LAS VEGAS--(BUSINESS WIRE)--At Perform, its flagship annual user conference, Dynatrace (NYSE: DT), the leading AI-powered observability platform, announced a deeply integrated set of developer experience and agentic AI capabilities. These updates evolve observability from passive insight into an intelligent control layer that actively guides, optimizes, and protects software delivery in real time. Software delivery is undergoing a major shift as cloud-native architectures, AI-assisted development, and agent ...

This system is powered by the Dynatrace 3 generation platform, including: LAS VEGAS--(BUSINESS WIRE)--At Perform, its flagship annual user conference, Dynatrace (NYSE: DT), the leading AI-powered observability platform, unveiled Dynatrace Intelligence, a new agentic operations system that fuses deterministic and agentic AI. This differentiated combination delivers reliable, agentic AI- powered observability to customers. Built to observe and optimize dynamic AI workloads, Dynatrace Intelligence empowers org ...

Financial Data and Key Metrics Changes - Dynatrace reported a strong second quarter for fiscal 2026, with Annual Recurring Revenue (ARR) growing 16% to $1.9 billion, consistent with Q1 growth [4][20] - Subscription revenue increased by 17% to $473 million, exceeding guidance by nearly 100 basis points [24] - Non-GAAP operating margin was 31%, surpassing the top end of guidance by 150 basis points [24] - Non-GAAP net income reached $133 million, or $0.44 per diluted share, which was 3 cents above the high end of guidance [24][25] - Free cash flow for Q2 was $28 million, with a trailing 12-month free cash flow of $473 million, or 26% of revenue [25][29] Business Line Data and Key Metrics Changes - Subscription revenue growth was driven by strong net new ARR bookings and significant expansion in the logs business, which is the fastest-growing product category, growing over 100% year over year [20][22][24] - The Dynatrace platform subscription licensing model (DPS) has gained traction, with 50% of customers and 70% of ARR now utilizing this model [16][22] Market Data and Key Metrics Changes - Execution was particularly strong in North America and Asia-Pacific, with many deals influenced by Global System Integrators (GSI) partners [20] - The company added 139 new logos in Q2, with an average ARR per new logo exceeding $140,000 [21] Company Strategy and Development Direction - Dynatrace is focusing on AI-powered observability as a critical component for software reliability and performance, aiming to enable autonomous operations [4][8] - The company is investing in partnerships, such as with ServiceNow and Atlassian, to enhance its autonomous IT operations capabilities [12][13] - The logs market is viewed as a significant opportunity for disruption, with Dynatrace's unified data model allowing for cross-data analytics [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth drivers, raising full-year ARR growth guidance to 14%-15% in constant currency [26][28] - The company acknowledged potential timing variability in closing large deals but emphasized a healthy demand environment [60][66] - Management highlighted the importance of consumption growth as a leading indicator for future expansions and overall business health [49][50] Other Important Information - The company repurchased 994,000 shares for $50 million during Q2 as part of a $500 million share repurchase program [25] - The logs business is rapidly approaching a $100 million annualized consumption milestone [14][55] Q&A Session Summary Question: Clarification on net retention rate - Management noted that while net new ARR grew 16%, the net retention rate (NRR) is a trailing metric and will take time to reflect the positive momentum seen in other areas [36][37] Question: Productivity from go-to-market improvements - Management confirmed that investments in go-to-market strategies have led to improved close rates and pipeline productivity [41][42] Question: Convergence of net new ARR and subscription revenue growth - Management explained that while subscription revenue is recognized ratably, consumption growth is a key leading indicator for future revenue growth [47][50] Question: Focus on consumption as a key metric - Management emphasized that consumption is an important metric to monitor, as it fuels expansions and overall growth [53][54] Question: Dynamics of early renewals impacting revenue guidance - Management indicated that early renewals from DPS customers positively impacted Q2 results and are expected to continue influencing future revenue [89]

