Dynatrace(DT) - 2025 Q4 - Annual Results

Executive Summary & Business Overview Company Performance Highlights (Q4 & FY25) Dynatrace concluded fiscal 2025 with strong Q4 results, surpassing guidance across key metrics, driven by platform consumption growth, significant subscription revenue increases, and strong operating margins Fourth Quarter Fiscal 2025 Financial Highlights: | Metric | Value | YoY Increase (Constant Currency) | | :-------------------------------- | :---------------- | :------------------------------- | | Total ARR | $1,734 million | 17% | | Total Revenue | $445 million | 19% | | Subscription Revenue | $424 million | 20% | | GAAP Income from Operations | $43 million | - | | Non-GAAP Income from Operations | $118 million | - | | GAAP EPS (diluted) | $0.13 | - | | Non-GAAP EPS (diluted) | $0.33 | - | Full Year Fiscal 2025 Financial Highlights: | Metric | Value | YoY Increase (Constant Currency) | | :-------------------------------- | :---------------- | :------------------------------- | | Total Revenue | $1,699 million | 20% | | Subscription Revenue | $1,622 million | 20% | | GAAP Income from Operations | $179 million | - | | Non-GAAP Income from Operations | $494 million | - | | GAAP EPS (diluted) | $1.59 | - | | Non-GAAP EPS (diluted) | $1.39 | - | | GAAP Operating Cash Flow | $459 million | - | | Free Cash Flow | $431 million | - | Strategic Business Developments Dynatrace demonstrated strong go-to-market traction with its platform subscription model, expanded strategic partnerships, and received significant industry recognition for its AI-powered observability platform - Go-to-market traction: Closed 15 deals greater than $1 million in ACV in Q4 FY25, with 14 in collaboration with partners[4] - Dynatrace Platform Subscription (DPS) licensing models are gaining traction, with over 40% of the customer base and more than 60% of ARR leveraging this model[4] - Consumption growth rates for DPS customers are twice that of SKU-based customers[4] - Partner evolution: Signed a new strategic collaboration agreement with Amazon Web Services (AWS) and announced early access for joint Google Cloud customers to platform innovations powered by Grail™[4] - Industry and customer recognition: Named a Leader in The Forrester Wave™: AIOps Platforms, Q2 2025 report (highest score in Current Offering category), a Leader and Outperformer in the 2025 GigaOm Radar Report for Cloud Observability, and a Customers' Choice in the 2024 Gartner Peer Insights Voice of the Customer for Observability Platforms report[4] Share Repurchase Program Dynatrace continued its share repurchase program, spending $43 million in Q4 FY25 and a total of $173 million since inception, reflecting a commitment to returning value to shareholders - During the fourth quarter, Dynatrace repurchased 787,000 shares for $43 million at an average price of $53.99[5] - From the program's inception in May 2024 through March 31, 2025, Dynatrace repurchased 3.4 million shares for $173 million at an average price of $50.06[5] Intellectual Property Transfer In fiscal 2025, Dynatrace completed an intra-entity transfer of intellectual property rights to align them more closely with business operations, resulting in a significant income tax benefit - Dynatrace completed an intra-entity asset transfer of global economic rights of intellectual property (IP) from a U.S. subsidiary to a Swiss subsidiary in fiscal 2025[6] - The IP transfer generated an income tax benefit of $320.9 million, or $1.06 per share on a dilutive basis[6] Fourth Quarter Fiscal 2025 Financial Results Key Financial Metrics (Q4 FY25) Dynatrace reported robust financial performance for the fourth quarter of fiscal 2025, with significant year-over-year growth in ARR, total revenue, and subscription revenue, alongside improved GAAP and Non-GAAP operating margins and strong cash flow generation Fourth Quarter Fiscal 2025 Financial Highlights (Unaudited – In thousands, except per share data): | Metric | Q4 FY25 | Q4 FY24 | YoY Increase | YoY Increase (Constant Currency) | | :------------------------------------------ | :-------- | :-------- | :----------- | :------------------------------- | | Total ARR | $1,734,164 | $1,503,819 | 15% | 17% | | Total Revenue | $445,165 | $380,848 | 17% | 19% | | Subscription Revenue | $423,570 | $360,109 | 18% | 20% | | GAAP Income from Operations | $42,914 | $23,123 | 86% | - | | GAAP Operating Margin | 10% | 6% | +4 pp | - | | GAAP Net Income | $39,304 | $37,944 | 4% | - | | GAAP Net Income per Share - Diluted | $0.13 | $0.13 | 0% | - | | Non-GAAP Income from Operations | $117,887 | $95,093 | 24% | - | | Non-GAAP Operating Margin | 26% | 25% | +1 pp | - | | Non-GAAP Net Income | $99,047 | $89,401 | 11% | - | | Non-GAAP Net Income per Share - Diluted | $0.33 | $0.30 | 10% | - | | Net Cash Provided by Operating Activities | $162,790 | $131,672 | 24% | - | | Net Cash Provided by Operating Activities as % of Revenue | 37% | 35% | +2 pp | - | | Free Cash Flow | $145,528 | $121,262 | 20% | - | | Free Cash Flow Margin | 33% | 32% | +1 pp | - | GAAP to Non-GAAP Reconciliation (Q4) The company provides reconciliations from GAAP to Non-GAAP financial measures for the fourth quarter of fiscal 2025, adjusting for items such as share-based compensation, employer payroll taxes on employee stock transactions, amortization of intangibles, and restructuring costs to offer a clearer view of operational performance Non-GAAP Income from Operations Reconciliation (Q4 FY25 vs Q4 FY24): | Adjustment Category | Q4 FY25 (Thousands) | Q4 FY24 (Thousands) | | :------------------------------------ | :------------------ | :------------------ | | GAAP Income from Operations | $42,914 | $23,123 | | Share-based compensation | $70,204 | $55,598 | | Employer payroll taxes on employee stock transactions | $3,970 | $3,615 | | Amortization of intangibles | $747 | $9,685 | | Restructuring & other | $52 | $3,072 | | Non-GAAP Income from Operations | $117,887 | $95,093 | | GAAP Operating Margin | 10% | 6% | | Non-GAAP Operating Margin | 26% | 25% | Non-GAAP Net Income Reconciliation (Q4 FY25 vs Q4 FY24): | Adjustment Category | Q4 FY25 (Thousands) | Q4 FY24 (Thousands) | | :------------------------------------ | :------------------ | :------------------ | | GAAP 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 | | Non-GAAP Net Income per Share - Diluted | $0.33 | $0.30 | Free Cash Flow Reconciliation (Q4 FY25 vs Q4 FY24): | Metric | Q4 FY25 (Thousands) | Q4 FY24 (Thousands) | | :------------------------------------ | :------------------ | :------------------ | | 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 | Full Year Fiscal 2025 Financial Results [