Latest news with #DynatracePlatformSubscription
Yahoo
3 days ago
- Business
- Yahoo
DT Q1 Earnings Call: Dynatrace Misses Revenue Expectations but Raises Guidance on AI and Log Management Momentum
Application performance monitoring software provider Dynatrace (NYSE:DT) missed Wall Street's revenue expectations in Q1 CY2025, but sales rose 16.9% year on year to $445.2 million. Its non-GAAP EPS of $0.33 per share was 9.1% above analysts' consensus estimates. Is now the time to buy DT? Find out in our full research report (it's free). Revenue: $445.2 million (16.9% year-on-year growth) Adjusted EPS: $0.33 vs analyst estimates of $0.30 (9.1% beat) Revenue Guidance for Q2 CY2025 is $467.5 million at the midpoint, above analyst estimates of $453.7 million Adjusted EPS guidance for the upcoming financial year 2026 is $1.58 at the midpoint, beating analyst estimates by 2.7% Operating Margin: 9.6%, up from 6.1% in the same quarter last year Annual Recurring Revenue: $1.73 billion at quarter end, up 15.3% year on year Billings: $715.8 million at quarter end, up 12.6% year on year Market Capitalization: $16.25 billion Dynatrace's first quarter results reflected growing customer adoption of its AI-powered observability platform and continued expansion into enterprise accounts. CEO Rick McConnell highlighted the increasing role of large deal closures and noted that over 80% of annual contract value closed in the quarter was partner-influenced, particularly through global system integrators and hyperscalers. Management attributed incremental growth to the broader adoption of the Dynatrace Platform Subscription (DPS) licensing model, which allows customers to utilize a wider array of platform features. CFO James Benson emphasized the rising average annual recurring revenue per customer, now well over $400,000, as evidence of the platform's expanding footprint within client environments. New product traction in log management and ongoing investments in sales productivity and partner enablement were also cited as key contributors to the quarter's performance. Looking ahead, Dynatrace's guidance for the next quarter and the upcoming year is grounded in expectations of continued growth in AI-driven observability and broader platform adoption. Management sees the market's shift toward cloud-native and AI-native workloads as central to future expansion, with McConnell stating, "As organizations accelerate cloud and AI native initiatives, the need for AI-powered observability at scale has never been greater." CFO James Benson pointed to the company's evolving focus on consumption-based growth, driven by dedicated teams aimed at increasing product adoption. While management remains optimistic about the secular trends supporting demand, they are also cautious, acknowledging the potential for extended sales cycles and heightened budget scrutiny among enterprise customers. Investments in R&D, sales capacity, and partnership programs are expected to support long-term profitability and top-line growth. Management attributed the quarter's revenue shortfall to a mix of uncommitted on-demand consumption patterns and longer enterprise sales cycles, but emphasized notable progress in platform adoption and AI product expansion. DPS Licensing Adoption: The Dynatrace Platform Subscription (DPS) model continued to gain traction, now accounting for over 40% of the customer base and more than 60% of annual recurring revenue. Management reported that DPS customers adopt significantly more features and exhibit higher consumption rates, which they believe will drive future expansion revenue. Log Management Acceleration: Dynatrace's log management solution saw rapid uptake, with over one-third of customers now using the product—an 18% increase over the prior quarter. Nearly half of new customers implemented log management at the outset, and management expects this business to grow by over 100% in the coming year, underpinned by the Grail data lakehouse technology. Partner-Driven Sales Expansion: Over 80% of closed contract value was influenced by partners, notably global system integrators and hyperscalers. Management highlighted that these relationships provide greater reach and are crucial as workloads shift to cloud environments, with strategic accounts showing a 45% pipeline increase year over year. AI and Agentic Observability: The company outlined its continued investment in agentic AI, aiming to enable autonomous system remediation and optimization without human intervention. CEO Rick McConnell described advances in AI-native platform capabilities as a key differentiator, especially as enterprise customers seek to automate