Latest news with #RickMcConnell
Yahoo
6 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.
Yahoo
23-05-2025
- Yahoo
Search underway in south central Kansas for missing Overland Park woman
OVERLAND PARK, Kan. — An 81-year-old Overland Park woman, Jerry McConnell, has been missing for a week now. Her son, Rick McConnell, says he filed the report last Friday after she didn't make it back to Overland Park from Harrisonville, Missouri. Accused shooter charged in Washington D.C. Jewish museum shooting 'There have been a lot of people who have put an enormous amount of effort to try to find my mother, and unfortunately, it hasn't panned out yet, but they haven't given up,' he said. 'Everyone keeps reminding us that even after this amount of time, she could still be found alive, so that's just what we are hoping for.' He believes she may have gotten lost on the drive back to Overland Park. 'It is incredibly apparent that she just got lost, turned around, passing the same intersection multiple times, many times, so close to her retirement community, but never quite made it there,' he added. Her vehicle, a grey 2009 Honda Accord, was found in Cowley County, Kansas, which is south of Wichita, and hours away from her residence in Overland Park, Kansas.'Basically, all hands are on deck. We are still looking for her. We've located her vehicle. She was not inside her vehicle,' Officer John Lacy, the Overland Park Police Department's Public Information Officer, shared. Sheriff Dave Falletti, with the Cowley County Sheriff's Office, says once the vehicle was recovered, a search was immediately started for her. The area it was found in has been searched by helicopters, drones, horses, side-by-sides, four-wheelers, trackers, specialized dog teams and water rescue units, the Cowley County Sherriff's Office .Now, dozens of volunteers have been requested for a full-grid search Thursday. It took place Thursday morning in the 4000 block of 327th Road, Cambridge, Kansas. Johnson County woman among victims shot near DC Jewish museum McConnell is a Tallgrass Creek resident in Overland Park. She's lived there since August of 2024 The retirement community sent FOX4 the following statement: 'At Tallgrass Creek, the well-being of all who live and work at our community is always our highest priority. We are deeply concerned about Jerry, a Tallgrass Creek resident, and our thoughts and prayers remain focused on her safety. We are committed to continuing to work closely with authorities and supporting the resident's family in all search efforts.' Sheriff Falletti, of Cowley County, says the terrain where the search is being conducted is vast and hilly and on private property. He's hopeful, though she's survived after being missing for a week. 'If she is no longer with us here on this Earth, she knew she was headed to a better place,' her son Rick shared. 'First thing would be that we find Jerry alive and whatever level of well she can be after a week, but if that doesn't pan out, then obviously some sort of resolution for myself and my sister.' Rick McConnell has commended law enforcement and their efforts, from Overland Park to Cowley County. Quindaro Townsite designated as National Historic Landmark 'Once this got in the hands of the Overland Park Police Department, and their detective, things really started to progress quickly, but we had from Friday night, all day Saturday, all day Sunday, nothing happened because there was no detective assigned to this.' If you see Jerry McConnell, please call 9-1-1 immediately. If you have other information about her whereabouts, call the Overland Park Police Department at (913)-895-6300. O.P.P.D says there is evidence that Ms. McConnell was last near Severy, KS on the afternoon of 5/15/25. Investigators share she is also considered an 'at-risk' adult. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
15-05-2025
- Business
- Yahoo
Q4 2025 Dynatrace Inc Earnings Call
Noelle Faris; Vice President of Investor Relations; Dynatrace Inc Rick McConnell; Chief Executive Officer, Director; Dynatrace Inc James Benson; Chief Financial Officer, Senior Vice President, Treasurer; Dynatrace Inc Patrick Colville; Analyst; Scotiabank GBM Matt Hedberg; Analyst; RBC Capital Markets Wealth Management Brent Thill; Analyst; Jefferies Rob Owens; Analyst; Piper Sandler Raimo Lenschow; Analyst; Barclays Capital Inc. Kast Rangan; Analyst; Goldman Sachs Andrew Nowinski; Analyst; Wells Fargo Securities, LLC Sanjit Singh; Analyst; Morgan Stanley Pinjalim Bora; Analyst; J.P. Morgan Securities LLC Will Power; Analyst; Robert W. Baird & Co., Inc. Jacob Roberge; Analyst; William Blair & Company, L.L.C. Keith Bachman; Analyst; BMO Capital Markets Operator Greetings, and welcome to the Dynatrace fourth-quarter and full-year fiscal 2025 earnings conference call and webcast. (Operator Instructions) As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Noelle Faris, Vice President, Investor Relations. Noelle, please go ahead. Noelle Faris Good morning, and thank you for joining Dynatrace's fourth-quarter and full-year fiscal 2025 earnings conference call. Joining me today are Rick McConnell, Chief Executive Officer; and Jim Benson, Chief Financial Officer. Before we get started, please note that today's comments include forward-looking statements such as statements regarding revenue, earnings guidance and economic results may differ materially from our expectations due to a number of risks and uncertainties discussed in Dynatrace's SEC filings, including our most recent quarterly report on Form 10-Q and our upcoming annual report on Form 10-K that we plan to file later this month. The forward-looking statements contained in this call represent the company's views on May 14, assume no obligation to update these statements as a result of new information, future events or circumstances. Unless otherwise noted, the growth rates we discuss today are non-GAAP, reflecting constant currency growth and per share amounts are on a diluted will also discuss other non-GAAP financial measures on today's call. To see reconciliations between non-GAAP and GAAP measures, please refer to today's earnings press release and supplemental presentation, which are both posted in the Financial Results section of our IR web with that, let me turn the call over to our Chief Executive Officer, Rick McConnell. Rick McConnell Thanks, Noelle, and good morning, everyone. Thank you for joining us for today's call. Dynatrace delivered a strong finish to fiscal 2025, having achieved several noteworthy milestones and accomplishments. Subscription revenue grew 20%. We surpassed $1.7 billion in ARR and $1 billion in DPS expanded our non-GAAP operating margin by more than 100 basis points and our pretax free cash flow margin by roughly 250 basis points, emphasizing the strength of our balanced business model. We surpassed 4,000 customers and 5,000 announced major platform innovations, including Grail for GCP, observability for developers, preventive