Financial Data and Key Metrics Changes - Dynatrace reported strong Q2 fiscal 2026 results, with ARR growing 16% and subscription revenue increasing 17% [3][18] - Pre-tax free cash flow was 32% of revenue on a trailing 12-month basis, while total revenue for Q2 was $494 million, up 17% [3][23] - Non-GAAP operating margin was 31%, exceeding guidance by 150 basis points, and non-GAAP net income was $133 million, or $0.44 per diluted share [23][24] Business Line Data and Key Metrics Changes - The logs business is the fastest-growing product category, growing over 100% year over year and approaching $100 million in annualized consumption [12][21] - The Dynatrace platform subscription licensing model (DPS) has reached a milestone with 50% of customers and 70% of ARR utilizing it [15][20] - Total Q2 consumption growth was more than 20%, outpacing subscription revenue growth [21][22] Market Data and Key Metrics Changes - Execution was particularly strong in North America and Asia-Pacific, with many deals influenced by GSI partners [18][19] - The strategic account pipeline is up 45% year over year, indicating strong demand for observability solutions [25][49] - The net retention rate (NRR) was 111% in Q2, consistent with the prior quarter, reflecting stable customer expansion [19][20] Company Strategy and Development Direction - Dynatrace aims to evolve its platform towards autonomous operations, leveraging AI for preventive measures and self-healing capabilities [4][7] - The company is focusing on capturing the growing demand for end-to-end observability and large-scale tool consolidations [3][17] - Recent partnerships with ServiceNow and Atlassian aim to enhance autonomous IT operations and improve incident management processes [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth drivers, citing secular tailwinds from vendor consolidation, cloud modernization, and AI workload proliferation [25][26] - The company raised its full-year ARR growth guidance to 14%-15% and total revenue growth guidance to 15%-15.5% [26][27] - Management acknowledged the dynamic macro and geopolitical environment, particularly in AMEA, while maintaining a positive outlook on demand [25][46] Other Important Information - Dynatrace repurchased 994,000 shares for $50 million during Q2 as part of a $500 million share repurchase program [24] - The company is focusing on driving platform adoption and consumption as foundational growth engines [22][23] Q&A Session Summary Question: Insights on net retention rate metric - Management noted that while net new ARR grew 16% for the quarter, NRR is a trailing metric and will take time to reflect the current business momentum [30][31] Question: Productivity from go-to-market improvements - Management confirmed that investments in sales coverage have led to improved close rates and pipeline productivity [32][33] Question: Convergence of net new ARR and subscription revenue growth - Management explained that while subscription revenue is ratable, consumption growth is a leading indicator for future expansions [36][39] Question: Impact of early DPS customer renewals on Q3 guidance - Management indicated that early renewals from DPS customers positively impacted Q2 results and are expected to continue influencing future revenue [59][60] Question: Strategic collaboration with ServiceNow - Management highlighted the collaboration's potential to enhance autonomous IT operations and improve overall service delivery [61]

Core Insights - Dynatrace reported quarterly earnings of $0.44 per share, exceeding the Zacks Consensus Estimate of $0.41 per share, and showing an increase from $0.37 per share a year ago, resulting in an earnings surprise of +7.32% [1] - The company achieved revenues of $493.85 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.35% and up from $418.13 million year-over-year [2] - Dynatrace has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The sustainability of Dynatrace's stock price movement will largely depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.40 on revenues of $502 million, and for the current fiscal year, it is $1.60 on revenues of $1.98 billion [7] Industry Context - The Computers - IT Services industry, to which Dynatrace belongs, is currently ranked in the top 30% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8] - The performance of Dynatrace's stock may also be influenced by the overall industry outlook and trends in earnings estimate revisions [5][8]

Core Viewpoint - Dynatrace, Inc. has raised its earnings and revenue guidance for the third quarter and the full-year 2026, indicating positive growth expectations for the company. Financial Results and Guidance - For the third quarter, Dynatrace projects adjusted earnings between $0.40 and $0.42 per share, with total revenues expected to be between $503 million and $508 million [1] - Analysts expect the company to report earnings of $0.40 per share on revenues of $501.41 million for the quarter [2] - Looking ahead to fiscal 2026, Dynatrace now projects adjusted earnings in the range of $1.62 to $1.64 per share, with total revenues between $2.010 billion and $2.025 billion, an increase from previous expectations of $1.58 to $1.61 per share and revenues between $1.970 billion and $1.985 billion [2] Market Expectations - The market anticipates earnings of $1.61 per share on revenues of $1.98 billion for the fiscal year [3]