Financial Data and Key Metrics Changes - Dynatrace reported a strong second quarter for fiscal 2026, with Annual Recurring Revenue (ARR) growing by 16% to $1.9 billion, consistent with the previous quarter [20] - Subscription revenue increased by 17% to $473 million, exceeding guidance by nearly 100 basis points [24] - Non-GAAP operating margin reached 31%, surpassing the top end of guidance by 150 basis points [24] - Non-GAAP net income was $133 million, or $0.44 per diluted share, which was $0.03 above the high end of guidance [24] - Free cash flow for the quarter was $28 million, with a trailing 12-month free cash flow of $473 million, or 26% of revenue [25] Business Line Data and Key Metrics Changes - Subscription revenue growth was driven by strong net new ARR bookings, particularly in North America and Asia-Pacific [20] - The logs business is the fastest-growing product category, with growth exceeding 100% year-over-year and approaching $100 million in annualized consumption [13][22] - The Dynatrace platform subscription licensing model (DPS) has gained traction, with 50% of customers and 70% of ARR now utilizing this model [22][16] Market Data and Key Metrics Changes - The company added 139 new logos in Q2, with an average ARR per new logo exceeding $140,000 [21] - The net retention rate (NRR) was 111%, consistent with the prior quarter, indicating strong customer retention [21] - The strategic account pipeline increased by 45% year-over-year, reflecting healthy demand in the market [27] Company Strategy and Development Direction - Dynatrace is focusing on AI-powered observability as a critical component for software reliability and performance, aiming to enable autonomous operations [4][8] - The company is leveraging partnerships with ServiceNow and Atlassian to enhance its offerings and drive intelligent automation [12] - The strategy includes a strong emphasis on log management and tool consolidation to capture growing enterprise demand [13][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth drivers, citing secular tailwinds from vendor consolidation, cloud modernization, and AI workload proliferation [26] - The company raised its full-year ARR growth guidance to 14%-15% in constant currency, reflecting strong first-half performance [28] - Management acknowledged potential timing variability in closing large deals but remains optimistic about the overall demand environment [62] Other Important Information - The company repurchased 994,000 shares for $50 million during Q2 as part of a $500 million share repurchase program [25] - The emphasis on driving platform adoption and consumption is seen as a foundational growth engine for the company [23] Q&A Session Summary Question: Insights on net retention rate metric - Management noted that while net new ARR grew 16%, NRR is a trailing metric and will take time to reflect the positive momentum seen in other areas [36][38] Question: Productivity from go-to-market improvements - Management confirmed that investments in sales coverage have led to improved close rates and pipeline productivity [42][43] Question: Convergence of net new ARR and subscription revenue growth - Management explained that while subscription revenue is recognized ratably, consumption growth is a key leading indicator for future expansions [48][50] Question: Focus on consumption as a key metric - Management emphasized that while ARR is important, consumption growth is critical for driving expansions and overall business health [54][55] Question: Dynamics of early renewals impacting Q3 guidance - Management indicated that early renewals from DPS customers positively influenced Q2 results and are expected to continue impacting future revenue [90]

Financial Data and Key Metrics Changes - Dynatrace reported strong Q2 fiscal 2026 results, with ARR growing 16% and subscription revenue increasing 17% [3][18] - Pre-tax free cash flow was 32% of revenue on a trailing 12-month basis, while total revenue for Q2 was $494 million, up 17% [3][23] - Non-GAAP operating margin was 31%, exceeding guidance by 150 basis points, and non-GAAP net income was $133 million, or $0.44 per diluted share [23][24] Business Line Data and Key Metrics Changes - The logs business is the fastest-growing product category, growing over 100% year over year and approaching $100 million in annualized consumption [12][21] - The Dynatrace platform subscription licensing model (DPS) has reached a milestone with 50% of customers and 70% of ARR utilizing it [15][20] - Total Q2 consumption growth was more than 20%, outpacing subscription revenue growth [21][22] Market Data and Key Metrics Changes - Execution was particularly strong in North America and Asia-Pacific, with many deals influenced by GSI partners [18][19] - The strategic account pipeline is up 45% year over year, indicating strong demand for observability solutions [25][49] - The net retention rate (NRR) was 111% in Q2, consistent with the prior quarter, reflecting stable customer expansion [19][20] Company Strategy and Development Direction - Dynatrace aims to evolve its platform towards autonomous operations, leveraging AI for preventive measures and self-healing capabilities [4][7] - The company is focusing on capturing the growing demand for end-to-end observability and large-scale tool consolidations [3][17] - Recent partnerships with ServiceNow and Atlassian aim to enhance autonomous IT operations and improve incident management processes [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth drivers, citing secular tailwinds from vendor consolidation, cloud modernization, and AI workload proliferation [25][26] - The company raised its full-year ARR growth guidance to 14%-15% and total revenue growth guidance to 15%-15.5% [26][27] - Management acknowledged the dynamic macro and geopolitical environment, particularly in AMEA, while maintaining a positive outlook on demand [25][46] Other Important Information - Dynatrace repurchased 994,000 shares for $50 million during Q2 as part of a $500 million share repurchase program [24] - The company is focusing on driving platform adoption and consumption as foundational growth engines [22][23] Q&A Session Summary Question: Insights on net retention rate metric - Management noted that while net new ARR grew 16% for the quarter, NRR is a trailing metric and will take time to reflect the current business momentum [30][31] Question: Productivity from go-to-market improvements - Management confirmed that investments in sales coverage have led to improved close rates and pipeline productivity [32][33] Question: Convergence of net new ARR and subscription revenue growth - Management explained that while subscription revenue is ratable, consumption growth is a leading indicator for future expansions [36][39] Question: Impact of early DPS customer renewals on Q3 guidance - Management indicated that early renewals from DPS customers positively impacted Q2 results and are expected to continue influencing future revenue [59][60] Question: Strategic collaboration with ServiceNow - Management highlighted the collaboration's potential to enhance autonomous IT operations and improve overall service delivery [61]