Core Insights - Dynatrace reported Q1 FY2026 results, with revenue of $477 million and Non-GAAP EPS of $0.42, both below Wall Street expectations [1][5] - Despite missing estimates, the company achieved 20% year-over-year GAAP revenue growth and improved Non-GAAP profitability for FY2025 [1][5] - The gap between company guidance and analyst expectations was notable this quarter [1] Financial Performance - Q1 FY26 Non-GAAP EPS was $0.42, slightly below the $0.43 estimate, and up 27.3% from $0.33 in Q1 FY25 [2] - GAAP revenue of $477 million fell short of the $533.78 million estimate, but represented a 19.5% increase from $399.2 million in Q1 FY25 [2] - Subscription revenue reached $457.5 million, growing 19.9% year-over-year [2] - Non-GAAP operating margin improved to 30%, while free cash flow was $262 million, a 15.2% increase from $227.4 million in the previous year [2][6] Business Strategy and Focus Areas - Dynatrace focuses on AI-powered observability and automation tools for IT systems, providing real-time insights into cloud and hybrid environments [3] - Recent efforts include expanding AI capabilities, enhancing cloud integration, and promoting a flexible subscription model [4] - The company emphasizes automation and partnerships with system integrators and cloud providers to drive growth [4] Subscription Model and Customer Adoption - Over 45% of customers and more than 65% of ARR are now utilizing the Dynatrace Platform Subscription (DPS) model [7] - DPS customers consume an average of 12 capabilities compared to 5 for traditional SKU-based customers, leading to higher spending [7] - Dynatrace closed 12 large expansion deals worth over $1 million annually, with significant deployments of its Log Management product [7] AI and Product Development - The company advanced its AI-powered observability tools, including the "Davis AI" engine for analytics and incident response [8] - New agentic AI capabilities were launched to enhance IT teams' control and resource efficiency [8] - Dynatrace expanded integrations with major cloud providers, strengthening its position in the observability market [8] Recognition and Growth Areas - Dynatrace was recognized as a "Leader" in the 2025 Gartner Magic Quadrant™ for Observability Platforms for the 15th consecutive year [9] - Log Management is the fastest-growing segment, with expectations of over 100% growth and projected consumption exceeding $100 million [9] Share Buyback and Financial Guidance - The company repurchased 905,000 shares for $45 million as part of a $500 million buyback program [10] - For fiscal 2026, management raised revenue guidance to $1.97 billion - $1.985 billion and Non-GAAP EPS to $1.58 - $1.61 [11] - Q2 FY2026 revenue is projected to be $484 - $489 million, reflecting a 16-17% increase year-over-year [12]

Financial Data and Key Metrics Changes - Subscription revenue grew 19% year over year, reaching $458 million, while total revenue for Q1 was $477 million, also growing 19% [5][28] - Annual recurring revenue (ARR) ended the quarter at $1.82 billion, representing a 16% growth, with net new ARR of $51 million, up 13% from the previous year [23][24] - Non-GAAP operating margin was 30%, exceeding guidance by 150 basis points, and non-GAAP net income was $126 million, or $0.42 per diluted share, also above guidance [28][30] Business Line Data and Key Metrics Changes - The company reported a strong expansion quarter with a dozen seven-figure expansion deals, particularly in North America and through the GSI channel [22][24] - The average ARR per new logo was over $130,000, while the average ARR per customer reached nearly $450,000, indicating ongoing adoption of the platform [24][25] - The logs consumption increased 36% sequentially and over 100% year over year, with expectations to achieve $100 million in annualized logs consumption by the end of the fiscal year [15][16] Market Data and Key Metrics Changes - The strategic enterprise pipeline grew nearly 50% year over year, with a significant increase in deals greater than $1 million [14][23] - The company added 103 new logos to the Dynatrace platform in Q1, reflecting strong market demand [24] - Dynatrace was named a leader in the 2025 Gartner Magic Quadrant for observability platforms, marking the fifteenth consecutive year in this position [19] Company Strategy and Development Direction - The company is focused on three approaches to unlocking value with observability: end-to-end observability, AI observability, and business observability [6][13] - Dynatrace aims to provide a unified platform that integrates various observability domains, allowing customers to optimize their digital services [7][8] - The company is investing in sales and marketing initiatives to capitalize on growth opportunities in the observability market [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong start to fiscal 2026, highlighting robust demand and a growing pipeline [22][36] - The company is maintaining a prudent approach to guidance, considering the timing variability of larger deals and the fluid macroeconomic environment [32][41] - Management noted that the observability market opportunity is stronger than ever, with a differentiated AI-powered platform [20][36] Other Important Information - The company repurchased 905,000 shares for $45 million in Q1, part of a $500 million share repurchase program [31] - The guidance for total revenue is now expected to be between $1.97 billion and $1.98 billion, with subscription revenue between $1.88 billion and $1.90 billion, both reflecting a 14% to 15% growth [33][34] Q&A Session Summary Question: Why not raise the constant currency guide? - Management maintained the guidance due to the early stage of the fiscal year and the uncertainty around large deal closures [39][40] Question: Who are you consolidating with in larger deals? - The company is consolidating with traditional log vendors, emphasizing the need for integrated solutions for better outcomes [44][45] Question: Is the expansion activity above the typical trend line? - The expansion activity is indeed above the typical trend line, driven by changes in the go-to-market strategy and a focus on higher propensity to spend customers [50][51] Question: Did the ODC revenue recognition change impact other metrics? - The ODC revenue recognition change did not impact other metrics such as ARR or NRR, only revenue recognition [56][59] Question: How is the competitive landscape evolving? - There has been little to no leakage to open source solutions, and the competitive environment remains stable [106]

Financial Data and Key Metrics Changes - Subscription revenue grew 19% year-over-year, reaching $458 million, while Annual Recurring Revenue (ARR) increased by 16% to $1.82 billion [4][28][23] - Total revenue for Q1 was $477 million, exceeding guidance by approximately 200 basis points, and non-GAAP operating margin was 30%, also exceeding guidance by 150 basis points [28][21] - Free cash flow for Q1 was $262 million, with a trailing twelve-month free cash flow of $465 million, representing 26% of revenue [29][30] Business Line Data and Key Metrics Changes - The company added 103 new logos to the Dynatrace platform, with an average ARR per new logo exceeding $130,000 [24] - The average ARR per customer reached nearly $450,000, indicating ongoing adoption of the platform [24] - The logs consumption increased 36% sequentially and over 100% year-over-year, with expectations to achieve $100 million in annualized logs consumption by the end of the fiscal year [15][16] Market Data and Key Metrics Changes - The strategic enterprise pipeline grew nearly 50% year-over-year, with a significant increase in deals greater than $1 million [14][22] - The company was recognized as a leader in the 2025 Gartner Magic Quadrant for observability platforms, marking the fifteenth consecutive year of such recognition [19] Company Strategy and Development Direction - The company is focused on three key approaches to observability: end-to-end observability, AI observability, and business observability, which are seen as durable drivers of growth in the observability market [5][12] - Dynatrace aims to provide a unified platform that integrates various observability domains, allowing customers to optimize their digital services [7][8] - The company is investing in sales and marketing initiatives to capitalize on growth opportunities in observability [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong start to fiscal 2026, highlighting robust expansion activity and a healthy pipeline [21][36] - The company is maintaining a prudent approach to guidance due to the early stage of the fiscal year and the variability associated with larger deals [31][40] - Management noted that while demand remains strong, the macroeconomic environment continues to be fluid, impacting outlook considerations [30][36] Other Important Information - The company repurchased 905,000 shares for $45 million during Q1, part of a $500 million share repurchase program [30] - The non-GAAP EPS guidance for the full year was raised to a range of $1.58 to $1.61 per diluted share [34] Q&A Session Summary Question: Why not raise the constant currency guidance? - Management maintained a prudent guide early in the year despite strong Q1 performance due to the uncertainty around large deal closures [39][40] Question: Who are the competitors in the consolidation of log management? - The company is consolidating traditional log vendors, emphasizing the benefits of integrated solutions over isolated log offerings [45][46] Question: How is the expansion activity compared to historical trends? - Expansion activity is significantly above typical trends, driven by changes in go-to-market strategies and a focus on high propensity to spend customers [51][52] Question: What impact has the ODC revenue recognition change had on other metrics? - The ODC revenue recognition change did not impact other metrics such as ARR or NRR, only affecting revenue recognition [60][61] Question: What is the outlook on enterprise AI adoption? - There is an increasing discussion around AI utilization in observability use cases, with the company well-positioned to take advantage of this trend [103][104] Question: How is the competitive landscape evolving? - There has been little to no leakage to open source solutions, and the competitive environment remains stable [109]

