# EDGAR Filing Document

**Accession Number:** 0001448056
**File Stem:** 0001448056-23-000011
**Filing Date:** 2023-2
**Character Count:** 422978
**Document Hash:** e7c67ff9c21a5ff962952fe9d0d73d05
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001448056-23-000011.hdr.sgml**: 20230207

**ACCESSION NUMBER**: 0001448056-23-000011

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 97

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230207

**DATE AS OF CHANGE**: 20230207

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** NEW RELIC, INC.
- **CENTRAL INDEX KEY:** 0001448056
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-PREPACKAGED SOFTWARE [7372]
- **IRS NUMBER:** 262017431
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0331

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-36766
- **FILM NUMBER:** 23596125

**BUSINESS ADDRESS:**
- **STREET 1:** 188 SPEAR STREET, STE. 1000
- **CITY:** SAN FRANCISCO
- **STATE:** CA
- **ZIP:** 94105
- **BUSINESS PHONE:** 650-777-7600

**MAIL ADDRESS:**
- **STREET 1:** 188 SPEAR STREET, STE. 1000
- **CITY:** SAN FRANCISCO
- **STATE:** CA
- **ZIP:** 94105

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** NEW RELIC, INC
- **DATE OF NAME CHANGE:** 20151105

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** NEW RELIC INC
- **DATE OF NAME CHANGE:** 20081016

?xml version="1.0" ? newr-20221231

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**_________________________________________________**

**FORM 10-Q** 

**_________________________________________________**

**(Mark One)**

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended December 31, 2022** 

**or**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> to <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>**

**Commission File Number: 001-36766** 

**_________________________________________________**

**New Relic, Inc.** 

**(Exact name of registrant as specified in its charter)** 

**_________________________________________________**

---

| | |
|:---|:---|
| **Delaware** | **26-2017431** |
| **(State or other jurisdiction of<br>incorporation or organization)** | **(I.R.S. Employer<br>Identification No.)** |

---

**188 Spear Street, Suite 1000** 

**San Francisco, California 94105** 

**(Address of principal executive offices, including zip code)**

**(650) 777-7600** 

**(Registrant's telephone number, including area code)**

__________________________________________________________________

**Securities registered pursuant to Section 12(b) of the Act:**

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| **Common Stock, par value $0.001 per share** | **NEWR** | **New York Stock Exchange** |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.&nbsp;&nbsp;&nbsp;&nbsp;Yes ☒&nbsp;&nbsp;&nbsp;&nbsp;No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).&nbsp;&nbsp;&nbsp;&nbsp;Yes ☒&nbsp;&nbsp;&nbsp;&nbsp;No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☒ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| Emerging growth company | ☐ | | |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).&nbsp;&nbsp;&nbsp;&nbsp;Yes ☐&nbsp;&nbsp;&nbsp;&nbsp;No ☒

As of January 31, 2023, there were 68,883,490 shares of the registrant's common stock, par value $0.001 per share, outstanding.

------

**NEW RELIC, INC.**

**Form 10-Q Quarterly Report**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| | | **Page** |
| **<u>[Special Note Regarding Forward-Looking Statements](#i5bc76baf3a0b4794bf099658d30e3622_10)</u>** | **<u>[Special Note Regarding Forward-Looking Statements](#i5bc76baf3a0b4794bf099658d30e3622_10)</u>** | <u>[2](#i5bc76baf3a0b4794bf099658d30e3622_10)</u> |
| &nbsp;&nbsp;**<u>[PART I. FINANCIAL INFORMATION](#i5bc76baf3a0b4794bf099658d30e3622_13)</u>** | &nbsp;&nbsp;**<u>[PART I. FINANCIAL INFORMATION](#i5bc76baf3a0b4794bf099658d30e3622_13)</u>** |  |
| &nbsp;&nbsp;&nbsp;**Item 1.** | **<u>[Financial Statements (Unaudited)](#i5bc76baf3a0b4794bf099658d30e3622_16)</u>** | <u>[5](#i5bc76baf3a0b4794bf099658d30e3622_16)</u> |
|  | **<u>[Condensed Consolidated Balance Sheets as of](#i5bc76baf3a0b4794bf099658d30e3622_19)[December 31](#i5bc76baf3a0b4794bf099658d30e3622_19)[, 2022 and March 31, 20](#i5bc76baf3a0b4794bf099658d30e3622_19)22</u>** | <u>[5](#i5bc76baf3a0b4794bf099658d30e3622_19)</u> |
|  | **<u>[Condensed Consolidated Statements of Operations for the Three](#i5bc76baf3a0b4794bf099658d30e3622_22)[and](#i5bc76baf3a0b4794bf099658d30e3622_22)[Nine](#i5bc76baf3a0b4794bf099658d30e3622_22)[Months Ended](#i5bc76baf3a0b4794bf099658d30e3622_22)[D](#i5bc76baf3a0b4794bf099658d30e3622_22)ecember 31[, 2022](#i5bc76baf3a0b4794bf099658d30e3622_19)[and 20](#i5bc76baf3a0b4794bf099658d30e3622_22)[2](#i5bc76baf3a0b4794bf099658d30e3622_22)1</u>** | <u>[6](#i5bc76baf3a0b4794bf099658d30e3622_22)</u> |
|  | **<u>[Condensed Consolidated Statements of Comprehensive Loss for the](#i5bc76baf3a0b4794bf099658d30e3622_25)[Three](#i5bc76baf3a0b4794bf099658d30e3622_22)[and](#i5bc76baf3a0b4794bf099658d30e3622_22)[Nine](#i5bc76baf3a0b4794bf099658d30e3622_22)[Months Ended](#i5bc76baf3a0b4794bf099658d30e3622_22)[D](#i5bc76baf3a0b4794bf099658d30e3622_22)ecember 31[, 2022](#i5bc76baf3a0b4794bf099658d30e3622_19)[and 20](#i5bc76baf3a0b4794bf099658d30e3622_22)[2](#i5bc76baf3a0b4794bf099658d30e3622_22)1</u>** | <u>[7](#i5bc76baf3a0b4794bf099658d30e3622_25)</u> |
|  | **<u>[Condensed Consolidated Statements of Stockholders' Equity for the](#i5bc76baf3a0b4794bf099658d30e3622_28)[Three](#i5bc76baf3a0b4794bf099658d30e3622_22)[and](#i5bc76baf3a0b4794bf099658d30e3622_22)[Nine](#i5bc76baf3a0b4794bf099658d30e3622_22)[Months Ended](#i5bc76baf3a0b4794bf099658d30e3622_22)[D](#i5bc76baf3a0b4794bf099658d30e3622_22)ecember 31[, 2022](#i5bc76baf3a0b4794bf099658d30e3622_19)[and 20](#i5bc76baf3a0b4794bf099658d30e3622_22)[2](#i5bc76baf3a0b4794bf099658d30e3622_22)1</u>** | <u>[8](#i5bc76baf3a0b4794bf099658d30e3622_28)</u> |
|  | **<u>[Condensed Consolidated Statements of Cash Flows for the](#i5bc76baf3a0b4794bf099658d30e3622_31)[Nine](#i5bc76baf3a0b4794bf099658d30e3622_22)[Months Ended](#i5bc76baf3a0b4794bf099658d30e3622_22)[D](#i5bc76baf3a0b4794bf099658d30e3622_22)ecember 31[, 2022](#i5bc76baf3a0b4794bf099658d30e3622_19)[and 20](#i5bc76baf3a0b4794bf099658d30e3622_22)[2](#i5bc76baf3a0b4794bf099658d30e3622_22)1</u>** | <u>[9](#i5bc76baf3a0b4794bf099658d30e3622_31)</u> |
|  | **<u>[Notes to Condensed Consolidated Financial Statements](#i5bc76baf3a0b4794bf099658d30e3622_34)</u>** | <u>[10](#i5bc76baf3a0b4794bf099658d30e3622_34)</u> |
| &nbsp;&nbsp;&nbsp;**Item 2.** | **<u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i5bc76baf3a0b4794bf099658d30e3622_91)</u>** | <u>[26](#i5bc76baf3a0b4794bf099658d30e3622_91)</u> |
| &nbsp;&nbsp;&nbsp;**Item 3.** | **<u>[Quantitative and Qualitative Disclosures About Market Risk](#i5bc76baf3a0b4794bf099658d30e3622_118)</u>** | <u>[41](#i5bc76baf3a0b4794bf099658d30e3622_118)</u> |
| &nbsp;&nbsp;&nbsp;**Item 4.** | **<u>[Controls and Procedures](#i5bc76baf3a0b4794bf099658d30e3622_121)</u>** | <u>[42](#i5bc76baf3a0b4794bf099658d30e3622_121)</u> |
| &nbsp;&nbsp;**<u>[PART II. OTHER INFORMATION](#i5bc76baf3a0b4794bf099658d30e3622_124)</u>** | &nbsp;&nbsp;**<u>[PART II. OTHER INFORMATION](#i5bc76baf3a0b4794bf099658d30e3622_124)</u>** |  |
| &nbsp;&nbsp;&nbsp;**Item 1.** | **<u>[Legal Proceedings](#i5bc76baf3a0b4794bf099658d30e3622_127)</u>** | <u>[43](#i5bc76baf3a0b4794bf099658d30e3622_127)</u> |
| &nbsp;&nbsp;&nbsp;**Item 1A.** | **<u>[Risk Factors](#i5bc76baf3a0b4794bf099658d30e3622_130)</u>** | <u>[43](#i5bc76baf3a0b4794bf099658d30e3622_130)</u> |
| &nbsp;&nbsp;&nbsp;**Item 2.** | **<u>[Unregistered Sales of Equity Securities and Use of Proceeds](#i5bc76baf3a0b4794bf099658d30e3622_133)</u>** | <u>[69](#i5bc76baf3a0b4794bf099658d30e3622_133)</u> |
| &nbsp;&nbsp;&nbsp;**Item 3.** | **<u>[Defaults Upon Senior Securities](#i5bc76baf3a0b4794bf099658d30e3622_136)</u>** | <u>[69](#i5bc76baf3a0b4794bf099658d30e3622_136)</u> |
| &nbsp;&nbsp;&nbsp;**Item 4.** | **<u>[Mine Safety Disclosures](#i5bc76baf3a0b4794bf099658d30e3622_139)</u>** | <u>[69](#i5bc76baf3a0b4794bf099658d30e3622_139)</u> |
| &nbsp;&nbsp;&nbsp;**Item 5.** | **<u>[Other Information](#i5bc76baf3a0b4794bf099658d30e3622_142)</u>** | <u>[69](#i5bc76baf3a0b4794bf099658d30e3622_142)</u> |
| &nbsp;&nbsp;&nbsp;**Item 6.** | **<u>[Exhibits](#i5bc76baf3a0b4794bf099658d30e3622_145)</u>** | <u>[70](#i5bc76baf3a0b4794bf099658d30e3622_145)</u> |
|  | **<u>[Signatures](#i5bc76baf3a0b4794bf099658d30e3622_148)</u>** | <u>[71](#i5bc76baf3a0b4794bf099658d30e3622_148)</u> |

---

Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to "New Relic," "we," "Company," "us," and "our" refer to New Relic, Inc. and its subsidiaries. "New Relic," the New Relic logo, and other trademarks or service marks of New Relic that may appear in this Quarterly Report on Form 10-Q are the property of the Company. This Quarterly Report on Form 10-Q contains additional trade names, trademarks, and service marks of other companies. The Company does not intend its use or display of other companies' trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of the Company by, these other companies, and all such third-party trade names, trademarks, and service marks are the property of their respective owners.

------

**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS**

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "would," "shall," "might," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of natural disasters and actual or threatened public health emergencies, such as the COVID-19 pandemic;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our future financial performance, including our revenue, cost of revenue, gross profit, gross margin, operating expenses, ability to generate positive cash flow, and ability to achieve and maintain GAAP (as defined below) and non-GAAP profitability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our key operating metrics;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• use and limitations of non-GAAP financial measures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the sufficiency of our cash and cash equivalents to meet our working capital, capital expenditure, and liquidity needs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to attract and retain customers to use our products, to optimize the pricing for our products, to expand our sales to our customers, and to convince our existing customers to remain on our platform and increase their spend with us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our product and pricing strategies and their anticipated impacts on our business and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our growth strategy, including increasing usage within our installed base, addition of new customers, penetration of international markets, and expansion of our platform and capabilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the evolution of technologies affecting our products and markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to innovate and provide a superior user experience and our intentions and strategy with respect thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to successfully expand in our existing markets and into new markets, including international markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the attraction and retention of key personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to effectively manage our growth and future expenses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to maintain, protect, and enhance our intellectual property rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• worldwide economic conditions, including inflation and increases in interest rates, and their impact on spending; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to comply with modified or new laws and regulations applying to our business, including privacy and data security regulations.

We caution you that the foregoing list does not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-

------

looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

**SELECTED RISKS AFFECTING OUR BUSINESS**

Investing in our common stock involves a high degree of risk because we are subject to numerous risks and uncertainties that could negatively impact our business, financial condition and results of operations, as more fully described below. These risks and uncertainties include, but are not limited to, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have a limited operating history with our current business model, which makes it difficult to evaluate our current business and future prospects and increases the risk of your investment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have limited experience with respect to determining the optimal prices and pricing strategies for our products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have a history of losses and our revenue growth rate could decline over time, and as our costs increase, we may not be able to generate sufficient revenue to achieve and sustain profitability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Weakened global economic conditions, including market volatility, a downturn or recession, rising inflation and interest rates, and the economic and other impacts of geopolitical conflicts, may harm our industry, business, and results of operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Unfavorable movements in foreign exchange rates may harm our business and results of operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The ongoing global coronavirus ("COVID-19") pandemic could harm our business and results of operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we are not able to manage our growth and expansion, or if our business does not grow as we expect, our operating results may suffer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our business depends on our customers remaining on our platform and increasing their spend with us.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we are not able to develop enhancements to our products, increase adoption and usage of our products, and introduce new products that achieve market acceptance, our business could be harmed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If customers do not expand their use of our products beyond the current predominant use cases, our ability to grow our business and operating results may be adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our quarterly results may fluctuate, and if we fail to meet the expectations of analysts or investors, our stock price and the value of your investment could decline substantially.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, and changing customer needs, requirements, or preferences, our products may become less competitive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The markets in which we participate are intensely competitive, and if we do not compete effectively, our operating results could be harmed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Interruptions or performance problems associated with our technology and infrastructure may adversely affect our business and operating results.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our ongoing and planned expenditures on cloud hosting providers and expenditures on transitioning our services and customers from our data center hosting facilities to public cloud providers are expensive and complex, may result in a negative impact on our cash flows, and may negatively impact our financial results.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our reliance upon open source software could negatively affect our ability to sell our products and subject us to possible litigation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*•* If we lose key members of our management team or are unable to attract and retain executives and employees we need to support our operations and growth, our business may be harmed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we cannot continue to maintain and develop our corporate culture as we grow, we could lose the innovation, teamwork, passion, and focus on execution that we believe contribute to our success.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our failure or perceived failure to comply with existing or future laws, regulations, contracts, self-regulatory schemes, standards, and other obligations related to data privacy and security (including security incidents) could harm our business. Compliance or the actual or perceived failure to comply with such obligations could increase the costs of our products, limit their use or adoption, and otherwise negatively affect our operating results and business.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have incurred substantial indebtedness that may decrease our business flexibility, access to capital, and/or increase our borrowing costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Because our long-term growth strategy involves further expansion of our sales to customers outside the United States, our business will be susceptible to risks associated with international operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate these controls.

------

**PART I. FINANCIAL INFORMATION**

**Item 1. Financial Statements**

**NEW RELIC, INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

*(In thousands, except par value)*

*(Unaudited)*

---

| | | |
|:---|:---|:---|
| | **December 31, 2022** | **March 31, 2022** |
| **Assets** | | |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $506815 | $268695 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short-term investments | 293356 | 559984 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net of allowances of $2,547 and $3,073, respectively | 197926 | 226182 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 21433 | 29447 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred contract acquisition costs | 16805 | 24058 |
| Total current assets | 1036335 | 1108366 |
| Property and equipment, net | 54114 | 68368 |
| Restricted cash | 5786 | 5775 |
| Goodwill | 172298 | 163677 |
| Intangible assets, net | 13986 | 15636 |
| Deferred contract acquisition costs, non-current | 6691 | 10463 |
| Lease right-of-use assets | 40304 | 50465 |
| Other assets, non-current | 5657 | 4916 |
| Total assets | $1335171 | $1427666 |
| **Liabilities, redeemable non-controlling interest and stockholders' equity** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | $29261 | $32545 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued compensation and benefits | 40446 | 37023 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities | 26472 | 36098 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Convertible senior notes, current | 499486 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 294759 | 398754 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities | 11233 | 11103 |
| Total current liabilities | 901657 | 515523 |
| Convertible senior notes, net |  | 497663 |
| Lease liabilities, non-current | 40983 | 49809 |
| Deferred revenue, non-current | 7243 | 108 |
| Other liabilities, non-current | 24856 | 20173 |
| Total liabilities | 974739 | 1083276 |
| Commitments and contingencies (Note 10) |  |  |
| Redeemable non-controlling interest | 18335 | 21686 |
| Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock, $0.001 par value; 100,000 shares authorized at December 31, 2022 and March 31, 2022; 69,118 shares and 66,988 shares issued at December 31, 2022 and March 31, 2022, respectively; and 68,857 shares and 66,728 shares outstanding at December 31, 2022 and March 31, 2022, respectively | 68 | 66 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Treasury stock - at cost (260 shares) | (263) | (263) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 1258562 | 1114221 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (9943) | (8012) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit | (906327) | (783308) |
| Total stockholders' equity | 342097 | 322704 |
| Total liabilities, redeemable non-controlling interest and stockholders' equity | $1335171 | $1427666 |

---

*See notes to condensed consolidated financial statements.*

------

**NEW RELIC, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

*(In thousands, except per share data)*

*(Unaudited)*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Revenue | $239763 | $203591 | $683134 | $579769 |
| Cost of revenue | 61316 | 68793 | 189992 | 192319 |
| Gross profit | 178447 | 134798 | 493142 | 387450 |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development | 69261 | 53362 | 202760 | 153460 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing | 95477 | 97723 | 296100 | 293603 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 42799 | 35614 | 124312 | 113193 |
| Total operating expenses | 207537 | 186699 | 623172 | 560256 |
| Loss from operations | (29090) | (51901) | (130030) | (172806) |
| Other income (expense): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income | 4685 | 575 | 8220 | 2237 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (1283) | (1228) | (3748) | (3682) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income (expense) | 192 | (268) | 190 | (647) |
| Loss before income taxes | (25496) | (52822) | (125368) | (174898) |
| Income tax provision | 1116 | 763 | 1002 | 816 |
| Net loss | $(26612) | $(53585) | $(126370) | $(175714) |
| Net loss and adjustment attributable to redeemable non-controlling interest | 607 | (9121) | 3351 | (19175) |
| Net loss attributable to New Relic | $(26005) | $(62706) | $(123019) | $(194889) |
| Net loss attributable to New Relic per share, basic and diluted | $(0.38) | $(0.96) | $(1.83) | $(3.04) |
| Weighted-average shares used to compute net loss per share, basic and diluted | 68050 | 64983 | 67229 | 64203 |

---

*See notes to condensed consolidated financial statements.*

------

**NEW RELIC, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS**

*(In thousands)*

*(Unaudited)*

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| **Net loss attributable to New Relic** | $(26005) | $(62706) | $(123019) | $(194889) |
| **Other comprehensive loss:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unrealized gain (loss) on available-for-sale securities | 1890 | (1749) | (1931) | (2938) |
| **Comprehensive loss attributable to New Relic** | $(24115) | $(64455) | $(124950) | $(197827) |

---

*See notes to condensed consolidated financial statements.*

------

**NEW RELIC, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY**

*(In thousands)*

*(Unaudited)*

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** |
| | **Common Stock** | **Common Stock** | **Additional<br>Paid-In<br>Capital** | **Treasury Stock** | **Treasury Stock** | **Accumulated<br>Other<br>Comprehensive Income <br>(Loss)** | **Accumulated<br>Deficit** | **Total<br>Stockholders'<br>Equity** | **Common Stock** | **Common Stock** | **Additional<br>Paid-In<br>Capital** | **Treasury Stock** | **Treasury Stock** | **Accumulated<br>Other<br>Comprehensive<br>Loss** | **Accumulated<br>Deficit** | **Total<br>Stockholders'<br>Equity** |
| | **Shares** | **Amount** | **Additional<br>Paid-In<br>Capital** | **Shares** | **Amount** | **Accumulated<br>Other<br>Comprehensive Income <br>(Loss)** | **Accumulated<br>Deficit** | **Total<br>Stockholders'<br>Equity** | **Shares** | **Amount** | **Additional<br>Paid-In<br>Capital** | **Shares** | **Amount** | **Accumulated<br>Other<br>Comprehensive<br>Loss** | **Accumulated<br>Deficit** | **Total<br>Stockholders'<br>Equity** |
| **Balance at beginning of period** | 68568 | $68 | $1215315 | 260 | $(263) | $(11833) | $(880322) | $322965 | 65639 | $65 | $1008363 | 260 | $(263) | $(1208) | $(665089) | $341868 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock upon exercise of stock options | 100 |  | 1932 |  |  |  |  | 1932 | 412 | 1 | 21550 |  |  |  |  | 21551 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock for vested restricted stock units | 450 |  |  |  |  |  |  |  | 345 |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 41315 |  |  |  |  | 41315 |  |  | 38384 |  |  |  |  | 38384 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive income (loss), net |  |  |  |  |  | 1890 |  | 1890 |  |  |  |  |  | (1749) |  | (1749) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss attributable to New Relic |  |  |  |  |  |  | (26005) | (26005) |  |  |  |  |  |  | (62706) | (62706) |
| **Balance at end of period** | 69118 | $68 | $1258562 | 260 | $(263) | $(9943) | $(906327) | $342097 | 66396 | $66 | $1068297 | 260 | $(263) | $(2957) | $(727795) | $337348 |

---

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Nine Months Ended December 31, 2022** | **Nine Months Ended December 31, 2022** | **Nine Months Ended December 31, 2022** | **Nine Months Ended December 31, 2022** | **Nine Months Ended December 31, 2022** | **Nine Months Ended December 31, 2022** | **Nine Months Ended December 31, 2022** | **Nine Months Ended December 31, 2022** | **Nine Months Ended December 31, 2021** | **Nine Months Ended December 31, 2021** | **Nine Months Ended December 31, 2021** | **Nine Months Ended December 31, 2021** | **Nine Months Ended December 31, 2021** | **Nine Months Ended December 31, 2021** | **Nine Months Ended December 31, 2021** | **Nine Months Ended December 31, 2021** |
| | **Common Stock** | **Common Stock** | **Additional<br>Paid-In<br>Capital** | **Treasury Stock** | **Treasury Stock** | **Accumulated<br>Other<br>Comprehensive<br>Loss** | **Accumulated<br>Deficit** | **Total<br>Stockholders'<br>Equity** | **Common Stock** | **Common Stock** | **Additional<br>Paid-In<br>Capital** | **Treasury Stock** | **Treasury Stock** | **Accumulated<br>Other<br>Comprehensive<br>Loss** | **Accumulated<br>Deficit** | **Total<br>Stockholders'<br>Equity** |
| | **Shares** | **Amount** | **Additional<br>Paid-In<br>Capital** | **Shares** | **Amount** | **Accumulated<br>Other<br>Comprehensive<br>Loss** | **Accumulated<br>Deficit** | **Total<br>Stockholders'<br>Equity** | **Shares** | **Amount** | **Additional<br>Paid-In<br>Capital** | **Shares** | **Amount** | **Accumulated<br>Other<br>Comprehensive<br>Loss** | **Accumulated<br>Deficit** | **Total<br>Stockholders'<br>Equity** |
| **Balance at beginning of period** | 66988 | $66 | $1114221 | 260 | $(263) | $(8012) | $(783308) | $322704 | 64019 | $64 | $1001309 | 260 | $(263) | $(19) | $(587116) | $413975 |
| &nbsp;&nbsp;&nbsp;&nbsp;Effect of adoption of ASU 2020-06 |  |  |  |  |  |  |  |  |  |  | (100136) |  |  |  | 54210 | (45926) |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock upon exercise of stock options | 369 |  | 8434 |  |  |  |  | 8434 | 727 | 1 | 29164 |  |  |  |  | 29165 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock for vested restricted stock units | 1388 | 2 | (2) |  |  |  |  |  | 1149 | 1 | (1) |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock related to employee stock purchase plan | 103 |  | 6062 |  |  |  |  | 6062 | 100 |  | 5417 |  |  |  |  | 5417 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock related to acquisition of business | 270 |  | 12112 |  |  |  |  | 12112 | 401 |  | 13487 |  |  |  |  | 13487 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 117735 |  |  |  |  | 117735 |  |  | 119057 |  |  |  |  | 119057 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive loss, net |  |  |  |  |  | (1931) |  | (1931) |  |  |  |  |  | (2938) |  | (2938) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss attributable to New Relic |  |  |  |  |  |  | (123019) | (123019) |  |  |  |  |  |  | (194889) | (194889) |
| **Balance at end of period** | 69118 | $68 | $1258562 | 260 | $(263) | $(9943) | $(906327) | $342097 | 66396 | $66 | $1068297 | 260 | $(263) | $(2957) | $(727795) | $337348 |

---

*See notes to condensed consolidated financial statements.*

------

**NEW RELIC, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

*(In thousands)*

*(Unaudited)*

---

| | | |
|:---|:---|:---|
| | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** |
| **Cash flows from operating activities:** |  |  |
| Net loss attributable to New Relic | $(123019) | $(194889) |
| Net loss and adjustment attributable to redeemable non-controlling interest (Note 3) | (3351) | 19175 |
| Net loss: | $(126370) | $(175714) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 50989 | 66787 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 115413 | 117549 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount and issuance costs | 1823 | 1766 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on facilities exit | 10840 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | 2008 | (204) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities, net of acquisition of business: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 27999 | (3053) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | 5277 | (2990) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred contract acquisition costs | (8711) | (1668) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease right-of-use assets | 7919 | 6743 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (3808) | 2922 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued compensation and benefits and other liabilities | 2911 | 14650 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities | (8696) | (5888) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | (96859) | (67228) |
| **Net cash used in operating activities** | (19265) | (46328) |
| **Cash flows from investing activities:** |  |  |
| Purchases of property and equipment | (2774) | (3177) |
| Proceeds from sale of property and equipment | 1773 |  |
| Cash paid for acquisition, net of cash acquired | (7507) | (7192) |
| Purchases of short-term investments | (50373) | (175668) |
| Proceeds from sale and maturity of short-term investments | 313975 | 212328 |
| Capitalized software development costs | (12194) | (9406) |
| **Net cash provided by investing activities** | 242900 | 16885 |
| **Cash flows from financing activities:** |  |  |
| Proceeds from employee stock purchase plan | 6062 | 5417 |
| Proceeds from exercise of employee stock options | 8434 | 29165 |
| **Net cash provided by financing activities** | 14496 | 34582 |
| Net increase in cash, cash equivalents and restricted cash | 238131 | 5139 |
| Cash, cash equivalents and restricted cash at beginning of period | 274470 | 246463 |
| Cash, cash equivalents and restricted cash at end of period | $512601 | $251602 |
| **Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets:** |  |  |
| Cash and cash equivalents | $506815 | $245827 |
| Restricted cash | 5786 | 5775 |
| Total cash, cash equivalents and restricted cash | $512601 | $251602 |
| **Supplemental disclosure of cash flow information:** |  |  |
| Cash paid for interest and income taxes | $3694 | $4448 |
| Noncash investing and financing activities: |  |  |
| Property and equipment purchased but not yet paid | $194 | $3 |
| Issuance of common stock for the acquisition of business | $12112 | $13487 |
| Acquisition holdback | $3300 | $7250 |

---

*See notes to condensed consolidated financial statements.*

------

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

*(Unaudited)*

**1. Description of Business and Summary of Significant Accounting Policies**

**Business**—New Relic, Inc. (the "Company" or "New Relic") was incorporated in Delaware on February 20, 2008, when it converted from a Delaware limited liability company called New Relic Software, LLC, which was formed in Delaware in September 2007. The Company delivers a software platform for customers to land all their telemetry data in one place and derive actionable insights from that data in a unified front-end application. The New Relic platform provides users with a consistent and comprehensive view of their digital environment allowing them to observe and operate all the components of their digital infrastructure.

**Fiscal Year**—The Company's fiscal year ends on March 31. References to fiscal 2023 refer to the fiscal year ended March 31, 2023.

**Basis of Presentation**—The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries, wholly owned or otherwise, and have been prepared in accordance with United States generally accepted accounting principles ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. All significant intercompany balances and transactions have been eliminated in consolidation. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2022, as filed with the SEC on May 17, 2022 (the "Annual Report").

In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, stockholders' equity and cash flows for the interim period, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year ending March 31, 2023. The condensed consolidated balance sheet as of March 31, 2022 included herein was derived from the audited financial statements as of that date.

**Use of Estimates**—The preparation of the Company's consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Significant items subject to such estimates and assumptions include the fair value of share-based awards, fair value of purchased intangible assets and goodwill, variable consideration included in the transaction price for our customer contracts, useful lives of purchased intangible assets, unrecognized tax benefits, incremental borrowing rate used for operating lease liabilities, and the capitalization and estimated useful life of the Company's software development costs.

These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from management's estimates.

**Concentration of Credit Risk**—Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, and accounts receivable. The Company maintains its cash balances at financial institutions that management believes are high-credit, quality financial institutions, where deposits, at times, exceed the Federal Deposit Insurance Corporation ("FDIC") limits. As of December 31, 2022 and March 31, 2022, 97% and 96%, respectively, of cash, cash equivalents, and restricted cash were concentrated in the United States. The Company has not experienced any losses on cash and cash equivalents to date. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with typical commercial banking relationships. For the purpose of assessing concentrations of credit risk and customer significance, a group of customers under common control or customers that are affiliates of each other are regarded as a single customer. There was no customer that represented more than 10% of the Company's accounts receivable balance as of December 31, 2022 or March 31, 2022. There was no customer that individually exceeded 10% of the Company's revenue during the three or nine months ended December 31, 2022 or 2021.

------

**Significant Accounting Policies**

**Revenue Recognition**—The Company generates revenue from consumption-based and subscription-based agreements that allow customers to access its products and/or platform over the internet as a service. The Company typically sells (1) a subscription-based agreement for a committed contractual amount that is apportioned ratably over the term of the subscription period, (2) a consumption-based agreement for a committed contractual amount where the committed contractual amount is drawn down as usage occurs and may or may not include a usage overage component, and (3) a consumption-based arrangement that is billed based on usage ("Pay as You Go").

The Company determines revenue recognition through the following steps:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• identification of the contract, or contracts with a customer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• identification of the performance obligations in the contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• determination of the transaction price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• allocation of the transaction price to the performance obligations in the contract; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• recognition of revenue, when, or as, the Company satisfies a performance obligation.

Usage above the commitment for consumption-based agreements is either recognized as revenue as the usage is incurred or as revenue as part of an estimate of total usage above the commitment. Total usage above the commitment is estimated by surveying usage in previous months along with other factors and projecting usage for the remaining term of the contract. The estimated usage-based revenues are constrained to the amount the Company expects to be entitled to receive in exchange for providing access to its platform. Revenue from subscription-based agreements is recognized on a ratable basis over the contractual subscription period of the agreement.

**Recently Issued Accounting Pronouncements Not Yet Adopted**

In October 2021, the Financial Accounting Standards Board ("FASB") issued ASU No. 2021-08, *Business Combinations - Accounting for Contract Liabilities from Contracts with Customers (Topic 805),* which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities from acquired contracts using the revenue recognition guidance under ASC 606 as if the entity had originated the contracts. The guidance is effective for fiscal years beginning after April 1, 2023, including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this guidance.

**2.&nbsp;&nbsp;&nbsp;&nbsp;Business Combinations**

*K2 Cyber Security Inc.*

On September 14, 2022, the Company acquired all of the equity interests in K2 Cyber Security Inc. ("K2"), a company that provides a differentiated, signatureless approach to vulnerability and hack detection. The aggregate purchase price of $16.6 million consisted of approximately (i) $4.5 million in cash (of which the Company held back approximately $3.3 million for 18 months after the transaction closing date for indemnification purposes, which has been accrued as a long-term liability) and (ii) 202,752 shares of the Company's common stock with an aggregate fair value of approximately $12.1 million, after taking into account the holdback arrangement with the K2 founders, as described below. The fair value of the consideration transferred was determined based on a $59.74 per share price of the Company's common stock on the closing date of the acquisition.

