Slides
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dynatrace Q1 2027 Investor Presentation August 5 , 2026
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Legal DisclaimerThis presentation consists of these slides and the associated remarks and comments, which are related and intended to be presented and understood together. Please refer to the appendix of these slides for definitions of certain terms. Cautionary Language Concerning Forward-Looking StatementsThis presentation includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future growth prospects, industry trends related to cloud, AI, and software, the expected and current benefits that we believe organizations receive from using the Dynatrace platform, and our financial and business outlook, including our financial guidance for the full year and second quarter of fiscal 2027. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this presentation that are not historical facts and statements identified by words such as “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, our ability to maintain our revenue growth rates in future periods; overall demand for and market adoption of our solutions; our ability to compete; our ability to innovate and develop and effectively market solutions that meet customer needs, including with AI capabilities and functionalities; our ability to acquire new customers and retain and expand our relationships with existing customers; our ability to expand our sales and marketing capabilities; our ability to maintain successful relationships with partners; the ability of our platform and solutions to effectively interoperate with customers’ IT infrastructures; our ability to hire and retain necessary qualified employees to grow our business and expand our operations; our ability to successfully complete acquisitions and integrate newly acquired businesses and offerings; our use of new and evolving technologies, including AI, in our offerings and business; security breaches, computer malware, computer hacking attacks, and other security incidents or compromises; real or perceived errors, failures, defects, or vulnerabilities in our solutions; our ability to protect and enforce our proprietary technology and intellectual property rights; the effect on our business of uncertainty in the U.S. and global economies, along with uncertain geopolitical conditions; and other risks set forth under the caption “Risk Factors” in our most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, and our other SEC filings. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.Non-GAAP Financial MeasuresIn addition to disclosing financial measures prepared in accordance with GAAP, this presentation contains certain non-GAAP financial measures as defined by Regulation G, including non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, adjusted free cash flow (adjusted FCF), adjusted FCF margin, pre-tax adjusted FCF, and pre-tax adjusted FCF margin. We also use or discuss non-GAAP financial measures in earnings releases, conference calls, other slide presentations and webcasts. We use these non-GAAP financial measures for financial and operational decision-making purposes, and as a means to evaluate period-to-period comparisons and liquidity. We believe that these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Our non-GAAP financial measures may not provide information that is directly comparable to similarly titled metrics provided by other companies. Non-GAAP financial measures are defined in our press release dated August 5, 2026 and in this presentation and the tables included in that press release and this presentation include reconciliations of historical non-GAAP financial measures to their most directly comparable GAAP measures. Please also see the Data Trends Table on the Investor Relations page of our website.Dynatrace presents constant currency (CC) amounts for Annual Recurring Revenue (ARR), Total Revenue and Subscription Revenue to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations.In this presentation, YoY (year over year) compares our financial performance to the applicable period in the previous fiscal year.Dynatrace and the Dynatrace logo are trademarks of the Dynatrace, Inc. group of companies. All other trademarks are the property of their respective owners. © 2026 Dynatrace LLC. 2
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Enterprises are facing unprecedented challenges Explosion of complexity Tool fragmentationStruggle to trust AI and realize value 3
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Unprecedented challenges demand a differentiated approach Eliminate data blind spotsUnified telemetry for instant answers Ground decisions in precise contextReal-time mapping across dependencies Get answers, not guessesDeterministic intelligence with autonomous action CONTEXT INTELLIGENCE UNIFIED DATA 4
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Transform complexity into powerful business assets. The AI-poweredobservability platform 5
