Dynatrace (DT) Q1 2026 Earnings Call August 06, 2025 08:00 AM ET Company ParticipantsNoelle Faris - VP - IRRick McConnell - CEO & DirectorJim Benson - CFORaimo Lenschow - Managing DirectorSanjit Singh - Executive DirectorKash Rangan - Managing DirectorMark Murphy - Managing DirectorAndrew Sherman - Vice PresidentBrent Thill - MD & Tech Sector Leader - Software & Internet ResearchBrad Reback - Managing DirectorW. Miller Jump - Equity Research AssociateConference Call ParticipantsKoji Ikeda - Senior Research ...

Dynatrace (DT) Q1 2026 Earnings Call August 06, 2025 08:00 AM ET Speaker0Greetings, and welcome to Dynatrace Fiscal First Quarter twenty twenty six Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Noelle Farris, Vice President of Investor Relations.Thank you. You may begin.Speaker1Good morning and thank you for joining Dynatrace's fir ...

Core Viewpoint - The article discusses how AI is revolutionizing the processes of root cause analysis (RCA) and software reliability maintenance in DevOps and Site Reliability Engineering (SRE) through the development of AI agents by Traversal [3][4][10]. Group 1: AI in DevOps and SRE - Traversal is building AI agents to transform the world of DevOps and SRE, addressing the challenges of production downtime and the complexities of maintaining software reliability [3][4]. - The company believes that AI agents can automate complex workflows in RCA, allowing human engineers to focus on more creative and strategic tasks [6][15]. - The current state of DevOps is likened to a healthcare analogy, where immediate issues (like heart attacks) take precedence over chronic problems, reflecting the urgent nature of incident management [4][5]. Group 2: Challenges and Solutions - The article highlights the dual nature of the current software engineering landscape, where rapid coding practices (vibe coding) can lead to reliability issues due to a lack of craftsmanship [7][9]. - Traversal aims to automate RCA processes, which are traditionally complex and manual, by using AI systems to streamline these workflows [15][16]. - The company emphasizes the importance of having a rich set of tools to express RCA as a sequence of tool calls, which is essential for solving complex tasks [16][18]. Group 3: Observability and RCA - Observability tools are critical in the tech spending landscape, yet many companies still struggle with effective RCA processes, often resorting to chaotic communication in incident response [13][14]. - The article discusses the limitations of current observability tools, which primarily focus on data generation and visualization, leaving the complex RCA workflows still reliant on manual efforts [15][14]. - Traversal's approach seeks to enhance observability by automating the RCA process, thus reducing the reliance on human intervention and improving efficiency [15][22]. Group 4: Traversal's Product and Impact - Traversal's AI agents are designed to orchestrate various tools for data retrieval and analysis, enabling effective RCA by understanding the relationships between different logs and metrics [16][25]. - The company has observed significant improvements in accuracy and response times when applying their AI solutions in real-world scenarios, achieving over 90% accuracy in identifying root causes when data is available [23][24]. - The deployment of Traversal's solutions has led to a reduction in the number of personnel involved in incident resolution, streamlining the process and enhancing productivity [23][24]. Group 5: Future of Software Engineering - The future of software engineering is expected to shift towards a focus on functionality rather than code quality, with AI systems playing a crucial role in ensuring system reliability [36][37]. - The article suggests that as AI continues to evolve, the skills required for SRE and DevOps roles will also change, necessitating a blend of traditional engineering knowledge and AI literacy [33][34]. - The design of observability data will transform, requiring engineers to adapt to new standards for logging that cater to AI systems rather than human readability [34][35].

