Dynatrace, Inc. (DT) — Agentic Tribune

ITEM 1. BUSINESS

Overview

Dynatrace is advancing observability for today’s digital businesses, helping to transform the complexity of modern digital ecosystems into powerful business assets. By leveraging AI-powered insights, Dynatrace enables organizations to analyze, automate, and innovate faster to drive their business forward. Our vision is a world where software works perfectly.

The Dynatrace platform combines broad and deep observability, continuous runtime application security, and advanced AI to support IT operations, development, security, business, and executive teams. This comprehensive approach enables organizations to optimize cloud and IT operations, accelerate secure software delivery, and improve digital performance.

The Dynatrace platform is built to scale, integrating seamlessly into hybrid, multicloud ecosystems, including major hyperscalers such as Amazon Web Services (“AWS”), Microsoft Azure (“Azure”), and Google Cloud Platform (“GCP”), as well as traditional on-premises and mainframe solutions.

Our customer base includes some of the largest global enterprises. These organizations rely on the Dynatrace platform as part of their plans to accelerate the adoption of cloud-native and AI-native initiatives and to address the related challenges of increasing workloads, dynamic environments, and evolving cybersecurity threats. Our ability to provide sophisticated analytics and our advanced automation capabilities support their operational goals in environments characterized by rapid technological changes. Cloud modernization and the dramatic growth in the use of AI have resulted in an explosion of data and a massive increase in its scale and complexity that are untenable for many organizations to manage as they previously did. As a result, we believe the need for comprehensive end-to-end observability, such as the Dynatrace platform, has become mandatory, especially for larger organizations building resiliency into ever more complex environments. We also believe our company has a significant market opportunity based on the technical differentiation of our platform, our ability to integrate successfully into customers’ cloud ecosystems, and the trust that we have built within our customer base and partner ecosystem.

Key Differentiators

We believe our approach is different from other offerings in three critical ways:

•Dynatrace is an end-to-end platform that enables contextual analysis. We store all data types, including logs, traces, metrics, real user data, and business events, in an integrated, highly performant and massively scalable data lakehouse called GrailTM,, which is the core of the Dynatrace platform. Through our proprietary technology, these data types are stored together in context, and we are able to analyze billions of interdependencies across applications, networks, and infrastructure throughout an enterprise. This provides near real-time end-to-end awareness of an organization’s IT ecosystem that we believe is not possible to replicate without a unified data store with equivalent capabilities.

•The Dynatrace platform is AI-powered. For over a decade, Dynatrace customers have relied on the causal and predictive AI capabilities of our AI engine, Davis®. During our fiscal 2025, we made generative AI capabilities available on the Dynatrace platform through Davis CoPilot, bringing the platform to a much wider array of end users and extending the capabilities of the Dynatrace platform. We believe we have architected our combination of causal, predictive, and generative AI to make AI techniques iteratively more intelligent. Our AI capabilities drive differentiation, with an increasing focus on evolving into an agentic AI platform that can act autonomously to plan, make decisions, and take actions without human intervention. As organizations collect and maintain more data, AI embedded in end-to-end observability and related solutions is often required for reliable prediction and analysis, accurate insights, prevention of issues and problems, and quick identification and resolution when they arise. We believe our experience in AI gives our customers a competitive advantage in developing their own AI initiatives, and we are investing in AI best practices in services, data, and observability to support our customers on their AI journeys and to enable AI practices of our partners.

•The Dynatrace platform is automated. We believe many organizations want a unified platform with broad-based situational awareness that can automatically identify, analyze, repair, and remediate issues and maximize application performance by optimizing the code, underlying infrastructure resources, and software delivery processes. Dynatrace OneAgent® uses automation to discover hybrid, multicloud environments, dynamically instruments applications, and consistently learns and updates without human scripting and user configuration. Our Smartscape® technology continuously updates topological dependencies as the application or operating environment evolves, providing the Dynatrace platform with a representation of relationships between all elements within an environment. We believe this is especially critical during business-impacting threats or incidents. AppEngine and AutomationEngine enable our customers to create custom automations of workflows and processes. Our focus on agentic AI is expected to increase the level and types of automation within the Dynatrace platform.

