Summary
Dynatrace closed fiscal 2026 with fourth quarter total revenue of $531.7 million, up 19.4% from $445.2 million a year earlier. Full year revenue reached $2.02 billion, up 18.8%. Annual recurring revenue crossed $2 billion, finishing at $2,054 million, an increase of 18%, or 16% on a constant currency basis. The company said it delivered a fourth consecutive quarter of 16% constant currency ARR growth.
Profitability split sharply between the quarter and the year. Fourth quarter GAAP income from operations fell 13.0% to $37.3 million, and GAAP net income dropped 55.7% to $17.4 million. GAAP operating margin narrowed to 7.0%. For the full year, GAAP income from operations rose 36.8% to $245.4 million and GAAP operating margin was 12.2%, up 1.6 points. Full year GAAP net income fell 66.4% to $162.7 million, and diluted EPS was $0.54, down from $1.59. The prior year included a large tax benefit tied to the intra-entity transfer of intellectual property rights to Switzerland. On a non-GAAP basis, fourth quarter income from operations was $142.6 million and full year income from operations was $591.9 million, with non-GAAP operating margins of 27% and 29%.
Cash generation stayed strong. Operating cash flow was $226.4 million in the quarter, up 39.1%, and $561.9 million for the year, up 22.3%. Free cash flow, a different measure that subtracts capital spending, was $212.4 million in the quarter and $529.5 million for the year. Capital expenditures were $13.96 million in the quarter, down 4.2%, and $32.2 million for the year, up 23.2%. Deferred revenue, current, rose 14.2% to $1.24 billion, and remaining performance obligations rose 20.7% to $3.49 billion. The company repurchased $224 million of stock in the fourth quarter, 5.9 million shares at an average price of $37.71, completing its initial $500 million program and directing $151 million to a new $1 billion authorization.
Operational momentum centered on larger deals and newer products. Dynatrace closed a record 22 deals greater than $1 million in annual contract value in the quarter, nine of them new logos. Log management remained the fastest growing major product category, with fourth quarter consumption growing more than 100% year over year. The company made two acquisitions, DevCycle and Bindplane, and surpassed $1 billion in AWS Marketplace sales. The dollar-based net retention rate was 110%.
Guidance for fiscal 2027 points to continued growth. Management guided full year fiscal 2027 ARR to $2,382 million to $2,402 million. Full year non-GAAP operating margin is guided to 29.5%, non-GAAP net income per diluted share to $1.93 to $1.95, and free cash flow to $613 million to $620 million. For the first quarter of fiscal 2027, non-GAAP net income per diluted share is guided to $0.44 to $0.45. Management flagged a foreign exchange tailwind of roughly $10 million on ARR and $15 million on revenue for fiscal 2027.
Risks remain familiar. The company cited the macroeconomic environment, geopolitical disruption, tariffs and trade policy, foreign currency swings, competition, security breaches, hiring and retention, and the integration of acquisitions. It also recorded an impairment of long-lived assets in fiscal 2026 tied to leased office space it no longer expects to use. The stated objective is to accelerate ARR growth while balancing growth and profitability.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2026 | Q3 FY2026 | QoQ | Q4 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $531.7M | $515.5M | +3.2% | $445.2M | +19.4% |
| Gross profit | $430.3M | $419.6M | +2.5% | $360.1M | +19.5% |
| Gross margin | 80.9% | 81.4% | -0.5 pp | 80.9% | +0.1 pp |
| Research & development | $130.6M | $120.6M | +8.3% | $103.3M | +26.4% |
| Sales & marketing | $183.4M | $174.1M | +5.4% | $161.8M | +13.4% |
| General & administrative | $60.4M | $52.3M | +15.6% | $52.1M | +16.0% |
| Total operating expenses | $393.0M | $346.9M | +13.3% | $317.2M | +23.9% |
| Operating income (loss) | $37.3M | $72.7M | -48.7% | $42.9M | -13.0% |
| Operating margin | 7.0% | 14.1% | -7.1 pp | 9.6% | -2.6 pp |
| Net income (loss) | $17.4M | $40.1M | -56.5% | $39.3M | -55.7% |
| Net margin | 3.3% | 7.8% | -4.5 pp | 8.8% | -5.6 pp |
| Diluted EPS | $0.06 | $0.13 | -$0.07 | $0.13 | -$0.07 |
| Customers | 4,100 | — | — | 4,100 | ±0.0% |
Risks
Competitors may incorporate AI into their products more quickly or successfully, invest more in AI development, or have access to more advanced AI models or autonomous agents, which could reduce demand for the Dynatrace platform. The filing also cites competition from generic LLMs, generative AI, vibe coding, and general-purpose agents, while MD&A emphasizes agentic AI as a differentiation focus.