Financial Performance - Dynatrace's Annual Recurring Revenue (ARR) reached $1.82 billion[37] - The company achieved a Subscription Revenue Mix of 96%[37] - Dynatrace reported a Gross Retention Rate in the mid-90s percentage range[37] - The TTM (Trailing Twelve Months) Non-GAAP Operating Margin was 29%[37] - ARR growth year-over-year (YoY) was 16%[37] - Subscription Revenue growth YoY was 19%[37] - The Net Retention Rate was 141%[37] - The TTM Pre-tax Free Cash Flow (FCF) Margin was 33%[37] FY26 Guidance (Updated) - The company's updated FY26 ARR guidance is between $1.988 billion and $2.003 billion[56], an increase of $13 million from the prior guidance[56] - Total revenue guidance is now $1.970 billion to $1.985 billion[56], a $20 million increase[56] - Subscription revenue guidance is $1.884 billion to $1.899 billion[56], up by $19 million[56] - Non-GAAP income from operations is projected to be between $563 million and $573 million[56]

[PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Unaudited Q2 2025 financials show total revenue at $477.3 million, net income at $48.0 million, and operating cash flow at $269.7 million [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Balance Sheet Highlights (In thousands) | June 30, 2025 (unaudited) | March 31, 2025 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $1,247,381 | $1,017,039 | | Total current assets | $1,851,819 | $1,931,461 | | Goodwill | $1,343,839 | $1,336,435 | | **Total assets** | **$4,080,935** | **$4,139,678** | | **Liabilities & Equity** | | | | Deferred revenue, current | $1,002,189 | $1,087,518 | | Total current liabilities | $1,232,517 | $1,381,286 | | **Total liabilities** | **$1,382,649** | **$1,518,530** | | **Total shareholders' equity** | **$2,698,286** | **$2,621,148** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Income Statement Highlights (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Subscription Revenue | $457,507 | $381,576 | | **Total revenue** | **$477,349** | **$399,220** | | Gross profit | $392,140 | $324,467 | | Income from operations | $62,338 | $42,029 | | **Net income** | **$47,955** | **$38,620** | | Diluted net income per share | $0.16 | $0.13 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Highlights (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $269,692 | $230,741 | | Net cash used in investing activities | ($8,448) | ($35,595) | | Net cash used in financing activities | ($43,854) | ($42,810) | | **Net increase in cash and cash equivalents** | **$230,342** | **$151,332** | | Cash and cash equivalents, end of period | $1,247,381 | $930,315 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - As of June 30, 2025, the company had remaining performance obligations of **$2,918.9 million**, of which **53%** is expected to be recognized as revenue over the next 12 months[36](index=36&type=chunk) - The effective tax rate for the three months ended June 30, 2025, was **41.1%**, a significant increase from **26.8%** in the prior-year period, primarily due to the intra-entity IP transfer to Switzerland which impacted the GILTI inclusion[46](index=46&type=chunk) - In May 2024, the company announced a share repurchase program for up to **$500 million**; during the quarter ended June 30, 2025, **0.9 million shares** were repurchased for **$45.0 million**, with **$282.4 million** remaining available for future repurchases[57](index=57&type=chunk)[58](index=58&type=chunk) - Total share-based compensation expense increased to **$71.9 million** for the quarter, up from **$57.7 million** in the same period last year[59](index=59&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reports strong Q1 FY2026 results with ARR growing 18% to $1.82 billion and total revenue up 20% to $477 million, driven by technology leadership and customer expansion [Key Metrics and Financial Highlights](index=22&type=section&id=Key%20Metrics%20and%20Financial%20Highlights) | Key Metric | As of/For Quarter Ended June 30, 2025 | As of/For Quarter Ended June 30, 2024 | | :--- | :--- | :--- | | Total ARR | $1,822.2 million | $1,540.6 million | | ARR Year-over-year increase | 18% | 19% | | Dollar-based net retention rate | 111% | 112% | | Non-GAAP income from operations | $143.1 million | $114.3 million | | Free cash flow | $262.0 million | $227.4 million | - The company's strategy focuses on extending its technology leadership, expanding