Problem Statement - The current software engineering workflow is inefficient, with too much time spent on troubleshooting production incidents [2][9] - Existing approaches to automated troubleshooting, such as AIOps and LLMs, have fundamental limitations [10][11][12][13][14][15][16][17][18] - Troubleshooting is becoming increasingly complex due to AI-generated code and increasingly complex systems [3][4] Solution: Traversal's Approach - Traversal combines causal machine learning (statistics), reasoning models (semantics), and a novel agentic control flow (swarms of agents) for autonomous troubleshooting [19][20][21][22][23][24] - Causal machine learning helps identify cause-and-effect relationships in data, addressing the issue of correlated failures [20][21] - Reasoning models provide semantic understanding of logs, metrics, and code [22] - Swarms of agents enable exhaustive search through telemetry data in an efficient way [23][24] Results and Impact - Traversal has achieved a 40% reduction in mean time to resolution (MTTR) for Digital Ocean, a cloud provider serving hundreds of thousands of customers [32][37] - Traversal AI orchestrates a swarm of expert AIs to sift through petabytes of observability data in parallel, providing users with the root cause of incidents within five minutes [39][40] - Traversal integrates with various observability tools, processing trillions of logs [45] Future Applications - The principles of exhaustive search and swarms of agents can be applied to other domains such as network observability and cybersecurity [47]

Company Overview & Market Position - The company operates in the observability and security space, helping engineers ensure systems are fast, reliable, and secure [2] - The company serves over 60% of the Fortune 100 and eight of the top 10 AI companies [3] - The company has more than 30,000 customers with a gross retention rate of 97-98% [8] Growth Drivers & Future Outlook - Migration to the cloud and the increasing number of applications being built are key drivers of the company's success [9] - The company anticipates a dramatic increase in the number of applications and systems being built due to AI [9] - The company is extremely bullish about the future, seeing an acceleration in the amount of applications and systems being built by companies [3] Challenges & Risks - There was a Guggenheim downgrade due to concerns that OpenAI may create a product to replace the company's services [7] - The company acknowledges the increasing volume of attacks and the need for security solutions, especially with AI advancements enabling bad actors [14] - A big challenge is observing AI applications and models to ensure they behave correctly, are secure, and don't expose information they shouldn't [12]

Hey there, Clia here from Lama Index and today we're going to see how a syllabus extraction agent uh can work. So this agent is basically designed to extract information from a university course syllabus and to give you some summary information about the syllable the syllabus. So let's uh start with this syllabus here. Let's submit it uh so that we can see basically the agent at work.And first is the syllabus extractor tool that use that uses slama extract from llama cloud and basically extracts the informa ...

[Music] So I'm here to talk about taming rogue AI agents but essentially want to talk about uh evaluation driven development observability driven but really why we need observability. So, who uses AI? Is that Jim's stupid most stupid question of the day? Probably. Who trusts AI? Right. If you'd like to meet me after, I've got some snake oil you might be interested in buying. Yeah, we do not trust AI in the slightest. Now, different question. Who reads books? That's reading books. If you want some recommenda ...

[Music] My name is John Gutsinger. Uh I work for Cisco. I'm a principal engineer and I work in the technical assistance center or TAC for short.Uh really I'm focused on AI engineering, agentic engineering in the face of customer support. We've been doing a IML for you know a couple years now maybe five or six years. really it started with trying to figure out how do we handle these mass scale issues type problems right where uh some trending issues going to pop up we know we're going to have tens of thousan ...