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We believe the Dynatrace platform’s integrated approach reduces or eliminates the need for organizations to maintain a variety of disparate and siloed tools, enabling them to:

•improve the reliability and performance of their infrastructure and applications, which can help optimize the experience of their own users;

•improve organizational productivity, decision making and innovation, while also increasing transparency and collaboration between IT, development teams, and other business functions;

•reduce operating costs; and

•mitigate risk.

The Dynatrace Platform

The Dynatrace platform comprises several solutions, including the following:

•Infrastructure Observability provides complete visibility into a customer’s IT infrastructure layer across public and private clouds and hybrid, multicloud environments, including AWS, Azure, GCP, VMware Tanzu, Red Hat OpenShift, and Kubernetes.

•Application Observability monitors the full stack (i.e., front-end and back-end technologies) through APM, distributed tracing, and profiling across public and private clouds and hybrid, multicloud environments.

•AI Observability provides observability to improve the performance, resilience, explainability, and compliance of generative AI applications, large language models (LLMs), and agentic systems.

•Digital Experience allows customers to monitor user experiences across channels with real-user and synthetic monitoring and session replays and encompasses mobile and web applications.

•Log Analytics provide a unified approach to unlock the value of log data in the Dynatrace platform and can be developed for different use cases with enterprise-grade extensibility and customization.

•Application Security automatically and continuously detects runtime vulnerabilities in applications, libraries, and code. It also provides near real-time detection and blocking to help protect against third-party cyber-attacks that can exploit critical vulnerabilities.

•Threat Observability enables AI and runtime-enhanced detection, investigation, and response to cybersecurity events.

•Software Delivery leverages observability and security data to drive workflow automations created with a visual workflow creator or automation-as-code.

•Business Analytics unify data flowing through the Dynatrace platform to provide precise, near real-time answers that enable teams to understand how the performance of their digital services affects critical key performance indicators and provides insights to improve user experiences.

The Dynatrace platform provides the following key benefits to customers through our various proprietary technologies:

•Securely unify, store, and analyze data in context. Grail, our data lakehouse, is a unified storage solution with a massively parallel processing (“MPP”) analytics engine. Grail allows organizations to interconnect and analyze large volumes of different types of data quickly and cost effectively in context, without the overhead, expense, and limitation of storage tiering, re-indexing, and rehydration imposed by alternative solutions.

•Receive answer-centric insights and automation with AI. Davis, our AI engine at the core of the platform, combines causal, predictive, and generative AI to deliver answers, insights, automation, and recommendations, and detect, identify, remediate, and prevent issues. Davis CoPilot democratizes use of the Dynatrace platform to more of our customers’ teams by enabling interaction in natural language to tap into the full power of the platform.

•Create and share custom applications and automations to support all business needs. AutomationEngine supports advanced workflow automation, and AppEngine allows organizations to create and share custom, data-driven applications. Business, development, security, and operations teams can collaborate and innovate faster with greater security and smarter answers.

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•Visualize and understand environments in near real time. Smartscape automatically identifies and maps interactions and relationships between applications and the underlying IT infrastructure and uses that map to enrich and contextualize data. This helps organizations understand how everything in their environments is connected.

•Automatically capture and pre-process data in any form, from anywhere.

◦OpenPipeline uses high performance, stream processing technology to ingest, enrich, and contextualize data from a variety of sources (such as OpenTelemetry) for in-depth, AI-powered analytics. This helps organizations manage the cost and scale of large amounts of data, understand the context, and address security requirements.

◦OneAgent deploys once on a host and instantly and continuously collects all relevant data and metrics along the full chain of applications that are being delivered. OneAgent helps organizations discover which processes are running on the host and automatically activates instrumentation.

◦PurePath® captures and analyzes timing and code-level context for all distributed traces, end-to-end, across the full stack.