operations, cloud security posture management, AI-powered log management and analytics and AI observability to name just a few. And we were consistently named a leader in all major analyst reports for observability and AI Ops over the past year. Today, I'm going to cover my perspective on the observability market, growth, tailwinds and opportunities our agenetic AI vision and the growing criticality of business begin with the market. While we are clearly in an uncertain economic environment, we continue to see strength in the observability market as virtually all organizations aspire to have their software work perfectly, just as our vision imagines. And now more than ever, customers need to deliver improved productivity and a better user experience at lower cost, which is precisely our value proposition. As such, we see observability spend continuing to be a priority. Additionally, cloud growth remains are now generating nearly $250 billion in annualized revenue growing in the mid-20s. And as organizations accelerate cloud and AI native initiatives, the need for AI-powered observability at scale has never been greater. We expect to see materially greater penetration in the coming year into hyperscaler workloads, where we expect the majority of observability market growth to occur, and we are innovating to capture this next major platform release planned for June will further empower cloud and AI native teams to expand their AI Ops and preventive operations. These new capabilities will provide development teams with easy access to hyperscaler and Kubernetes telemetry, leverage Davis to analyze all data with AI assistance and leverage Davis Copilot for remediation workflows or instant believe these secular tailwinds will fuel an addressable market opportunity that we now size at $65 billion in observability and application security. Beyond these market dynamics, I'd like to talk next about four key Dynatrace growth drivers. Each of these represents an intentional area of focus to drive consumption growth across the Dynatrace are the ongoing investments in our go-to-market efforts, including customer segmentation, partner enablement, and expanding our sales motion beyond application performance to include end-to-end observability and cloud modernization. We kicked off these initiatives at the beginning of fiscal 2025 and they continue to gain expect them to drive sales productivity gains in fiscal 2026. We've seen a consistent trend in total pipeline growth, driven primarily by strength in strategic accounts, where pipeline was up 45% compared to last year, highlighting the traction in our customer segmentation efforts. More than 80% of our ACV closed in the quarter were partner influenced with over 40% of those coming from GSIs and the expansion of our sales motion beyond our proven land-and-expand approach resulted in more than 50% of our anchor deals in the quarter, driving end-to-end observability. These investments are gaining traction and contributed to large deal closures in the quarter, including 15 deals with incremental ACV of over $1 our Dynatrace Platform Subscription or DPS licensing model continues to build momentum with over 40% of our customer base and more than 60% of ARR leveraging this approach as of the end of the fourth quarter. With access to the full platform, customers are adopting Dynatrace more broadly across their IT environments, resulting in increased expect this DPS adoption to materialize over time in early expansions or on-demand consumption beyond customer commit levels. Third is the massive opportunity in log management. We believe the logs market remains ripe for disruption, given expensive legacy solutions that largely operate independently from existing observability tools and result in lower unique approach to log management and analytics integrates logs, traces, metrics and other core observability and security data types into a single platform, providing a holistic view of the help of IT ecosystems. Combined with our AI approach, teams can derive greater value from logs faster and at lower Grail as our massively parallel processing data lake house, logs can then contribute near real-time insights at enormous scale. We are seeing strong adoption of our log management offering with 1/3 of our customers now using this solution. The number of customers leveraging logs is up 18% compared to last quarter, plus nearly half of our new logos added in the fourth quarter are deploying logs in their initial implementation compared to roughly 20% in the same quarter last finally, in what could arguably be our largest growth opportunity, the AI revolution is upon us. So I'd like to turn to that next. As you know, AI is evolving into a whole new era where systems can plan, make decisions and take action autonomously. According to IDC, by 2029, [GenAI-based] software testing tools capable of writing 85% of tests will be augmented by AI agents and agentic workflows. And we expect that as much as 80% or more of developers' time is spent ensuring that code is running properly in production by securing debugging and optimizing many ways, this is exactly what Dynatrace was purpose-built to enable and it represents a massive opportunity. We were pleased to see that Forrester recently recognized Dynatrace as a leader in AIOps with the highest score in the Current Offering mission for many years has been to deliver answers and intelligent automation from data, well beyond dashboards and root cause analysis. Automation is enabled by an autonomous system that can recommend and then carry out action based upon trustworthy, deterministic conclusions from context-rich data. And agentic AI is the architectural approach for that our AI native platform is what sets Dynatrace apart from our peers. And we believe that as a result of this market evolution, it will become an even bigger differentiator in the future. In fact, Dynatrace has been investing in advancing our capabilities to evolve into a fully agentic AI platform that can automatically remediate, protect and optimize without the need for human intervention. A true agentic platform must be able to make intelligent decisions to act in real time. We postulate this requires various core need a common data lake house to store all data types in context for accuracy, performance and scale without manual tagging. You must be able to act in real time without limitations of predefined schemas or indexing. You need causation of data, not correlation, to deliver answers that are trustworthy and need a combination of AI techniques, including causal, predictive and generative AI to facilitate the discovery and prediction of issues to provide these answers. And in autonomously preventing and remediating issues as well as optimizing cloud-native workloads, an agentic AI system needs to delegate and handle tasks not only on its own, but also to an ecosystem of AI believe Dynatrace is uniquely positioned to lead in this space with Grail. Our indexless