WALTHAM, Mass.–(BUSINESS WIRE)–Dynatrace (NYSE: DT) today announced financial results for the third quarter of fiscal 2025 ended December 31, 2024.
“Our third quarter results exceeded guidance across all key operating metrics,” said Rick McConnell, Chief Executive Officer of Dynatrace. “The explosion of data, along with its complexity, combined with the unprecedented requirements for speed and scale, are making modern digital ecosystems unmanageable. In a world where generative and now agentic AI workloads are ramping, the observability market has become mission critical for organizations to ensure high business resiliency and deliver exceptional customer experiences. Our leading AI-powered observability platform, combined with our ongoing innovation, provide us with a powerful advantage to capture the opportunity ahead.”
Third Quarter Fiscal 2025 Financial and Other Recent Business Highlights:
All growth rates are compared to the third quarter of fiscal 2024, unless otherwise noted.
Financial Highlights:
- ARR of $1,647 million, an increase of 16%, or 18% on a constant currency basis
- Total Revenue of $436 million, an increase of 19%, or 20% on a constant currency basis
- Subscription Revenue of $417 million, an increase of 20%, or 21% on a constant currency basis
- GAAP Income from Operations of $47 million and Non-GAAP Income from Operations of $131 million
- GAAP EPS of $1.191 and Non-GAAP EPS of $0.37, both on a dilutive basis
Business Highlights:
- Industry recognition: Dynatrace received the following recognitions by third-party industry analysts:
- Named a Leader in both the Cloud-Native Observability and Security Quadrants in the 2024 ISG Provider Lens, Multi Public Cloud Solutions Report, for competitive strength and portfolio attractiveness.
- Recognized as a Leader in the inaugural 2024 GigaOm Radar Report for Kubernetes Observability.
- Partner evolution: Dynatrace was named the 2024 AWS EMEA technology partner of the year for helping customers innovate faster, reduce costs and be more agile through cloud migration and modernization programs. In addition, Dynatrace became a member of the Microsoft Intelligent Security Association (MISA) based on our powerful integration with Microsoft’s SIEM solution, Microsoft Sentinel.
- Sustainability progress: We published our second annual Sustainability Report, which discusses our progress on environmental, social, and governance topics that are important to Dynatrace stakeholders. The report is posted on our website at www.dynatrace.com/company/sustainability/ and highlights third party limited assurance/verification of our fiscal year 2024 greenhouse gas emissions data, our new Global Inclusion Council, AI-related governance developments, and more.
Share Repurchase Program
- During the third quarter, Dynatrace spent $40 million to repurchase 732,000 shares at an average price of $54.64 under its $500 million share repurchase program. From the inception of the program in May 2024 through December 31, 2024, Dynatrace has repurchased 2.7 million shares for $130 million at an average price of $48.89.
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1 During the third quarter, Dynatrace completed an intra-entity asset transfer of the global economic rights of intellectual property (IP) from a wholly-owned U.S. subsidiary to a wholly-owned Swiss subsidiary, more closely aligning IP rights with business operations. The transfer generated an income tax benefit of $320.9 million, or $1.06 per share on a dilutive basis. |
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Third Quarter 2025 Financial Highlights |
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(Unaudited – In thousands, except per share data) |
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Three Months Ended December 31, |
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2024 |
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2023 |
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Key Operating Metric: |
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Annual recurring revenue (ARR) |
$ |
1,647,412 |
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$ |
1,425,284 |
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Year-over-Year Increase |
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16 |
% |
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Year-over-Year Increase – constant currency (*) |
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18 |
% |
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Revenue: |
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Total revenue |
$ |
436,169 |
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$ |
365,096 |
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Year-over-Year Increase |
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19 |
% |
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Year-over-Year Increase – constant currency (*) |
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20 |
% |
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Subscription revenue |
$ |
417,207 |
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$ |
348,294 |
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Year-over-Year Increase |
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20 |
% |
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Year-over-Year Increase – constant currency (*) |
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21 |
% |
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GAAP Financial Measures: |
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GAAP income from operations |
$ |
47,464 |
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$ |
35,720 |
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GAAP operating margin |
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11 |
% |
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10 |
% |
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GAAP net income (**) |
$ |
361,752 |
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$ |
42,691 |
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GAAP net income per share – diluted (**) |
$ |
1.19 |
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$ |
0.14 |
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GAAP shares outstanding – diluted |
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303,467 |
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299,246 |
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Net cash provided by operating activities |
$ |
42,238 |
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$ |
75,657 |
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Non-GAAP Financial Measures (*): |
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Non-GAAP income from operations |
$ |
130,734 |
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$ |
104,636 |
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Non-GAAP operating margin |
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30 |
% |
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29 |
% |
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Non-GAAP net income |
$ |
111,679 |
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$ |
96,184 |
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Non-GAAP net income per share – diluted |
$ |
0.37 |
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$ |
0.32 |
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Non-GAAP shares outstanding – diluted |
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303,467 |
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299,246 |
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Free cash flow |
$ |
37,569 |
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$ |
67,357 |
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* For additional information, please see the “Non-GAAP Financial Measures” and “Definitions – Non-GAAP and Other Metrics” sections of this press release. |
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** For additional information, please see note 1 above. |
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Financial Outlook
Based on information available as of January 30, 2025, Dynatrace is issuing guidance for the fourth quarter and increasing its previous guidance for full year fiscal 2025 in the table below.
