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Jun 30
Dynatrace Q1 2026 Earnings Report
Dynatrace exceeded expectations across all key metrics in Q1 FY2026, delivering solid revenue growth and strong profitability.
Key Takeaways
Dynatrace delivered a strong Q1 FY2026 with 20% revenue growth and solid profitability, driven by robust customer expansion and increased adoption of its AI-powered observability platform.
Total revenue grew to $477,349,000, driven by strong subscription growth.
Non-GAAP EPS rose to $0.42, reflecting strong operational leverage.
Achieved $126,277,000 in non-GAAP net income with a 30% non-GAAP operating margin.
Generated $262,016,000 in free cash flow, representing 55% of revenue.
Dynatrace
Dynatrace
Dynatrace Revenue by Segment
Revenue by Segment
Subscription Revenue
CapyFin.comService Revenue
CapyFin.com Forward Guidance
Dynatrace raised its FY2026 guidance slightly, with projected revenue, ARR, and subscription revenue all trending above prior outlook, supported by foreign exchange tailwinds and continued strong customer demand.
Positive Outlook
- Raised full-year ARR guidance midpoint by $13 million.
- Raised full-year revenue guidance midpoint by $20 million.
- Subscription revenue guidance midpoint raised by $19 million.
- Foreign exchange now expected to be a $34 million ARR tailwind.
- Q2 Non-GAAP EPS expected between $0.40 and $0.41.
Challenges Ahead
- Free cash flow margin projected to decline to 26% for the full year.
- No upside in non-GAAP operating margin (held flat at 29%).
- Q2 revenue growth slows compared to Q1 reported rates.
- Foreign exchange impacts create variability in future ARR comparisons.
- Share repurchases excluded from guidance post Q1.
Revenue & Expenses
Visualization of income flow from segment revenue to net income