relationships with existing customers, growing its customer base among the largest 15,000 global enterprises, and leveraging its strategic partner ecosystem[90](index=90&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) | Revenue Component (In thousands) | Q1 FY2026 (Ended June 30, 2025) | Q1 FY2025 (Ended June 30, 2024) | Change (%) | | :--- | :--- | :--- | :--- | | Subscription | $457,507 | $381,576 | +20% | | Service | $19,842 | $17,644 | +12% | | **Total Revenue** | **$477,349** | **$399,220** | **+20%** | - The **20%** increase in subscription revenue was driven by existing customers expanding their use of the platform and adoption by new customers, with variable on-demand consumption revenue also increasing by **$9.1 million**[122](index=122&type=chunk) | Expense Component (In thousands) | Q1 FY2026 (Ended June 30, 2025) | Q1 FY2025 (Ended June 30, 2024) | Change (%) | | :--- | :--- | :--- | :--- | | Cost of subscription | $65,018 | $53,572 | +21% | | Research and development | $108,172 | $87,578 | +24% | | Sales and marketing | $165,314 | $145,106 | +14% | | General and administrative | $56,304 | $44,978 | +25% | - Operating expenses increased primarily due to higher personnel costs, including share-based compensation, from headcount growth across R&D, sales, and G&A to support business expansion[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - Amortization of acquired technology and other intangibles decreased significantly by **$3.5 million** and **$4.8 million** respectively, as certain assets became fully amortized during fiscal 2025[127](index=127&type=chunk)[135](index=135&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company's principal sources of liquidity included **$1.25 billion** in cash and cash equivalents, **$149.7 million** in investments, and **$399.0 million** available under its credit facility[140](index=140&type=chunk) - Net cash provided by operating activities increased by **$39.0 million** to **$269.7 million** for the quarter, primarily driven by higher collections from revenue growth[150](index=150&type=chunk) - The company repurchased **$45.0 million** of its common stock during the quarter under its **$500 million** share repurchase program[147](index=147&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency and interest rate fluctuations, with significant international operations and cash holdings, but expects no material impact from a 10% rate change - **Foreign Currency Risk:** The company has significant international operations, exposing it to both translation risk (converting foreign subsidiary financials to USD) and transaction risk (transactions in non-functional currencies), with the Euro being a particularly significant currency[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) - **Interest Rate Risk:** Risk stems from interest-earning assets (**$1.25 billion** in cash/equivalents and **$149.7 million** in investments) and potential borrowings under its **$400 million** variable-rate credit facility, though a hypothetical **10%** change in interest rates is not expected to have a material impact[162](index=162&type=chunk)[163](index=163&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective in ensuring that information required to be disclosed is recorded, processed, and reported in a timely manner[165](index=165&type=chunk) - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[166](index=166&type=chunk) [PART II - OTHER INFORMATION](index=37&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings but does not anticipate a material adverse effect on its business or financial condition - The company states that it is not currently party to any legal proceedings that it believes would have a material adverse effect on its business[169](index=169&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) The company faces various risks including growth volatility, intense competition, innovation demands, cybersecurity threats, reliance on cloud infrastructure, and global legal and macroeconomic uncertainties [Risks Related to Our Business and Industry](index=37&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) - Recent rapid revenue growth may not be indicative of future performance, and operating results can fluctuate significantly due to factors like customer demand, sales cycles, and economic conditions[171](index=171&type=chunk)[173](index=173&type=chunk) - The business faces significant competition from a variety of vendors, including those with greater brand recognition, larger customer bases, and more substantial financial resources[193](index=193&type=chunk)[197](index=197&type=chunk) - Success depends on the ability to innovate and respond to rapidly changing customer needs and technologies, including AI, and failure to do so could harm the company's competitive position[181](index=181&type=chunk)[182](index=182&type=chunk) - The business relies on maintaining successful relationships