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 essence of long-term investment success lies in discipline rather than brilliance, emphasizing the importance of avoiding mistakes over chasing high returns [1][2][7] Investment Philosophy - Successful investing mirrors poker and sports, where avoiding costly errors is crucial; investors should focus on not overpaying for stocks and maintaining a disciplined approach to valuation [3][4][5] - The market rewards those who survive by sidestepping high-risk investments, leading to a cumulative long-term advantage [8] Valuation Concerns - Companies trading at high multiples, such as 40 times earnings or 20 times sales, lack a margin for error, making them vulnerable to downturns when expectations are not met [5] - The Piotroski F-Score serves as a valuable tool for assessing a company's fundamental health, with low scores indicating potential pitfalls similar to struggling sports teams [6][10] Company-Specific Analysis - Synopsys (NASDAQ:SNPS) is highlighted as overvalued, trading at over 45 times forward earnings and 12 times sales, with growth slowing and competitive pressures increasing [9][10] - Snowflake (NYSE:SNOW) is noted for its significant valuation disconnect, trading at over 15 times forward sales despite declining revenue growth and persistent losses [11][12] - Datadog (NASDAQ:DDOG) faces valuation challenges, trading at around 70 times forward earnings, with growth slowing and competition impacting pricing power [12][13]

Core Viewpoint - The P/E ratio is a significant metric for assessing a company's market performance relative to the industry and historical earnings, indicating potential undervaluation or lack of expected growth [4][7]. Group 1: P/E Ratio Comparison - Dynatrace has a lower P/E ratio compared to the aggregate P/E of 93.06 for the Software industry, suggesting it may be undervalued or expected to perform worse than peers [5]. - A lower P/E ratio could imply that shareholders do not anticipate better future performance from Dynatrace [5][7]. Group 2: Limitations of P/E Ratio - The P/E ratio should not be used in isolation, as it has limitations and must be considered alongside other financial metrics and qualitative analyses [7]. - Factors such as industry trends and business cycles can significantly influence a company's stock price, affecting the interpretation of the P/E ratio [7].

Company Performance - Dynatrace (DT) stock decreased by 1.63% to $47.82, underperforming the S&P 500 which fell by 0.13% [1] - Prior to the recent trading session, Dynatrace shares had declined by 0.47%, lagging behind the Computer and Technology sector's gain of 6.17% and the S&P 500's gain of 2.71% [1] Upcoming Financial Results - The upcoming EPS for Dynatrace is projected at $0.41, reflecting a 10.81% increase compared to the same quarter last year [2] - Revenue is estimated to be $487 million, indicating a growth of 16.47% compared to the corresponding quarter of the previous year [2] Annual Estimates - For the annual period, earnings are anticipated to be $1.6 per share and revenue is expected to reach $1.98 billion, representing increases of +15.11% and +16.41% respectively from the previous year [3] Analyst Estimates and Stock Performance - Recent changes to analyst estimates for Dynatrace are crucial as they indicate near-term business trends, with positive revisions seen as favorable for the business outlook [3][4] - The Zacks Rank system, which incorporates estimate changes, has a strong track record, with 1 stocks averaging an annual return of +25% since 1988 [5] Valuation Metrics - Dynatrace is currently trading at a Forward P/E ratio of 30.34, which is a premium compared to the industry average of 17.22 [6] - The PEG ratio for Dynatrace stands at 2.37, compared to the industry average PEG ratio of 2.05 [6] Industry Context - The Computers - IT Services industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 107, placing it in the top 44% 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 Viewpoint - Dynatrace has announced its participation in the launch of the GitHub MCP Registry, enhancing its commitment to open cloud ecosystems and strengthening its partnership with GitHub to foster innovation through observability and automation [1] Group 1 - Dynatrace is recognized as a leading AI-powered observability platform [1] - The GitHub MCP Registry is a curated directory aimed at helping developers discover and integrate AI-ready services quickly [1] - The collaboration with GitHub is intended to accelerate innovation through real-time observability and intelligent automation [1]

Group 1 - The Goldman Sachs Communacopia and Technology Conference is currently in its fourth year, having evolved through multiple versions since its inception [1] - The conference has seen participation from a global audience, including attendees from Australia, Asia Pacific, Europe, and Canada, highlighting its international appeal [1] - The event has been described as a fantastic success, indicating strong engagement and support from clients and participants [1]