more operational workflows. Go-to-Market Enhancements: Dynatrace introduced 'strike teams' focused on driving adoption in key areas such as logs, application security, and digital experience monitoring. These dedicated teams are measured on consumption and are intended to support the company's transition toward a more usage-based revenue model. Dynatrace's outlook is shaped by the anticipated expansion of cloud and AI-native workloads, increased product consumption, and ongoing investment in platform innovation. AI-Powered Product Expansion: Management plans to accelerate investment in AI observability and preventive operations, anticipating that these enhancements will drive broader adoption among development teams and differentiate Dynatrace in a rapidly evolving market. Consumption-Focused Growth Model: The company is increasing its emphasis on consumption-based revenue streams, supported by dedicated adoption and customer success teams. Management expects this approach to result in higher usage volumes, though it may introduce variability in short-term revenue recognition as customers shift to on-demand consumption patterns. Enterprise Sales Cycle and Budget Scrutiny: While secular trends remain favorable, management flagged a cautious outlook due to extended sales cycles and increasing budget scrutiny among large enterprise clients. This dynamic may affect the timing of new bookings but is expected to be offset by growing partner influence and expansion within existing accounts. In the coming quarters, the StockStory team will focus on (1) the pace of DPS adoption and its impact on customer expansion rates, (2) the growth trajectory of log management and AI-driven observability solutions, and (3) the effectiveness of partner-led sales motions, particularly with hyperscalers and global system integrators. Progress in application security adoption and continued innovation in AI automation will also be important indicators of Dynatrace's ability to maintain momentum. Dynatrace currently trades at a forward price-to-sales ratio of 8.4×. Should you double down or take your chips? See for yourself in our full research report (it's free). The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
Business Wire
14-05-2025
- Business
- Business Wire
Dynatrace Reports Fourth Quarter and Full Year Fiscal 2025 Financial Results
WALTHAM, Mass.--(BUSINESS WIRE)--Dynatrace (NYSE: DT), the leading AI-powered observability platform, today announced financial results for the fourth quarter and full year ended March 31, 2025. "Dynatrace delivered a strong finish to fiscal 2025. Our fourth quarter results exceeded guidance on all of our key operating metrics, fueled by broad consumption growth across the platform," said Rick McConnell, Chief Executive Officer of Dynatrace. "The world continues to shift to cloud and AI-native software deployments. Purpose-built for this environment, Dynatrace's AI-powered observability platform provides customers not only with rich technical analytics but also valuable business insights. We remain focused on delivering extraordinary customer value, generating strong profitability and free cash flow, and investing thoughtfully in strategic priorities to capture the substantial opportunities we see ahead." All growth rates are compared to the fourth quarter and full year fiscal 2024 ended March 31, 2024 unless otherwise noted. Fourth Quarter Fiscal 2025 Financial Highlights: Total ARR of $1,734 million, an increase of 15%, or 17% on a constant currency basis Total Revenue of $445 million, an increase of 17%, or 19% on a constant currency basis Subscription Revenue of $424 million, an increase of 18%, or 20% on a constant currency basis GAAP Income from Operations of $43 million and Non-GAAP Income from Operations of $118 million GAAP EPS of $0.13 and non-GAAP EPS of $0.33, on a dilutive basis Full Year Fiscal 2025 Financial Highlights: Total Revenue of $1,699 million, an increase of 19%, or 20% on a constant currency basis Subscription Revenue of $1,622 million, an increase of 19%, or 20% on a constant currency basis GAAP Income from Operations of $179 million and Non-GAAP Income from Operations of $494 million GAAP EPS of $1.59 1 and non-GAAP EPS of $1.39, on a dilutive basis GAAP Operating Cash Flow of $459 million and Free Cash Flow of $431 million Business Highlights: Go-to-market traction: Dynatrace closed 15 deals greater than $1 million in annual contract value (ACV) in the quarter, fourteen of which were in collaboration with partners. Dynatrace Platform Subscription (DPS) licensing models continue to gain traction with over 40% of our customer base and more