscription$1,929,722 $1,622,163 $1,359,354 \n\nService88,665 76,520 71,176 \n\nTotal revenue2,018,387 1,698,683 1,430,530 \n\nCost of revenue:\n\nCost of subscription284,611 233,299 184,765 \n\nCost of service84,105 73,631 65,423 \n\nAmortization of acquired technology3,488 13,262 16,265 \n\nTotal cost of revenue372,204 320,192 266,453 \n\nGross profit1,646,183 1,378,491 1,164,077 \n\nOperating expenses:\n\nResearch and development474,312 384,572 304,739 \n\nSales and marketing690,489 605,599 534,233 \n\nGeneral and administrative217,414 195,347 174,412 \n\nAmortization of other intangibles56 13,540 22,293 \n\nImpairment of long-lived assets18,525 — — \n\nTotal operating expenses1,400,796 1,199,058 1,035,677 \n\nIncome from operations245,387 179,433 128,400 \n\nInterest income, net47,731 48,281 37,284 \n\nOther income (expense), net6,643 (4,285)(10,769)\n\nIncome before income taxes299,761 223,429 154,915 \n\nIncome tax (expense) benefit(137,092)260,255 (283)\n\nNet income$162,669 $483,684 $154,632 \n\nNet income per share:\n\nBasic$0.54 $1.62 $0.53 \n\nDiluted$0.54 $1.59 $0.52 \n\nWeighted average shares outstanding:\n\nBasic300,102 298,384 294,051 \n\nDiluted303,727 303,602 299,280 \n\nSee accompanying notes to consolidated financial statements\n\n59\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nDYNATRACE, INC.\n\nCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME\n\n(In thousands)\n\nFiscal Year Ended March 31,\n\n202620252024\n\nNet income$162,669 $483,684 $154,632 \n\nOther comprehensive (loss) income\n\nForeign currency translation adjustment(1,108)380 (3,397)\n\nUnrealized (losses) gains on available-for-sale securities, net of taxes(245)377 (173)\n\nTotal other comprehensive (loss) income(1,353)757 (3,570)\n\nComprehensive income $161,316 $484,441 $151,062 \n\nSee accompanying notes to consolidated financial statements\n\n60\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nDYNATRACE, INC.\n\nCONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY\n\n(In thousands)\n\nCommon SharesAdditional\nPaid-In Capital(Accumulated Deficit) Retained EarningsAccumulated\nOther\nComprehensive\nLossTotal Shareholders’ Equity\n\nSharesAmount\n\nBalance, March 31, 2023290,411 $290 $1,989,797 $(353,389)$(31,829)$1,604,869 \n\nOther comprehensive loss— — — — (3,570)(3,570)\n\nRestricted stock units vested4,376 4 (4)— — — \n\nRestricted stock awards granted142 — — — — — \n\nIssuance of common stock related to employee stock purchase plan534 1 19,471 — — 19,472 \n\nExercise of stock options1,500 2 31,189 — — 31,191 \n\nShare-based compensation— — 208,896 — — 208,896 \n\nNet income— — — 154,632 — 154,632 \n\nBalance, March 31, 2024296,963 $297 $2,249,349 $(198,757)$(35,399)$2,015,490 \n\nOther comprehensive income— — — — 757 757 \n\nRestricted stock units vested5,228 5 (5)— — — \n\nIssuance of common stock related to employee stock purchase plan531 — 21,159 — — 21,159 \n\nExercise of stock options932 1 20,994 — — 20,995 \n\nShare-based compensation— — 271,703 — — 271,703 \n\nShares withheld for employee taxes(394)— (20,022)— — (20,022)\n\nRepurchases of common stock(3,447)(3)(172,615)— — (172,618)\n\nNet income— — — 483,684 — 483,684 \n\nBalance, March 31, 2025299,813 $300 $2,370,563 $284,927 $(34,642)$2,621,148 \n\nOther comprehensive loss— — — — (1,353)(1,353)\n\nRestricted stock units vested5,679 6 (6)— — — \n\nRestricted stock awards granted41 — — — — — \n\nIssuance of common stock related to employee stock purchase plan585 — 24,390 — — 24,390 \n\nExercise of stock options315 — 6,487 — — 6,487 \n\nShare-based compensation— — 299,626 — — 299,626 \n\nShares withheld for employee taxes(422)— (21,138)— — (21,138)\n\nRepurchases of common stock(11,358)(11)(480,428)— — (480,439)\n\nNet income— — — 162,669 — 162,669 \n\nBalance, March 31, 2026294,653 $295 $2,199,494 $447,596 $(35,995)$2,611,390 \n\nSee accompanying notes to consolidated financial statements\n\n61\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nDYNATRACE, INC.\n\nCONSOLIDATED STATEMENTS OF CASH FLOWS\n\n(In thousands)\n\nFiscal Year Ended March 31,\n\n202620252024\n\nCash flows from operating activities:\n\nNet income$162,669 $483,684 $154,632 \n\nAdjustments to reconcile net income to cash provided by operations:\n\nDepreciation18,446 19,236 15,499 \n\nAmortization5,613 28,868 39,441 \n\nShare-based compensation299,626 271,703 208,896 \n\nDeferred income taxes25,132 (392,942)(59,915)\n\nImpairment of long-lived assets18,525 — — \n\nOther(6,928)2,035 11,216 \n\nNet change in operating assets and liabilities:\n\nAccounts receivable(77,127)(24,026)(161,888)\n\nDeferred contract costs(31,057)(14,648)(23,520)\n\nPrepaid expenses and other assets(15,977)(36,593)(47,401)\n\nAccounts payable and accrued expenses25,896 31,534 37,896 \n\nOperating leases, net2,434 (231)1,026 \n\nDeferred revenue134,598 90,799 202,227 \n\nNet cash provided by operating activities561,850 459,419 378,109 \n\nCash flows from investing activities:\n\nPurchase of property and equipment(32,173)(26,106)(26,459)\n\nCapitalized software additions(194)(2,696)(5,268)\n\nAcquisition of businesses, net of cash acquired(6,000)(100)(57,111)\n\nPurchases of marketable securities(120,306)(145,555)(104,210)\n\nProceeds from sales and maturities of marketable securities143,729 105,142 — \n\nOther(750)— — \n\nNet cash used in investing activities(15,694)(69,315)(193,048)\n\nCash flows from financing activities:\n\nProceeds from employee stock purchase plan24,390 21,159 19,472 \n\nProceeds from exercise of stock options6,487 20,995 31,191 \n\nRepurchases of common stock(478,708)(172,618)— \n\nTaxes paid related to net share settlement of equity awards(21,845)(18,958)— \n\nOther(4,418)(2,208)— \n\nNet cash (used in) provided by financing activities(474,094)(151,630)50,663 \n\nEffect of exchange rates on cash and cash equivalents8,119 (418)(12,089)\n\nNet increase in cash and cash equivalents80,181 238,056 223,635 \n\nCash and cash equivalents, beginning of year1,017,039 778,983 555,348 \n\nCash and cash equivalents, end of year$1,097,220 $1,017,039 $778,983 \n\nSupplemental cash flow data:\n\nCash paid for interest$749 $753 $851 \n\nCash paid for tax, net$117,584 $117,979 $81,360 \n\nNon-cash investing and financing activities:\n\nExcise taxes on repurchases of common stock in accrued expenses$1,731 $— $— \n\nCapitalized software additions in accounts payable and accrued expenses$— $567 $6,073 \n\nSee accompanying notes to consolidated financial statements\n\n62\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nDYNATRACE, INC.\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n1.    Description of the Business\n\nBusiness\n\nDynatrace, Inc. (“Dynatrace” or the “Company”) combines broad and deep observability, continuous runtime application security, and advanced agentic artificial intelligence (“AI”) to deliver answers and intelligent automation across information technology (“IT”) operations, development, security, business, and executive teams, enabling organizations to optimize cloud and IT operations, accelerate secure software delivery, and improve digital performance.\n\nFiscal year\n\nThe Company’s fiscal year ends on March 31. References to fiscal 2026, for example, refer to the fiscal year ended March 31, 2026.\n\n2.    Significant Accounting Policies\n\nBasis of presentation and consolidation\n\nThe 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 financial reporting. All intercompany balances and transactions have been eliminated in the accompanying consolidated financial statements.\n\nForeign currency translation\n\nThe reporting currency of the Company is the U.S. dollar. The functional currency of the Company’s principal foreign subsidiaries is the currency of the country in which each entity operates. Accordingly, assets and liabilities in the consolidated balance sheets have been translated at the rate of exchange at the balance sheet date, and revenues and expenses have been translated at average exchange rates prevailing during the period the transactions occurred. Translation adjustments have been excluded from the results of operations and are reported as accumulated other comprehensive loss within the consolidated statements of shareholders’ equity.\n\nTransaction gains and losses generated by the effect of changes in foreign currency exchange rates on recorded assets and liabilities denominated in a currency different than the functional currency of the applicable entity are recorded in “Other income (expense), net” in the consolidated statements of operations.\n\nUse of estimates\n\nThe preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the 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 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 contract costs, 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.\n\nBusiness combinations\n\nWhen the Company acquires a business, management allocates the fair value of the purchase consideration to the assets acquired and liabilities assumed. The excess of the fair value of purchase consideration over the fair values of the identifiable assets and liabilities is recorded as goodwill. Determining the fair values of identifiable assets and liabilities requires management to make estimates and assumptions, especially with respect to intangible assets. These estimates can include, but are not limited to, future expected cash flows, expected asset lives, estimated obsolescence rates, discount rates, and royalty rates. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of assets acquired and liabilities assumed, with the corresponding offset to goodwill. Acquisition-related transactions are expensed as incurred.\n\nRevenue recognition\n\nThe Company sells subscriptions, software licenses, maintenance and support, and professional services together in contracts with its customers, which include end-customers and channel partners. The Company’s software license agreements provide customers with a right to use software for a defined term. As required under applicable accounting principles, the goods and services that the Company\n\n63\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\npromises to transfer to a customer are accounted for separately if they are distinct from one another. Promised items that are not distinct are bundled as a combined performance obligation. The transaction price is allocated to the performance obligations based on the relative estimated standalone selling prices of those performance obligations.\n\nThe Company determines revenue recognition through the following steps:\n\n1.Identification of the contract, or contracts, with a customer\n\nThe Company considers the terms and conditions of the contract in identifying the contracts. The Company determines a contract with a customer to exist when the contract is approved, each party’s rights regarding the services to be transferred can be identified, the payment terms for the services can be identified, it has been determined the customer has the ability and intent to pay, and the contract has commercial substance. At contract inception, the Company will evaluate whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation. The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit, and financial information pertaining to the customer.\n\n2.Identification of the performance obligations in the contract\n\nPerformance obligations promised in a contract are identified based on the services and the products that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services and the products is separately identifiable from other promises in the contract. In identifying performance obligations, the Company reviews contractual terms, considers whether any implied rights exist, and evaluates published product and marketing information. The Company’s performance obligations generally consist of (a) subscription services; (b) software licenses; (c) maintenance and support for software licenses; and (d) professional services.\n\n3.Determination of the transaction price\n\nThe transaction price is determined based on the consideration to which the Company expects to be entitled in exchange for transferring services to the customer. 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. The Company’s contracts do not contain a significant financing component.\n\n4.Allocation of the transaction price to the performance obligations in the contract\n\nIf the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price (“SSP”) for arrangements not including subscription services or software licenses. The Company has determined that its pricing for subscription services and software licenses is highly variable and therefore allocates the transaction price to those performance obligations using the residual approach.\n\n5.Recognition of revenue when, or as a performance obligation is satisfied\n\nRevenue is recognized at the time the related performance obligation is satisfied by transferring the control of the promised service to a customer. Revenue is recognized when control of the service is transferred to the customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those services.\n\nSubscription revenue\n\nSubscription revenue relates to performance obligations for which the Company recognizes revenue over time as control of the product or service is transferred to the customer. Subscription revenue is derived from (i) Software-as-a-Service (“SaaS”) arrangements that permit customers to access and utilize the Company’s platform on a hosted basis and (ii) arrangements where the software is delivered and used on-premise as term-based licenses which is sold with maintenance. Subscription revenues from the performance obligations when sold as a SaaS arrangement are generally recognized ratably over the term of the arrangement as access is provided. For on-premise term licenses, the when-and-if available updates of the Dynatrace platform, which are part of the maintenance agreement, are critical to the continued utility of the Dynatrace platform. Therefore, the Company has determined the Dynatrace platform and the related when-and-if available updates to be a combined performance obligation. When the platform is sold as a term-based license, the revenue for the combined performance obligation is recognized ratably over the license term as maintenance is included for the duration of the license term.\n\n64\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nService revenue\n\nThe Company offers implementation, consulting and training services for the Company’s software solutions and SaaS offerings. Services fees are generally based on hourly rates. Revenues from services are recognized in the period the services are performed, provided that collection of the related receivable is reasonably assured.\n\nVariable consideration\n\nThe 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.\n\nDeferred revenue\n\nThe Company recognizes deferred revenue upon receipt of customer payment in advance of satisfying the performance obligations of the contract. Deferred revenue consists primarily of billed subscription fees related to the future service period of subscription agreements in effect at the reporting date. Short-term deferred revenue represents the unearned revenue that will be earned within 12 months of the balance sheet date. Long-term deferred revenue represents the unearned revenue that will be earned after 12 months from the balance sheet date.\n\nPayment terms\n\nPayment terms and conditions vary by contract type, although the Company’s terms generally include a requirement of payment within 30 to 60 days.\n\nContract modifications\n\nContract 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 SSP 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 generally accounts for on a prospective basis as the termination of the existing contract and the creation of a new contract.\n\nDeferred contract costs\n\nSales commissions earned by the Company’s sales force and referral fees paid to our partners are considered incremental and recoverable costs of obtaining a contract with a customer. These contract costs for new and renewal contracts are deferred and then amortized on a straight-line basis over a period of benefit which the Company has estimated to be three years. The period of benefit has been determined by taking into consideration the duration of customer contracts, the life of the technology, renewals of maintenance and other factors. Amortization expense is included in “Sales and marketing” expenses on the consolidated statements of operations.\n\nThe Company periodically reviews these contracts to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred contract costs. There were no impairment losses recorded during the periods presented.\n\nResearch and development\n\nResearch and development costs are expensed as incurred. Research and development costs primarily include the cost of programming personnel, including share-based compensation, deprecation of equipment, and facilities- and IT-related expenses.\n\nAdvertising\n\nAdvertising costs are expensed as incurred, except for certain production costs that are deferred and expensed at the first time the advertising takes place, and are included in “Sales and marketing” expense in the consolidated statements of operations. Advertising expense was $19.8 million, $32.7 million, and $37.7 million for the years ended March 31, 2026, 2025 and 2024, respectively.\n\nLeases\n\nLeases arise from contractual obligations that convey the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. At the inception of the contract, the Company determines if an arrangement contains a lease based on whether there is an identified asset and whether the Company controls the use of the identified asset. The Company also\n\n65\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\ndetermines the classification of that lease, between financing and operating, at the lease commencement date. The Company accounts for and allocates consideration to the lease and non-lease components as a single lease component.