Summary
Dynatrace closed fiscal 2024 with a mixed GAAP picture. Fourth-quarter revenue was $380.85 million, up 21.1% from the prior-year quarter. Full-year revenue was $1.43 billion, up 23.5%. Gross profit followed the top line: $308.98 million in the quarter, up 21.2%, and $1.16 billion for the year, up 24.4%. Gross margin was flat in the quarter at 81.1% and rose for the full year to 81.4%, up 0.6 percentage points. Operating income was $23.12 million in the quarter, up 19.0%, and $128.40 million for the full year, up 38.3%. Operating margin slipped slightly in the quarter to 6.1%, down 0.1 percentage points, but improved for the full year to 9.0%, up 1.0 percentage points. Net income told a different story. Fourth-quarter net income fell 52.7% to $37.94 million, while full-year net income rose 43.2% to $154.63 million. Full-year diluted EPS was $0.52, up 40.5%.
The operating metrics show durable demand. Total ARR reached $1,504 million at March 31, 2024, up 21% as reported and 20% on a constant currency basis. The company closed a record 18 deals greater than $1 million in annual contract value. Fifteen of those deals involved partners, including a first-ever 9-figure total contract value expansion with Accenture. Dynatrace also closed its largest new logo win, a nearly 8-figure ACV deal. Customers grew to approximately 4,000 from approximately 3,600 a year earlier. Dollar-based net retention rate was 111%, compared with 119% a year earlier. The company completed the Runecast acquisition and is integrating its AI-powered security and compliance technology into the Dynatrace platform.
Cash generation remained solid. Fourth-quarter operating cash flow was $131.67 million, up 9.3%, and full-year operating cash flow was $378.11 million, up 6.5%. Capital expenditures were $9.80 million in the quarter, up 65.6%, and $26.46 million for the year, up 22.8%. Free cash flow, a non-GAAP measure, was $121.262 million in the quarter and $346.382 million for the full year. Deferred revenue, current portion, rose 21.8% to $987.95 million. Remaining performance obligations rose 23.2% to $2.42 billion. The company ended the year with no long-term debt. Dynatrace also announced a $500 million share repurchase program. The program has no time limit and may be suspended, modified, or terminated at any time.
Guidance points to continued growth but slower expansion. For the full fiscal year 2025, the company guides to ARR of $1,720 million to $1,735 million, which is 14% to 15% growth as reported and 15% to 16% in constant currency. For the first quarter of fiscal 2025, non-GAAP income from operations is guided to $105 million to $108 million, and for the full fiscal year to $459 million to $467 million. Full-year non-GAAP operating margin is guided to 28%. Non-GAAP net income is guided to $86 million to $89 million for the first quarter and $383 million to $392 million for the full year. Non-GAAP diluted EPS is guided to $0.29 to $0.30 for the first quarter and $1.26 to $1.29 for the full year. Full-year free cash flow is guided to $386 million to $398 million, with a free cash flow margin of 23.5% to 24%. The company expects a foreign exchange headwind of approximately $10 million on ARR and revenue for fiscal 2025.