The total purchase price was allocated to the developed technology acquired with an estimated useful life of three years and net assets assumed. Deferred tax related to the developed technology was deemed immaterial. The excess purchase price was recorded as goodwill, as set forth below. Goodwill generated from the acquisition was attributable to expected synergies from future growth and was not deductible for tax purposes.

------

The following table presents the preliminary purchase price allocation related to the acquisition (in thousands):

---

| | |
|:---|:---|
| Cash consideration | $4497 |
| Fair value of common shares | 16132 |
| Total consideration | 20629 |
| Post-business combination compensation expense | (4019) |
| Total purchase price | 16610 |
| Net assets assumed | (589) |
| Developed technology acquired | (7400) |
| Goodwill | $8621 |

---

The acquisition was accounted for as a business combination in accordance with ASC 805. The estimated fair value of developed technology acquired of $7.4 million was determined through the use of a third-party valuation firm using cost approach methodology. The direct transaction costs of the acquisition were accounted for separately from the business combination and expensed as incurred. The business combination did not have a material impact on the condensed consolidated financial statements and therefore historical and pro forma disclosures have not been presented.

The acquisition also included a holdback arrangement with the two founders of K2, totaling approximately 67,278 shares of the Company's common stock, contingent upon their continued employment with the Company. The fair value of these awards, which are subject to the recipients' continued service, was $4.0 million and was excluded from the aggregate purchase price. These awards are recognized as stock-based compensation expenses over the vesting period, which is 24 and 36 months for the two founders, respectively.

*CodeStream Inc.*

On June 8, 2021, the Company acquired all of the equity interests in CodeStream Inc. ("CodeStream"), a company that provides an integrated developer collaboration platform. The aggregate purchase price of $28.6 million consisted of approximately $15.1 million in cash (of which the Company held back approximately $7.3 million from the aggregate purchase price for 18 months after the transaction closing date, and all of which was subsequently paid out in December 2022 in accordance with the holdback term) and 202,561 shares of the Company's common stock with an aggregate fair value of approximately $13.5 million. The fair value of the consideration transferred was determined based on a $66.58 per share price of the Company's common stock on the closing date of the acquisition. The total purchase price was allocated to the developed technology acquired with an estimated useful life of three years, net assets assumed, and a deferred tax liability related to the developed technology. The excess purchase price was recorded as goodwill. The acquisition was accounted for as a business combination in accordance with ASC 805. The estimated fair value of developed technology acquired of $10.3 million was determined through the use of a third-party valuation firm using cost approach methodology. The business combination did not have a material impact on the condensed consolidated financial statements and therefore historical and proforma disclosures have not been presented.

The acquisition also included a holdback arrangement with certain employees of CodeStream, totaling approximately 199,492 shares of the Company's common stock, contingent upon their continued employment with the Company. The fair value of these awards, which are subject to the recipients' continued service, was $13.3 million and was excluded from the aggregate purchase price. These awards are being recognized as stock-based compensation expense over the vesting period, which is 42 months.

**3. &nbsp;&nbsp;&nbsp;&nbsp;Joint Venture**

On July 13, 2018, the Company entered into an agreement with Japan Cloud Computing L.P. and M30 LLC (collectively, the "Investors") to engage in the investment, organization, management and operation of New Relic K.K., a Japanese subsidiary of the Company that is focused on the sale of the Company's products and services in Japan. On August 21, 2018, the investors initially contributed approximately $3.6 million (396 million Japanese Yen) in exchange for 40% of the outstanding common stock of New Relic K.K. On August 21, 2019, the Company and Investors additionally contributed approximately $1.5 million (156 million Japanese Yen) and approximately $1.0 million (104 million Japanese Yen), respectively, to subscribe to additional shares. As of December 31, 2022, the Company owned approximately 60% of the outstanding common stock in New Relic K.K.

------

All of the common stock held by the Investors may be callable by the Company or puttable by the Investors upon certain contingent events. Should the call or put option be exercised, the redemption value would be determined based on a prescribed formula derived from the discrete revenues of New Relic K.K. and the Company and may be settled, at the Company's discretion, with Company stock or cash. As a result of the put right available to the redeemable non-controlling interest holders in the future, the redeemable non-controlling interest in New Relic K.K. is classified outside of permanent equity in the Company's consolidated balance sheet as of December 31, 2022, and the balance is reported at the greater of the initial carrying amount adjusted for the redeemable non-controlling interest's share of earnings or losses, or its estimated redemption value. Accordingly, the Company adjusted the redeemable non-controlling interest by $3.4 million at December 31, 2022.

The following table summarizes the activity in the redeemable non-controlling interest for the periods indicated below (in thousands):

---

| | | |
|:---|:---|:---|
| | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** |
| Balance, beginning of period | $21686 | $3389 |
| Net loss attributable to redeemable non-controlling interest | (348) | (275) |
| Adjustment to redeemable non-controlling interest | (3003) | 19450 |
| Balance, end of period | $18335 | $22564 |

---

**4. &nbsp;&nbsp;&nbsp;&nbsp;Fair Value Measurements**

The Company classifies time deposits and other investments that are highly liquid and have maturities of three months or less at the date of purchase as cash equivalents.

The Company's restricted cash consists of compensating balances that must be maintained at a financial institution as collateral for the Company's standby letters of credit relating to its property leases.

The Company invests in certificates of deposit, commercial paper, corporate debt securities, U.S. treasury securities, and U.S. agency securities, which are classified as available-for-sale securities.

------

The following tables present information about the Company's financial assets measured at fair value on a recurring basis as of December 31, 2022 and March 31, 2022 based on the three-tier fair value hierarchy (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Fair Value Measurements as of December 31, 2022** | **Fair Value Measurements as of December 31, 2022** | **Fair Value Measurements as of December 31, 2022** | **Fair Value Measurements as of December 31, 2022** |
| | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Cash and cash equivalents: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Money market funds | $420517 | $— | $— | $420517 |
| Short-term investments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certificates of deposit |  | 29386 |  | 29386 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial paper |  | 2954 |  | 2954 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate notes and bonds |  | 83018 |  | 83018 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. treasury securities | 177998 |  |  | 177998 |
| Restricted cash: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Money market funds | 5786 |  |  | 5786 |
| Total | $604301 | $115358 | $— | $719659 |
| Included in cash and cash equivalents |  |  |  | $420517 |
| Included in short-term investments |  |  |  | $293356 |
| Included in restricted cash |  |  |  | $5786 |
|  | **Fair Value Measurements as of March 31, 2022** | **Fair Value Measurements as of March 31, 2022** | **Fair Value Measurements as of March 31, 2022** | **Fair Value Measurements as of March 31, 2022** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Cash and cash equivalents: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Money market funds | $109327 | $— | $— | $109327 |
| Short-term investments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certificates of deposit |  | 126885 |  | 126885 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial paper |  | 27861 |  | 27861 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate notes and bonds |  | 85065 |  | 85065 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. treasury securities | 320173 |  |  | 320173 |
| Restricted cash: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Money market funds | 5775 |  |  | 5775 |
| Total | $435275 | $239811 | $— | $675086 |
| Included in cash and cash equivalents |  |  |  | $109327 |
| Included in short-term investments |  |  |  | $559984 |
| Included in restricted cash |  |  |  | $5775 |

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There were no transfers between fair value measurement levels during the nine months ended December 31, 2022 and 2021.

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The following table presents the Company's available-for-sale securities as of December 31, 2022 (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Available-for-sale Investments as of December 31, 2022** | **Available-for-sale Investments as of December 31, 2022** | **Available-for-sale Investments as of December 31, 2022** | **Available-for-sale Investments as of December 31, 2022** |
| | **Amortized Cost** | **Unrealized Gains** | **Unrealized Losses** | **Fair Value** |
| Short-term investments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certificates of deposit | $29500 | $— | $(114) | $29386 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial paper | 2974 |  | (20) | 2954 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate notes and bonds | 85907 |  | (2889) | 83018 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. treasury securities | 183211 |  | (5213) | 177998 |
| Total available-for-sale investments | $301592 | $— | $(8236) | $293356 |

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The following table presents the Company's available-for-sale securities as of March 31, 2022 (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Available-for-sale Investments as of March 31, 2022** | **Available-for-sale Investments as of March 31, 2022** | **Available-for-sale Investments as of March 31, 2022** | **Available-for-sale Investments as of March 31, 2022** |
| | **Amortized Cost** | **Unrealized Gains** | **Unrealized Losses** | **Fair Value** |
| Short-term investments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certificates of deposit | $127500 | $— | $(615) | $126885 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial paper | 27946 |  | (85) | 27861 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate notes and bonds | 87259 |  | (2194) | 85065 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. treasury securities | 323584 | 79 | (3490) | 320173 |
| Total available-for-sale investments | $566289 | $79 | $(6384) | $559984 |

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The Company reviews its debt securities classified as short-term investments on a regular basis for impairment. For debt securities in unrealized loss positions, the Company determines whether any portion of the decline in fair value below the amortized cost basis is due to credit-related factors where the Company neither intends to sell nor anticipates that it is more likely than not that it will be required to sell prior to recovery of the amortized cost basis. The Company consider factors such as the extent to which the market value has been less than the cost, any noted failure of the issuer to make scheduled payments, changes to the rating of the security, and other relevant credit-related factors in determining whether or not a credit loss exists. During the nine months ended December 31, 2022 and the twelve months ended March 31, 2022, the Company did not recognize an allowance for credit-related losses on any of its investments.

As of December 31, 2022 and March 31, 2022, securities that were in an unrealized loss position for more than 12 months were $5.5 million and $1.3 million, respectively. The unrealized losses were caused by changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities, and not related to the underlying credit of the issuers or the underlying collateral. The unrealized losses on these investments are not considered other-than-temporary impairment, because the decline in fair value is not attributable to credit quality and because the Company does not intend, and it is not likely that it will be required, to sell these securities before recovery of their amortized cost basis. As a result, the Company did not consider any available-for-sale securities to be impaired as of December 31, 2022 and March 31, 2022.

The following table classifies the Company's available-for-sale short-term investments by contractual maturities as of December 31, 2022 and March 31, 2022 (in thousands):

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| | | |
|:---|:---|:---|
| | **December 31, 2022** | **March 31, 2022** |
| Due within one year | $165992 | $354774 |
| Due after one year and within three years | 127364 | 205210 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $293356 | $559984 |

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For certain other financial instruments, including accounts receivable, accounts payable and other current liabilities, the carrying amounts approximate their fair value due to the relatively short maturity of these balances.

**Convertible Senior Notes**

As of December 31, 2022, the fair value of the Notes was $443.7 million. The fair value was determined based on the quoted price of the Notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2 in the fair value hierarchy.

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**5.&nbsp;&nbsp;&nbsp;&nbsp;Revenue**

**Accounts Receivable and Contract Assets**

The Company performed procedures to evaluate the creditworthiness of its customers and assess collectability of accounts. Using a current expected credit loss model, the Company determined that, while there may be a delay in collections due to the downturn in economic activity, there has not been a material impact to the risk of credit loss on accounts receivables as of December 31, 2022.

The Company receives payments from customers based upon billing cycles. As the Company performs under customer contracts, its right to consideration that is unconditional is considered to be accounts receivable. If the Company's right to consideration for such performance is contingent upon a future event or satisfaction of additional performance obligations, the amount of revenues the Company has recognized in excess of the amount it has billed to the customer is considered to be a contract asset. Contract assets were $2.8 million and $1.5 million as of December 31, 2022 and March 31, 2022, respectively. The Company has no asset impairment charges related to contract assets for the periods presented.

**Deferred Revenue and Performance Obligations**

Deferred revenue represents consideration received from customers in excess of revenues recognized. The following table presents the changes to the Company's deferred revenue for each of the periods presented below (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Deferred revenue, beginning of period | $285286 | $272246 | $398862 | $375268 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contributions from contract asset | (1381) | (1022) | 1293 | 618 |
| &nbsp;&nbsp;&nbsp;&nbsp;Billings | 257860 | 240407 | 584981 | 511923 |
| &nbsp;&nbsp;&nbsp;&nbsp;Revenue recognized | (239763) | (203591) | (683134) | (579769) |
| Deferred revenue, end of period | $302002 | $308040 | $302002 | $308040 |

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For the three and nine months ended December 31, 2022 and 2021, the majority of revenue recognized was from the deferred revenue balances at the beginning of each period. For the three and nine months ended December 31, 2022, the Company recognized $7.5 million and $11.1 million, respectively, in revenue from performance obligations satisfied in prior periods. For the three and nine months ended December 31, 2021, the Company recognized $8.6 million and $9.7 million, respectively, in revenue from performance obligations satisfied in prior periods.

The aggregate unrecognized transaction price of the Company's remaining performance obligations as of December 31, 2022 and 2021 was $726.1 million and $609.9 million, respectively. The Company expects approximately 75% to be recognized as revenue in the 12 months ending December 31, 2023, 93% of the balance as revenue in the 24 months following December 31, 2022, and the remainder thereafter based on historical customer consumption patterns. However, the amount and timing of revenue recognition are generally dependent upon customers' future consumption, which is inherently variable at customers' discretion and can extend beyond the original contract term in cases where customers are permitted to roll over unused capacity to future periods, generally on the purchase of additional capacity at renewal.

The aggregate balance of remaining performance obligations represents contracted revenue that has not yet been recognized and does not include contract amounts which are cancellable by the customer and amounts associated with optional renewal periods.

**Capitalized Contract Costs**

The Company capitalizes certain contract acquisition costs primarily consisting of commissions, if the Company expects the benefit of the contact acquisition costs to be greater than one year. The balances of deferred costs to obtain customer contracts were $23.5 million and $34.5 million as of December 31, 2022 and March 31, 2022, respectively. In the three months ended December 31, 2022 and 2021, amortization from amounts capitalized was $6.0 million and $8.8 million, respectively. In the nine months ended December 31, 2022 and 2021, amortization from amounts capitalized was $19.7 million and $28.6 million, respectively. In the three months ended December 31, 2022 and 2021, amounts expensed as incurred were $14.7 million and $17.0 million, respectively. In the nine months ended December 31, 2022 and 2021, amounts expensed as incurred were $43.2 million and $46.5 million, respectively.

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**6. &nbsp;&nbsp;&nbsp;&nbsp;Property and Equipment**

Property and equipment, net, consisted of the following (in thousands):

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| | | |
|:---|:---|:---|
| | **December 31, 2022** | **March 31, 2022** |
| Computers, software, and equipment | $14595 | $13854 |
| Site operation equipment | 56966 | 67726 |
| Furniture and fixtures | 4783 | 5772 |
| Leasehold improvements | 34795 | 49756 |
| Capitalized software development costs | 85548 | 79808 |
| Total property and equipment | 196687 | 216916 |
| Less: accumulated depreciation and amortization | (142573) | (148548) |
| Total property and equipment, net | $54114 | $68368 |

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Depreciation and amortization expense related to property and equipment was $10.0 million and $10.3 million for the three months ended December 31, 2022 and 2021, respectively, and $25.2 million and $31.9 million for the nine months ended December 31, 2022 and 2021, respectively.

**7.&nbsp;&nbsp;&nbsp;&nbsp;0.5% Convertible Senior Notes and Capped Call**

In May 2018, the Company issued $500.25 million in aggregate principal amount of Notes in a private offering, including $65.25 million in aggregate principal amount of Notes pursuant to the exercise in full of the initial purchasers' option to purchase additional Notes. The Notes are the Company's senior unsecured obligations and bear interest at a fixed rate of 0.5% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2018. The Notes will mature on May 1, 2023, unless earlier converted or repurchased. Each $1,000 principal amount of the Notes will initially be convertible into 9.0244 shares of the Company's common stock (the "Conversion Option"), which is equivalent to an initial conversion price of approximately $110.81 per share. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the indenture governing the Notes. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate, in certain circumstances, for a holder who elects to convert its Notes in connection with such a corporate event. The Notes became convertible at the option of their holders on November 1, 2022.

Until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes, in multiples of $1,000 principal amount, at the option of the holder. On November 1, 2022, the Company was deemed to have elected to settle all conversions on or after November 1, 2022, with cash up to the principal amount of the Notes and shares for any excess conversion value.

In accounting for the transaction, the Notes were separated into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated conversion feature. The carrying amount of the equity component representing the Conversion Option was $102.5 million and was determined by deducting the fair value of the liability component from the proceeds received upon issuance of the Notes. The equity component was recorded in additional paid-in capital and is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the Notes over the liability component (the "Debt Discount") and the debt issuance costs were amortized to interest expense over the contractual term of the Notes at an effective interest rate of 5.74%. This rate is inclusive of the issuance costs.

In accounting for the debt issuance costs of $11.6 million related to the Notes, the Company allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds of the Notes. Issuance costs attributable to the liability component were $9.2 million and were amortized to interest expense using the effective interest method over the contractual term of the Notes. Issuance costs attributable to the equity component were $2.4 million and netted with the equity component in additional paid-in capital.

In connection with the offering of the Notes, the Company entered into privately negotiated capped call transactions with certain financial institutions (the "Capped Calls"). The Capped Calls each have an initial strike price of approximately $110.81 per share, subject to certain adjustments, which correspond to the initial conversion price of the Notes. The Capped Calls have initial cap prices of $173.82 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-

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dilution adjustments, approximately 4.5 million shares of the Company's common stock. Conditions that cause adjustments to the initial strike price of the Capped Calls mirror conditions that result in corresponding adjustments for the Notes. The Capped Calls are generally intended to reduce potential dilution to holders of the Company's common stock upon any conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset, as the case may be, subject to a cap based on the cap price. For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders' equity and are not accounted for as derivatives. The cost of $63.2 million incurred in connection with the Capped Calls was recorded as a reduction to additional paid-in capital. The net impact related to stockholders' equity has been included in additional paid-in capital and was a result of the issuance costs of $2.4 million and the purchase of Capped Calls noted above in the amount of $63.2 million.

In the first quarter of fiscal 2022, the Company adopted ASU No. 2020-06, *Accounting for Convertible Instruments and Contract on an Entity's Own Equity*. As a result of the adoption, the Conversion Option of $102.5 million and issuance costs of $2.4 million previously attributable to the equity component are no longer presented in equity. Similarly, the debt discount, which was equal to the carrying value of the embedded conversion feature upon issuance, is no longer amortized into income as interest expense over the life of the instrument. As a result, the Company recorded a $54.2 million decrease to the opening balance of accumulated deficit, a $100.1 million decrease to the opening balance of additional paid-in capital, and a $45.9 million increase to the opening balance of the Notes, net on the consolidated balance sheet.

The Notes became current and were reclassified to short-term effective in the first quarter of fiscal year 2023. For the three months ended December 31, 2022, the effective interest rate for the Notes was 0.98%. The net carrying amount of the liability component of the Notes was as follows (in thousands):

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| | | |
|:---|:---|:---|
| | **December 31, 2022** | **March 31, 2022** |
| Principal | $500250 | $500250 |
| Unamortized issuance costs | (764) | (2587) |
| Net carrying amount | $499486 | $497663 |

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Interest expense related to the Notes was as follows (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Amortization of issuance costs | $635 | $590 | 1823 | 1766 |
| Contractual interest expense | 625 | 624 | 1872 | 1872 |
| Total interest expense | $1260 | $1214 | $3695 | $3638 |

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**8. &nbsp;&nbsp;&nbsp;&nbsp;Goodwill and Purchased Intangibles Assets**

In September 2022, the Company acquired all of the equity interests in K2. As of the closing of the acquisition, the estimated fair value of the acquired developed technology and goodwill was $7.4 million and $8.6 million, respectively. Refer to Note 2 — Business Combinations for more information.

The changes in the carrying amount of goodwill for the nine months ended December 31, 2022 consisted of the following (in thousands):

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| | |
|:---|:---|
| Goodwill as of March 31, 2022 | $163677 |
| Goodwill acquired | 8621 |
| Goodwill as of December 31, 2022 | $172298 |

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During the three months ended December 31, 2022, the Company impaired certain intangible assets acquired as part of historical acquisitions, resulting in a write-down of the full book value of $6.3 million, net of accumulated amortization of $4.6 million. The impairment expense is included in cost of revenue on the Condensed Consolidated Statements of Operations.

Purchased intangible assets subject to amortization as of December 31, 2022 consisted of the following (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **Gross Carrying<br>Amount** | **Accumulated<br>Amortization** | **Net Carrying<br>Amount** |
| Developed technology | $28600 | $(14614) | $13986 |

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Purchased intangible assets subject to amortization as of March 31, 2022 consisted of the following (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **Gross Carrying<br>Amount** | **Accumulated<br>Amortization** | **Net Carrying<br>Amount** |
| Developed technology | $27500 | $(11864) | $15636 |

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Amortization expense of purchased intangible assets was $4.4 million and $2.0 million for the three months ended December 31, 2022 and 2021, respectively, and $9.0 million and $5.4 million for the nine months ended December 31, 2022 and 2021, respectively, and is included in cost of revenue on the Company's condensed consolidated statements of operations.

Estimated future amortization expense as of December 31, 2022 was as follows (in thousands):

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| | |
|:---|:---|
| **<u>Fiscal Years Ending March 31,</u>** | **Estimated Total Future Amortization Expense** |
| 2023 (remaining three months) | $2383 |
| 2024 | 5900 |
| 2025 | 4470 |
| Thereafter | 1233 |
|  | $13986 |

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**9. &nbsp;&nbsp;&nbsp;&nbsp;Leases**

The Company leases office space under non-cancelable operating leases, which expire from 2023 to 2031. All of its office leases are classified as operating leases with lease expense recognized on a straight-line basis over the lease term.

Lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As these leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company considers information including, but not limited to, the lease term, the Company's credit rating and interest rates of similar debt instruments with comparable credit ratings. The lease right-of-use assets are also increased by any lease prepayments made and reduced by any lease incentives such as tenant improvement allowances. Options to extend the lease term are included in the lease term when it is reasonably certain that the Company will exercise the extension option.

The Company's operating leases typically include nonlease components such as common-area maintenance costs. The Company has elected to include nonlease components with lease payments for the purpose of calculating lease right-of-use assets and liabilities, to the extent that they are fixed. Nonlease components that are not fixed are expensed as incurred as variable lease payments.

Leases with a term of one year or less are not recognized on the Company's condensed consolidated balance sheet.

The Company continues to evaluate its real estate portfolio and adjust certain of its right-of-use assets and other lease-related assets including leasehold improvements, furniture and fixtures, and computer equipment for impairment. For the three months ended December 31, 2022, the Company incurred lease exit costs of $8.1 million, including $3.1 million for the impairment, $2.4 million for accelerated depreciation of leasehold improvements for certain facilities, and $2.6 million for accelerated depreciation of right-of-use assets where the Company has ceased the use of the space or the closing process has commenced. For the nine months ended December 31, 2022, the Company incurred lease exit costs of $10.8 million, including $4.7 million for the impairment, $2.4 million for accelerated depreciation of leasehold improvements for certain facilities, and $3.7 million for accelerated depreciation of right-of-use assets where the Company has ceased the use of the space or the closing process has commenced.

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The following table presents information about leases on the condensed consolidated balance sheet (in thousands):

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| | | |
|:---|:---|:---|
| | **December 31, 2022** | **March 31, 2022** |
| **Assets** | | |
| Lease right-of-use-assets | $40304 | $50465 |
| **Liabilities** |  |  |
| Lease liabilities | $11233 | $11103 |
| Lease liabilities, non-current | 40983 | 49809 |
| Total operating lease liabilities | $52216 | $60912 |

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As of December 31, 2022, the weighted average remaining lease term was 4.7 years and the weighted average discount rate was 6.9%.

The following table presents information about leases on its condensed consolidated statement of operations (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Operating lease expense | $3097 | $3418 | $9970 | $10372 |
| Short-term lease expense | 169 | 164 | 620 | 467 |
| Variable lease expense | 829 | 736 | 2327 | 2099 |

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The following table presents supplemental cash flow information about the Company's leases (in thousands):

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| | | |
|:---|:---|:---|
| | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** |
| Cash paid for amounts included in the measurement of lease liabilities | $11403 | $11120 |
| Operating lease assets obtained in exchange for new lease liabilities (1) | 748 | 1414 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Includes the impact of new leases as well as remeasurements and modifications to existing leases.

As of December 31, 2022, remaining maturities of lease liabilities were as follows (in thousands):

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| | |
|:---|:---|
| **<u>Fiscal Years Ending March 31,</u>** | **Operating Leases** |
| 2023 (remaining three months) | $3303 |
| 2024 | 14340 |
| 2025 | 11493 |
| 2026 | 11699 |
| 2027 | 12278 |
| 2028 | 6281 |
| Thereafter | 2014 |
| Total operating lease payments | $61408 |
| Less imputed interest | (9192) |
| Total operating lease liabilities | $52216 |

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**10.&nbsp;&nbsp;&nbsp;&nbsp;Commitments and Contingencies**

**Purchase Commitments**—As of December 31, 2022 and March 31, 2022, the Company had purchase commitments of $550.3 million and $549.4 million, respectively, primarily related to data center, cloud and hosting services.

**Other Contingencies**—In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed, under certain conditions, to hold these third parties harmless against

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specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Company's products when used for their intended purposes infringe the intellectual property rights of such other third parties, or other claims made against certain parties. To date, the Company has not incurred any costs as a result of such obligations and has not accrued any liabilities related to such obligations in the consolidated financial statements. In addition, the Company indemnifies its officers, directors, and certain key employees while they are serving in good faith in their respective capacities. The Company does not currently believe there is a reasonable possibility that a loss may have been incurred under these indemnification obligations. To date, there have been no claims under any such indemnification provisions.

**Legal Reserves and Typical Proceedings**—The Company is involved from time to time in various claims and legal actions arising in the ordinary course of business. The Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Unless otherwise specifically disclosed in this note, the Company has determined that no provision for liability nor disclosure is required related to any claim against the Company because: (a) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim; (b) a reasonably possible loss or range of loss cannot be estimated; or (c) such estimate is immaterial. While it is not feasible to predict or determine the ultimate outcome of these matters, the Company believes that none of its current legal proceedings will have a material adverse effect on its financial position, results of operations, or cash flows.

**401(k) Plan**—The Company sponsors a 401(k) defined contribution plan covering all eligible U.S. employees. The Company is responsible for the administrative costs of the 401(k) plan and beginning on January 1, 2021, the Company has been making matching contributions to the 401(k) plan, up to a certain limit. Contributions to the 401(k) plan are discretionary. For the three months ended December 31, 2022 and 2021, the Company incurred expense of $1.1 million and $0.9 million, respectively, for matching contributions. For the nine months ended December 31, 2022 and 2021, the Company incurred expense of $5.0 million and $3.7 million, respectively, for matching contributions.

**11.&nbsp;&nbsp;&nbsp;&nbsp;Common Stock and Stockholders' Equity**

**Employee Stock Purchase Plan**—The Company's board of directors adopted, and the Company's stockholders approved, the Company's 2014 Employee Stock Purchase Plan (the "ESPP"), which became effective in December 2014. The ESPP initially reserved and authorized the issuance of up to 1,000,000 shares of common stock. The ESPP provides that the number of shares reserved and available for issuance under the ESPP automatically increases each April, beginning on April 1, 2015, by the lesser of 500,000 shares, 1% of the number of the Company's common stock shares issued and outstanding on the immediately preceding March 31, or such lesser number of shares as determined by the Company's board of directors. Offering periods are generally six months long and begin on February 15th and August 15th of each year. For the nine months ended December 31, 2022, 102,750 shares of common stock were purchased under the ESPP at an average price of $59.00. For the nine months ended December 31, 2021, 100,309 shares of common stock were purchased under the ESPP at an average price of $54.00. The intrinsic value of shares purchased during the nine months ended December 31, 2022 and 2021 was $0.9 million and $2.6 million, respectively. The intrinsic value is calculated as the difference between the market value on the date of purchase and the purchase price of the shares. Stock-based compensation expense recognized related to the ESPP was $1.4 million and $1.1 million for the three months ended December 31, 2022 and 2021, respectively, and $4.2 million and $3.0 million for the nine months ended December 31, 2022 and 2021, respectively. As of December 31, 2022, 3,384,792 shares of common stock were available for issuance under the ESPP.

**2008 Equity Incentive Plan**—The Company's board of directors adopted, and the Company's stockholders approved, the 2008 Equity Incentive Plan, or the 2008 Plan, in February 2008. The 2008 Plan was terminated in connection with the Company's initial public offering ("IPO"), and accordingly, no shares are available for future issuance under this plan. The 2008 Plan continues to govern outstanding awards granted thereunder.

**2014 Equity Incentive Plan**—The Company's board of directors adopted, and the Company's stockholders approved, the Company's 2014 Equity Incentive Plan (the "2014 Plan"), which became effective in December 2014. The 2014 Plan serves as the successor to the Company's 2008 Plan. The 2014 Plan initially reserved and authorized the issuance of 5,000,000 shares of the Company's common stock. Additionally, shares not issued or subject to outstanding grants under the 2008 Plan upon its termination became available under the 2014 Plan, resulting in a total of 5,184,878 available shares under the 2014 Plan as of the effective date of the 2014 Plan. Pursuant to the terms of the 2014 Plan, any shares subject to outstanding stock options or other stock awards under the 2008 Plan that (i) expire or terminate for any reason prior to exercise or settlement, (ii) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise return to the Company or (iii) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or

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to satisfy the purchase price or exercise price of a stock award will become available for issuance pursuant to awards granted under the 2014 Plan. The 2014 Plan provides that the number of shares reserved and available for issuance under the plan automatically increases each April 1, beginning on April 1, 2015, by 5% of the outstanding number of shares of the Company's common stock shares issued and outstanding on the immediately preceding March 31, or such lesser number of shares as determined by the Company's board of directors. As of December 31, 2022, there were 14,980,528 shares available for issuance under the 2014 Plan.

The following table summarizes the Company's stock option, restricted stock unit ("RSU"), and performance-based restricted stock unit ("PSU") award activities for the nine months ended December 31, 2022 (in thousands, except exercise price, contractual term and fair value information):

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| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Options Outstanding** | **Options Outstanding** | **Options Outstanding** | **Options Outstanding** | **RSUs Outstanding** | **RSUs Outstanding** | **RSUs Outstanding** | **RSUs Outstanding** | **PSUs Outstanding** | **PSUs Outstanding** | **PSUs Outstanding** | **PSUs Outstanding** |
| | **Number of Shares** | **Weighted- Average Exercise Price** | **Weighted-<br>Average<br>Remaining<br>Contractual<br>Term<br>(in years)** | **Aggregate Intrinsic Value** | **Number of Shares** | **Weighted- Average Grant Date Fair Value** | **Weighted-<br>Average<br>Remaining<br>Contractual<br>Term<br>(in years)** | **Aggregate Intrinsic Value** | **Number of Shares** | **Weighted- Average Grant Date Fair Value** | **Weighted-<br>Average<br>Remaining<br>Contractual<br>Term<br>(in years)** | **Aggregate Intrinsic Value** |
| Outstanding - April 1, 2022 | 1663 | $54.66 | 5.6 | $31436 | 3351 | $70.04 | 2.6 | $224096 | 320 | $86.88 | 1.8 | $21430 |
| &nbsp;&nbsp;Granted |  |  |  |  | 2932 | 51.32 |  |  | 307 | 72.05 |  |  |
| &nbsp;&nbsp;Exercised/vested | (369) | 22.83 |  | 13494 | (1258) | 65.56 |  |  | (130) | 89.05 |  |  |
| &nbsp;&nbsp;Canceled/forfeited | (93) | 70.00 |  |  | (860) | 61.26 |  |  | (26) | 71.07 |  |  |
| Outstanding - December 31, 2022 | 1201 | $63.26 | 5.5 | $8839 | 4165 | $60.02 | 2.3 | $235110 | 471 | $77.49 | 1.8 | $26625 |

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PSUs granted under the 2014 Plan are contingent upon the achievement of pre-determined market and service conditions. The number of shares of common stock to be issued at vesting will range from 0% to 200% of the target number based on the Company's total shareholder return ("TSR") relative to the performance of peer companies for each measurement period, over a one-year, two-year cumulative, and three-year cumulative period. If these market conditions are not met but service conditions are met, the PSUs will not vest; however, any stock-based compensation expense recognized to date will not be reversed. The Company uses a Monte Carlo simulation model to determine the fair value of its PSUs and recognizes expense using the accelerated attribution method over the requisite service period. The PSUs presented in the table above were calculated based on 100% expected achievement.