\n\nA right-of-use asset represents the Company’s right to use an underlying asset for the lease term and a lease liability represents the Company’s obligation to make payments during the lease term. Right-of-use assets are recognized at the lease commencement date for the lease liability, adjusted for initial direct costs incurred and lease incentives received. Lease liabilities are recorded at the present value of the future lease payments over the lease term. The discount rate used to determine the present value is the incremental borrowing rate as the implicit rate for the operating leases is generally not determinable. The Company determines the incremental borrowing rate of the leases by considering various factors, such as the credit rating, interest rates of similar debt instruments of entities with comparable credit ratings, jurisdictions, and the lease term.\n\nThe Company’s lease terms may include options to extend or terminate the lease. The Company generally uses the base, non-cancelable, lease term when recognizing the lease assets and liabilities, unless it is reasonably certain that the Company will exercise those options. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.\n\nThe Company does not record leases with terms of 12 months or less on the consolidated balance sheets. Lease expense is recognized on a straight-line basis over the expected lease term.\n\nConcentration of credit risk\n\nFinancial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, marketable securities and accounts receivable.\n\nThe Company maintains the majority of its cash, cash equivalents and marketable securities with major financial institutions that the Company believes to be of high credit standing. The Company maintains its cash in bank deposit accounts that, at times, may exceed federally insured limits.\n\nThe Company provides credit to customers in the normal course of business. The Company performs periodic credit evaluations and generally does not require collateral. The Company’s customer base consists of a large number of geographically-dispersed customers across multiple industries.\n\nAs of March 31, 2026 and 2025, there was one channel partner with a balance greater than 10% of accounts receivable. No end- customers had a balance greater than 10% of the Company’s accounts receivable as of March 31, 2026 and 2025. For the years ended March 31, 2026 and 2025, one channel partner accounted for 10% of revenue. No channel partners accounted for 10% or more of revenue for the year ended March 31, 2024. There were no end-customers who represented 10% or more of revenue for the years ended March 31, 2026, 2025, and 2024.\n\nCash and cash equivalents\n\nAll highly liquid securities with an original maturity of three months or less when purchased are considered cash and cash equivalents.\n\nMarketable Securities\n\nThe Company invests in commercial paper, corporate debt securities, U.S. government agency securities, and U.S. treasury securities. These marketable debt securities are classified as available-for-sale and recorded at fair value in the consolidated balance sheet.\n\nUnrealized gains and losses on available-for-sale securities, net of tax, are included within accumulated other comprehensive loss in the 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 securities and it is more likely than not that the Company will not be required to sell these securities before recovery of their amortized cost basis. Based on the evaluation of available evidence, the Company does not believe any unrealized losses on its marketable securities as of March 31, 2026 represent credit losses.\n\nRealized gains and losses from the sales of available-for-sale securities are based on the specific identification method and are recorded in the consolidated statement of income as “Other income (expense), net”.\n\n66\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nAccounts receivable, net\n\nAccounts receivable are recorded at the invoiced amount, net of allowance for credit losses. The Company regularly reviews the adequacy of the allowance for credit losses based on a combination of factors. In establishing any required allowance, management considers historical losses adjusted for current market conditions, the customers’ financial condition, the amount of any receivables in dispute, the current receivables aging, current payment terms and expectations of forward-looking loss estimates. Allowance for credit losses was $3.8 million and $3.5 million as of March 31, 2026 and 2025, respectively.\n\nProperty and equipment, net\n\nThe Company records property and equipment, net, at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. The following table presents the estimated useful lives of the Company’s property and equipment:\n\nComputer equipment and software\n3 - 5 years\n\nFurniture and fixtures\n5 - 10 years\n\nLeasehold improvements\nLesser of 10 years or the lease term\n\nGoodwill and intangible assets\n\nGoodwill is evaluated for impairment annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The Company has elected to first assess the qualitative factors to determine if it is more likely than not that the fair value of the underlying assets is less than its carrying amount. If the Company determines that it is more likely than not that the underlying assets’ fair value is less than its carrying amount in the qualitative analysis, then a quantitative goodwill impairment test will be performed by comparing the fair value of the assets to their carrying value. For the purposes of impairment testing, the Company is evaluated as one reporting unit.\n\nIntangible assets consist primarily of customer relationships, developed technology, tradenames and trademarks, all of which have a finite useful life. Intangible assets are amortized based on either the pattern in which the economic benefits of the intangible assets are estimated to be realized or on a straight-line basis, which approximates the manner in which the economic benefits of the intangible asset will be consumed.\n\nThere was no impairment of goodwill during the years ended March 31, 2026, 2025 and 2024.\n\nCapitalized software\n\nQualifying software development costs associated with software developed, acquired or modified for internal use is capitalized. Costs incurred during the preliminary planning and evaluation stage of the project and during the post implementation stages of the project are expensed as incurred. Costs incurred during the application development stage of the project are capitalized. These capitalized costs consist of internal compensation related costs and direct external costs. The amortization period for these capitalized costs is generally three to five years depending on the project.\n\nDuring the year ended March 31, 2024, the Company entered into a license agreement with an application security provider, resulting in $10.3 million of capitalized costs related to software developed for internal use. During the years ended March 31, 2026 and 2025, the Company did not capitalize costs for software developed for internal use. Amortization of software developed for internal use was $2.1 million during the years ended March 31, 2026 and 2025 and $0.9 million during the year ended March 31, 2024 and is recorded within “Cost of subscription” in the consolidated statements of operations.\n\nCosts related to software developed for sale are expensed as research and development until technological feasibility has been established for the product. Once technological feasibility has been established for the product, all software costs are capitalized until the product is available for general release to customers. To date, the software development costs have not been capitalized as the cost incurred and time between technological feasibility and general product release was insignificant. As such, these costs are expensed as incurred and recorded in “Research and development” in the consolidated statements of operations.\n\nImpairment of long-lived assets\n\nLong-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by an asset or asset group to the carrying value of the asset. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is estimated by the Company using discounted cash flows and other market-related valuation models, including earnings multiples and comparable asset market values. In 2026, the\n\n67\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nCompany recorded impairment losses of $14.8 million on operating lease right-of-use assets and $3.7 million on related property and equipment. For further information, refer to Note 12, Leases. The Company did not incur any impairment losses during the years ended March 31, 2025 and 2024.\n\nIncome taxes\n\nThe Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the consolidated financial statements and income tax bases of assets and liabilities and net operating loss and tax credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date. The Company records deferred tax liabilities that arise from outside basis differences in foreign subsidiaries that are not considered indefinitely reinvested.\n\nDeferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all of the deferred taxes will not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations.\n\nThe Company records uncertain tax positions on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that that the tax positions will be sustained on the basis of the technical merits of the position; and (2) for those tax positions that meet the more likely than not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line the accompanying consolidated statement of operations.