Dynatrace(US:DT)2025-11-05 11:51Financial 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]