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2026 20+ years of groundbreaking innovation & milestones 2025 2024 2023 2022 2019 2014 2011 2005 Founded in Linz, AustriaAppMon pioneers APM market Dynatrace acquired by Compuware and merged with Gomez Pioneers industry’s first causal and predictive AI engine, Davis AI®SaaS platformintroducedse Dynatrace IPO Sales reach $400MGrail™ data lakehouse introducedSales reach $1BCloud Automation added to platform (2021) Davis CoPilot™ launched, adding generative AI capabilities Expands to Application Security market Kubernetes Security Posture Management solution launchedA Leader in the Gartner® Magic Quadrant™ for Digital Experience MonitoringSecurity Analytics expands security offeringObservability for Developers introduced Gartner, Magic Quadrant for Observability Platforms, Gregg Siegfried, Matt Crossley, Padraig Byrne, Andre Bridges, Martin Caren, 7 July 2025.Gartner, Magic Quadrant for Digital Experience Monitoring, Padraig Byrne, Matt Crossley, DB Cummings, Martin Caren, Pankaj Prasad, 21 October 2024.Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally. MAGIC QUADRANT is a registered trademarks of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved.The Gartner content described herein (the “Gartner Content”) represents research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. (“Gartner”), and is not a representation of fact. Gartner Content speaks as of its original publication date, and opinions expressed in the Gartner Content are subject to change without notice. A Leader in Gartner® Magic Quadrant™ for Observability Platforms for 16 consecutive years Announced new AI-powered Log Analytics capabilitiesAI Observability for Large Language Models and Generative AI launchedAutomationEngineand AppEngineadded to platform Introduces the industry’s first agentic operations system, Dynatrace IntelligenceLog management & analytics reaches$200 million of annualized consumption Surpasses $2B ARR Deepened strategic collaboration with ServiceNow to advance autonomous IT Operations 6
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Platform evolution to support autonomous operations Answer drivenautomationDynatrace 2023+Dynatrace 2014+Answers,not just dataDynatrace 2006+Datacollection Issues are deeply understood after they occur Issues are auto-diagnosed when they occur Issues are anticipated before they occurIssues are resolved before they matter THE LEADERTHE INNOVATORTHE PIONEERTODAY Dynatrace 2026+Autonomous intelligence Preventive operationsAutomated root-causeReactive operations Autonomous operations 7
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Real-time dependency graphSmartscapeAgentic operations systemDynatrace Intelligence Unified data lakehouseGrail THE DYNATRACE PLATFORM Groundbreaking technologies at the core 8
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Operate on determinism and facts Topology Traces Metrics Logs Behavior Metadata Code Network Threats Vulnerabilities Business events LLMs Smartscape Grail Dynatrace Intelligence DETERMINISTIC AGENTS:Root Cause AgentAnalytics AgentForecasting AgentOperator AgentAutonomous SRE AgentCloud SRE Agent Development & ITOps teams Cloud & AI native teams Business teams 3rd party agents UNIFIED DATACONTEXTINTELLIGENCEANSWERS 9
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Considered a leader in the cloud observability market since 2005 10 Named a Leaderin the 2026 Gartner®Magic Quadrant™ for Observability Platforms. This is the 16th consecutive year that Gartner has named Dynatrace a Leader in this report.1 Dynatrace named a Leader in The Forrester Wave™: AIOps Platforms, Q2 2025.2 Recognized as a Leader in both the Cloud-Native Observability and Cloud-Native Security quadrants in the 2025 ISG Provider Lens™ Multi Public Cloud Solutions report. 1.Gartner, Magic Quadrant for Observability Platforms, Padraig Byrne, Martin Caren, D.B. Cummings, Neil Young, 13 July 2026.Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s Research & Advisory organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and MAGIC QUADRANT is a registered trademark of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved.2.Forrester does not endorse any company, product, brand, or service included in its research publications and does not advise any person to select the products or services of any company or brand based on the ratings included in such publications. Information is based on the best available resources. Opinions reflect judgment at the time and are subject to change. This report is part of a broader collection of Forrester resources, including interactive models, frameworks, tools, data, and access to analyst guidance. For more information, read about Forrester’s objectivityhere: https://www.forrester.com/about-us/objectivity/ Dynatrace named a Leader and Outperformer in 2026 GigaOm Radar for Kubernetes Observability.
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. American Airlines Transforms Observability and Accelerates Delivery with Dynatrace Different buckets of logs from a legacy solution all consolidated onto Grailreduction in mean time to detect by leveraging Dynatrace causal AI to determine root cause11 Dynatrace impact: “Dynatrace helped us to bring our new AI travel tool to market much faster because it gives our internal stakeholders a single source of truth they can use to evaluate the decisions they make and move forward with confidence.” 11
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A rapidly expanding total addressable market 12 $92B TAMCore Observability: $64BApplication Security: $18BAI & LLM Observability: $10B Based on internal estimates and third-party research.
