Long-term Debt |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
| Long-term Debt | Long-term Debt 2031 Exchangeable Senior Notes In August 2026, Dynatrace LLC, an indirect wholly owned subsidiary of the Company, issued $1,437.5 million aggregate principal amount of Exchangeable Senior Notes (the “2031 Notes”). The 2031 Notes mature on September 1, 2031, unless earlier exchanged, redeemed, or repurchased. The 2031 Notes do not bear regular interest and the principal amount of the 2031 Notes does not accrete. The 2031 Notes were issued pursuant to an indenture dated as of August 20, 2026 (the “Indenture”), among Dynatrace LLC, the Company, and U.S. Bank Trust Company, National Association, as trustee. The 2031 Notes are senior, unsecured obligations of Dynatrace LLC and are fully and unconditionally guaranteed on an unsecured and unsubordinated basis by the Company. The Company accounts for the 2031 Notes as a liability at amortized cost, as no embedded features require bifurcation or other separate accounting. Costs of $26.9 million incurred in connection with the issuance of the 2031 Notes are reported net with the liability and are amortized using the effective interest rate method over the term of the 2031 Notes. The 2031 Notes are exchangeable at an initial exchange rate of 15.5585 shares of the Company’s common stock per $1,000 principal amount of 2031 Notes, which is equivalent to an initial exchange price of $64.27 per share and represents approximately 22.4 million shares of the Company’s common stock. The initial exchange price represented an exchange premium of approximately 35% above the last reported sale price of $47.61 per share of the common stock on The New York Stock Exchange on August 17, 2026. The exchange rate of the 2031 Notes is subject to adjustment as provided in the Indenture. Prior to the close of business on the business day immediately preceding June 1, 2031, holders may exchange all or any portion of the 2031 Notes only upon the occurrence of one or more of the following circumstances: •during any calendar quarter commencing after the calendar quarter ending on December 31, 2026 (and only during such fiscal quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ended on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 150% of the exchange price on each applicable trading day; •during the five business day period after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of 2031 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the exchange rate on each such trading day; •if Dynatrace LLC calls any 2031 Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date, but only with respect to the 2031 Notes called (or deemed called, in the case of an optional redemption) for redemption; or •upon the occurrence of specified corporate events, as set forth in the Indenture. On or after June 1, 2031 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may exchange all or any portion of their 2031 Notes at any time regardless of the foregoing circumstances. Upon exchange of the 2031 Notes, Dynatrace LLC will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of both, at Dynatrace LLC’s election. Dynatrace LLC may not redeem the 2031 Notes prior to September 6, 2029, except in the event of a Cleanup Redemption (as defined below). On or after September 6, 2029 and prior to the 21st scheduled trading day immediately preceding the maturity date, Dynatrace LLC may redeem for cash all or any portion of the 2031 Notes (subject to a partial redemption limitation set forth in the Indenture), at its option, if the last reported sale price of the Company’s common stock has been at least 130% of the exchange price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which Dynatrace LLC provides notice of redemption (an “Optional Redemption”). In addition, subject to certain conditions, Dynatrace LLC may redeem for cash all, but not less than all, of the 2031 Notes at any time prior to the 21st scheduled trading day immediately preceding the maturity date if the aggregate principal amount of the 2031 Notes that remains outstanding at such time is less than $100 million (a “Cleanup Redemption”). The redemption price for any 2031 Notes called for Optional Redemption or Cleanup Redemption will be equal to 100% of the principal amount of the 2031 Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the related redemption date. No sinking fund is provided for the 2031 Notes. Subject to certain conditions, holders of the 2031 Notes will have the right to require Dynatrace LLC to repurchase all or a portion of their Notes upon the occurrence of a fundamental change (as defined in the Indenture) at a repurchase price of 100% of their principal amount plus any accrued and unpaid special interest, if any. In connection with certain corporate events or if Dynatrace LLC calls any 2031 Notes for redemption, Dynatrace LLC will, under certain circumstances, increase the exchange rate for holders who elect to exchange their 2031 Notes in connection with any such corporate event or exchange their 2031 Notes called for redemption. The following table presents the net carrying value and fair value of the 2031 Notes as of September 30, 2026 (in thousands):
_________________ (1) The fair value was determined based on the closing quoted price of the 2031 Notes on the last trading day of the period and is classified as Level 2 in the fair value hierarchy, because the 2031 Notes are not actively traded in the market. Exchangeable note hedge and warrant transactions In connection with the 2031 Notes, Dynatrace LLC and the Company entered into exchangeable note hedge transactions (the “2031 Exchangeable Note Hedges”) for an aggregate premium of $412.6 million. The 2031 Exchangeable Note Hedges are expected to reduce the potential dilution to the Company’s common stock if the 2031 Exchangeable Notes are exchanged and/or offset any cash payments the Company may be required to make in excess of the principal amount. The 2031 Exchangeable Note Hedges cover approximately 22.4 million shares of the Company’s common stock at an initial strike price of $64.27 per share, subject to anti-dilution adjustments substantially similar to those