Dynatrace Deployment and Operations

Dynatrace provides out-of-the-box configuration for the leading cloud platforms, such as AWS, Azure, GCP, Red Hat OpenShift, and SAP, the leading AI and agentic AI frameworks and platforms, as well as Kubernetes and coverage for traditional on-premises systems, including mainframe and monolithic applications in a single, easy-to-use, intelligent platform.

The majority of our customers deploy Dynatrace as a Software-as-a-Service (“SaaS”) solution to get the latest Dynatrace features and updates with greatly reduced administrative effort. Our SaaS solution provides customers with the ability to scale up and down rapidly, without having to purchase, provision, and manage their hardware. We also provide options to deploy our platform in customer-provisioned infrastructure, which we call Dynatrace Managed. This offering allows customers the flexibility to maintain control of the environment where their data resides, whether in the cloud or on-premises, combining the simplicity of SaaS with the ability to adhere to their own data security and sovereignty requirements. We automatically upgrade all Dynatrace instances and offer on-premises cluster customers auto-deployment options that suit their specific enterprise management processes.

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Financial statements

data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .

From 10-Q filed 2026-02-09 (period ending 2025-12-31).

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. We prepare our condensed consolidated financial statements in accordance with accounting principles generally accepted in the United State of America (“GAAP”) and applicable SEC rules and regulations regarding interim financial reporting. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business. In particular, we encourage you to review the risks and uncertainties described in the section titled “Risk Factors” included elsewhere in this Form 10-Q and in our Form 10-K for the fiscal year ended March 31, 2025 (the “Annual Report”). These risks and uncertainties could cause actual results to differ materially from those projected in forward-looking statements contained in this report or implied by past results and trends. Our fiscal year ends on March 31. Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full fiscal year or any other period.

Overview

We take Dynatrace to market through a combination of our global direct sales team and a network of partners, including global system integrators (“GSIs”), cloud providers, resellers and technology alliance partners. We target the largest 15,000 global enterprise accounts, which generally have annual revenues in excess of $1 billion, which we believe see more value from our integrated full-stack platform.

We generate revenue primarily by selling subscriptions, which we define as Software-as-a-Service (“SaaS”) agreements, term-based licenses, and maintenance and support agreements. The majority of our customers deploy Dynatrace as a SaaS solution to get the latest Dynatrace features and updates with greatly reduced administrative effort. We also provide options to deploy our platform in customer-provisioned infrastructure.

The Dynatrace Platform Subscription (“DPS”) licensing model provides customers with a flexible, scalable, and transparent subscription for the modern cloud. Under the DPS licensing model, a customer makes a minimum annual spend commitment at the platform level and then consumes that commitment based on actual usage and a straightforward rate card. Any platform capability can be used in any quantity at any time based on the customer’s evolving needs.

The Dynatrace platform has been commercially available since 2016 and is the primary offering we sell.

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Third-Quarter 2026 Financial Highlights

Our financial highlights for the three months ended December 31, 2025 were:

•Our annual recurring revenue (“ARR”) was $1,972 million as of December 31, 2025, which reflected 20% growth year-over-year;

•Our total revenue was $515 million, which reflected 18% growth year-over-year;

•Our subscription revenue was $493 million, which reflected 18% growth year-over-year;

•We delivered GAAP income from operations of $73 million and non-GAAP income from operations(1) of $153 million; and

•Our net cash provided by operating activities and free cash flow(1) was $34 million and $27 million, respectively.

(1) Non-GAAP financial measure. For additional information, please see the “Key Metrics” section below for applicable definitions and the “Non-GAAP Financial Results” section below for a reconciliation to the most directly comparable GAAP financial measure.

We believe in a disciplined and balanced approach to operating our business. We plan to continue driving innovation to meet customers’ needs and grow our customer relationships. We also plan to invest in future growth opportunities that we expect will drive long-term value, while leveraging our global partner ecosystem, optimizing costs, and improving efficiency and profitability.