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Expansive go-to-market to capture global 15,000 customers 13 Comprehensive partner channelsGlobal System Integrators (GSIs), Hyperscaler and Technology Alliance Partners, Regional resellers and solution partners Global go-to-market reach35+ countries across NORAM, EMEA, APAC, and LATAM STRATEGIC ENTERPRISE COMMERCIAL
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Frictionless upsellNo hidden feesSimple contractFull platform access Dynatrace Platform Subscription (DPS) 14 Flexible and scalable pricing model suited for the enterprise
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Large and expanding TAMContinuous innovation and platform evolutionDifferentiated AI-powered observability platform Powerful combination of growth and profitability at scaleFlexible, customer-friendly pricing model driving consumptionProven and scalable go-to-market model Building blocks in place for continued success 15
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Q1 FY 2027Financial Results
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Financial results as of August 5th, 2026.1.See the Appendix for definitions.2.Denotes growth when adjusted for constant currency exchange rates. See the Appendix for definition.3.Operating margin and pre-tax adjusted FCF margin are non-GAAP financial measures. See the Appendix for reconciliations of GAAP to non-GAAP financial measures. $2.14BAnnual Recurring Revenue1 96%Q1-27 Subscription Revenue Mix Mid-90s %Gross Retention Rate1 29%TTM Q1-27Non-GAAP Operating Margin1,3 17%ARR Growth YoY2 15%Q1-27 Subscription Revenue Growth YoY2 110%Net Retention Rate1 32%TTM Q1-27Pre-tax Adjusted FCF Margin1,3 . Dynatrace financials at a glance 17
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TotalARR growth 18 QUARTERLY TOTAL ARR ($M)1 $1,617 $1,647 $1,734 $1,822 $1,899 $1,972 $2,054 $2,136 Q2-25Q3-25Q4-25Q1-26Q2-26Q3-26Q4-26Q1-27 1.Quarterly Total ARR amounts shown in bar graphs are ‘As Reported’ metrics.2.Constant currency growth rates reflect YoY growth when using exchange rates from the same period in the prior year. See the Appendix for definitions. As Reported YoY Growth %Constant Currency YoY Growth %2 18%17%20%16%15%18%17%20%16%17%19%18%17%16%16%16%
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QUARTERLY & LAST TWELVE MONTHS (LTM) NET NEW ARR @ CC ($M)1Net New ARR growth 19 $51$70$75$81 $254$263$270$277 Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27 1.Net New ARR amounts shown in bar graphs represent Total Net New ARR at Constant Currency. See the Appendix for definition. 2.Defined as quarterly increase in Net New ARR in Constant Currency compared to the year-ago quarter Net New ARR in Constant Currency.3.Represent organic growth, excluding $13 million dollars of contribution from Bindplane acquisition. Constant Currency YoY Growth %2 Quarterly Y/Y GrowthLTMY/Y Growth(2)%1%5%12%23% / 17%313%16%11%9%66% / 41%3 $298$311 $73$85
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Subscription & Total Revenue growth 20 $400 $417 $424 $458 $473 $493 $506 $530 $418 $436 $445 $477 $494 $515 $532 $555 Q2-25Q3-25Q4-25Q1-26Q2-26Q3-26Q4-26Q1-27 QUARTERLY REVENUE ($M)Total Revenue1Subscription Revenue 1.Total Revenue includes Subscription and Services Revenue. 2.Constant currency growth rates reflect YoY growth when using exchange rates from the same period in the prior year. See Appendix for definition. 17%16%16%15%19%20%19%19%17%16%16%15%20%21%20%19% Subscription Revenue Constant Currency YoY Growth2Total Revenue Constant Currency YoY Growth2
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Efficient model with best-in-class gross margins1 21 81%82%81% 86%85%85% 4%5%8% FY25FY26Q1-27 TTM GAAP GROSS PROFIT MARGIN Total GMSubscription GM Services GM 84%84%84%87%87%87% 18%19%21% FY25FY26Q1-27 TTM NON-GAAP GROSS PROFIT MARGIN2 Total GMSubscription GM Services GM 1.Our reference to “best-in-class” is in relation to other public companies that focus on observability.2.These are non-GAAP financial measures. See the Appendix for reconciliations of GAAP to non-GAAP financial measures.