**Stock-Based Compensation Expense**—Total stock-based compensation expense included in cost of revenue, research and development, sales and marketing, and general and administrative expenses for the three and nine months ended December 31, 2022 and 2021 were as follows (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Cost of revenue | $1174 | $1382 | $4051 | $3757 |
| Research and development | 14977 | 13117 | 42705 | 36228 |
| Sales and marketing | 12556 | 12537 | 36013 | 37619 |
| General and administrative (1) | 11972 | 10755 | 32644 | 39945 |
| Total stock-based compensation expense (2) | $40679 | $37791 | $115413 | $117549 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Includes $9.6 million acceleration of share-based payment expense for the nine months ended December 31 2021, for one of the Company's executives due to his departure at the end of June 2021. There was no corresponding expense for the nine months ended December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Includes $0.5 million stock-based compensation expense for the nine months ended December 31, 2021, due to the restructuring activities commenced in the first quarter of fiscal 2022. There was no corresponding expense for the nine months ended December 31, 2022. Refer to Note 15 — Restructuring for more information.

As of December 31, 2022, unrecognized stock-based compensation cost related to outstanding unvested stock options was $4.1 million, which is expected to be recognized over a weighted-average period of approximately 1.1 years. As of December 31, 2022, unrecognized stock-based compensation cost related to outstanding unvested RSUs was $256.8 million, which is expected to be recognized over a weighted-average period of approximately 2.2 years. As of December 31, 2022, unrecognized stock-based compensation cost related to PSUs was $19.1 million, which is expected to be recognized over a weighted-average period of approximately 1.8 years.

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**12.&nbsp;&nbsp;&nbsp;&nbsp;Income Taxes**

The Company is subject to income tax in the United States as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax. The Company does not provide for federal income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are indefinitely reinvested.

The Company recorded income tax expense of $1.1 million and $0.8 million for the three months ended December 31, 2022 and 2021, respectively. The Company recorded income tax expense of $1.0 million and $0.8 million for the nine months ended December 31, 2022 and 2021, respectively. The income tax expense for the three and nine months ended December 31, 2022 is primarily related to foreign and U.S. state taxes. The income tax expense for the three and nine months ended December 31, 2021 is primarily related to foreign and U.S. state taxes partially offset by the release of the valuation allowance from the acquisition of CodeStream.

Based on the available evidence during the three and nine months ended December 31, 2022, the Company believes it is not more-likely-than-not to realize tax benefits of U.S. and Japan losses incurred during the three and nine months ended December 31, 2022. The primary difference between the effective tax rate and the statutory tax rate relates to the valuation allowance on the U.S. and Japan losses, foreign tax rate differences and state income taxes.

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (the Inflation Act) into law. The Inflation Act contains certain tax measures, including a corporate alternative minimum tax of 15% on some large corporations. The Company is currently evaluating the various provisions of the Inflation Act, but does not anticipate it will have a material effect on the condensed consolidated financial statements.

**13.&nbsp;&nbsp;&nbsp;&nbsp;Net Loss Per Share**

Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period, less shares subject to repurchase, and excludes any dilutive effects of employee share-based awards and warrants. Diluted net loss per share is computed giving effect to all potential dilutive common shares, including issuances of common stock upon exercise of stock options, purchases of shares under the Employee Stock Purchase Plan, and the vesting of restricted stock units and performance stock units. As the Company had net losses for each of the three and nine months ended December 31, 2022 and 2021, all potential common shares were determined to be anti-dilutive, resulting in basic and diluted net loss per share being equal. Additionally, the 4.5 million shares underlying the Conversion Option in the Notes were not considered in the calculation of diluted net loss per share as the effect would be anti-dilutive. The Notes were not convertible as of December 31, 2022.

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The following table sets forth the computation of net loss per share, basic and diluted (in thousands, except per share amounts):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Numerator: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss attributable to New Relic | $(26005) | $(62706) | $(123019) | $(194889) |
| Denominator: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Weighted average shares used to compute net loss per share, basic and diluted | 68050 | 64983 | 67229 | 64203 |
| Net loss attributable to New Relic per share—basic and diluted | $(0.38) | $(0.96) | $(1.83) | $(3.04) |

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The following outstanding options, unvested shares, and ESPP shares were excluded (as common stock equivalents) from the computation of diluted net loss per common share for the periods presented as their effect would have been antidilutive (in thousands):

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| | | |
|:---|:---|:---|
| | **As of December 31,** | **As of December 31,** |
| | **2022** | **2021** |
| Options to purchase common stock | 1,201 | 1,804 |
| RSUs | 4,165 | 3,617 |
| PSUs | 471 | 320 |
| ESPP shares | 134 | 87 |
| | 5,971 | 5,828 |

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**14.&nbsp;&nbsp;&nbsp;&nbsp;Revenue by Geographic Location**

The following table shows the Company's revenue by geographic areas, as determined based on the billing address of its customers (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| United States | $152518 | $134687 | $443691 | $391127 |
| EMEA | 43937 | 31714 | 116949 | 89920 |
| APAC | 26091 | 21354 | 73745 | 57852 |
| Other | 17217 | 15836 | 48749 | 40870 |
| Total revenue | $239763 | $203591 | $683134 | $579769 |

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Substantially all of the Company's long-lived assets were attributable to operations in the United States as of December 31, 2022 and March 31, 2022.

**15.&nbsp;&nbsp;&nbsp;&nbsp;Restructuring** 

There were no restructuring charges incurred for the three months ended December 31, 2022 and 2021.

On August 17, 2022, the Company announced the adoption of a new restructuring plan to better align the Company's organizational structure and operations with its strategic initiatives, resulting in a global workforce reduction and other cost saving initiatives. For the nine months ended December 31, 2022, the Company incurred restructuring costs of approximately $7.2 million in employee wages, termination benefits, and certain asset impairments directly attributable to the restructuring activities. The restructuring plan was completed in the second quarter of fiscal 2023.

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The following table shows the Company's restructuring charges for the nine months ended December 31, 2022 and 2021 (in thousands):

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** |
| | **Severance and other employee costs** | **Asset impairment** | **Total** | **Severance and other employee costs** | **Stock-based compensation** | **Asset impairment** | **Total** |
| Cost of Revenue | $404 | $3 | $407 | $— | $— | $— | $— |
| Research and Development | 1414 | 21 | 1435 |  |  |  |  |
| Sales and Marketing | 3725 | 33 | 3758 | 10819 | 406 | 104 | 11329 |
| General and administrative | 1592 | 18 | 1610 | 1170 | 87 | 26 | 1283 |
| Total | $7135 | $75 | $7210 | $11989 | $493 | $130 | $12612 |

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**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations**

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business. In particular, we encourage you to review the risks and uncertainties described in Part II, Item 1A "Risk Factors" included elsewhere in this report. These risks and uncertainties could cause actual results to differ materially from those projected in forward-looking statements contained in this report or implied by past results and trends. Forward-looking statements are statements that attempt to forecast or anticipate future developments in our business, financial condition or results of operations. See the section titled "Special Note Regarding Forward-Looking Statements" in this report. These statements, like all statements in this report, speak only as of their date (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments, except as required by law.*

*In addition to our results determined in accordance with U.S. generally accepted accounting principles (GAAP), Non-GAAP Loss from Operations, a non-GAAP financial measure, is included in the section titled "Non-GAAP Financial Measures." This non-GAAP financial measure is not meant to be considered in isolation or as a substitute for, or superior to, comparable GAAP financial measures and should be read only in conjunction with our unaudited condensed consolidated financial statements prepared in accordance with GAAP. Our presentation of this non-GAAP financial measure may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the GAAP-to-non-GAAP reconciliation included in the section titled "Non-GAAP Financial Measures," to more fully understand our business.*

**Overview**

New Relic delivers a software platform for customers to land all of their telemetry data quickly and affordably in one place and derive actionable insights from that data in a unified front-end application. This category of software products is generally referred to as observability. Our customers use our software platform to ensure that they can observe and operate all of the components of their digital infrastructure and provide a quality digital experience for their customers. With a unified front end, purpose built on top of the world's most powerful telemetry data platform, the New Relic platform helps our users get a comprehensive and consistent view of their digital estate.

At present, most observability software is targeted at a small subset of the developer community that works in the "operate" phase of the developer lifecycle. These engineers are primarily concerned with the availability of the applications and infrastructure that are the primary components of a customer's digital environment. However, a key component of our multi-year strategy is to help all software developers realize the largely dormant value of telemetry data. We fundamentally believe that telemetry data is valuable in all of the phases of the developer lifecycle: plan, build, deploy and operate.

To deliver on this strategy, we make data ingest so affordable that customers have no reservations about populating our data platform with their growing amounts of telemetry data. We believe engineers are attracted to very large data sets, and over time we intend to introduce ways for engineers in the plan, build and deploy phases of the developer lifecycle to realize significant value from that data.

We have built a massively scalable proprietary telemetry data platform, which is a unique competitive advantage and we are able to leverage that scale to offer more cost-effective solutions. Our unified front end and data-centric approach to observability gives our users a consistent and comprehensive view of their digital environment. This is in contrast to most other vendors we compete against that take an application-centric approach that forces users to toggle between a variety of stand-alone applications on top of purpose-built databases, effectively creating silos of data.

Our customers span the continuum from startups to the world's largest corporations; the common thread among all of the users of our products is a desire to offer their constituents a top-tier digital experience. We primarily sell our platform on a consumption model; customers on this pricing model pay for data ingest and provisioned users. We engage with prospects and customers directly through our field, inside sales teams and on our website, as well as indirectly through channel partners. The majority of our customers are on either commitment contracts where they commit to an amount of spend over their contracted period in exchange for a discount on their usage pricing or "Pay as You Go" contracts where they are charged for usage in arrears. Our contracts are typically annual or multi-year in term length and are either billed upfront or in arrears. Usage in excess of the commitment is generally invoiced in arrears.

We offer a free tier of our New Relic platform. As a result, our direct sales prospects may be familiar with our platform and may already be using it in a limited fashion. A core component of our growth strategy is to provide a friction-free

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environment for developers to familiarize themselves with our solutions, and then offer incremental opportunities to derive more value from our products either by in-product support, or engaging with our technically oriented customer adoption team.

Our revenue for the three months ended December 31, 2022 and 2021 was $239.8 million and $203.6 million, respectively, representing year-over-year growth of 18%. For the nine months ended December 31, 2022 and 2021, our revenue was $683.1 million and $579.8 million, respectively, representing year-over-year growth of 18%. We continue to make significant expenditures and investments, including in personnel-related costs, sales and marketing, infrastructure and operations, and have incurred net losses in each period since our inception, including net losses attributable to New Relic of $26.0 million and $62.7 million for the three months ended December 31, 2022 and 2021, respectively, and $123.0 million and $194.9 million for the nine months ended December 31, 2022 and 2021, respectively. Our accumulated deficit as of December 31, 2022 was $906.3 million.

Internationally, we currently offer our products in Europe, the Middle East, and Africa ("EMEA"); Asia-Pacific, ("APAC"); and other non-U.S. locations, as determined based on the billing address of our customers, and our revenue from those regions constituted 18%, 11%, and 7%, respectively, of our revenue for the three months ended December 31, 2022, and 16%, 10%, and 8%, respectively, of our revenue for the three months ended December 31, 2021. Our revenue from those regions constituted 17%, 11%, and 7%, respectively, of our revenue for the nine months ended December 31, 2022, and 16%, 10%, and 7%, respectively, of our revenue for the nine months ended December 31, 2021. We believe there is an opportunity to increase our international revenue overall and as a proportion of our revenue, and we are increasingly investing in our international operations and intend to invest in further expanding our footprint in international markets.

***Impact of the Ongoing COVID-19 Pandemic and Current Economic Conditions***

The continuing effects of the COVID-19 pandemic are highly unpredictable and could be significant, and the duration and extent to which they will impact our future results of operations and overall financial performance remains uncertain. The extent of the impact of the COVID-19 pandemic on our operational and financial performance will continue to depend on certain developments, including the duration of the pandemic, the successful rollout of vaccines and the efficacy and durability of such vaccines, especially in light of the emergence of new variant strains; impact on our customers and our sales cycles; impact on our customer, employee, and industry events; impact on our employee recruitment and attrition; and effect on our vendors, all of which remain uncertain and cannot be predicted at this time.

We currently allow most of our employees to continue to work remotely if they prefer and as additional COVID-19 variants emerge, we will continue to evaluate our workforce strategies and operations, taking into consideration factors such as treatments, vaccine progress, and public health recommendations. We also continue to evaluate our real estate needs and have in the past made the decision to exit certain office space leases. As we continue to assess our return-to-office needs, we are planning to exit additional office space leases which could result in further losses associated with our real estate lease assets. Our revenue and deferred revenue have been, in part, negatively impacted by the slowdown in activity and uncertainty associated with the COVID-19 pandemic and the current economic conditions impacted by supply chain disruption, market volatility, inflation, rising interest rates, fluctuating currency exchange rates, and labor shortages, but at this point, the extent of any continuing impact to our financial condition or results of operations, including cash flows, is uncertain, particularly as the COVID-19 pandemic and the current economic uncertainty continue to persist for an extended period of time. With the recent volatility of multiple major foreign currencies against the U.S. dollar, we are seeing more significant impact from exchange rates on our revenue growth and expenses in fiscal 2023 than in the previous fiscal year, and we expect the impact to be significant in the next quarter if we continue to experience similar or greater foreign currencies volatility against the U.S. dollar. Other factors affecting our performance are discussed below, although we caution you that the COVID-19 pandemic and the current economic conditions may also further impact these factors.

**Factors Affecting Our Performance**

*Market Adoption of Our Platform*. Our success, including our rate of customer expansions and renewals, is dependent on the market adoption of our platform. With the introduction of new technologies, the evolution of our platform and new market entrants, competition has intensified and we expect competition to further intensify in the future. We employ a land and expand business model centered around offering a platform that is open, connected and programmable. We believe that we have built a highly differentiated platform and we intend to continue to invest in building additional offerings, features and functionality that expand our capabilities and facilitate the extension of our platform to new use cases. We also intend to continue to evaluate strategic acquisitions and investments in businesses and technologies to drive product and market expansion. Our ability to improve market adoption of our platform will also depend on a number of other factors, including the competitiveness and pricing of our products, offerings of our competitors, success of international expansion, and effectiveness of our sales and marketing efforts. Our pricing strategy, which relies primarily upon a per-user license fee and payment based on the quantity of data ingested, our revenue is closely tied to the usage of our platform. Together with this pricing strategy, we

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also have a robust free tier and improved self-service capabilities, which we expect to continue to result in an increase in our ability to attract and convert free users into new paying customers.

*Retention and Expansion.* A key factor in our success is the retention and expansion of our platform usage with our existing customers. In order for us to continue to grow our business, it is important to generate additional revenue from our existing customers, and we intend to do this in several ways. As we improve our existing products and platform capabilities and introduce new products, we believe that the demand for our products will generally grow. We also believe that there is a significant opportunity for us to increase our revenue from sales to our current customers as they become more familiar with our products and adopt our products to address additional business use cases. In addition, we believe our pricing strategy allows sales resources to focus energy on helping customers increase their data ingestion and the number of users and use cases.

**Key Operating Metrics**

We review the following key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make key strategic decisions. The calculation of the key operating metrics discussed below may differ from other similarly titled metrics used by other companies, securities analysts, or investors.

*Number of Active Customer Accounts.* We believe the number of Active Customer Accounts is an important indicator of the growth of our business, the market adoption of our platform, and future revenue trends. We define an Active Customer Account at the end of any period as an individual account, as identified by a unique account identifier, aggregated at the parent hierarchy level, for which we have recognized any revenue in the fiscal quarter. As our customers grow their businesses and extend the use of our platform, they sometimes create multiple customer accounts with us for operational or other reasons. As such, when we identify a parent organization that has created a new Active Customer Account, this new Active Customer Account is combined with, and revenue from this new Active Customer Account is included with, the original Active Customer Account. In addition, our Active Customer Accounts metric is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity. We round the number of Active Customer Accounts that we report as of a particular date down to the nearest hundred.

For the three-month period ended December 31, 2022, we had 15,700 Active Customer Accounts, which is up 1,100 from 14,600 Active Customer Accounts for the three-month period ended December 31, 2021 and is up 400 sequentially from 15,300 Active Customer Accounts for the three-month period ended September 30, 2022.

*Number of Active Customer Accounts with Revenue Greater than $100,000.* Large customer relationships generally lead to scale and operating leverage in our business model. Compared with smaller customers, large customers present a greater opportunity for us to sell additional capacity because they often have larger budgets, a wider range of potential use cases, and greater potential for migrating new workloads to our platform over time. As a measure of our ability to scale with our customers and attract large enterprises to our platform, we count the number of Active Customer Accounts for which we have recognized greater than $100,000 in revenue in the trailing 12-months.

For the three-month period ended December 31, 2022, we had 1,203 Active Customer Accounts with trailing 12-month revenue greater than $100,000, which was a 13% increase compared to 1,064 for the three-month period ended December 31, 2021 and a 3% increase compared to 1,171 for the three-month period ended September 30, 2022.

*Percentage of Revenue from Active Customer Accounts Greater than $100,000*. In addition to the number of Active Customer Accounts with revenue greater than $100,000, we also look at our percentage of overall revenue we receive from those accounts in any given quarter as an indicator of our relative performance when selling to our large customer relationships compared to our smaller revenue accounts. An increase in the percentage of revenue reflects relative higher growth in our large customer relationships, whereas a decrease in the percentage reflects relative higher growth in our performance with smaller revenue customers.

The percentage of our total revenue from Active Customer Accounts with trailing 12-month revenue greater than $100,000 was 84% for the three-month period ended December 31, 2022, compared to 81% for the three-month period ended December 31, 2021 and 83% for the three-month period ended September 30, 2022.

*Net Revenue Retention Rate.* We believe the growth of our platform by our existing Active Customer Accounts is an important measure of the health of our business and our future growth prospects. We monitor our net revenue retention rate ("NRR") to measure this growth. We expect our NRR to increase when Active Customer Accounts increase their usage of a product, extend their usage of a product to new applications, or adopt a new product. We expect our NRR to decrease when Active Customer Accounts cease or reduce their usage of a product.

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To calculate NRR, we first identify the cohort of Active Customer Accounts that were Active Customer Accounts in the same quarter of the prior fiscal year. Next, we identify the measurement period as the 12-month period ending with the period reported and the prior comparison period as the corresponding period in the prior year. NRR is the quotient obtained by dividing the revenue generated from a cohort of Active Customer Accounts in the measurement period by the revenue generated from that same cohort in the prior comparison period.

Our NRR increased year-over-year to 118% for the period ended December 31, 2022, compared to 116% for the period ended December 31, 2021 and decreased quarter-over-quarter from 119% for the period ended September 30, 2022.

**Key Components of Results of Operations**

***Revenue***

For the periods presented, we offered access to our platform under consumption and subscription-based plans that include service and support for one or more of our products. For our paying customers, we offer a variety of pricing plans based on the particular product purchased. Our commitment plans typically have terms of one year, although some of our customers commit for shorter or longer periods; our Pay as You Go plans do not have a commitment. Most of our revenue comes from contracts that are non-cancellable over the contract term.

We have and may continue to experience volatility for our remaining performance obligations and deferred revenue as a result of our shift to our consumption pricing model. We had remaining performance obligations in the amount of $726.1 million and $706.1 million as of December 31, 2022 and March 31, 2022, respectively, consisting of both billed and unbilled consideration. Deferred revenue consists of billings or payments received in advance of revenue being recognized, and can fluctuate with changes in billing frequency and other factors. As a result of these factors, as well as our mix of consumption and subscription plans and billing frequencies, we do not believe that changes in our remaining performance obligations and deferred revenue in a given period are directly correlated with our revenue growth in that period.

The Company's remaining performance obligations were $726.1 million as of December 31, 2022, of which the Company expects approximately 75% to be recognized as revenue in the 12 months ending December 31, 2023 based on historical customer consumption patterns. However, the amount and timing of revenue recognition are generally dependent upon customers' future consumption, which is inherently variable at customers' discretion and can extend beyond the original contract term in cases where customers are permitted to roll over unused capacity to future periods, generally on the purchase of additional capacity at renewal.

Historically, we have received a higher volume of orders in the fourth fiscal quarter of each year, and to a lesser extent our third fiscal quarter of each year. As a result, we have historically seen higher cash collections in the first and fourth fiscal quarters of each year, and our sequential growth in remaining performance obligations has historically been highest in the fourth fiscal quarter of each year, and to a lesser extent our third fiscal quarter of each year. With our shift to a consumption based pricing model, we expect over time that our revenue will more closely approximate our customer usage of our products and services, and thereby our revenue may experience seasonal fluctuations based upon our customer consumption patterns.

***Cost of Revenue***

Cost of revenue consists of expenses relating to hosting-related costs, salaries and benefits of operations and global customer support personnel, data center operations, depreciation and amortization, consulting costs, and payment processing fees. Personnel-related costs consist of salaries, benefits, bonuses, and stock-based compensation. We plan to continue increasing the capacity, capability, and reliability of our infrastructure to support the expected growth of our customer adoption and the number of products we offer, as customer usage is expected to continue to grow. Additionally, we are continuing to build out services and functionality in the public cloud with a view to migrating our entire platform over time from third-party data center hosting facilities to public cloud hosting providers. We are continuing to decrease the amount of capital expenditures on hosting equipment for use in our data center facilities as we transition to greater dependence on cloud hosting providers.

***Gross Profit and Margin***

Gross profit is revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of revenue. Our gross margin has been, and will continue to be, affected by a number of factors, including the timing and extent of our investments in our hosting-related costs, operations and global customer support personnel, and the amortization of capitalized software. Although we expect our gross margin to fluctuate from period to period as a result of these factors, our recent public cloud migration and, to a lesser extent, our pricing transition, have contributed to lower gross margins.

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***Operating Expenses***

Personnel costs, which consist of salaries, benefits, bonuses, stock-based compensation and, with regard to sales and marketing expenses, sales commissions, are the most significant component of our operating expenses.

*Research and Development.* Research and development expenses consist primarily of personnel costs and an allocation of our general overhead expenses. We continue to focus our research and development efforts on adding new features and products, and increasing the functionality and enhancing the ease of use of our existing products. We capitalize the portion of our software development costs that meets the criteria for capitalization.

We plan to continue to hire employees for our engineering, product management, and design teams to support our research and development efforts. As a result, we expect our research and development expenses to continue to increase in absolute dollars for the foreseeable future, although our research and development expenses may fluctuate from period to period depending on fluctuations in our revenue and the timing and extent of our research and development expenses.

*Sales and Marketing.* Sales and marketing expenses consist of personnel costs for our sales, marketing, and business development employees and executives. A significant majority of commissions are expensed as incurred. Previously commissions attributable to acquiring new customer contracts were capitalized and amortized on a straight-line basis over the anticipated period of benefit. Therefore, commission expenses will be larger until we have fully recognized the remaining capitalized commissions expenses from prior periods under our subscription model. Sales and marketing expenses also include the costs of our marketing and brand awareness programs, including our free tier offering.

We expect that go-to-market operations in our consumption-based business model will be more efficient, and require less investment, than in our former more traditional subscription model. In furtherance of this strategy shift, we have reallocated some spending from sales and marketing to increase our investment on research and development. While we expect our sales and marketing expenses to decrease as a percentage of our revenue over the long term, our sales and marketing expenses, both in absolute dollars and as a percentage of our revenue, may fluctuate from period to period depending on fluctuations in our revenue and the timing and extent of our sales and marketing expenses.

*General and Administrative*. General and administrative expenses consist primarily of personnel costs for our administrative, legal, human resources, information technology, finance, and accounting employees, and executives. Also included are non-personnel costs, such as legal and other professional fees.

We plan to continue to expand our business both domestically and internationally, and we expect to increase the size of our general and administrative function to support the growth of our business. As a result, we expect our general and administrative expenses to continue to increase in absolute dollars for the foreseeable future. However, we expect our general and administrative expenses to remain flat or decrease modestly as a percentage of our revenue over the long term, although our general and administrative expense, as a percentage of our revenue, may fluctuate from period to period depending on the timing and extent of our general and administrative expenses, such as litigation or accounting costs.

***Other Income (Expense)***

Other income (expense) consists primarily of interest income, interest expense, and foreign exchange gains and losses.

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**Results of Operations**

The following tables summarize our consolidated statements of operations data for the periods presented and as a percentage of our revenue for those periods.

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| | (in thousands, except per share amounts) | (in thousands, except per share amounts) | (in thousands, except per share amounts) | (in thousands, except per share amounts) |
| Revenue | $239763 | $203591 | $683134 | $579769 |
| Cost of revenue (1) | 61316 | 68793 | 189992 | 192319 |
| Gross profit | 178447 | 134798 | 493142 | 387450 |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development (1) | 69261 | 53362 | 202760 | 153460 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing (1) | 95477 | 97723 | 296100 | 293603 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative (1) | 42799 | 35614 | 124312 | 113193 |
| Total operating expenses | 207537 | 186699 | 623172 | 560256 |
| Loss from operations | (29090) | (51901) | (130030) | (172806) |
| Other income (expense): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income | 4685 | 575 | 8220 | 2237 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (1283) | (1228) | (3748) | (3682) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income (expense) | 192 | (268) | 190 | (647) |
| Loss before income taxes | (25496) | (52822) | (125368) | (174898) |
| Income tax provision | 1116 | 763 | 1002 | 816 |
| Net loss | $(26612) | $(53585) | $(126370) | $(175714) |
| Net loss and adjustment attributable to redeemable non-controlling interest | 607 | (9121) | 3351 | (19175) |
| Net loss attributable to New Relic | $(26005) | $(62706) | $(123019) | $(194889) |
| Net loss attributable to New Relic per share, basic and diluted | $(0.38) | $(0.96) | $(1.83) | $(3.04) |
| Weighted-average shares used to compute net loss per share, basic and diluted | 68050 | 64983 | 67229 | 64203 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Includes stock-based compensation expense as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| | (in thousands) | (in thousands) | (in thousands) | (in thousands) |
| Cost of revenue | $1174 | $1382 | $4051 | $3757 |
| Research and development | 14977 | 13117 | 42705 | 36228 |
| Sales and marketing | 12556 | 12537 | 36013 | 37619 |
| General and administrative (2) | 11972 | 10755 | 32644 | 39945 |
| Total stock-based compensation expense (3) | $40679 | $37791 | $115413 | $117549 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Includes $9.6 million acceleration of share-based payment expense for the nine months ended December 31, 2021 for one of our executives due to his departure at the end of June 2021. There was no corresponding expense for the nine months ended December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Includes $0.5 million stock-based compensation expense for the nine months ended December 31, 2021 due to the restructuring activities commenced in April 2021. There was no corresponding expense for the nine months ended December 31, 2022. Refer to Note 15 — Restructuring contained in the "Notes to Condensed Consolidated Financial Statements" in Item 1 of Part I of this Quarterly Report on Form 10-Q for more information.

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| | (as a percentage of revenue) | (as a percentage of revenue) | (as a percentage of revenue) | (as a percentage of revenue) |
| Revenue | 100% | 100% | 100% | 100% |
| Cost of revenue (1) | 26 | 34 | 28 | 33 |
| Gross profit | 74 | 66 | 72 | 67 |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development (1) | 28 | 26 | 29 | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing (1) | 40 | 49 | 43 | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative (1) | 18 | 17 | 18 | 20 |
| Total operating expenses | 86 | 92 | 90 | 97 |
| Loss from operations | (12) | (26) | (18) | (30) |
| Other income (expense): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income | 2 |  | 1 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (1) | (1) | (1) | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income (expense), net |  |  |  |  |
| Loss before income taxes | (11) | (27) | (18) | (31) |
| Income tax provision (benefit) |  |  |  |  |
| Net loss | (11)% | (27)% | (18)% | (31)% |
| Net loss and adjustment attributable to redeemable non-controlling interest |  | (4) |  | (3) |
| Net loss attributable to New Relic | (11)% | (31)% | (18)% | (34)% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1) Includes stock-based compensation expense as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| | (as a percentage of revenue) | (as a percentage of revenue) | (as a percentage of revenue) | (as a percentage of revenue) |
| Cost of revenue | —% | 1% | 1% | 1% |
| Research and development | 6 | 6 | 6 | 6 |
| Sales and marketing | 6 | 6 | 5 | 6 |
| General and administrative | 5 | 5 | 5 | 7 |
| Total stock-based compensation expense | 17% | 18% | 17% | 20% |

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***Revenue***

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Change** | **Change** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** | **Change** | **Change** |
| | **2022** | **2021** | **Amount** | **%** | **2022** | **2021** | **Amount** | **%** |
| | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) |
| United States | $152518 | $134687 | $17831 | 13% | $443691 | $391127 | $52564 | 13% |
| EMEA | 43937 | 31714 | 12223 | 39 | 116949 | 89920 | 27029 | 30 |
| APAC | 26091 | 21354 | 4737 | 22 | 73745 | 57852 | 15893 | 27 |
| Other | 17217 | 15836 | 1381 | 9 | 48749 | 40870 | 7879 | 19 |
| Total revenue | $239763 | $203591 | $36172 | 18% | $683134 | $579769 | $103365 | 18% |

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Total revenue increased $36.2 million, or 18%, in the three months ended December 31, 2022 compared to the same period of 2021. Our revenue from the United States increased $17.8 million, or 13%, our revenue from EMEA increased $12.2 million, or 39%, our revenue from APAC increased $4.7 million, or 22%, and our revenue from other regions increased $1.4 million, or 9% in the three months ended December 31, 2022, compared to the same period of 2021, primarily as a result of growth in our customer base and increase in consumption.

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Total revenue increased $103.4 million, or 18%, in the nine months ended December 31, 2022 compared to the same period of 2021. Our revenue from the United States increased $52.6 million, or 13%, our revenue from EMEA increased $27.0 million, or 30%, our revenue from APAC increased $15.9 million, or 27%, and our revenue from other regions increased $7.9 million, or 19% in the nine months ended December 31, 2022, compared to the same period of 2021, primarily as a result of growth in our customer base and increase in consumption in addition to revenue recognized from variable consideration.

***Cost of Revenue***

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Change** | **Change** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** | **Change** | **Change** |
| | **2022** | **2021** | **Amount** | **%** | **2022** | **2021** | **Amount** | **%** |
| | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) |
| Cost of revenue | $61316 | $68793 | $(7477) | (11)% | $189992 | $192319 | $(2327) | (1)% |

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Cost of revenue decreased $7.5 million, or 11%, in the three months ended December 31, 2022, compared to the same period of 2021. The decrease was primarily due to a $14.9 million decrease in hosting-related costs, consulting, and software expenses and a $1.5 million decrease in personnel-related costs. The decrease was partially offset by a $9.3 million increase in allocated costs, including facilities, depreciation, facilities exit costs, and the impairment of certain acquired technologies.

Cost of revenue decreased $2.3 million, or 1%, in the nine months ended December 31, 2022, compared to the same period of 2021. The decrease was primarily due to a $9.0 million decrease in hosting-related costs, consulting, and software expenses and a $0.5 million decrease in travel expenses. The decrease was partially offset by a $4.2 million increase in allocated costs, including facilities, depreciation, facilities exit costs, the impairment of certain acquired technologies, a $2.4 million increase in personnel-related costs, and a $0.5 million increase in other miscellaneous expenses.

***Research and Development***

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Change** | **Change** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** | **Change** | **Change** |
| | **2022** | **2021** | **Amount** | **%** | **2022** | **2021** | **Amount** | **%** |
| | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) |
| Research and development | $69261 | $53362 | $15899 | 30% | $202760 | $153460 | $49300 | 32% |

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Research and development expenses increased $15.9 million, or 30%, in the three months ended December 31, 2022 compared to the same period of 2021. The increase was primarily a result of an increase in personnel-related costs of $12.1 million, driven by an increase in headcount, salary and equity-based compensation, a $3.6 million increase in allocated costs, including facilities, depreciation, and facilities exit costs, and a $2.2 million increase in consulting and software expenses. The increase was partially offset by $2.0 million decrease in travel and other miscellaneous expenses.

