Financial Data and Key Metrics Changes - Dynatrace achieved a total revenue of $515 million in Q3, with subscription revenue at $493 million, both reflecting a 16% year-over-year growth, exceeding guidance by 150 basis points [33][39] - The company reported an ARR of $1.97 billion, representing a 16% growth, marking three consecutive quarters of stabilization in ARR growth [30][38] - Non-GAAP net income was $135 million, or $0.44 per diluted share, which was $0.02 above the high end of guidance [35] Business Line Data and Key Metrics Changes - The log management solution surpassed $100 million in annualized consumption, growing over 100% year-over-year, making it the fastest-growing product category [33][50] - The average ARR per new logo was over $160,000, with the average land size exceeding $200,000, indicating strong demand for the platform [31][32] - The gross retention rate remained in the mid-90s, while the net retention rate was 111%, consistent with previous quarters [32] Market Data and Key Metrics Changes - The AI market is projected to grow from less than $200 billion in 2023 to nearly $5 trillion in the next seven years, indicating a significant opportunity for Dynatrace [8] - Hyperscaler growth is approaching $300 billion in annualized revenue, growing in the high 20s, which presents challenges for customers that Dynatrace aims to address [9] Company Strategy and Development Direction - Dynatrace is focusing on end-to-end observability as a foundational element for AI-driven operations, emphasizing the importance of integrating various data sources [43][64] - The company announced Dynatrace Intelligence, an agentic operations system designed for modern software ecosystems, which will enhance its observability capabilities [17][18] - The strategy includes deeper technical engagements with major hyperscalers and the acquisition of DevCycle to enhance feature management for AI-native applications [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for observability solutions, driven by trends in cloud modernization and AI workload proliferation [37][38] - The company raised its full-year guidance for ARR growth to a range of 15.5%-16%, expecting to surpass $2 billion in ARR [38][39] - Management highlighted the importance of observability in an AI-first world, stating that it is essential for trusted insights and automation [21][64] Other Important Information - The board authorized a new $1 billion share repurchase program, doubling the size of the previous program, reflecting confidence in the business [37] - Dynatrace is actively investing in R&D while returning capital to shareholders, indicating a balanced approach to growth and shareholder value [36][37] Q&A Session Summary Question: Client engagement levels regarding automation and data integration - Management noted strong momentum in end-to-end observability as customers seek to consolidate tools and improve outcomes [43] Question: Pace of change in AI-driven incident management - Management indicated that while there is apprehension about AI adoption, end-to-end observability is becoming foundational for AI-driven actions [46][48] Question: Growth in log monitoring consumption - Management confirmed that log consumption is growing over 100% and is expected to be a significant source of new ARR [50][52] Question: New logo growth and market expansion - Management expects a near-term mix of one-third new logos and two-thirds expansions, emphasizing ongoing opportunities within the existing customer base [74] Question: Competitive environment and risks from larger language models - Management believes that Dynatrace's comprehensive platform and architectural advantages position it well against competition, including potential threats from LLMs [81][84]