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FY25FY26Q1-27 TTM Highly efficientoperating model $938$1,102$1,143 FY25FY26Q1-27 TTM NON-GAAP OPEX $’S & AS % OF REVENUE ($M)1 17%18% 30%29% 7%7% GAAP OPEX $’S & AS % OF REVENUE ($M) R&D G&A S&M 23%24% 34%34% 11%11% Other OPEX21%1%$1,199$1,401 23% 36% 11% 1% 16% 31% 8% 1.These are non-GAAP financial measures. See the Appendix for reconciliations of GAAP to non-GAAP financial measures.2.Other OpEx includes amortization of intangibles and impairment of long-lived assets. 22 R&D G&A S&M $1,451
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FY27 guidance summaryBased on information available as of August 5th, 2026, Dynatrace is issuing guidance for the second quarter and updating its prior guidance for full year fiscal 2027 in the tables below. This guidance is based on the average foreign exchange rates for the month of June 30, 2026. We expect foreign exchange to be a headwind of approximately $14 million on ARR and approximately $4 million on revenue for fiscal 2027 compared to ARR and revenue at constant currency. This represents an incremental headwind of approximately $23 million to ARR and $19 million to revenue compared to our prior guidance. This guidance also excludes the impact of any share repurchases after June 30, 2026. Growth rates for ARR, Total revenue, and Subscription revenue are presented in constant currency to provide better visibility into the underlying growth of the business. 23 (in millions, except per share data)CurrentFY 2027GuidancePriorFY 2027 GuidanceGuidance Changeat Midpoint(in millions, except per share data)Q2 Fiscal 2027GuidanceARR $2,359 - $2,379$2,382 - $2,402$(23)Total revenue$565 - $570As reported15% - 16%16% - 17%(100) BpsAs reported14% - 15%Constant currency15.5% - 16.5%15.5% - 16.5%- Constant currency15% - 16%Total revenue$2,306 - $2,320$2,317 - $2,335$(13)Subscription revenue$540 - $545As reported14% - 15%15% - 16%(100) bpsAs reported14% - 15%Constant currency14.5% - 15%14% - 15%25 bpsConstant currency15% - 16%Subscription revenue$2,206 - $2,220$2,217 - $2,235$(13)Non-GAAP income from operations$166 - $170As reported14% - 15%15% - 16%(100) bpsNon-GAAP Operating Margin29.5% - 30%Constant currency14.5% - 15%14% - 15%25 bpsNon-GAAP net income$141 - $145Non-GAAP income from operations$682 - $690$682 - $690$- Non-GAAP net income per diluted share$0.48 - $0.49Non-GAAP Operating Margin29.5% - 29.75%29.5%13 bpsDiluted weighted average shares outstanding293 – 294Non-GAAP net income$581 - $591$584 - $594$(3)Non-GAAP net income per diluted share$1.97 - $1.99$1.93 - $1.95$0.04Diluted weighted average shares outstanding295 – 297302 - 304(7)Adjusted free cash flow*$610 - $615$613 - $620$(4)Adjusted free cash flow margin*26.5%26.5%- All growth rates are compared to the second quarter and full year of fiscal 2026.Reconciliations of non-GAAP income from operations, non-GAAP net income, non-GAAP net income per diluted share and adjusted free cash flow guidance to the most directly comparable GAAP measures are not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of share-based compensation expense, employer taxes and tax deductions specific to equity compensation awards that are directly impacted by future hiring, turnover and retention needs, as well as unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results. *Beginning in the first quarter of fiscal 2027, we updated our non-GAAP liquidity measure from free cash flow to adjusted free cash flow (with a corresponding update to the related margin). For additional information, please see the appendix for definition. Our prior guidance for fiscal 2027 issued on May 13, 2026 (as set forth in this table) reflected our previous definition of free cash flow and the related margin and there were no "below the line" items contemplated at the time to be adjusted (as set forth in our current definition of adjusted free cash flow).
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$2,382-$2,402 $2,382-$2,402 Prior ARRGuidance(as reported $)Q1 Currency HeadwindUpdated ARRGuidance(as reported $) 15.5%-16.5%2 Updated FY27 ARR guidance vs. Prior1 24 $(23)15.5%-16.5%2 Maintaining Constant Currency ARR Guidance 1.Values have been rounded and may not add up precisely to the totals.2.Represents year-over-year growth rates in constant currency. See the Appendix for definition.
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$2,317-$2,335 $2,306-$2,320 Prior RevenueGuidance(as reported $)Q1 Currency HeadwindGuidance Changeat MidpointUpdated RevenueGuidance(as reported $) 14.5%-15%2 25bps Raise to Guidance at Midpoint(CC) Updated FY27 Revenue & Subscription Revenue guidance vs. Prior1 25 $2,217-$2,235 $2,206-$2,220 Prior Subs.RevenueGuidance(as reported $) Q1 CurrencyHeadwindGuidance Changeat MidpointUpdated Subs.RevenueGuidance(as reported $) 14%-15%2 $5$(18) 25bps Raise to Guidance at Midpoint(CC) 14.5%-15%2 $6$(19)14-15%2Total Revenue Subscription Revenue 1.Values have been rounded and may not add up precisely to the totals.2.Represents year-over-year growth rates in constant currency. See the Appendix for definition.