than 60% of our ARR leveraging this flexible, scalable, and transparent subscription approach. Consumption growth rates across the Dynatrace platform continued to outpace revenue growth, with consumption growth rates for DPS customers growing twice the rate of SKU-based customers. Partner evolution: Dynatrace signed a new strategic collaboration agreement with Amazon Web Services (AWS) to optimize the digital enterprise to provide joint customers with elevated business insights and accelerated time to outcomes. In addition, we announced early access for joint Google Cloud customers to our latest platform innovations, powered by Grail™ enabling customers to benefit from the combined power of the Dynatrace platform with Google Cloud's cutting-edge infrastructure and AI capabilities. Industry and customer recognition: Dynatrace was named a Leader in The Forrester Wave™: AIOps Platforms, Q2 2025 report 2 with the highest score in the Current Offering category. Dynatrace was also named a Leader and Outperformer in the 2025 GigaOm Radar Report for Cloud Observability, highlighting the company's industry leadership and proven ability to help customers turn complex data into an asset by leveraging its AI-powered observability platform. In addition, Dynatrace has been named a Customers' Choice in the 2024 Gartner Peer Insights Voice of the Customer for Observability Platforms report. 3 Share Repurchase Program During the fourth quarter, Dynatrace spent $43 million to repurchase 787,000 shares at an average price of $53.99 under its $500 million share repurchase program. From the inception of the program in May 2024 through March 31, 2025, Dynatrace has repurchased 3.4 million shares for $173 million at an average price of $50.06. _________________________ 1 During fiscal 2025, Dynatrace completed an intra-entity asset transfer of the global economic rights of intellectual property (IP) from a wholly-owned U.S. subsidiary to a wholly-owned Swiss subsidiary, more closely aligning IP rights with business operations. The transfer generated an income tax benefit of $320.9 million, or $1.06 per share on a dilutive basis. 2 Forrester does not endorse any company, product, brand, or service included in its research publications and does not advise any person to select the products or services of any company or brand based on the ratings included in such publications. Information is based on the best available resources. Opinions reflect judgment at the time and are subject to change. For more information, read about Forrester's objectivity here. 3 Gartner, Peer Insights Voice of the Customer for Observability Platforms, By Peer Contributors, 24 December 2024. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, PEER INSIGHTS is a registered trademark of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved. Gartner Peer Insights content consists of the opinions of individual end users based on their own experiences, and should not be construed as statements of fact, nor do they represent the views of Gartner or its affiliates. Gartner does not endorse any vendor, product or service depicted in this content nor makes any warranties, expressed or implied, with respect to this content, about its accuracy or completeness, including any warranties of merchantability or fitness for a particular purpose. The Gartner content described herein (the 'Gartner Content') represents research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and is not a representation of fact. Gartner Content speaks as of its original publication date (and not as of the date of this Earnings Press Release), and the opinions expressed in the Gartner Content are subject to change without notice. Expand Full Year 2025 Financial Highlights (Unaudited – In thousands, except per share data) Year Ended March 31, 2025 2024 Revenue: Total revenue $ 1,698,683 $ 1,430,530 Year-over-Year Increase 19 % Year-over-Year Increase - constant currency (*) 20 % Subscription revenue $ 1,622,163 $ 1,359,354 Year-over-Year Increase 19 % Year-over-Year Increase - constant currency (*) 20 % GAAP Financial Measures: GAAP income from operations $ 179,433 $ 128,400 GAAP operating margin 11 % 9 % GAAP net income (**) $ 483,684 $ 154,632 GAAP net income per share - diluted (**) $ 1.59 $ 0.52 GAAP shares outstanding - diluted 303,602 299,280 Net cash provided by operating activities $ 459,419 $ 378,109 Net cash provided by operating activities as a percent of revenue 27 % 26 % Non-GAAP Financial Measures (*): Non-GAAP income from operations $ 493,540 $ 398,239 Non-GAAP operating margin 29 % 28 % Non-GAAP net income $ 422,313 $ 358,117 Non-GAAP net income per