\n\nThe Company treats Global Intangible Low Taxed Income (\"GILTI\") as a period cost.\n\nFair value of assets and liabilities\n\nAssets and liabilities recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The hierarchical levels are as follows:\n\n•Level 1: Observable inputs that reflect quoted prices for identical assets or liabilities in active markets;\n\n•Level 2: Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and\n\n•Level 3: Unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.\n\nThe Company’s financial instruments consist of cash equivalents, marketable securities, accounts receivable, accounts payable and other current liabilities. Cash equivalents and marketable securities are measured at fair value on a recurring basis. The carrying values of accounts receivable, accounts payable and other current liabilities are stated at their carrying value, which approximates their fair values due to their short maturities.\n\nShare repurchase programs\n\nShare repurchases are recorded on the trade date. Repurchased shares are immediately retired. The Company records all consideration paid for share repurchases, including commissions and excise taxes, as applicable, as a reduction to shareholders’ equity. For additional information, refer to Note 14, Shareholders’ Equity.\n\nShare-based compensation\n\nThe Company measures the cost of employee services received in exchange for an award of equity instruments based upon the grant-date fair value of the award.\n\nTime-based restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) vest based upon continued service. The fair value of time-based RSUs and RSAs is determined by the closing price of the Company’s common stock on the grant date. Share-based compensation expense from time-based RSUs and RSAs is recognized on a straight-line attribution method over the requisite service period.\n\nPerformance-based RSUs vest based upon continued service and achievement of certain performance conditions. The fair value of performance-based RSUs is determined by the closing price of the Company’s common stock on the grant date. Share-based\n\n68\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\ncompensation expense from performance-based RSUs is recognized over the requisite service period following the accelerated attribution method based upon the probability that the performance condition will be satisfied.\n\nMarket-based RSUs vest based upon continued service and achievement of certain market conditions. The fair value of market-based RSUs is calculated using the Monte Carlo simulation model. Share-based compensation expense from market-based RSUs is recognized following the accelerated attribution method over the requisite service period.\n\nStock options generally vest based upon continued service. The fair value of stock options is calculated using the Black-Scholes option-pricing model. Share-based compensation expense from stock options is recognized on a straight-line attribution method over the requisite service period.\n\nThe purchase rights under the Employee Stock Purchase Plan (“ESPP”) are measured using the Black-Scholes option-pricing model. Share-based compensation expense from the purchase rights issued under the ESPP is recognized on a straight-line attribution method over the offering period.\n\nForfeitures are accounted for in the period in which the awards are forfeited.\n\nNet income per share\n\nBasic net income per share is calculated by dividing the net income for the period by the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed by giving effect to all potentially dilutive securities, including stock options, RSUs, RSAs, and the impact of the purchase rights of the ESPP.\n\nRecently adopted accounting pronouncements\n\nIn December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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. The Company adopted ASU 2023-09 on a prospective basis in its consolidated financial statements for the fiscal year ended March 31, 2026. Refer to Note 9, Income Taxes, for the inclusion of the new disclosures required.\n\nRecently issued accounting pronouncements\n\nIn 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.\n\nIn July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which introduces a practical expedient for estimating the expected credit losses on current accounts receivables and contract assets. ASU 2025-05 is effective for annual periods beginning after December 15, 2025, and interim periods within those annual reporting periods, which is the Company’s fiscal 2027. The Company does not expect ASU 2025-05 will have a material impact on its consolidated financial statements and disclosures.\n\nIn 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 the software development stages in the capitalization guidance and introduces a more judgment based capitalization approach. 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.\n\n69\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\n3.    Revenue Recognition\n\nDisaggregation of revenue\n\nThe following table is a summary of the Company’s total revenue by geographic region based on customer location (in thousands, except percentages):\n\nFiscal Year Ended March 31,\n\n202620252024\n\nAmount%Amount%Amount%\n\nNorth America$1,017,463 50%$876,756 52%$739,747 52%\n\nEurope, Middle East and Africa648,925 32%526,416 31%432,873 30%\n\nAsia Pacific193,072 10%161,784 9%141,403 10%\n\nLatin America158,927 8%133,727 8%116,507 8%\n\nTotal revenue$2,018,387 $1,698,683 $1,430,530 \n\nEffective 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.\n\nFor the years ended March 31, 2026, 2025, and 2024, the United States was the only country that represented more than 10% of the Company’s revenues in any period, constituting $927.7 million and 46%, $807.0 million and 48%, and $682.2 million and 48% of total revenue, respectively.\n\nDeferred contract costs\n\nThe following table represents a rollforward of the Company’s deferred contract costs (in thousands):\n\nFiscal Year Ended March 31,\n\n202620252024\n\nBeginning balance$205,192 $192,245 $169,261 \n\nAdditions to deferred contract costs167,234 131,510 121,100 \n\nAmortization of deferred contract costs(131,820)(118,563)(98,116)\n\nEnding balance$240,606 $205,192 $192,245 \n\nDeferred revenue\n\nRevenue recognized during the years ended March 31, 2026, 2025, and 2024 which was included in the deferred revenue balances at the beginning of each respective period was $1,079.3 million, $975.7 million, and $800.0 million.\n\nRemaining performance obligations\n\nAs of March 31, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations was $3,491.6 million, which consists of both billed consideration in the amount of $1,294.9 million and unbilled consideration in the amount of $2,196.7 million that the Company expects to recognize as subscription and service revenue. The Company expects to recognize 53% of this amount as revenue in the year ending March 31, 2027 and the remainder thereafter.\n\nContract assets\n\nAs of March 31, 2026 and 2025, contract assets of $19.8 million and $1.6 million, respectively, are included in accounts receivable, net, on the Company’s consolidated balance sheets.\n\n4.    Business Combinations\n\nDevCycle\n\nOn January 13, 2026, the Company acquired certain assets from Taplytics Inc. (“DevCycle”), a feature management platform, to help developers, site reliability engineers, and platform teams bring progressive delivery of AI-native applications directly into the Dynatrace platform. The purchase consideration consisted of $6.0 million of cash paid at closing and $0.8 million to be paid within 12 months after closing.\n\n70\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nThe fair value of the purchase price was allocated to the identifiable assets acquired and liabilities assumed as of the acquisition date, with the excess recorded to goodwill. The Company acquired $0.8 million of net assets, including $1.6 million of intangible assets, resulting in goodwill of $6.0 million. The goodwill was allocated to the Company’s one reporting unit.\n\nRunecast Solutions Limited\n\nOn March 1, 2024, the Company acquired all of the outstanding equity of Runecast Solutions Limited (“Runecast”), a provider of software solutions that provide insights for security compliance, vulnerability assessment, and configuration management for complex, on-premises, hybrid and multi-cloud IT environments. This acquisition expanded the Company’s platform from the addition of Runecast’s technology and experienced team.\n\nThe purchase consideration consisted of $26.1 million of cash paid at closing and $2.3 million in deferred cash payments for a post-closing purchase price adjustment and a holdback paid within 15 months after the acquisition date to satisfy indemnification claims. The Company paid $2.2 million and $0.1 million of the deferred cash considerations during the years ended March 31, 2026 and 2025, respectively.