Dynatrace, Inc. (DT) | Investment Case

1. Company Snapshot

1.a. Company Description

Dynatrace, 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.

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1.b. Last Insights on DT

Dynatrace's recent performance was positively driven by strong Q2 2026 results, with 20% revenue growth and robust ARR expansion. The company's large deal wins, deepening GSI partnerships, and a powerful go-to-market execution shift fueled enterprise momentum. Additionally, DPS and log management adoption outpaced expectations, driving faster customer growth and higher stickiness. The company's Q2 earnings also surpassed estimates, with quarterly earnings of $0.44 per share, beating the Zacks Consensus Estimate. Several institutional investors, including World Investment Advisors and DekaBank Deutsche Girozentrale, have also shown confidence in the company.

1.c. Company Highlights

Last Price	44.31
Change Percentage	-0.31%
Open	44.67
Previous Close	44.45
Market Cap ( Millions)	13359
Volume	1628767
Year High	63
Year Low	39.3
M A 50	47.58
M A 200	50.0

FCF Yield	3.56%
Dividend Yield	0.00%
ROE	19.01%
Debt / Equity	3.12%
Net Debt / EBIDTA	-418.30%
Price To Book	4.81
Price Earnings Ratio	26.39
Price To FCF	28.06
Price To sales	7.21
EV / EBITDA	44.91

2. Dynatrace's Strong Q2 FY2026 Results Driven by Growth in ARR and Consumption

Dynatrace reported a robust second quarter fiscal 2026, with total revenue reaching $494 million, up 17% year-over-year, and subscription revenue at $473 million, also up 17%. The company's non-GAAP operating margin was 31%, exceeding the top end of guidance by 150 basis points. Earnings per share (EPS) came in at $0.44, beating estimates of $0.41. The strong financial performance was driven by a 16% growth in Annual Recurring Revenue (ARR) to $1.9 billion, with net new ARR of $70 million, up 16% from the previous year.

Publication Date: Nov -13

                                    📋 Highlights
                                    Strong Revenue & ARR Growth:
                                                Exceeded guidance with ARR growing 16% to $1.9B and subscription revenue up 17% to $473M, driven by 16% QoQ net new ARR growth.
New Logo Expansion:
                                                Added 139 new logos in Q2 (avg. $140K ARR), with new logo ARR growing >30% YoY and average land size up 30% YoY.
DPS Licensing Traction:
                                                50% of customers and 70% of ARR now on DPS model, accelerating platform adoption across IT environments.
High Retention & Consumption:
                                                Net retention rate (NRR) at 111%, gross retention in mid-90s, and average ARR per customer over $450K.
Guidance Raised:
                                                Full-year ARR growth guidance lifted to 14–15% (up 100 bps), with revenue growth at 15–15.5% and free cash flow margin of 26%.

                                

Growth Drivers and Customer Adoption

The company's AI-powered observability platform is driving significant customer value, resulting in accelerating platform consumption. The average ARR per customer is over $450,000, highlighting the criticality and business value provided to customers. Dynatrace's DPS licensing model has gained traction, with 50% of its customer base and 70% of ARR now on this model. The company is seeing rapid growth in logs, with a 4x increase in customers spending over $500,000 a year, approaching $100 million in revenue.

Valuation and Outlook

With a P/E Ratio of 27.7 and an EV/EBITDA of 47.34, Dynatrace's valuation suggests that the market is pricing in significant growth expectations. Analysts estimate next year's revenue growth at 18.0%, indicating a strong outlook for the company. Dynatrace's conviction in its growth drivers continues to strengthen, fueled by secular tailwinds such as vendor consolidation, cloud modernization, and AI workload proliferation. The company's go-to-market momentum and pipeline of large anchor deals continue to grow, with the pipeline of strategic enterprise ACV up 45% year-over-year.

Operational Highlights and Future Expectations

Dynatrace is poised to benefit from macro trends such as accelerated public cloud migrations and AI adoption. The company is seeing growth from cloud and AI native workloads, with a significant increase in interest from CXOs of major organizations. The company's third-gen platform developer capabilities are expanding interest in Dynatrace, particularly among AI native companies. With a strong focus on growing pipeline and closing deals, Dynatrace is confident in its foundational elements underpinning its growth.

3. NewsRoom

Dynatrace Expands AWS Integrations at re:Invent 2025; Achieves AWS Agentic AI Specialization and Named AWS Public Sector Technology Partner of the Year for LATAM

Dec -03

Source: businesswire.com

Dynatrace, Inc. (DT) Presents at UBS Global Technology and AI Conference 2025 Transcript

Dec -02

Source: seekingalpha.com

SNX vs. DT: Which Stock Is the Better Value Option?

