Dynatrace Q1 Earnings Call Highlights

ARR rose 17% year over year to $2.14 billion, while revenue reached $555 million and non-GAAP EPS was $0.48. Net new ARR increased 66%, supported by record new-logo growth and larger enterprise deals.

Logs and AI are accelerating platform consumption. Log management grew more than 100% to nearly $200 million in annualized consumption, while more than 1,000 customers now monitor AI workloads and over 800 use Dynatrace agentic capabilities.

The company raised its revenue and EPS outlook but maintained ARR growth guidance. Fiscal 2027 revenue growth is now expected at 14.5%–15%, EPS at $1.97–$1.99, and operating margin up to 29.75%; CFO Jim Benson plans to retire by the end of fiscal 2027.

Dynatrace NYSE: DT said its first-quarter fiscal 2027 results exceeded the high end of its guidance, supported by record new-logo growth, expanding platform consumption and continued demand for observability tools as enterprises deploy more artificial intelligence workloads. Total annual recurring revenue, or ARR, reached $2.14 billion, up 17% year over year in constant currency. Net new ARR was $85 million, an increase of 66% from the prior-year quarter. Excluding the $13 million contribution from the BindPlane acquisition, organic net new ARR was $73 million, representing 41% growth.

Chief Executive Officer Rick McConnell said the quarter reinforced management’s confidence that Dynatrace can accelerate ARR growth during fiscal 2027. The company cited enterprise demand for end-to-end observability, improving go-to-market execution and increasing complexity in customer technology environments as contributors to the performance.

Total revenue was $555 million, while subscription revenue was $530 million. Both measures increased 15% year over year in constant currency and were 100 basis points above the high end of Dynatrace’s guidance, according to Chief Financial Officer Jim Benson. DTE’s Stargate Deal Turns Power Into Profits Non-GAAP operating margin was 29%, also exceeding the company’s guidance by 100 basis points. Non-GAAP net income totaled $140 million, or $0.48 per diluted share, which was $0.03 above the high end of the company’s outlook. Dynatrace generated $309 million in adjusted free cash flow during the first quarter. The company updated its free-cash-flow definition to exclude restructuring, acquisition-related and other non-recurring cash expenses. On a trailing 12-month basis, adjusted free cash flow was $579 million, or 28% of revenue, including a 500-basis-point effect from cash taxes.

The company added 122 new logos during the quarter. Average land size was nearly $285,000, helping drive more than 160% growth in new-logo ARR. Benson said the results reflected a go-to-market strategy that increasingly targets strategic and enterprise accounts, as well as demand from customers seeking to consolidate fragmented monitoring tools onto a single platform. Average ARR per customer rose to more than $500,000. Gross retention remained in the mid-90% range, while trailing-12-month net retention was 110%.

Log management remained Dynatrace’s fastest-growing product category, growing more than 100% and reaching nearly $200 million in annualized consumption. The company had surpassed $100 million in annualized log consumption two quarters earlier. Benson said BindPlane, which supports OpenTelemetry data collection, was performing ahead of plan and would help accelerate the logs business. BindPlane ...