Software Intelligence Firm Dynatrace Aims to Raise $427M in IPO

[Updated 7/22/19, 1:15 pm: Added IPO timing and updated headline.] Enterprise software business Dynatrace plans to take in $427.2 million from its initial public offering, the Waltham, MA-based company says in a new filing that sets the terms for its intended public market debut.

The company says it will sell 35.6 million shares at a potential price range of $11 a share to $13 a share, valuing the offering at $427.2 million. Dynatrace will be listed on the New York Stock Exchange under the ticker “DT.” At the middle of the price range, the company market cap will be $3.5 billion.

Dynatrace says if it sells at $12 per share, it expects to pocket $381.1 million from the public stock offering, after the IPO underwriters take their cut. The offering could bring in up to $436.4 million if the bank underwriters use all their options to purchase more shares.

IPO research firm Renaissance Capital expects the offering to hit markets next week.

Proceeds from the IPO will be used “to increase our capitalization and financial flexibility,” as well as provide liquidity for existing shareholders, the company said when it filed its initial paperwork with the SEC for the stock sale. Some amount of the cash raised from the offering will go toward paying down a portion of the company’s debts, which total more than $1 billion.

Dynatrace makes intelligence software to help businesses manage their applications across complex systems like multiple cloud services and on-demand computing operations. Private equity firm Thoma Bravo will maintain a 71.4 percent controlling stake in the company after the public offering.

Like many tech companies wending their way to the public markets these days, Dynatrace is not profitable. It expects to lose as much as $53 million in the most recent financial quarter ending June 30. It estimates it will have $107 million in sales during that same period.

Interest on debts cost Dynatrace $19 million in that quarter, and share-based compensation resulted in $41 million in added costs, the company says in its updated filing.

Dynatrace launched in Austria in 2005, but it was brought to the Boston area through an investment from Bain Capital Ventures in 2006. Dynatrace’s venture investors sold the company to Detroit-based Compuware in 2011 for $256 million. Thoma Bravo bought Compuware in 2014 for $2.5 billion and decided to spin out Dynatrace as its own company.

Dynatrace says its software competes with Cisco (NASDAQ: CSCO), Broadcom (NASDAQ: AVGO), New Relic (NYSE: NEWR), Datadog, Nagios, Akamai (NASDAQ: AKAM), Catchpoint, as well as cloud computing providers including Amazon (NASDAQ: AMZN) and Google (NASDAQ: GOOGL).

Headcount at the company was 1,981 as of June 30, with 647 employees in sales and marketing, 631 in research, 203 in administrative functions, 224 in services, and 276 in customer support, the company says in its filing. Most workers (940) are in Europe, the Middle East, and Africa; 799 are in North America.

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