Research and development expenses increased $49.3 million, or 32%, in the nine months ended December 31, 2022 compared to the same period of 2021. The increase was primarily a result of an increase in personnel-related costs of $38.0 million, driven by an increase in headcount, salary and equity-based compensation, a $7.5 million increase in allocated costs, including facilities, depreciation, and facilities exit costs, a $2.4 million increase in consulting and software expenses, and a $1.7 million increase in travel and other miscellaneous expenses. The increase was partially offset by a $0.3 million decrease in hosting service credits.

***Sales and Marketing***

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Change** | **Change** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** | **Change** | **Change** |
| | **2022** | **2021** | **Amount** | **%** | **2022** | **2021** | **Amount** | **%** |
| | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) |
| Sales and marketing | $95477 | $97723 | $(2246) | (2)% | $296100 | $293603 | $2497 | 1% |

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Sales and marketing expenses decreased $2.2 million, or 2%, in the three months ended December 31, 2022 compared to the same period of 2021. The decrease was primarily a result of a $3.4 million decrease in personnel-related cost, a $2.3 million decrease in travel expenses, and a $0.9 million decrease in allocated costs, including facilities and depreciation. The decrease was partially offset by a $1.9 million increase in marketing programs, a $1.0 million increase in consulting and

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software expenses, and a $1.5 million increase in other miscellaneous expenses. The decrease in personnel-related costs was due to the impact of higher commission amortization expenses in the same period last year when we first shifted to a consumption-business model from our subscription-business model.

Sales and marketing expenses increased $2.5 million, or 1%, in the nine months ended December 31, 2022 compared to the same period of 2021. The increase was primarily a result of a $8.4 million increase in marketing program expenses, a $6.1 million increase in travel expenses, and a $2.4 million increase in other miscellaneous expenses. The increase was partially offset by a $7.0 million decrease in personnel-related costs and a $6.9 million decrease in allocated costs, including facilities and depreciation. The decrease in personnel-related costs was due to the impact of higher restructuring costs that were incurred in the same period last year.

***General and Administrative***

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Change** | **Change** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** | **Change** | **Change** |
| | **2022** | **2021** | **Amount** | **%** | **2022** | **2021** | **Amount** | **%** |
| | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) |
| General and administrative | $42799 | $35614 | $7185 | 20% | $124312 | $113193 | $11119 | 10% |

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General and administrative expenses increased $7.2 million, or 20%, in the three months ended December 31, 2022 compared to the same period of 2021. The increase was primarily a result of an increase in personnel-related costs of $4.4 million driven by an increase in headcount, salary and equity-based compensation, a $2.5 million increase in allocated costs, including facilities, depreciation and lease exit expenses, a $0.7 million increase in travel expenses, and a $0.5 million increase in consulting and software. The increase was partially offset by a $1.0 million decrease in other miscellaneous expenses.

General and administrative expenses increased $11.1 million, or 10%, in the nine months ended December 31, 2022 compared to the same period of 2021. The increase was primarily a result of a $5.2 million increase in personnel-related costs driven by an increase in headcount, salary and equity-based compensation, a $3.7 million increase in travel expenses, a $1.6 million increase in allocated costs, including facilities, depreciation, and lease exit expenses, and a $0.6 million increase in consulting, software, and other miscellaneous expenses.

***Other Income (Expense)***

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Change** | **Change** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** | **Change** | **Change** |
| | **2022** | **2021** | **Amount** | **%** | **2022** | **2021** | **Amount** | **%** |
| | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) |
| Other income (expense) | $3594 | $(921) | $4515 | 490% | $4662 | $(2092) | $6754 | 323% |

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Other income increased by $4.5 million, or 490%, in the three months ended December 31, 2022 compared to the same period of 2021. The increase was primarily a result of a $4.1 million increase in interest income and a $0.4 million decrease in other expenses.

Other income increased by $6.8 million, or 323%, in the nine months ended December 31, 2022 compared to the same period of 2021. The increase was primarily a result of a $6.0 million increase in interest income and a $0.8 million decrease in other expenses.

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***Provision for (Benefit from) Income Tax***

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Change** | **Change** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** | **Change** | **Change** |
| | **2022** | **2021** | **Amount** | **%** | **2022** | **2021** | **Amount** | **%** |
| | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) |
| Loss before income taxes | $(25496) | $(52822) | $27326 | 52% | $(125368) | $(174898) | $49530 | 28% |
| Effective tax rate | (4.38)% | (1.44)% |  |  | (0.80)% | (0.47)% |  |  |
| Income tax provision | $1116 | $763 | $353 | 46% | $1002 | $816 | $186 | 23% |

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We recognized an income tax expense of $1.1 million for the three months ended December 31, 2022 as compared to an income tax expense of $0.8 million for the same period of 2021. The change of $0.4 million, or 46%, was mostly related to an increase in foreign taxes.

We recognized an income tax expense of $1.0 million for the nine months ended December 31, 2022 as compared to an income tax expense of $0.8 million for the same period of 2021. The change of $0.2 million, or 23%, was mostly related to an increase in U.S. state taxes.

***Net Loss and Adjustment Attributable to Redeemable Non-controlling Interest***

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Change** | **Change** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** | **Change** | **Change** |
| | **2022** | **2021** | **Amount** | **%** | **2022** | **2021** | **Amount** | **%** |
| | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) | (dollars in thousands) |
| Net loss and adjustment attributable to redeemable non-controlling interest | $607 | $(9121) | $9728 | 107% | $3351 | $(19175) | $22526 | 117% |

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Net loss and adjustment attributable to redeemable non-controlling interest decreased by $9.7 million, or 107%, in the three months ended December 31, 2022, compared to the same period of 2021. The decrease was related to the redeemable non-controlling interest's associated loss and adjustment to estimated redemption value of our joint venture in New Relic K.K.

Net loss and adjustment attributable to redeemable non-controlling interest decreased by $22.5 million, or 117%, in the nine months ended December 31, 2022, compared to the same period of 2021. The decrease was related to the redeemable non-controlling interest's associated loss and adjustment to estimated redemption value of our joint venture in New Relic K.K.

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**Non-GAAP Financial Measures**

In addition to our results determined in accordance with U.S. generally accepted accounting principles (GAAP), Non-GAAP Income (Loss) from Operations, a non-GAAP financial measure, is included in the section titled "Non-GAAP Financial Measures." This non-GAAP financial measure is not meant to be considered in isolation or as a substitute for, or superior to, comparable GAAP financial measures and should be read only in conjunction with our unaudited condensed consolidated financial statements prepared in accordance with GAAP. Our presentation of this non-GAAP financial measure may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the GAAP-to-non-GAAP reconciliation included in the section titled "Non-GAAP Financial Measures," to more fully understand our business.

***Non-GAAP Income (Loss) From Operations***&nbsp;&nbsp;&nbsp;&nbsp;

To supplement our consolidated financial statements presented in accordance with GAAP, we provide investors with certain non-GAAP financial measures, including non-GAAP income (loss) from operations and non-GAAP net income (loss) attributable to New Relic. We define non-GAAP income (loss) from operations and non-GAAP net income (loss) attributable to New Relic as the respective GAAP balance, adjusted for, as applicable: (1) stock-based compensation expense, (2) amortization of stock-based compensation capitalized in software development costs, (3) the amortization of purchased intangibles, (4) employer payroll tax expense on equity incentive plans, (5) amortization of debt discount and issuance costs, (6) the transaction costs related to acquisitions, (7) lawsuit litigation cost and other expense, (8) net loss and adjustment attributable to redeemable non-controlling interest, and (9) restructuring charges. We use non-GAAP financial measures, including non-GAAP income (loss) from operations and non-GAAP net income (loss) attributable to New Relic, internally to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate our financial performance. In addition, our bonus opportunity for eligible employees and executives is based in part on non-GAAP income (loss) from operations.

We believe these measures are useful to investors, as a supplement to GAAP measures, in evaluating our operational performance. We have provided below a reconciliation of GAAP income (loss) from operations to non-GAAP income (loss) from operations and a reconciliation of GAAP net income (loss) attributable to New Relic to non-GAAP net income (loss) attributable to New Relic. We believe non-GAAP income (loss) from operations and non-GAAP net income (loss) attributable to New Relic are useful to investors and others in assessing our operating performance due to the following factors:

*Stock-based compensation expense and amortization of stock-based compensation capitalized in software development costs*. We utilize share-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of our stockholders and at long-term retention, rather than to address operational performance for any particular period. As a result, share-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period.

*Amortization of purchased intangibles*. We view amortization of purchased intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of purchased intangibles is an expense that is not typically affected by operations during any particular period.

*Employer payroll tax expense on equity incentive plans.* We exclude employer payroll tax expense on equity incentive plans as these expenses are tied to the exercise or vesting of underlying equity awards and the price of our common stock at the time of vesting or exercise. As a result, these taxes may vary in any particular period independent of the financial and operating performance of our business.

*Amortization of debt discount and issuance costs.* In May 2018, we issued $500.25 million of our 0.50% convertible senior notes due 2023 (the "Notes"), which bear interest at an annual fixed rate of 0.5%. The effective interest rate of the Notes was 5.74%. Effective April 1, 2021 we adopted ASU No. 2020-06, *Accounting for Convertible Instruments and Contract on an Entity's Own Equity*. As a result of the adoption, the debt conversion option and debt issuance costs previously attributable to the equity component are no longer presented in equity. Similarly, the debt discount, which was equal to the carrying value of the embedded conversion feature upon issuance, is no longer amortized into income as interest expense over the life of the instrument. This resulted in a $54.2 million decrease to the opening balance of accumulated deficit, a $100.1 million decrease to the opening balance of additional paid-in capital, and a $45.9 million increase to the opening balance of the Notes, net on the consolidated balance sheet. The debt issuance costs were amortized as interest expense. The expense for the amortization of debt issuance costs is a non-cash item, and we believe the exclusion of this interest expense will provide for a more useful comparison of our operational performance in different periods.

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*Transaction costs related to acquisitions.* We may from time to time incur direct transaction costs related to acquisitions. We believe it is useful to exclude such charges because we do not consider such amounts to be part of the ongoing operation of our business.

*Lawsuit litigation cost and other expense*. We may from time to time incur charges or benefits related to litigation that are outside of the ordinary course of our business. We believe it is useful to exclude such charges or benefits because we do not consider such amounts to be part of the ongoing operation of our business and because of the singular nature of the claims underlying the matter.

*Net loss and adjustment to redeemable non-controlling interest.* We allocate the net loss and adjust the value of redeemable non-controlling interest in connection with our joint venture in New Relic K.K. Starting from the period ended December 31, 2022, we also include the net loss attributable to redeemable non-controlling interest as a non-GAAP item. As such, prior periods have been adjusted to reflect this change. We believe it is useful to exclude the net loss and adjustment to redeemable non-controlling interest because it may not be indicative of our future operating results and that investors benefit from an understanding of our operating results without giving effect to this adjustment.

*Restructuring charges.* In April 2021, we commenced a restructuring plan to realign our cost structure to better reflect significant product and business model innovation over the prior 12 months. In August 2022, we commenced a new restructuring plan to realign our cost structure with our business needs as we move to focus our resources on top priorities. As a result of each of these restructuring plans, we incurred charges of approximately $7.2 million and $12.6 million for the nine months ended December 31, 2022 and 2021, respectively, for employee terminations and other costs associated with the restructuring plans. We believe it is appropriate to exclude the restructuring charges because they are not indicative of our future operating results.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP and may differ from non-GAAP financial measures used by other companies in our industry and exclude expenses that may have a material impact on our reported financial results.

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The following tables present our non-GAAP income (loss) from operations and our non-GAAP net income (loss) attributable to New Relic and reconcile our GAAP income (loss) from operations to non-GAAP income (loss) from operations and our GAAP net income (loss) attributable to New Relic to our non-GAAP net income (loss) attributable to New Relic for the three and nine months ended December 31, 2022 and 2021 (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| **GAAP loss from operations** | $(29090) | $(51901) | $(130030) | $(172806) |
| &nbsp;&nbsp;&nbsp;Plus: Stock-based compensation expense | 40679 | 37791 | 115413 | 117549 |
| &nbsp;&nbsp;&nbsp;Plus: Amortization of purchased intangibles | 4467 | 2006 | 9050 | 5358 |
| &nbsp;&nbsp;&nbsp;Plus: Transaction costs related to acquisitions |  |  | 929 | 361 |
| &nbsp;&nbsp;&nbsp;Plus: Amortization of stock-based compensation capitalized in software development costs | 2024 | 640 | 3517 | 1680 |
| &nbsp;&nbsp;&nbsp;Plus: Lawsuit litigation cost and other expense |  | 59 | 88 | 59 |
| &nbsp;&nbsp;&nbsp;Plus: Employer payroll tax on employee equity incentive plans | 619 | 956 | 2231 | 2552 |
| &nbsp;&nbsp;Plus: Restructuring charges (1) |  | (151) | 7210 | 12119 |
| **Non-GAAP income (loss) from operations** | $18699 | $(10600) | $8408 | $(33128) |

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| **GAAP net loss attributable to New Relic** | $(26005) | $(62706) | $(123019) | $(194889) |
| &nbsp;&nbsp;&nbsp;Plus: Stock-based compensation expense | 40679 | 37791 | 115413 | 117549 |
| &nbsp;&nbsp;&nbsp;Plus: Amortization of purchased intangibles | 4467 | 2006 | 9050 | 5358 |
| &nbsp;&nbsp;&nbsp;Plus: Transaction costs related to acquisitions |  |  | 929 | 361 |
| &nbsp;&nbsp;&nbsp;Plus: Amortization of stock-based compensation capitalized in software development costs | 2024 | 640 | 3517 | 1680 |
| &nbsp;&nbsp;&nbsp;Plus: Lawsuit litigation cost and other expense |  | 59 | 88 | 59 |
| &nbsp;&nbsp;&nbsp;Plus: Employer payroll tax on employee equity incentive plans | 619 | 956 | 2231 | 2552 |
| &nbsp;&nbsp;&nbsp;Plus: Amortization of debt discount and issuance costs | 636 | 590 | 1823 | 1766 |
| &nbsp;&nbsp;Plus: Net loss and adjustment to redeemable non-controlling interest (2) | (607) | 9121 | (3351) | 19175 |
| &nbsp;&nbsp;Plus: Restructuring charges (1) |  | (151) | 7210 | 12119 |
| **Non-GAAP net income (loss) attributable to New Relic** | $21813 | $(11694) | $13891 | $(34270) |

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(1) For the nine months ended December 31, 2021, restructuring related charge for the stock-based compensation expense of $0.5 million was included on its respective line items. There was no corresponding expense for the nine months ended December 31, 2022.

(2) Beginning from the period ended December 31, 2022, net loss attributable to redeemable non-controlling interest is included in the non-GAAP reconciliation. As such, reclassifications have been made to prior periods to conform with the current presentation.

Although we generated non-GAAP income from operations and non-GAAP net income attributable to New Relic in the three and nine months ended December 31, 2022, and although we expect that these numbers will improve over time with increased efficiencies, we have generated non-GAAP loss from operations and non-GAAP net loss attributable to New Relic in prior recent periods.

***Free Cash Flow***

We define free cash flow, a non-GAAP financial measure, as GAAP net cash provided by (used in) operating activities reduced by purchases of property and equipment and capitalized software development costs. We believe information regarding free cash flow provides useful supplemental information to investors.

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The following table presents a reconciliation of free cash flow to net cash provided by (used in) operating activities, the most directly comparable financial measure calculated in accordance with GAAP, for the periods presented (in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| **Net cash used in operating activities** | $(24828) | $(19197) | $(19265) | $(46328) |
| &nbsp;&nbsp;&nbsp;Capital expenditures | (358) | (351) | (2774) | (3177) |
| &nbsp;&nbsp;&nbsp;Capitalized software development costs | (4287) | (3359) | (12194) | (9406) |
| **Free cash flow (Non-GAAP)** | $(29473) | $(22907) | $(34233) | $(58911) |
| **Net cash provided by investing activities** | $58654 | $11687 | $242900 | $16885 |
| **Net cash provided by financing activities** | $1932 | $21551 | $14496 | $34582 |

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**Liquidity and Capital Resources**

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| | | |
|:---|:---|:---|
| | **Nine Months Ended December 31,** | **Nine Months Ended December 31,** |
| | **2022** | **2021** |
| | (in thousands) | (in thousands) |
| Cash used in operating activities | $(19265) | $(46328) |
| Cash provided by investing activities | 242900 | 16885 |
| Cash provided by financing activities | 14496 | 34582 |
| Net increase in cash, cash equivalents and restricted cash | $238131 | $5139 |

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***Sources of Cash and Material Cash Requirements***

To date, we have financed our operations primarily through the issuance of the Notes, private and public equity financings and customer payments. As disclosed in Note 7 — 0.5% Convertible Senior Notes and Capped Call in the "Notes to Condensed Consolidated Financial Statements" in Item 1 of Part I of this Quarterly Report on Form 10-Q, our 0.5% Convertible Senior Notes and Capped Call will mature on May 1, 2023. We may seek to repurchase a portion of our 0.5% Convertible Senior Notes pursuant to open market purchases or privately negotiated transactions in advance of their maturity date. We believe that our existing cash, cash equivalents, and short-term investment balances, together with cash generated from operations, will be sufficient to meet our working capital, capital expenditure requirements, and debt retirement obligations for at least the next 12 months.

We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities, available cash balances, and issuance of equity or debt securities. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the timing of our public cloud migration and the related decreased spending on capital expenditures, the introduction of new and enhanced products, seasonality of our billing activities, the timing and extent of spending to support our growth strategy, the continued market acceptance of our products, and competitive pressures. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, technologies and intellectual property rights. We may need or choose to raise additional funds from equity or debt securities in order to meet those capital requirements. In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results, and financial condition would be adversely affected.

Our material cash requirements consist of obligations under leases for office space and purchase commitments and our 0.5% Convertible Senior Notes. Except as set forth in Note 9 — Leases and Note 10 — Commitments and Contingencies contained in the "Notes to Condensed Consolidated Financial Statements" in Item 1 of Part I of this Quarterly Report on Form 10-Q, there were no material changes to our material cash requirements, as disclosed in our audited consolidated financial statements for the fiscal year ended March 31, 2022 in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022 (our "Annual Report"), as filed with the Securities and Exchange Commission ("SEC"), on May 17, 2022.

***Operating Activities***

During the nine months ended December 31, 2022, cash used in operating activities was $19.3 million as a result of a net loss of $126.4 million, adjusted by non-cash charges of $181.1 million and a change of $74.0 million in our operating assets and liabilities. The change in our operating assets and liabilities was the result of a $96.9 million decrease in deferred revenue, a $8.7 million increase in deferred contract acquisition and fulfillment costs, a $8.7 million decrease in lease liabilities, and a $3.8 million decrease in accounts payable. The decrease was offset by a $28.0 million decrease in account receivable, a $7.9 million decrease in lease right-of-use assets, a $5.3 million decrease in prepaid and other assets, and a $2.9 million increase in accrued compensation and benefits and other liabilities.

During the nine months ended December 31, 2021, cash used in operating activities was $46.3 million as a result of a net loss of $175.7 million, adjusted by non-cash charges of $185.9 million and a change of $56.5 million in our operating assets and liabilities. The change in our operating assets and liabilities was primarily the result of a $67.2 million decrease in deferred revenue, a $5.9 million decrease in lease liabilities, a $3.1 million increase in accounts receivable, a $3.0 million increase in prepaid and other assets, and a $1.7 million increase in deferred contract acquisition and fulfillment costs. This was partially offset by a $14.7 million increase in accrued compensation and benefits and other liabilities, a $6.7 million decrease in lease right-of-use assets, and a $2.9 million increase in accounts payable.

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***Investing Activities***

Cash provided by investing activities during the nine months ended December 31, 2022 was $242.9 million, primarily as a result of proceeds from the maturity and sale of short-term investments of $314.0 million and proceeds from sale of property and equipment of $1.8 million. This was partially offset by the purchase of short-term investments of $50.4 million, an increase in capitalization of software development costs of $12.2 million, purchases of property and equipment of $2.8 million, and a net payment of $7.5 million which was held back for an acquisition that occurred in the prior year.

Cash provided by investing activities during the nine months ended December 31, 2021 was $16.9 million, primarily as a result of proceeds from the maturity and sale of short-term investments of $212.3 million. This was partially offset by purchases of short-term investments of $175.7 million, cash paid for acquisition, net of cash acquired, of $7.2 million, purchases of property and equipment of $3.2 million, and increases in capitalization of software development costs of $9.4 million.

***Financing Activities***

Cash provided by financing activities during the nine months ended December 31, 2022 was $14.5 million, which was the result of proceeds received from the purchase of shares of common stock pursuant to our employee stock purchase plan of $6.1 million and from the exercise of stock options of $8.4 million.

Cash provided by financing activities during the nine months ended December 31, 2021 was $34.6 million, which was the result of proceeds received from the purchase of shares of common stock pursuant to our employee stock purchase plan of $5.4 million and from the exercise of stock options of $29.2 million.

**Critical Accounting Policies**

We prepare our consolidated financial statements in accordance with United States generally accepted accounting principles, ("GAAP"). In the preparation of these consolidated financial statements, we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from our estimates. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates.

There have been no significant changes in our critical accounting policies and estimates during the nine months ended December 31, 2022 as compared to the critical accounting policies and estimates described in our Annual Report.

***Recent Accounting Pronouncements***

See Note 1 — Description of Business and Summary of Significant Accounting Policies contained in the "Notes to Condensed Consolidated Financial Statements" in Item 1 of Part I of this Quarterly Report on Form 10-Q.

**Item 3. Quantitative and Qualitative Disclosures About Market Risk**

***Foreign Currency Exchange Risk***

The majority of our subscription and usage-based agreements are denominated in U.S. dollars. A portion of our operating expenses are incurred outside the United States and are denominated in foreign currencies and subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro and Japanese Yen. Additionally, fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our statements of operations. As exchange rates may fluctuate significantly between periods, our non-U.S. dollar denominated revenue and operating expenses may also experience significant fluctuations between periods as we convert these to U.S. dollars. Volatile market conditions arising from the macro environment have and may in the future result in significant changes in exchange rates, and in particular a weakening of foreign currencies relative to the U.S. dollar has and may in the future negatively affect our revenue expressed in U.S. dollars. As the impact of foreign currency exchange rates are not projected to be material to our operating results, we have not engaged in any foreign currency hedging transactions. As our international operations grow, we will continue to reassess our approach to managing the risks relating to fluctuations in currency rates. The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our historical consolidated financial statements.

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***Interest Rate Risk***

We had cash and cash equivalents of $506.8 million as of December 31, 2022, consisting of bank deposits and money market funds. These interest-earning instruments carry a degree of interest rate risk. To date, fluctuations in our interest income have not been significant. We have an agreement to maintain cash balances at a financial institution of no less than $5.8 million as collateral for several letters of credit in favor of our landlords. The letters of credit carry a fixed interest rate of 1%.

We had short-term investments of $293.4 million as of December 31, 2022, consisting of certificates of deposit, commercial paper, corporate notes and bonds, and U.S. treasury securities. Our investments in marketable securities are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. Due to the short-term nature of these investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates.

A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our consolidated financial statements.

In March 2018, we issued $500.25 million aggregate principal amount of the Notes. The fair value of the Notes is subject to interest rate risk, market risk and other factors due to the conversion feature in the Notes. The fair value of the Notes will generally increase as our common stock price increases and will generally decrease as our common stock price declines. The interest and market value changes affect the fair value of the Notes but do not impact our financial position, cash flows or results of operations due to the fixed nature of the debt obligation. Additionally, we carry the Notes at face value less unamortized issuance on our balance sheet, and we present the fair value for required disclosure purposes only.

**Item 4. Controls and Procedures**

***Evaluation of Disclosure Controls and Procedures***

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2022, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

***Limitations on the Effectiveness of Controls***

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

***Changes in Internal Control over Financial Reporting***

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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**PART II — OTHER INFORMATION**

**Item 1. Legal Proceedings**

From time to time, we may be subject to legal proceedings and claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, financial condition or cash flows. We have received, and may in the future continue to receive, claims from third parties asserting, among other things, infringement of their intellectual property rights. Future litigation may be necessary to defend ourselves, our partners and our customers by determining the scope, enforceability and validity of third-party proprietary rights, or to establish our proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

**Item 1A. Risk Factors**

*We have identified the following risks and uncertainties that may have a material adverse effect on our business, financial condition, or results of operations. This description includes any material changes to and supersedes the description of the risk factors disclosed in Part I, Item 1A of our Annual Report. We have marked with an asterisk (\*) those risks described below that reflect substantive changes from the risks disclosed in Part I, Item 1A of our Annual Report.*

*The risks described below are not the only ones we face. Additional risks not presently known to us or that we currently believe are immaterial may also significantly impair our business operations. Our business could be harmed by any of these risks. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. In assessing these risks, you should also refer to the other information contained in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and accompanying notes.*

**<u>Risks Related to Our Business and Our Industry</u>**

***We have a limited operating history with our current business model, which makes it difficult to evaluate our current business and future prospects and increases the risk of your investment.***

We were founded in 2007, launched our first commercial product in 2008, launched our New Relic platform in 2019, and introduced our updated pricing strategy in 2020. This limited operating history with our current business model limits our ability to forecast our future operating results and subjects us to a number of uncertainties, including our ability to plan for and model future growth. Our historical revenue growth should not be considered indicative of our future performance. We have encountered and will encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as determining appropriate investments of our limited resources, market adoption of our existing and future products and platform capabilities, competition from other companies, acquiring and retaining customers, hiring, integrating, training and retaining skilled personnel, developing new products and platform capabilities, determining prices and pricing structures for our products and platform capabilities, unforeseen expenses, and challenges in forecasting accuracy. If our assumptions regarding these risks and uncertainties, which we use to plan our business, are incorrect or change, or if we do not address these risks successfully, our operating and financial results and our business could suffer.

***We have limited experience with respect to determining the optimal prices and pricing structures for our products and have employed evolving pricing models, which subject us to challenges that could make it difficult for us to derive value from our customers and may adversely affect our operating results.***

We have evolved our pricing models over time and we expect that they will continue to evolve. For example, in fiscal 2021, we updated our pricing strategy to calculate customer spend based upon their consumption. Customers may be charged upon their usage in arrears, which we refer to as "Pay as You Go," or they may commit to a minimum spend over their contracted period in exchange for a discount on their usage pricing. Consumption under this model is measured by number of users and data ingested into our system, thereby collapsing what had previously been a number of different products priced in individualized ways into a simplified strategy that is intended to drive consumption across our platform.

We have seen that the pricing transition has negatively impacted our revenue and deferred revenue for certain customers at the time of their renewal. For example, some customers have decided to take advantage of our consumption pricing model and choose smaller upfront commitments in favor of spending on actual consumption in excess of committed amounts. Whether our consumption pricing model will prove successful is subject to numerous uncertainties, including but not

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limited to: customer demand, renewal and expansion rates, our ability to further develop and scale infrastructure, the ability of our sales force to successfully execute new sales strategies, tax and accounting implications, pricing, and our costs. In addition, the metrics we use to gauge the status and success of our consumption pricing model may continue to evolve as significant trends emerge.

We have seen indications of acceptance of our pricing model from our customers and the market in general, however, if our pricing model fails to gain continued or broader customer and market acceptance, our business and results of operations could be harmed. In addition, our evolving pricing models may allow competitors with different pricing models to attract customers unfamiliar or uncomfortable with our pricing models, which would cause us to lose business or modify our pricing models, both of which could adversely affect our revenues and operating margins.

We expect that we will continue to evolve our pricing model, including as a result of global economic conditions; reductions in our customers' spending levels generally; the introduction of new products and services; the evolution of existing products and services; or changes in how computing infrastructure is broadly consumed. We have introduced and expect to continue to introduce variations to our pricing models and other pricing programs that provide broader usage and cost predictability for our customers. Although we may believe that these pricing changes will drive net new customers, increase customer adoption, and support our transition to a consumption-based model, it is possible that they will not and may potentially cause confusion with our customers, which could negatively impact our business, revenue, and other financial results. If we have difficulty determining the appropriate price structure for our products, we may be required from time to time to further revise our pricing structure, increase billing frequency, or reduce our prices, which could adversely affect our business.

***We have a history of losses and our revenue growth rate could decline over time. As our costs increase, we may not be able to generate sufficient revenue to achieve and sustain profitability.\****

We have incurred net losses in each fiscal period since our inception, including net loss attributable to New Relic of $123.0 million and $194.9 million in the nine months ended December 31, 2022 and 2021, respectively. At December 31, 2022, we had an accumulated deficit of $906.3 million. We expect to continue to expend substantial financial and other resources on, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• investments in our research and development team, and the development of new platform offerings, capabilities, features, and functionality;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• expansion of our operations and infrastructure, both domestically and internationally;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• hiring of additional employees; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general administration, including legal, accounting, and other expenses related to our growing operations and infrastructure.

In addition, we are currently migrating our entire platform over time from third-party data center hosting facilities to public cloud hosting providers, and our costs and gross margins are significantly influenced by the prices we are able to negotiate with them, which in certain cases are also our competitors. These investments may not result in increased revenue or growth of our business. Our revenue growth rate experienced decline in previous periods and it could decline again over time. Accordingly, we may not be able to generate sufficient revenue to offset our expected cost increases and to achieve and sustain profitability. If we fail to achieve and sustain profitability, our operating results and business would be harmed.

***Weakened global economic conditions, including market volatility, any downturn or recession, rising inflation and interest rates, and the economic and other impacts of geopolitical conflicts, may harm our industry, business, and results of operations.***

Our overall performance depends in part on worldwide economic conditions. Global financial developments and downturns, even those seemingly unrelated to us or the information technology industry, may harm us. The United States and other key international economies are being impacted by supply chain disruption, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies, inflation, rising interest rates, labor shortages and overall uncertainty with respect to the economy. Businesses may look, and in many cases are looking, to rationalize their spending in response to such factors, which could impact our sales and renewal rates and negatively impact our business. Further, global events, such as Russia's invasion of Ukraine, may lead to or continue to result in disruption, instability, deterioration and volatility in global markets and industries that could negatively impact our business, financial condition and results of operations.

Furthermore, the revenue growth and potential profitability of our business depends on demand for software applications and products generally, and application performance monitoring and our other offerings specifically. In addition,

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our revenue is dependent on the number of users of our products and the degree of adoption of such users with respect to our products and platform capabilities. Historically, during economic downturns there have been reductions in spending on information technology systems as well as pressure for extended billing terms and other financial concessions, which would limit our ability to grow our business and negatively affect our operating results. These conditions affect the rate of information technology spending and could adversely affect our customers' ability or willingness to purchase our products, delay prospective customers' purchasing decisions, reduce the value or duration of their commitments or amount of their spend, or affect renewal rates, all of which could harm our operating results.

***We are exposed to foreign currency exchange rate fluctuations, which may harm our business and results of operations.\****

While we have historically transacted in U.S. dollars with substantially all of our customers and vendors, we have transacted in foreign currencies and will continue to transact in foreign currencies in the future. In addition, our international subsidiaries may maintain net assets that are denominated in currencies other than the functional operating currencies of these entities. Accordingly, changes in the value of foreign currencies relative to the U.S. dollar can affect our revenue and operating results as we convert these to U.S. dollars. Volatile market conditions arising from the macro environment have and may in the future result in significant changes in exchange rates, and with the recent volatility of multiple major foreign currencies against the U.S. dollar, we are seeing more significant impact from exchange rates on our revenue growth and expenses in fiscal 2023 than in the previous fiscal year, and we expect the impact to be significant in the next quarter if we continue to experience similar or greater foreign currencies volatility against the U.S. dollar. As a result of such foreign currency exchange rate fluctuations, it could be more difficult to detect underlying trends in our business and results of operations.

In addition, to the extent that fluctuations in currency exchange rates cause our results of operations to differ from our expectations or the expectations of our investors, the trading price of our common stock could be adversely affected. We do not currently maintain a program to hedge transactional exposures in foreign currencies. However, in the future, we may use derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates. The use of such hedging activities may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place. Moreover, the use of hedging instruments may introduce additional risks if we are unable to structure effective hedges with such instruments.

***We have experienced significant growth in prior periods and our historical growth rates may not be indicative of our future growth. If we are not able to manage our growth and expansion, or if our business does not grow as we expect, our operating results may suffer.***

We have experienced significant growth in our customer adoption and have expanded and intend to continue to significantly expand our operations, including our domestic and international employee headcount. This growth has placed, and will continue to place, significant demands on our management and our operational and financial infrastructure and we may not be able to sustain revenue growth consistent with prior periods, or at all.