with partners, including global system integrators (GSIs) and hyperscalers (AWS, Azure, GCP), for sales and distribution[202](index=202&type=chunk) [Risks Related to Information Technology, IP, and Data Security and Privacy](index=49&type=section&id=Risks%20Related%20to%20Information%20Technology%2C%20IP%2C%20and%20Data%20Security%20and%20Privacy) - The company is a target for cybersecurity attacks, and any security breaches or compromises could harm its reputation, brand, and operating results, and lead to significant financial exposure[216](index=216&type=chunk)[218](index=218&type=chunk) - The business depends on third-party cloud infrastructure providers (hyperscalers like AWS, Azure, GCP), and any service disruptions or outages from these providers could adversely affect the delivery of its SaaS solutions[225](index=225&type=chunk)[226](index=226&type=chunk) - The company faces risks of IP infringement claims from third parties, which could result in significant costs, and must also protect its own proprietary technology and IP rights to maintain its competitive advantage[228](index=228&type=chunk)[232](index=232&type=chunk) - Failure to comply with evolving and stringent global privacy laws (such as GDPR and CCPA) and regulations concerning AI could result in significant penalties, proceedings, and damage to the company's reputation[240](index=240&type=chunk)[241](index=241&type=chunk) [Risks Related to Legal, Regulatory, Accounting, and Tax Matters](index=56&type=section&id=Risks%20Related%20to%20Legal%2C%20Regulatory%2C%20Accounting%2C%20and%20Tax%20Matters) - As a multinational corporation, the company is subject to complex tax laws in numerous jurisdictions; changes in these laws, such as the OECD's Pillar Two minimum tax, or adverse audit outcomes could impact its effective tax rate and financial results[245](index=245&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk) - Global sales and operations expose the company to risks including foreign currency fluctuations, geopolitical instability (e.g., conflicts in Ukraine and Israel), trade restrictions, and compliance with laws like the FCPA[252](index=252&type=chunk)[254](index=254&type=chunk) - The company's solutions are subject to U.S. and international export/import controls and economic sanctions, which could impair its ability to compete in international markets if not properly managed[274](index=274&type=chunk) [Risks Related to Our Common Stock](index=66&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) - The trading price of the company's common stock has been and may continue to be volatile due to market conditions, operating results, and other factors[280](index=280&type=chunk) - The share repurchase program is not guaranteed to be fully consummated or enhance stockholder value and could increase stock price volatility while diminishing cash reserves[287](index=287&type=chunk) - The company does not intend to pay dividends, so a return on investment depends entirely on the appreciation of the stock price[288](index=288&type=chunk) - Anti-takeover provisions in the company's charter and bylaws, such as a classified board and supermajority voting requirements, could discourage or delay a change in control[289](index=289&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=70&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **904,609 shares** at an average price of **$49.76** under its publicly announced program during Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 334,468 | $44.11 | | May 2025 | 291,210 | $51.61 | | June 2025 | 278,931 | $54.60 | | **Total** | **904,609** | **$49.76** | - On May 15, 2024, the company announced a share repurchase program for up to **$500 million** of its common stock, which does not have a time limit[299](index=299&type=chunk) [Item 5. Other Information](index=70&type=section&id=Item%205.%20Other%20Information) Three company insiders, including the CEO, adopted Rule 10b5-1 trading arrangements for future share sales during the quarter - CEO Rick McConnell adopted a Rule 10b5-1 trading plan on June 12, 2025, for the sale of **90,000 shares**, with transactions scheduled from September 11, 2025, through July 31, 2026[303](index=303&type=chunk) [Item 6. Exhibits](index=71&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with or incorporated by reference into the Form 10-Q, including corporate documents and officer certifications

EXHIBIT 99.1 First Quarter Fiscal 2026 Financial and Other Recent Business Highlights: All growth rates are compared to the first quarter of fiscal 2025, unless otherwise noted. Exceeds high end of guidance across all metrics Delivers Subscription Revenue growth of 19% on a constant currency basis Achieves GAAP Operating Margin of 13% and Non-GAAP Operating Margin of 30% BOSTON, Mass., August 6, 2025 - Dynatrace (NYSE: DT), the leading AI-powered observability platform, today announced financial results for ...

