Dynatrace’s fourth-quarter results were met with a positive market response, as the company outpaced Wall Street’s expectations on both revenue and adjusted earnings. Management attributed this performance to ongoing adoption of its AI-powered observability platform and growing customer interest in consolidating disparate monitoring tools into a unified system. CEO Rick McConnell highlighted the role of new customer wins and deeper product engagement, stating that the company’s platform is becoming “foundational to resilient software and dependable AI environments.” Notable momentum was seen in large enterprise deals and the rapid growth of Dynatrace’s log management solution, which surpassed key usage milestones during the period.
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Dynatrace (DT) Q4 CY2025 Highlights:
- Revenue: $515.5 million vs analyst estimates of $505.9 million (18.2% year-on-year growth, 1.9% beat)
- Adjusted EPS: $0.44 vs analyst estimates of $0.41 (7.2% beat)
- Adjusted Operating Income: $153.4 million vs analyst estimates of $146.2 million (29.8% margin, 4.9% beat)
- Revenue Guidance for Q1 CY2026 is $520.5 million at the midpoint, above analyst estimates of $514.3 million
- Management raised its full-year Adjusted EPS guidance to $1.68 at the midpoint, a 3.1% increase
- Operating Margin: 14.1%, up from 10.9% in the same quarter last year
- Annual Recurring Revenue: $1.97 billion (19.7% year-on-year growth, beat)
- Billings: $560 million at quarter end, up 26.4% year on year
- Market Capitalization: $11.09 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Dynatrace’s Q4 Earnings Call
- Raimo Lenschow (Barclays) asked about client engagement with Dynatrace’s automation and data consolidation story. CEO Rick McConnell responded that end-to-end observability remains the core driver of expansion and is mandatory for AI-first outcomes.
- Sanjit Singh (Morgan Stanley) inquired about the pace of adoption for agentic AI and its impact on observability usage. McConnell explained that while adoption will be gradual, observability is foundational for trusted autonomous actions and is increasingly embedded in customer operations.
- Gray Powell (BTIG) raised questions about the trajectory and milestones of log monitoring growth. McConnell noted that logs consumption has more than doubled year-over-year, and future milestones will focus on continued ARR contribution from this product.
- Keith Bachman (BMO Capital Markets) pressed on new logo growth versus expansion potential within the existing base. CFO James Benson clarified that while new logos comprise about one-third of growth, significant cross-sell and upsell potential remains in the installed base.
- Matthew Hedberg (RBC Capital Markets) explored competitive risks from smaller vendors and large language model providers. McConnell argued that Dynatrace’s end-to-end architecture and deep domain expertise are difficult to replicate, making the platform resilient to new entrants and technology shifts.
Catalysts in Upcoming Quarters
In the quarters ahead, the StockStory team will focus on (1) adoption and monetization of Dynatrace Intelligence as customers implement more autonomous operations, (2) sustained growth in logs and security solutions as key drivers of platform expansion, and (3) the impact of deeper integrations with major cloud providers and ServiceNow. Progress in developer adoption following the DevCycle acquisition will also be a key signpost for platform breadth.
Dynatrace currently trades at $37.15, up from $33.71 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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