To manage our growth effectively, we must continue to improve our operational, financial, and management systems and controls by, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• effectively attracting, training, integrating, and retaining a large number of new employees, particularly members of our research and development teams and employees and consultants in jurisdictions outside of the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• further improving our key business systems, processes, and information technology infrastructure, including our cloud services, to support our business needs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• enhancing our information, training, and communication systems to ensure that our employees are well-coordinated and can effectively communicate with each other and our customers; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• improving our internal control over financial reporting and disclosure controls and procedures to ensure timely and accurate reporting of our operational and financial results.

If we fail to manage our expansion, implement and transition to our new systems, implement improvements, or maintain effective internal controls and procedures, our costs and expenses may increase more than we plan and we may lose the ability to increase our customer adoption, enhance our existing solutions, develop new solutions, satisfy our customers, respond to competitive pressures, or otherwise execute our business plan. If we are unable to manage our growth, our operating results likely will be harmed.

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***Our business depends on our customers remaining on our platform and increasing their spend with us. Any decline in our customer expansions and renewals would harm our future operating results.\****

Our future success depends in part on our ability to retain and expand our platform usage with our current customers. If our customers do not remain on our platform or increase their spend with us, our revenue may decline, and our operating results may be harmed.

In addition, in order for us to maintain or improve our operating results, it is important that our customers renew their commitments or remain on our platform and increase their spend when the contract term expires. Many of our customers may start their accounts on a free tier and have no obligation to enter into a paid commitment or incur spend above the free tier. Our customers that enter into paid commitments have no obligation to renew after the expiration of the contractual term nor an obligation to remain on our platform and incur additional usage fees. Commitments are most often one year in length, and, our customers may renew for lower commitment amounts or instead use our Pay as You Go model, under which they are billed in arrears for their usage. To the extent we are not successful increasing customer budget available to spend on our products and services, whether through demonstrating our value or increasing their contractual commitment level in-line with their usage, there is no guarantee that our customers will grow their consumption with us. Also, in the past, some of our customers have elected not to renew their agreements with us, and we cannot accurately predict future net expansion rates. Moreover, certain legacy customers with annual subscriptions entered into prior to our consumption pricing model have the right to cancel their agreements prior to the termination of the subscription term. Additionally, some customers have decided and may continue to remain within the limitations of our free-tier or lower-priced offerings.

Our customer expansions and renewals may decline or fluctuate as a result of a number of factors, including: customer usage, customer satisfaction with our products and platform capabilities and customer support, our prices, including as a result of changes to our pricing strategy, the prices of competing products, mergers and acquisitions affecting our customer base, consolidation of affiliates' multiple accounts into a single account, the effects of uncertain global economic conditions, including as a result of the COVID-19 pandemic and Russia's invasion of Ukraine, or reductions in our customers' spending levels generally.

***If we are not able to develop enhancements to our products, increase adoption and usage of our products, and introduce new products and capabilities that achieve market acceptance, our business could be harmed.***

Our ability to attract new customers and increase revenue from existing customers depends in large part on our ability to enhance and improve our existing products, increase adoption and usage of our products, and introduce new products and capabilities. The success of any enhancement or new products depends on several factors, including timely completion, competitive pricing, adequate quality testing, introduction, integration with existing technologies and our platform, and market acceptance. Any products that we develop may not be introduced in a timely or cost-effective manner, may contain errors or defects, or may not achieve the broad market acceptance necessary to generate sufficient revenue. If we are unable to successfully enhance our existing products to meet customer requirements, increase adoption and usage of our products, or develop new products, our business and operating results will be harmed.

***If customers do not expand their use of our products beyond the current predominant use cases, our ability to grow our business and operating results may be adversely affected.***

Most of our customers currently use our products to support application performance management functions, and the majority of our revenue to date has been from our application performance management products. Our ability to grow our business depends in part on our ability to persuade current and future customers to expand their use of our software to additional use cases across our entire platform. If we fail to achieve market acceptance of our software, or if a competitor establishes a more widely adopted solution, our ability to grow our business and financial results will be adversely affected. In addition, as the amount of data stored for a given customer grows, that customer may have to limit or decrease usage in order to stay within budgeted amounts or lower their cost. If their fees grow significantly, customers may react adversely to this pricing model, particularly if they perceive that the value of our software has become eclipsed by such fees or otherwise.

***Failure to effectively align our marketing and sales capabilities with our consumption pricing structure and increase sales efficiency could harm our ability to increase our customer adoption and achieve broader market acceptance of our products.***

Our ability to increase our customer adoption and achieve broader market acceptance of our products will depend to a significant extent on our ability to align our marketing and sales capabilities with our consumption pricing structure and increase sales efficiency.

The effectiveness of our marketing programs has varied over time and may vary in the future due to competition, and we are continuously making adjustments to increase our emphasis on overall product experience and reorient our sales

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organization around customer success. All of these efforts have required and will continue to require us to invest significant resources. If we are unable to hire, develop, and retain talented sales personnel, if our sales personnel are unable to achieve desired productivity levels in a reasonable period of time or unable to successfully execute sales strategies in connection with our pricing model changes, or if our sales and marketing programs are not effective, our ability to increase our customer adoption and achieve broader market acceptance of our products could be harmed.

In particular, we may in the future need to further adjust our go-to-market cost structure and target metrics, particularly as they relate to how we structure, effect, and compensate our sales teams to become more efficient and effective at selling under the consumption-based business model. Any adjustments in compensation structure could negatively affect the productivity of our sales teams, and there is no assurance that we will be able to successfully implement the adjustments in a timely or cost-effective manner, or that we will be able to realize all or any of the expected benefits from such adjustments.

***If we are unable to develop and grow a broad base of high-spend customers, many of which we expect to be large enterprise customers, while mitigating the risks associated with serving such customers, our business, financial position, and results of operations may suffer.***

Our growth strategy is dependent, in large part, upon developing and growing a broad base of high-spend customers, many of which we expect to be large enterprise customers. Sales to large customers involve risks that may not be present or that are present to a lesser extent with sales to smaller entities, such as longer sales cycles, more complex customer requirements, substantial upfront sales costs, and less predictability in completing some of our sales. For example, enterprise customers may require considerable time to evaluate and test our applications and those of our competitors prior to making a purchase decision and placing an order. A number of factors influence the length and variability of our sales cycle, including the need to educate potential customers about the uses and benefits of our applications, the discretionary nature of purchasing and budget cycles, and the competitive nature of evaluation and purchasing approval processes. As a result, the length of our sales cycle, from identification of the opportunity to deal closure, may vary significantly from customer to customer, with sales to large enterprises typically taking longer to complete. Moreover, large enterprise customers often begin to deploy our products on a limited basis, but nevertheless demand extensive configuration, integration services, and pricing negotiations, which increase our upfront investment in the sales effort with no guarantee that these customers will deploy our products widely enough across their organization to justify our substantial upfront investment.

In addition, our ability to improve our sales of products to large enterprises is dependent on us continuing to attract and retain sales personnel with experience in selling to large organizations. Also, because security breaches with respect to larger, high-profile enterprises are likely to be heavily publicized, there is increased reputational risk associated with serving such customers. If we are unable to continue to increase sales of our products to large enterprise customers while mitigating the risks associated with serving such customers, our business, financial position, and results of operations may suffer.

***Our quarterly results may fluctuate and our recent operating results may not be a good indication of our future performance. If we fail to meet the expectations of analysts or investors, our stock price and the value of your investment could decline substantially.***

Our quarterly financial results may fluctuate widely as a result of the risks and uncertainties described in this report, many of which are outside of our control. In addition, our pricing model may give rise to a number of risks reflected in risk factors titled "*We have limited experience with respect to determining the optimal prices and pricing structures for our products and have employed evolving pricing models, which subject us to challenges that could make it difficult for us to derive value from our customers and may adversely affect our operating results*" and "*If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected*." If our financial results fall below the expectations of investors or any securities analysts who follow our stock, the price of our common stock could decline substantially.

We believe that quarter-to-quarter comparisons of our revenue, operating results, and cash flows may not be meaningful and should not be relied upon as an indication of future performance. If our revenue or operating results fall below the expectations of investors or securities analysts in a particular quarter, or below any guidance we may provide, the price of our common stock could decline.

***Because users are able to configure our platform to collect and store confidential, personal or proprietary information, security concerns could result in additional cost and liability to us or inhibit sales of our products.\****

Our operations and those of service providers upon which we rely involve protection of our intellectual property, along with the storage and transmission and processing of our customers' proprietary data, which customers might choose to have include some personally identifiable information. While we have developed systems and processes to protect the integrity,

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confidentiality and security of our customers' data, our security measures or those of our third-party service providers could fail and result in unauthorized access to or disclosure, modification, misuse, loss or destruction of such data and there can be no assurance that these measures will be effective.

Further, we may experience delays in developing and deploying remedial measures designed to address any identified vulnerabilities. Any security breaches, computer malware (including as a result of advance threat intrusions), malicious code (such as viruses and worms), software bugs, ransomware, supply-chain attacks, server malfunctions, software or hardware failures, computer hacking, cyber-attacks, ransomware, phishing attacks and other social engineering schemes, denial or degradation of service attacks, credential harvesting, internal and external personnel misconduct or error, unauthorized access or use, device theft, loss of data or information technology assets, and other types of security incidents experienced by us or our third-party service providers, could expose us to a risk of loss of confidential, personal or proprietary information, loss of business, severe reputational damage adversely affecting customer or investor confidence, regulatory investigations and orders, litigation, demands, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations, and significant costs for investigation, remediation and incentives offered to customers or other business partners in an effort to maintain business relationships after a breach and other liabilities.

Cyber-attacks, intrusions and other malicious internet-based activity including by threat actors, internal and external personnel (such as through theft or misuse), computer hackers, nation-state-supported actors, foreign governments and cyber terrorists, continue to increase generally as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Such actors now engage and are expected to continue to engage in cyber-attacks for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including cyber-attacks that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services. Ransomware attacks are becoming increasingly prevalent and severe and can lead to significant interruptions in our operations, loss of data and income, reputational harm, and diversions of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments. Supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners' supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems or the information technology systems of our third-party partners with whom we work. Future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities' systems and technologies.

The costs to us to investigate and mitigate network security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and while we have implemented security measures to protect our data security and information technology systems, our efforts to address these problems may not be successful, and these problems could result in unexpected interruptions, delays, cessation of service, negative publicity and other harm to our business and our competitive position. Certain data privacy and security obligations may require us to implement and maintain specific, industry-standard, or reasonable security measures to protect our information technology systems and information. If our products or security measures are perceived as weak or actually compromised as a result of third-party action, employee or customer error, malfeasance, stolen or fraudulently obtained log-in credentials, or otherwise, our customers may curtail or stop using our products, our reputation could be damaged, our business may be harmed, and we could incur significant liability. We may be unable to anticipate or prevent techniques used to obtain unauthorized access or to sabotage systems because they change frequently and generally are not detected until after an incident has occurred. As we increase our customer adoption and our brand becomes more widely known and recognized, we may become more of a target for third parties seeking to compromise our security systems or gain unauthorized access to our customers' data. Additionally, with so many of our employees now working remotely due to the COVID-19 pandemic, we may face an increased risk of attempted security breaches and incidents. Moreover, if a high-profile security breach occurs with respect to another cloud platform provider, our customers and potential customers may lose trust in the security of cloud platforms generally, which could adversely impact our ability to retain existing customers or attract new ones. Additionally, future acquisitions could also expose us to additional cybersecurity risks and vulnerabilities from any newly acquired information technology infrastructure.

Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences. If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences.

If we are not able to detect and indicate activity on our platform that might be nefarious in nature or design processes or systems to reduce the impact of similar activity at a third-party service provider, our customers could suffer harm. In such

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cases, we could face exposure to legal claims, particularly if the customer suffered actual harm. We cannot assure you that any limitations of liability provisions in our contracts for a security lapse or breach would be enforceable or adequate or would otherwise protect us from any liabilities or damages with respect to any particular claim. We also cannot be sure that our existing insurance coverage will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims related to a security breach, or that the insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our expansion rates, financial condition, operating results, and reputation.

***The ongoing global coronavirus ("COVID-19") pandemic could harm our business and results of operations.***

The continuing effects of the COVID-19 pandemic are highly unpredictable and could be significant, and the duration and extent to which they will impact our future results of operations and overall financial performance remains uncertain. While the rollout of COVID-19 vaccines is ongoing, the timing and speed of vaccination rollouts and acceptance and the lifting of occupancy limits and movement restrictions varies from location to location is evolving, and to varying degrees remains unknown.

In light of the ongoing uncertainty relating to the COVID-19 pandemic, we have taken precautionary measures intended to minimize the risk of the virus to our employees, our customers, and the communities in which we operate, which could negatively impact our business. Although we have reopened all our offices and held in-person meetings and events in compliance with applicable government orders and guidelines, the majority of our employees continue to work remotely and in-person meetings remain limited. While the travel bans and other restrictions that were implemented by federal, state, or local authorities at the beginning of the pandemic have been lifted or relaxed generally, some of these restrictions have been re-imposed in some areas at different times due to the proliferation of new variants, among other developments, and new restrictions may be implemented. While we have a distributed workforce and our employees are accustomed to working remotely, our workforce is not normally fully remote and our employees travel frequently to establish and maintain relationships with one another and with our customers, partners, and investors. In addition, our management team has, and will likely continue, to spend significant time, attention and resources monitoring the COVID-19 pandemic and seeking to minimize the risk of the virus and manage its effects on our business and workforce. Furthermore, with most of our employees continuing to work remotely, we are at increased risk of cyber security-related breaches. We continue to take steps to monitor and enhance the security of our systems, IT infrastructure, networks, and data; however, the unprecedented scale of remote work may require additional personnel and resources, which nevertheless cannot be guaranteed to fully safeguard all systems, IT infrastructure networks, and data upon which we rely. The COVID-19 pandemic may also have long-term effects on the nature of the office environment and remote working, which has and may continue to bring changes to our real estate lease assets.

The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on certain developments, including the duration of the pandemic and the successful rollout of vaccines and the efficacy and durability of such vaccines, especially in light of the emergence of new variant strains; impact on our customers and our sales cycles; impact on our customer, employee, and industry events; impact on our employee recruitment and attrition; and effect on our vendors, all of which are uncertain and cannot be predicted at this time. In addition, COVID-19 may continue to disrupt the operations of our customers and partners for an indefinite period of time, including as a result of travel restrictions and/or business shutdowns, all of which could negatively impact our business and results of operations, including cash flows. Our revenue and deferred revenue have been negatively impacted, in part, by the slowdown in activity associated with the COVID-19 pandemic, but at this point, the extent of the impact to our financial condition or results of operations, including cash flows, is uncertain, particularly as the COVID-19 pandemic continues to persist for an extended period of time. Meanwhile, our shift to consumption-based pricing contracts, where the revenue we receive is tied to our customers' actual usage of our products, may further exacerbate the uncertainty with respect to the revenue we receive from our customers. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this ''Risk Factors'' section.

***If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, and changing customer needs, requirements, or preferences, our products may become less competitive.***

The software industry is subject to rapid technological change, evolving industry standards and practices, and changing customer needs, requirements, and preferences. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis. If we are unable to develop and sell new products that satisfy our customers and provide enhancements and new features for our existing products and platform capabilities that keep pace with rapid technological and industry change, our revenue and operating results could be adversely affected. Further, the value of our platform to customers increases to the extent they are able to use it for all of their telemetry data. We need to continue to invest

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in technologies, services, and partnerships that increase the ease with which customers can ingest data into our platform. If new technologies emerge that are able to deliver competitive products and applications at lower prices, more efficiently, more conveniently, or more securely, such technologies could adversely impact our ability to compete.

Our platform must also integrate with a variety of network, hardware, mobile, and software platforms and technologies, and we need to continuously modify and enhance our products and platform capabilities to adapt to changes and innovation in these technologies. If developers widely adopt new software platforms, we would have to develop new versions of our products and platform capabilities to work with those new platforms. This development effort may require significant engineering, marketing, and sales resources, all of which would affect our business and operating results. Any failure of our products and platform capabilities to operate effectively with future infrastructure platforms and technologies could reduce the demand for our products. If we are unable to respond to these changes in a cost-effective manner, our products may become less marketable and less competitive or obsolete, and our operating results may be negatively affected. Similarly, application stores such as those operated by Apple and Google, may change their technical requirements or policies in a manner that adversely impacts the way in which we or our partners or customers collect, use, and share data from users. If the use of our products does not comply with these requirements, customers may not be able to use our products for their intended purposes and our business could be harmed.

***We are dependent upon lead generation strategies to drive our sales and revenue. If these marketing strategies fail to continue to generate sales opportunities, our ability to grow our revenue will be adversely affected.***

We are dependent upon lead generation strategies, including our expanded free tier offering, to generate sales opportunities. These strategies may not be successful in continuing to generate sufficient sales opportunities necessary to increase our revenue. To the extent that we are unable to successfully attract and grow paying customers, we will not realize the intended benefits of these marketing strategies and our ability to grow our revenue will be adversely affected.

***The markets in which we participate are intensely competitive, and if we do not compete effectively, our operating results could be harmed.***

The markets in which we compete are rapidly evolving, significantly fragmented, and highly competitive. Our observability platform combines functionality from numerous traditional product categories, and hence we compete in each of these categories with home-grown and open-source technologies, as well as a number of different vendors.

With respect to application performance monitoring, we compete with providers such as Cisco Systems, Inc. and Dynatrace, Inc. With respect to log management, we compete with Elastic NV and Splunk Inc. With respect to infrastructure monitoring, we compete with diversified technology vendors such as International Business Machines Corporation, BMC Software, Inc. and CA, Inc. (a subsidiary of Broadcom, Inc.); with native solutions from cloud providers such as Amazon Web Services, Inc., Microsoft Corporation, and Google LLC; and with independent vendors such as Datadog, Inc. In addition, we may increasingly choose to allow third-party hosting providers to offer our solutions directly through their customer marketplaces. An increasing number of sales through cloud provider marketplaces could reduce both the number of customers with whom we have direct commercial relationships as well as our profit margins on sales made through such marketplaces.

Some of our competitors and potential competitors are larger and have greater name recognition, longer operating histories, more established customer relationships, larger budgets, and significantly greater resources than we do, and have the operating flexibility to bundle competing products and services with other software offerings at little or no perceived incremental cost, including offering them at a lower price as part of a larger sale. As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, or customer requirements. In addition, some competitors may offer products or services that address one or a limited number of functions at lower prices or with greater depth than our products. Our current and potential competitors may develop and market new technologies with comparable functionality to our products and platform capabilities, and this could lead to us having to decrease prices in order to remain competitive.

With the introduction of new technologies, the evolution of our products and platform capabilities and new market entrants, we expect competition to intensify in the future. Moreover, as we expand the scope of our solutions, we may face additional competition. Additionally, some potential customers, particularly large organizations, may elect to develop their own internal products. If one or more of our competitors were to merge or partner with another of our competitors or another large diversified technology company, the change in the competitive landscape could also adversely affect our ability to compete effectively. For example, in March 2017, Cisco Systems, Inc. completed its purchase of AppDynamics, Inc., in November 2018, Broadcom Inc. completed its acquisition of CA, Inc., and, in October 2019, Splunk Inc. completed its acquisition of SignalFX, Inc. If we are unable to maintain our current pricing or fail to gain market acceptance of our updated pricing strategy due to the competitive pressures, our margins will be reduced, and our operating results will be negatively affected. In addition,

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pricing pressures and increased competition generally could result in reduced sales, reduced margins, losses, or the failure of our solutions to achieve or maintain more widespread market acceptance, any of which could harm our business.

***Due to differences between our legacy subscription-based pricing model and our transition to a consumption-based pricing model, we may not have visibility into our future financial position and results of operations.***

We have historically employed a subscription-based model and for contracts entered into prior to our consumption pricing model, we recognize revenue from customers ratably over the terms of their subscriptions. A portion of the revenue we report in each quarter is derived from the recognition of revenue relating to subscriptions entered into during previous quarters. Consequently, a decline in new or renewed subscriptions in any single quarter may have a small impact on our revenue for that quarter. However, such a decline will negatively affect our revenue in future quarters. Accordingly, the effect of significant downturns in sales and market acceptance of our solutions, and potential changes in our rate of renewals, may not be fully reflected in our results of operations until future periods. As a result, due to this historical reliance on a subscription-based business model, the effects of the COVID-19 pandemic to date were not fully reflected in our results of operations until later periods.

Because our customers have flexibility in the timing of their consumption under our pricing model, we do not have the same visibility into the timing of revenue recognition as we did under the subscription-based model. There is a risk that customers will consume our platform at a different pace than we expect, and our actual results may differ from our forecasts.

***Seasonality may cause fluctuations in our sales and operating results.\****

We have experienced seasonality in our sales and operating results in the past, and we believe that we will continue to experience seasonality in the future. Historically, we have received a higher volume of orders in the fourth fiscal quarter of each year, driven largely by contract renewals, and to a lesser extent our third fiscal quarter of each year. As a result, we have historically seen higher cash collections in the first and fourth fiscal quarters of each year, and our sequential growth in remaining performance obligations has historically been highest in the fourth fiscal quarter of each year, and to a lesser extent our third fiscal quarter of each year. With our shift to a consumption based pricing model in fiscal 2022, we expect over time that our revenue will more closely approximate our customer usage of our products and services, and thereby our revenue may experience seasonal fluctuations based upon our customer consumption patterns. For example, in recent years, we have seen a seasonal decline in consumption usage on an aggregate basis around the Christmas holiday in mid-December that begins to recover in January as the users of our platform return to work. For customers under consumption based pricing models that exhibit this seasonal pattern, we would have a corresponding revenue decrease for the impacted period of seasonally reduced usage.

***If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.***

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations." The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources.

Assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, which include variable consideration, stock-based compensation, and business combinations. For example, the calculations to derive variable consideration require a combination of quantitative and qualitative inputs, which include estimates of our customers' future consumption and estimates regarding the collectability of consumption above committed amounts, that are based largely on an assessment of information (historical, current and forecasted) that is reasonably available to us at that time.

As a result, the timing of recognizing revenue in any given quarter, including the extent to which revenue from transactions in a given period may not be recognized until a future period, can be variable and difficult to predict and our results of operations may be adversely affected if such assumptions change or if actual circumstances differ from those in our assumptions. This could result in fluctuations in our revenue from period to period, which may make these comparisons less meaningful and make it difficult for us, securities analysts and investors to accurately forecast our revenue and operating results, which could cause our results of operations to differ from our financial outlook or the expectations of securities analysts and investors, potentially resulting in a decline in the market price of our common stock. In addition, our consumption pricing

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model has only been in place since fiscal 2021 and we are continuing to refine our assumptions and estimates. As we continue to obtain more historical data, we expect that our ability to forecast and derive these estimates will improve over time.

***Interruptions or performance problems associated with our technology and infrastructure may adversely affect our business and operating results.\****

Our continued growth depends in part on the ability of our existing and potential customers to access our products and platform capabilities at any time and within an acceptable amount of time. We have experienced, and may in the future experience, disruptions, outages, and other performance problems due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, capacity constraints due to an overwhelming number of users accessing our products and platform capabilities simultaneously, denial or degradation of service attacks, computer viruses, natural disasters, climate change and extreme weather related events, terrorism, war, telecommunications and electrical failures, cyberattacks or other security-related incidents. It may become increasingly difficult to maintain and improve our performance, especially during peak usage times and as our products and platform capabilities become more complex and our user traffic increases. If our products and platform capabilities are unavailable or if our users are unable to access our products and platform capabilities within a reasonable amount of time or at all, our business would be negatively affected. As we expand our business, our customers increasingly rely on our customer support personnel to realize the full benefits that our platform provides, and if we do not help our customers quickly resolve issues and provide effective ongoing support, our ability to maintain and expand our platform usage to existing and new customers could suffer, and our reputation with existing or potential customers could suffer. In addition, to the extent that we do not effectively address capacity constraints, upgrade our systems as needed, and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business and operating results may be adversely affected.

In addition, we currently serve our customers from third-party data centers and a combination of cloud hosting providers. The continuous availability of our products and platform capabilities depends on the operations of our data center facilities, on our cloud hosting providers, on a variety of network service providers, on third-party vendors, and on our own site operations staff. We depend on our third-party providers' abilities to protect our data center facilities against damage or interruption from natural disasters, power or telecommunications failures, criminal acts, and similar events. If there are any lapses of service, damage to the facilities, or prolonged cloud hosting provider service disruptions or downtime affecting our platform, we could experience lengthy interruptions in our products and platform capabilities as well as delays and additional expenses in arranging new facilities and services. In addition, we are in the process of migrating our entire platform over time from third-party data center hosting facilities to public cloud hosting providers. After we complete this migration, we will rely extensively on these public cloud providers to provide our clients and their users with fast and reliable access to our products. Even with current and planned disaster recovery arrangements, which, to date, have not been tested in an actual crisis, our business could be harmed. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. These factors in turn could further reduce our revenue, subject us to liability, and cause us to issue credits or cause customers not to renew their commitments or increase their spend with us, any of which could harm our business.

***We depend and rely on SaaS technologies and related services from third parties in order to operate critical functions of our business and interruptions or performance problems with these technologies or services may adversely affect our business and operating results.***

We depend and rely on software-as-a-service, or SaaS, technologies and related services from third parties in order to operate critical functions of our business, including billing and order management, financial accounting services, and customer relationship management services. If these services become unavailable due to extended outages or interruptions, security vulnerabilities, or cyber-attacks, because they are no longer available on commercially reasonable terms or prices, or due to other unforeseen circumstances, our expenses could increase, our ability to manage these critical functions could be interrupted, and our processes for and ability to manage sales of our products, recognize revenue, and support our customers could be impaired, all of which could adversely affect our business and operating results.

***Defects or disruptions in our products and platform capabilities could diminish demand, harm our financial results, and subject us to liability.***

Our customers use our products and platform capabilities for important aspects of their businesses, and any errors, defects, or disruptions to our products and platform capabilities or other performance problems with our products and platform capabilities could hurt our brand and reputation and may damage our customers' businesses. We provide regular product updates, which may contain undetected errors when first introduced or released. In the past, we have discovered software errors, failures, vulnerabilities, and bugs in our products and platform capabilities after they have been released and new errors in our existing products and platform capabilities may be detected in the future. Real or perceived errors, failures, or bugs in our products and platform capabilities could result in negative publicity, loss of or delay in market acceptance of our products, loss of competitive position, delay of payment to us, lower renewal rates, or claims by customers for losses sustained by them. In

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such an event, we may be required, or may choose, for customer relations or other reasons, to expend additional resources in order to help correct the problem. In addition, we may not carry insurance sufficient to compensate us for the losses that may result from claims arising from defects or disruptions in our products and platform capabilities. As a result, we could lose future sales and our reputation, and our brand could be harmed.

***Our ongoing and planned investments in cloud hosting providers and expenditures on transitioning our services and customers from our data center hosting facilities to public cloud providers are expensive and complex, may result in a negative impact on our cash flows, and may negatively impact our financial results.***

We have made and will continue to make substantial investments in our cloud hosting providers to support our growth and provide enhanced levels of products and platform capabilities to our customers. We have been continuing to decrease the amount of capital expenditures on hosting equipment for use in our data center hosting facilities as we transition to greater dependence on cloud hosting providers. If costs associated with cloud hosting services utilized to support our growth continue to be greater than originally expected or if we are required to make larger continuing investments in our data centers than we anticipated, the negative impact on our operating results would likely exceed our expectations. Furthermore, if we determine to no longer utilize our data centers and related property, and equipment sooner than planned, we may be forced to accelerate expense recognition as a result of the shorter estimated life of such assets. In addition, ongoing or future improvements to our cloud infrastructure may be more expensive than we anticipate, and may not yield the expected savings in operating costs or the expected performance benefits. We may not be able to maintain or achieve cost savings from our investments, which could harm our financial results.

We plan to continue to invest resources in connection with transitioning our customers and services to third-party cloud hosting providers and may encounter obstacles in completing the transition. Additionally, due to the difficulty in predicting usage of our cloud hosting providers related to customers recently migrated or customers to be migrated from our data centers, we may not be able to accurately forecast our expenditures on such cloud hosting services, which may increase the variability of our results of operations.

In addition, we may need to change our current operations infrastructure in order for us to achieve profitability and scale our operations efficiently, which makes our future prospects even more difficult to evaluate. For example, in order to grow our sales in a financially sustainable manner, we may need to further customize our offering and modify our go-to-market strategy to reduce our operating and customer acquisition costs. If we fail to implement these changes on a timely basis or are unable to implement them effectively, our business may suffer.

***Because our long-term growth strategy involves further expansion of our sales to customers outside the United States, our business will be susceptible to risks associated with international operations.\****

During the nine months ended December 31, 2022, we derived approximately 35% of our total revenue from customers outside the United States. A component of our growth strategy involves the further expansion of our operations and customer adoption internationally. Operating in international markets requires significant resources and management attention and subjects us to regulatory, economic, and political risks that are different from those in the United States. We have limited operating experience in international markets, and we cannot assure you that our expansion efforts into international markets will be successful. Our international expansion efforts may not be successful in creating further demand for our products outside of the United States or in effectively selling our products in the international markets we enter. Our current international operations and future initiatives involve a variety of risks, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in a specific country's or region's political or economic conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unexpected changes in regulatory requirements, taxes, or trade laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• economic and political uncertainty around the world, including uncertainty regarding U.S foreign and domestic policies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regional data security and privacy laws and regulations and the unauthorized use of, or access to, commercial and personal information;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• differing labor regulations where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• significant reliance upon, and potential disputes with, local business partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increased travel, real estate, infrastructure, and legal compliance costs associated with international operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we chose to do so in the future;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limitations on our ability to repatriate earnings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of public health epidemics on our employees, partners and customers, such as the coronavirus epidemic, currently impacting various regions throughout the world;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• laws and business practices favoring local competitors, or general preferences for local vendors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limited or insufficient intellectual property protection;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• exposure to liabilities under anti-corruption, export controls and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act, and similar laws and regulations in other jurisdictions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash or create other collection difficulties.

Our limited experience operating our business internationally increases the risk that recent and any potential future expansion efforts will not be successful. If substantial time and resources invested to expand our international operations do not result in a successful outcome, our operating results and business will suffer.

In addition, in February 2022, Russia launched a large-scale military attack on Ukraine. The invasion significantly amplified pre-existing geopolitical tensions. It is not possible to predict the full extent of the broader consequences of Russia's ongoing invasion of Ukraine, including sanctions, embargoes, regional instability, geopolitical shifts and adverse effects on macroeconomic conditions, currency exchange rates and financial markets. Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from such conflict.

***If we lose key members of our management team or are unable to attract and retain executives and employees we need to support our operations and growth, our business may be harmed.***

Our success and future growth depend largely upon the continued services of our executive officers and other key employees in the areas of research and development, marketing, sales, services, and general administrative functions. From time to time, there may be changes in our executive management team or other key employees resulting from the hiring or departure of these personnel. For example, in fiscal 2022, Lew Cirne, our founder and former Chief Executive Officer, transitioned from his role as Chief Executive Officer to Executive Chairman of our Board of Directors and Williams Staples, our former President and Chief Product Officer was promoted to Chief Executive Officer. In the first quarter of fiscal 2023, Mark Sachleben, our former Chief Financial Officer, retired from the position and transitioned into an advisory role at the company and David Barter became our Chief Financial Officer. In addition, Mark Dodds joined us as our Chief Revenue Officer in the second quarter of fiscal 2023.

Our executive officers and other key employees are employed on an at-will basis, which means that these personnel could terminate their employment with us at any time. Any changes in our senior management team in particular, even in the ordinary course of business, may be disruptive to our business. While we seek to manage these transitions carefully, including by establishing strong processes and procedures and succession planning, such changes may result in a loss of institutional knowledge and cause disruptions to our business. In addition, new executive hires may fail to achieve any anticipated benefits. If our senior management team fails to work together effectively or execute our plans and strategies on a timely basis as a result of management turnover or otherwise, our business could be harmed.

In addition, to execute our growth plan, we must attract and retain highly qualified personnel. Competition for these personnel is intense, especially for engineers experienced in designing and developing software and SaaS, applications and experienced sales professionals. If we are unable to attract such personnel in locations where we are located, we may need to hire in other locations as well as consider alternative flexible work options, which may add to the complexity and costs of our business operations. Complexities in hiring and the need for flexible work arrangements have heightened during the COVID-19 pandemic. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications, especially during the current period of heightened employee attrition in the U.S. and other countries. Many of the companies with which we compete for experienced personnel have greater resources than we have. If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees

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or we have breached their legal obligations, resulting in a diversion of our time and resources. In addition, prospective and existing employees often consider the value of the equity awards they receive in connection with their employment. If the perceived value of our equity awards declines, or experiences significant volatility, it may adversely affect our ability to recruit and retain key employees. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be adversely affected.

