Dynatrace (DT) AI Stock Analysis

Compare

2,324 Followers

Top Page

Dynatrace

(NYSE:DT)

Select Model

Outperform 72 (OpenAI - 5.2)

Rating:72Outperform

Price Target:

$40.00

▲(13.83% Upside)

Action:ReiteratedDate:02/10/26

The score is supported primarily by strong financial quality (high margins, low leverage, strong cash conversion) and an earnings call that raised guidance and expanded buybacks. These positives are tempered by weak technicals (price below all key moving averages with negative MACD) and a demanding valuation (high P/E) amid signs of slowing growth.

Positive Factors

SaaS subscription model

A subscription SaaS model gives durable recurring revenue and predictable ARR, improving cash visibility and unit economics. Usage-based pricing (hosts/data monitored) scales with customer cloud adoption, supporting upsells, high retention and durable revenue as enterprises standardize on observability platforms.

Very high margins & cash conversion

Sustained ~81% gross margins and ~27–28% net margins indicate strong pricing power and scalable delivery. Near-100% conversion of net income to free cash flow provides financing flexibility for R&D, inorganic growth, and buybacks, and cushions the business through slower top-line periods.

Logs consumption & product differentiation

Rapid logs consumption growth diversifies revenue beyond seat/host metrics and increases wallet share per customer. Combined with Grail, SmartScape and hyperscaler integrations, this strengthens Dynatrace's platform moat and creates durable cross-sell and expansion pathways inside large enterprise accounts.

Negative Factors

Slowing revenue / ARR deceleration

A material step-down in growth rates is a structural concern: lower top-line momentum makes it harder to sustain historical operating-leverage gains and returns. If ARR/revenue growth remains muted, the company must rely more on price increases, deeper penetration, or new products to maintain profit expansion.

Dependence on expansions vs new logos

Heavy reliance on upsells and expansions concentrates growth risk in existing customers; if enterprise budgets tighten or expansion cadence slows, overall ARR growth could compress. Durable scale requires consistent new-logo acquisition to broaden the base and reduce customer-concentration growth risk.

Consumption-to-ARR conversion lag

When usage rises faster than contracted ARR, monetization lags and reported recurring revenue can understate underlying demand. This timing gap can create persistent volatility in reported growth and requires contract or packaging changes to reliably capture consumption in ARR, a multi-quarter structural challenge.

Dynatrace (DT) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$10.22B

Dividend YieldN/A

Average Volume (3M)6.14M

Price to Earnings (P/E)57.9

Beta (1Y)1.03

Revenue Growth18.50%

EPS Growth207.45%

CountryUS

Employees4,700

SectorTechnology

Sector Strength88

IndustrySoftware - Application

Share Statistics

EPS (TTM)0.44

Shares Outstanding298,251,130

10 Day Avg. Volume5,114,312

30 Day Avg. Volume6,140,919

Financial Highlights & Ratios

PEG Ratio0.14

Price to Book (P/B)5.37

Price to Sales (P/S)8.28

P/FCF Ratio32.47

Enterprise Value/Market Cap0.95

Enterprise Value/Revenue5.00

Enterprise Value/Gross Profit6.13

Enterprise Value/Ebitda32.04

Forecast

1Y Price Target

$49.86

Price Target Upside41.88% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering26

EPS Forecast (FY)1.68

Revenue Forecast (FY)$2.01B

Dynatrace Business Overview & Revenue Model

Company DescriptionDynatrace, Inc. provides a software intelligence platform for dynamic multi-cloud environments. It operates Dynatrace, a software intelligence platform, which provides application and microservices monitoring, runtime application security, infrastructure monitoring, digital experience monitoring, business analytics, and cloud automation. Its platform allows its customers to modernize and automate IT operations, develop and release software, and enhance user experiences. The company also offers implementation, consulting, and training services. Dynatrace, Inc. markets its products through a combination of direct sales team and a network of partners, including resellers, system integrators, and managed service providers. It serves customers in various industries comprising banking, insurance, retail, manufacturing, travel, and software. The company operates in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. Dynatrace, Inc. was founded in 2005 and is headquartered in Waltham, Massachusetts.