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Updated FY27 Non-GAAP Income from Operations Guidance vs. Prior1 261.These are non-GAAP financial measures. See the Appendix for definitions of non-GAAP financial measures.2.As reported dollars and percent of revenue. Non-GAAP Income from Operations2 $682-$690 $682-$690$(5) $5 Prior NG Op IncomeGuidanceQ1 Currency HeadwindGuidance Changeat MidpointUpdated NG Op IncomeGuidance 29.5% 29.5%-29.75% 25bps Raise to Guidance at the High End
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Definitions & Non-GAAP Reconciliations
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1)Annual Recurring Revenue (ARR) is defined as the daily revenue of all subscription agreements that are actively generating revenue as of the last day of the reporting period multiplied by 365. We exclude from our calculation of Total ARR any revenues derived from month-to-month agreements and/or product usage overage billings.2)Constant Currency (CC) amounts for ARR, Total Revenue and Subscription Revenue are presented to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign exchange rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. 3)Dollar-Based Gross Retention Rate is defined as the ARR from all customers as of one year prior, less contraction and customer churn, divided by the total ARR from one year prior. This metric reflects the percentage of ARR from all customers as of the year prior that has been retained.4)Dollar-Based Net Retention Rate is defined as the ARR at the end of a reporting period for the cohort of Dynatrace accounts as of one year prior to the date of calculation, divided by the ARR one year prior to the date of calculation for that same cohort. Our dollar-based net retention rate reflects customer renewals, expansion, contraction and churn. Dollar-based net retention rate is presented on a constant currency basis.5)Dynatrace Customers are defined as accounts, as identified by a unique account identifier, that generate at least $10,000 of Dynatrace ARR as of the reporting date. In infrequent cases, a single large organization may comprise multiple customer accounts when there are distinct divisions, departments or subsidiaries that operate and make purchasing decisions independently from the parent organization. In cases where multiple customer accounts exist under a single organization, each customer account is counted separately based on a mutually exclusive accounting of ARR.6)Adjusted Free Cash Flow ("Adjusted FCF") is defined as the net cash provided by or used in operating activities less capital expenditures, reflected as purchase of property and equipment and capitalized software additions in our financial statements, plus cash paid for acquisition-related, restructuring, and other non-recurring and unusual items. The related margin is adjusted free cash flow expressed as a percentage of total revenue.7)Pre-Tax Adjusted Free Cash Flow is defined as adjusted free cash flow excluding the impact of cash paid for or received from taxes. The related margin is pre-tax adjusted free cash flow expressed as a percentage of total revenue. Appendix - Definitions 28
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ARR expansion trends1 29 1.Values have been rounded and may not add up precisely to the totals.2.Year-over-year FX headwind/(tailwind) using exchange rates from the same quarter in the prior fiscal year.3.Represents the year-over-year growth rate excluding the FX headwind/(tailwind).4.Defined as the quarterly increase/(decrease) in the current quarter As Reported ARR compared to the previous quarters As Reported ARR. 5.Quarterly FX impact using exchange rates from the prior quarter. 6.Defined as Net New ARR (as reported) adjusted for quarterly FX impact.7.Defined as quarterly increase in Net New ARR in Constant Currency compared to the year-ago quarter Net New ARR in Constant Currency. FY27FY25 FY26($ in millions)Q1-25Q2-25Q3-25Q4-25Q1-26Q2-26Q3-26Q4-26Q1-27Year-over-YearARR (As Reported)$1,541 $1,617 $1,647 $1,734$1,822$1,899$1,972$2,054$2,136Year-over-Year increase19% 20% 16% 15%18%17%20%18%17%TTM FX headwind/(tailwind)2 12 (14) 37 19(28)(19)(57)(46)(4)ARR - Constant Currency1,553 1,603 1,684 1,7531,7951,8801,9152,0082,132Year-over-Year ARR Increase - Constant Currency3 20% 19% 18% 17%16%16%16%16%17%Q1-25Q2-25Q3-25Q4-25Q1-26Q2-26Q3-26Q4-26Q1-27Q1-27 TTMQuarter-over-QuarterARR (As Reported)$1,541 $1,617 $1,647 $1,734$1,822$1,899$1,972$2,054$2,136Net New ARR (As Reported)4 37 76 31 878877738182314Quarterly FX headwind/(tailwind)5 9 (15) 37 (13)(37)(7)2(1)3(3)Net New ARR - Constant Currency6 46 61 68 745170758185311Year-over-Year Net New ARR Growth – Constant Currency 7 23% 3% -3% -12%13%16%11%9%66%23%