schema-free lake house designed for real-time intelligent AI automation at scale. Today, we already provide the knowledge, memory, reasoning, planning and actioning to meet the heightened requirements of an agentic AI knowledge is fueled by one agent collecting all data types in context, normalized with our semantic dictionary cleansed, protected and then ingested through open pipeline. Grail provides instant access petabytes of short- and long-term data in context, the real-time memory to enable AI queries. Davis leverages the combination of causal predictive and generative AI to handle the AI copilot can then intelligently plan actions based on context and reasoning. And finally, our automation engine is able to take action, autonomously executing tasks and collaborating with third-party AI agents. We plan to continue to innovate aggressively to meet the needs of the rapidly evolving AI landscape. I'd like to next turn to business observability. As the AI landscape continues to evolve, so too have our customers' needs for a more sophisticated observability want more than technical analytics. Organizations want to use observability solutions to help them understand core business metrics. Business observability provides precise answers to help customers address not only operational issues, such as cost reduction and risk mitigation, but also customer-centric issues such as optimizing user experience and driving example, a large cruise ship operator is using Dynatrace to enable an exceptional on-ship experience for passengers. They begin with the core user experience as they want to track and then drill down into micro services and technical analytics rather than the other way many such customer deployments, our platform is playing an increasing role in our differentiation. Only Dynatrace captures business events in context with other data types, enabling quick and easy querying rich visualization dashboards and business-driven automation. (inaudible)I'd like to welcome Steve McMahon to Dynatrace as our new Chief Customer Officer, replacing Matthias Dollentz-Scharer, who is retiring from the company. I wish Matthias well after an incredible career here over the past decade, and I am delighted with Steve's employment as his background and observability and security at Splunk, CrowdStrike and Zscaler provides him a terrific foundation or a rapid ramp. To wrap up, our market opportunity is stronger than have several Dynatrace specific drivers supporting our growth. We have a significantly differentiated AI-powered observability platform that is leading the way toward us delivering a highly differentiable genic observability platform. We are increasingly bringing customers deep business insights. And we have a compelling business model which has enabled us to deliver a sustained balance of growth and profitability. Jim, over to you. James Benson Thank you, Rick, and good morning, everyone. Q4 was a strong finish to fiscal '25. Once again, we exceeded the high end of guidance across all top line growth and profitability metrics. Our ability to execute successfully in this dynamic environment is a testament to the growing criticality of observability and security in the market, our highly differentiated AI-powered platform, our ability to demonstrate exceptional business value and ROI for our customers, and the predictability and durability of our business model. Fiscal '25 was a pivotal year in evolving our go-to-market model and driving broader usage of the platform across our customer our flexible, scalable and frictionless DPS licensing model, we have made it easy for a growing number of customers to gain full access to the platform and adopt Dynatrace more extensively within their IT environments, including capturing more usage of our emerging and adjacent solutions. This journey continues in fiscal ' review the results in more detail. Growth rates mentioned will be year over year and in constant currency, unless otherwise stated. Annual recurring revenue, or ARR, ended the year at $1.73 billion, representing 17% growth, slightly above the high end of guidance driven by steady expansion bookings, including a number of seven-figure ACV vendor consolidation added 171 new logos in Q4, up slightly from a year ago, as we remain focused on landing enterprise accounts with a higher propensity to expand. The average new logo land size remains healthy at $130,000 on a trailing 12-month basis, highlighting the market trend away from ineffective point solutions and towards software providers like Dynatrace with platform breadth and customers experience the benefits of the Dynatrace platform, they have been quick to expand their usage. Our average ARR per customer continues to grow and is now well over $400,000, highlighting the incremental adoption of the platform and inherent business value we provide to customers. Given the significant cross-sell and upsell opportunities in our enterprise customer base, we believe the average ARR per customer opportunity could be $1 million or more over the long gross retention rate in Q4 remained in the mid-90s, demonstrating the strategic relevance for the Dynatrace platform as a mission-critical component of our customers' operations. Net retention rate or NRR was 110% in the fourth quarter. Customer penetration of our DPS licensing model is gaining traction. As Rick noted, we exited Q4 with over 40% of our customer base on DPS, more than doubling the number of DPS customers during fiscal '25. Further, DPS customers now contribute over 60% of our ARR, representing more than $1 expectation when we launched DPS was that customers with full access to the platform would leverage more capabilities and extend Dynatrace more broadly into their IT environment, and we have seen this thesis play out. For example, DPS customers consume, on average, 12 capabilities compared to five capabilities for SKU-based terms of usage volumes on the platform, customer consumption growth rates are 2x the rate of SKU-based customers and leading to much higher expansion rates. As a result, the average ARR per DPS customer is over $600,000, well above the company average. While consumption growth takes time to translate into subscription revenue or ARR growth, these robust DPS penetration and platform consumption trends are positive indicators for future top line we shared last quarter, as DPS has matured and scaled it's customer-friendly approach to pricing, which was -- which does not penalize customers for exceeding commitments, is leading some customers to consume on-demand instead of renewing or expanding Q4, on-demand consumption revenue or ODC, was $9 million, up from $7 million in Q3 and bringing trailing 12-month ODC revenue to $21 million. ODC is another lever for subscription revenue growth in addition to new logo and expansion bookings. However, this revenue is not captured in our NRR or ARR metrics, which only include contractually committed revenue. Moving on to revenue for Q4 