applicable to the 2031 Notes. The 2031 Exchangeable Note Hedges will expire upon the maturity of the 2031 Notes, if not earlier exercised or terminated. Separately from the 2031 Exchangeable Note Hedges and in connection with the 2031 Notes, the Company entered into warrant transactions (the “2031 Warrants”) to acquire up to 22.4 million shares of the Company’s common stock at an initial strike price of $107.12 per share, subject to certain adjustments under the terms of the 2031 Warrants. The Company received proceeds of $244.8 million from the issuance of the 2031 Warrants. The 2031 Exchangeable Note Hedges and 2031 Warrants will generally have the effect of increasing the exchange price of the 2031 Notes to the 2031 Warrants strike price of $107.12 per share. The Company determined that the 2031 Exchangeable Note Hedges and 2031 Warrants meet the criteria for equity classification, because they are indexed to the Company's common stock and the Company has the option to settle both in shares of common stock or in cash. The 2031 Exchangeable Note Hedges and 2031 Warrants are not remeasured as long as they continue to meet the criteria for equity classification. The Company recognized the purchase of the 2031 Exchangeable Note Hedges as a decrease in additional paid-in capital and the 2031 Warrants as an increase in additional paid-in capital. The Company structured the 2031 Exchangeable Note Hedges as tax integrated for federal income tax purposes pursuant to applicable U.S. Treasury Regulations. Accordingly, the $412.6 million cost of the 2031 Exchangeable Note Hedges will be deductible for income tax purposes over the life of the hedges. As a result, the Company established a deferred income tax asset of $94.3 million at inception, with a corresponding offset in additional paid-in capital. 2022 Credit Facility In August 2026, in connection with the 2031 Notes, Dynatrace LLC terminated its senior secured revolving credit facility in an aggregate amount of $400.0 million, which had been originally entered into in December 2022 (the “2022 Credit Facility”) and recognized unamortized debt issuance costs of $0.7 million within “Interest income, net” in the condensed consolidated statements of operations. No amounts were outstanding under the 2022 Credit Facility upon termination. The 2022 Credit Facility had 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 2022 Credit Facility was due to mature on December 2, 2027. The debt issuance costs incurred in connection with the 2022 Credit Facility were included within “Other assets” in the condensed consolidated balance sheets and were amortized into interest expense over the contractual term of the 2022 Credit Facility. 2026 Credit Facility In September 2026, Dynatrace LLC entered into a new Credit Agreement for a senior secured revolving credit facility (the “2026 Credit Facility”) in an aggregate amount of $500.0 million. The 2026 Credit Facility has sublimits for swing line loans of up to $30.0 million and for the issuance of standby letters of credit in a face amount of up to $45.0 million. As of September 30, 2026, there was $500.0 million of availability under the 2026 Credit Facility as no amounts were outstanding and there were no letters of credit issued thereunder. The 2026 Credit Facility is scheduled to mature on June 24, 2031 with the option for two one-year extensions. However, if an aggregate principal amount greater than $300.0 million on the 2031 Notes remains outstanding on June 2, 2031, the 2026 Credit Facility will instead mature on such date. Borrowings under the 2026 Credit Facility are available in U.S. dollars, Euros, Pounds Sterling, and Canadian Dollars subject to an aggregate $100.0 million cap on non-U.S. dollar denominated borrowings. Borrowings under the 2026 Credit Facility will accrue interest at (i) the Term Secured Overnight Financing Rate, (ii) the Euro Interbank Offer Rate, (iii) the Adjusted Term Canadian Overnight Repo Rate, (iv) Daily Simple Sterling Overnight Index Average, or (v) the base rate as defined per the 2026 Credit Facility, in each case, plus an applicable margin as defined by the 2026 Credit Facility. Interest payments are due quarterly, or more frequently, based on the terms of the 2026 Credit Facility. The 2026 Credit Facility fees include (i) a commitment fee at the rate per annum equal to the applicable margin, as defined by the 2026 Credit Facility, times the actual daily amount by which the aggregate revolving credit commitments exceeds the principal amount of revolving loans and line of credit obligations then outstanding, (ii) a fronting fee equal to 0.125% of the face amount of each letter of credit, (iii) a participation fee at a rate per annum equal to the applicable margin, as defined per the 2026 Credit Facility, in effect during each day of such quarter applied to the daily average face amount of letters of credit outstanding during such quarter, and (iv) customary administrative fees. Debt issuance costs of $2.1 million were incurred in connection with the 2026 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 2026 Credit Facility. There were $2.1 million of unamortized debt issuance costs as of September 30, 2026. Pursuant to the 2026 Credit Facility, obligations owed thereunder are secured by a first priority lien on certain assets of Dynatrace LLC, including a pledge of the equity interests of certain subsidiaries. Under certain circumstances, the guarantees may be released without action by, or consent of, the administrative agent of the 2026 Credit Facility. The 2026 Credit Facility contains customary representations and warranties, events of default and affirmative and negative covenants, including financial covenants that require the Company to maintain specified financial ratios. At September 30, 2026, the Company was in compliance with all applicable covenants. Interest expense Interest expense, including amortization of debt issuance costs, was $0.7 million and $0.2 million for the three months ended September 30, 2026 and 2025, respectively, and $0.8 million and $0.4 million for the six months ended September 30, 2026 and 2025, respectively.
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