Financial Data and Key Metrics Changes - Dynatrace achieved a total revenue of $515 million in Q3, representing a 16% year-over-year growth, exceeding guidance by 150 basis points [33] - Subscription revenue was $493 million, also up 16% year-over-year [33] - Annual Recurring Revenue (ARR) ended at $1.97 billion, reflecting a 16% growth and stabilization of ARR growth for three consecutive quarters [30] - Net new ARR for Q3 was $75 million, adjusted for foreign exchange, marking an 11% increase from the previous year [30] - Non-GAAP operating margin was 30%, exceeding guidance by nearly 100 basis points [34] - Non-GAAP net income was $135 million, or $0.44 per diluted share, surpassing guidance by $0.02 [35] - Free cash flow for Q3 was $27 million, with a trailing 12-month free cash flow of $463 million, representing 24% of revenue [35] Business Line Data and Key Metrics Changes - Log Management surpassed $100 million in annualized consumption, growing over 100% year-over-year, making it the fastest-growing product category [33][52] - The average ARR per customer is now nearly $500,000, indicating strong adoption of the platform [32] - The average ARR per new logo was over $160,000, with 164 new logos added in Q3 [31] Market Data and Key Metrics Changes - The AI market is projected to grow from less than $200 billion in 2023 to nearly $5 trillion in the next seven years, indicating significant market potential for observability solutions [8] - Hyperscaler growth is approaching $300 billion in annualized revenue, growing in the high 20s, which presents both opportunities and challenges for customers [9] Company Strategy and Development Direction - Dynatrace is focusing on end-to-end observability as a foundational element for AI-driven operations, emphasizing the importance of integrating various data sources [43][64] - The company announced Dynatrace Intelligence, an agentic operations system designed for modern software ecosystems, which will enhance AI-powered observability [17][18] - The strategy includes deeper technical engagements with major hyperscalers and the acquisition of DevCycle to enhance feature management capabilities [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for observability solutions, driven by trends in cloud modernization and AI workload proliferation [38] - The board authorized a new $1 billion share repurchase program, reflecting confidence in the business and belief that shares are undervalued [37] - The company raised its full-year guidance for ARR growth to a range of 15.5%-16%, expecting to surpass $2 billion in ARR [39] Other Important Information - The company hosted its annual customer conference, PERFORM 2026, which highlighted advancements in the Dynatrace platform and customer success stories [7][22] - Dynatrace is investing in partnerships and collaborations, particularly with ServiceNow, to enhance autonomous IT operations [24] Q&A Session Summary Question: Client engagement and automation story - Management noted strong momentum in end-to-end observability as clients seek to consolidate tools and improve outcomes [43] Question: Pace of change in AI and observability - Management indicated that while there is apprehension about AI adoption, end-to-end observability is becoming essential for driving AI outcomes [46] Question: Log monitoring consumption growth - Management confirmed that log consumption is growing over 100% and is expected to be a significant source of new ARR [50][52] Question: New logo growth and market expansion - Management expressed confidence in new logo momentum, expecting a mix of one-third new logos and two-thirds expansions in the near term [74] Question: Competitive environment and AI risks - Management believes that Dynatrace's comprehensive platform differentiates it from smaller competitors and that observability is essential for AI-driven operations [81][84]

Q3 2026 Investor Presentation February 9, 2026 1 Legal Disclaimer This presentation consists of these slides and the associated remarks and comments, which are related and intended to be presented and understood together. Please refer to the appendix of these slides for definitions of certain terms. Cautionary Language Concerning Forward-Looking Statements This presentation includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including sta ...

Core Insights - Dynatrace announced a new set of developer experience and agentic AI capabilities at its annual user conference, enhancing observability from passive insight to an intelligent control layer for real-time software delivery optimization [1][2] Group 1: Industry Trends - The software delivery landscape is shifting towards cloud-native architectures and AI-assisted development, with 42% of organizations currently using agentic AI in customer-facing digital products and 31% planning to expand its adoption in the next five years [2] - The need for real-time, production-grade control is increasing as code and configurations evolve rapidly, necessitating enhanced visibility and risk management [2] Group 2: Product Enhancements - Dynatrace's new capabilities unify various aspects of software development, including frontend, backend, AI telemetry, and mobile, into a single developer-facing experience [3] - Key enhancements include a modernized frontend experience with Real User Monitoring (RUM) and Error Inspector for improved visibility and troubleshooting [6] - New mobile diagnostics tools help developers quickly identify Application Not Responding (ANR) events and crashes, thereby enhancing app stability [6] Group 3: Developer Impact - The enhancements are designed to improve developer productivity and confidence, allowing organizations to innovate faster without increasing risk [5][7] - Dynatrace's observability improvements support developers in ensuring the quality and performance of AI-generated code, particularly for frontend and mobile applications [5] Group 4: Future Developments - Dynatrace is integrating DevCycle to advance observability into an active control system, with updates already in progress [6] - The company plans to roll out several enhancements over time, further solidifying its position in the observability market [7]