was $445 million, growing 19% and exceeding the high end of our guidance range by 200 basis points. Subscription revenue for Q4 was $424 million, up 20% and similarly exceeding our guidance aided by strength in ODC revenue. Turning to profitability. Q4 non-GAAP operating margin was 26%, exceeding the top end of guidance by over 100 basis points, driven by revenue upside flowing to the bottom line. Non-GAAP net income was $99 million or $0.33 per diluted share, $0.02 above the high end of to a quick summary of the full year results. Total revenue was $1.7 million, and subscription revenue was $1.62 billion, both growing 20%. Full year non-GAAP operating margin was 29%, 25 basis points above the high end of guidance and 120 basis points above fiscal '24, demonstrating our ability to drive leverage in the business model while still investing for growth. Non-GAAP net income for the year was $422 million or $1.39 per diluted share. Our non-GAAP earnings factor in an effective cash tax rate of 22%.Full year free cash flow was $431 million or 25% of revenue, 50 basis points above the high end of guidance and 100 basis points above fiscal '24. As a reminder, this strong cash flow margin result includes absorbing nearly 700 basis points of impact due to cash taxes. Adjusting for cash taxes, pretax free cash flow for fiscal '25 was 32% of revenue, an improvement of nearly 250 basis points compared to fiscal '24. Turning to the balance sheet. As of March 31, we had nearly $1.2 billion of cash and investments and 0 Q4, we repurchased 787,000 shares for $43 million as part of our opportunistic share repurchase program. Since the inception of the program, in May 2024 through March 31, 2025, we have repurchased 3.4 million shares for $173 million with approximately $327 million remaining of the $500 million authorization. Let's turn to guidance. As always, we continue to manage the business in a measured manner, and our prudent approach to guidance remains unchanged. We are mindful of the fluid nature of the geopolitical and macro we have not seen any notable impacts in demand or close rates to date, we expect enterprises to remain careful in their spending, and our approach to guidance assumes an incremental level of caution in terms of budget scrutiny and sales cycle lag throughout fiscal ' that as context, let's start with our guidance for the full year. We expect ARR to be between $1.975 billion and $1.99 billion representing ARR growth of 13% to 14%. While we don't guide to ARR on a quarterly basis, we expect quarterly seasonality of net new ARR to be similar to the last three years. Turning to expect total revenue to be between $1.95 billion to $1.965 billion, up 14% to 15%. Underlying that, subscription revenue is expected to be between $1.65 billion and $1.88 billion, also up 14% to 15%. Within subscription revenue, we are assuming an ODC revenue contribution of $30 million. Since ODC is uncommitted, dependent on many factors and our history is somewhat limited, we are being appropriately conservative with our initial ODC assumption for the year. Our fiscal '26 guidance is based on foreign exchange spot rates as of May 12, 2025, representing an FX tailwind to ARR and revenue of $20 million and $17 million, expect non-GAAP operating income to be between $560 million and $570 million, resulting in a non-GAAP operating margin of 29% for the year. We will continue prioritizing investments in R&D, sales capacity, customer success and our partnership programs while driving further scale and efficiency in other areas. We expect non-GAAP net income to be $481 million to $494 million, resulting in a non-GAAP EPS of $1.56 to $1.59 per diluted share based on 309 million to 310 million shares estimate our fiscal '26 effective cash tax rate to be 19%, down from 22% in fiscal '25 due primarily to the benefit of the IP transfer I mentioned last quarter. We expect free cash flow to be between $505 million and $515 million or 26% of revenue, a 100 basis point improvement from fiscal '25 a full cash taxpayer, we believe the best way to benchmark our cash flow generation is on a pretax basis. as most software peers pay minimal cash taxes. Adjusting for cash taxes, pretax free cash flow margin is expected to be 32% in fiscal ' a helpful reminder for your modeling, due to seasonality and variability in billings, we expect free cash flow to be significantly higher in the first and fourth quarters and significantly lower in the second and third quarters. Looking to Q1, we expect total revenue to be between $465 million and $470 million, and subscription revenue is expected to be between $445 million and $450 million, both growing 16% to 17%.Non-GAAP operating income is expected to be between $130 million and $135 million or 28% to 28.5% of revenue. Lastly, non-GAAP EPS is expected to be $0.37 to $0.38 per diluted share based on a share count of 304 million to 305 million closing, the strength of our Q4 and fiscal '25 performance sets a solid foundation for fiscal '26. The secular growth driver is fueling the observability market are unchanged and our AI-powered end-to-end platform differentiates us and puts us in a strong competitive position. The fundamentals of the business are increasingly being driven by consumption, and we are investing to fuel that have a strong track record of consistent execution. We are committed to maintaining a disciplined approach to optimizing costs and improving efficiency. At the same time, we will continue to invest in future growth opportunities that we expect will drive long-term value. With that, we will open the line for questions. Operator? Operator (Operator Instructions) Patrick Colville, Scotiabank. Patrick Colville I'm going to ask this one to both Rick and Jim. In our field work, logs is performing very well, was interesting to hear in your prepared remarks, similar commentary. If I rewind back to this time last year, the logs target for $100 million of ARR was pushed out slightly. So I guess, could you kind of wrap around some quantitative context to that qualitative logs commentary? And any update if possible on where we are versus that target and what we should expect in fiscal '26 in logs? James Benson Good question, Patrick. We're very pleased with logs. We have over 1/3 of our customers now leveraging our log solutions. So it continues to grow. As you can imagine, it varies for customers that are using it pretty significantly and customers that are just starting with the fastest-growing product category in the company, it has been. And for the $100 million goal, just to remind you that, that's kind of a -- because it's a consumption-oriented goal, not an ARR goal because with DPS contracts, we don't exactly know what the customers consuming until they consume the $100 million ambition, we have high confidence we will exceed that in fiscal '26. And it is a business just to give you just some rough numbers, that business will grow well over 100% in fiscal '26. Rick McConnell