Dynatrace is experiencing an increase in large, strategic deals with longer sales cycles, greater uncertainty of completing the sale, and specially negotiated terms. The third and fourth fiscal quarters are typically largest, and a significant portion of transactions occur in the last two weeks of each quarter.
The markets are highly competitive and fragmented, with larger competitors that can bundle offerings and have greater resources. The filing specifically notes Cisco acquired Splunk in 2024 and Palo Alto Networks acquired Chronosphere in 2026, and customers may build in-house solutions leveraging AI and open source.
MD&A states the company is navigating a macroeconomic environment that can include geopolitical considerations, tariffs and trade policies, inflation, interest rates, and changes in customer confidence and spending. These factors may affect the size of transactions and length of sales cycles.
The company states it is and may continue to be subject to shareholder activism, proxy contests, and pressure for strategic alternatives. Such actions could divert management attention, generate substantial costs, create employee and partner uncertainty, and force strategic decisions that prioritize short-term returns.
The EU adopted the AI Act on August 1, 2024, with significant components continuing to come into effect, and US state AI laws are creating a complicated patchwork. Compliance burdens and potential fines could increase costs and affect how Dynatrace develops and deploys AI.
Competition for employees with AI and machine learning experience is intense, particularly in Europe where Dynatrace concentrates its research and development operations. The filing also notes recent senior management changes, including new Chief People Officer, Chief Customer Officer, Chief Revenue Officer, and Chief Marketing Officer.
Dollar-based net retention rate was 110% as of March 31, 2026, compared with 110% as of March 31, 2025 and 111% as of March 31, 2024. Customers have no obligation to renew, and renewals may occur on less favorable terms or not at all.
Annual revenue grew 19%, 19%, and 23% in the years ended March 31, 2026, 2025, and 2024, respectively, compared to the prior year. The filing cautions this growth may not be indicative of future growth and may not be sustained.
Dynatrace relies on partners including GSIs such as Accenture, Atos, Deloitte, DXC, and Kyndryl, and hyperscalers such as AWS, GCP, and Azure. Partner agreements are generally non-exclusive, some partners compete with Dynatrace, and partners may cease marketing its offerings with limited notice.
Sales to US federal, state, and foreign government entities are subject to budgetary cycles, continuing resolutions, government shutdowns, and procurement laws. Violations or funding reductions could lead to penalties, contract termination, or reduced public sector demand.
The company has a $400.0 million Credit Facility with $399.0 million available and $1.0 million of letters of credit outstanding as of March 31, 2026. It contains covenants including a maximum leverage ratio, and a default could accelerate indebtedness and permit lenders to exercise remedies against substantially all assets.
FY2026 income tax expense was $137.1 million, which increased by $397.4 million from an income tax benefit of $260.3 million in FY2025, primarily due to a $320.9 million tax benefit recognized in FY2025 on the IP Transfer. Net income for FY2026 year to date was down 66.4% versus prior year.
The company recorded an $18.5 million impairment loss in FY2026 for certain leased office spaces due to changes in utilization, including the decision to cease use of certain locations and pursue sublease arrangements. No impairment loss was recorded in prior periods.
SaaS KPIs
All quarters →Non-GAAP Operating Margin
Total ARR
Free Cash Flow
Free Cash Flow Margin
Non-GAAP Income from Operations
Non-GAAP Gross Margin
Summary, forecast, risks and KPIs are extracted from Dynatrace, Inc.'s SEC filings for Q4 FY2026 (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 1, 2026.