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Dynatrace’s (DT - Free Report) third-quarter fiscal 2022 adjusted earnings of 18 cents per share beat the Zacks Consensus Estimate by 12.50%. The bottom-line figure increased at the same rate of 12.50% on a year-over-year basis.
Revenues of $240.8 million outpaced the consensus mark by 2.6% and improved 32% year over year. At constant currency (cc), revenues increased 33% year over year.
Solid demand for Dynatrace’s robust portfolio of AI capabilities and automation, led by the accelerated digital transformation across enterprises, acted as a key catalyst in the reported quarter.
Subscription revenues jumped 33% year over year to $226.3 million. At cc, subscription revenues climbed 34% year over year.
Service revenues increased 17.2% from the year-ago quarter to $14.5 million.
License revenues were $2 million compared with $257 million.
Total annual recurring revenues (“ARR”) at the end of the fiscal third quarter increased 29% year over year to $930 million. At cc, ARR surged 32% to $951 million.
Moreover, the net expansion rate remained more than 120% for the 15th consecutive quarter.
Dynatrace added 206 new logos, up 9% year over year.
Operating Details
Gross margin was flat year over year at 85% in the reported quarter.
Research & development (R&D) expenses flared up 37% year over year to $40.876 million.
Sales & marketing (S&M) expenses were $94,033 million, up 45.04% year over year.
General & administrative (G&A) expenses advanced 39.25% year over year to $32,643 million.
Non-GAAP operating margin dropped to 25% compared with the year-ago quarter’s 29%.
Balance Sheet & Other Details
As of Dec 31, 2021, Dynatrace had cash and cash equivalents worth $408.723 million compared with $370.319 million as of Sep 30, 2021.
Long-term debt, as of Dec 31, 2021, was $303.415 million compared with $332.907 million as of Sep 30, 2021.
The company’s quarterly unlevered free cash flow was $59.186 million compared with free cash flow of $73.989 million witnessed in the year-ago quarter.
Guidance
For fourth-quarter fiscal 2022, revenues are projected to be $245-$247million, suggesting an improvement of 25-26% year over year.
The Zacks Consensus Estimate for the ongoing quarter’s revenues is currently pegged at $246.74 million, indicating growth of 25.57% from the figure reported in the year-ago quarter.
Subscription revenues are expected to be $230.5-$232 million, suggesting an improvement of 26-27% year over year.
Non-GAAP operating income is expected between $51.5 million and $53.5 million.
For fiscal 2022, revenues are projected to be $922-$924 million (up from the previous guided range of $913-$919 million), indicating year-over-year jump of 31%.
The Zacks Consensus Estimate for the current fiscal year’s revenues is pegged at $918.04 million, indicating an improvement of 30.49% from the year-earlier reported number.
Subscription revenues are estimated in the range of $866 million to $867.5 million (up from previous guidance of $857.5-$862.5 million), suggesting growth of 32%.
Total ARR is projected between $990 million and $996 million (up from $986-$996 million).
Non-GAAP operating income is envisioned between $228 million and $230 million (up from the prior guidance of $219-$226 million).
Non-GAAP earnings are anticipated to be 66-67 cents per share (up from the previously guided range of 63-65 cents per share). The consensus mark for current-year earnings stands at 16 cents per share, suggesting a 6.67% surge from the figure reported in the year-ago period.
Unlevered free cash flow is predicted in the band of $268 million to $275 million (up from $263-$275 million).
Zacks Rank & Other Stocks to Consider
Dynatrace currently carries a Zacks Rank #2 (Buy).
Dynatrace’s shares declined 7.9% against the Zacks Computer and Technology sector’s return of 8.7% in the past year.
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Dynatrace (DT) Q3 Earnings Beat Estimates, Revenues Rise Y/Y
Dynatrace’s (DT - Free Report) third-quarter fiscal 2022 adjusted earnings of 18 cents per share beat the Zacks Consensus Estimate by 12.50%. The bottom-line figure increased at the same rate of 12.50% on a year-over-year basis.
Revenues of $240.8 million outpaced the consensus mark by 2.6% and improved 32% year over year. At constant currency (cc), revenues increased 33% year over year.