I would just add, Patrick, that we had a pretty substantial upgrade wave in the logs capability back in the October time frame. And that's when we really saw logs begin to accelerate. So we're excited about what we've seen. We like the metrics of more than $100 million in consumption this year, as Jim said. And at that growth rate of north of 100%, we were quite optimistic about the business to come this year. Operator Matt Hedberg, RBC. Matt Hedberg Rick, I wanted to drill into the go-to-market. It looks like you had a lot of success this past year with GSIs and hyperscalers in particular. So that's great to see. I guess, first of all, how would you talk about sales productivity? You guys obviously made a lot of changes last year, including new six-month quotas and you also realigned some territories.I guess, how did that fare versus your expectations? And are there any other significant changes you're planning on making this year to kind of the go-to-market? Rick McConnell Yes. Let me take the first part, and I'll let Jim comment on sales productivity. On the first part, GSIs and hyperscalers are a fundamental part of our strategy. We have now grown our overall partners, as we said in the prepared remarks, to well more than 70% of our overall deployment in it gives us substantially greater reach to get to customers for deployments, implementations, management, so it gives us a bigger footprint to then attack those customer opportunities we look forward. GSI's are obviously very much aligned to our target customer base. So that's helpful. And as we shift our attention to cloud-native workloads as well as AI native workloads, those are all going to be present in the cloud, in which case, hyperscalers become incrementally more critical for us (inaudible) those we're fully leaned into partners. It remains a core element of the overall sales motion. Jim, do you want to comment on productivity? James Benson Yes. What I would say about the go-to-market update, is, I think, I would say we remain pleased with the progress. As a reminder, you mentioned a few of the changes, but the three big ones were we refocused to kind of wrapped more to higher propensity to spend customers. That's progressing well. Those accounts have doubled the pipeline and the pipeline in very good traction there. Obviously, pipeline is a precursor to a booking. Rick mentioned channels. We now have over 3/4 of our business that is leveraging a channel. We still want to continue to get some progress on (inaudible) originated, but good progress on then the sales play, the sales plays being the -- your traditional APM sales play, kind of a cloud-native workload sales play and end-to-end tool consolidation, again, doing very well -- doing very well particularly with tool we feel very good about it. I'd say maybe the one enhancement, Matt, that we're making for fiscal '26, everything else that I said remains unchanged, we are adding what we're calling strike teams. So these are teams of people that, one, are working, they're not specialist teams but they are strike teams that have a particular focus area. And the focus areas for our strike teams are, one, logs; two, application security and; three DEM, digital experience those three areas, we're going to have strike teams, and they're focused on driving adoption, driving consumption. You heard a lot in the opening remarks about the company underpinning is becoming more consumption and adoption oriented. Having these strike teams are going to help us fuel that growth on the go-to-market side. So we feel very good about that. Operator Brent Thill, Jefferies. Brent Thill Just on the strategic account growth, I think you mentioned over 45% pipeline growth just remind us, when have you seen that level of strength? And maybe to Matt's question on the close, the pipeline seems like it's growing at a much higher rate. When do the close rate start to come up to kind of match that pipeline growth you're seeing? James Benson Yes, it's a good question. I mean, I'd say you have the tailwinds and I'll say headwinds. On the tailwind side, I think that the demand environment continues to be pretty resilient. And so therefore, you're seeing that kind of in a broader pipeline. And the good news is these larger accounts, we're seeing a growing percentage of that said that, I'd say what's changed in the last maybe three months, and I'd say the macro environment is a bit more uncertain, I still think deals are going to get done. I think what we've tried to imply in this is that deals might take a little bit longer, especially when you're talking to large strategic accounts, especially for those that are considering some level of tool consolidation, those deals and those accounts take a little bit so I think that for us, the fuel is pipeline. And to remind you that again, about this notion of driving more consumption that with our business becoming more heavily weighted towards Dynatrace platform subscriptions, 60% of our ARR now and growing. The notion of driving adoption and consumption becomes much, much more important because that, by its definition, is a consumption-oriented model. It has the benefit of a ratable revenue recognition subscription model, but it's underpinnings are consumption. And so there's a bit of a reorientation within the I mentioned, strike teams, it's also our customer success teams around making investments to drive more consumption. Now there's a lag between consumption. And when you see it either show up in ARR or in subscription revenue through ODCs, but it is kind of a core underpinning of future growth for the company. And the good news is consumption is growing at a very rapid clip. Operator Rob Owens, Piper Sandler. Rob Owens Great. I'd love to pivot a little bit to the security opportunity. And what you think needs to happen to unlock it more broadly? Is this a function of product depth or more so go-to-market at this point? Rick McConnell I think it's a combination, Rob. We see good traction with our RVA solution for vulnerability analytics. We need to continue to extend our offerings in this area, expectations toward movement to CADR and cloud SIM type opportunities, I think, represents the next foundation of growth for us. So that's where we're looking. And of course, we've got Kubernetes and cloud security posture management, which is now available which we expect to grow as short form is a combination of expanded product offerings with which we are working in delivering the market as well as expanded go-to-market. Jim mentioned strike teams earlier. We have an AppSec strike team that is exclusively focused on the go-to-market part of this area as well. Operator Raimo Lenschow, Barclays. Raimo Lenschow Jim, you have the not so easy task to think about on the (inaudible) revenue for next year. Can you talk a little bit about how you went about it? Because obviously, as you said, you don't have a lot of historic data. Like how should we think about how you kind of