\n\nIn connection with the acquisition of Runecast, $9.0 million of RSAs were issued to the previous owners subject to continuing employment and certain indemnification clauses. For the years ended March 31, 2026, 2025, and 2024, the Company recognized $2.9 million, $3.7 million, and $0.3 million of share-based compensation expense for these RSAs, respectively.\n\nThe fair value of the purchase price was allocated to the identifiable assets acquired and liabilities assumed as of the acquisition date, with the excess recorded to goodwill. The Company acquired $3.2 million of net assets, including $7.5 million of intangible assets, resulting in goodwill of $25.2 million. The fair value of acquired assets and assumed liabilities was finalized in March 2025.\n\nGoodwill related to Runecast is primarily attributable to expected synergies and acquired skilled workforce. The goodwill was allocated to the Company’s one reporting unit. The Company identified developed technology and customer relationships as the acquired intangible assets. The estimated fair value of the developed technology and customer relationships was $7.3 million and $0.2 million, respectively, which was based on a valuation using the income approach. The estimated useful lives of the developed technology and customer relationships is seven years and four years, respectively. The acquired goodwill and intangible assets were not deductible for tax purposes.\n\nRookout, Ltd.\n\nOn August 31, 2023, the Company acquired all of the outstanding equity of Rookout, Ltd. (“Rookout”), a provider of enterprise-ready and privacy-aware solutions that enable developers to troubleshoot and debug actively running code in Kubernetes-hosted cloud-native applications. This acquisition expanded the Company’s platform from the addition of Rookout’s technology and experienced team. The purchase consideration of Rookout was $33.4 million, after considering certain adjustments, and was paid from cash on hand.\n\nThe fair value of the purchase price was allocated to the identifiable assets acquired and liabilities assumed as of the acquisition date, with the excess recorded to goodwill. The Company acquired $6.0 million of net assets, including $7.8 million of intangible assets, resulting in goodwill of $27.4 million. The fair value of acquired assets and assumed liabilities was finalized in August 2024.\n\nGoodwill related to Rookout was primarily attributable to expected synergies and acquired skilled workforce. The goodwill was allocated to the Company’s one reporting unit. The Company identified developed technology as the sole acquired intangible asset. The estimated fair value of the developed technology was $7.8 million, which was based on a valuation using the income approach. The estimated useful life of the developed technology is seven years. The acquired goodwill and intangible asset were not deductible for tax purposes.\n\n71\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\n5.     Investments and Fair Value Measurements\n\nThe following table summarizes the amortized cost, unrealized gains and losses, and fair value of the Company’s available-for-sale securities, including those securities classified within “Cash and cash equivalents” in the consolidated balance sheets (in thousands):\n\nMarch 31, 2026\n\nAmortized CostGross Unrealized GainsGross Unrealized LossesFair Value\n\nU.S. treasury securities$92,611 $74 $(105)$92,580 \n\nCorporate debt securities25,491 23 (44)25,470 \n\nU.S. government agency securities3,987 — (1)3,986 \n\nCommercial paper2,588 — — 2,588 \n\nTotal$124,677 $97 $(150)$124,624 \n\nMarch 31, 2025\n\nAmortized CostGross Unrealized GainsGross Unrealized LossesFair Value\n\nU.S. treasury securities$108,045 $223 $(12)$108,256 \n\nCorporate debt securities$22,457 $71 $(14)22,514 \n\nU.S. government agency securities12,744 2 (3)12,743 \n\nCommercial paper7,778 2 (1)7,779 \n\nTotal$151,024 $298 $(30)$151,292 \n\nAs of March 31, 2026, the fair values of available-for-sale securities by remaining contractual maturity are as follows (in thousands):\n\nMarch 31, 2026\n\nDue within one year$74,881 \n\nDue in one year through five years49,743 \n\n   Total$124,624 \n\nThe Company offers a non-qualified deferred compensation plan to eligible U.S. employees and directors. The Company held $2.2 million and $0.7 million of securities in mutual funds that are associated with this plan and were classified as restricted trading securities as of March 31, 2026 and 2025, respectively. These securities are not included in the tables above but are included as marketable securities in the consolidated balance sheets.\n\n72\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nThe following tables present the Company’s financial assets that have been measured at fair value on a recurring basis as of March 31, 2026 and 2025, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):\n\nMarch 31, 2026\n\nLevel 1Level 2Level 3Total\n\nCash equivalents:\n\nMoney market funds$528,169 $— $— $528,169 \n\nMarketable securities:\n\nMutual funds2,165 — — 2,165 \n\nU.S. treasury securities— 92,580 — 92,580 \n\nCorporate debt securities— 25,470 — 25,470 \n\nU.S. government agency securities— 3,986 — 3,986 \n\nCommercial paper— 2,588 — 2,588 \n\nTotal financial assets$530,334 $124,624 $— $654,958 \n\nMarch 31, 2025\n\nLevel 1Level 2Level 3Total\n\nCash equivalents:\n\nMoney market funds$679,675 $— $— $679,675 \n\nU.S. treasury securities— 1,577 — 1,577 \n\nU.S. government agency securities— 996 — 996 \n\nCommercial paper— 1,596 — 1,596 \n\nMarketable securities:\n\nMutual funds714 — — 714 \n\nU.S. treasury securities— 106,679 — 106,679 \n\nCorporate debt securities— 22,514 — 22,514 \n\nU.S. government agency securities— 11,747 — 11,747 \n\nCommercial paper— 6,183 — 6,183 \n\nTotal financial assets$680,389 $151,292 $— $831,681 \n\nThe Company recorded interest income from its cash, cash equivalents, and marketable securities of $48.6 million, $49.3 million, $38.7 million for the years ended March 31, 2026, 2025, and 2024, respectively.\n\n6.    Prepaid Expenses and Other Current Assets\n\nPrepaid expenses and other current assets consists of the following (in thousands):\n\nMarch 31,\n\n20262025\n\nPrepaid expenses$66,758 $59,552 \n\nIncome taxes refundable28,080 11,576 \n\nOther18,813 12,773 \n\nPrepaid expenses and other current assets$113,651 $83,901 \n\n73\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\n7.    Property and Equipment, Net\n\nThe following table summarizes, by major classification, the components of property and equipment (in thousands):\n\nMarch 31,\n\n20262025\n\nComputer equipment and software$43,740 $37,841 \n\nFurniture and fixtures19,837 19,815 \n\nLeasehold improvements71,655 58,627 \n\nOther13,805 12,584 \n\nTotal property and equipment149,037 128,867 \n\nLess: accumulated depreciation and amortization(76,044)(67,345)\n\nProperty and equipment, net$72,993 $61,522 \n\nDepreciation of property and equipment totaled $18.4 million, $19.2 million, and $15.5 million for the years ended March 31, 2026, 2025, and 2024, respectively.\n\n8.    Goodwill and Intangible Assets, Net\n\nChanges in the carrying amount of goodwill on a consolidated basis for fiscal 2026 consists of the following (in thousands):\n\nMarch 31, 2026\n\nBalance, beginning of year$1,336,435 \n\nGoodwill from acquisitions5,961 \n\nForeign currency impact7,860 \n\nBalance, end of year$1,350,256 \n\nIntangible assets, net, excluding goodwill, consists of the following (in thousands):\n\nMarch 31, 2026 (1)\n\nGross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted Average Useful Life (in months)\n\nCapitalized software$35,710 $(13,057)$22,653 78\n\nCustomer relationships312 (115)197 48\n\nTotal intangible assets$36,022 $(13,172)$22,850 \n\nMarch 31, 2025\n\nGross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted Average Useful Life (in months)\n\nCapitalized software$221,966 $(196,582)$25,384 103\n\nCustomer relationships351,761 (351,611)150 120\n\nTrademarks and tradenames55,003 (55,003)— 120\n\nTotal intangible assets$628,730 $(603,196)$25,534 \n\n_________________\n\n(1) Fully amortized intangible assets related to prior acquisitions are no longer presented as of March 31, 2026.\n\nAmortization of intangible assets totaled $5.6 million, $28.9 million, and $39.4 million for the years ended March 31, 2026, 2025, and 2024, respectively.\n\n74\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nAs of March 31, 2026, the estimated future amortization expense of the Company’s intangible assets is as follows (in thousands):\n\nFiscal Years Ending March 31,Amount\n\n2027$5,835 \n\n20285,831 \n\n20294,922 \n\n20303,655 \n\n20311,957 \n\nThereafter650 \n\nTotal$22,850 \n\n9.    Income Taxes\n\nIncome before income taxes includes the following (in thousands):\n\nFiscal Year Ended March 31,\n\n202620252024\n\nDomestic$66,058 $138,333 $82,033 \n\nForeign233,703 85,096 72,882 \n\nTotal$299,761 $223,429 $154,915 \n\nThe income tax provision includes the following (in thousands):\n\nFiscal Year Ended March 31,\n\n202620252024\n\nCurrent tax position:\n\nFederal$75,229 $93,563 $44,568 \n\nState955 5,530 (6,236)\n\nForeign35,840 33,729 21,839 \n\nTotal current tax position112,024 132,822 60,171 \n\nDeferred tax provision:\n\nFederal8,844 (58,527)(52,712)\n\nState1,119 (4,201)(3,500)\n\nForeign15,105 (330,349)(3,676)\n\nTotal deferred tax provision25,068 (393,077)(59,888)\n\nTotal income tax expense (benefit)$137,092 $(260,255)$283 \n\nDuring the year ended March 31, 2025, 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.