Dynatrace Inc. (NYSE:DT) shares rose Wednesday after the company topped second-quarter earnings and revenue forecasts and lifted its fiscal 2026 outlook.
The company reported adjusted earnings of 44 cents per share, beating analysts’ estimate of 41 cents.
Total revenue climbed to $493.85 million from $418.13 million a year earlier, surpassing analysts’ expectations of $484.80 million.
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The company reported an adjusted operating margin of 31% for the quarter, with an adjusted gross profit margin of 84%.
Total ARR reached $1.899 billion, reflecting a 17% increase, or 16% on a constant currency basis.
Subscription revenue totaled $473 million, marking an 18% growth, or 17% on a constant currency basis.
Strategic Partnerships
Dynatrace strengthened its ecosystem in the quarter with new partnerships, including a multi-year collaboration with ServiceNow, an integration with Atlassian for real-time production insights, and participation in GitHub’s Model Context Protocol Registry.
Annual contract value from seven-figure deals rose 53% year over year, driven by partners and end-to-end observability, while its Dynatrace Platform Subscription model reached 50% of customers and 70% of ARR.
The company was also named a Leader in Gartner’s 2025 Magic Quadrant for Digital Experience Monitoring and achieved AWS Generative AI Competency recognition.
Share Buyback Program and Cash Reserves
In the second quarter of fiscal 2026, Dynatrace repurchased 994,000 shares for $50 million at an average price of $50.27 under its $500 million share buyback program.
Since the program’s launch in May 2024, the company has repurchased a total of 5.3 million shares for $268 million at an average price of $50.05.
The company ended the quarter with $1.23 billion in cash and cash equivalents.
Outlook
For fiscal 2026, the company now expects adjusted earnings per share to be $1.62 to $1.64, up from its prior forecast of $1.58 to $1.61, compared with the analysts’ estimate of $1.61.
Dynatrace also raised its revenue outlook to a range of $1.985 billion to $1.995 billion, from $1.970 billion to $1.985 billion previously, compared to the Street estimate of $ 1.981 billion. The company expects an adjusted operating margin of 29%.
For the third quarter, the company projects adjusted EPS of 40 cents to 42 cents, in line with the consensus estimate of $0.40, and revenue between $503 million and $508 million, which is slightly above the expectations of $502.2 million.
The company expects a non-GAAP operating margin of 28.5% to 29% for the third quarter.
CEO Commentary
Rick McConnell, CEO of Dynatrace, stated, “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.”
Price Action: DT shares were trading higher by 3.87% to $51.55 premarket at last check Wednesday.
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