frame that? James Benson It's a good question, Raimo. Obviously, if we kind of inserted in Q3 this notion of on-demand consumption becoming kind of a growing part of the growth story of the company, which is, again, underpinning this consumption point that I made we're a year into it, as you can imagine, with customers that have gone through at least the first cohort of customers that have gone through their annual reset periods. And so we've looked at how they behaved. We've looked at what are the -- think of it as the attach rate, how much of your business is going through an annual reset period by much is that growing? What is the kind of -- for lack of better word, ODC attach rate to what you've seen historically. So what we've done is we've tried to apply some analytics on that. And as I mentioned in my prepared remarks, because it's uncommitted and it -- you have to account for a bunch of factors, including do cohort classes for your first year cohorts behave the same way in year the new cohort classes behave the same way as the first year cohort classes. And so we did apply a level of kind of conservatism to that. We'll update you along the way. But that's kind of the general way that we framed it. We looked at it from a -- think of it as an attach rate perspective, but we built some caution knowing that cohort classes are going to behave a little bit differently. Operator Kash Rangan, Goldman Sachs. Kast Rangan Congrats on finishing up the fiscal year very solidly. As you look at the on-demand revenue, how do you trade off the upside where you want to do better? And maybe talk about the sales incentives that are going into the consumption aspect of the business versus, also at the same level, raising the bar for what is predictable and increasingly trying to get the upside into the customer contracts, so you lock them up and you get even more visibly. So trading off the upside versus the predictability at a higher level is what I wanted to get your thoughts on. James Benson Yes. Kash, that's a good question. As you can imagine, there's a bunch of variables within there. One of the things that we haven't done that we are doing this year, Kash, is that our customer success teams and the strike teams that we mentioned, they are exclusively measured on consumption and so it's a bit of a change where we now have dedicated teams of people that before we're working with customers on helping them in the adoption of our products and solutions, we now have a new team with these strike teams in addition to our core customer success so these from an incentive perspective, both of these teams, their measurement is on consumption. So again, my point about driving more adoption, driving more consumption. And as I said in my prepared remarks, we're already making tremendous traction, get customers on DPS as a contracting vehicle. And we have found they consume more -- they consume more of the platform, so they consume more of our solutions. They consume more so what we needed to do and the changes we made this year is to better fortify teams that are focused on driving consumption and adoption. And so that's the big focus, as you mentioned, that, that will show up in two ways. Ultimately, it will show up with maybe continued high growth in consumption and customers burn through their commitments earlier and either go to an on-demand consumption or in some cases, customers will renew a bit of timing delay for these, but again, kind of a core underpinning that we were trying to convey on this call is that consumption is becoming a growing kind of part of the narrative that we've historically been a kind of bookings, ARR oriented company. That's still this consumption notion is becoming more important for the company. And I'd say we're going through a bit of a transition and '26 will be that kind of the next phase of the transition that started in fiscal '26. Rick McConnell Yes, I would add to that, just to highlight, we are still a subscription business. But that said, we believe that especially in a DPS world, it really is about driving consumption. So to Jim's point, whether it is compensating on consumption for strike teams, our D1 services teams, our customer success teams, we see dramatically higher consumption in the DPS deployment. We believe that, that is a precursor to future revenue and subscription growth opportunity. And so that's where we're focused as a company. Operator Andrew Nowinski, Wells Fargo. Andrew Nowinski And a nice quarter results. I wanted to ask maybe on the net retention rates. So I know the ODC component seems to distort that real net retention rate given that it's not included in ARR. But I'm wondering given that it is a growing piece of your business, what would NRR look like if -- or would it have increased if you would use subscription revenue instead of ARR as part of the NRR calculation? And then how are you thinking about the trajectory of the net retention rate in fiscal '26? James Benson Yes, it's a good question. As you can imagine, the dynamics of NRR, as you said, there's a correlation between what is committed, which is an NRR and what is uncommitted, which is not an NNR. So NRR ticked modestly down. We're talking decimals from 111 to 110 from Q3 to Q4. But again, decimals that if you added in ODCs, which I kind of think about them as deferred ARR or deferred NRR actually, you would have seen a modest uptick in NRR in Q4 from Q3. Operator Sanjit Singh, Morgan Stanley. Sanjit Singh A bit higher level question. Kind of on your AI theme, Rick, in your script, we're hearing more about autonomous or maybe nearly autonomous SRE agents. Two questions there. One, any sort of trend line that you're seeing about customers wanting to move to this sort of operational cadence, having agents execute a lot of the observability workflows?And if that is the case, what do you think the impact is on overall observability demand and sort of how products are built if agents are going to be executing the workflows and an observability platform versus human SRE engineers? Rick McConnell That was a great question, Sanjit. And after about an hour, I will have answered it. The short form is we see the trend line absolutely moving and moving aggressively toward agentic AI broadly and specifically in observability. And the result of it is that what customers really want is they want the conclusion or fluctuation of our mission, which is to deliver answers and intelligent automation from data. What they've been getting in observability is the data part or the answers part but not the automation the way that we see this evolving is that through agentic observability or an agentic observability platform with Dynatrace they actually can now take action based on those answers. Well, that begins to get your second question on how does this occur?What we believe is that you need multiple different layers of capabilities to deliver a true agentic observability platform. You first need a completely