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Sep 30
Dynatrace Q2 2026 Earnings Report
Dynatrace exceeded the high end of its guidance across all metrics and raised its fiscal year 2026 guidance.
Key Takeaways
Dynatrace reported strong second-quarter fiscal year 2026 results, driven by increasing demand for end-to-end observability and large-scale tool consolidations. The company achieved significant growth in ARR and subscription revenue on a constant currency basis, along with robust GAAP and non-GAAP operating margins. Strategic collaborations and go-to-market traction further solidified its market position.
Total ARR reached $1,899 million, marking a 17% increase year-over-year, or 16% on a constant currency basis.
Total revenue grew to $494 million, an 18% increase, or 17% on a constant currency basis.
Non-GAAP operating margin stood at 31%, demonstrating strong operational efficiency.
The company raised its full-year fiscal 2026 guidance for ARR, total revenue, subscription revenue, non-GAAP income from operations, and non-GAAP net income per diluted share.
Dynatrace
Dynatrace
Dynatrace Revenue by Segment
Revenue by Segment
Subscription Revenue
CapyFin.comService Revenue
CapyFin.com Forward Guidance
Dynatrace has raised its full-year fiscal 2026 guidance across key financial metrics, reflecting strong business momentum and a positive outlook. The company anticipates continued growth in ARR, total revenue, and subscription revenue, along with stable non-GAAP operating margins and increased non-GAAP net income per diluted share.
Positive Outlook
- Increased ARR guidance to $2,010 - $2,025 million, up $22 million at the midpoint from prior guidance.
- Raised total revenue guidance to $1,985 - $1,995 million, an increase of $13 million at the midpoint.
- Subscription revenue guidance improved to $1,898 - $1,908 million, up $12 million at the midpoint.
- Non-GAAP net income per diluted share guidance increased to $1.62 - $1.64, a $0.04 increase at the midpoint.
- Maintained strong free cash flow guidance of $505 - $515 million with a 26% margin.
Challenges Ahead
- Diluted weighted average shares outstanding guidance for fiscal 2026 decreased by 2 million shares at the midpoint compared to prior guidance, which could indicate ongoing share repurchases or other factors affecting share count.
- The guidance is based on foreign exchange rates as of October 31, 2025, and excludes the impact of any share repurchases after September 30, 2025, which could introduce variability.
- Reconciliations of forward-looking non-GAAP measures to GAAP are not available without unreasonable efforts due to high variability and low visibility of certain excluded charges, making direct GAAP comparisons difficult for future periods.
- The company's ability to maintain revenue growth rates in future periods is subject to market adoption of its product offerings and continued demand for its solutions.
- Potential risks include the ability to innovate and develop solutions that meet customer needs as cloud and AI workloads grow rapidly, and the ability to effectively interoperate with customers’ IT infrastructures.
Revenue & Expenses
Visualization of income flow from segment revenue to net income