share - diluted $ 1.39 $ 1.20 Non-GAAP shares outstanding - diluted 303,602 299,280 Free Cash Flow 430,617 346,382 Free Cash Flow margin 25 % 24 % * For additional information, please see the "Non-GAAP Financial Measures" and "Definitions - Non-GAAP and Other Metrics" sections of this press release. ** For additional information, please see note 1 of this press release. Expand Financial Outlook Based on information available as of May 14, 2025, Dynatrace is issuing guidance for the first quarter and full year fiscal 2026 in the table below. This guidance is based on foreign exchange spot rates as of May 12, 2025. The total foreign exchange tailwind for fiscal 2026 is expected to be approximately $20 million on ARR and $17 million on revenue. This guidance also excludes the impact of any share repurchases during fiscal 2026. Growth rates for ARR, Total revenue, and Subscription revenue are presented in constant currency to provide better visibility into the underlying growth of the business. All growth rates are compared to the first quarter and full year of fiscal 2025 ended March 31, 2025 unless otherwise noted. (In millions, except per share data) First Quarter Fiscal 2026 Full Year Fiscal 2026* ARR - $1,975 - $1,990 As reported - 14% - 15% Constant currency - 13% - 14% Total revenue $465 - $470 $1,950 - $1,965 As reported 17% - 18% 15% - 16% Constant currency 16% - 17% 14% - 15% Subscription revenue $445 - $450 $1,865 - $1,880 As reported 17% - 18% 15% - 16% Constant currency 16% - 17% 14% - 15% Non-GAAP income from operations $130 - $135 $560 - $570 Non-GAAP operating margin 28% - 28.5% 29% Non-GAAP net income $111 - $116 $481 - $494 Non-GAAP net income per diluted share $0.37 - $0.38 $1.56 - $1.59 Diluted weighted average shares outstanding 304 - 305 309 - 310 Free cash flow - $505 - $515 Free cash flow margin - 26% *Guidance growth rates rounded to the nearest percentage point. Expand Conference Call and Webcast Information Dynatrace will host a conference call and live webcast to discuss its results and business outlook at 8:00 a.m. Eastern Time today, May 14, 2025. To access the conference call from the U.S. and Canada, dial (866) 405-1247, or internationally, dial (201) 689-8045 with event confirmation #: 13753227. The call will also be available live via webcast on the company's website, An audio replay of the call will also be available until 11:59 p.m. Eastern Time on August 12, 2025 by dialing (877) 660-6853 from the U.S. or Canada, or for international callers by dialing (201) 612-7415 and entering event confirmation #: 13753227. In addition, an archived webcast will be available at We announce material financial information to our investors using our Investor Relations website, press releases, SEC filings and public conference calls and webcasts. We also use these channels to disclose information about the company, our planned financial and other announcements, attendance at upcoming investor and industry conferences, and for complying with our disclosure obligations under Regulation FD. Non-GAAP Financial Measures & Key Metrics In addition to disclosing financial measures prepared in accordance with GAAP, this press release and the accompanying tables contain certain non-GAAP financial measures as defined by Regulation G, including non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, and free cash flow. We also use or discuss non-GAAP financial measures in conference calls, slide presentations and webcasts. We use these non-GAAP financial measures for financial and operational decision-making purposes, and as a means to evaluate period-to-period comparisons and liquidity. We believe that these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Our non-GAAP financial measures may not provide information that is directly comparable to similarly titled metrics provided by other companies. Non-GAAP financial measures are defined in this press release and the tables included in this press release include reconciliations of historical non-GAAP financial measures to their most directly comparable GAAP measures. We also include non-GAAP financial measures in our financial outlook included in this press release. Reconciliations of forward-looking non-GAAP income from operations, non-GAAP net income, non-GAAP net income per diluted share, and free cash flow guidance to the most directly comparable GAAP measures are not available without unreasonable efforts due to the high variability, complexity, and low visibility with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of share-based compensation expense, employer taxes and tax deductions specific to equity compensation