Core Insights - Dynatrace announced the launch of domain-specific Agents designed to enhance site reliability engineering (SRE), development, and security teams through autonomous actions, leveraging its AI-powered observability platform [1][3] Group 1: Product Features - The Dynatrace Intelligence Agents provide real-time observability insights, enabling organizations to achieve fully autonomous outcomes with speed, precision, and governance [1][2] - These agents automatically mobilize in response to detected anomalies or user requests, assessing context and urgency to coordinate next steps [3][4] - The agents facilitate collaboration across external platform agents and enterprise systems, allowing for comprehensive operational actions without vendor lock-in [4][5] Group 2: Operational Benefits - The introduction of domain-specific agents enhances team capabilities, accelerating response times, improving consistency, and allowing teams to focus on higher-value tasks [4][6] - Organizations can expect reduced operational toil through automation of repeatable tasks, leading to improved customer experiences and faster issue resolution [6][7] - The agents are designed to operationalize expertise into repeatable workflows, increasing confidence and control through policy-driven governance [6][7] Group 3: Market Positioning - Dynatrace positions its Intelligent Agents as a means to shift from incident management to intelligence management, creating a self-healing foundation that transforms cloud complexity into a strategic advantage [8] - The company emphasizes the importance of deterministic AI in reducing costs and increasing trust, which is essential for scaling enterprise operations [7][8] - Dynatrace's partnerships with major technology providers like AWS, Microsoft Azure, and Google Cloud enhance the effectiveness of its automation platforms [8] Group 4: Availability - Dynatrace Intelligence Agents are currently available, with additional agents expected to follow [9]

Financial Performance & Guidance - Dynatrace's Annual Recurring Revenue (ARR) reached $1.90 billion[39] - The Q2 2026 subscription revenue mix was at 96%[39] - The company's gross retention rate was in the mid-90s percentage range[39] - The TTM Q2-26 Non-GAAP operating margin was 29%[39] - ARR growth year-over-year was 16%[39] - The net retention rate was 141%[39] - The TTM Q2-26 pre-tax Free Cash Flow (FCF) margin was 32%[39] - The FY26 ARR guidance is $2010 - $2025 million, representing a 14%-15% growth in constant currency[57] - The FY26 total revenue guidance is $1985 - $1995 million, representing a 15%-15.5% growth in constant currency[57] - The FY26 subscription revenue guidance is $1898 - $1908 million, representing a 15%-15.5% growth in constant currency[57] Market Opportunity - The total addressable market (TAM) for observability and security is large and growing, with observability at $85 billion and security at $14 billion[29]

Core Insights - DXC Technology has been named Global Partner of the Year by Dynatrace, recognizing a 15-year strategic collaboration that has delivered transformative results for enterprise customers globally [1][2][3] Company Achievements - The award highlights DXC's exceptional innovation and market adoption of Dynatrace solutions, showcasing its ability to exceed expectations and address evolving enterprise needs [2][3] - DXC has established a dedicated Dynatrace strategic business unit with over 280 certified engineers and more than 1,500 trained professionals worldwide [2][3] Partnership Impact - In the past 15 months, DXC has assisted over 200 organizations, including complex enterprises, in adopting Dynatrace solutions, enhancing their transformation and issue resolution capabilities [3][4] - The partnership emphasizes the combined potential of DXC and Dynatrace to deliver significant business outcomes, with a focus on innovation and market growth [3][4] Expertise and Commitment - DXC is recognized for its substantial investment in Dynatrace talent, reflecting its commitment to next-generation observability solutions [4] - The company operates a Center of Excellence focused on Logs Management on Grail, demonstrating leadership in applying AI to enterprise-scale applications [4]