***If we fail to enhance our brand, or to do so in a cost-effective manner, our ability to expand our customer adoption will be impaired and our financial condition may suffer.***

We believe that our development of the New Relic brand is critical to achieving widespread awareness of our existing and future solutions, and, as a result, is important to attracting new customers and retaining existing customers. We also believe that the importance of brand recognition will increase as competition in our market increases. Successful promotion of our brand will depend largely on the effectiveness of our marketing efforts, including our ability to do so in a cost-effective manner, and on our ability to provide reliable and useful products at competitive prices. In the past, our efforts to build our brand have involved significant expenses, and we may have to expend significant resources again in the future in connection with brand promotion and marketing activities. Brand promotion and marketing activities may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand.

***If we cannot continue to maintain and develop our corporate culture as we grow, we could lose the innovation, teamwork, passion, and focus on execution that we believe contribute to our success, and our business may be harmed.***

We believe that our corporate culture has been a critical component to our success. We have invested substantial time and resources in building our team. As we grow and mature as a public company, and as we continue to expand internationally and adopt more flexible work arrangements, we may find it difficult to continue to maintain and develop our corporate culture. There have been changes in our senior executive management team resulting from the hiring, promotion, or departure of these personnel, and we expect to also recruit and hire other senior executives in the future. Such management changes subject us to a number of risks, such as risks pertaining to the creation of new management systems and processes and differences in management style, any of which could adversely impact our corporate culture. In addition, we may need to continue to adapt our corporate culture and work environments to such changing circumstances. Any failure to preserve our culture could negatively affect our future success, including our ability to recruit and retain personnel and effectively focus on and pursue our corporate objectives.

***Acquisitions, strategic investments, partnerships, or alliances could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our operating results and financial condition.***

We have in the past and may in the future seek to acquire or invest in businesses, joint ventures, products and platform capabilities, or technologies that we believe could complement or expand our products and platform capabilities, enhance our technical capabilities, or otherwise offer growth opportunities. For example, in the third quarter of fiscal 2021, we acquired Pixie Labs Inc., a company that provides a next generation machine intelligence observability solution for developers using Kubernetes, in the first quarter of fiscal 2022, we acquired CodeStream Inc., a company that provides an integrated developer collaboration platform, and in the second quarter of fiscal 2023, we acquired K2 Cyber Security Inc., a company that provides a differentiated, signatureless approach to vulnerability and hack detection. Any acquisition or investment may divert the attention of management and cause us to incur various expenses in identifying, investigating, and pursuing suitable opportunities, whether or not the transactions are completed, and may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products and platform capabilities, personnel, or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us, their software is not easily adapted to work with our platform, or we have difficulty retaining the customers of any acquired business due to changes in ownership, management, or otherwise. These transactions may also disrupt our business, divert our resources, and require significant management attention that would otherwise be available for development of our existing business. Any such transactions that we are able to complete may not result in any synergies or other benefits we had expected to achieve, which could result in impairment charges that could be substantial. In addition, we may not be able to find and identify desirable acquisition targets or business opportunities or be successful in entering into an agreement with any particular strategic partner. These transactions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results. In addition, if the resulting business from such a transaction fails to meet our expectations, our operating results, business, and financial condition may suffer or we may be exposed to unknown risks or liabilities.

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***We provide service level commitments under some of our customer contracts. If we fail to meet these contractual commitments, we could be obligated to provide credits or refunds for prepaid amounts related to unused portion of our contractual commitments or face contract terminations, which could adversely affect our revenue.***

Some of our customer agreements provide service level commitments. If we are unable to meet the stated service level commitments or suffer extended periods of unavailability for our products and platform capabilities, we may be contractually obligated to provide these customers with service credits or refunds for prepaid amounts related to unused portion of our contractual commitments, or we could face contract terminations. Our revenue could be significantly affected if we suffer unscheduled downtime that exceeds the allowed downtimes under our agreements with our customers. Any extended service outages could adversely affect our reputation, revenue, and operating results.

***If third parties, such as customers, partners and third-party software developers fail to maintain interoperability, availability, or privacy compliance controls in the integrations and applications that they provide, our services that rely upon such integrations may have less value to customers, become less marketable, or less competitive, and our brand and financial performance could be harmed.***

We provide software that enables customers, partners and third-party software developers to build integrations and applications with our products and extend the functionality of our platform capabilities. This presents certain risks to our business, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• customers, partners and third-party developers may not continue developing or supporting the integrations and applications that they provide or they may favor a competitor's or their own competitive offerings over ours;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we cannot provide any assurance that these integrations and applications meet the same quality standards that we apply to our own development efforts, and, to the extent they contain bugs, defects, or security risks, they may create disruptions in our customers' use of our software or negatively affect our brand;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we do not currently provide support or warranties related to the functionality, security, and integrity of the data transmission or processing for integrations and applications developed by customers, partners and third-party software developers, and users may seek warranties or be left without support and potentially cease using our products if the developers do not provide warranties or support for their integrations and applications; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• these customers, partners and third-party software developers may not possess the appropriate intellectual property rights to develop and share their integrations and applications or the legal basis and privacy and security compliance measures to process or control personal information that flows through our systems.

While many of these risks are not within our control to prevent, our brand and financial performance could be harmed if these integrations and applications do not perform to our customers' satisfaction and if that dissatisfaction is attributed to us.

***Sales to government entities and highly regulated organizations are subject to a number of challenges and risks.***

We may sell to U.S. federal, state, and local, as well as foreign, governmental agency customers, as well as to customers in highly regulated industries such as financial services, telecommunications and healthcare. Sales to such entities are subject to a number of challenges and risks. Selling to such entities can be highly competitive, expensive, and time-consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale. Government contracting requirements may change and in doing so restrict our ability to sell into the government sector until we have attained the revised certification. Government demand and payment for our products are affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our products.

Further, governmental and highly regulated entities may demand contract terms that differ from our standard arrangements and are less favorable than terms agreed with private sector customers. Such entities may have statutory, contractual, or other legal rights to terminate contracts with us or our partners for convenience or for other reasons. Any such termination may adversely affect our ability to contract with other government customers as well as our reputation, business, financial condition and results of operations.

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***We have incurred substantial indebtedness that may decrease our business flexibility, access to capital, and/or increase our borrowing costs, and we may still incur substantially more debt, which may adversely affect our operations and financial results.***

As of December 31, 2022, we had $500.25 million (undiscounted) principal amount of indebtedness under our 0.50% convertible senior notes due 2023 (the "Notes"). Our indebtedness may:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, or other general business purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions, or other general business purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• require us to use a substantial portion of our cash flow from operations to make debt service payments, such as those at maturity of the Notes, which occurs on May 1, 2023;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limit our flexibility to plan for, or react to, changes in our business and industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• place us at a competitive disadvantage compared to our less leveraged competitors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increase our vulnerability to the impact of adverse economic and industry conditions.

Further, the indenture governing the Notes, or the indenture, does not restrict our ability to incur additional indebtedness and we and our subsidiaries may incur substantial additional indebtedness in the future, subject to the restrictions contained in any future debt instruments existing at the time, some of which may be secured indebtedness.

***Servicing our debt will require a significant amount of cash. We may not have sufficient cash flow from our business to pay our substantial debt, and we may not have the ability to raise the funds necessary to settle conversions of the Notes in cash or to repurchase the Notes upon a fundamental change, which could adversely affect our business and results of operations.\****

Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, such as the amounts owed at maturity of the Notes on May 1, 2023, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our indebtedness and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional equity or debt capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, particularly during times of market volatility and general economic instability, which could result in a default on our debt obligations.

Further, holders of the Notes will have the right to require us to repurchase all or a portion of their Notes upon the occurrence of a "fundamental change" (as defined in the indenture) before the maturity date of the Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any. In addition, on November 1, 2022, we were deemed to have elected to settle all conversions on or after November 1, 2022, with cash up to the principal amount of the Notes and shares for any excess conversion value. Upon conversion of the Notes, we will be required to make cash payments in respect of the Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes being surrendered or pay cash with respect to Notes being converted.

***The capped call transactions may affect the value of the Notes and our common stock.***

In connection with the pricing of the Notes, we entered into capped call transactions with certain financial institutions (the "Capped Calls"). The Capped Call transactions are generally intended to reduce potential dilution to holders of our common stock upon any conversion of the Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset, as the case may be, subject to a cap.

In connection with establishing their initial hedges of the Capped Calls, these financial institutions or their respective affiliates likely purchased shares of our common stock and/or entered into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the Notes. These financial institutions or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and are likely to do so during any observation period related to a

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conversion of Notes). This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the Notes.

The potential effect, if any, of these transactions and activities on the price of our common stock or the Notes will depend in part on market conditions and cannot be ascertained at this time. Any of these activities could adversely affect the value of our common stock.

***Provisions in the indenture for the Notes may deter or prevent a business combination that may be favorable to our stockholders.***

If a fundamental change occurs prior to the maturity date of the Notes, holders of the Notes will have the right, at their option, to require us to repurchase all or a portion of their Notes. In addition, if a "make-whole fundamental change" (as defined in the indenture) occurs prior to the maturity date, we will in some cases be required to increase the conversion rate of the Notes for a holder that elects to convert its Notes in connection with such make-whole fundamental change.

Furthermore, the indenture will prohibit us from engaging in certain mergers or acquisitions unless, among other things, the surviving entity assumes our obligations under the Notes. These and other provisions in the indenture could deter or prevent a third party from acquiring us even when the acquisition may be favorable to our stockholders.

***Conversion of the Notes may dilute the ownership interest of existing stockholders, including holders who had previously converted their Notes, or may otherwise depress the price of our common stock*.\***

The conversion of some or all of the Notes may dilute the ownership interests of existing stockholders to the extent we deliver shares of our common stock upon conversion of any of the Notes and the potential dilution is not reduced or offset by the Capped Calls we entered into. On November 1, 2022, we were deemed to have elected to settle all conversions on or after November 1, 2022, with cash up to the principal amount of the Notes and shares for any excess conversion value. The Notes became convertible at the option of their holders on November 1, 2022. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could be used to satisfy short positions, or anticipated conversion of the Notes into shares of our common stock could depress the price of our common stock.

***Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.***

As of our fiscal year ended March 31, 2022, we had U.S. federal and state net operating losses of approximately $776.7 million and $449.3 million, respectively. Other than federal net operating losses arising in tax years beginning after December 31, 2017, the federal and state net operating loss carryforwards will begin to expire, if not utilized, beginning in 2028 and 2022, respectively. These net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities. Under the 2017 federal income tax law, as modified by the federal tax law changes enacted in March 2020, federal net operating losses incurred in tax years beginning after December 31, 2017 may be carried forward indefinitely, but, for taxable years beginning after December 31, 2020, the deductibility of such federal net operating losses is limited. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an "ownership change," which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation's ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. If an ownership change occurs and our ability to use our net operating loss carryforwards is materially limited, it would harm our future operating results by effectively increasing our future tax obligations. In addition, for state income tax purposes, there may be periods during which the use of net operating losses is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

***Our effective tax rate may fluctuate, and we may incur obligations in tax jurisdictions in excess of accrued amounts.***

We are subject to taxation in numerous U.S. states and territories and in non-U.S. countries. As a result, our effective tax rate is derived from a combination of applicable tax rates in the various places that we operate. In preparing our financial statements, we estimate the amount of tax that will become payable in each of such places. Nevertheless, our effective tax rate may be different than experienced in the past due to numerous factors, including passage of federal income tax law changes, changes in the mix of our profitability from jurisdiction to jurisdiction, the results of examinations and audits of our tax filings, our inability to secure or sustain acceptable agreements with tax authorities, changes in accounting for income taxes and other changes in tax laws. Any of these factors could cause us to experience an effective tax rate significantly different from previous periods or our current expectations and may result in tax obligations in excess of amounts accrued in our financial statements.

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**<u>Risks Related to Laws and Regulations</u>**

***We are subject to stringent and rapidly changing laws, regulations, industry standards, contractual obligations, and other obligations relating to privacy, data protection, and data security. The actual or perceived failure to comply with such obligations by us, our customers, or third parties with whom we work could harm our reputation, subject us to significant fines and liability, or otherwise adversely affect our business.\****

We, our customers, and third parties who we work with are subject to numerous evolving and increasingly stringent domestic and foreign laws and other obligations relating to privacy, data protection, and data security that are increasing the cost and complexity of operating our business.

Foreign laws relating to privacy, data protection, and data security are undergoing a period of rapid change and have become more stringent in recent years. For example, the General Data Protection Regulation ("GDPR") took effect in the European Union ("EU") in May 2018 and has also been transposed into national law in the United Kingdom ("UK"). The GDPR imposes strict requirements for processing personal information, and subjects noncompliant companies to fines of up to the greater of 20 million Euros or 4% of their global annual revenues, restrictions or prohibitions on processing of personal information, and private litigation. Laws in EU member states and the UK also impose restrictions on direct marketing communications and the use of cookies and similar technologies online, and a new regulation proposed in the EU called the e-Privacy Regulation may make such restrictions more stringent. Furthermore, in Europe, there is a proposed regulation related to artificial intelligence ("AI") that, if adopted, could impose onerous obligations related to the use of AI-related systems. We may have to change our business practices to comply with such obligations.

Globally, certain jurisdictions have enacted data localization laws and have imposed requirements for cross-border transfers of personal information. For example, the GDPR and other European data protection laws generally prohibit the transfer of personal information to countries outside the European Economic Area ("EEA,"), such as the United States, that are not considered by the European Commission to provide an adequate level of data protection. Swiss and UK law contain similar data transfer restrictions as the GDPR. The European Commission recently released a set of Standard Contractual Clauses ("SCCs"), a mechanism to transfer data outside of the EEA, which imposes additional obligations to carry out cross-border data transfers. Although there are currently valid mechanisms available to transfer data from these jurisdictions, there remains some uncertainty regarding the future of these cross-border data transfers. Countries outside of Europe have enacted or are considering similar cross-border data transfer restrictions and laws requiring local data residency and restricting cross-border data transfers, which could increase the cost and complexity of doing business. If we elect to rely on the new SCCs for data transfers, we may be required to incur significant time and resources to update our contractual arrangements and to comply with new obligations. The new SCCs may increase the legal risks and liabilities under European privacy, data protection, and data security laws. If we cannot implement a valid mechanism for cross-border personal information transfers, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including increased exposure to regulatory actions, penalties, data processing restrictions or bans, interruption or degradation of our operations, the inability to transfer data and work with third parties, and reduced demand for our services. Loss of our ability to import personal information from Europe and elsewhere may also require us to increase our data processing capabilities outside the U.S. at significant expense.

Other foreign jurisdictions are also passing and proposing more stringent privacy, data protection and data security laws. For example, Brazil's General Data Protection Law (Lei Geral de Proteção de Dados Pessoais) (Law No. 13,709/2018) ("LGPD"), Australia Privacy Act of 1988, and Canada's Personal Information Protection and Electronic Documents Act ("PIPEDA") impose strict requirements for processing the personal information of individuals and may apply to our operations. We also have operations in Japan, Singapore, South Korea, and India and may be subject to new and emerging data privacy regimes in Asia, such as Japan's Act on the Protection of Personal Information, Singapore's Personal Data Protection Act, South Korea's Personal Information Protection Act, and India's proposed Digital Personal Data Protection Bill.

In the United States, federal, state and local governments have enacted numerous privacy, data protection, and data security laws, including data breach notification laws, personal information privacy laws, health information privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws). For example, the California Consumer Privacy Act ("CCPA"), which took effect on January 1, 2020, gives California residents expanded rights to access and delete their personal information, opt-out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations (up to $7,500 per violation), as well as a private right of action for data breaches that is expected to increase data breach litigation. Additionally, the California Privacy Rights Act of 2020 ("CPRA") substantially expanded the CCPA, including applying to personal information of business representatives and employees and establishing a new regulatory agency to implement and enforce the law. Aspects of the CCPA and CPRA and their interpretation and enforcement remain uncertain.

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Other states are considering or have also enacted privacy and data security laws. For example, Virginia, Utah, Colorado, and Connecticut have similarly enacted comprehensive privacy laws, all of which differ from the CCPA and become effective in 2023. A patchwork of differing state privacy and data security laws would increase the cost and complexity of operating our business and increase our exposure to liability.

We may also be subject to federal laws related to privacy, data protection, and data security, such as the federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA") and the Telephone Consumer Protection Act ("TCPA"). HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act ("HITECH"), imposes specific requirements relating to the privacy, security, and transmission of individually identifiable health information. The TCPA imposes specific requirements relating to marketing to individuals using technology such as telephones, mobile devices, and text messages. TCPA violations can result in significant financial penalties, as businesses can incur penalties or criminal fines imposed by the Federal Communications Commission or be fined up to $1,500 per violation through private litigation or state attorneys general or other state actor enforcement. Class action suits are the most common method for private enforcement.

Like our legal obligations, the demands our customers place on us relating to privacy, data protection, and data security are becoming more stringent. Laws such as the GDPR and CCPA increasingly require companies to impose specific contractual restrictions on their service providers. We are also subject to the terms of our privacy and data security policies, representations, certifications, publications, contractual obligations, and other obligations related to privacy, data protection, and data security, including operating rules and standards imposed by industry organizations such as PCI-DSS. Although we endeavor to comply with our obligations, we and the third parties on which we rely may at times fail to do so or may be perceived to have failed to do so. Such failures could subject us to regulatory enforcement action as well as costly legal claims by affected individuals or our customers.

We strive to comply with applicable privacy, data protection, and data security laws and other obligations, but we cannot fully determine the impact that current or future such laws and other obligations may have on our business or operations. We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations. Moreover, despite our efforts, our personnel or third parties on whom we rely may fail to comply with such obligations, which could negatively impact our business operations. Such laws or obligations may be inconsistent from one jurisdiction to another, subject to differing interpretations, and courts or regulators may deem our efforts to comply as insufficient. Preparing for and attempting to comply with these obligations requires significant resources and, potentially, changes to our technologies, systems, and practices and those of any third parties that process personal information on our behalf. If we or the third parties we rely on to operate our business and deliver our services fail to comply, or are perceived as failing to comply, with our legal, contractual, or other obligations relating to privacy, data protection, or data security, or our policies and documentation relating to personal information, we could face governmental enforcement action; litigation with our customers, individuals or others; fines and civil or criminal penalties for us or company officials; obligations to cease offering our services or to substantially modify them in ways that make them less effective in certain jurisdictions; negative publicity and harm to our brand and reputation; and reduced overall demand for our services. Such developments could adversely affect our business, financial condition, and results of operations.

***We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate these controls.***

Our products are subject to U.S. export controls, and we incorporate encryption technology into certain of our products. Governmental regulation of encryption technology and regulation of imports or exports of encryption products, or our failure to obtain required import or export authorization for our products, when applicable, could harm our international sales and adversely affect our revenues. Compliance may also create delays in the introduction of our product releases in international markets, prevent our customers with international operations from deploying our products or, in some cases, prevent the export of our products to some countries altogether. If we fail to comply, we could be subject to both civil and criminal penalties, including substantial fines, possible incarceration for employees and managers for willful violations, and the possible loss of export or import privileges. For example, following Russia's invasion of Ukraine in February 2022, the United States and other countries announced sanctions against Russia and Belarus, which include restrictions on selling or importing goods, services, or technology in or from affected regions and travel bans and asset freezes impacting connected individuals and political, military, business, and financial organizations in Russia and Belarus, and the United States and other countries could impose wider sanctions and take other actions as the conflict continues to escalate. Any decreased use of our products or limitation on our ability to export or sell our products would likely adversely affect our business, financial condition and results of operations.

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***We are subject to the tax laws of various jurisdictions, which are subject to unanticipated changes and to interpretation, which could harm our future results.***

We are subject to income taxes in the United States and foreign jurisdictions, and our domestic and international tax liabilities are subject to the allocation of expenses in differing jurisdictions. Our effective tax rate could be adversely affected by changes in the mix of earnings and losses in countries with differing statutory tax rates, certain non-deductible expenses as a result of acquisitions, the valuation of deferred tax assets and liabilities, and changes in federal, state, or international tax laws and accounting principles.

On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy. Based on our current analysis of the provisions, we do not believe this legislation will have a material impact on our consolidated financial statements. Further, each jurisdiction has different rules and regulations governing sales and use, value added, and similar taxes, and these rules and regulations are subject to varying interpretations that change over time. Certain jurisdictions in which we did not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties, and interest, and we may be required to collect such taxes in the future. In addition, we may be subject to income tax audits by many tax jurisdictions throughout the world, many of which have not established clear guidance on the tax treatment of SaaS-based companies. In addition, the COVID-19 pandemic and resulting use of flexible work policies may increase the probability of payroll tax audits. Any tax assessments, penalties, and interest, or future requirements may adversely affect our results of operations. Moreover, imposition of such taxes on us going forward would effectively increase the cost of our products to our customers and might adversely affect our ability to retain existing customers or to gain new customers in the areas in which such taxes are imposed.

In addition, the application of the tax laws of various jurisdictions, including the United States, to our international business activities is subject to interpretation and depends on our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements. The taxing authorities of jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements, including our transfer pricing, or determine that the manner in which we operate our business does not achieve the intended tax consequences. As we operate in numerous taxing jurisdictions, the application of tax laws can also be subject to diverging and sometimes conflicting interpretations by tax authorities of these jurisdictions. For instance, it is not uncommon for taxing authorities in different countries to have conflicting views, with respect to, among other things, the manner in which the arm's length standard is applied for transfer pricing purposes, or with respect to the valuation of intellectual property.

**<u>Risks Related to Our Intellectual Property</u>**

***We may incur significant costs due to claims for alleged infringement of proprietary rights.***

There is considerable patent, copyright, trademark, trade secret, and other intellectual property development activity in our industry. Our success depends in part on not infringing upon the intellectual property rights of others and how we prepare for and handle claims of infringement. From time to time, our competitors or other third parties may claim that we are infringing upon their intellectual property rights, and we may be found to be infringing upon such rights. We may receive claims that our products, platform capabilities, and underlying technology infringe or violate the claimant's intellectual property rights. In addition, agreements with customers and other third parties may include indemnification provisions under which we agree to indemnify them in the event of claims of infringement of certain proprietary rights. Any claims or litigation, regardless of merit, could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our products and platform capabilities, or require that we comply with other unfavorable terms.

Even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results. We expect that the occurrence of infringement claims is likely to grow as the market for our products grows. Accordingly, our exposure to damages resulting from infringement claims could increase and this could further exhaust our financial and management resources.

***Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand.\****

Our success depends to a significant degree on our ability to protect our proprietary technology and our brand. We rely on a combination of trademarks, trade secret laws, patent, copyrights, service marks, contractual restrictions, and other

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intellectual property laws and confidentiality procedures to establish and protect our proprietary rights. However, the steps we take to protect our intellectual property may be inadequate. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. If we fail to protect our intellectual property rights adequately, our competitors may gain access to our technology and our business may be harmed. In addition, defending our intellectual property rights might entail significant expense. Any patents, trademarks, or other intellectual property rights that we obtain may be challenged by others or invalidated through administrative process or litigation. As of December 31, 2022, we had 41 issued patents in the United States and abroad and 28 patent applications pending in the United States and abroad. Despite our issued patents and pending patent applications, we may be unable to maintain or obtain patent protection for our technology. In addition, our existing patents and any patents issued in the future may not provide us with competitive advantages, or may be successfully challenged by third parties. Furthermore, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized third parties to copy our products and platform capabilities and use information that we regard as proprietary to create products and services that compete with ours. Effective patent, trademark, copyright, and trade secret protection may not be available to us in every country in which our products are available. The laws of some foreign countries may not be as protective of intellectual property rights as those in the United States, and mechanisms for enforcement of intellectual property rights may be inadequate. As we expand our international activities, our exposure to unauthorized copying and use of our products and platform capabilities and proprietary information will likely increase. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property.

We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with other parties. No assurance can be given that these agreements will be effective in controlling access to and distribution of our proprietary information. Further, these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our products and platform capabilities.

In order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect our intellectual property rights. Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets. Litigation brought to protect and enforce our intellectual property rights could be costly, time-consuming, and distracting to management, and could result in the impairment or loss of portions of our intellectual property. Further, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management's attention and resources, could delay further sales or the implementation of our products and platform capabilities, impair the functionality of our products and platform capabilities, delay introductions of new solutions, result in our substituting inferior or more costly technologies into our products, or injure our reputation.

***Our reliance upon open source software could negatively affect our ability to sell our products and subject us to possible litigation.***

We rely heavily upon open source software for the operation of our products and platform capabilities and expect to continue to do so in the future. During fiscal 2021, we strengthened this commitment when we announced that we are making our agents, integrations, and SDKs available under an open source license, and that we are standardizing our future observability offerings in OpenTelemetry, a Cloud Native Computing Foundation project that is an emerging standard for software instrumentation. As a result of our use of open source software in our offerings, as well as our contributions of code to open source software projects, we, including companies that we have acquired, may face claims from others claiming ownership of, or seeking to enforce the terms of, incompatible or conflicting licenses or other rights. This may include a demand to release the open source software, derivative works, or our proprietary source code that was developed using such software. These claims could also result in litigation, require us to purchase a costly license, or require us to devote additional research and development resources to change our platform, any of which would have a negative effect on our business and operating results. In addition, if the license terms for the software we utilize change, additional licenses from third parties may be required or we may be forced to reengineer or discontinue our products and platform capabilities or incur additional costs. In addition, open source licensors generally do not provide warranties, support, indemnity, or assurance of title or controls on origin of the software which may lead to greater risks. Likewise, some open source projects have known security and other vulnerabilities and architectural instabilities and are provided on an "as-is" basis which, if not properly addressed, could negatively affect the performance of our product. While we have established processes to help alleviate these risks, we cannot assure that these measures will reduce or completely shield us from these risks. Moreover, we cannot be certain that we, including companies that we have acquired, have not incorporated software in our products and platform capabilities in a manner that is inconsistent with the terms of the applicable proprietary rights that may govern their use, or our own policies and procedures.

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Our continued shift to increase reliance upon open source software will also present increased risk from the standpoint of competition. Because any software source code we contribute to open source projects is publicly available, our ability to protect our intellectual property rights with respect to such software source code may be limited or lost entirely. Anyone may obtain access to the source code for our open source features and then redistribute it (either in a modified or unmodified form), and we may be unable to prevent our competitors or others from using such software source code for competitive purposes, or for commercial or other purposes beyond what we intended. For instance, our conversion of the license terms for our agents, integrations and SDKs from our historical proprietary licenses to open source licenses may allow the use of our previous proprietary code with competitor's platforms. Additionally, we make the source code of our proprietary features publicly available, which may enable others to compete more effectively. Such competition can develop without the degree of overhead and lead time required by traditional proprietary software companies, due to the permissions allowed under open source licensing. It is possible for competitors to develop their own software, including software based on our products, potentially reducing the demand for our services.

**<u>Risks Related to Ownership of Our Common Stock</u>**

***Our stock price has been and will likely continue to be subject to fluctuations, which may be volatile and due to factors beyond our control.\****

The market price of our common stock is subject to wide fluctuations in response to various factors, some of which are beyond our control. In addition to the factors discussed in this "Risk Factors" section and elsewhere in this report, factors that could cause fluctuations in the market price of our common stock include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual or anticipated fluctuations in our operating results;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• seasonal and end-of-quarter concentration of our transactions and variations in the number and size of transactions that close in a particular quarter;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates and publication of other news by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ratings changes by any securities analysts who follow our company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actions instituted by activist shareholders or others that could disrupt our ongoing business, divert resources, increase our expenses, and distract our management;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• price and volume fluctuations in the overall stock market from time to time, including as a result of trends in the economy as a whole;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in accounting standards, policies, guidelines, interpretations, or principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual or anticipated developments in our business or our competitors' businesses or the competitive landscape generally;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in our pricing models and practices or those of our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• developments or disputes concerning our intellectual property or our products and platform capabilities, or third-party proprietary rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cybersecurity attacks or incidents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• announced or completed acquisitions of businesses or technologies by us or our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• new laws or regulations or new interpretations of existing laws, or regulations applicable to our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in our board of directors or management;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• announced or completed equity or debt transactions involving our securities;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sales of shares of our common stock by us, our officers, directors, or other stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• lawsuits filed or threatened against us; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other events or factors, including those resulting from war, incidents of terrorism, public health epidemics, or responses to these events.

In addition, the market for technology stocks and the stock markets in general have experienced extreme price and volume fluctuations. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. Moreover, fluctuations in our quarterly operating results and the price of our common stock may be particularly pronounced in the current economic environment due to the uncertainty associated with the global economic conditions and the COVID-19 pandemic. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business, results of operations, financial condition, and cash flows. A decline in the value of our common stock, including as a result of one or more factors set forth above, may result in substantial losses for our stockholders.

***Substantial future sales of shares of our common stock could cause the market price of our common stock to decline.***

The market price of our common stock could decline as a result of substantial sales of our common stock, particularly sales by our directors, executive officers, and significant stockholders, a large number of shares of our common stock becoming available for sale, or the perception in the market that holders of a large number of shares intend to sell their shares. Further, the Notes may become in the future convertible at the option of their holders prior to their scheduled terms under certain circumstances. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. Additionally, the shares of common stock subject to outstanding options under our equity incentive plans and the shares reserved for future issuance under our equity incentive plans, as well as shares issuable upon vesting of restricted stock awards, will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations. We have also registered shares of common stock that we may issue under our employee equity incentive plans. Accordingly, these shares may be able to be sold freely in the public market upon issuance as permitted by any applicable vesting requirements.

***Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.***

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a change of control or changes in our management. Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• specify that special meetings of our stockholders can be called only by the Chair of our board of directors, our Chief Executive Officer, or by our board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide that our board of directors is divided into three classes, with each class serving three-year staggered terms, until our 2023 annual meeting of stockholders when the classes will be fully phased out;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• prohibit cumulative voting in the election of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide that our directors may be removed only for cause until our 2023 annual meeting of stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• require the approval of our board of directors or the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, because we are incorporated in Delaware, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any "interested" stockholder for a period of three years following the date on which the stockholder became an "interested" stockholder. Any delay or prevention of a change of control transaction or changes in our management could cause the market price of our common stock to decline.

***Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the U.S. federal district courts will be the exclusive forums for the adjudication of certain disputes, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.***

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any derivative action or proceeding brought on our behalf;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any action asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee of New Relic to us or our stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any action asserting a claim against us or any of our directors, officers, or other employees arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation, or our amended and restated bylaws; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any action asserting a claim against us or any of our directors, officers, or other employees that is governed by the internal affairs doctrine.

These exclusive-forum provisions may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees.

***We do not intend to pay dividends on our common stock so any returns will be limited to changes in the value of our common stock.***

We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings for the development, operation, and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. In addition, our ability to pay cash dividends on our common stock may be prohibited or limited by the terms of any future debt financing arrangements. Any return to stockholders will therefore be limited to the increase, if any, of our stock price, which may never occur.

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***If securities or industry analysts do not continue to publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.***

The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If industry analysts cease coverage of us, the trading price for our common stock would be negatively affected. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our common stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline. In addition, independent industry analysts, such as Gartner and Forrester, often provide reviews of our products and platform capabilities, as well as those of our competitors, and perception of our offerings in the marketplace may be significantly influenced by these reviews. We have no control over what these industry analysts report, and because industry analysts may influence current and potential customers, our brand could be harmed if they do not provide a positive review of our products and platform capabilities or view us as a market leader.

**<u>General Risk Factors</u>**

***Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.***

Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate, especially in a volatile economic environment. Our estimates and forecasts relating to the size and expected growth of our market may prove to be inaccurate. Even if the market in which we compete meets our size estimates and forecasted growth, our business could fail to grow at similar rates, if at all.