awards that are directly impacted by future hiring, turnover and retention needs, as well as unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results. Definitions - Non-GAAP and Other Metrics Annual Recurring Revenue (ARR) is defined as the daily revenue of all subscription agreements that are actively generating revenue as of the last day of the reporting period multiplied by 365. We exclude from our calculation of ARR any revenues derived from month-to-month agreements and/or product usage overage billings. Constant Currency amounts for ARR, Total Revenue and Subscription Revenue are presented to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign exchange rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Non-GAAP Income from Operations is defined as GAAP income from operations adjusted for the following items: share-based compensation; employer payroll taxes on employee stock transactions; amortization of intangibles; transaction, restructuring and other non-recurring or unusual items that may arise from time to time. The related margin is non-GAAP income from operations expressed as a percentage of total revenue. Non-GAAP Net Income is defined as GAAP net income adjusted for the following items: income tax expense/benefit; non-GAAP effective cash taxes; net interest expense and income; net cash received from and paid for interest; share-based compensation; employer payroll taxes on employee stock transactions, amortization of intangibles; gains and losses on currency translation; and transaction, restructuring and other non-recurring or unusual items that may arise from time to time. Non-GAAP net income per diluted share is calculated as non-GAAP net income divided by the diluted weighted average shares outstanding used to compute GAAP net income per diluted share. Free Cash Flow is defined as the net cash provided by or used in operating activities less capital expenditures, reflected as purchase of property and equipment and capitalized software additions in our financial statements. The related margin is free cash flow expressed as a percentage of total revenue. About Dynatrace Dynatrace (NYSE: DT) is advancing observability for today's digital businesses, helping to transform the complexity of modern digital ecosystems into powerful business assets. By leveraging AI-powered insights, Dynatrace enables organizations to analyze, automate, and innovate faster to drive their business forward. To learn more about Dynatrace, visit visit our blog and follow us on LinkedIn and X @dynatrace. Cautionary Language Concerning Forward-Looking Statements This press release includes certain 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the benefits that we believe organizations receive from using Dynatrace, our focus on delivering extraordinary customer value, generating strong profitability and free cash flow, and investing thoughtfully in strategic priorities to capture the substantial opportunities we see ahead, and our financial and business outlook, including our financial guidance for the first quarter and full year of fiscal 2026. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as 'will,' 'expects,' 'anticipates,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates' or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, our ability to maintain our revenue growth rates in future periods; market adoption of our product offerings; continued demand for, and spending on, our solutions; our ability to innovate and develop solutions that meet customer needs, including through Davis AI; the ability of our platform and solutions to effectively interoperate with customers' IT infrastructures; our ability to acquire new customers and retain and expand our relationships with existing customers; our ability to expand our sales and marketing capabilities; our ability to compete; our ability to maintain successful relationships with partners; security breaches, other security incidents and any real or perceived errors, failures, defects or vulnerabilities in our solutions; our ability to protect our intellectual property; our ability to hire and retain necessary qualified employees to grow our business and expand our operations; our ability to successfully complete acquisitions and to integrate newly acquired businesses and offerings; the effect on our business of the macroeconomic environment, associated global economic conditions and geopolitical disruption; and other risks set forth under the caption 'Risk Factors' in our Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, and our other SEC filings. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise. DYNATRACE, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) March 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 1,017,039 $ 778,983 Short-term investments 96,189 57,891 Accounts receivable, net 624,437 602,739 Deferred commissions, current 109,895 98,935 Prepaid expenses and other current assets 83,901 66,749 Total current assets 1,931,461 1,605,297 Long-term investments 51,648 46,350 Property and equipment, net 61,522 53,325 Operating lease right-of-use asset, net 67,479 61,390 Goodwill 1,336,435 1,335,494 Intangible assets, net 25,534 50,995 Deferred tax assets, net 529,550 138,836 Deferred commissions, non-current 95,297 93,310 Other assets 40,752 24,782 Total assets $ 4,139,678 $ 3,409,779 Liabilities and shareholders' equity Current liabilities: Accounts payable $ 27,286 $ 21,410 Accrued expenses, current 252,503 233,675 Deferred revenue, current 1,087,518 987,953 Operating lease liabilities, current 13,979 15,513 Total current liabilities 1,381,286 1,258,551 Deferred revenue, non-current 50,989 62,308 Accrued expenses, non-current 24,452 18,404 Operating lease liabilities, non-current 61,384 54,013 Deferred tax liabilities 419 1,013 Total liabilities 1,518,530 1,394,289 Shareholders' equity: Common shares, $0.001 par value, 600,000,000 shares authorized, 299,813,048 and 296,962,547 shares issued and outstanding at March 31, 2025 and 2024, respectively 300 297 Additional paid-in capital 2,370,563 2,249,349 Retained earnings (accumulated deficit) 284,927 (198,757 ) Accumulated other comprehensive loss (34,642 ) (35,399 ) Total shareholders' equity 2,621,148 2,015,490 Total liabilities and shareholders' equity $ 4,139,678 $ 3,409,779 Expand DYNATRACE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended March 31, 2025 2024 Cash flows from operating activities: Net income $ 483,684 $ 154,632 Adjustments to reconcile net income to cash provided by operations: Depreciation 19,236 15,499 Amortization 28,868 39,441 Share-based compensation 271,703 208,896 Deferred income taxes (392,942 ) (59,915 ) Other 2,035 11,216 Net change in operating assets and liabilities: Accounts receivable (24,026 ) (161,888 ) Deferred commissions (14,648 ) (23,520 ) Prepaid expenses and other assets (36,593 ) (47,401 ) Accounts payable and accrued expenses 31,534 37,896 Operating leases, net (231 ) 1,026 Deferred revenue 90,799 202,227 Net cash provided by operating activities 459,419 378,109 Cash flows from investing activities: Purchase of property and equipment (26,106 ) (26,459 ) Capitalized software additions (2,696 ) (5,268 ) Acquisition of businesses, net of cash acquired (100 ) (57,111 ) Purchases of investments (145,555 ) (104,210 ) Sales and maturities of investments 105,142 — Net cash used in investing activities (69,315 ) (193,048 ) Cash flows from financing activities: Payments of deferred consideration related to capitalized software additions (2,208 ) — Proceeds from employee stock purchase plan 21,159 19,472 Proceeds from exercise of stock options 20,995 31,191 Repurchases of common stock (172,618 ) — Taxes paid related to net share settlement of equity awards (18,958 ) — Net cash (used in) provided by financing activities (151,630 ) 50,663 Effect of exchange rates on cash and cash equivalents (418 ) (12,089 ) Net increase in cash and cash equivalents 238,056 223,635 Cash and cash equivalents, beginning of year 778,983 555,348 Cash and cash equivalents, end of year $ 1,017,039 $ 778,983 Expand DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands) Three Months Ended March 31, 2025 Non-GAAP income from operations: Cost of revenue $ 85,094 $ (9,659 ) $ (661 ) $ (734 ) $ — $ 74,040 Gross profit 360,071 9,659 661 734 — 371,125 Gross margin 81 % 83 % Research and development 103,285 (26,097 ) (1,637 ) — — 75,551 Sales and marketing 161,797 (19,855 ) (1,197 ) — (52 ) 140,693 General and administrative 52,062 (14,593 ) (475 ) — — 36,994 Amortization of other intangibles 13 — — (13 ) — — Income from operations $ 42,914 $ 70,204 $ 3,970 $ 747 $ 52 $ 117,887 Operating margin 10 % 26 % Expand Three Months Ended March 31, 2024 Non-GAAP income from operations: Cost of revenue $ 71,873 $ (6,962 ) $ (542 ) $ (4,230 ) $ — $ 60,139 Gross profit 308,975 6,962 542 4,230 — 320,709 Gross margin 81 % 84 % Research and development 84,271 (19,424 ) (1,055 ) — (26 ) 63,766 Sales and marketing 148,788 (16,939 ) (1,626 ) — (615 ) 129,608 General and administrative 47,338 (12,273 ) (392 ) — (2,431 ) 32,242 Amortization of other intangibles 5,455 — — (5,455 ) — — Income from operations $ 23,123 $ 55,598 $ 3,615 $ 9,685 $ 3,072 $ 95,093 Operating margin 6 % 25 % Expand DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands, except