Q1 2026 Dynatrace Inc Earnings Call Transcript
Key Points
- Dynatrace Inc (DT) reported a strong start to fiscal 2026 with subscription revenue growing 19% and ARR increasing by 16%.
- The company achieved a pretax free cash flow of 33% of revenue on a trailing 12-month basis, demonstrating strong profitability.
- Dynatrace Inc (DT) closed 12 seven-figure ACV deals in the quarter, indicating robust expansion activity.
- The strategic enterprise pipeline grew nearly 50% year over year, with significant contributions from deals greater than $1 million.
- The company continues to see strong traction with its partner ecosystem, particularly with Global System Integrators (GSIs), which contributed significantly to large deals.
- Despite strong performance, Dynatrace Inc (DT) maintained a cautious outlook and did not raise its constant currency ARR guidance, citing early fiscal year timing and large deal variability.
- The company noted that large deals come with increased timing variability and longer duration to close, which could impact future revenue recognition.
- New logo additions were lighter than expected, indicating potential challenges in acquiring new customers.
- The company faces a modest headwind to margins due to the weakening dollar, as a significant portion of its expenses are euro-weighted.
- There is ongoing uncertainty in the macro and geopolitical environment, which could impact future performance.
Greetings, and welcome to Dynatrace's fiscal first-quarter 2026 earnings call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce Noelle Faris, Vice President of Investor Relations. Thank you. You may begin.
Good morning, and thank you for joining Dynatrace's first-quarter fiscal 2026 earnings conference call. Joining me today are Rick McConnell, Chief Executive Officer; and Jim Benson, Chief Financial Officer.
Before we get started, please note that today's comments include forward-looking statements such as statements regarding revenue, earnings guidance, and economic conditions. Actual results may differ materially from our expectations due to a number of risks and uncertainties discussed in Dynatrace's SEC filings, including our most recent quarterly report on Form 10-Q and our annual report on Form 10-K. The forward-looking statements contained in this call represent the company's views on August 6, 2025.
We assume
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