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Dynatrace Inc (DT)
NYSE:DT
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Dynatrace
(NYSE:DT)
Rating:74Outperform
Price Target:―
Positive Factors
Customer Engagement
DPS customers spend twice as much as non-DPS customers and consume more products, indicating strong customer engagement.
Financial Performance
Dynatrace reported strong financial results with revenue and profitability exceeding expectations, indicating a solid performance in the recent quarter.
Growth Drivers
Logs and DPS are significant growth drivers for Dynatrace, with the addition of AI presenting a growing opportunity.
Negative Factors
ARR Growth
Constant currency ARR growth slowed for the third quarter in a row to 17% YoY with net-new ARR declining.
Investor Expectations
FY26 guide for ARR and subscription revenue growth was a tad shy of investor expectations but is viewed as conservative.
Dynatrace (DT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$15.94B
Dividend YieldN/A
Average Volume (3M)3.11M
Price to Earnings (P/E)33.4
Beta (1Y)1.21
Revenue Growth19.81%
EPS Growth139.58%
CountryUS
Employees4,700
SectorTechnology
Sector Strength76
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.33
Shares Outstanding299,350,040
10 Day Avg. Volume3,199,437
30 Day Avg. Volume3,107,461
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)6.10
Price to Sales (P/S)0.00
P/FCF Ratio39.32
Enterprise Value/Market Cap0.94
Enterprise Value/Revenue2.45
Enterprise Value/Gross Profit11.41
Enterprise Value/Ebitda18.18
Forecast
1Y Price Target
$63.85Price Target Upside19.91% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering22
Dynatrace Business Overview & Revenue Model
Company DescriptionDynatrace (DT) is a leading software intelligence company that specializes in application performance management (APM), artificial intelligence for IT operations (AIOps), cloud infrastructure monitoring, and digital experience management. The company provides a comprehensive platform that enables enterprises to optimize their IT environments, ensuring optimal performance and efficiency. Dynatrace's platform utilizes advanced AI and automation to deliver actionable insights, helping businesses to innovate faster and improve customer experiences.
How the Company Makes MoneyDynatrace generates revenue primarily through the sale of software subscriptions and services. The company's revenue model is predominantly based on a Software-as-a-Service (SaaS) model, where customers pay recurring subscription fees to access its cloud-based platform. This model provides a predictable and consistent revenue stream. Additionally, Dynatrace offers professional services to assist with the implementation and optimization of its solutions, contributing to its revenue. The company also benefits from strong partnerships with major cloud service providers, such as AWS, Azure, and Google Cloud, which enhance its market reach and integration capabilities. Significant factors contributing to Dynatrace's earnings include its continuous investment in research and development to maintain its technological edge and its ability to scale effectively to meet the demands of large enterprise clients.
Dynatrace Financial Statement Overview
Summary
Dynatrace demonstrates strong financial performance with impressive profitability and revenue growth. The balance sheet shows low financial leverage and a solid equity base. Cash flows are robust, supporting liquidity and operational needs.Income Statement
Dynatrace shows strong profitability with a high gross profit margin and consistent revenue growth over the years. The net profit margin has improved significantly, indicating effective cost management and rising profitability. The EBIT and EBITDA margins are solid, showcasing operational efficiency.90
Very Positive
Balance Sheet
The balance sheet reflects strong financial health with a low debt-to-equity ratio, indicating low financial leverage. The company has a high equity ratio, suggesting a stable financial base. ROE has improved over time, signaling efficient use of equity to generate profits.85
Very Positive
Cash Flow
Dynatrace exhibits robust cash flow generation with consistent growth in free cash flow. The operating cash flow to net income ratio is favorable, reflecting strong cash conversion from net income. The company has maintained positive free cash flow, supporting its liquidity and operational needs.88
Very Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.63B | 1.43B | 1.16B | 929.45M | 703.51M | 545.80M | Gross Profit |
| 1.32B | 1.18B | 935.64M | 756.57M | 575.80M | 416.87M | EBIT |
| 159.64M | 128.40M | 92.81M | 81.31M | 91.90M | -170.85M | EBITDA |
| 232.91M | 183.34M | 147.42M | 138.18M | 153.02M | -109.52M | Net Income Common Stockholders |
| 482.32M | 154.63M | 107.96M | 52.45M | 75.71M | -418.02M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.01B | 836.87M | 555.35M | 462.97M | 324.96M | 213.17M | Total Assets |
| 3.74B | 3.41B | 2.77B | 2.54B | 2.26B | 2.04B | Total Debt |
| 75.21M | 69.53M | 75.17M | 338.76M | 439.61M | 509.99M | Net Debt |
| -832.27M | -709.46M | -480.18M | -124.20M | 114.64M | 296.81M | Total Liabilities |
| 1.18B | 1.39B | 1.16B | 1.24B | 1.14B | 1.08B | Stockholders Equity |
| 2.55B | 2.02B | 1.60B | 1.30B | 1.11B | 961.50M |
| Cash Flow | Free Cash Flow | ||||
| 406.35M | 346.38M | 333.35M | 233.22M | 206.36M | -163.07M | Operating Cash Flow |
| 428.30M | 378.11M | 354.88M | 250.92M | 220.44M | -142.46M | Investing Cash Flow |
| -190.92M | -193.05M | -21.54M | -30.89M | -13.88M | -20.61M | Financing Cash Flow |
| -105.05M | 50.66M | -232.34M | -80.66M | -97.80M | 329.39M |
Dynatrace Technical Analysis
Positive
53.25
Price Trends
47.62
Positive
51.91
Positive
52.28
Positive
Market Momentum
1.84
Negative
72.69
Negative
90.12
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DT, the sentiment is Positive. The current price of 53.25 is above the 20-day moving average (MA) of 49.49, above the 50-day MA of 47.62, and above the 200-day MA of 52.28, indicating a bullish trend. The MACD of 1.84 indicates Negative momentum. The RSI at 72.69 is Negative, neither overbought nor oversold. The STOCH value of 90.12 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DT.