***Natural disasters and other events beyond our control could harm our business.\**** 

Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce, and the global economy, and thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics, including the ongoing COVID-19 pandemic, effects of climate change, extreme weather, flooding and other events beyond our control. We rely on our network and third-party infrastructure and enterprise applications, internal technology systems, and our website for our development, marketing, operational support, hosted products, and sales activities. The west coast of the United States contains active earthquake zones and this area has also historically experienced, and is projected to continue to experience, climate-related events including drought and water scarcity, flooding, warmer temperatures, wildfires and air quality impacts and power shut-offs associated with wildfire prevention. Although we maintain crisis management and disaster response plans, in the event of a major earthquake, hurricane or other extreme weather event, or catastrophic event such as fire, power loss, telecommunications failure, cyber-attack, war, or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our product development, lengthy interruptions in service, breaches of data security, and loss of critical data, all of which could have an adverse effect on our future operating results.

***Climate change and related environmental issues could have a material adverse impact on our business, financial condition and results of operations.\****

Climate change-related events, such as increased frequency and severity of storms, floods, wildfires, droughts, hurricanes, freezing conditions, and other natural disasters, may have an increasingly adverse impact on our business, financial condition and results of operations. Our major sites in California are vulnerable to such climate change effects, which have caused regional short-term systemic failures in the U.S. and elsewhere. For example, in California, increasing intensity of drought throughout the state and annual periods of wildfire danger increase the probability of planned power outages in the communities where we work and live. While this danger has a low-assessed risk of disrupting normal business operations, it has the potential to impact employees' abilities to stay connected effectively. Climate-related events, including the increasing frequency of extreme weather events and their impact on critical infrastructure in the U.S. and internationally, have the potential to disrupt our business, the business of our third-party suppliers, and/or the business of our customers, and may cause us to experience higher attrition, losses, and additional costs to maintain or resume operations. Regulatory developments and changing market dynamics regarding climate change may also impact adversely our business, financial condition and results of operations.

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***The nature of our business requires the application of complex revenue recognition rules. Significant changes in U.S. GAAP from the adoption of recently issued accounting standards and other non-financial reporting standards could materially affect our financial position and results of operations.***

We prepare our financial statements in accordance with GAAP, which is subject to interpretation or changes by the FASB, the SEC, and other various bodies formed to promulgate and interpret appropriate accounting principles. New accounting pronouncements and changes in accounting principles have occurred in the past and are expected to occur in the future, which may have a significant effect on our financial results. Any difficulties in implementation of changes in accounting principles, including the ability to modify our accounting systems, could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and harm investors' confidence in us. In addition, certain choices in the method of implementation of any new standard that may be adopted may have an adverse impact on our potential as an acquirer or an acquiree in a business combination.

In addition, as we identify Environment, Social and Governance ("ESG") topics for voluntary disclosure and work to align with the recommendations of the Sustainability Accounting Standards Board ("SASB") and our own ESG materiality assessment, we have made and, in the future may continue to expand, our disclosures in these areas. Statements about our ESG initiatives and goals, and progress against those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. If our ESG-related data, processing and reporting are incomplete or inaccurate, or if we fail to achieve progress on our metrics on a timely basis, or at all, our reputation, business, financial performance and growth could be adversely affected.

***We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs. If additional capital is not available, we may have to delay, reduce, or cease certain investments.***

We may in the future require additional capital to settle the Notes upon maturity on May 1, 2023, operate our business and respond to business opportunities that may arise, including the need to develop new products and platform capabilities or enhance our existing products and platform capabilities, enhance our operating infrastructure, protect our intellectual property, pursue possible acquisitions of complementary businesses and technologies, respond to a decline in the level of adoption or usage of our platform, or address other circumstances. We may not be able to timely secure additional debt or equity financing on favorable terms, or at all, especially in light of recent volatility and disruptions in the debt and equity markets. Any debt financing obtained by us could involve restrictive covenants relating to financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions, and could require us to use a portion of our cash flows to make debt service payments, which could place us at a competitive disadvantage relative to our less leveraged peers. If we raise additional funds through further issuances of equity, convertible debt securities, or other securities convertible into equity, our existing stockholders could suffer significant dilution in their percentage ownership of our company, and any new equity securities we issue could have rights, preferences, and privileges senior to those of holders of our common stock, including registration rights. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to support our business and to respond to business challenges could be significantly limited, and our business, operating results, financial condition, and prospects could be harmed.

***The requirements of being a public company and a growing and increasingly complex organization may strain our resources, divert management's attention, and affect our ability to attract and retain executive management and qualified board members.***

We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of the New York Stock Exchange, and other applicable securities rules and regulations. Compliance with these rules and regulations increases our legal and financial compliance costs, make some activities more difficult, time-consuming, or costly, and increases demand on our systems and resources.

In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming. These laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies or as market practices develop. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

As a result of disclosure of information in our filings with the SEC, our business and financial condition have become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be adversely affected, and even if the claims do not result

------

in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results.

From time to time, public companies are subject to campaigns by investors seeking to increase short-term stockholder value through actions such as financial restructuring, increased debt, special dividends, stock repurchases, management changes or sales of assets or the entire company. If stockholders attempt to effect such changes or acquire control over us, responding to such actions would be costly, time-consuming and disruptive, which could adversely affect our results of operations, financial results and the value of our common stock. These factors could also make it more difficult for us to attract and retain qualified employees, executive officers and members of our board of directors.

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**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds**

None.

**Item 3. Defaults Upon Senior Securities**

None.

**Item 4. Mine Safety Disclosures**

Not applicable.

**Item 5. Other Information**

None.

------

**Item 6. Exhibits**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Exhibit<br>No.** | **Description of Exhibit** | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** | **Filed<br>Herewith** |
| **Exhibit<br>No.** | **Description of Exhibit** | **Form** | **File No.** | **Exhibit** | **File Date** | **Filed<br>Herewith** |
| <u>[3.1](https://www.sec.gov/Archives/edgar/data/1448056/000144805621000060/newr8-k81821xex31.htm)</u> | Amended and Restated Certificate of Incorporation of the Registrant, as amended. | 8-K | 001-36766 | 3.1 | August 19, 2021 |  |
| <u>[3.2](https://www.sec.gov/Archives/edgar/data/1448056/000144805623000008/newr1231228-kex31.htm)</u> | Amended and Restated Bylaws of the Registrant. | 8-K | 001-36766 | 3.1 | February 7, 2023 |  |
| <u>[10.1](https://www.sec.gov/Archives/edgar/data/1448056/000144805622000051/newr6302210qex101.htm)</u> | Form of Change in Control and Severance Agreement. | 10-Q | 001-36766 | 10.1 | August 4, 2022 |  |
| <u>[10.2](https://www.sec.gov/Archives/edgar/data/1448056/000144805623000008/newr1231228-kex101.htm)</u> | Form of Special Performance Unit Award Grant Notice under the 2014 Equity Incentive Plan, and related form agreements | 8-K | 001-36766 | 10.1 | February 7, 2023 |  |
| <u>[10.3](https://www.sec.gov/Archives/edgar/data/1448056/000144805622000067/newr9302210qex103.htm)</u> | Offer Letter between the Registrant and David Barter, dated as of August 1, 2022. | 10-Q | 001-36766 | 10.3 | November 9, 2022 |  |
| <u>[10.4](https://www.sec.gov/Archives/edgar/data/1448056/000144805622000067/newr9302210qex104.htm)</u> | Offer Letter between the Registrant and Thomas Lloyd, dated as of August 17, 2022. | 10-Q | 001-36766 | 10.4 | November 9, 2022 |  |
| <u>[10.5](https://www.sec.gov/Archives/edgar/data/1448056/000144805622000067/newr9302210qex105.htm)</u> | Offer Letter between the Registrant and Mark Dodds, dated as of August 26, 2022. | 10-Q | 001-36766 | 10.5 | November 9, 2022 |  |
| <u>[31.1](newr12312210qex311.htm)</u> | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |  |  |  |  | X |
| <u>[31.2](newr12312210qex312.htm)</u> | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |  |  |  |  | X |
| <u>[32.1](newr12312210qex321.htm)</u>(1) | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |  |  |  |  | X |
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the In-line XBRL document. |  |  |  |  |  |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |  |  |  |  | X |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |  |  |  |  | X |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |  |  |  |  | X |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |  |  |  |  | X |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |  |  |  |  | X |
| 104 | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |  |  |  |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1)The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed "filed" by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any of the Registrant's filings under the Securities Act of 1933, as amended, irrespective of any general incorporation language contained in any such filing.

------

**SIGNATURES**

Pursuant to the requirements of the Securities Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
| | | | **NEW RELIC, INC.** |
| Date: | February 7, 2023 |  |  |
|  |  | By: | /s/ David Barter |
|  |  |  | **David Barter** |
|  |  |  | **Chief Financial Officer** |
|  |  |  | **(Principal Financial and Accounting Officer and Duly Authorized Signatory)** |

---

## Exhibit 10.1

Exhibit 10.1

**NEW RELIC, INC.**

**CHANGE IN CONTROL AND SEVERANCE AGREEMENT**

This Change in Control and Severance Agreement (this "<u>Agreement</u>") is entered into by and between [ ] ("<u>Executive</u>") and **New Relic, Inc.**, a Delaware corporation (the "<u>Company</u>"), with an effective date of __________.

<u>RECITALS</u>

The Company's Board of Directors (the "<u>Board</u>") believes it is in the best interests of the Company and its shareholders to retain Executive and to provide Executive with certain protections in the event of Executive's termination of employment under certain circumstances.

Now therefore, in consideration of the mutual promises, covenants and agreements contained herein, and in consideration of the continuing employment of Executive by the Company, the parties hereto agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Effectiveness and Term of Agreement; At-Will Employment</u>. This Agreement shall be effective as of the date first set forth above and shall remain in effect for a term of three years from such date, after which time this Agreement may be renewed by mutual agreement of the parties. Executive's employment is and shall remain at-will, which means that the Company may terminate Executive's employment at any time, with or without advance notice, and with or without Cause. Similarly, Executive may resign Executive's employment at any time, with or without advance notice. Executive shall not receive any compensation of any kind, including, without limitation, stock option or other equity award vesting acceleration and severance benefits, following Executive's termination of employment with the Company, except as expressly provided herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Severance Benefits</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Severance Benefits upon a Termination During a Change in Control Period</u>. If Executive's employment is terminated by the Company without Cause (as defined below, and other than as a result of death or disability), or Executive resigns from employment with the Company for Good Reason (as defined below), in either case in connection with a period commencing three months prior to the effective date of a Change in Control and ending 12 months following the effective date of a Change in Control (the "<u>Change in Control Period</u>"), and provided such termination constitutes a "separation from service" (within the meaning of Treasury Regulation Section 1.409A-1(h), a "<u>Separation from Service</u>"), and further provided that Executive delivers an effective release of claims as required under Section 3 below (a "<u>Covered Termination</u>"), then Executive shall be entitled to the following severance benefits (the "<u>CIC Benefits</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.The Company shall pay Executive a lump sum amount in cash equal to [ ] months of Executive's then-current base salary and (b) [ ] of Executive's Target Incentive, in either case, ignoring any decrease in base salary that forms the basis for Good Reason and payable at the time specified in Section 3 below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.Subject to Section 9(c), the Company shall pay Executive's expenses for continuing Executive's health care coverage and that of any dependents who are covered at the time of Executive's Separation from Service (the "<u>COBRA Premiums</u>") under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("<u>COBRA</u>") for a period ending on the earlier of [ ] months from the Separation from Service or the date on which Executive becomes eligible to be covered by the group health care plans of another employer (the "<u>CIC COBRA Period</u>"), provided Executive timely elects such COBRA continuation coverage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.All outstanding stock awards shall become fully vested and exercisable with respect to all of the shares subject thereto, effective immediately prior to Executive's Separation from Service under this Section 2(a); provided, that

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) notwithstanding anything to the contrary contained in the grant notice or award agreement pursuant to which Executive has been granted any performance unit award that vests based on the achievement of relative total shareholder return goals (the "<u>PSU Grant Documents</u>"), the "Continued Service Requirement" (as defined in

------

Exhibit 10.1

the PSU Grant Documents) shall be waived and the "CIC Units" (as defined in the PSU Grant Documents) shall fully vest and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) to the extent the Covered Termination occurs prior to the Change in Control, the accelerated vesting set forth in this Section 2(b)(iii) shall be contingent and effective upon the Change in Control, and applicable stock awards shall remain outstanding following the Covered Termination in order to give effect to such acceleration as necessary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Severance Benefits upon a Termination Not During a Change in Control Period</u>. If Executive's employment is terminated by the Company without Cause (other than as a result of death or disability), and such termination does not occur during the Change in Control Period, and provided such termination constitutes a Separation from Service and that Executive delivers an effective release of claims as required under Section 3 below, then Executive shall be entitled to the following severance benefits (the "<u>Severance Benefits</u>"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.The Company shall pay Executive an amount in cash equal to [ ] months of Executive's then-current base salary, paid over the [ ] month period following Executive's Separation from Service, in accordance with the Company's regular payroll schedule, at the time specified in Section 3 below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.Subject to Section 9(c), the Company shall pay Executive's COBRA Premiums for a period ending on the earlier of the date that is [ ] months following the Separation from Service or the date on which Executive becomes eligible to be covered by the group health care plans of another employer (the "<u>Severance COBRA Period</u>"), provided Executive timely elects such COBRA continuation coverage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>Accrued Wages, Bonus and Vacation, Expenses</u>. Without regard to the reason for, or the timing of, Executive's termination of employment, the Company shall pay (or provide reimbursement to) Executive for (i) any unpaid base salary due for periods prior to and including the date of Separation from Service; (ii) all accrued and unused vacation through the date of Separation from Service, if applicable; (iii) any earned (as determined and approved by the Board prior to the Separation from Service) but not yet paid incentive bonus from the prior fiscal year, which bonus shall be paid in accordance with the Company's regular bonus payment process and in any event by no later than two and one-half (2 ½) months after the end of such subsequent year; and (iv) following submission of proper expense reports by Executive, all expenses reasonably and necessarily incurred by Executive in connection with the business of the Company prior to the Separation from Service. These payments shall be made promptly upon or following termination (or in the case of an earned bonus, within the time period set forth in the Company's bonus plan and in any event by no later than two and one-half (2 ½) months after the end of the fiscal year following the year in which the bonus was earned), and in all cases within the period of time mandated by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.<u>Non-Duplication of Benefits</u>. In no event shall Executive be entitled to the CIC Benefits and the Severance Benefits. If Executive becomes entitled to CIC Benefits under Section 2(a), Executive shall receive the CIC Benefits, and such benefits shall be reduced by any Severance Benefits previously provided to Executive under Section 2(b).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Release Required; Timing of Payments</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Requirement of Release</u>. Prior to the payment of any CIC Benefits or Severance Benefits (including the acceleration of equity, if applicable), Executive shall execute and allow to become effective a standard employment release agreement releasing the Company (and its successor) from any and all claims Executive may have against such entities related to or arising in connection with Executive's employment and the terms of such employment and termination thereof (the "<u>Release</u>") within the time frame set forth therein, but not later than 60 days following Executive's Separation from Service (the "<u>Release Effective Date</u>"). No CIC or Severance Benefits shall be paid or provided prior to the Release Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Form of Release</u>. The Release shall be in substantially the form attached hereto as ***Exhibit A*** or ***Exhibit B*** or ***Exhibit C***, as applicable, and shall specifically relate to all of Executive's rights and

------

Exhibit 10.1

claims in existence at the time of such execution and shall confirm Executive's continuing obligations to the Company (including, but not limited to, obligations under any confidentiality and/or non-solicitation agreement with the Company). Unless a Change in Control has occurred, the Board, in its sole discretion, may modify the form of the required Release to comply with applicable law and shall determine the form of the required Release, which may be incorporated into a termination agreement or other agreement with Executive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>Timing of Payments</u>. Within five days following the Release Effective Date, the Company will pay (or commence payment of) the CIC Benefits or Severance Benefits Executive would otherwise have received on or prior to such date but for the delay in payment related to the effectiveness of the Release, with the balance of benefits being paid as scheduled. Notwithstanding the foregoing, if the Company (or, if applicable, the successor entity thereto) determines that any of the CIC Benefits or Severance Benefits constitute "nonqualified deferred compensation" under Section 409A (defined below), then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, no CIC Benefits or Severance Benefits will be paid prior to the 60th day following Executive's Separation from Service. On the 60th day following the date of Separation from Service, the Company will pay to Executive in a lump sum the CIC Benefits or Severance Benefits, as applicable, that Executive would otherwise have received on or prior to such date, with the balance of the CIC Benefits or Severance Benefits being paid as originally scheduled.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Limitation on Payments</u>. If any payment or benefit (including payments and benefits pursuant to this Agreement) that Executive would receive in connection with a Change in Control from the Company or otherwise ("<u>Transaction Payment</u>") would (i) constitute a "parachute payment" within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the "<u>Excise Tax</u>"), then the Company shall cause to be determined, before any amounts of the Transaction Payment are paid to Executive, which of the following two alternative forms of payment would result in Executive's receipt, on an after-tax basis, of the greater amount of the Transaction Payment notwithstanding that all or some portion of the Transaction Payment may be subject to the Excise Tax: (1) payment in full of the entire amount of the Transaction Payment (a "<u>Full Payment</u>"), or (2) payment of only a part of the Transaction Payment so that Executive receives the largest payment possible without the imposition of the Excise Tax (a "<u>Reduced Payment</u>"). For purposes of determining whether to make a Full Payment or a Reduced Payment, the Company shall cause to be taken into account all applicable federal, state and local income and employment taxes and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes). If a Reduced Payment is made, (x) Executive shall have no rights to any additional payments and/or benefits constituting the Transaction Payment, and (y) reduction in payments and/or benefits will occur in the following order: (1) reduction of cash payments; (2) cancellation of accelerated vesting of equity awards other than stock options; (3) cancellation of accelerated vesting of stock options; and (4) reduction of other benefits paid to Executive. In the event that acceleration of vesting of equity award compensation is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant of Executive's equity awards. In no event will the Company or any stockholder be liable to Executive for any amounts not paid as a result of the operation of this Section 4.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.The professional firm engaged by the Company for general tax purposes as of the day prior to the effective date of the Change in Control shall make all determinations required to be made under this Section 4. If the professional firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint a nationally recognized independent registered public accounting firm to make the determinations required hereunder. The Company shall bear all expenses with respect to the determinations by such professional firm required to be made hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.The professional firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and Executive within fifteen (15) calendar days after the date on which Executive's right to a Transaction Payment is triggered or such other time as reasonably requested by the Company or Executive. If the professional firm determines that no Excise Tax is payable with respect to the Transaction Payment, either before or

------

Exhibit 10.1

after the application of the Reduced Amount, it shall furnish the Company and Executive with detailed supporting calculations of its determinations that no Excise Tax will be imposed with respect to such Transaction Payment. Any good faith determinations of the professional firm made hereunder shall be final, binding and conclusive upon the Company and Executive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>Successors</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Company's Successors</u>. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets shall assume the Company's, or ensure that the Company fully performs its, obligations under this Agreement and shall perform the Company's, or ensure that the Company performs its, obligations, under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term "Company" shall include any such successor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Executive's Successors</u>. Without the written consent of the Company, Executive shall not assign or transfer any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.<u>Notices</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>General</u>. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of Executive, mailed notices shall be addressed to Executive at the home address which Executive most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Notice of Termination</u>. Any termination by the Company with or without Cause or by Executive as a result of a voluntary resignation for any reason shall be communicated by a notice of termination to the other party hereto given in accordance with this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.<u>Arbitration</u>. The Company and Executive shall attempt to settle any disputes arising in connection with this Agreement through good faith consultation. In the event that Executive and the Company are not able to resolve any such disputes within fifteen (15) days after notification in writing to the other, any dispute or claim arising out of or in connection with this Agreement will be finally settled by binding arbitration in San Francisco, California in accordance with the rules of the American Arbitration Association by one arbitrator mutually agreed upon by the parties. The arbitrator will apply California law, without reference to rules of conflicts of law or rules of statutory arbitration, to the resolution of any dispute, and may award only those remedies that would have applied if the matter had been heard in court. The arbitrator's decision must be in writing and contain findings of fact and conclusions of law. Except as set forth in Section 9(i) below, the arbitrator shall not have authority to modify the terms of this Agreement. The Company shall pay the costs of the arbitration proceeding. Each party shall, unless otherwise determined by the arbitrator, bear the party's own attorneys' fees and expenses, provided however that if Executive prevails in an arbitration proceeding, the Company shall reimburse Executive for reasonable attorneys' fees and costs. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. All claims in arbitration have the same statutes of limitation that would apply to those claims in a court. Notwithstanding the foregoing, the Company and Executive may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this paragraph, without breach of this arbitration provision. All determinations of final relief, including final injunctive relief, shall be decided in arbitration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.<u>Definition of Terms</u>. The following terms referred to in this Agreement shall have the following meanings:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Cause</u>. "<u>Cause</u>" for termination of Executive's employment is defined as any of the following: (i) Executive's willful failure substantially to perform Executive's duties and responsibilities to the Company or deliberate violation of a Company policy; (ii) Executive's commission of any act of

------

Exhibit 10.1

fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in material injury to the Company; (iii) unauthorized use or disclosure by Executive of any proprietary information or trade secrets of the Company or any other party to whom Executive owes an obligation of nondisclosure as a result of Executive's relationship with the Company; or (iv) Executive's willful breach of any obligations under any written agreement or covenant with the Company. The determination as to whether Executive is being terminated for Cause shall be made in good faith by the Company and shall be final and binding on Executive. The term "Company" will be interpreted to include any subsidiary, parent or affiliate of the Company, as appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Change in Control</u>. "<u>Change in Control</u>" shall have the meaning set forth in the Company's 2014 Equity Incentive Plan, as it may be amended from time to time; provided that to the extent required for compliance with Section 409A of the Code, in no event will a Change in Control be deemed to have occurred if such transaction is not also a "change in the ownership or effective control of" the Company or "a change in the ownership of a substantial portion of the assets of" the Company as determined under Treasury Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>Good Reason</u>. "<u>Good Reason</u>" for Executive's resignation of employment shall exist following the occurrence of any of the following without Executive's written consent: (i) a material reduction in job duties, responsibilities or authority inconsistent with Executive's position with the Company; <u>provided</u>, <u>however,</u> that any such reduction or change after a Change in Control will not constitute Good Reason if Executive retains reasonably comparable duties, position and responsibilities with respect to the Company's business within the successor entity following a Change of Control; (ii) a material reduction of Executive's then-current base salary, representing a reduction of more than ten percent (10%) of Executive's then-current base salary; <u>provided</u>, that an across-the-board reduction in the salary level of all executive officers of the Company by the same percentage amount as part of a general salary level reduction shall not constitute such a material salary reduction; (iii) the relocation of Executive's principal place of employment to a place that increases Executive's one-way commute by more than fifty (50) miles as compared to Executive's then-current principal place of employment immediately prior to such relocation; (iv) any material breach by the Company of this Agreement or any other written agreement between the Company and Executive; or (v) the failure by any successor to the Company to assume this Agreement or any obligations under this Agreement; <u>provided</u>, that Executive gives written notice to the Company of the event forming the basis of the termination for Good Reason within thirty (30) days after the date on which the Company gives written notice to Executive of the Company's affirmative decision to take an action set forth in clause (i), (ii), (iii), (iv) or (v) above, the Company fails to cure such basis for the Good Reason resignation within thirty (30) days after receipt of Executive's written notice, and Executive terminates from employment within thirty (30) days following the expiration of the cure period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.<u>Target Incentive</u>. "<u>Target Incentive</u>" is defined as the cash incentive payable to Executive pursuant to a performance bonus or variable compensation plan based on achievement of specified performance goals for the year in which such Covered Termination occurs (as defined in Section 2(a)), as if all the applicable performance goals for such year were attained at a level of 100%. If at the time of the Covered Termination, Executive is eligible for a Target Incentive, but no target percentage or target dollar amount is specified for the year in which such Covered Termination occurs, the Target Incentive amount will be the target incentive percentage established for Executive in the preceding year (but adjusted if necessary for Executive's position for the year in which the Covered Termination occurs).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.<u>Miscellaneous Provisions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Executive Obligations</u>. Notwithstanding anything to the contrary contained herein, payment of any of the CIC Benefits or Severance Benefits will be conditioned upon (i) Executive continuing to comply with Executive's obligations under the Proprietary Information and Inventions Agreement (or such similar form that Executive previously executed in connection with Executive's employment) during the period of time in which Executive is receiving the CIC Benefits or

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Exhibit 10.1

Severance Benefits; and (ii) Executive's resignation from all positions with the Company, any subsidiaries and affiliates, and the Board (as applicable), to be effective no later than the date of Separation from Service (or such other date as determined by the Board).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Income and Employment Taxes</u>. All amounts paid or provided under this Agreement shall be net of required withholdings, and Executive shall be responsible for any additional taxes of any nature (including any penalties or interest that may apply to such taxes) that the Company reasonably determines apply to any payment made hereunder. Executive's receipt of any benefit hereunder is conditioned on Executive's satisfaction of any applicable withholding or similar obligations that apply to such benefit and any cash payment owed hereunder will be reduced to satisfy any such withholding or similar obligations that may apply.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>Alternative Method of Providing COBRA Benefit</u>. If the Company determines, in its sole discretion, that the Company cannot pay COBRA Premiums as provided in Section 2(a) or 2(b) without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall, in lieu thereof, pay Executive a taxable cash amount, which payment shall be made regardless of whether Executive or Executive's eligible family members elect group health care continuation coverage (the "<u>Health Care Benefit Payment</u>"). The Health Care Benefit Payment shall be paid in monthly installments on the same schedule and over the same time period that the COBRA Premiums would otherwise have been paid on behalf of Executive. The Health Care Benefit Payment shall be equal to the amount that the Company would have otherwise paid for COBRA Premiums (which amount shall be calculated based on the premium for the first month of coverage), and shall be paid until the expiration of the CIC COBRA Period or the Severance COBRA Period, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.<u>No Duty to Mitigate</u>. Executive shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that Executive may receive from any other source.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.<u>Interaction with Other CIC Benefits</u>. In the event that Executive would be entitled to a greater level of CIC Benefits under the terms and conditions of a severance plan or policy provided by the Company or its successor to other Company employees being terminated in the Change in Control Period but for the existence of this Agreement, Executive shall be entitled to receive the greater of the CIC Benefits or the benefits under such other agreement, subject to the applicable terms and conditions thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.<u>Waiver</u>. No provision of this Agreement may be waived or discharged unless the waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g.<u>Integration</u>. This Agreement supersedes all prior or contemporaneous agreements, whether written or oral, with respect to the subject matter of this Agreement; provided that, for clarification purposes, this Agreement shall not affect any agreements between the Company and Executive regarding intellectual property matters, non-solicitation or non-competition restrictions, or confidential information of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h.<u>Choice of Law</u>. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.<u>Severability</u>. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j.<u>Code Section 409A</u>. It is intended that each installment of the payments and benefits provided for in this Agreement shall be treated as a separate "payment" for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i). For the avoidance of doubt, it is intended that this Agreement and payment of the amounts set forth in this Agreement shall (a) satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Internal Revenue Code of 1986, as

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Exhibit 10.1

amended (the "<u>Code</u>") (Section 409A of the Code, together, with any state law of similar effect, "<u>Section 409A</u>"), including under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), or (b) be construed and administered in accordance with Section 409A. However, if the Company (or, if applicable, the successor entity thereto) determines that the severance payments and benefits provided under this Agreement (the "<u>Agreement Payments</u>") constitute "nonqualified deferred compensation" under Section 409A and Executive is, on the date of Executive's Separation from Service, a "specified employee" of the Company or any successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of the Code (a "<u>Specified Employee</u>"), then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, the timing of the payments and benefits provided for in this Agreement shall be delayed as follows: on the earlier to occur of (i) the date that is six (6) months and one day after Executive's Separation from Service or (ii) the date of Executive's death (such earlier date, the "<u>Delayed Initial Payment Date</u>"), the Company (or the successor entity thereto, as applicable) shall pay to Executive a lump sum amount equal to the applicable payment or benefit that Executive would otherwise have received through the Delayed Initial Payment Date if the commencement of the payment of the payment or benefit had not been so delayed pursuant to this Section 9(j). Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by Executive on account of non-compliance with Section 409A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k.<u>Legal Fees and Expenses</u>. The parties shall each bear their own expenses, legal fees and other fees incurred in connection with the execution of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l.<u>Counterparts</u>. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

[*Signature Page Follows*]

 **In Witness Whereof,** the parties have executed this Agreement as of the date first set forth above.

**EXECUTIVE**

[Insert name]

Date:

**NEW RELIC, INC.**

By:

Name:

Title:

Date:

## Exhibit 10.2

Exhibit 10.2

**<u>CHANGE IN CONTROL AND SEVERANCE AGREEMENT –</u> <u>ADDENDUM TO YOUR EMPLOYMENT CONTRACT</u>**

Steve Hurn

1 July 2022

Dear Steve:

This letter agreement (**"Addendum"**) is presented further to our recent discussions in order to set out below the terms which apply to you in relation to a Change in Control of New Relic, Inc, a Delaware corporation (the "**Parent Company**") or your termination without cause.

This Addendum shall be effective as of the date above and shall remain in effect for a period of three years from such date, after which time this Addendum may be renewed by mutual agreement.

Your employment is and shall remain subject to the terms your contract of employment with New Relic UK Limited (the "**Company**") dated 20 April 2020 and any subsequent amendment thereto ("**Employment Contract**"), and this Addendum shall have no effect on the terms of the Employment Contract, other than as provided herein. For the avoidance of doubt, this Addendum supersedes the addendum in relation to a Change in Control of the Parent Company dated 1 February 2021 which you signed as of 15 February 2021, the earlier addendum shall be rendered null and void upon the execution of this Addendum.

**<u>1.</u><u>DEFINITIONS</u>**

1.1 **"Cause"** for termination of your employment with the Company will exist under this Addendum if your employment terminates for any of the following reasons:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.your wilful failure to substantially to perform your duties and responsibilities to the Company or deliberate violation of a Company policy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.your commission of any act of fraud, embezzlement, dishonesty, or any other wilful misconduct that has caused or is reasonably expected to result in material injury to the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.unauthorised use or disclosure by you of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of non-disclosure as a result of your relationship with the Company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.your wilful breach of any of your obligations under any written agreement or covenant with the Company.

The determination as to whether your employment is being terminated for Cause shall be made in good faith by the Company and shall be final and binding on you.

1.2 **"Change in Control"** shall have the meaning set forth in the Parent Company's 2014 Equity Incentive Plan, as it may be amended from time to time; provided that to the extent required for compliance with applicable US law (Section 409A of the Internal Revenue Code of 1986), in no event will a Change in Control be deemed to have occurred if such transaction is not also a "change in the ownership or effective control of" the Parent Company or "a change in the ownership of a substantial portion of the assets of" the Parent Company as determined under US Treasury Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).

1.3 **"Good Reason"** for resignation of your employment shall exist under this Addendum following the occurrence of any of the following without your written consent:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.a material reduction in job duties, responsibilities, or authority inconsistent with your position with the Company; <u>provided</u>, <u>however,</u> that any such reduction or change after a Change in Control will not constitute Good Reason if you retain reasonably comparable duties, position, and responsibilities with respect to the Company's business within the successor entity (or any successor to the Parent Company) following a Change in Control;

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Exhibit 10.2

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.a material reduction of your then current base salary, representing a reduction of more than 10% of your then current base salary; <u>provided</u>, that an across-the-board reduction in the salary level of all executive officers of the Parent Company by the same percentage amount as part of a general salary level reduction shall not constitute such a material salary reduction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.the relocation of your principal place of employment to a place that increases your one-way commute by more than 50 miles as compared to your then current principal place of employment immediately prior to such relocation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.any material breach by the Company of this Addendum or any other written agreement between the Company or any Group Company and you; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v.the failure by any successor to the Company to assume this Addendum or any obligations under this Addendum; <u>provided</u>, that you give written notice to the Company of the event forming the basis of the termination for Good Reason within 30 days after the date on which the Company gives written notice to you of the Company's affirmative decision to take an action set forth in clause (i), (ii), (iii), (iv), or (v) above, the Company fails to remedy such basis for the Good Reason resignation within 30 days after receipt of your written notice and you terminate your employment within 30 days following the expiration of the remedy period. For the avoidance of doubt, this Agreement shall be rendered null and void in circumstances where your employment transfers to a third party by reason of the Transfer of Undertakings (Protection of Employment) Regulations 2006 as amended from time to time.

1.4 "**Group Company**" is the Company and its Parent Undertakings, its Subsidiary Undertakings and the Subsidiary Undertakings of any of its Parent Undertakings from time to time ("Parent Undertaking" and "Subsidiary Undertaking" having the meanings set out in section 1162 Companies Act 2006).