This guidance reflects foreign exchange rates as of December 31, 2024. We now expect foreign exchange to be a headwind of approximately $38 million on ARR and approximately $17 million on revenue for fiscal 2025 compared to ARR and revenue at constant currency. Given recent strengthening of the U.S. dollar, this represents an incremental headwind of approximately $28 million to ARR and $10 million to revenue. This guidance also excludes the impact of any share repurchases during the fourth quarter of fiscal 2025.
Growth rates for ARR, Total revenue, and Subscription revenue are presented in constant currency to provide better visibility into the underlying growth of the business.
All growth rates below are compared to the fourth quarter and full year of fiscal 2024.
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(In millions, except per share data) |
Q4 Fiscal 2025 Guidance |
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Total revenue |
$432 – $437 |
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As reported |
13% – 15% |
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Constant currency |
16% – 17% |
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Subscription revenue |
$410 – $415 |
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As reported |
14% – 15% |
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Constant currency |
17% – 18% |
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Non-GAAP income from operations |
$104 – $110 |
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Non-GAAP operating margin |
24% – 25% |
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Non-GAAP net income |
$88 – $93 |
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Non-GAAP net income per diluted share |
$0.29 – $0.31 |
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Diluted weighted average shares outstanding |
304 – 305 |
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(In millions, except per share data) |
Current Guidance Fiscal 2025 |
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Prior Guidance Fiscal 2025* |
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Guidance Change at Midpoint** |
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ARR |
$1,705 – $1,715 |
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$1,720 – $1,735 |
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$(18) |
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As reported |
13% – 14% |
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14% – 15% |
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(100) bps |
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Constant currency |
16% – 16.5% |
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15% – 16% |
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75 bps |
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Total revenue |
$1,686 – $1,691 |
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$1,665 – $1,675 |
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$19 |
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As reported |
18% |
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16% – 17% |
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150 bps |
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Constant currency |
19% |
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17% – 18% |
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150 bps |
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Subscription revenue |
$1,609 – $1,614 |
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$1,590 – $1,600 |
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$17 |
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As reported |
18% – 19% |
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17% – 18% |
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100 bps |
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Constant currency |
20% |
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17% – 18% |
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250 bps |
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Non-GAAP income from operations |
$480 – $486 |
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$466 – $474 |
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$13 |
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Non-GAAP operating margin |
28.5% – 28.75% |
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28% – 28.25% |
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50 bps |
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Non-GAAP net income |
$412 – $417 |
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$396 – $404 |
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$15 |
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Non-GAAP net income per diluted share |
$1.36 – $1.37 |
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$1.31 – $1.33 |
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$0.05 |
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Diluted weighted average shares outstanding |
303 – 304 |
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303 – 305 |
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(1) |
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Free cash flow |
$415 – $420 |
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$393 – $404 |
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$19 |
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Free cash flow margin |
25% |
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23.5% – 24% |
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125 bps |
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*Prior guidance was issued on November 7, 2024. |
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**Guidance change at midpoint rounded to the nearest million. |
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About Dynatrace
Dynatrace exists to make the world’s software work perfectly. Our end-to-end platform combines broad and deep observability and continuous runtime application security with Davis® hypermodal AI to provide answers and intelligent automation from data at an enormous scale. This enables innovators to modernize and automate cloud operations, deliver software faster and more securely, and ensure flawless digital experiences. That’s why the world’s largest organizations trust the Dynatrace® platform to accelerate digital transformation.