Core Insights - Dynatrace (DT) is expected to report quarterly earnings of $0.38 per share, reflecting a year-over-year increase of 15.2% [1] - Anticipated revenues are projected to be $466.07 million, showing a 16.7% increase compared to the same quarter last year [1] Earnings Estimates - The consensus EPS estimate has remained unchanged over the past 30 days, indicating analysts have not revised their projections [2] - Revisions to earnings projections are crucial for predicting investor behavior and stock price performance [3] Revenue Projections - Analysts estimate 'Revenues- Services' will reach $19.84 million, representing a year-over-year change of +12.5% [4] - 'Revenues- Subscriptions' are predicted to be $447.92 million, indicating a +17.4% change from the prior-year quarter [5] Key Metrics - 'Annual Recurring Revenue (ARR)- Total' is expected to reach $1.78 billion, up from $1.54 billion reported in the same quarter last year [5] - The 'Dollar-based Net Retention Rate' is projected at 109.9%, down from 112.0% in the same quarter of the previous year [6] - 'Gross profit- Subscriptions' is anticipated to be $390.94 million, compared to $328.00 million reported in the same quarter last year [6] Stock Performance - Dynatrace shares have decreased by -10.7% in the past month, contrasting with a +0.6% change in the Zacks S&P 500 composite [6] - The company holds a Zacks Rank 3 (Hold), suggesting it is expected to perform in line with the overall market in the near future [6]

Core Viewpoint - The market anticipates Dynatrace (DT) will report a year-over-year increase in earnings driven by higher revenues when it releases its results for the quarter ended June 2025 [1] Earnings Expectations - Dynatrace is expected to post quarterly earnings of $0.38 per share, reflecting a year-over-year increase of +15.2% [3] - Revenues are projected to reach $466.07 million, which is an increase of 16.8% compared to the same quarter last year [3] Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analysts' assessments [4] - The Most Accurate Estimate for Dynatrace is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +1.33%, suggesting a bullish outlook on the company's earnings prospects [12] Earnings Surprise History - In the last reported quarter, Dynatrace was expected to earn $0.30 per share but actually earned $0.33, resulting in a surprise of +10.00% [13] - Over the past four quarters, Dynatrace has consistently beaten consensus EPS estimates [14] Industry Context - In the Zacks Computers - IT Services industry, Leidos (LDOS) is expected to report earnings of $2.63 per share, unchanged from the previous year, with revenues projected at $4.23 billion, up 2.4% [18] - Leidos has a revised EPS estimate that is 0.8% lower over the last 30 days, but a higher Most Accurate Estimate gives it an Earnings ESP of +1.46%, indicating a likely earnings beat [19]

Company Performance - Dynatrace (DT) closed at $54.71, with a +1.03% change from the previous day, outperforming the S&P 500's daily gain of 0.02% [1] - Over the past month, shares of Dynatrace have decreased by 1.35%, underperforming the Computer and Technology sector's gain of 6.31% and the S&P 500's gain of 4.93% [1] Upcoming Earnings - Dynatrace is set to release its earnings report on August 6, 2025, with projected earnings per share (EPS) of $0.38, indicating a 15.15% increase from the same quarter last year [2] - The consensus estimate for quarterly revenue is $466.07 million, reflecting a 16.75% increase from the year-ago period [2] Fiscal Year Projections - For the entire fiscal year, earnings are projected at $1.58 per share and revenue at $1.95 billion, representing increases of +13.67% and +14.98% respectively from the prior year [3] - Recent modifications to analyst estimates indicate positive sentiment regarding Dynatrace's business and profitability [3] Valuation Metrics - Dynatrace has a Forward P/E ratio of 34.27, which is a premium compared to the industry average Forward P/E of 19.78 [6] - The company has a PEG ratio of 2.72, compared to the Computers - IT Services industry average PEG ratio of 1.95 [7] Industry Context - The Computers - IT Services industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 161, placing it in the bottom 35% of over 250 industries [8] - The Zacks Industry Rank assesses the strength of industry groups based on the average Zacks Rank of individual stocks, with top-rated industries outperforming lower-rated ones by a factor of 2 to 1 [8]

Core Insights - Dynatrace (DT) is positioned to potentially continue its earnings-beat streak in upcoming reports, having surpassed earnings estimates by an average of 11.06% in the last two quarters [1][5]. Earnings Performance - In the most recent quarter, Dynatrace reported earnings of $0.30 per share against an expectation of $0.33 per share, resulting in a surprise of 10.00% [2]. - For the previous quarter, the company exceeded the consensus estimate of $0.33 per share by reporting $0.37 per share, achieving a surprise of 12.12% [2]. Earnings Estimates and Predictions - Estimates for Dynatrace have been trending higher, influenced by its history of earnings surprises, and the stock currently has a positive Zacks Earnings ESP of +1.33%, indicating bullish sentiment among analysts [5][8]. - The combination of a positive Earnings ESP and a Zacks Rank of 2 (Buy) suggests a strong possibility of another earnings beat [8]. Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise [6]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [7].