1.5 "**PAYE deductions**" are deductions made to comply with or to meet any liability of the Company to account for tax pursuant to regulations made under Chapter 2 of Part 11 of the Income Tax (Earnings and Pensions) Act 2003 and to comply with any obligation to make a deduction in respect of national insurance contributions.

1.6 "**Settlement Agreement**" is a settlement agreement in the Company's chosen form to be provided prior to the Termination Date which complies with the requirements of s203 of the Employment Rights Act 1996 and which includes express provisions in relation to your ongoing obligations of confidentiality, non-derogatory remarks, return of Company property, protection of confidential information, cooperation in legal matters, and compliance with the post-termination restrictions of your Employment Contract (attached as **Exhibit A**).

1.7 **"Termination Date"** is the date on which your employment under the Employment Contract terminates.

1.8 **"Target Incentive"** is defined as the cash incentive payable to you pursuant to a performance bonus or variable compensation plan based on achievement of specified performance goals for the year in which the Termination Date occurs, as if all the applicable performance goals for such year were attained at a level of 100%. If at the time of the Covered Termination, you are eligible for a Target Incentive, but no target percentage is specified for the year in which such Covered Termination (as defined at clause 2 below) occurs, the Target Incentive amount will be the target incentive percentage established for you in the preceding year (but adjusted if necessary for your position for the year in which the Covered Termination occurs).

**2. <u>TERMINATION PAYMENTS</u>**

2.1 If your employment is terminated by the Company without Cause (other than as a result of death or disability), or you resign your employment with the Company for Good Reason, in either case in connection with or within a period commencing three months prior to the effective date of a Change in Control and ending 12 months following the effective date of a Change in Control (the **"Change in Control Period"**) provided that you sign a Settlement Agreement waiving all claims against the Company or any Group Company as specified in clause 3 below (a **"Covered Termination"**), the Company shall pay you, subject to clause 2.3, a lump sum amount in cash equal to twelve (12) months of your then current

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Exhibit 10.2

base salary and 100% of your Target Incentive, in either case, ignoring any decrease in base salary that would form the basis for Good Reason, as at the Termination Date less PAYE deductions (the **"CIC Payment"**). The date that the settlement agreement executed under this clause 2.1 is effective will be the **"Settlement Agreement Effective Date"** for purposes of section 2 of your Change in Control and Severance Agreement with the Parent Company, executed contemporaneously with this Addendum.

2.2 In the event that the termination of your employment does not trigger a payment pursuant to clause 2.1 and if your employment is terminated by the Company without Cause (other than as a result of death or disability), and such termination does not occur within the Change in Control Period, provided that you sign a Settlement Agreement waiving all claims against the Company or any Group Company as specified in clause 3 below, the Company shall pay you, subject to clause 2.3, a lump sum amount in cash equal to six (6) months of your then current base salary as at the Termination Date less PAYE deductions to be paid over the six (6) month period following the Termination Date in accordance with the Company's regular payroll schedule (the **"Enhanced Severance Payment"**). Any execution of a Settlement Agreement under this clause 2.2 will have no effect on your Change in Control and Severance Agreement with the Parent Company.

2.3 The CIC Payment or the Enhanced Severance Payment (whichever applies), shall be reduced by the equivalent of any sums paid to you as a payment in lieu of notice (as defined in the Employment Contract) upon the termination of your employment and/or by any sums paid to you for your then current base salary during your notice period including for the avoidance of doubt any period when you are placed on garden leave pursuant to the Employment Contract.

2.4 In no circumstances shall you be entitled to both the CIC Payment and the Enhanced Severance Payment. If you become entitled to the CIC Payment under clause 2.1, you shall receive the CIC Payment. Where you have already received the Enhanced Severance Payment pursuant to clause 2.2 this shall be deducted from any subsequent CIC Payment which is due to be paid to you.

2.5 You shall not be required to mitigate the amount of any payment contemplated by this Addendum, nor shall any such payment be reduced by any earnings that you may receive from any other source.

2.6 This clause 2 supersedes clause 11 of your Employment Contract ("Termination") only in the event of the occurrence of all conditions described in clause 2.1 or 2.2. In the event that clause 2.1 or 2.2 is not operative, clause 11 of your Employment Contract shall govern the termination of your employment.

**3. <u>WAIVER OF CLAIMS AND CONDITIONS</u>**

3.1 It is a condition of this Addendum that prior to the payment of any CIC Payment or Enhanced Severance Payment, you shall prior to the Termination Date allow to become effective a Settlement Agreement releasing the Company, any Group Company, and their successors from any and all claims you may have against such entities related to or arising in connection with your employment, the terms of such employment, and/or the termination of your employment. No CIC Payment or Enhanced Severance Payment shall be paid or provided prior to the receipt of a validly executed Settlement Agreement in the form approved by the Company prior to the Termination Date.

3.2 Payment of the CIC Payment or the Enhanced Severance Payment is subject to and conditional upon you resigning any executive positions you may hold with the Company or any Group Company and you complying with (and continuing to comply with) your obligations relating to confidentiality, intellectual property, and post termination restrictive covenants as set out in your Employment Contract and the Employee Proprietary Information and Inventions Agreement.

**4. <u>TIMING OF PAYMENT</u>**

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Exhibit 10.2

4.1 The Company will pay (or commence payment of) the CIC Payment or Enhanced Severance Payment within 28 days of the Termination Date.

4.2 For the avoidance of doubt, the payment of CIC Payment or Enhanced Severance Payment shall not affect your entitlement to any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.any accrued but unpaid salary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.any payment in lieu of accrued but unused holiday;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.he reimbursement of expenses, provided that all claims for reimbursement are submitted within two weeks after the Termination Date,

in relation, in each case, to the period before the Termination Date.

**5. <u>SUCCESSORS</u>**

5.1 Any successor to the Company or Parent Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation, or otherwise) to all or substantially all of the Company's business and/or assets shall assume the Company's, or ensure that the Company fully performs its, obligations under this Addendum and shall perform the Company's, or ensure that the Company performs its, obligations, under this Addendum in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession.

5.2 Without the written consent of the Company, you shall not assign or transfer any right or obligation under this Addendum to any other person or entity. Notwithstanding the foregoing, the terms of this Addendum and all your rights hereunder shall inure to the benefit of, and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees.

**6. <u>WAIVER</u>**

6.1 No provision of this Addendum may be waived or discharged unless the waiver or discharge is agreed to in writing and signed by you and by an authorised officer of the Company (other than you) and an authorised officer of the Parent Company. No waiver by either party of any breach of, or of compliance with, any condition or provision of this Addendum by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

**7. <u>INTEGRATION</u>** 

7.1 This Addendum supersedes all prior or contemporaneous agreements, whether written or oral, with respect to this Addendum; provided that, for clarification purposes, this Addendum shall not affect any agreements between the Company and you regarding intellectual property matters, non-solicitation or non-competition restrictions, or confidential information of the Company or between you and the Parent Company relating to a Change in Control.

**8. <u>CHOICE OF LAW</u>**

8.1 The validity, interpretation, construction and performance of this Addendum shall be governed by the internal substantive laws, but not the conflicts of law rules, of England and Wales**.**

**9. <u>COUNTERPARTS</u>**

9.1 This Addendum may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument**.**

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Exhibit 10.2

Signed by the Company:

<u>/s/ Mark Schleben</u> Date: July 5, 2022

Name: <u>Mark Joseph Schleben</u> 

Title: <u>Director</u> 

Accepted and agreed by you:

<u>/s/ Steve Hurn</u> Date: July 5, 2022

**Steve Hurn**

## Exhibit 10.3

![image_0.jpg](image_0.jpg)

**NEW RELIC, INC. EXECUTIVE OFFER LETTER**

This offer letter (this "<u>Agreement</u>") is entered into by and between David Barter (references to "you" and "<u>your</u>") and **New Relic, Inc.**, a Delaware corporation (the "<u>Company</u>"), with an effective date of August 1, 2022.

We are pleased to offer you an executive role with the Company. Please review this offer, including the attached agreements to be incorporated in your employment terms. When you are ready to accept, please sign this offer and the attached documents in the places indicated and return them to us via DocuSign.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Position and Start Date; Appointment by Board</u>

You will join New Relic initially as Executive Vice President. Your employment will begin on August 1, 2022, or other such date as is mutually agreed. Your assigned primary work location will be New Relic's San Francisco office. You will also travel to support the Company's global operations. It is anticipated that your role will formally transition upon approval by the Company's Board of Directors at its meeting on August 17, 2022, following which you would become the Chief Financial Officer of the Company, with commensurate responsibilities, reporting to Bill Staples, Chief Executive Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Salary</u>

Your initial annualized base salary will be $430,000.00.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Annual Performance Bonus</u>

In addition, you will be eligible for an annual performance bonus, paid quarterly and targeted at 70% of your annual base salary per year, based initially upon the terms of the Company's Corporate Bonus Plan for Executives adopted by the Compensation Committee of the Board of Directors. The Company reserves the right to terminate or change the bonus program at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Sign-on Bonus</u>

You will be paid a sign-on bonus of $35,000.00 with the first eligible payroll period after 30 days of employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>Equity</u>

In the month following your commencement of employment, we will request that the Company's Board of Directors (or its delegate) grant you an equity award with a value of $7,500,000.00, pursuant to the terms of the Company's 2014 Equity Incentive Plan.

If approved, $3,750,000.00 of the aggregate value of the award will be awarded in the form of Restricted Stock Units (RSUs), and $3,750,000.00 will be awarded in the form of Performance Restricted Stock Units (PRSUs). The number of RSUs will be determined using the average

closing price of New Relic's common stock as quoted on the New York Stock Exchange (the "NYSE") for the 30-day calendar period immediately preceding the grant date. The target and maximum number of PRSUs will be determined using the average closing price of New Relic's common stock as quoted on the NYSE for the 30-day calendar period immediately preceding the grant date.

Your awards will vest, subject to your continued employment with New Relic through each vesting date, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.For your **RSUs,** 1/12th of the total number of units on each quarterly anniversary of your RSU Vesting Commencement Date (which would lead to full vesting three years from the RSU Vesting Commencement Date). We expect your RSU Vesting Commencement Date will be August 15, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.For your **PRSUs,** the amount of units that vest will be dependent upon certain company performance criteria and service vesting conditions, based on three separate Measurement Periods within the Performance Period. For additional details regarding the vesting schedule, please refer to the Performance Unit Award Vesting Criteria set forth in Attachment I to your Grant Notice.

Charles Schwab will notify you via email when your new award has been posted to your account for acceptance (generally 2-3 weeks after your equity has been granted).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.<u>Benefits</u>

You will find information about benefit plans offered by the Company in which you may be eligible to participate in the Company's Benefits Guide. Your eligibility to participate in any employee benefits plans and the terms of your

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participation will be governed by the governing plan documents. Nothing in this letter can modify those provisions of the plans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.<u>Health Insurance</u>

The Company's benefits package includes medical, dental, vision, disability, and life insurance. Additional details of insurance benefits will be provided separately. Your insurance benefits are effective from your first day of employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.<u>401(k) Plan</u>

You will be eligible to participate in New Relic's 401(k) retirement plan immediately upon starting employment. Additional details of this plan, including the Company's current match policy, will be provided at hire or can be requested for review.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.<u>Time Off and Annual Holidays</u>

You will be eligible for Flex Time Off, which means that you will not accrue paid time off. Instead, you may take a reasonable amount of time off with pay, as permitted by your duties and responsibilities, and as approved in advance by your manager. New Relic also has generous paid sick time and medical, parental, volunteer, and other leave programs. The Company observes 11regular annual paid holidays, which may change from time to time. The Company's time off, leaves, and holiday policies are subject to change at the Company's discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.<u>Company Policies</u>

As an employee of New Relic, you will be subject to our employment policies, which may be modified from time to time. You will be entitled to reimbursement by New Relic for customary business expenses consistent with the policies of the Company.

The Company reserves the right to modify the compensation or benefits arrangements described in this letter or otherwise maintained by the Company, and also reserves the right to modify your position or duties to meet business needs and to use its discretion in deciding on appropriate discipline.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.<u>Tax and Other Withholding</u>

The compensation and benefits described in this letter are before tax or other withholdings required or permitted by law. New Relic reserves the right to withhold all applicable federal, state and local income, Social Security and other employment taxes, along with any other amounts of required withholding, from all amounts of compensation and other benefits payable to you, whether as direct compensation or under any applicable compensation or benefit plans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.<u>Additional Agreements</u>

For your offer to be effective (subject also to the Post-Offer Conditions below), you must sign and return with this letter the Proprietary Information and Inventions Agreement ("PIIAA") attached as Exhibit A. Note that if you have items to disclose on the Prior Inventions Form, your offer of employment is subject to review and acceptance by the Company. This post-offer condition will only be satisfied once the Company countersigns your submission to the Prior Inventions Form.

Also included with this offer is your Change in Control and Severance Agreement attached as Exhibit B. The agreement provides that you will be eligible for severance benefits, subject to the terms set forth therein, following your appointment by the Board as Chief Financial Officer.

In addition to the above-referenced agreements, it is also anticipated upon your appointment as Chief Financial Officer you will be offered to enter into an Indemnification Agreement in the form then-applicable for the Company's executive officers and directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.<u>At Will Employment</u>

New Relic is an "at-will" employer. At-will employment is not for a definite period and can be terminated at the choice of either you or the Company, with or without cause, and without prior notice. This "at-will" employment relationship can only be modified in writing by the CEO. Nothing in this letter should be interpreted to alter the at-will nature of your anticipated employment with the Company.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.<u>Other Employment</u>

By signing this offer, you agree New Relic will be your primary employer and you will prioritize your time, attention, skills to perform your job duties as assigned and delegated to you by New Relic. If you have other business, board, or professional consulting/advisory obligations, please get approval through our Chief Legal Officer in writing before accepting this offer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.<u>Representation and Warranty</u>

By signing this offer, you acknowledge that you have received no inducements or representations other than those set forth in this letter (including its exhibits) that caused you to accept this offer of employment. You represent and warrant to us that the performance of your duties for the Company will not violate any agreement with or trade secrets of any other person or entity and that your duties for the Company, unless we are notified in writing in advance to the Chief Legal Officer, will not be limited or restricted by any other agreements or understandings between you and other persons, entities, or companies. You specifically agree to ensure that you do not use or infringe on the confidentiality or intellectual property rights of any current or previous employer. You agree to indemnify the Company against a breach of the representations and warranties in this paragraph.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.<u>Post-Offer Conditions</u>

In accordance with law, the Company conditions this offer upon:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Your timely return of this offer and the attached agreements, duly signed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Completion of acceptable reference checks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Successfully passing a background check, which will include education, employment, credit, and post-offer criminal history verification. Our background check provider will send you additional information and consent documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Confirmation that you are not subject to any relevant legal restrictions on your activities (see "Representation and Warranty" above);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)Your providing proof of your COVID-19 vaccination or being approved for an accommodation though our accommodation process;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)The Company receiving any export license or other approval from a government or customer that may be required for you to perform all anticipated duties; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)Your providing appropriate documentation within three (3) business days of your hire date demonstrating that you have authorization to work in the United States.

This offer will be withdrawn (whether or not you have already signed it) if any of the above conditions are not satisfied. Unless and until all such steps have been completed, this conditional offer of employment may be withdrawn and you should not change any personal circumstances in reliance on this conditional offer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.<u>Conclusion</u>

This offer will remain open through 6 p.m. Pacific time on July 29, 2022. To indicate your acceptance under the terms here, please sign and date this letter and the other documents enclosed for your signature and return the documents via DocuSign. This offer, once signed and accepted by both parties, constitutes the complete and exclusive agreement between you and the Company with respect to the subject matter hereof and supersedes and replaces any and all prior agreements or representations relating to such subject.

We look forward to having you join us.

*[Signature page follows.]*

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![image_0.jpg](image_0.jpg)

**In Witness Whereof,** the parties have executed this Agreement as of the date first set forth above.

**NEW RELIC, INC.**

By: <u>/s/ Bill Staples</u> 

Name: <u>Bill Staples</u> 

Title: <u>Chief Executive Officer</u> 

<u>Candidate Signature</u>

By signing below, I acknowledge that I have been furnished with a copy of this offer and that I understand and agree to the terms set forth above. I understand that I will be an at-will employee and that nothing in this document is intended to create a contract of employment or alter the at- will nature of my employment.

**EXECUTIVE**

<u>/s/ David Barter&nbsp;&nbsp;&nbsp;&nbsp;</u><br> David Barter

## Exhibit 10.4

![image.jpg](image.jpg)

**NEW RELIC, INC.** 

**CONFIRMATORY EMPLOYMENT LETTER**

This confirmatory employment letter (this "<u>Agreement</u>") is entered into by and between Thomas Lloyd ("<u>Executive</u>") and **New Relic, Inc.**, a Delaware corporation (the "<u>Company</u>"), with an effective date of August 17, 2022.

Please review this Agreement, including any attached agreements to be incorporated in your employment terms. When you are ready to accept, please sign this Agreement where indicated and return it to us via DocuSign.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Position and Start Date</u>

You will continue to serve as New Relic's Chief Legal Officer and Corporate Secretary reporting to Bill Staples, Chief Executive Officer. You will continue to work out of New Relic's San Francisco office and travel to support the Company's global operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Salary</u>

Your initial annualized base salary will continue to be $410,000. Your position is classified as exempt from overtime and your salary compensates you for all hours of work.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Annual Performance Bonus</u>

In addition, you will continue to be eligible for an annual performance bonus, paid quarterly and targeted at 60% of your annual base salary per year, based on individual, group, and/or corporate goals to be determined during the first month of your employment. The Company reserves the right to terminate or change the bonus program at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Equity</u>

You will be eligible to receive equity awards pursuant to the Company's 2014 Equity Incentive Plan, or any other plans or arrangements the Company may have in effect from time to time. The Board or a committee thereof, as applicable, will determine in its sole discretion whether you will be granted any such equity awards and the terms of any such award in accordance with the terms of any applicable plan or arrangement that may be in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>Benefits</u>

Your continued eligibility to participate in any employee benefits plans and the terms of your participation will be governed by the governing plan documents. Nothing in this letter can modify those provisions of the plans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.<u>Health Insurance</u>

The Company's benefits package includes medical, dental, vision, disability, and life insurance. Additional details of insurance benefits were provided separately.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.<u>401(k) Plan</u>

You will continue to be eligible to participate in New Relic's 401(k) retirement plan during your employment. Additional details of this plan, including the Company's current match policy, have been provided to you separately.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.<u>Time Off and Annual Holidays</u>

You will continue to be eligible for Flex Time Off, which means that you will not accrue paid time off. Instead, you may take a reasonable amount of time off with pay, as permitted by your duties and responsibilities, and as approved in advance by your manager. New Relic also has generous paid sick time and medical, parental, volunteer, and other leave programs. The Company observes 11 regular annual paid holidays, which may change from time to time. The Company's time off, leave, and holiday policies are subject to change at the Company's discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.<u>Company Policies</u>

As an employee of New Relic, you will continue to be subject to our employment policies, which may be modified from time to time. You will be entitled to reimbursement by New Relic for customary business expenses consistent with the policies of the Company. In addition, the Company reserves the right to modify the compensation or

------

benefits arrangements described in this letter or otherwise maintained by the Company, and also reserves the right to modify your position or duties to meet business needs and to use its discretion in deciding on appropriate discipline.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.<u>Tax and Other Withholding</u>

The compensation and benefits described in this letter are before tax or other withholdings required or permitted by law. New Relic reserves the right to withhold all applicable federal, state and local income, Social Security and other employment taxes, along with any other amounts of required withholding, from all amounts of compensation and other benefits payable to you, whether as direct compensation or under any applicable compensation or benefit plans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.<u>Additional Documents Incorporated into this Agreement</u>

The following additional agreements (the "<u>Incorporated Documents</u>") previously executed by you and the Company are incorporated by reference into this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Proprietary Information and Inventions Agreement, dated as of January 30, 2015, by and between you and the Company (Exhibit A)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Arbitration Agreement, dated as of January 30, 2015, by and between you and the Company (Exhibit B)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Indemnification Agreement, dated as of August 17, 2022 by and between you and the Company (Exhibit C)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Change in Control and Severance Agreement, dated as of July 5, 2022, by and between you and the Company (Exhibit D)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.<u>At Will Employment</u>

New Relic is an "at-will" employer. At-will employment is not for a definite period and can be terminated at the choice of either you or the Company, with or without cause, and without prior notice. This "at-will" employment relationship can only be modified in writing by the CEO. **Nothing in this letter should be interpreted to alter the at-will nature of your anticipated employment with the Company.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.<u>Other Employment</u>

By signing this Agreement, you agree New Relic will continue to be your primary employer and you will prioritize your time, attention, skills to perform your job duties as assigned and delegated to you by New Relic. If you have a side business or consulting/advisory obligations, please get approval through our Legal team before accepting this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.<u>Representation and Warranty</u>

By signing this Agreement, you acknowledge that you have received no inducements or representations other than those set forth in this letter that caused you to accept this Agreement, and that this Agreement, together with the Incorporated Documents and the equity awards granted to you by the Company under its applicable equity plans and the applicable award agreements thereunder, constitute the entire agreement between you and the Company regarding the material terms and conditions of your employment, and they supersede and replace all prior negotiations, representations or agreements between you and the Company. You represent and warrant to us that the performance of your duties for the Company will not violate any agreement with or trade secrets of any other person or entity and that your duties for the Company will not be limited or restricted by any other agreements or understandings between you and other persons, entities, or companies. You specifically agree to ensure that you do not use or infringe on the confidentiality or intellectual property rights of any current or previous employer. You agree to indemnify the Company against a breach of the representations and warranties in this paragraph.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <u>Conclusion</u>

To indicate your acceptance under the terms here, please sign and date this letter and the other documents enclosed for your signature and return the documents via DocuSign. This Agreement, once accepted, together with the Incorporated Documents, constitutes the complete and exclusive agreement between you and the Company with respect to the subject matter hereof and supersedes and replaces any and all prior agreements or representations relating to such subject.

------

**In Witness Whereof,** the parties have executed this Agreement as of the date first set forth above.

**NEW RELIC, INC.**

By: <u>/s/ Bill Staples</u> 

Name: <u>Bill Staples</u> 

Title: <u>Chief Executive Officer</u> 

**EXECUTIVE**

<u>/s/ Thomas Lloyd</u> 

Thomas Lloyd

## Exhibit 10.5

![imagea.jpg](imagea.jpg)

**NEW RELIC, INC.** 

**EXECUTIVE OFFER LETTER**

This offer letter (this "<u>Agreement</u>") is entered into by and between Mark Dodds ("<u>Executive</u>") and **New Relic, Inc.**, a Delaware corporation (the "<u>Company</u>"), with an effective date of August 26, 2022.

We are pleased to offer you the role of Chief Revenue Officer with New Relic. Please review this offer, including the attached agreements to be incorporated in your employment terms. When you are ready to accept, please sign this offer and the attached documents in the places indicated and return them to us via DocuSign.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Position and Start Date</u>

You will join New Relic as our Chief Revenue Officer reporting to Bill Staples, Chief Executive Officer. Your employment will begin on October 3, 2022, or other such date as is mutually agreed. You will work out of your home office in Washington and travel to support the Company's global operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Salary</u>

Your initial annualized base salary will be $460,000. Your position is classified as exempt from overtime and your salary compensates you for all hours of work.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Annual Performance Bonus</u>

In addition, you will be eligible for an annual performance bonus, paid quarterly and targeted at 100% of your annual base salary per year, based on individual, group, and/or corporate goals to be determined during the first month of your employment. The Company reserves the right to terminate or change the bonus program at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Equity</u>

In the month following your commencement of employment, we will request that the Company's Board of Directors (or its delegate) grant you an equity award with a value of $7,500,000, pursuant to the terms of the Company's 2014 Equity Incentive Plan.

If approved, $3,750,000.00 of the aggregate value of the award will be awarded in the form of Restricted Stock Units (RSUs), with the remaining value awarded in the form of Performance Restricted Stock Units (PRSUs). The number of RSUs will be determined using the average closing price of New Relic's common stock as quoted on the New York Stock Exchange (the "NYSE") for the 30-day calendar period immediately preceding the grant date. The target and maximum number of PRSUs will be determined using the average closing price of New Relic's common stock as quoted on the NYSE for the 30-day calendar period immediately preceding the grant date.

Your awards will vest, subject to your continued employment with New Relic through each vesting date, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.For your **RSUs,** 1/12th of the total number of units on each quarterly anniversary of your RSU Vesting Commencement Date (which would lead to full vesting three years from the RSU Vesting Commencement Date). We expect your RSU Vesting Commencement Date will be November 15, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.For your **PRSUs,** the amount of units that vest will be dependent upon certain company performance criteria and service vesting conditions, based on three separate Measurement Periods within the Performance Period. For additional details regarding the vesting schedule, please refer to the Performance Unit Award Vesting Criteria set forth in Attachment I to your Grant Notice.

Charles Schwab will notify you via email when your new award has been posted to your account (generally 2-3 weeks after your equity has been granted). Once received, please be sure to follow the link and instructions included in the email so you can read and accept your grant agreement(s) in the Schwab system.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.<u>Benefits</u>

You will find information about benefit plans offered by the Company in which you may be eligible to participate in the Benefits Guide provided by your recruiter. Your eligibility to participate in any employee benefits plans and the terms of your participation will be governed by the governing plan documents. Nothing in this letter can modify those provisions of the plans.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.<u>Health Insurance</u>

The Company's benefits package includes medical, dental, vision, disability, and life insurance. Additional details of insurance benefits will be provided separately. Your insurance benefits are effective from your first day of employment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.<u>401(k) Plan</u>

You will be eligible to participate in New Relic's 401(k) retirement plan immediately upon starting employment. Additional details of this plan, including the Company's current match policy, will be provided at hire or can be requested from your recruiter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.<u>Time Off and Annual Holidays</u>

You will be eligible for Flex Time Off, which means that you will not accrue paid time off. Instead, you may take a reasonable amount of time off with pay, as permitted by your duties and responsibilities, and as approved in advance by your manager. New Relic also has generous paid sick time and medical, parental, volunteer, and other leave programs. The Company observes 11 regular annual paid holidays, which may change from time to time. The Company's time off, leaves, and holiday policies are subject to change at the Company's discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.<u>Company Policies</u>

As an employee of New Relic, you will be subject to our employment policies, which may be modified from time to time. You will be entitled to reimbursement by New Relic for customary business expenses consistent with the policies of the Company. In addition, the Company reserves the right to modify the compensation or benefits arrangements described in this letter or otherwise maintained by the Company, and also reserves the right to modify your position or duties to meet business needs and to use its discretion in deciding on appropriate discipline.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.<u>Tax and Other Withholding</u>

The compensation and benefits described in this letter are before tax or other withholdings required or permitted by law. New Relic reserves the right to withhold all applicable federal, state and local income, Social Security and other employment taxes, along with any other amounts of required withholding, from all amounts of compensation and other benefits payable to you, whether as direct compensation or under any applicable compensation or benefit plans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.<u>Additional Agreements</u>

Three additional agreements are attached to this offer and must be signed and returned with this letter for your offer to be effective (subject to the Post-Offer Conditions below).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.<u>Proprietary Information and Inventions Agreement ("PIIAA")</u> (Exhibit A) Note that if you have items to disclose on the Prior Inventions Form, your offer of employment is subject to review and acceptance by the Company. This post-offer condition will only be satisfied once the Company countersigns your submission to the Prior Inventions Form.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.<u>Arbitration Agreement</u> (Exhibit B)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.<u>Change in Control and Severance Agreement.</u> You will be eligible for severance benefits under the terms of the attached Change in Control and Severance Agreement as a "Tier 2" participant, which you should sign and return with this Agreement (Exhibit C).

In addition to the above-referenced agreements, it is also anticipated upon your appointment by our Board of Directors, you will be offered to enter into an Indemnification Agreement in the form then-applicable for the Company's executive officers and directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.<u>At Will Employment</u>

New Relic is an "at-will" employer. At-will employment is not for a definite period and can be terminated at the choice of either you or the Company, with or without cause, and without prior notice. This "at-will" employment relationship can only be modified in writing by the CEO. **Nothing in this letter should be interpreted to alter the at-will nature of your anticipated employment with the Company.**

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.<u>Other Employment</u>

By signing this offer, you agree New Relic will be your primary employer and you will prioritize your time, attention, skills to perform your job duties as assigned and delegated to you by New Relic. If you have a side business or consulting/advisory obligations, please get approval through our Legal team before accepting this offer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.<u>Representation and Warranty</u>

By signing this offer, you acknowledge that you have received no inducements or representations other than those set forth in this letter that caused you to accept this offer of employment. You represent and warrant to us that the performance of your duties for the Company will not violate any agreement with or trade secrets of any other person or entity and that your duties for the Company, unless we are notified in writing in advance to the General Counsel, will not be limited or restricted by any other agreements or understandings between you and other persons, entities, or companies. You specifically agree to ensure that you do not use or infringe on the confidentiality or intellectual property rights of any current or previous employer. You agree to indemnify the Company against a breach of the representations and warranties in this paragraph.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.<u>Post-Offer Conditions</u>

In accordance with law, the Company conditions this offer upon:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Your timely return of this offer and the attached agreements, duly signed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Completion of acceptable reference checks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Successfully passing a background check, which will include education, employment, credit, and criminal history checks. Our background check provider will send you additional information and consent documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Confirmation that you are not subject to any relevant legal restrictions on your activities (see "Representation and Warranty" above);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e.Your providing proof of your COVID-19 vaccination or being approved for an accommodation though our medical or religious accommodation process;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f.The Company receiving any export license or other approval from a government or customer that may be required for you to perform all anticipated duties; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g.Your providing appropriate documentation within three (3) business days of your hire date demonstrating that you have authorization to work in the United States.

This offer will be withdrawn (whether or not you have already signed it) if any of the above conditions are not satisfied. Unless and until all such steps have been completed, this conditional offer of employment may be withdrawn and you should not change any personal circumstances in reliance on this conditional offer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. <u>Conclusion</u>

This offer will remain open for three (3) business days. To indicate your acceptance under the terms here, please sign and date this letter and the other documents enclosed for your signature and return the documents via DocuSign. This offer, once accepted, constitutes the complete and exclusive agreement between you and the Company with respect to the subject matter hereof and supersedes and replaces any and all prior agreements or representations relating to such subject.

We look forward to having you join us.

*[Signature page follows.]*

------

**In Witness Whereof,** the parties have executed this Agreement as of the date first set forth above.

**NEW RELIC, INC.**

By:<u>/s/ Bill Staples</u> 

Name: <u>Bill Staples</u> 

Title: <u>Chief Executive Officer</u> 

<u>Candidate Signature</u>

By signing below, I acknowledge that I have been furnished with a copy of this offer and that I understand and agree to the terms set forth above. I understand that I will be an at-will employee and that nothing in this document is intended to create a contract of employment or alter the at-will nature of my employment.

**EXECUTIVE**

<u>/s/ Mark Dodds</u> 

Mark Dodds

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, William Staples, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of New Relic, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | | |
|:---|:---|:---|:---|
| Date: | February 7, 2023 | By: | /s/&nbsp;&nbsp;&nbsp;&nbsp;William Staples&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; |
|  |  |  | **William Staples** |
|  |  |  | Chief Executive Officer<br>(Principal Executive Officer) |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, David Barter, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of New Relic, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | | | |
|:---|:---|:---|:---|
| Date: | February 7, 2023 | By: | /s/&nbsp;&nbsp;&nbsp;&nbsp;David Barter |
|  |  |  | **David Barter** |
|  |  |  | Chief Financial Officer<br>(Principal Financial Officer) |

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## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER**

**PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

I, William Staples, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of New Relic, Inc. for the fiscal quarter ended December 31, 2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of New Relic, Inc.

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| | | | |
|:---|:---|:---|:---|
| Date: | February 7, 2023 | By: | /s/&nbsp;&nbsp;&nbsp;&nbsp;William Staples&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; |
|  |  |  | **William Staples** |
|  |  |  | Chief Executive Officer |

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I, David Barter, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of New Relic, Inc. for the fiscal quarter ended December 31, 2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of New Relic, Inc.

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| | | | |
|:---|:---|:---|:---|
| Date: | February 7, 2023 | By: | /s/&nbsp;&nbsp;&nbsp;&nbsp;David Barter &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; |
|  |  |  | **David Barter** |
|  |  |  | Chief Financial Officer |

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This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of New Relic, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

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