\n\n75\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nIn accordance with ASU 2023-09 disclosure requirements, the Company’s income tax expense differs from the amounts computed by applying the U.S. federal income tax rate of 21% to pre-tax income for the year ended March 31, 2026 as a result of the following (in thousands, except for percentages):\n\nFiscal Year Ended March 31, 2026\n\nAmountPercent\n\nIncome tax expense at U.S. federal statutory income tax rate$62,950 21.0 %\n\nState and local income taxes, net of federal income tax effect (1)\n4,151 1.4 %\n\nForeign tax effects\n\nAustria\n\nEmployee compensation(4,893)(1.6)%\n\nOther(1,465)(0.5)%\n\nBrazil\n\nWithholding tax4,618 1.5 %\n\nOther(54)— %\n\nIsrael\n\nTax effect of intercompany IP transfer3,304 1.1 %\n\nChanges in valuation allowances(3,758)(1.3)%\n\nOther646 0.2 %\n\nPoland\n\nResearch and development tax credits(4,875)(1.6)%\n\nChanges in valuation allowances4,290 1.4 %\n\nOther(578)(0.2)%\n\nSwitzerland\n\nStatutory tax rate difference between Switzerland and U.S.(23,412)(7.8)%\n\nCantonal and communal income taxes6,821 2.3 %\n\nOther306 0.1 %\n\nOther foreign jurisdictions18,770 6.3 %\n\nEffect of cross-border tax laws\n\nGILTI, net of credits26,548 8.8 %\n\nImpact of foreign branches, net of credits19,398 6.5 %\n\nU.S. tax on foreign IP royalties6,235 2.1 %\n\nOther(2,416)(0.8)%\n\nNontaxable or nondeductible items\n\nEmployee compensation12,964 4.3 %\n\nOther2,374 0.8 %\n\nChanges in unrecognized tax benefits3,325 1.1 %\n\nOther adjustments1,843 0.6 %\n\nTotal income tax expense$137,092 45.7 %\n\n(1) State and local tax in California, Washington D.C., Illinois, Michigan, and Detroit, Michigan made up the majority (greater than 50%) of the tax effect in this category.\n\n76\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nIn accordance with disclosure requirements prior to the adoption of ASU 2023-09, the Company’s income tax (benefit) expense differs from the amounts computed by applying the U.S. federal income tax rate of 21% to pre-tax income for the years ended March 31, 2025 and 2024 as a result of the following (in thousands):\n\nFiscal Year Ended March 31,\n\n20252024\n\nIncome tax expense at U.S. federal statutory income tax rate$46,920 $32,532 \n\nState and local tax expense, net of federal benefits7,296 306 \n\nForeign tax rate differential2,129 3,318 \n\nU.S. effects of foreign branch income12,147 8,662 \n\nNon-taxable income and non-deductible expenses860 1,742 \n\nTax credits(58,761)(41,740)\n\nGILTI inclusion and foreign-derived intangible income deduction\n(14,563)(13,905)\n\nEmployee compensation8,622 (7,188)\n\nChanges in uncertain tax positions6,534 (14,835)\n\nChanges in valuation allowance27,116 13,080 \n\nForeign withholding tax18,414 18,469 \n\nInflation and currency related adjustments100 851 \n\nIP Transfer(320,902)— \n\nOther adjustments3,833 (1,009)\n\nTotal income tax (benefit) expense$(260,255)$283 \n\nIn accordance with ASU 2023-09 disclosure requirements, cash paid for income taxes, net of refunds received, by jurisdiction for the year ended March 31, 2026 includes the following (in thousands):\n\nFiscal Year Ended March 31, 2026\n\nU.S. federal$70,826 \n\nU.S. state and local6,229 \n\nForeign:\n\nAustria6,778 \n\nBrazil7,058 \n\nOther26,693 \n\nTotal foreign40,529 \n\nTotal cash paid for income taxes, net of refunds$117,584 \n\nCash paid for income taxes, net of refunds, for the years ended March 31, 2025 and 2024 was $118.0 million and $81.4 million, respectively.\n\n77\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nTemporary differences and carryforwards that give rise to a significant portion of deferred tax assets and liabilities are as follows (in thousands):\n\nMarch 31,\n\n20262025\n\nDeferred tax assets:\n\nDeferred revenue$32,386 $32,055 \n\nCapitalized research and development costs147,630 155,368 \n\nAccrued expenses25,619 21,829 \n\nShare-based compensation28,586 28,012 \n\nOperating lease liabilities57,481 24,249 \n\nNet operating loss carryforwards26,736 24,312 \n\nIntangible assets270,453 303,835 \n\nTax credit carryforwards69,392 59,599 \n\nOther5,544 4,683 \n\nTotal deferred tax assets663,827 653,942 \n\nValuation allowance(71,573)(68,222)\n\nTotal deferred tax assets, net valuation allowance592,254 585,720 \n\nDeferred tax liabilities:\n\nOperating lease right-of-use assets49,219 22,267 \n\nDeferred contract costs34,271 33,632 \n\nOther1,965 690 \n\nTotal deferred tax liabilities85,455 56,589 \n\nNet deferred tax assets$506,799 $529,131 \n\nAs of March 31, 2026, the Company continues to maintain a valuation allowance of $39.7 million with respect to certain U.S. federal and state deferred tax assets that, due to their nature, are not likely to be realized. In addition, the Company continues to maintain a valuation allowance of $31.9 million with respect to its deferred tax assets in certain non-U.S. jurisdictions. The net change in the valuation allowance during the year ended March 31, 2026 was $3.4 million, of which $1.5 million impacted tax expense.\n\nAs of March 31, 2026, the Company had non-U.S. net operating loss carryforwards of $204.0 million, of which $190.0 million expire in periods through 2033 if not utilized, and the remaining balance of $14.0 million may be carried forward indefinitely. The Company also had non-U.S. tax credit carryforwards of $24.0 million, of which $23.1 million expire in periods through 2032 if not utilized, and the remaining balance of $0.9 million may be carried forward indefinitely. Deferred tax assets of $25.1 million related to non-U.S. net operating losses and tax credit carryforwards are subject to valuation allowances as of March 31, 2026.\n\nAs of March 31, 2026, the Company had U.S. state and local net operating loss carryforwards of $34.1 million, of which $32.4 million expire in periods through 2043 if not utilized, and the remaining balance of $1.7 million may be carried forward indefinitely. The Company also had U.S. federal tax credit carryforwards of $45.4 million, which expire in periods through 2036. Deferred tax assets of $39.7 million primarily related to U.S. federal tax credit carryforwards are subject to valuation allowances as of March 31, 2026.\n\nAs of March 31, 2026, the Company had unremitted foreign earnings associated with certain foreign subsidiaries that are not indefinitely reinvested. Any taxes to be incurred upon repatriation of these earnings, as well as any related deferred tax liabilities, are not expected to be material.\n\nThe amount of gross unrecognized tax benefits was $23.8 million and $20.2 million as of March 31, 2026 and 2025, respectively, all of which would favorably affect the Company’s effective tax rate if recognized in future periods.\n\n78\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nThe following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the years ended March 31, 2026, 2025, and 2024 (in thousands):\n\nFiscal Year Ended March 31,\n\n202620252024\n\nGross unrecognized tax benefit, beginning of year$20,168 $13,668 $29,110 \n\nGross increases to tax positions for the current period5,602 6,725 — \n\nGross increases to tax positions for prior periods6,948 1,689 721 \n\nGross decreases to tax positions for prior periods(7,428)— (4,277)\n\nDecreases related to settlements— — (168)\n\nDecreases due to lapse of statutes of limitations(1,504)(1,922)(11,689)\n\nForeign currency translation$(26)$8 $(29)\n\nGross unrecognized tax benefit, end of year$23,760 $20,168 $13,668 \n\nAs of March 31, 2026 and 2025, the net interest and penalties payable associated with uncertain tax positions was $1.2 million and $0.9 million, respectively. For the years ended March 31, 2026, 2025, and 2024, the Company recognized a benefit of $0.3 million, $0.3 million, and $1.4 million, respectively, related to interest and penalties.\n\nThe Company files tax returns in U.S. federal, state, and foreign jurisdictions and the tax returns are subject to examination by various domestic and international tax authorities. As of March 31, 2026, the Company has open U.S. federal tax years back to fiscal year 2023. The Company also has open years in certain significant state jurisdictions back to fiscal year 2019, and foreign jurisdictions back to 2015. These open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations due to the amount, timing or inclusion of revenue and expenses.\n\n10.    Accrued Expenses\n\nAccrued expenses, current consists of the following (in thousands):\n\nMarch 31,\n\n20262025\n\nAccrued employee-related expenses$153,488 $127,712 \n\nAccrued tax liabilities46,212 47,591 \n\nAccrued payables32,936 18,733 \n\nAccrued partner fees26,707 19,750 \n\nIncome taxes payable\n25,903 25,007 \n\nOther17,014 13,710 \n\nTotal accrued expenses, current$302,260 $252,503 \n\n11.    Long-term Debt\n\nIn 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 March 31, 2026 and 2025, there were no amounts outstanding under the Credit Facility. There were $1.0 million and $0.8 million of letters of credit issued as of March 31, 2026 and 2025, respectively. The Company had $399.0 million and $399.2 million of availability under the Credit Facility as of March 31, 2026 and 2025, respectively.