per share data) Three Months Ended March 31, 2025 2024 Non-GAAP net income: Net income $ 39,304 $ 37,944 Income tax expense (benefit) 16,400 (7,842 ) Non-GAAP effective cash tax (29,616 ) (16,618 ) Interest income, net (10,930 ) (11,024 ) Cash received from interest, net 10,776 10,926 Share-based compensation 70,204 55,598 Employer payroll taxes on employee stock transactions 3,970 3,615 Amortization of intangibles 747 9,685 Transaction, restructuring, and other 52 3,072 (Gain) loss on currency translation (1,860 ) 4,045 Non-GAAP net income $ 99,047 $ 89,401 Share count: Weighted-average shares outstanding - basic 299,441 296,264 Weighted-average shares outstanding - diluted 304,354 300,867 Shares used in non-GAAP per share calculations: Weighted-average shares outstanding - basic 299,441 296,264 Weighted-average shares outstanding - diluted 304,354 300,867 Non-GAAP net income per share: Net income per share - basic $ 0.13 $ 0.13 Net income per share - diluted $ 0.13 $ 0.13 Non-GAAP net income per share - basic $ 0.33 $ 0.30 Non-GAAP net income per share - diluted $ 0.33 $ 0.30 Expand Three Months Ended March 31, 2025 2024 Free Cash Flow: Net cash provided by operating activities $ 162,790 $ 131,672 Purchase of property and equipment (14,566 ) (9,797 ) Capitalized software additions (2,696 ) (613 ) Free Cash Flow $ 145,528 $ 121,262 Expand DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands) Year Ended March 31, 2025 Non-GAAP income from operations: Cost of revenue $ 320,192 $ (36,924 ) $ (2,447 ) $ (13,262 ) $ — $ 267,559 Gross profit 1,378,491 36,924 2,447 13,262 — 1,431,124 Gross margin 81 % 84 % Research and development 384,572 (100,866 ) (7,121 ) — (3 ) 276,582 Sales and marketing 605,599 (77,336 ) (4,186 ) — (158 ) 523,919 General and administrative 195,347 (56,577 ) (1,690 ) — 3 137,083 Amortization of other intangibles 13,540 — — (13,540 ) — — Income from operations $ 179,433 $ 271,703 $ 15,444 $ 26,802 $ 158 $ 493,540 Operating margin 11 % 29 % Expand Year Ended March 31, 2024 GAAP Share-based compensation Employer payroll taxes on employee stock transactions Amortization of intangibles Restructuring & other Non-GAAP Non-GAAP income from operations: Cost of revenue $ 266,453 $ (26,622 ) $ (2,058 ) $ (16,265 ) $ — $ 221,508 Gross profit 1,164,077 26,622 2,058 16,265 — Gross margin 81 % 85 % Research and development 304,739 (69,543 ) (5,446 ) — (26 ) 229,724 Sales and marketing 534,233 (65,762 ) (4,967 ) — (216 ) 463,288 General and administrative 174,412 (46,969 ) (1,517 ) — (8,155 ) 117,771 Amortization of other intangibles 22,293 — — (22,293 ) — — Income from operations $ 128,400 $ 208,896 $ 13,988 $ 38,558 $ 8,397 $ 398,239 Operating margin 9 % 28 % Expand DYNATRACE, INC. GAAP to Non-GAAP Reconciliations (Unaudited - In thousands, except per share data) Year Ended March 31, 2025 2024 Non-GAAP net income: Net income $ 483,684 $ 154,632 Income tax (benefit) expense (260,255 ) 283 Non-GAAP effective cash tax (118,154 ) (75,604 ) Interest income, net (48,281 ) (37,284 ) Cash received from interest, net 46,927 35,482 Share-based compensation 271,703 208,896 Employer payroll taxes on employee stock transactions 15,444 13,988 Amortization of intangibles 26,802 38,558 Transaction, restructuring, and other 158 8,397 Loss on currency translation 4,285 10,769 Non-GAAP net income $ 422,313 $ 358,117 Share count: Weighted-average shares outstanding - basic 298,384 294,051 Weighted-average shares outstanding - diluted 303,602 299,280 Shares used in non-GAAP per share calculations: Weighted-average shares outstanding - basic 298,384 294,051 Weighted-average shares outstanding - diluted 303,602 299,280 Non-GAAP net income per share: Net income per share - basic $ 1.62 $ 0.53 Net income per share - diluted $ 1.59 $ 0.52 Non-GAAP net income per share - basic $ 1.42 $ 1.22 Non-GAAP net income per share - diluted $ 1.39 $ 1.20 Expand Year Ended March 31, 2025 2024 Free Cash Flow: Net cash provided by operating activities $ 459,419 $ 378,109 Purchase of property and equipment (26,106 ) (26,459 ) Capitalized software additions (2,696 ) (5,268 ) Free Cash Flow 430,617 346,382 Expand
Yahoo
31-01-2025
- Business
- Yahoo
Dynatrace Inc (DT) Q3 2025 Earnings Call Highlights: Strong Revenue Growth and AI-Driven Demand
