Company Reports

Dynatrace delivered a strong fiscal first quarter, with revenue up 16% and organic annual recurring revenue (ARR) growth accelerating to 41%. Record ARR from new customers, rising AI consumption, and rapid log-management growth suggest stronger observability demand is translating into results.

Dynatrace is a software-as-a-service observability platform. "Observability" refers to the assessment of a system’s current state using the data, or telemetry, it produces.

Dynatrace shares fell after its fiscal fourth-quarter earnings were at the low end of management’s expectations for annual recurring revenue (ARR), and even more disappointing relative to Datadog, where growth is accelerating.

Dynatrace's fiscal third-quarter revenue grew 18%, exceeding guidance for 16%. The firm also raised its full-year revenue growth forecast by 1 percentage point, to roughly 18%. We suspect caution surrounding potential artificial intelligence disruption is driving the stock more than results.

Dynatrace is a software-as-a-service observability platform. "Observability" refers to the assessment of a system’s current state using the data, or telemetry, it produces. Dynatrace’s observability solution deploys agents that discover causal relationships across an enterprise’s technology systems and then displays telemetry in a useful dashboard that acts as a single point of analysis. While rapid improvements in agentic models have heightened disruption fears, we believe Observability's complexity and role in the technology landscape creates defensibility and even upside potential with exploding data gravity.

Datadog, Dynatrace, and Elastic are all trading down after Palo Alto Networks announced plans to acquire Chronosphere, an observability platform that targets artificial intelligence-focused companies, for 21 times annual recurring revenue.

Dynatrace's fiscal second-quarter earnings exceeded management's forecast for 16% revenue growth. The firm also raised revenue forecasts for the remainder of the fiscal year, although we suspect investors were looking for rosier guidance, given the mid-single-digit decline in shares.

Dynatrace is a software-as-a-service observability platform. "Observability" refers to the assessment of a system’s current state using the data, or telemetry, it produces. Dynatrace’s observability solution deploys agents that discover causal relationships across an enterprise’s technology systems and then displays telemetry in a useful dashboard that acts as a single point of analysis.

We are transferring coverage of software observability platforms, Datadog and Dynatrace. Both have grown rapidly as enterprises have shifted from on-premises servers to cloud-based workflows and have benefited from the increasing complexity of enterprise technological infrastructures.

Dynatrace is a software-as-a-service observability platform. "Observability" refers to the assessment of a system’s current state using the data, or telemetry, it produces. Dynatrace’s observability solution deploys agents that discover causal relationships across an enterprise’s technology systems and then displays telemetry in a useful dashboard that acts as a single point of analysis.

Dynatrace kicked off fiscal 2026 with a set of strong financial results, with the firm's sales growing 20% to $477 million and adjusted operating margins expanding 140 basis points to 30%. The firm's average annual recurring revenue per customer grew over 10% to $450,000.

Dynatrace reported solid results to close out fiscal 2025, with the firm's sales and profitability expanding 17% and 150 basis points year over year to $445 million and 26%, respectively. Alongside financial results, the firm also provided strong guidance for fiscal 2026.

We have a positive outlook for Dynatrace’s prospects in the observability space. The firm’s products benefit from secular tailwinds driving an increase in data for enterprises to monitor and analyze. In our opinion, the firm’s sticky product portfolio, broad swath of products that cover the entire IT stack, and increased penetration in its target market have enabled Dynatrace to form a narrow economic moat around its business.

Dynatrace reported strong fiscal third-quarter financial results. Sales expanded 19% year over year to $436 million and adjusted operating margin came in at 30%, up from 29% a year ago.

We have a positive outlook for Dynatrace’s prospects in the observability space. The firm’s products benefit from secular tailwinds driving an accelerating increase in data for enterprises to monitor and analyze. In our opinion, the firm’s sticky product portfolio, broad swath of products that cover the entire IT stack, and increased penetration in its target market have enabled Dynatrace to form a narrow economic moat around its business.

Dynatrace reported solid second-quarter earnings, with the firm's top line growing 20% year over year to $418 million and its adjusted operating margins expanding 100 basis points year over year to 31%.

We have a positive outlook on Dynatrace’s prospects in the observability space. The firm’s products benefit from secular tailwinds driving an accelerating increase in data for enterprises to monitor and analyze. In our opinion, the firm’s sticky product portfolio, broad swath of products that cover the entire IT stack, and increased penetration in its target market have enabled Dynatrace to form a narrow economic moat around its business.

We maintain our $50 per share fair value estimate for narrow-moat Dynatrace after the firm kicked off fiscal 2025 with strong financial results, showcasing solid top-line growth supported by continued upmarket customer penetration. While the company has been affected by elongated sales cycles in recent quarters as customers have sought to rationalize and push forward their spending on software-as-a-service vendors, we forecast a rebound in Dynatrace's as macro conditions improve. Beyond the near term, we reiterate our view that Dynatrace is a leading observability vendor with long-term secular tailwinds. Within the observability space (software to monitor the state of a system or application) we continue to like Dynatrace as well as Datadog, both moaty SaaS names that trade in 3-star territory.

We are maintaining our $50 fair value estimate for narrow-moat Dynatrace after the firm closed out fiscal 2024 with a set of strong financial results, largely in line with our above-consensus prior estimates. While fiscal 2024 has been affected by the tough macroeconomic backdrop, leading to customers pushing out purchasing decisions and being cost conscious, we expect fiscal 2025 to be marginally better as some of the macro uncertainty subsides. Beyond the near term, however, we continue to see Dynatrace as a leader in the observability space. With Cisco’s recent acquisition of Splunk, the number of publicly traded observability vendors has whittled down to three, Datadog, Dynatrace, and Elastic. For investors seeking observability exposure at a reasonable price, we’d recommend Dynatrace which is a moaty company trading in the 3-star range.

We have a positive outlook on Dynatrace’s prospects in the observability space. The firm’s products benefit from secular tailwinds driving an accelerating increase in data for enterprises to monitor and analyze. In our opinion, the firm’s sticky product portfolio, broad swath of products that cover the entire IT stack, and increased penetration in its target market have enabled Dynatrace to form a narrow economic moat around its business.