Dynatrace Shares Drop Despite Q3 Beat; Margin Contracts

  • Dynatrace Inc DT reported third-quarter FY22 revenue growth of 32% year-on-year to $240.8 million, beating the consensus of $234.4 million. 
  • Total ARR increased 29% Y/Y to $930 million. Revenues from Subscription rose 33% Y/Y to $226 million.
  • Margins: The non-GAAP operating margin contracted 400 basis points to 25%.
  • Non-GAAP EPS of $0.18 beat the consensus of $0.16.
  • Dynatrace generated $60.8 million in operating cash flow. It held $408.7 million in cash and equivalents.
  • Outlook: Dynatrace sees Q4 revenue of $245 million- $247 million, versus the consensus of $246.6 million. It sees non-GAAP EPS of $0.15 - $0.16 at par against the consensus of $0.15.
  • For FY22, it expects total revenue of $922 million - $924 million (prior view $913 million - $919 million), above the consensus of $917.4 million.
  • Non-GAAP EPS of $0.66 - $0.67 (prior $0.63 - $0.65), above the consensus of $0.65.
  • "Having completed my first quarter as CEO, I am very pleased with our third-quarter performance, beating the high end of guidance across our key operating metrics driven by new logo additions and continued net expansion rate above 120%," said CEO Rick McConnell.
  • Price Action: DT shares traded lower by 12.9% at $49.00 in the premarket session on the last check Wednesday.
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