How the Company Makes MoneyDynatrace generates revenue primarily through a subscription-based model, offering its software solutions on a Software-as-a-Service (SaaS) basis. Customers pay for access to the platform based on usage metrics such as the number of hosts or the amount of data monitored. Key revenue streams include annual subscription fees, which provide a predictable income flow, and professional services that include consulting and implementation support. Dynatrace also benefits from significant partnerships with cloud service providers and technology integrators, which help expand its market reach and drive additional sales. The company's focus on innovation and continuous product development ensures that they meet the evolving needs of their customers, further solidifying their revenue base.

Dynatrace Key Performance Indicators (KPIs)

Any

Annual Recurring Revenue

Annual Recurring Revenue
Indicates the predictable revenue generated from subscriptions or contracts, reflecting the company's stability and potential for sustained growth.

Chart InsightsDynatrace's Annual Recurring Revenue (ARR) has shown consistent growth, reaching $1.82 billion. The latest earnings call highlights a robust start to fiscal 2026, with a 16% ARR increase and significant growth in strategic enterprise deals and log management. Despite this momentum, the company remains cautious, maintaining ARR growth guidance at 13% to 14% due to macroeconomic uncertainties. The shift towards expanding existing customer relationships over acquiring new logos is evident, reflecting a strategic focus on deepening market penetration and enhancing revenue streams.

Data provided by:

The Fly

Dynatrace Earnings Call Summary

Earnings Call Date:Feb 09, 2026

(Q3-2026)

% Change Since: |

Next Earnings Date:May 20, 2026

Earnings Call Sentiment Positive

The call conveyed strong operational and financial momentum: ARR and revenue growth of 16% YoY, robust net new ARR and new-logo metrics, logs consumption exceeding $100M with >100% YoY growth, profitability and cash-generation beats, and an expanded $1B buyback program. Management raised full-year guidance and highlighted product differentiation (Grail, SmartScape, Dynatrace Intelligence), strategic hyperscaler integrations, and customer outcomes. Risks discussed included quarter-seasonal free cash flow variability, a lag between consumption growth and ARR realization, ongoing reliance on expansion within the installed base, cautious customer adoption timelines for agentic AI, and competitive/LLM-related questions. On balance, the positives — sustained ARR stabilization, accelerating consumption, product differentiation, and upgraded guidance — materially outweigh the noted challenges.

Q3-2026 Updates

Positive Updates

ARR Growth and Stabilization

ARR ended Q3 at $1.97 billion, up 16% year-over-year, representing three consecutive quarters of stabilized ARR growth and positioning the company on track to surpass $2.0B ARR in FY2026.

Strong Net New ARR and New Logo Performance

Q3 net new ARR was $75 million (adjusted for FX), up 11% year-over-year and marking the third consecutive quarter of double-digit net new ARR growth. The company added 164 new logos with average ARR per new logo > $160k and average land size > $200k.

Revenue and Profitability Beat

Total revenue was $515 million and subscription revenue $493 million, both up 16% year-over-year and exceeding the high end of guidance. Non-GAAP operating margin was 30%, and non-GAAP net income was $135 million ($0.44 per diluted share), ahead of guidance.

Logs Consumption Surge

Annualized logs consumption surpassed $100 million and is growing at over 100% year-over-year; logs are identified as the fastest-growing product category and a significant new ARR driver embedded in many end-to-end deals.

Strong Cash Generation and Capital Returns

Trailing twelve-month free cash flow was $463 million (24% of revenue) and pre-tax free cash flow 30% of revenue. The board authorized a new $1 billion share repurchase program (double prior program); Q3 repurchases included 3.5M shares for $160M at ~ $45 average.

Raised FY Guidance

Management raised full-year guidance: ARR growth guidance increased by 125 basis points to 15.5%–16%, revenue and subscription growth guidance raised (midpoint +75 bps to ~16%), non-GAAP operating margin to ~29%, free cash flow margin to ~26%, and non-GAAP EPS guidance raised to $1.67–$1.69.

Customer Outcomes and Momentum

Multiple customer case studies highlighted material operational improvements (e.g., airline: 31% better reliability and 75% fewer incidents; Telus: average time to resolve issues reduced from 40 to 5 minutes; Nationwide: 74% reduction in priority-one incidents). Dozens of 7-figure wins and increased platform standardization reported.

Product & Ecosystem Differentiation

Announced Dynatrace Intelligence (agentic operations OS), emphasized Grail (massively parallel observability lakehouse) and SmartScape (real-time topology) as key differentiators. Strategic partnerships and hyperscaler integrations (Amazon Bedrock, Azure SRE agent, GCP Gemini) plus acquisition of DevCycle to extend developer/feature management capabilities.

