Dynatrace Reports First Quarter Fiscal Year 2026 Financial Results

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%

Dynatrace (NYSE:DT), the leading AI-powered observability platform, today announced financial results for the first quarter of fiscal 2026 ended June 30, 2025.

"We delivered a strong start to the fiscal year, exceeding guidance across all our metrics, driven by a large number of seven-figure expansion deals and accelerating log management deployment," said Rick McConnell, Chief Executive Officer of Dynatrace. "Cloud modernization and AI have caused an explosion of data and complexity that is compelling customers to move away from fragmented tools toward an end-to-end observability platform. Our 3rd generation platform, with Grail at its core, was purpose-built to address this market shift, providing deterministic insights that can lead to more resilient software and serve as a trustworthy foundation for an agentic AI future."

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.

Financial Highlights:

• Total ARR of $1,822 million, an increase of 18%, or 16% on a constant currency basis
• Total revenue of $477 million, an increase of 20%, or 19% on a constant currency basis
• Subscription revenue of $458 million, an increase of 20%, or 19% on a constant currency basis
• GAAP income from operations of $62 million and non-GAAP income from operations of $143 million
• GAAP net income per share of $0.16 and non-GAAP net income per share of $0.42, on a dilutive basis

Business Highlights:

• Go-to-market traction:
  • Dynatrace closed 12 expansion deals greater than $1 million in annual contract value (ACV) in the quarter, 10 of which were in collaboration with partners, and 50% of the deals had significant Log Management deployments.
  • Dynatrace Platform Subscription (DPS) licensing models continue to gain traction with over 45% of our customer base and over 65% of our ARR leveraging this flexible, scalable, and transparent subscription approach.

• Industry and customer recognition:
  • Positioned highest in Execution in the 2025 Gartner® Magic Quadrant™ for Observability Platforms. This is the 15th consecutive year that Gartner has named Dynatrace a Leader in this report.¹
  • Ranked #1 across four of six use cases in the 2025 Gartner Critical Capabilities for Observability Platforms Report.²
  • Named a Customers' Choice in the 2025 Gartner Peer Insights Voice of the Customer for Digital Experience Monitoring.³
  • Named a Leader and Outperformer in the 2025 GigaOm Radar for Kubernetes Observability.

• Product innovation:
  • Announced significant advancements to Dynatrace's 3rd generation platform, enhancing Cloud-Native, AI-Observability, and Log Management capabilities, to help customers further simplify operations and accelerate innovation.
  • Announced general availability of Live Debugger, delivering real-time, non-intrusive insights that accelerate problem solving and streamline performance monitoring at scale.
  • Expanded the Dynatrace platform with agentic AI capabilities designed to prevent issues, optimize resources, and adapt autonomously.

• Partner traction:
  • Announced a new collaboration to integrate Dynatrace's full-stack, AI and LLM observability solution with NVIDIA's Enterprise AI Factory, enabling customers to deploy their own AI factory with real-time observability and AI-powered insights.
  • Announced Dynatrace agent support for Amazon Bedrock Agent monitoring, OpenAI Agent Software Development Kit (SDK), and Google Agent Development Kit (ADK) to help customers improve performance and compliance and provide detailed debugging tools.
  • Added Red Hat OpenShift AI to the Dynatrace AI Ready Initiative to help customers innovate more confidently with AI.
  • Integrated DXC's Modernization Studio into the Dynatrace platform to help enterprises leverage AI and machine learning to modernize applications and remove unproductive technical debt.

Share Repurchase Program

• During the first quarter of fiscal 2026, Dynatrace spent $45 million to repurchase 905,000 shares at an average price of $49.76 under its $500 million share repurchase program. From the inception of the program in May 2024 through June 30, 2025, Dynatrace has repurchased 4.4 million shares for $218 million at an average price of $49.99.

Financial Outlook

Based on information available as of August 6, 2025, Dynatrace is issuing guidance for the second quarter and updating its previous guidance for full year fiscal 2026 in the table below.

This guidance is based on foreign exchange rates as of July 31, 2025. We now expect foreign exchange to be a tailwind of approximately $34 million on ARR and approximately $29 million on revenue for fiscal 2026 compared to ARR and revenue at constant currency. This represents an incremental tailwind of approximately $13 million to ARR and $12 million to revenue. This guidance also excludes the impact of any share repurchases after June 30, 2025.

Growth rates for ARR, Total revenue, and Subscription revenue are presented in constant currency to provide better visibility into the underlying growth of the business.

Conference Call and Webcast Information

Dynatrace will host a conference call and live webcast to discuss its results and business outlook at 8:00 a.m. Eastern Time today, August 6, 2025. To access the conference call from the U.S. and Canada, dial (866) 405-1247, or internationally, dial (201) 689-8045 with event confirmation #: 13754900. The call will also be available live via webcast on the company's website, ir.dynatrace.com.

An audio replay of the call will also be available until 11:59 p.m. Eastern Time on November 4, 2025, by dialing (877) 660-6853 from the U.S. and Canada, or for international callers by dialing (201) 612-7415 and entering event confirmation #: 13754900. In addition, an archived webcast will be available at ir.dynatrace.com.

We announce material financial information to our investors using our Investor Relations website, press releases, SEC filings and public conference calls and webcasts. We also use these channels to disclose information about the company, our planned financial and other announcements, attendance at upcoming investor and industry conferences, and for complying with our disclosure obligations under Regulation FD.

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with GAAP, this press release and the accompanying tables contain certain non-GAAP financial measures as defined by Regulation G, including non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share, and free cash flow. We also use or discuss non-GAAP financial measures in conference calls, slide presentations and webcasts.

