Dynatrace Inc (DT)

[JohnCM]

Dynatrace Earnings Surge 400%; Software IPO Stock Jumps

REINHARDT KRAUSE
01/29/2020

Dynatrace earnings jumped more than 400% during its fiscal third-quarter, the company said Wednesday, as the recent initial public offering topped Wall Street estimates. Dynatrace stock jumped on the news.

Earnings for Waltham-Mass.-based Dynatrace (DT) were an adjusted 10 cents a share vs. 2 cents for the year-ago quarter. The enterprise software maker's revenue climbed 25% to $143.3 million from $114.7 million a year ago.

Analysts expected Dynatrace earnings of 7 cents a share on revenue of $137.5 million for the period ended Dec. 31.

Analysts say one key financial metric for Dynatrace stock heading into earnings was annual recurring revenue. Dynatrace said ARR rose 44% to $534.5 million in the third quarter, topping estimates of $514.5 million.

The company added 380 customers to reach 2,208 total platform customers, up 92% year-over-year.

Dynatrace Stock: Annual Recurring Revenue Key Metric

"We think ARR is an important metric for investors and are encouraged by the 44% growth in total ARR this quarter," said BMO Capital Markets analyst Keith Bachman in a report. "We believe ARR growth will be driven primarily by high net retention rates, along with new customer adds."

He added: "We anticipate total ARR growth to be 40% in fiscal Q4, and gradually moderate to the mid-to-low-30% range in fiscal 2021."

Dynatrace also said subscription revenue rose 36% to $139.4 million.

For the current quarter ending March 31, its fiscal fourth, Dynatrace forecast profit of 8 cents and revenue of $147.5 million at its midpoint of guidance. Analysts had modeled for Dynatrace earnings of 7 cents a share and revenue of $144.8 million.

Dynatrace Stock: Rivals Include Cisco, New Relic
Dynatrace stock jumped 8.1% to close at 31 on the stock market today. Intraday, shares surged nearly 15% at one point to 32.95. On Tuesday, Dynatrace stock rose 2.6% to 28.68, edging out of a buy zone with an entry point of 27.29.

Short interest in Dynatrace stock had shot up ahead of its earnings report, brokerage Goldman Sachs said in a note to clients.

Dynatrace's software tools measure and analyze the performance of business-critical applications.

Dynatrace went public Aug. 1, backed by private equity firm Thoma Bravo. The Dynatrace IPO raised $570 million, with shares priced at 16.

Dynatrace competes versus the AppDynamics unit of Cisco Systems (CSCO), New Relic (NEWR) and others.