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Dynatrace’s (DT - Free Report) fourth-quarter fiscal 2023 adjusted earnings of 31 cents, which beat the Zacks Consensus Estimate by 40.9%. The bottom line increased 82.4% year over year.
Revenues of $314.5 million beat the consensus mark by 3.62%. The top line increased 24.5% year over year. At constant currency (cc), revenues increased 27% year over year.
Top-Line Details
Subscription revenues climbed 24.8% year over year to $293.3 million. At cc, subscription revenues increased 28% year on year.
Service revenues surged 20.2% from the year-ago quarter’s levels to $21.2 million.
Total annual recurring revenues (“ARR”) at the end of the fiscal fourth quarter increased 25% year over year to $1.25 billion. At cc, ARR jumped 28% year over year.
The company’s customer base continued to expand in the reported quarter with 179 new logos added to the Dynatrace platform. The net retention rate remained at 119% in the reported quarter.
Operating Details
Gross margin remained flat year over year to 84% in the reported quarter.
Research & development (R&D) expenses flared up 33.9% year on year to $49 million. Moreover, as a percentage of revenues, R&D expenses increased 110 bps to 15.6%.
Sales & marketing (S&M) expenses were $108.5 million, up 18.7% year over year. As a percentage of revenues, S&M expenses declined 170 bps to 34.5%.
General & administrative (G&A) expenses rose 8.7% year over year to $28.6 million. As a percentage of revenues, G&A declined 130 bps to 9.1%.
Non-GAAP operating margin expanded 200 bps on a year-over-year basis to 25% in the reported quarter.
Balance Sheet & Other Details
As of Mar 31, 2023, Dynatrace had cash and cash equivalents worth $555.4 million.
The company generated a free cash flow of $114.5 million compared with $82.4 million reported in the year-ago quarter.
Guidance
For first-quarter fiscal 2024, revenues are projected between $325 million and $328 million, suggesting a 22-23% increase year over year (22-23% at cc).
Subscription revenues are estimated between $306 million and $309 million, indicating a 23-24% increase year over year (23-24% at cc).
Non-GAAP operating income is expected between $76.5 million and $78.5 million, suggesting an operating margin in the range of 23.5-24%.
Non-GAAP earnings are anticipated at 22 cents per share.
For fiscal 2024, total ARR is projected between $1.475 billion and $1.49 billion, indicating a 18-20% year-over-year increase. Unfavorable forex is expected to benefit the top line by $10 million.
Revenues are expected in the range of $1.388-$1.406 billion, suggesting 20-21% year-over-year growth. Unfavorable forex is expected to benefit the top line by $13 million.
Subscription revenues are estimated in the range of $1.311-$1.327 billion, indicating 21-22% growth.
Non-GAAP operating income is envisioned between $348 million and $358 million.
Moreover, non-GAAP earnings are anticipated between 98 cents and $1.02 per share.
Further, free cash flow is projected in the band of $303-$312 million.
Zacks Rank & Stocks to Consider
Dynatrace currently carries a Zacks Rank #3 (Hold).
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Dynatrace (DT) Q4 Earnings Beat Estimates, Revenues Rise Y/Y
Dynatrace’s (DT - Free Report) fourth-quarter fiscal 2023 adjusted earnings of 31 cents, which beat the Zacks Consensus Estimate by 40.9%. The bottom line increased 82.4% year over year.
Revenues of $314.5 million beat the consensus mark by 3.62%. The top line increased 24.5% year over year. At constant currency (cc), revenues increased 27% year over year.
Top-Line Details
Subscription revenues climbed 24.8% year over year to $293.3 million. At cc, subscription revenues increased 28% year on year.
Service revenues surged 20.2% from the year-ago quarter’s levels to $21.2 million.
Dynatrace, Inc. Price, Consensus and EPS Surprise
Dynatrace, Inc. price-consensus-eps-surprise-chart | Dynatrace, Inc. Quote
Total annual recurring revenues (“ARR”) at the end of the fiscal fourth quarter increased 25% year over year to $1.25 billion. At cc, ARR jumped 28% year over year.
The company’s customer base continued to expand in the reported quarter with 179 new logos added to the Dynatrace platform. The net retention rate remained at 119% in the reported quarter.
Operating Details
Gross margin remained flat year over year to 84% in the reported quarter.
Research & development (R&D) expenses flared up 33.9% year on year to $49 million. Moreover, as a percentage of revenues, R&D expenses increased 110 bps to 15.6%.
Sales & marketing (S&M) expenses were $108.5 million, up 18.7% year over year. As a percentage of revenues, S&M expenses declined 170 bps to 34.5%.
General & administrative (G&A) expenses rose 8.7% year over year to $28.6 million. As a percentage of revenues, G&A declined 130 bps to 9.1%.
Non-GAAP operating margin expanded 200 bps on a year-over-year basis to 25% in the reported quarter.
Balance Sheet & Other Details
As of Mar 31, 2023, Dynatrace had cash and cash equivalents worth $555.4 million.
The company generated a free cash flow of $114.5 million compared with $82.4 million reported in the year-ago quarter.
Guidance
For first-quarter fiscal 2024, revenues are projected between $325 million and $328 million, suggesting a 22-23% increase year over year (22-23% at cc).
Subscription revenues are estimated between $306 million and $309 million, indicating a 23-24% increase year over year (23-24% at cc).
Non-GAAP operating income is expected between $76.5 million and $78.5 million, suggesting an operating margin in the range of 23.5-24%.
Non-GAAP earnings are anticipated at 22 cents per share.
For fiscal 2024, total ARR is projected between $1.475 billion and $1.49 billion, indicating a 18-20% year-over-year increase. Unfavorable forex is expected to benefit the top line by $10 million.
Revenues are expected in the range of $1.388-$1.406 billion, suggesting 20-21% year-over-year growth. Unfavorable forex is expected to benefit the top line by $13 million.
Subscription revenues are estimated in the range of $1.311-$1.327 billion, indicating 21-22% growth.
Non-GAAP operating income is envisioned between $348 million and $358 million.
Moreover, non-GAAP earnings are anticipated between 98 cents and $1.02 per share.
Further, free cash flow is projected in the band of $303-$312 million.
Zacks Rank & Stocks to Consider
Dynatrace currently carries a Zacks Rank #3 (Hold).
Okta (OKTA - Free Report) , CrowdStrike (CRWD - Free Report) and HP (HPQ - Free Report) are some better-ranked stocks that investors can consider in the broader sector. All three stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Okta’s shares are up 17.6% year to date. OKTA is set to report first-quarter fiscal 2024 results on May 31.
CrowdStrike’s shares are up 30.4% year to date. CRWD is set to report first-quarter fiscal 2024 results on May 31.
HP shares are up 12.7% year to date. HPQ is set to report second-quarter fiscal 2023 results on May 30.