UBS has revised its price target for Dynatrace (DT, Financial), reducing it from $62 to $50. The firm continues to hold a Neutral rating on the company's shares. This adjustment comes as UBS fine-tunes its projections in anticipation of forthcoming results, as informed by the analyst in a communication to investors.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 28 analysts, the average target price for Dynatrace Inc (DT, Financial) is $62.04 with a high estimate of $74.00 and a low estimate of $50.00. The average target implies an upside of 35.52% from the current price of $45.78. More detailed estimate data can be found on the Dynatrace Inc (DT) Forecast page.
Based on the consensus recommendation from 33 brokerage firms, Dynatrace Inc's (DT, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Dynatrace Inc (DT, Financial) in one year is $72.40, suggesting a upside of 58.15% from the current price of $45.78. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Dynatrace Inc (DT) Summary page.
DT Key Business Developments
Release Date: January 30, 2025
- Annual Recurring Revenue (ARR): $1.65 billion, up 18% year-over-year.
- Net New ARR: $68 million on a constant currency basis.
- New Logos Added: 193 in Q3.
- Average ARR per New Logo: Over $140,000 on a trailing 12-month basis.
- Average ARR per Customer: Surpassed $400,000.
- Gross Retention Rate: Mid-90s.
- Net Retention Rate (NRR): 111% in Q3.
- Total Revenue: $436 million, up 20% year-over-year.
- Subscription Revenue: $417 million, up 21% year-over-year.
- Non-GAAP Gross Margin: 84%.
- Non-GAAP Operating Margin: 30%.
- Non-GAAP Net Income: $112 million or $0.37 per diluted share.
- Free Cash Flow: $38 million in Q3; $406 million on a trailing 12-month basis.
- Share Repurchase: 732,000 shares for $40 million at an average price of $54.64.
- Full Year ARR Growth Guidance: $1.705 billion to $1.715 billion, representing 16% to 16.5% growth year-over-year.
- Full Year Total Revenue Growth Guidance: $1.686 billion to $1.691 billion, representing 19% growth year-over-year.
- Full Year Subscription Revenue Growth Guidance: $1.609 billion to $1.614 billion, representing 20% growth year-over-year.
- Full Year Non-GAAP Operating Margin Guidance: 28.5% to 28.75%.
- Full Year Non-GAAP EPS Guidance: $1.36 to $1.37 per diluted share.
- Full Year Free Cash Flow Guidance: $415 million to $420 million, representing a 25% margin.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dynatrace Inc (DT, Financial) outperformed its guidance across all top line and profitability metrics, showcasing strong execution and demand for its AI-powered observability platform.
- Annual Recurring Revenue (ARR) grew 18% year-over-year, and subscription revenue increased by 21% year-over-year.
- The company is seeing significant traction with its Dynatrace Platform Subscription (DPS) licensing model, which now represents over 35% of its customer base and 55% of ARR.
- Dynatrace Inc (DT) is benefiting from increased customer interest in end-to-end observability and tool consolidation, with deals greater than $1 million growing 55% year-over-year.
- The company is experiencing strong growth in its log management solutions, with over 1,000 customers leveraging these solutions, up 17% compared to the previous quarter.
Negative Points
- Net new ARR on a constant currency basis was down modestly from the same period last year.
- The company is facing challenges in the commercial segment, with lower expansion levels compared to strategic accounts.
- There is increased variability in close timing and deal certainty due to the trend of larger and more strategic deals.
- The strength of the US dollar is creating a sizable headwind, with an expected FX impact of $38 million to ARR and $17 million to revenue.
- Dynatrace Inc (DT) has a high percentage of sales reps with less than one year of tenure, which may impact sales productivity in the short term.
