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Dynatrace Inc (DT)
NYSE:DT
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Dynatrace
(NYSE:DT)
73Outperform
Positive Factors
Customer Adoption
A significant increase in customer adoption of AI tools has been noted, with new AI guardrail and compliance observability tools being announced.
Platform Expansion
Dynatrace is expanding into cloud security management, providing a unified platform for managing cloud security and observability.
Revenue Growth
The shift to a consumption model makes subscription revenue a key growth metric with on-demand consumption creating potential upside scenarios.
Negative Factors
Market Uncertainty
There is rising macro uncertainty, though there is potential for on-demand consumption to sustain subscription revenue growth in the coming years.
Partner Engagement
Partner presence and expo hall size was a bit lighter than expected, although partner contributions have continued to perform nicely.
Dynatrace (DT) vs. S&P 500 (SPY)
Market Cap
$12.58B
Dividend YieldN/A
Average Volume (3M)2.86M
Price to Earnings (P/E)26.4
Beta (1Y)1.18
Revenue Growth19.81%
EPS Growth139.58%
CountryUS
Employees4,700
SectorTechnology
Sector Strength40
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.59
Shares Outstanding299,350,040
10 Day Avg. Volume2,760,721
30 Day Avg. Volume2,857,109
Financial Highlights & Ratios
PEG Ratio0.19
Price to Book (P/B)N/A
Price to Sales (P/S)9.13
Price to Cash Flow (P/CF)88.30
P/FCF Ratio87.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$65.00Price Target Upside54.73% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering23
Dynatrace Business Overview & Revenue Model
Company DescriptionDynatrace, Inc. provides a software intelligence platform for dynamic multi-cloud environments. It operates Dynatrace, a software intelligence platform, which provides application and microservices monitoring, runtime application security, infrastructure monitoring, digital experience monitoring, business analytics, and cloud automation. Its platform allows its customers to modernize and automate IT operations, develop and release software, and enhance user experiences. The company also offers implementation, consulting, and training services. Dynatrace, Inc. markets its products through a combination of direct sales team and a network of partners, including resellers, system integrators, and managed service providers. It serves customers in various industries comprising banking, insurance, retail, manufacturing, travel, and software. The company operates in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. Dynatrace, Inc. was founded in 2005 and is headquartered in Waltham, Massachusetts.
How the Company Makes MoneyDynatrace generates revenue primarily through the sale of software subscriptions and services. The company's revenue model is predominantly based on a Software-as-a-Service (SaaS) model, where customers pay recurring subscription fees to access its cloud-based platform. This model provides a predictable and consistent revenue stream. Additionally, Dynatrace offers professional services to assist with the implementation and optimization of its solutions, contributing to its revenue. The company also benefits from strong partnerships with major cloud service providers, such as AWS, Azure, and Google Cloud, which enhance its market reach and integration capabilities. Significant factors contributing to Dynatrace's earnings include its continuous investment in research and development to maintain its technological edge and its ability to scale effectively to meet the demands of large enterprise clients.
Dynatrace Financial Statement Overview
Summary
Overall, Dynatrace demonstrates strong financial performance with improving profitability, a robust balance sheet, and healthy cash flow metrics. The company is well-positioned for continued growth and exhibits a sound financial foundation with minimal leverage risk.Income Statement
Dynatrace shows strong profitability with a high gross profit margin and consistent revenue growth over the years. The net profit margin has improved significantly, indicating effective cost management and rising profitability. The EBIT and EBITDA margins are solid, showcasing operational efficiency.90
Very Positive
Balance Sheet
The balance sheet reflects strong financial health with a low debt-to-equity ratio, indicating low financial leverage. The company has a high equity ratio, suggesting a stable financial base. ROE has improved over time, signaling efficient use of equity to generate profits.85
Very Positive
Cash Flow
Dynatrace exhibits robust cash flow generation with consistent growth in free cash flow. The operating cash flow to net income ratio is favorable, reflecting strong cash conversion from net income. The company has maintained positive free cash flow, supporting its liquidity and operational needs.88
Very Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.63B | 1.43B | 1.16B | 929.45M | 703.51M | 545.80M | Gross Profit |
| 1.32B | 1.14B | 935.64M | 756.57M | 575.80M | 416.87M | EBIT |
| 159.64M | 128.40M | 92.81M | 81.31M | 91.90M | -170.85M | EBITDA |
| 205.43M | 183.34M | 147.42M | 138.18M | 153.02M | -109.52M | Net Income Common Stockholders |
| 482.32M | 154.63M | 107.96M | 52.45M | 75.71M | -418.02M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 77.58M | 836.87M | 555.35M | 462.97M | 324.96M | 213.17M | Total Assets |
| 1.90B | 3.41B | 2.77B | 2.54B | 2.26B | 2.04B | Total Debt |
| 0.00 | 69.53M | 75.17M | 338.76M | 439.61M | 509.99M | Net Debt |
| -77.58M | -709.46M | -480.18M | -124.20M | 114.64M | 296.81M | Total Liabilities |
| 2.00B | 1.39B | 1.16B | 1.24B | 1.14B | 1.08B | Stockholders Equity |
| -268.69M | 2.02B | 1.60B | 1.30B | 1.11B | 961.50M |
| Cash Flow | Free Cash Flow | ||||
| 406.35M | 346.38M | 333.35M | 233.22M | 206.36M | -163.07M | Operating Cash Flow |
| 428.30M | 378.11M | 354.88M | 250.92M | 220.44M | -142.46M | Investing Cash Flow |
| -190.92M | -193.05M | -21.54M | -30.89M | -13.88M | -20.61M | Financing Cash Flow |
| -105.05M | 50.66M | -232.34M | -80.66M | -97.80M | 329.39M |
Dynatrace Technical Analysis
Negative
42.01
Price Trends
54.62
Negative
54.43
Negative
51.77
Negative
Market Momentum
-1.95
Negative
35.04
Neutral
21.85
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DT, the sentiment is Negative. The current price of 42.01 is below the 20-day moving average (MA) of 48.62, below the 50-day MA of 54.62, and below the 200-day MA of 51.77, indicating a bearish trend. The MACD of -1.95 indicates Negative momentum. The RSI at 35.04 is Neutral, neither overbought nor oversold. The STOCH value of 21.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DT.