Negative Updates

Quarterly Free Cash Flow Seasonality

Q3 free cash flow was modest at $27 million, reflecting quarter-to-quarter seasonality; management emphasizes trailing twelve-month FCF for a clearer view and noted a ~600 basis point drag from cash taxes on trailing results.

Consumption-to-ARR Conversion Lag

Platform consumption is growing north of 20% (management stated consumption growth >20%), outpacing ARR growth, indicating a timing/lag between increased consumption and it converting to ARR/expansions.

Reliance on Expansion vs. New Logos

Approximately two-thirds of ARR growth is still driven by existing customers (expansions) vs. one-third from new logos; while new-logo momentum is healthy, investors flagged concerns about sustaining top-line growth if expansions slow.

Adoption Pace of Agentic AI Uncertain

Management acknowledged customer apprehension and a multi-step journey to agentic automation—observability must be established first—implying a gradual adoption curve for some agentic features and monetization.

Competitive & Technology Risk

Investors raised questions about competitive threats from specialized vendors and large language model providers; management defended its architectural moat but acknowledged monitoring competitive moves and industry consolidation.

Security Business Still Developing

Security was described as growing 'nicely' but without material quantitative milestones disclosed; strategy focuses on observability buyer rather than CISO-led motion, suggesting security is not yet a major standalone revenue driver.

Company Guidance

Management raised full‑year guidance, increasing ARR growth by 125 basis points to 15.5%‑16% (with ARR on track to surpass $2.0B after Q3 ARR of $1.97B, +16%), and lifting total and subscription revenue growth by 75 basis points to about 16% at the midpoint; they also raised non‑GAAP operating income by $9M (implying a 29% non‑GAAP operating margin), increased free cash flow guidance by $13M (26% FCF margin), and bumped non‑GAAP EPS to $1.67–$1.69 (up $0.05 at midpoint) on an expected ~304M diluted shares, while authorizing a new $1.0B share repurchase program (doubling the prior $500M program); management cited continued momentum — Q3 net new ARR $75M (adjusted FX, +11% YoY), 164 new logos (avg ARR per new logo >$160k; avg land >$200k), nearly $500k average ARR per customer, mid‑90s gross retention, 111% NRR TTM, logs annualized consumption >$100M (logs growth >100% YoY) and platform consumption growth >20% — as drivers of the upgraded guidance.

Dynatrace Financial Statement Overview

Summary

High-quality software fundamentals: very strong ~81% gross margins, improved net margins (~27–28% in latest periods), conservative balance sheet with minimal leverage (debt-to-equity ~0.03), and strong free cash flow conversion (~93–94% of net income). Main offset is the evident revenue growth slowdown in the most recent periods and slightly negative TTM free cash flow growth (-2.2%).

Income Statement

Very Positive

DT shows strong profitability and consistently high gross margins (~81% across the period). Profitability has scaled meaningfully versus earlier years, with net margin improving from mid-single digits (2022) to ~28% (2025 annual) and ~27% in TTM (Trailing-Twelve-Months). The main watch-out is growth deceleration: revenue growth stepped down from ~29–32% (2021–2022) to ~23–25% (2023–2024) and is much lower in the most recent periods (2025 annual ~0.2% and TTM ~4.3%), suggesting a slower growth trajectory despite solid margins.

Balance Sheet

Very Positive

The balance sheet is very conservative with low leverage and improving capital structure. Debt-to-equity is minimal in the latest periods (~0.03 in both 2025 annual and TTM), down sharply from 2021–2022 levels (roughly ~0.26–0.39). Equity has grown materially over time, and returns on equity have strengthened to ~18–19% in 2025 annual and TTM, indicating solid profitability relative to the equity base. Primary risk appears limited on leverage, with the bigger consideration being whether returns remain durable as growth slows.