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Non-GAAP subscription and services gross margin reconciliation1 30 1.Values have been rounded and may not add up precisely to the totals. FY26 Q1-27 TTM ($ in millions)GAAPShare-Based Comp.Employer Payroll Tax on Employee Stock trans.Amort. of IntangiblesAcquisition-related, Restructuring & OtherNon-GAAPGAAPShare-Based Comp.Employer Payroll Tax on Employee Stock trans.Amort. of IntangiblesAcquisition-related, Restructuring & OtherNon-GAAP Subscription Cost of Revenue285 (29)(2)-(1)253300 (28)(1)-(1)269Subscription Gross Profit$1,645$29$2-$1$1,677$1,703$28$1-$1$1,734Subscription Gross Margin85% 87%85% 87% Services Cost of Revenue84(12)(1)--7286(11)(1)--74 Services Gross Profit$5$12$1--$17$7$11$1--$20 Services Gross Margin5% 19%8% 21%
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31 1.Values have been rounded and may not add up precisely to the totals. Non-GAAP subscription and services gross margin reconciliation1 FY25 ($ in millions)GAAPShare-Based Comp.Employer Payroll Tax on Employee Stock trans.Amort of IntangiblesAcquisition-related, Restructuring & OtherNon-GAAP Subscription Cost of Revenue233(27)(2)--205Subscription Gross Profit$1,389$27$2--$1,418Subscription Gross Margin86% 87% Services Cost of Revenue74(10)(1)--63 Services Gross Profit$3$10$1--$13 Services Gross Margin4% 18%
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Non-GAAP income from operations reconciliation1 321.Values have been rounded and may not add up precisely to the totals. FY26 Q1-27 TTM ($ in millions)GAAPStock-Based Comp.Employer Payroll Tax on Employee Stock trans.Amort. of IntangiblesAcquisition-related, Restructuring & OtherNon-GAAPGAAPStock-Based Comp.Employer Payroll Tax on Employee Stock trans.Amort. of IntangiblesAcquisition-related, Restructuring & OtherNon-GAAP Cost of Revenues372(40)(2)(3)(1)325390(40)(2)(5)(1)342 Gross Profit$1,646$40$2$3$1$1,694$1,705 $40$2$5$1$1,753 Gross Margin82% 84%81% 84%Research and Development474(114)(7)-(2)352502(117)(6)-(2)377 Sales and Marketing691(84)(4)-(2)599707(84)(4)-(2)616General and Administrative217(61)(2)-(4)151223(60)(1)-(12)149Amortization of other intangibles-- ---- -- ----Impairment of long-lived assets19- --(19)- 19- --(19)-Income from Operations1 $245$300$15$428$592$255$301$14$536$610 Operating Margin12% 29%12% 29%
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Non-GAAP income from operations reconciliation1 33 FY25 ($ in millions)GAAPStock-Based Comp.Employer Payroll Tax on Employee Stock trans.Amort of IntangiblesAcquisition-related, Restructuring & OtherNon-GAAP Cost of Revenues320(37)(2)(13)-268 Gross Profit$1,378$37$2$13-$1,431 Gross Margin81% 84%Research and Development385(101)(7)--277 Sales and Marketing606(77)(4)--524General and Administrative195(57)(2)--137Amortization of other intangibles14- -(14)--Impairment of long-lived assets-- ----Income from Operations1 $179$272$15$27-$494 Operating Margin11% 29% 1.Values have been rounded and may not add up precisely to the totals.
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Adjusted FCF reconciliation1 341.Values have been rounded and may not add up precisely to the totals. ($ in millions)FY25FY26Q1-27 TTMAdjusted Free Cash FlowNet Cash Provided by Operating Activities$459$562 $598 PP&E (26)(32)(28)Capitalized software additions(3)- -Cash paid for acquisition-related, restructuring, and other costs1 2 8Total Adjusted FCF$432$532$579Adjusted FCF % of Revenue25%26%28% Total Adjusted FCF$432$532$579Cash paid for tax118118101Total Pre-tax Adjusted FCF$550$649$680Pre-tax Adjusted FCF % of Revenue32%32%32%