Financial Performance & Guidance - Dynatrace's Annual Recurring Revenue (ARR) reached $1.90 billion[39] - The Q2 2026 subscription revenue mix was at 96%[39] - The company's gross retention rate was in the mid-90s percentage range[39] - The TTM Q2-26 Non-GAAP operating margin was 29%[39] - ARR growth year-over-year was 16%[39] - The net retention rate was 141%[39] - The TTM Q2-26 pre-tax Free Cash Flow (FCF) margin was 32%[39] - The FY26 ARR guidance is $2010 - $2025 million, representing a 14%-15% growth in constant currency[57] - The FY26 total revenue guidance is $1985 - $1995 million, representing a 15%-15.5% growth in constant currency[57] - The FY26 subscription revenue guidance is $1898 - $1908 million, representing a 15%-15.5% growth in constant currency[57] Market Opportunity - The total addressable market (TAM) for observability and security is large and growing, with observability at $85 billion and security at $14 billion[29]

Financial Performance - Annual recurring revenue (ARR) was $1,899 million as of September 30, 2025, reflecting a 17% year-over-year growth[91] - Total revenue for the quarter was $494 million, representing an 18% year-over-year increase[91] - Subscription revenue reached $473 million, also showing an 18% growth year-over-year[91] - Total revenue for the three months ended September 30, 2025, was $493.8 million, an increase of $75.7 million or 18% compared to $418.1 million in the same period of 2024[122] - Subscription revenue increased by $73.3 million, or 18%, for the three months ended September 30, 2025, primarily due to existing customers expanding their use of the Dynatrace platform and new customer adoption[125] - Total revenue for the six months ended September 30, 2025, was $971.2 million, a 19% increase from $817.3 million in the same period of 2024[143] - Subscription revenue increased by $149.2 million, or 19%, for the six months ended September 30, 2025, primarily due to existing customers expanding their use of the Dynatrace platform[144] - Gross profit for the three months ended September 30, 2025, was $404.1 million, representing a 19% increase from $340.3 million in the same period of 2024[131] - Gross profit for the six months ended September 30, 2025, was $796.2 million, a 20% increase from $664.8 million in the same period of 2024[150] - Net income for the three months ended September 30, 2025, was $57.2 million, compared to $44.0 million in the same period of 2024, reflecting a significant increase[122] Expenses and Costs - Non-GAAP income from operations was $152.8 million for the three months ended September 30, 2025, compared to $130.7 million for the same period in 2024[94] - Operating expenses increased by $37.8 million, or 13%, for the three months ended September 30, 2025, totaling $331.1 million compared to $293.3 million in 2024[134] - Research and development expenses rose by $19.6 million, or 21%, for the three months ended September 30, 2025, primarily due to increased personnel costs and cloud-based hosting costs[135] - Cost of subscription increased by $12.6 million, or 23%, for the three months ended September 30, 2025, mainly due to increased cloud-based hosting costs and personnel costs[128] - Operating expenses increased by $85.2 million, or 15%, for the six months ended September 30, 2025, compared to the same period in 2024[153] - Research and development expenses increased by $40.2 million, or 22%, for the six months ended September 30, 2025, primarily due to increased personnel costs[154] - Sales and marketing expenses increased by $43.7 million, or 15%, for the six months ended September 30, 2025, driven by increased personnel costs[155] - Total cost of revenue for the three months ended September 30, 2025, was $89.8 million, an increase of $12.0 million or 15% compared to $77.8 million in 2024[127] - Cost of revenue decreased by $22.4 million, or 15%, for the six months ended September 30, 2025, compared to the same period in 2024[146] Cash Flow and Investments - Free cash flow for the quarter was $27.8 million, up from $20.1 million in the prior year[94] - Net cash provided by operating activities increased to $301.7 million for the six months ended September 30, 2025, compared to $254.4 million for the same period in 2024, reflecting a $47.3 million increase[172] - Net cash used in investing activities decreased to $6.5 million for the six months ended September 30, 2025, from $46.6 million in the same period in 2024[173] - Net cash used in financing activities was $99.1 million for the six months ended September 30, 2025, compared to $84.6 million in 2024, marking a $14.5 million increase[174] - The company had $399.0 million available under its Credit Facility as of September 30, 2025[170] Customer Metrics and Market Strategy - The dollar-based net retention rate was 111% as of September 30, 2025, slightly down from 112% a year earlier[94] - 50% of the customer base and 70% of ARR leveraged the flexible Dynatrace Platform Subscription (DPS) model as of September 30, 2025[92] - Dynatrace targets the largest 15,000 global enterprise accounts, which typically have annual revenues exceeding $1 billion[84] - The company aims to strengthen relationships with existing customers and expand its customer base through strategic partnerships and market segmentation[93] Future Outlook and Strategic Initiatives - The company plans to invest in innovation and expand its platform capabilities to address new market opportunities in fiscal 2026[92] - The company expects future capital requirements to depend on growth rate, R&D spending, and market acceptance of products[168] - The company has not engaged in hedging strategies for foreign currency transactions but may reassess this as international operations grow[181] Shareholder Actions - The company repurchased 1.0 million shares for $50.0 million during the three months ended September 30, 2025, and 1.9 million shares for $95.0 million during the six months ended September 30, 2025[169]

