"We delivered a strong first half to the fiscal year. I believe the market is increasingly playing to our strengths in AI-driven observability."
— Rick McConnell
03Detailed Report
DT
Dynatrace Inc
Period
Q2 2025
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 17, 2026
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Executive Summary
Dynatrace Inc (NYSE: DT) reported impressive financial results for the second quarter of fiscal 2025, demonstrating strong year-over-year growth driven predominantly by its AI-driven observability platform. The Company achieved a 19% year-over-year increase in Annual Recurring Revenue (ARR) to $1.62 billion and a 20% rise in subscription revenue to $400 million. This performance reflects Dynatrace's effective execution amidst challenging macroeconomic conditions and a growing demand for observability solutions. Management emphasized their innovative strategies and robust customer engagement, reinforcing their confidence in sustained growth moving forward. Notably, the corporation's net income reached $44 million, indicative of a 22.9% increase compared to the same period last year, showcasing the effectiveness of their operational strategies and market positioning.
Key Performance Indicators
Revenue
Increasing
418.13M
QoQ: 4.74% | YoY: 18.89%
Gross Profit
Increasing
340.35M
81.40% margin
QoQ: 4.89% | YoY: 18.45%
Operating Income
Increasing
47.03M
QoQ: 11.89% | YoY: 33.34%
Net Income
Increasing
44.01M
QoQ: 13.95% | YoY: 22.90%
EPS
Increasing
0.15
QoQ: 15.38% | YoY: 25.00%
Revenue Trend
Margin Analysis
Financial Highlights
Revenue Performance:
- Total Revenue: $418 million (up 19% YoY and 4.74% QoQ)
- Subscription Revenue: $400 million (up 20% YoY)
- Gross Profit: $340 million (Gross Margin: 81.4%)
- Net Income: $44 million (Net Margin: 10.5%, up 22.9% YoY)
- Earnings Per Share (EPS): $0.15 (up 25% YoY)
Profitability Metrics:
- Non-GAAP Operating Income: $131 million (Operating Margin: 31%, exceeded expectations by 15 million)
- Non-GAAP EPS: $0.37, four cents higher than guidance
- Free Cash Flow: $20 million, with an annualized free cash flow margin of 28%
Key Financial Ratios:
- Current Ratio: 1.42
- Net Debt: $826 million (cash and equivalents of $907 million)
- Cash Flow Coverage Ratio: 0.293 (indicating strong debt service capabilities)
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
418.13M
18.89%
4.74%
Gross Profit
340.35M
18.45%
4.89%
Operating Income
47.03M
33.34%
11.89%
Net Income
44.01M
22.90%
13.95%
EPS
0.15
25.00%
15.38%
Key Financial Ratios
Gross Profit Margin
Excellent
81.40%
Gross profit margin is exceptional, indicating strong pricing power and operational efficiency
Operating Profit Margin
Fair
11.20%
Operating margin is moderate, room for improvement in cost management
Net Profit Margin
Good
10.50%
Net profit margin is healthy and competitive within industry standards
Return on Assets
Weak
1.32%
Return on assets suggests inefficient capital allocation
Return on Equity
Weak
2.05%
Return on equity suggests inefficient capital allocation
Current Ratio
Adequate
1.42
Current ratio meets minimum requirements but limited cushion
Debt to Equity
Conservative
0.04
Debt-to-equity shows conservative leverage and low financial risk
P/E Ratio
High Growth
90.55x
Very high P/E indicates aggressive growth expectations, higher risk
Price to Book
High Premium
7.43x
Very high premium suggests asset-light business model or lofty expectations
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