Annual Recurring Revenue (ARR): $1.65 billion, up 18% year-over-year. Net New ARR: $68 million on a constant currency basis. New Logos Added: 193 in Q3. Average ARR per New Logo: Over $140,000 on a trailing 12-month basis. Average ARR per Customer: Surpassed $400,000. Gross Retention Rate: Mid-90s. Net Retention Rate (NRR): 111% in Q3. Total Revenue: $436 million, up 20% year-over-year. Subscription Revenue: $417 million, up 21% year-over-year. Non-GAAP Gross Margin: 84%. Non-GAAP Operating Margin: 30%. Non-GAAP Net Income: $112 million or $0.37 per diluted share. Free Cash Flow: $38 million in Q3; $406 million on a trailing 12-month basis. Share Repurchase: 732,000 shares for $40 million at an average price of $54.64. Full Year ARR Growth Guidance: $1.705 billion to $1.715 billion, representing 16% to 16.5% growth year-over-year. Full Year Total Revenue Growth Guidance: $1.686 billion to $1.691 billion, representing 19% growth year-over-year. Full Year Subscription Revenue Growth Guidance: $1.609 billion to $1.614 billion, representing 20% growth year-over-year. Full Year Non-GAAP Operating Margin Guidance: 28.5% to 28.75%. Full Year Non-GAAP EPS Guidance: $1.36 to $1.37 per diluted share. Full Year Free Cash Flow Guidance: $415 million to $420 million, representing a 25% margin. Warning! GuruFocus has detected 7 Warning Sign with DOV. Release Date: January 30, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Dynatrace Inc (NYSE:DT) outperformed its guidance across all top line and profitability metrics, showcasing strong execution and demand for its AI-powered observability platform. Annual Recurring Revenue (ARR) grew 18% year-over-year, and subscription revenue increased by 21% year-over-year. The company is seeing significant traction with its Dynatrace Platform Subscription (DPS) licensing model, which now represents over 35% of its customer base and 55% of ARR. Dynatrace Inc (NYSE:DT) is benefiting from increased customer interest in end-to-end observability and tool consolidation, with deals greater than $1 million growing 55% year-over-year. The company is experiencing strong growth in its log management solutions, with over 1,000 customers leveraging these solutions, up 17% compared to the previous quarter. Net new ARR on a constant currency basis was down modestly from the same period last year. The company is facing challenges in the commercial segment, with lower expansion levels compared to strategic accounts. There is increased variability in close timing and deal certainty due to the trend of larger and more strategic deals. The strength of the US dollar is creating a sizable headwind, with an expected FX impact of $38 million to ARR and $17 million to revenue. Dynatrace Inc (NYSE:DT) has a high percentage of sales reps with less than one year of tenure, which may impact sales productivity in the short term. Q: Can you provide more details on the on-demand consumption model and its impact on Q4 guidance and fiscal 2026? A: Jim Benson, CFO, explained that the on-demand consumption model is evolving as expected, with customers consuming at twice the rate of those on the SKU-based platform. For Q4, they modeled mid-single digits for on-demand consumption, acknowledging its variability. For fiscal 2026, they anticipate on-demand consumption to grow as DPS grows, impacting subscription revenue positively. Q: How does the on-demand consumption model affect the net retention rate (NRR) trajectory? A: Jim Benson noted that on-demand consumption is not included in ARR or NRR metrics, which only account for contractually committed revenue. However, DPS customers are expanding at a greater rate than SKU-based customers, suggesting potential NRR accretion over time as DPS matures. Q: Can you elaborate on the traction Dynatrace is seeing with AI-related tools and their impact on revenue? A: Rick McConnell, CEO, highlighted that AI is a significant tailwind, driving data complexity and the need for sophisticated observability platforms. Dynatrace's AI observability capabilities are gaining traction across various sectors, with hundreds of customers already using them, indicating a positive impact on revenue. Q: What are the expectations for ARR growth in Q4, and how does it relate to the DPS model? A: Jim Benson stated that the ARR guidance for Q4 reflects a prudent approach due to the funnel's heavy weighting towards large strategic deals, which introduces variability in close timing and deal certainty. The DPS model's on-demand consumption dynamic also influences ARR growth expectations. Q: How are the go-to-market changes impacting sales productivity, and what are the expectations moving forward? A: Jim Benson mentioned that while productivity improvements are not yet evident, they are seeing positive indicators like improved rolling four-quarter pipeline and deal closures in strategic accounts. They continue to focus on tuning the commercial segment to enhance expansion levels. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