Dynatrace Risk Analysis
Dynatrace disclosed 50 risk factors in its most recent earnings report. Dynatrace reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Dynatrace Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $11.72B | 53.41 | 24.39% | 0.65% | 10.15% | -28.62% | |
77 Outperform | $14.62B | 14.12 | 68.18% | ― | 7.78% | 1345.45% | |
73 Outperform | $12.58B | 26.38 | 21.59% | ― | 19.81% | 139.58% | |
72 Outperform | $11.06B | 360.01 | 3.51% | ― | 33.21% | ― | |
63 Neutral | $14.62B | 528.94 | -1.34% | ― | 17.16% | 67.81% | |
57 Neutral | $18.54B | 9.84 | -14.38% | 2.71% | 5.07% | -23.65% | |
53 Neutral | $6.93B | ― | -20.84% | ― | -17.10% | 21.82% |
* Technology Sector Average
Performance Comparison
DT
Dynatrace
42.01
-5.08
-10.79%
GWRE
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174.25
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DOCU
DocuSign
72.21
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21.04%
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16.92
-9.29
-35.44%
BSY
Bentley Systems
38.66
-11.48
-22.90%
MNDY
Monday.com
217.77
2.34
1.09%
Dynatrace Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -26.75% | Next Earnings Date: May 14, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a generally positive outlook with strong revenue growth, high gross retention rate, and notable customer wins. However, there were some challenges, such as a decrease in net new ARR, a decline in net retention rate, and lower new logo additions, particularly in the commercial segment.Highlights
Strong Revenue Growth
Total revenue for Q3 was $436 million, up 20% year-over-year, exceeding the high end of guidance by $8 million.
Subscription Revenue Increase
Subscription revenue was $417 million, up 21% year-over-year, exceeding guidance by $7 million as reported and $10 million in constant currency.
ARR Growth
Annual Recurring Revenue (ARR) ended Q3 at $1.65 billion, up 18% year-over-year.
High Gross Retention Rate
Gross retention rate remained in the mid-90s, highlighting the strategic relevance of the Dynatrace platform.
Notable Customer Wins
Dynatrace secured several significant deals, including an eight-figure TCV with a top Canadian bank and a large Midwest retailer.
Lowlights
Net New ARR Decline
Q3 net new ARR on a constant currency basis was $68 million, down modestly from the same period last year.
Net Retention Rate (NRR) Decrease
NRR was 111% in Q3, showing a downtick from previous quarters due to challenges in the commercial segment.
Commercial Segment Weakness
The company experienced lower expansion levels in the commercial segment, impacting overall performance.
New Logo Additions Decline
Dynatrace added 193 new logos in Q3, showing a decrease in new logo additions year-over-year.
Company Guidance
During Dynatrace's fiscal third quarter 2025 earnings call, the company reported strong performance, surpassing guidance across all key metrics. Annual recurring revenue (ARR) grew 18% year-over-year to $1.65 billion, while subscription revenue increased by 21% year-over-year to $417 million. The trailing 12-month free cash flow margin was 25%. Dynatrace's AI-powered observability platform, which leverages its Grail data store, continues to drive significant business value and customer adoption. The company added 193 new logos, bringing the average ARR per customer to over $400,000. Despite some challenges in the commercial segment, net retention rate (NRR) was 111%, and the Dynatrace Platform Subscription (DPS) model is gaining traction, with DPS customers representing over 55% of ARR. The company raised its fiscal 2025 guidance, expecting total revenue growth of 19% year-over-year and subscription revenue growth of 20%.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.