\n\nBorrowings 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.\n\nThe 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\n\n79\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\napplicable margin, as defined per the Credit Facility, applied to the daily average face amount of letters of credit; and (iv) customary administrative fees.\n\nDebt 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 consolidated balance sheets and are being amortized into interest expense over the contractual term of the Credit Facility. There were $0.6 million and $1.0 million of unamortized debt issuance costs as of March 31, 2026 and 2025, respectively.\n\nPursuant 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. As of March 31, 2026, the Company was in compliance with all applicable covenants.\n\nInterest expense\n\nFor the years ended March 31, 2026, 2025, and 2024, the Company recognized $0.8 million, $1.0 million, and $1.4 million in interest expense and amortization of debt issuance costs and original issuance discount, respectively.\n\n12.    Leases\n\nThe Company leases office space under non-cancelable operating leases which expire at various dates from fiscal 2027 to 2037. As of March 31, 2026, the weighted average remaining lease term was 8.0 years and the weighted average discount rate was 4.0%. The Company does not have any finance leases.\n\nThe following table presents information about leases on the consolidated statements of operations (in thousands):\n\nFiscal Year Ended March 31,\n\n202620252024\n\nOperating lease expense$17,205 $15,282 $15,522 \n\nShort-term lease expense\n$2,254 $2,591 $2,033 \n\nVariable lease expense\n$1,542 $1,412 $1,585 \n\nThe following table presents supplemental cash flow information about the Company’s leases (in thousands):\n\nFiscal Year Ended March 31,\n\n202620252024\n\nCash paid for amounts included in the measurement of lease liabilities$19,648 $19,950 $18,908 \n\nOperating lease assets obtained in exchange for new operating lease liabilities$104,866 $21,198 $10,470 \n\nDuring the year ended March 31, 2026, the Company identified indicators of impairment related to certain leased office spaces due to changes in its utilization of these facilities, including the decision to cease use of certain locations and pursue sublease arrangements. As a result, the Company performed a recoverability test on the related asset groups, which included the right‑of‑use asset and associated leasehold improvements. The estimated undiscounted future cash flows were less than the carrying value of the asset group, and therefore the Company recorded an impairment loss of $18.5 million which represents the aggregate amount by which the carrying values of the related asset groups exceeded its estimated fair value.\n\nTo calculate the fair value of the asset groups, the Company estimated the undiscounted cash flow models based on market participant assumptions, including projected sublease income over the remaining lease term, the projected downtime prior to the commencement of the sublease, and the applicable discount rate.\n\n80\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nAs of March 31, 2026, remaining maturities of lease liabilities were as follows (in thousands):\n\nFiscal Years Ending March 31,Amount\n\n2027$28,358 \n\n202825,437 \n\n202923,773 \n\n203022,586 \n\n203120,130 \n\nThereafter71,515 \n\nTotal operating lease payments191,799 \n\nLess: imputed interest(27,475)\n\nTotal operating lease liabilities$164,324 \n\nAs of March 31, 2026, the Company had a commitment of $4.1 million for an operating lease that has not yet commenced, and therefore is not included in the right-of-use assets or operating lease liabilities. This operating lease is expected to commence during fiscal year 2027, with a lease term of five years.\n\n13.    Commitments and Contingencies\n\nLegal matters\n\nThe 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.\n\nPurchase obligations\n\nThe Company’s purchase obligations are primarily related to cloud-based hosting costs, business technology software and support, and sales and marketing activities. As of March 31, 2026, the future minimum payments for the Company’s purchase obligations were as follows (in thousands):\n\nFiscal Years Ending March 31,Amount\n\n2027$152,459 \n\n2028164,767 \n\n2029103,787 \n\n2030104,315 \n\nTotal purchase obligations$525,328 \n\n14.    Shareholders’ Equity\n\nShare Repurchases\n\nIn May 2024, the Company announced a share repurchase program for up to $500 million of common stock, which was completed in February 2026.\n\nOn February 9, 2026, the Company announced a new share repurchase program under which it is authorized to purchase up to $1 billion of its common stock from time to time on the open market or through privately negotiated transactions, including, without limitation, through Rule 10b5-1 trading plans, any other legally permissible means, or any combination of the foregoing. The new share repurchase program has no time limit and does not obligate the Company to acquire any specific dollar amount or to acquire any specific number of shares on any particular timetable or at all. The number of shares to be repurchased will depend on market conditions and other factors. Repurchases under the program are expected to be funded from a combination of existing cash balances and future cash flow.\n\nFor the years ended March 31, 2026 and 2025, the Company repurchased and retired 11.4 million and 3.4 million shares of its common stock for a total cost, including commissions, of $478.7 million and $172.6 million, respectively. For the year ended March 31, 2026, the Company recognized $1.7 million of excises taxes as part of the cost of shares repurchased, which was also included within “Accrued expenses, current” in the consolidated balance sheets. For the year ended March 31, 2025, the Company was not subject to the 1% excise tax under the Inflation Reduction Act of 2022. As of March 31, 2026, $848.6 million remained available for future repurchases.\n\n81\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\n15.    Share-based Compensation\n\nThe following table summarizes the components of total share-based compensation expense included in the consolidated statements of operations for each period presented (in thousands):\n\nFiscal Year Ended March 31,\n\n202620252024\n\nCost of revenue$40,276 $36,924 $26,622 \n\nResearch and development114,110 100,866 69,543 \n\nSales and marketing84,480 77,336 65,762 \n\nGeneral and administrative60,760 56,577 46,969 \n\nTotal share-based compensation expense$299,626 $271,703 $208,896 \n\nThe total income tax benefit recognized in the consolidated statements of operations for share-based compensation arrangements was $66.4 million, $68.5 million, and $64.1 million for the years ended March 31, 2026, 2025, and 2024, respectively.\n\nAmended and Restated 2019 Equity Incentive Plan\n\nIn July 2019, the Company’s Board of Directors (the “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.\n\nThe 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 March 31, 2026, 63,036,517 shares of common stock were available for future issuance under the Equity Incentive Plan.\n\nThe awards granted under the Equity Incentive Plan have varying terms but generally vest over a three- or four-year period, upon satisfaction of a service-based vesting condition, with 33% and 25% vesting one year after the grant date and the remaining vesting ratably on a quarterly basis over two and three years for three-year and four-year grants, respectively. From time to time, the Company also grants performance-based and market-based awards to certain key employees that generally vest over a three- or four-year period upon satisfaction of certain financial performance and relative total stockholder return performance targets established and approved by the Company’s Board for each fiscal year.\n\nRestricted shares and units\n\nThe following table provides a summary of the changes in the number of RSUs and RSAs for the year ended March 31, 2026:\n\nNumber of RSUs\nWeighted Average\n\nGrant Date Fair Value\n\nNumber of RSAs\n\nWeighted Average\n\nGrant Date Fair Value\n\n(in thousands)(per share)(in thousands)(per share)\n\nBalance, March 31, 202510,024 $48.33 95 $49.05 \n\nGranted7,132 53.72 4149.05 \n\nVested(5,679)47.97 (75)49.05 \n\nForfeited(1,074)50.85 — — \n\nBalance, March 31, 202610,403 $51.96 61 $49.05 \n\nRSUs outstanding as of March 31, 2026 were comprised of 9.4 million RSUs with only service conditions and 1.0 million RSUs with both service and performance or market-based conditions (“PSUs”).\n\n82\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nThe Company grants 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 date.\n\nThe Financial PSUs generally vest 33% one year after the grant date and the remaining 67% vest ratably on a quarterly basis over the following two years. The number of shares that may be earned pursuant to the Financial PSUs is based on specific Company metrics related to the fiscal year that the award was granted.