Exceeds high end of guidance across all metrics; raises FY'26 guidance

Delivers ARR growth of 16% and Subscription Revenue growth of 17% on a constant currency basis

Achieves GAAP Operating Margin of 15% and Non-GAAP Operating Margin of 31%

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

“Our strong second quarter results were fueled by the growing demand for end-to-end observability driven by large-scale tool consolidations,” said Rick McConnell, CEO of Dynatrace. “As cloud and AI workloads grow rapidly, the need for an AI-powered observability platform is critical to managing the related complexity and scale. We believe Dynatrace's precise answers, advanced analytics, and deep intelligence uniquely position us to capitalize on the market opportunity ahead.”

Second Quarter Fiscal 2026 Financial and Other Recent Business Highlights:

All growth rates are compared to the second quarter of fiscal 2025, unless otherwise noted.

Financial Highlights:

• Total ARR of $1,899 million, an increase of 17%, or 16% on a constant currency basis
• Total revenue of $494 million, an increase of 18%, or 17% on a constant currency basis
• Subscription revenue of $473 million, an increase of 18%, or 17% on a constant currency basis
• GAAP income from operations of $73 million and non-GAAP income from operations of $153 million
• GAAP net income per share of $0.19 and non-GAAP net income per share of $0.44, on a dilutive basis

Business Highlights:

• Strategic ecosystem advancements:
  • Announced a multi-year strategic collaboration with ServiceNow to advance autonomous IT operations to empower customers to drive better outcomes, optimize services, and provide seamless digital experiences that drive customer and employee satisfaction.
  • Announced an integration with Atlassian, embedding real-time production insights directly into incident management processes.
  • Joined the GitHub Model Context Protocol (MCP) Registry, reinforcing Dynatrace's support for open, modern cloud ecosystems to help developers quickly discover and integrate AI-ready services.

• Go-to-market traction:
  • The annual contract value (ACV) from 7-figure deals closed in the quarter grew 53% year-over-year, all of which were in collaboration with partners, and nearly all leveraging end-to-end observability.
  • Dynatrace Platform Subscription (DPS) licensing models achieved a major milestone, with 50% of our customer base and 70% of our ARR now leveraging this flexible and scalable subscription approach.

• Industry recognition:
  • Named a Leader in the 2025 Gartner Magic Quadrant for Digital Experience Monitoring, positioned furthest for Completeness of Vision.1
  • Achieved the AWS Generative AI Competency, affirming Dynatrace's technical proficiency and proven customer success in helping organizations monitor and govern generative AI applications in production.

Share Repurchase Program

• During the second quarter of fiscal 2026, Dynatrace spent $50 million to repurchase 994,000 shares at an average price of $50.27 under its $500 million share repurchase program. From the inception of the program in May 2024 through September 30, 2025, Dynatrace has repurchased 5.3 million shares for $268 million at an average price of $50.05.

   

Financial Outlook

Based on information available as of November 5, 2025, Dynatrace is issuing guidance for the third quarter and updating its prior guidance for full year fiscal 2026 in the table below.

This guidance is based on foreign exchange rates as of October 31, 2025. We expect foreign exchange to be a tailwind of approximately $38 million on ARR and approximately $34 million on revenue for fiscal 2026 compared to ARR and revenue at constant currency. This represents an incremental tailwind of approximately $5 million to both ARR and revenue compared to our prior guidance. This guidance also excludes the impact of any share repurchases after September 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.

All growth rates below are compared to the third quarter and full year of fiscal 2025.

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, November 5, 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 #: 13756802. 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 February 4, 2026, by dialing (877) 660-6853 from the U.S. and Canada, or for international callers by dialing (201) 612-7415 and entering event confirmation #: 13756802. 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, free cash flow, and free cash flow margin. 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 cloud and artificial intelligence (AI) workload growth and the related need for AI-powered observability platforms, Dynatrace's capabilities and platform and the company's related market opportunity, the expected and current benefits that we believe organizations receive from using the Dynatrace platform and offerings of our partners and other companies with which we collaborate, and our financial and business outlook, including our financial guidance for the third 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 as cloud and AI workloads grow rapidly; the ability of our platform and solutions to effectively interoperate with customers’ IT infrastructures; our abi