integrated data link house in -- which we have in Grail which has all data types, log traces metrics, et cetera, in context in one unified data lake house. Secondly, you need a completely integrated Davis AI engine which we have that does causal predictive AI as well as generative AI to be able to deliver those answers that are you can trust the answer is then you need an automation engine which we have to then be able to execute those instructions within the observability environment. And finally, an area that we're beginning to work more (inaudible) on is to then extend that agentic set of protocols to third-party agents to be able to effectuate change in code, for it is a multilayered stack. We believe we have a foundation for success here that is unique in the observability industry, and we're all in on driving an genic future in observability utilizing Dynatrace. So this is a major, major thrust for us as we look to the future. Operator Pinjalim Bora, JPMorgan. Pinjalim Bora Congrats on the quarter. Jim, I just want to go back to a see a bit. How are you thinking of kind of the -- how should we, I guess, should think about the customer behavior and on-demand consumption going forward in this macro? And as you look towards kind of building the guide, how do you thread the needle between the assumptions around incremental ODC component versus last year's ODC leading to larger committed contracts? Rick McConnell Yes. It's a good question that I tried to answer a little bit of that with Raimo's question, which is the way we thought about ODCs that we thought about ODCs in the realm of looking at cohort classes, for classes that come up with their contract resets and looking even though our sample size is limited, it's four quarters, how did prior customers behave. We know that contract types vary a little bit. Some customers were in (inaudible). Some customers are we factored a bunch of things in. But we did apply some conservatism to it because by nature, it is uncommitted. Having said that, everything we've been talking about for the past 30 minutes has been about our focus on driving more consumption and adoption. So to the extent we can do that, you'll either see it hopefully show up in the form of ODC or in ARR. And relative to the macro, it's hard to judge, I'd say, right now, the fact that customers are using more of the platform would tell you that they're getting value out of so I think the criticality of observability is even greater now than it was kind of a year ago, especially with the evolution of things. But I'd say from a macro perspective, what you might find is you might find customers that maybe commit to a more finite number when they actually have a contractually committed they're willing to go into ODCs because, again, we don't penalize you for going over your consumption or your commitment, I should say. And so I think that it's actually good in a tighter macro environment because we're not doing something that pushes a customer to maybe throttle something, they can increase their adoption and we're not utilizing them for it. So it's actually a very kind of favorable vehicle in an environment that maybe customers will be a bit budget conscious. Operator Will Power, Baird. Will Power Okay. Great. Rick, you've called out the strength you're seeing in partner relationships from a go-to-market strategy perspective. And I think in your prepared remarks, you called out the expectation for material hyperscaler growth in particular. I wonder if you could just kind of drill down for us kind of what really is underpinning the confidence around the hyperscaler trends what you're seeing today versus what you've maybe seen in the past? Rick McConnell Well, a couple of things, Will. First, that is where we see the vast majority of the observability growth happening is in hyperscaler workloads. And given that, that's where the majority of the growth is happening in observability, the majority of customers want to take their contractual relationships through the hyperscalers because it utilizes their contractual total those relationships become seminal, I would say, in making sure that we have the most frictionless contract vehicle to be able to take orders for hyperscaler workloads, which is vastly increasing. Second thing is we either have entered or in the process of entering various different go-to-market relationships with the hyperscalers such as the one we recently announced with AWS with their SCA program to effectively engage in greater when we add the combination of co-sell plus teaming agreements with our other partners, we see very, very strong win rates. So this is one of the reasons we're pushing on it and one of the areas of acceleration potential as we see in FY26. Operator Jake Roberge, William Blair. Jacob Roberge Just on DPS -- great to hear those customers are still expanding at pretty healthy rates, can you talk about how behavior has trended across the different cohorts that you've onboarded on to DPS? I know early on, there may have been some selection bias there, but now that you've started to get a larger base of customers on the DPS, are you seeing those same types of expansion rates play out across the longer tail of the base? Rick McConnell Yes. I mean, it's a good question. I mean, I'd say broadly speaking, the answer is yes, you're right. The early cohort classes were customers that were SKU-based customers that were already pretty significant Dynatrace users, and they just wanted a better vehicle to better consume Dynatrace. But as we've added new cohort classes, we've seen kind of a broader behavior where customers are leveraging more of the so I'd say that what used to be kind of a sampling bias has become something that's played out across pretty broadly, which is, again, why our focus is get more customers on to DPS as a contracting vehicle, get our adoption teams oriented to try to drive more consumption. We have proven that when we do that, customers will burn through their commitments earlier and they either go through an ODC or they'll do an expansion. And so that's kind of the play that we're trying to run and we feel very good about the traction we made in fiscal '25. Operator Keith Bachman, BMO Capital Markets. Keith Bachman I also want to ask about DPS in two different guards. A, on the more near term, how are you thinking about the uptake rate for DPS in the next fiscal year? In other words, where do you think you'll end up either as a percent of customers or a percent of ARR?And then part B of the question is, one of the key benefits of DPS is the ability of customers to adopt your portfolio more rapidly just it reduces friction to buying. And I was wondering if you could just talk a little bit about how you're thinking about thereby portfolio expansion? And you have a couple of key building blocks, obviously, with Grail getting widespread adoption and AI, candidly probably requiring and enabling more part of the context of the question