\n\nThe rTSR PSUs generally vest 33% annually after the grant date. The number of shares that may be earned pursuant to the rTSR PSUs granted 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.\n\nThe Company estimated the fair value of rTSR PSUs on grant date using the Monte Carlo simulation model with the following assumptions:\n\nFiscal Year Ended March 31,\n\n20262025\n\nExpected dividend yield——\n\nExpected volatility of the Company\n35.3%\n\n44.5% - 44.8%\n\nAverage expected volatility of peer group\n49.0%\n\n48.5% - 49.2%\n\nExpected term (years)\n0.8 - 2.8\n\n0.6 - 2.8\n\nRisk-free interest rate\n3.9%\n\n3.9% - 4.5%\n\nThe Company has not paid and does not expect to pay dividends. Consequently, the Company uses an expected dividend yield of zero. The expected volatility of the Company is based on the historical volatility of the Company’s common stock and the average expected volatility of the peer group is based on the average historical volatility of the constituents of the Russell 3000 index. The computation of expected term is based upon the remaining term of each performance period upon grant date. The risk-free interest rate is based on the continuously compounded U.S. Treasury yield curve in effect at the time of grant that corresponds with the longest remaining performance period.\n\nThe weighted average grant-date fair value of RSUs granted during fiscal 2026, 2025, and 2024 was $53.72, $48.27, and $51.60, respectively. The weighted average grant-date fair value of RSAs granted during fiscal 2026 and 2024 was $49.05. There were no RSAs granted during the year ended March 31, 2025.\n\nThe aggregate fair value of RSUs vested during fiscal 2026, 2025, and 2024 was $279.1 million, $266.7 million, and $220.3 million, respectively. The aggregate fair value of RSAs vested during fiscal 2026, 2025, and 2024 was $3.6 million, $2.7 million, and $0.2 million, respectively.\n\nAs of March 31, 2026, the total unrecognized compensation expense related to unvested RSUs was $412.2 million and is expected to be recognized over a weighted average period of 2.0 years. As of March 31, 2026, the total unrecognized compensation expense related to unvested RSAs is $2.2 million and is to be recognized over a weighted average period of 0.8 years.\n\nStock options\n\nThe following table summarizes activity for stock options during the period ended March 31, 2026:\n\nNumber of Options\nWeighted Average\n\nExercise Price\nWeighted Average Remaining Contractual Term Aggregate Intrinsic Value\n\n(in thousands)(per share)(years)(in thousands)\n\nBalance, March 31, 20252,072 $22.07 \n\nExercised(315)20.63 \n\nForfeited or expired(30)34.99 \n\nBalance, March 31, 20261,727 $22.11 3.6$26,877 \n\nOptions vested and expected to vest at March 31, 20261,727 $22.11 3.6$26,877 \n\nOptions vested and exercisable at March 31, 20261,727 $22.11 3.6$26,877 \n\n83\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nThere were no options granted during fiscal 2026, 2025, or 2024. The aggregate intrinsic value of options exercised during fiscal 2026, 2025, and 2024 was $8.7 million, $28.1 million, and $46.1 million, respectively. The grant date fair value of options vested during fiscal 2026, 2025, and 2024 was $0.1 million, $1.6 million, and $9.1 million, respectively.\n\nAs of March 31, 2026, there was no unrecognized compensation expense related to non-vested stock options.\n\nEmployee Stock Purchase Plan\n\nIn 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 that the number of shares reserved and available for issuance under the plan will automatically increase each April 1 by lesser of (i) 1% of the outstanding number of shares of the Company’s common stock on the immediately preceding March 31, (ii) 3,500,000 shares of common stock, or (iii) such lesser number determined by the compensation committee. The ESPP provides for six-month offering periods and each offering period consists of six-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. For the year ended March 31, 2026, 585,374 shares of common stock were purchased under the ESPP. As of March 31, 2026, 20,716,161 shares of common stock were available for future issuance under the ESPP.\n\nAs of March 31, 2026, there was approximately $1.4 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.\n\nThe Company estimated the fair value of the ESPP purchase rights using a Black-Scholes option pricing model with the following assumptions:\n\nFiscal Year Ended March 31,\n\n202620252024\n\nExpected dividend yield— — — \n\nExpected volatility\n30.5% - 35.1%\n\n27.1% - 32.2%\n\n32.2% - 51.6%\n\nExpected term (years)0.50.50.5\n\nRisk-free interest rate\n3.7% - 4.3%\n\n4.3% - 5.4%\n\n4.7% - 5.4%\n\nThe Company has not paid and does not expect to pay dividends. Consequently, the Company uses an expected dividend yield of zero. The expected volatility is based on the historical volatility of the Company’s common stock. 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.\n\n16.    Net Income Per Share\n\nThe following table sets forth the computation of basic and diluted net income per share (in thousands, except per share data):\n\nFiscal Year Ended March 31,\n\n202620252024\n\nNumerator:\n\nNet income$162,669 $483,684 $154,632 \n\nDenominator:\n\nWeighted average shares outstanding, basic300,102 298,384 294,051 \n\nDilutive effect of share-based awards3,625 5,218 5,229 \n\nWeighted average shares outstanding, diluted303,727 303,602 299,280 \n\nNet income per share, basic$0.54 $1.62 $0.53 \n\nNet income per share, diluted$0.54 $1.59 $0.52 \n\n84\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nThe effect of certain common share equivalents were excluded from the computation of weighted-average diluted shares outstanding for the years ended March 31, 2026, 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):\n\nFiscal Year Ended March 31,\n\n202620252024\n\nStock options 58 74 130 \n\nUnvested RSAs and RSUs4,240 209 203 \n\n17.    Employee Benefit Plan\n\nThe Company has established a 401(k) tax-deferred savings plan (the “401(k) Plan”), which permits participants to make contributions by salary deduction pursuant to Section 401(k) of the Internal Revenue Code. The Company is responsible for administrative costs of the 401(k) Plan and may, at its discretion, make matching contributions to the 401(k) Plan. In addition, the Company offers defined contribution plans to employees in certain countries outside the U.S and as of January 2024, a non-qualified deferred compensation plan to eligible U.S. employees and directors. For the years ended March 31, 2026, 2025, and 2024, the Company made contributions of $8.7 million, $7.9 million and $7.0 million to the U.S. 401(k) Plan, respectively.\n\n18.    Segment and Geographic Information\n\nThe 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 as one operating and reportable segment.\n\nThe 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):\n\nFiscal Year Ended March 31,\n\n202620252024\n\nRevenue$2,018,387 $1,698,683 $1,430,530 \n\nAdjusted cost of revenue(1)\n324,507 267,559 221,508 \n\nAdjusted research and development expenses(1)\n351,796 276,582 229,724 \n\nAdjusted sales and marketing expenses(1)\n599,311 523,919 463,288 \n\nAdjusted general and administrative expenses(1)\n150,844 137,083 117,771 \n\nShare-based compensation and related employer payroll taxes314,918 287,147 222,884 \n\nAmortization of intangibles3,544 26,802 38,558 \n\nOther segment items(2)\n110,798 (304,093)(17,835)\n\nSegment net income$162,669 $483,684 $154,632 \n\nConsolidated net income$162,669 $483,684 $154,632 \n\n(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.\n\n(2) Other segment items primarily includes interest income, net; other income (expense), net; and income tax (expense) benefit, as reported in the consolidated statements of operations. Other segment items also includes $28.1 million, $0.2 million, and $8.4 million of transaction, restructuring and other-non-recurring or unusual items, which includes the impairment of long-lived assets on the consolidated statements of operations, for the years ended March 31, 2026, 2025, and 2024, respectively.\n\nThe measure of segment assets is the total assets as reported in the consolidated balance sheets.\n\nRevenue\n\nRevenues 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.\n\n85\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)\n\nLong-lived assets, net\n\nThe 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):\n\nMarch 31,\n\n20262025\n\nNorth America$40,905 $36,522 \n\nEurope, Middle East and Africa163,985 88,255 \n\nAsia Pacific6,876 3,577 \n\nLatin America512 647 \n\nTotal long-lived assets, net$212,278 $129,001 \n\n19.    Subsequent Event\n\nOn April 14, 2026, the Company acquired all of the outstanding equity of observIQ, Inc. d/b/a Bindplane, a provider of an open-standards-based telemetry pipeline that helps organizations capture and manage data at scale, for total cash consideration of $100.2 million. The Company is in process of allocating the purchase consideration over the fair value of identifiable assets and liabilities assumed.\n\n86\n\n[Table of Contents](#ib31a3d0e5bfc466a92d6e4374ce54c12_7)"}