Shares of Dynatrace (NYSE:DT) dropped more than 10% in premarket trading on Wednesday even after the software group reported quarterly earnings and revenue above Wall Street expectations.
Revenue and earnings top analyst forecasts
Dynatrace posted fourth-quarter adjusted earnings per share of $0.41, exceeding analyst expectations of $0.39 per share.
Quarterly revenue reached $532 million, ahead of the consensus estimate of $521.02 million. Revenue increased 19% from the same period a year earlier, or 16% on a constant-currency basis.
The company also surpassed $2 billion in annual recurring revenue (ARR) during the quarter.
ARR growth outlook points to slower expansion
For the full fiscal year, Dynatrace projected ARR in a range of $2.38 billion to $2.40 billion, representing constant-currency growth of between 15.5% and 16.5%.
The forecast indicates a modest slowdown compared with the 16% constant-currency ARR growth recorded in the fourth quarter, which marked the company’s fourth straight quarter at that growth level.
“Dynatrace delivered a strong finish to FY26, surpassing $2 billion in ARR and achieving our fourth consecutive quarter of 16% constant currency ARR growth,” said Rick McConnell, chief executive officer of Dynatrace.
“As we look ahead, our objective is to accelerate ARR growth while delivering balanced growth and profitability.”
Company issues fiscal 2027 guidance
Dynatrace said it expects first-quarter fiscal 2027 adjusted earnings per share of between $0.44 and $0.45, with the midpoint broadly matching analyst consensus expectations of $0.45.
First-quarter revenue is projected in a range of $547 million to $551 million. The midpoint of $549 million was slightly ahead of the consensus forecast of $548.2 million.
For fiscal 2027, the company forecast adjusted earnings per share of $1.93 to $1.95, with the midpoint of $1.94 well above analyst estimates of $1.68.
Dynatrace also projected full-year revenue of between $2.32 billion and $2.33 billion. The midpoint of $2.325 billion was modestly above the consensus estimate of $2.31 billion.