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Investing.com -- Dynatrace Inc. shares gained 3.1% premarket on Wednesday after the AI-powered observability platform provider reported first-quarter fiscal 2026 results that exceeded analyst expectations, driven by strong expansion deals and accelerating log management deployment.
The company reported adjusted earnings per share of $0.42, beating the analyst estimate of $0.38 by $0.04. Revenue came in at $477.3 million, surpassing the consensus estimate of $466.99 million and representing a 20% increase YoY, or 19% on a constant currency basis.
"We delivered a strong start to the fiscal year, exceeding guidance across all our metrics, driven by a large number of seven-figure expansion deals and accelerating log management deployment," said Rick McConnell, Chief Executive Officer of Dynatrace (NYSE:DT).
Subscription revenue, which makes up the bulk of the company’s business, grew 20% to $457.5 million, or 19% on a constant currency basis. Total (EPA:TTEF) annual recurring revenue (ARR) reached $1.82 billion, an increase of 18% YoY, or 16% on a constant currency basis.
Dynatrace achieved a GAAP operating margin of 13% and a non-GAAP operating margin of 30%, showing improved profitability compared to the same quarter last year.
Looking ahead, Dynatrace raised its full-year fiscal 2026 guidance, now expecting revenue between $1.97 billion and $1.985 billion, up from its previous forecast of $1.95 billion to $1.965 billion. The company also raised its adjusted EPS guidance to $1.58-$1.61 from $1.56-$1.59 previously.
For the second quarter, Dynatrace expects revenue between $484 million and $489 million, representing 15-16% growth on a constant currency basis, with adjusted EPS projected at $0.40-$0.41.