Core Insights - The S&P 500 has nearly recovered from a 19% drop due to tariffs, but many enterprise software stocks, including Datadog and Workiva, have not returned to their 2021 highs [1][2] Datadog - Datadog offers an observability platform that monitors cloud infrastructure, with over 30,500 businesses using its services across various industries [4] - The company has expanded into AI observability, with customer usage of its new AI tool more than doubling in the first quarter of 2025 compared to six months prior [5] - Datadog reported that 4,000 customers were using at least one of its AI products in Q1 2025, also doubling year over year [6] - Following strong Q1 results, Datadog raised its full-year revenue forecast for 2025 to $3.235 billion, representing a 21% growth from 2024 [7] - The price-to-sales (P/S) ratio for Datadog has decreased from around 70 in 2021 to 15.5, making it more attractive compared to its historical valuation [8] - Analysts are optimistic, with 31 out of 46 assigning a buy rating, and an average price target of $140.72 indicating a potential upside of 15% over the next 12 to 18 months [10] Workiva - Workiva provides a platform that integrates various digital applications, allowing managers to streamline workflows and reduce human error [11][12] - The company is becoming significant in the ESG reporting space, helping businesses track their impact on stakeholders [13] - Workiva had 6,385 customers at the end of Q1 2025, a 5% increase year-over-year, with higher-spending customer segments growing even faster [14] - The company expects to generate up to $868 million in revenue for 2025, a 17.5% increase compared to 2024 [15] - Workiva's P/S ratio is currently at 4.8, near its lowest level since going public [15] - Analysts are bullish on Workiva, with 11 out of 13 giving it a buy rating and an average price target of $97.64, suggesting a potential upside of 44% over the next 12 to 18 months [17][18]

Summary of Datadog (DDOG) 2025 Conference Company Overview - **Company**: Datadog (DDOG) - **Event**: 2025 Conference (Dash) - **Date**: June 10, 2025 Key Points Industry Focus - Datadog operates in the software and observability industry, focusing on monitoring and security solutions for cloud applications and infrastructure [3][39][115]. Core Themes and Innovations 1. **Investment in R&D**: The CEO emphasized the importance of continuous investment in research and development to keep pace with rapid technological changes, particularly in AI [3][4]. 2. **AI Integration**: Datadog is leveraging AI to enhance its products, including the introduction of autonomous agents like Bits AI, which assist in troubleshooting and incident response [20][49][50]. 3. **Observability and Security**: The company is integrating observability with security through its Cloud SIEM, which has processed over 230 trillion log events, doubling from the previous year [40][115]. Product Developments 1. **Bits AI SRE**: An autonomous AI agent that helps troubleshoot production issues, significantly reducing the time required for root cause analysis [10][20]. 2. **Datadog OnCall**: A tool that has gained over a thousand users, enhancing incident response processes beyond traditional alerting methods [22][36]. 3. **Bits AI Security Analyst**: This feature automates the investigation of security signals, reducing triage time from 30 minutes to 30 seconds [48]. 4. **Bits AI Dev Agent**: A new development tool that autonomously detects issues and creates context-aware pull requests, saving thousands of engineering hours per week [50][58]. 5. **APM Investigator**: A tool designed to help engineers debug latency issues more efficiently, providing insights and proposed fixes [60][71]. 6. **Internal Developer Portal (IDP)**: A fully managed portal that helps engineers manage infrastructure and track best practices, enhancing development speed [75][84]. Customer Use Cases - **Toyota Connected**: Highlighted the use of Datadog for monitoring over 12.5 million connected vehicles, achieving high reliability and operational excellence [113][115]. - **Cursor**: A customer that has scaled rapidly, utilizing Datadog for observability to enhance their AI coding tools [88][90]. Additional Features 1. **FlexLogs**: A product that allows teams to manage log storage effectively, now storing over 100 petabytes of data per month [120]. 2. **Flex Frozen**: A new long-term storage tier for logs, designed for compliance and historical reporting [121]. 3. **Datadog Archive Search**: A feature that simplifies log discovery and analysis across different storage locations [122]. Future Directions - Datadog is focused on enhancing its AI capabilities and integrating them into various aspects of its platform to improve user experience and operational efficiency [3][49][73]. Important Metrics - **Log Events Processed**: Over 230 trillion in the past year, more than double the previous year [40]. - **Connected Vehicles**: Over 12.5 million vehicles monitored by Toyota Connected using Datadog [113]. - **PRs Generated by Dev Agent**: Over 1,000 per month, significantly reducing engineering workload [58]. Conclusion Datadog is positioning itself as a leader in the observability and security space by integrating advanced AI capabilities into its products, enhancing user experience, and providing robust solutions for monitoring and incident response across various industries.