We use these non-GAAP financial measures for financial and operational decision-making purposes, and as a means to evaluate period-to-period comparisons and liquidity. We believe that these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.

The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Our non-GAAP financial measures may not provide information that is directly comparable to similarly titled metrics provided by other companies.

Non-GAAP financial measures are defined in this press release and the tables included in this press release include reconciliations of historical non-GAAP financial measures to their most directly comparable GAAP measures.

We also include non-GAAP financial measures in our financial outlook included in this press release. Reconciliations of forward-looking non-GAAP income from operations, non-GAAP net income, non-GAAP net income per diluted share, and free cash flow guidance to the most directly comparable GAAP measures are not available without unreasonable efforts due to the high variability, complexity, and low visibility with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of share-based compensation expense, employer taxes and tax deductions specific to equity compensation awards that are directly impacted by future hiring, turnover and retention needs, as well as unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.

Definitions - Non-GAAP and Other Metrics

Annual Recurring Revenue (ARR) is defined as the daily revenue of all subscription agreements that are actively generating revenue as of the last day of the reporting period multiplied by 365. We exclude from our calculation of ARR any revenues derived from month-to-month agreements and/or product usage overage billings.

Constant Currency amounts for ARR, Total Revenue and Subscription Revenue are presented to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign exchange rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year.

Non-GAAP Income from Operations is defined as GAAP income from operations adjusted for the following items: share-based compensation; employer payroll taxes on employee stock transactions; amortization of intangibles; transaction, restructuring and other non-recurring or unusual items that may arise from time to time. The related Non-GAAP Operating Margin is non-GAAP income from operations expressed as a percentage of total revenue.

Non-GAAP Net Income is defined as GAAP net income adjusted for the following items: income tax expense/benefit; non-GAAP effective cash taxes; net interest expense and income; net cash received from and paid for interest; share-based compensation; employer payroll taxes on employee stock transactions, amortization of intangibles; gains and losses on currency translation; and transaction, restructuring and other non-recurring or unusual items that may arise from time to time. Non-GAAP net income per diluted share is calculated as non-GAAP net income divided by the diluted weighted average shares outstanding used to compute GAAP net income per diluted share.

Free Cash Flow is defined as the net cash provided by or used in operating activities less capital expenditures, reflected as purchase of property and equipment and capitalized software additions in our financial statements. The related margin is free cash flow expressed as a percentage of total revenue.

About Dynatrace

Dynatrace (NYSE:DT) is advancing observability for today's digital businesses, helping to transform the complexity of modern digital ecosystems into powerful business assets. By leveraging AI-powered insights, Dynatrace enables organizations to analyze, automate, and innovate faster to drive their business forward. To learn more about Dynatrace, visit www.dynatrace.com, visit our blog and follow us on LinkedIn and X @dynatrace.

Dynatrace and the Dynatrace logo are trademarks of the Dynatrace, Inc. group of companies. All other trademarks are the property of their respective owners. © 2025 Dynatrace LLC.

Cautionary Language Concerning Forward-Looking Statements

This press release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding Dynatrace's capabilities and platform and the impact of cloud modernization and AI, the expected and current benefits that we believe organizations receive from using the Dynatrace platform and offerings of our partners, and our financial and business outlook, including our financial guidance for the second quarter and full year of fiscal 2026. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as "will," "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, our ability to maintain our revenue growth rates in future periods; market adoption of our product offerings; continued demand for, and spending on, our solutions; our ability to innovate and develop solutions that meet customer needs, including through Davis AI; the ability of our platform and solutions to effectively interoperate with customers' IT infrastructures; our ability to acquire new customers and retain and expand our relationships with existing customers; our ability to expand our sales and marketing capabilities; our ability to compete; our ability to maintain successful relationships with partners; security breaches, other security incidents and any real or perceived errors, failures, defects or vulnerabilities in our solutions; our ability to protect our intellectual property; our ability to hire and retain necessary qualified employees to grow our business and expand our operations; our ability to successfully complete acquisitions and to integrate newly acquired businesses and offerings; the effect on our business of the macroeconomic environment, associated global economic conditions and geopolitical disruption; and other risks set forth under the caption "Risk Factors" in our Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, and our other SEC filings. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

Gartner Disclaimers

1) Gartner, Magic Quadrant for Observability Platforms, Gregg Siegfried, Matt Crossley, Padraig Byrne, Andre Bridges, Martin Caren, 7 July 2025.

2) Gartner, Critical Capabilities for Observability Platforms, Gregg Siegfried, Matt Crossley, Padraig Byrne, Andre Bridges and Martin Caren, 8 July 2025.

3) Gartner, Peer Insights Voice of the Customer for Digital Experience Monitoring, By Peer Contributors, 23 May 2025.

Gartner Peer Insights content consists of the opinions of individual end users based on their own experiences, and should not be construed as statements of fact, nor do they represent the views of Gartner or its affiliates. Gartner does not endorse any vendor, product or service depicted in this content nor makes any warranties, expressed or implied, with respect to this content, about its accuracy or completeness, including any warranties of merchantability or fitness for a particular purpose. Reviews have been edited to account for errors and readability.

GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, MAGIC QUADRANT and Gartner Peer Insights are registered trademarks of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved.

Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Dynatrace was recognized as Compuware from 2010-2014.

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Investor Contact:

Noelle Faris

VP, Investor Relations

[email protected]

Media Relations:

Dynatrace PR Team

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