Nov -28

Source: zacks.com

Dynatrace, Inc. $DT Shares Acquired by Creative Planning

Nov -26

Source: defenseworld.net

Dynatrace, Inc. (DT) Presents at Wells Fargo's 9th Annual TMT Summit Transcript

Nov -18

Source: seekingalpha.com

Dynatrace, Inc. (DT) Presents at Global Technology, Internet, Media & Telecommunications Conference 2025 Transcript

Nov -18

Source: seekingalpha.com

Dynatrace Integrates with Amazon Bedrock AgentCore to Deliver End-to-End Observability for Agentic AI on AWS

Nov -18

Source: businesswire.com

Dynatrace Announces New Cloud Operations Solution for Microsoft Azure

Nov -13

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (14.37%)

6. Segments

Subscription

Expected Growth: 14.37%

Dynatrace's subscription growth of 14.37% is driven by increasing adoption of cloud-native applications, digital transformation, and growing demand for AI-powered observability and automation. Additionally, the company's expansion into new markets, strategic partnerships, and strong sales execution also contribute to this growth.

Service

Expected Growth: 14.37%

Dynatrace's 14.37% growth is driven by increasing adoption of its AI-powered observability platform, expansion into new markets, and growing demand for digital transformation solutions. Additionally, the company's strong sales execution, strategic partnerships, and high customer retention rates contribute to its rapid growth.

7. Detailed Products

Dynatrace

An all-in-one observability platform that provides AI-powered application performance monitoring, cloud infrastructure monitoring, and digital experience monitoring.

Dynatrace Application Security

A module that provides runtime vulnerability detection and protection for applications, enabling DevSecOps and reducing the risk of security breaches.

Dynatrace Digital Experience Monitoring

A solution that provides real-time monitoring and analytics of user interactions, enabling organizations to optimize digital experiences and improve customer satisfaction.

Dynatrace Cloud Automation

A module that provides automated cloud infrastructure monitoring, optimization, and cost management, enabling organizations to optimize cloud resources and reduce costs.

Dynatrace Synthetic Monitoring

A solution that provides proactive monitoring of application availability and performance, enabling organizations to identify issues before they impact users.

Dynatrace OpenTelemetry Distribution

A distribution of OpenTelemetry, an open-source observability framework, that provides a standardized way of collecting and sending telemetry data.

8. Dynatrace, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Dynatrace's AI-powered solutions are highly specialized, making it difficult for substitutes to emerge.

Bargaining Power Of Customers

While customers have some bargaining power due to the availability of alternative solutions, Dynatrace's strong brand reputation and high-quality products mitigate this power.

Bargaining Power Of Suppliers

Dynatrace has a diversified supplier base, reducing the bargaining power of individual suppliers.

Threat Of New Entrants

While new entrants may emerge, the high barriers to entry in the AI-powered software industry and Dynatrace's established market position make it challenging for new competitors to gain traction.

Intensity Of Rivalry

The APM and cloud monitoring markets are highly competitive, with several established players, leading to a high intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	3.33%
Debt Cost	9.25%
Equity Weight	96.67%
Equity Cost	9.25%
WACC	9.25%
Leverage	3.45%

11. Quality Control: Dynatrace, Inc. passed 6 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Paycom Software

A-Score: 5.7/10

Value: 2.2

Growth: 8.9

Quality: 8.4

Yield: 1.0

Momentum: 8.0

Volatility: 5.7

1-Year Total Return ->

Pegasystems

A-Score: 5.1/10

Value: 1.3

Growth: 8.0

Quality: 9.1

Yield: 0.0

Momentum: 9.0

Volatility: 3.3

1-Year Total Return ->

Dynatrace

A-Score: 4.7/10

Value: 1.0

Growth: 8.9

Quality: 8.6

Yield: 0.0

Momentum: 3.0

Volatility: 7.0

1-Year Total Return ->

Smartsheet

A-Score: 4.1/10

Value: 2.5

Growth: 7.4

Quality: 4.6

Yield: 0.0

Momentum: 5.0

Volatility: 5.3

1-Year Total Return ->

Q2 Holdings

A-Score: 3.6/10

Value: 1.2

Growth: 7.6

Quality: 4.9

Yield: 0.0

Momentum: 3.0

Volatility: 5.0

1-Year Total Return ->

Braze

A-Score: 3.6/10

Value: 4.8

Growth: 6.1

Quality: 4.5

Yield: 0.0

Momentum: 3.0

Volatility: 3.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

11.45%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.25%

Dynatrace, Inc. - US2681501092

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on DT

1.c. Company Highlights

Expensive

Higher Growth

Better Quality

Earnings Beats

Revenues Beats

Revenues Miss

2. Dynatrace's Strong Q2 FY2026 Results Driven by Growth in ARR and Consumption

Growth Drivers and Customer Adoption

Valuation and Outlook

Operational Highlights and Future Expectations

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (14.37%)

6. Segments

Subscription

Expected Growth: 14.37%

Service

Expected Growth: 14.37%

7. Detailed Products

Dynatrace

Dynatrace Application Security

Dynatrace Digital Experience Monitoring

Dynatrace Cloud Automation

Dynatrace Synthetic Monitoring

Dynatrace OpenTelemetry Distribution

8. Dynatrace, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Dynatrace, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

44.31$

Current Price

44.31$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA