"We believe that an AI-powered observability platform with sophisticated analytic and automation capabilities is vital in providing the visibility needed for software to work perfectly."
— Rick McConnell
03Detailed Report
DT
Dynatrace Inc
Period
Q3 2025
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 17, 2026
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Executive Summary
Dynatrace Inc (DT) recorded significant growth in Q3 2025, reporting total revenue of $436 million, a 20% increase year-over-year, exceeding guidance expectations. Subscription revenue alone rose by 21%, driven primarily by the company's innovative AI-powered observability platform that caters to the growing demand for cloud modernization solutions. The company achieved an annual recurring revenue (ARR) of $1.65 billion, reflecting an 18% growth year-over-year and demonstrating strong customer retention with a net retention rate of 111%. This quarter was further distinguished by a monumental tax benefit stemming from a strategic IP transfer, leading to a substantial net income of $361.75 million, representing an impressive growth of 747.37% from the prior year. Management highlighted strong customer feedback and demand across various sectors, positioning Dynatrace advantageously within the technology market.
Key Performance Indicators
Revenue
Increasing
436.17M
QoQ: 4.31% | YoY: 19.47%
Gross Profit
Increasing
353.61M
81.07% margin
QoQ: 3.90% | YoY: 18.97%
Operating Income
Increasing
47.46M
QoQ: 0.93% | YoY: 32.88%
Net Income
Increasing
361.75M
QoQ: 722.01% | YoY: 747.37%
EPS
Increasing
1.21
QoQ: 706.67% | YoY: 764.29%
Revenue Trend
Margin Analysis
Financial Highlights
- Total Revenue: $436 million (+20% YoY, +4.31% QoQ)
- Gross Profit: $353.61 million (Gross Margin: 81.07%)
- Operating Income: $47.46 million (Operating Margin: 10.88%)
- Net Income: $361.75 million (+747.37% YoY)
- EPS: $1.21 (+764.29% YoY)
- Annual Recurring Revenue (ARR): $1.65 billion (+18% YoY)
- Subscription Revenue: $417 million (+21% YoY)
- Customer Retention: Gross retention in the mid-90s, Net retention rate of 111%
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
436.17M
19.47%
4.31%
Gross Profit
353.61M
18.97%
3.90%
Operating Income
47.46M
32.88%
0.93%
Net Income
361.75M
747.37%
722.01%
EPS
1.21
764.29%
706.67%
Key Financial Ratios
Gross Profit Margin
Excellent
81.10%
Gross profit margin is exceptional, indicating strong pricing power and operational efficiency
Operating Profit Margin
Fair
10.90%
Operating margin is moderate, room for improvement in cost management
Net Profit Margin
Excellent
82.90%
Net profit margin is exceptional, indicating strong pricing power and operational efficiency
Return on Assets
Good
9.69%
Return on assets shows solid performance and effective asset utilization
Return on Equity
Good
14.20%
Return on equity shows solid performance and effective asset utilization
Current Ratio
Healthy
1.50
Current ratio shows adequate liquidity to meet short-term obligations
Debt to Equity
Conservative
0.03
Debt-to-equity shows conservative leverage and low financial risk
P/E Ratio
Value
11.22x
P/E ratio suggests potential undervaluation or stable earnings
Price to Book
High Premium
6.36x
Very high premium suggests asset-light business model or lofty expectations
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