Dynatrace Risk Analysis
Dynatrace disclosed 50 risk factors in its most recent earnings report. Dynatrace reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 2 New Risks
1.
We cannot guarantee that our share repurchase program will be fully consummated or will enhance long-term stockholder value, and share repurchases could increase the volatility of the trading price of our common stock and diminish our cash reserves. Q4, 2024
2.
Catastrophic events could materially interrupt or disrupt our business and others with which we conduct business. Q4, 2024
Dynatrace Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $14.58B | 61.10 | 25.20% | 0.52% | 10.71% | -27.64% | |
78 Outperform | $14.73B | 306.39 | 5.39% | ― | 32.25% | 156.94% | |
76 Outperform | $18.49B | 17.55 | 68.18% | ― | 7.78% | 1345.45% | |
74 Outperform | $15.94B | 33.36 | 20.86% | ― | 19.81% | 139.58% | |
67 Neutral | $9.24B | ― | -14.15% | ― | -16.74% | 49.75% | |
67 Neutral | $18.06B | 528.94 | -1.34% | ― | 17.16% | 67.81% | |
60 Neutral | $11.56B | 10.24 | -7.04% | 2.94% | 7.46% | -10.54% |
* Technology Sector Average
Performance Comparison
DT
Dynatrace
53.60
5.84
12.23%
GWRE
Guidewire
210.84
87.83
71.40%
DOCU
DocuSign
85.43
27.39
47.19%
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Unity Software
20.81
0.36
1.76%
BSY
Bentley Systems
47.31
-5.66
-10.69%
MNDY
Monday.com
291.90
45.46
18.45%
Dynatrace Earnings Call Summary
Earnings Call Date:May 14, 2025
(Q4-2025)
| % Change Since: 5.36%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong performance by Dynatrace with significant subscription revenue growth, expansion of operating margins, and platform innovations. However, there are concerns about a slight decline in net retention rate and macroeconomic uncertainties that could impact future growth.Q4-2025 Updates
Positive Updates
Strong Subscription Revenue Growth
Subscription revenue grew 20%, surpassing $1.7 billion in ARR and $1 billion in DPS ARR.
Expansion of Operating Margin
Non-GAAP operating margin expanded by more than 100 basis points, and pretax free cash flow margin increased by roughly 250 basis points.
Platform Innovations
Major platform innovations announced, including Grail for GCP, cloud security posture management, AI-powered log management and analytics, and AI observability.
Log Management Growth
Strong adoption of log management offering with 1/3 of customers using the solution, and the number of customers leveraging logs up 18% compared to last quarter.
High Partner Influence
More than 80% of ACV closed in the quarter were partner-influenced with over 40% of those coming from GSIs and hyperscalers.
New Logo Additions
Added 171 new logos in Q4, with a healthy average new logo land size of $130,000.
Negative Updates
Net Retention Rate Decline
Net retention rate was 110% in the fourth quarter, a decrease from previous levels.
Macroeconomic Uncertainty
Acknowledged a more uncertain macro environment, with expectations of enterprises being cautious in spending.
Company Guidance
During the Dynatrace Fourth Quarter and Full Year Fiscal 2025 Earnings Conference Call, the company provided robust guidance and highlighted numerous key performance metrics. Dynatrace achieved a 20% growth in subscription revenue, surpassing $1.7 billion in Annual Recurring Revenue (ARR) and reaching $1 billion in Dynatrace Platform Subscription (DPS) ARR. The company expanded its non-GAAP operating margin by over 100 basis points and increased its pretax free cash flow margin by approximately 250 basis points. With over 4,000 customers and more than 5,000 employees, Dynatrace continues to innovate with major platform advancements and maintains its leadership position in observability and AI Ops. Looking ahead, Dynatrace anticipates ARR to grow by 13% to 14%, with total revenue projected to increase by 14% to 15% in Fiscal 2026, underpinned by strong consumption growth, particularly in logs, which is expected to exceed $100 million in consumption and grow over 100% in the coming fiscal year.Dynatrace Corporate Events
Executive/Board Changes
Dynatrace Appoints Steve McMahon as Chief Customer Officer
Positive
Apr 22, 2025
On April 22, 2025, Dynatrace announced the appointment of Steve McMahon as the new Chief Customer Officer, effective May 12, 2025, succeeding Matthias Dollentz-Scharer, who will retire after over a decade with the company. McMahon, with extensive experience in customer success roles at Zscaler, CrowdStrike, and Splunk, is expected to enhance Dynatrace’s customer value and contribute to its long-term growth, building on the strong foundation established by Dollentz-Scharer.
Spark’s Take on DT Stock
According to Spark, TipRanks’ AI Analyst, DT is a Outperform.
Dynatrace’s overall score reflects its strong financial performance and positive earnings call outcomes, with robust revenue and subscription growth. However, the score is tempered by bearish technical indicators and moderate valuation levels. Challenges in the commercial segment and declining net new ARR and NRR also pose risks. The company’s solid financial foundation and innovative platform support a positive long-term outlook, but current market sentiment and valuation warrant cautious optimism.
To see Spark’s full report on DT stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.