Dynatrace’s Number of Customers (2019 – 2023)

Subscription 

Dynatrace generates the highest revenue from subscription services. This revenue consists of:

• Software-as-a-service (SaaS) agreements
• Dynatrace term-based licenses which are recognized at a rate over the contract term
• Dynatrace perpetual licenses that are recognized at a rate over the term of the expected optional maintenance renewals, which is generally three years
• maintenance and support agreements.

The SaaS subscription fees and term licenses are typically invoiced annually in advance. The subscription revenue is recognized at a rate over the term of the applicable agreement, provided that all other revenue recognition criteria have been satisfied. Over time, Dynatrace expects that subscription revenue will increase as a percentage of total revenue.

The subscription revenue increased by $54.9 million, or 34.8%, on a YoY basis. Even on a QoQ basis, there was a growth of 8.2%. This was primarily due to the growing adoption of the Dynatrace® platform by new customers along with their existing customers who expanded their use. As to 93% of total revenue in the last year, this segment contributed 94% of total revenue in Q2 2022. There has been a linear growth in the revenue generated during the last 3 years.

Service

The revenue that is generated from helping customers deploy the software in highly complex operational environments and train their personnel consists of service revenue.

• The revenues associated with these professional services are recognized on a time and materials basis, as and when the services are delivered or when the training is being provided.

This revenue increased by 31.3% on a YoY basis, as compared to 4.4% on a QoQ basis. The revenues associated with professional services are recognized, as the services are delivered. This segment has seen stable growth in the past 3 years, with the absolute return being 49%.

License

 The revenues that are recognized from sales of perpetual and term-based licenses of Classic products constitute License revenues. These are sold only to existing customers.

• Classic license arrangements: The fee portion of these products are recognized upfront assuming all revenue recognition criteria are satisfied.
• Classic term arrangements: The license fees for these products are also recognized upfront. These licenses are generally billed annually in advance.
• Perpetual licenses: These licenses are billed upfront.

This segment of revenue has witnessed a decline during the past 3 years. This was primarily due to the decline of sales of Classic products, as the existing customers converted to the Dynatrace® platform. These Classic products are no longer being sold to new customers. As we can see from the graph, the total revenue generated from this segment has been declining in the past 3 years, with the revenue in the most recent quarter being nil.

About the company

Dynatrace, Inc. is a global technology company, that provides a software intelligence platform, purpose-built for dynamic multi-cloud environments. This will help organizations embrace the cloud to affect their digital transformation, with this all-in-one intelligence platform, designed, addresses the growing complexity faced by technology and digital business teams. With automation and intelligence at its core, this platform delivers precise performance and security of applications to its customers. 

The underlying infrastructure, and the experience of all users, enable teams to innovate faster, simplify and secure cloud complexity, and collaborate more efficiently. The platform is designed such that, it allows the customers to modernize and automate IT operations, develop and release high-quality software faster. As a result, the products offered by Dynatrace are trusted by approximately 3,000 customers in over 90 countries. These customers are involved in diverse industries such as banking, insurance, retail, manufacturing, travel, and software.

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