Dynatrace(US:DT)2026-02-09 11:40Revenue Performance - Annual recurring revenue (ARR) reached $1,972 million as of December 31, 2025, reflecting a 20% year-over-year growth[93] - Total revenue for the three months ended December 31, 2025, was $515 million, representing an 18% year-over-year increase[93] - Subscription revenue amounted to $493 million for the same period, also showing an 18% growth year-over-year[93] - Total revenue for the three months ended December 31, 2025, was $515.5 million, an increase of $79.3 million or 18% compared to $436.2 million in the same period of 2024[126] - Subscription revenue increased by $76.2 million, or 18%, driven by existing customers expanding their use of the Dynatrace platform and new customer adoption[128] - Service revenue rose by $3.1 million, or 17%, primarily due to increased customer demand for product enablement and adoption services[129] - Total revenue for the nine months ended December 31, 2025, was $1,486.7 million, a 19% increase from $1,253.5 million in the same period of 2024[146] - Subscription revenue for the nine months ended December 31, 2025, increased by $225.4 million, or 19%, compared to the same period in 2024, due to existing customers expanding their use of the platform[147] Profitability and Expenses - Non-GAAP income from operations was $153 million for the three months ended December 31, 2025, compared to $130 million for the same period in 2024[96] - Gross profit for the three months ended December 31, 2025, was $419.6 million, reflecting a $66.0 million or 19% increase from $353.6 million in 2024[134] - Operating expenses totaled $346.9 million for the three months ended December 31, 2025, compared to $306.1 million in 2024[125] - Net income for the three months ended December 31, 2025, was $40.1 million, a decrease from $361.8 million in the same period of 2024[126] - Gross profit for the nine months ended December 31, 2025, was $1,215.9 million, an increase of $197.4 million, or 19%, compared to $1,018.4 million in 2024[154] - Net income for the nine months ended December 31, 2025, was $145.3 million, a decrease from $444.4 million in the same period of 2024[145] Cash Flow and Financing - Free cash flow for the three months ended December 31, 2025, was $27 million, down from $38 million in the same period of 2024[96] - Net cash provided by operating activities increased to $335.5 million for the nine months ended December 31, 2025, compared to $296.6 million for the same period in 2024, reflecting a $38.9 million increase driven by higher collections from revenue growth[176] - Net cash used in financing activities increased to $249.4 million for the nine months ended December 31, 2025, compared to $112.0 million for the same period in 2024, driven by increased stock repurchases[178] - The company repurchased 5.4 million shares for $255.0 million during the nine months ended December 31, 2025, compared to 2.7 million shares for $130.1 million in the same period of 2024[172] - Net cash used in investing activities decreased to $23.4 million for the nine months ended December 31, 2025, from $51.5 million in the same period of 2024, due to increased proceeds from sales and maturities of investments[177] Research and Development - The company plans to invest in research and development to enhance its AI-powered observability platform and expand its functionality[94] - Research and development expenses increased to $120.6 million, representing 23% of total operating expenses, up from $98.3 million in 2024[126] - Research and development expenses increased by $22.2 million, or 23%, for the three months ended December 31, 2025, primarily due to increased personnel costs and cloud-based hosting costs[138] Customer Strategy - Dynatrace aims to grow its customer base by focusing on the largest 15,000 global enterprise accounts, which typically have annual revenues exceeding $1 billion[94] - The company intends to strengthen relationships with existing customers by expanding the breadth of its platform capabilities[94] - Dynatrace is committed to leveraging its strategic partner ecosystem to enhance cloud-focused partnerships and participate in digital transformation projects[95] Tax and Other Financial Metrics - Income tax expense rose to $107.7 million for the nine months ended December 31, 2025, an increase of $384.3 million from a tax benefit of $276.7 million for the same period in 2024, largely due to a discrete tax benefit from an IP transfer[164] - Other income, net, was $7.3 million for the nine months ended December 31, 2025, compared to an expense of $6.1 million for the same period in 2024, primarily due to foreign currency gains and losses[163] - Total contractual commitments as of December 31, 2025, were $702.8 million, with $74.7 million due within the next 12 months[170] - The company had $399.0 million available under its Credit Facility as of December 31, 2025, with compliance to all applicable covenants[174] - The company expects future capital requirements to depend on growth rate, R&D spending, and market acceptance of products[171]