is Datadog candidly, just has a broader portfolio of solutions. And I just wanted to hear you speak a little bit about how you're thinking about your portfolio expansion given the building of the box and given DPS over -- not just the next year, but over the next number of years? James Benson Yes. So Keith, I'd hesitate to give you a percentage for fiscal '26 around percentage of DPS customers in ARR other than to say we expect it to continue to grow. I'd say longer term, we do expect, call it, 75% to 85% of our customers ultimately to go on to that. You probably won't get all of them. There will still be customers that want to stay on SKU-based vehicles, maybe government entities, things of that I'd say the objective longer term is we get 75% to 85%. So think of that as the vast majority of your business is going to be on this contracting vehicle. And your point about adoption is that is the fundamental premise of DPS. You get them on the -- to the DPS contract and be able to get full access to the platform. If you do look at the capabilities there, I would say that we have quite a few capabilities on the even though we're getting some level of penetration, even for us kind of new emerging areas, logs being kind of the most notable, so the fact is 1/3 of our customers are now on logs. But that 1/3 is not spending anywhere near what the opportunity is for for the reasons that Rick outlined, I think, is we're prime to be disruptive in that area just with the underpinnings of the platform with Grail. And so part of it is getting them to adopt more of the platform. There are a bunch of offerings that we do have even within the kind of the -- there's other capabilities beyond the core offerings of call it full stack infrastructure, DEM, logs, AppSec. There's other kind of subcomponents that we monetize as well. And so it's broader than maybe you're I think we feel pretty good about that. And the whole thing with our adoption teams is drive more adoption, try to give the customer something that they're getting more value from and leverage the advantages that we have within the platform. And we feel very good about where we are and kind of the strategy to go after that. Rick McConnell The short form, Keith, is that we absolutely agree with you that we need to drive the business both in terms of depth of existing capabilities and expanded breadth in areas such as log management, application security, digital experience management with just bought Medis for database observability. So we'll continue to expand the platform in both dimensions. That brings us to the end of our call. Thank you all for your engaged questions and ongoing support to I think, as you can tell, we are very enthusiastic about the growth opportunities ahead for us. We look forward to connecting with you at our events over the coming months, and we wish you all a very good day. Operator Thank you. That does conclude today's teleconference and webcast. You may disconnect.
Yahoo
14-05-2025
- Business
- Yahoo
Dynatrace's (NYSE:DT) Q1 Sales Top Estimates, Stock Jumps 10.9%
Application performance monitoring software provider Dynatrace (NYSE:DT) reported Q1 CY2025 results beating Wall Street's revenue expectations , with sales up 16.9% year on year to $445.2 million. On top of that, next quarter's revenue guidance ($467.5 million at the midpoint) was surprisingly good and 3% above what analysts were expecting. Its non-GAAP profit of $0.33 per share was 9.1% above analysts' consensus estimates. Is now the time to buy Dynatrace? Find out in our full research report. Revenue: $445.2 million vs analyst estimates of $434.7 million (16.9% year-on-year growth, 2.4% beat) Adjusted EPS: $0.33 vs analyst estimates of $0.30 (9.1% beat) Adjusted Operating Income: $117.9 million vs analyst estimates of $108.2 million (26.5% margin, 8.9% beat) Management's revenue guidance for the upcoming financial year 2026 is $1.96 billion at the midpoint, beating analyst estimates by 1.1% and implying 15.2% growth (vs 18.8% in FY2025) 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 Free Cash Flow Margin: 32.7%, up from 8.6% in the previous quarter Annual Recurring Revenue: $1.73 billion at quarter end, up 15.3% year on year Billings: $704.5 million at quarter end, up 10.9% year on year Market Capitalization: $15.13 billion "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. Founded in Austria in 2005, Dynatrace (NYSE:DT) provides companies with software that allows them to monitor the performance of their full technology stack, from software applications to the infrastructure they run on. A company's long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last three years, Dynatrace grew its sales at a decent 22.3% compounded annual growth rate. Its growth was slightly above the average software company and shows its offerings resonate with customers. This quarter, Dynatrace reported year-on-year revenue growth of 16.9%, and its $445.2 million of revenue exceeded Wall Street's estimates by 2.4%. Company management is currently guiding for a 17.1% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 13.6% over the next 12 months, a deceleration versus the last three years. Still, this projection is admirable and suggests the market sees success for its products and services. Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories. While reported revenue for a software company can include low-margin items like implementation fees, annual recurring revenue (ARR) is a sum of the next 12 months of contracted revenue purely from software subscriptions, or the high-margin, predictable revenue streams that make SaaS businesses so valuable. Dynatrace's ARR punched in at $1.73 billion in Q1, and over the last four quarters, its growth was solid as it averaged 17.6% year-on-year increases. This performance aligned with its total sales growth, reflecting the company's ability to maintain strong customer relationships and secure longer-term commitments. Its growth also contributes positively to Dynatrace's predictability and valuation, as investors typically prefer businesses with recurring revenue. The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments. Dynatrace is efficient at acquiring new customers, and its CAC payback period checked in at 37.6 months this quarter. The company's relatively fast recovery of its customer acquisition costs gives it the option to accelerate growth by increasing its sales and marketing investments. We were impressed by Dynatrace's optimistic EPS guidance for next quarter, which blew past analysts' expectations. We were also glad its full-year EPS guidance exceeded Wall Street's estimates. On the other hand, its billings slightly missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 10.9% to $56 immediately following the results. Dynatrace may have had a good quarter, but does that mean you should invest right now? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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