The main risks are familiar. Dynatrace operates in a dynamic macroeconomic environment with geopolitical considerations, fluctuations in credit, equity, and foreign currency markets, changes in inflation, interest rates, consumer confidence, and spending. Those factors can affect customer buying patterns, transaction sizes, and sales cycle lengths. Tax law changes under IRC Section 174 increase U.S. federal and state cash taxes and reduce cash flows in fiscal 2024 and future years. Share-based compensation tax effects can significantly impact the effective tax rate. The company also cites competition, its ability to maintain revenue growth rates, market adoption of its offerings, innovation and Davis AI development, interoperability with customer IT infrastructures, acquisition integration, security breaches, intellectual property protection, and hiring and retention of qualified employees. The share repurchase program does not obligate Dynatrace to acquire a specific number of shares. Repurchases are expected to be funded from existing cash balances and future cash flow.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2024 | Q3 FY2024 | QoQ | Q4 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $380.8M | $365.1M | +4.3% | $314.5M | +21.1% |
| Gross profit | $309.0M | $297.2M | +4.0% | $254.9M | +21.2% |
| Gross margin | 81.1% | 81.4% | -0.3 pp | 81.1% | +0.1 pp |
| Research & development | $84.3M | $80.1M | +5.2% | $64.5M | +30.6% |
| Sales & marketing | $148.8M | $132.7M | +12.1% | $126.8M | +17.3% |
| General & administrative | $47.3M | $43.2M | +9.5% | $37.4M | +26.6% |
| Total operating expenses | $285.9M | $261.5M | +9.3% | $235.5M | +21.4% |
| Operating income (loss) | $23.1M | $35.7M | -35.3% | $19.4M | +19.0% |
| Operating margin | 6.1% | 9.8% | -3.7 pp | 6.2% | -0.1 pp |
| Net income (loss) | $37.9M | $42.7M | -11.1% | $80.3M | -52.7% |
| Net margin | 10.0% | 11.7% | -1.7 pp | 25.5% | -15.6 pp |
| Diluted EPS | $0.13 | $0.14 | -$0.01 | $0.28 | -$0.15 |
| Customers | 4,000 | — | — | 3,600 | +11.1% |
| Net retention rate | 111.0% | — | — | 25.0% | +86.0 pp |
Risks
Fiscal 2024 MD&A describes navigating a dynamic macroeconomic environment, and the risk factors state the company observed global economic uncertainty and lengthening sales cycles during fiscal 2024. These conditions could cause customers to defer or reduce observability and security spending, lower renewals, or demand price concessions.
The company is seeing increased demand for large strategic deals, which carry higher variability, longer sales cycles, greater uncertainty of closing, and specially negotiated terms. Transactions are also concentrated in the third and fourth fiscal quarters and in the last two weeks of each quarter, making revenue timing harder to predict.
Dollar-based net retention rate declined to 111% as of March 31, 2024 from 119% as of March 31, 2023. Risk factors warn that retention and expansion rates may decline further due to go-to-market changes, pricing, competition, and customer spending reductions.
A recent go-to-market strategy update moved more than 30% of customer accounts to new sales representatives. The company says it is difficult to predict whether these changes will achieve their desired effects and that a negative impact on retention and other results is possible.
The markets for observability and security are highly competitive and rapidly changing, including new and evolving uses of AI. The risk factors cite Cisco's acquisition of Splunk earlier this year and note that larger competitors may have greater resources, broader distribution, and the ability to bundle competing offerings.
Fiscal 2024 introduced a new DPS licensing model with minimum annual spend commitments and usage-based consumption. The company's ability to increase sales to existing customers depends in part on this new pricing model, and failure to gain acceptance could adversely affect revenue and margins.
Future growth increasingly depends on partners including GSIs such as Accenture, Deloitte, DXC, and Kyndryl, and hyperscalers such as AWS, GCP, and Azure. Some partners also compete with Dynatrace, and partner failure, termination, or interoperability problems could limit sales.
Dynatrace acquired Rookout in August 2023 and Runecast in March 2024. Acquisitions may require significant management attention, disrupt operations, fail to achieve anticipated benefits, dilute stockholders, or lead to impairment of goodwill and intangible assets.
The business is subject to changing U.S. and foreign laws on cybersecurity controls, data governance, trade controls, and AI. Noncompliance could lead to investigations, fines, sanctions, and increased compliance costs, while new AI or data localization rules could raise cost of doing business.
In the last two fiscal years the company hired a new CFO, CRO, CMO, CLO, CPO, and CAO, among other leadership changes. Senior management is employed at will, and the loss of key executives could disrupt operations and harm execution of the business plan.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Free Cash Flow
Total customers
Net New ARR
ARR
Summary, forecast, risks and KPIs are extracted from Dynatrace, Inc.'s SEC filings for Q4 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.