EXHIBIT 99.1 Dynatrace Reports Second Quarter Fiscal Year 2026 Financial Results Exceeds high end of guidance across all metrics; raises FY'26 guidance Delivers ARR growth of 16% and Subscription Revenue growth of 17% on a constant currency basis Achieves GAAP Operating Margin of 15% and Non-GAAP Operating Margin of 31% BOSTON, Mass., November 5, 2025 - Dynatrace (NYSE: DT), the leading AI-powered observability platform, today announced financial results for the second quarter of fiscal 2026 ended September ...

Core Insights - Dynatrace reported strong financial results for Q2 of fiscal 2026, driven by increasing demand for end-to-end observability due to large-scale tool consolidations [1] - The growth in cloud and AI workloads is creating a critical need for AI-powered observability platforms to manage these complexities [1] Financial Performance - The financial results for the second quarter ended September 30, 2025, indicate robust performance, although specific numerical data is not provided in the excerpt [1] Market Trends - There is a notable trend towards large-scale tool consolidations in the industry, which is contributing to the demand for observability solutions [1] - The rapid growth of cloud and AI workloads is influencing the market dynamics, emphasizing the importance of observability platforms [1]

Core Insights - Dynatrace has been recognized as a Leader in the Gartner Magic Quadrant for Digital Experience Monitoring for the second consecutive year [1] - The evaluation included 14 vendors, with Dynatrace being acknowledged for its Ability to Execute and Completeness of Vision [1] - Dynatrace achieved the furthest placement on the Completeness of Vision axis in the evaluation [1]

Company Performance - Dynatrace (DT) closed at $49.64, reflecting a -1.72% change from the previous day, underperforming compared to the S&P 500's gain of 0.23% [1] - Over the past month, shares of Dynatrace have increased by 2.41%, while the Computer and Technology sector gained 6.04% and the S&P 500 gained 3.57% [1] Upcoming Earnings - Dynatrace is set to release its earnings on November 5, 2025, with projected EPS of $0.41, indicating a 10.81% increase year-over-year [2] - The consensus estimate for revenue is $487.26 million, which represents a 16.53% increase from the same quarter last year [2] Annual Estimates - For the annual period, the Zacks Consensus Estimates predict earnings of $1.6 per share and revenue of $1.98 billion, reflecting increases of +15.11% and +16.49% respectively from the previous year [3] Analyst Estimates - Recent modifications to analyst estimates for Dynatrace are crucial as they reflect near-term business trends, with positive revisions indicating a favorable business outlook [3][4] Zacks Rank - Dynatrace currently holds a Zacks Rank of 3 (Hold), with the consensus EPS estimate having decreased by 0.37% over the last 30 days [5] - The Zacks Rank system has a strong track record, with 1 stocks averaging an annual return of +25% since 1988 [5] Valuation Metrics - Dynatrace has a Forward P/E ratio of 31.5, which is a premium compared to the industry average Forward P/E of 16.81 [6] - The company also has a PEG ratio of 2.46, higher than the industry average PEG ratio of 2.02 [6] Industry Context - The Computers - IT Services industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 44, placing it in the top 18% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Insights - The article compares two IT Services stocks, Epam (EPAM) and Dynatrace (DT), to determine which is more attractive to value investors [1] Valuation Metrics - EPAM has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision activity compared to DT, which has a Zacks Rank of 3 (Hold) [3] - EPAM's forward P/E ratio is 13.96, significantly lower than DT's forward P/E of 31.77, suggesting EPAM may be undervalued [5] - The PEG ratio for EPAM is 1.77, while DT's PEG ratio is 2.48, indicating that EPAM has a better balance between its price and expected earnings growth [5] - EPAM's P/B ratio is 2.39, compared to DT's P/B of 5.7, further supporting the notion that EPAM is more attractively valued [6] Conclusion - Overall, EPAM demonstrates stronger estimate revision activity and more favorable valuation metrics than DT, making it a more appealing option for value investors at this time [7]