Cash Flow

Positive

Cash generation is strong, with free cash flow closely tracking earnings (free cash flow is ~93–94% of net income in both 2025 annual and TTM). Operating cash flow and free cash flow have risen materially versus earlier years, supporting financial flexibility. However, recent momentum is mixed: free cash flow growth is slightly negative in TTM (Trailing-Twelve-Months) (-2.2%) after positive growth in prior annual periods, pointing to some near-term normalization/pressure even as absolute cash generation remains healthy.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	1.93B	1.70B	1.43B	1.16B	929.45M	703.51M
Gross Profit	1.58B	1.38B	1.16B	935.64M	756.57M	575.80M
EBITDA	301.36M	227.54M	183.34M	147.42M	138.18M	153.02M
Net Income	184.56M	483.68M	154.63M	107.96M	52.45M	75.71M
Balance Sheet
Total Assets	4.10B	4.14B	3.41B	2.77B	2.54B	2.26B
Cash, Cash Equivalents and Short-Term Investments	1.19B	1.11B	836.87M	555.35M	462.97M	324.96M
Total Debt	154.09M	75.36M	69.53M	75.17M	338.76M	439.61M
Total Liabilities	1.35B	1.52B	1.39B	1.16B	1.24B	1.14B
Stockholders Equity	2.75B	2.62B	2.02B	1.60B	1.30B	1.11B
Cash Flow
Free Cash Flow	465.73M	433.31M	351.65M	333.35M	233.22M	206.36M
Operating Cash Flow	498.51M	459.42M	378.11M	354.88M	250.92M	220.44M
Investing Cash Flow	-41.22M	-69.31M	-193.05M	-21.54M	-30.89M	-13.88M
Financing Cash Flow	-289.04M	-151.63M	50.66M	-232.34M	-80.66M	-97.80M

Dynatrace Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price35.14

Price Trends

50DMA

39.78

Negative

100DMA

43.45

Negative

200DMA

47.59

Negative

Market Momentum

MACD

-1.27

Negative

RSI

46.23

Neutral

STOCH

47.08

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DT, the sentiment is Neutral. The current price of 35.14 is below the 20-day moving average (MA) of 35.92, below the 50-day MA of 39.78, and below the 200-day MA of 47.59, indicating a neutral trend. The MACD of -1.27 indicates Negative momentum. The RSI at 46.23 is Neutral, neither overbought nor oversold. The STOCH value of 47.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 0 New Risks

Dynatrace Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DT	72 Outperform	$10.22B	57.89	6.96%	―	18.50%	207.45%
GWRE	65 Neutral	$10.89B	128.87	6.57%	―	22.80%	198.93%
ESTC	65 Neutral	$5.94B	-56.14	-12.84%	―	16.98%	-265.85%
GTLB	65 Neutral	$4.20B	―	-5.17%	―	27.35%	18.18%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
U	54 Neutral	$7.92B	-19.43	-12.53%	―	-8.23%	48.57%

* Technology Sector Average

Performance Comparison

Dynatrace

36.35

-20.96

-36.57%

GWRE

Guidewire

144.08

-54.66

-27.50%

ESTC

Elastic

61.58

-39.70

-39.20%

Unity Software

19.58

-6.59

-25.18%

GTLB

Gitlab

27.89

-32.15

-53.55%

Dynatrace Corporate Events

Business Operations and StrategyStock BuybackFinancial Disclosures

Dynatrace Delivers Strong Q3 Results and Boosts Share Buybacks

Positive

Feb 9, 2026

On February 9, 2026, Dynatrace reported third-quarter fiscal 2026 results for the period ended December 31, 2025, beating the high end of its guidance on all key growth and profitability metrics and raising full-year guidance. The company posted annual recurring revenue of $1.97 billion, up 20% year over year (16% in constant currency), revenue of $515 million, up 18% (16% in constant currency), GAAP operating margin of 14%, non-GAAP operating margin of 30%, and continued double-digit net new ARR growth driven by larger enterprise deals, rapid log management expansion, and new AI-powered product innovations and cloud ecosystem integrations.

Dynatrace’s board also authorized a new $1 billion share repurchase program on February 9, 2026, following the near-completion of its inaugural $500 million buyback launched in May 2024, under which it has repurchased $495 million of stock to date. The new program, which has no time limit and will be funded through existing cash and future cash flow, underscores management’s confidence in the company’s cash generation, balance sheet strength, and long-term growth prospects while reinforcing a strategy of returning capital to shareholders alongside continued investment in its AI observability platform.

The most recent analyst rating on (DT) stock is a Hold with a $37.00 price target. To see the full list of analyst forecasts on Dynatrace stock, see the DT Stock Forecast page.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Feb 10, 2026