Solid demand for Dynatrace’s robust portfolio of AI capabilities and automation, led by the accelerated digital transformation across enterprises, acted as a key catalyst in the reported quarter.
Dynatrace, Inc. Price, Consensus and EPS Surprise
Dynatrace, Inc. price-consensus-eps-surprise-chart | Dynatrace, Inc. Quote
Top-Line Details
Subscription revenues jumped 33% year over year to $226.3 million. At cc, subscription revenues climbed 34% year over year.
Service revenues increased 17.2% from the year-ago quarter to $14.5 million.
License revenues were $2 million compared with $257 million.
Total annual recurring revenues (“ARR”) at the end of the fiscal third quarter increased 29% year over year to $930 million. At cc, ARR surged 32% to $951 million.
Moreover, the net expansion rate remained more than 120% for the 15th consecutive quarter.
Dynatrace added 206 new logos, up 9% year over year.
Operating Details
Gross margin was flat year over year at 85% in the reported quarter.
Research & development (R&D) expenses flared up 37% year over year to $40.876 million.
Sales & marketing (S&M) expenses were $94,033 million, up 45.04% year over year.
General & administrative (G&A) expenses advanced 39.25% year over year to $32,643 million.
Non-GAAP operating margin dropped to 25% compared with the year-ago quarter’s 29%.
Balance Sheet & Other Details
As of Dec 31, 2021, Dynatrace had cash and cash equivalents worth $408.723 million compared with $370.319 million as of Sep 30, 2021.
Long-term debt, as of Dec 31, 2021, was $303.415 million compared with $332.907 million as of Sep 30, 2021.
The company’s quarterly unlevered free cash flow was $59.186 million compared with free cash flow of $73.989 million witnessed in the year-ago quarter.
Guidance
For fourth-quarter fiscal 2022, revenues are projected to be $245-$247million, suggesting an improvement of 25-26% year over year.
The Zacks Consensus Estimate for the ongoing quarter’s revenues is currently pegged at $246.74 million, indicating growth of 25.57% from the figure reported in the year-ago quarter.
Subscription revenues are expected to be $230.5-$232 million, suggesting an improvement of 26-27% year over year.
Non-GAAP operating income is expected between $51.5 million and $53.5 million.
For fiscal 2022, revenues are projected to be $922-$924 million (up from the previous guided range of $913-$919 million), indicating year-over-year jump of 31%.
The Zacks Consensus Estimate for the current fiscal year’s revenues is pegged at $918.04 million, indicating an improvement of 30.49% from the year-earlier reported number.
Subscription revenues are estimated in the range of $866 million to $867.5 million (up from previous guidance of $857.5-$862.5 million), suggesting growth of 32%.
Total ARR is projected between $990 million and $996 million (up from $986-$996 million).
Non-GAAP operating income is envisioned between $228 million and $230 million (up from the prior guidance of $219-$226 million).
Non-GAAP earnings are anticipated to be 66-67 cents per share (up from the previously guided range of 63-65 cents per share). The consensus mark for current-year earnings stands at 16 cents per share, suggesting a 6.67% surge from the figure reported in the year-ago period.
Unlevered free cash flow is predicted in the band of $268 million to $275 million (up from $263-$275 million).
Zacks Rank & Other Stocks to Consider
Dynatrace currently carries a Zacks Rank #2 (Buy).
Dynatrace’s shares declined 7.9% against the Zacks Computer and Technology sector’s return of 8.7% in the past year.
Some other top-ranked stocks in the same sector include Mandiant , Photronics (PLAB - Free Report) and Vocera Communications , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Mandiant shares have fallen 25.6% underperforming the Zacks Computer and Technology sector in the past year.
The company is slated to report fourth-quarter 2021 results on Feb 8, 2022.
Photronic’s shares have rallied 54.9% in the past year.
The company is scheduled to report first-quarter 2022 results on Feb 23, 2022.
Vocera Communications’ shares have returned 81.8% in the past year.
The company is scheduled to report fourth-quarter 2021 results on Feb 10, 2022.