Dynatrace Shares Turn Positive as RBC Says Guidance Looks ‘Conservative’

WALTHAM, Mass. – Dynatrace Inc. (NYSE: NYSE:), a leader in unified observability and security, reported fourth-quarter earnings that surpassed analyst expectations but provided a softer outlook for fiscal 2025. Still, shares were up 4% in premarket trade.

The company announced a $0.30 adjusted EPS for the quarter, $0.03 above the consensus estimate of $0.27. Revenue for the quarter was reported at $381 million, beating the consensus estimate of $375.27 million and marking a 21% increase YoY.

Despite the strong fourth-quarter performance, Dynatrace’s guidance for the first quarter of 2025 and the full year fell short of analyst expectations. For Q1 2025, the company forecasts an adjusted EPS between $0.29 and $0.30, with the midpoint below the consensus of $0.30. Revenue guidance for the same period is set at $391-393 million, again with the midpoint falling short of the $393.6 million consensus.

For the full fiscal year 2025, Dynatrace anticipates an adjusted EPS of $1.26-$1.29, compared to the analyst consensus of $1.32, and revenue guidance of $1.64-1.65 billion versus the expected $1.68 billion.

“We’d call Q4/24 results better than expected with FY/25 guidance conservative,” RBC analysts said. 

CEO Rick McConnell attributed the strong fourth-quarter results to a record number of 7-figure deals and the company’s ability to consolidate monitoring tools into a unified platform. CFO Jim Benson also highlighted the announcement of a $500 million share repurchase program, reflecting confidence in the business and future growth prospects.

The company’s annual recurring revenue (ARR) grew 20% YoY on a constant currency basis, reaching $1,504 million. Subscription revenue also saw a significant increase of 23% YoY to $360 million. Dynatrace’s full-year financials showed a 23% increase in total revenue YoY, reaching $1,431 million, and a 25% increase in subscription revenue to $1,359 million.

Dynatrace’s market position was further solidified by industry recognitions, including being named a Leader in the 2024 GigaOm Radar Report for Cloud Observability Solutions and receiving the Customers’ Choice distinction in the 2024 Gartner® Peer Insights™ Voice of the Customer for Digital Experience Monitoring report. Additionally, the company successfully closed the acquisition of Runecast, enhancing its AI-driven security and compliance capabilities.

Investors reacted to the soft guidance for fiscal 2025, with the stock price moving down 3.6% following the earnings release.

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