We believe this approach is even more important at this time as we navigate the current macroeconomic environment, which can include geopolitical considerations, tariffs and trade policies, fluctuations in credit, equity, and foreign currency markets, changes in inflation, interest rates, consumer confidence and spending, and other factors that may affect the buying patterns of our customers and prospective customers, including the size of transactions and length of sales cycles. In the ongoing dynamic macroeconomic landscape, we have seen resiliency in our industry and we remain confident in our ability to execute in this environment. Please see the section titled “Risk Factors” included under Part II, Item 1A of this Quarterly Report for further discussion of the possible impact of macroeconomic conditions on our business and regarding fluctuations in our annual and quarterly operating results.

Key Factors Affecting Our Performance

Our historical financial performance has been, and we expect our financial performance in the future to be, driven by our ability to:

•Extend our technology and market leadership position. We intend to maintain our position as a leading AI-powered observability platform through increased investment in research and development, and innovation. We plan to expand the functionality of our end-to-end Dynatrace platform and invest in capabilities that address new market opportunities. For example, we believe we are well positioned to grow our next generation log management offering, which integrates logs, traces, metrics, and other core observability and security data types into a single platform, providing customers with greater value than legacy log management solutions that are viewed as too expensive, providing too little value, or largely operating independently from existing monitoring tools. We also plan to evolve our AI capabilities to drive differentiation, with a focus on evolving into an agentic AI platform that can act autonomously to make decisions and take actions without human intervention. We believe this strategy will enable new growth opportunities and allow us to deliver differentiated high-value outcomes to our customers.

•Expand and strengthen our relationships with existing customers. We plan to establish new and deeper relationships within our existing customers’ organizations and expand the breadth of our platform capabilities to provide for expansion opportunities. In addition, we believe the ease of implementation of Dynatrace provides us with the opportunity to expand adoption within our existing enterprise customers, across new customer applications, with cloud-native and development teams, and into additional business units or divisions. We also believe that our DPS licensing model will drive broader consumption of the Dynatrace platform and further expansion opportunities for customers that prefer the flexibility and predictability of pricing under that model. With access to the full Dynatrace platform, DPS customers are able to adopt Dynatrace more broadly across their IT environments, which can lead to increased consumption.

•Grow our customer base. We intend to drive new customer growth through ongoing investments in our go-to-market strategy focused on customer segmentation, partner enablement, and continued expansion of our sales motion beyond application performance to include end-to-end observability, tool consolidation, and cloud modernization. We are focused on the largest 15,000 global enterprise accounts, which generally have annual revenues in excess of $1 billion and more complex IT ecosystems and cloud environments. We have also increased the focus of our sales force on the largest 500 global companies and strategic enterprise accounts. In addition, we plan to expand our reach internationally to what we believe are large, mostly untapped, markets for our company, while leveraging our sector specialization globally.

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•Leverage our strategic partner ecosystem. We intend to invest in our strategic partner ecosystem, with a particular emphasis on building cloud-focused, loyal and comprehensive partnerships with GSIs and hyperscaler cloud providers. These strategic partners continually work with their customers to help them digitally transform their businesses and reduce cloud complexity. By working more closely with strategic partners, our objective is to participate in digital transformation projects earlier in the purchasing cycle and enable customers to establish more resilient cloud deployments from the start.

Key Metrics

We monitor the following key metrics to help us measure and evaluate the effectiveness of our operations:

	As of December 31,
	2025			2024
	(in thousands, except percentages)
Total ARR	$	1,972,283		$	1,647,412
Year-over-year increase	20		%	16		%
Dollar-based net retention rate	111		%	111		%

	Three Months Ended December 31,				Nine Months Ended December 31,
	2025		2024		2025		2024
	(in thousands)
Non-GAAP income from operations(1)	$	153,428	$	130,734	$	449,353	$	375,653
Free cash flow(1)	27,234		37,569		317,080		285,089

(1) Non-GAAP financial measure. For additional information, please see the applicable definitions below and the “Non-GAAP Financial Results” section below for a reconciliation to the most directly comparable GAAP financial measure.

ARR: We define ARR as the daily revenue of all subscription agreements that are actively generating revenue as of the last day of the reporting period multiplied by 365. We exclude from our calculation of ARR any revenues derived from month-to-month agreements and/or product usage overage billings.

Dollar-based net retention rate: We define the dollar-based net retention rate as the ARR at the end of a reporting period for the cohort of Dynatrace accounts as of one year prior to the date of calculation, divided by the ARR one year prior to the date of calculation for that same cohort. Our dollar-based net retention rate reflects customer renewals, expansion, contraction and churn. Dollar-based net retention rate is presented on a constant currency basis.

Non-GAAP income from operations: We define non-GAAP income from operations as GAAP income from operations adjusted for the following items: share-based compensation; employer payroll taxes on employee stock transactions; amortization of intangibles; transaction, restructuring and other non-recurring or unusual items that may arise from time to time.

Free cash flow: We define free cash flow as the net cash provided by or used in operating activities less capital expenditures, reflected as purchase of property and equipment and capitalized software additions in our financial statements.

Non-GAAP Financial Results

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we provide investors with certain non-GAAP financial measures, including non-GAAP income from operations and free cash flow. We use these non-GAAP financial measures for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons and liquidity. We believe that these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance, and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.

The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Our non-GAAP financial measures may not provide information that is directly comparable to similarly titled metrics provided by other companies.

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The tables below provide a reconciliation of our non-GAAP income from operations and free cash flow to their most directly comparable GAAP measure:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2025		2024		2025		2024
	(in thousands)
GAAP income from operations	$	72,738	$	47,464	$	208,045	$	136,519
Share-based compensation	77,918		72,139		226,627		201,499
Employer payroll taxes on employee stock transactions	1,894		3,294		12,084		11,474
Amortization of intangibles	878		7,731		2,597		26,055
Transaction, restructuring, and other	—		106		—		106
Non-GAAP income from operations	$	153,428	$	130,734	$	449,353	$	375,653

	Three Months Ended December 31,				Nine Months Ended December 31,
	2025		2024		2025		2024
	(in thousands)
Net cash provided by operating activities	$	33,780	$	42,238	$	335,489	$	296,629
Purchase of property and equipment	(6,546)		(4,669)		(18,215)		(11,540)
Capitalized software additions	—		—		(194)		—
Free cash flow	$	27,234	$	37,569	317,080		285,089

Key Components of Results of Operations

Revenue

Revenue includes subscriptions and services.

Subscription. Our subscription revenue consists of (i) SaaS agreements, (ii) term-based licenses which are recognized ratably over the contract term, and (iii) maintenance and support agreements. We typically invoice SaaS subscription fees and term licenses annually in advance and recognize subscription revenue ratably over the term of the applicable agreement, provided that all other revenue recognition criteria have been satisfied. See the section titled “Revenue Recognition” within the footnote titled “Significant Accounting Policies” included in Part II, Item 8 of our Annual Report for more information.

Service. Service revenue consists of revenue from helping our customers deploy our software in operational environments and training their personnel. We recognize the revenues associated with these professional services on a time and materials basis as we deliver the services or provide the training. We generally recognize the revenues associated with our services in the period the services are performed, provided that collection of the related receivable is reasonably assured.

Cost of Revenue

Cost of subscription. Cost of subscription revenue includes all direct costs to deliver and support our subscription products, including salaries, benefits, bonuses, share-based compensation and related expenses such as employer taxes, third-party hosting fees related to our cloud services, allocated overhead for depreciation, facilities, and IT, and amortization of internally developed capitalized software technology. We recognize these expenses as they are incurred.

Cost of service. Cost of service revenue includes salaries, benefits, bonuses, share-based compensation and related expenses such as employer taxes, and allocated overhead for depreciation, facilities, and IT. We recognize these expenses as they are incurred.

Amortization of acquired technology. Amortization of acquired technology includes amortization expense for technology acquired when our former controlling stockholder (the Thoma Bravo Funds) acquired our company in 2014 and from business combinations and asset acquisitions. As the acquired technology from the Thoma Bravo Funds’ acquisition of our company became fully amortized during the year ended March 31, 2025, we expect amortization expense to decrease as compared to historical periods.

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Gross Profit and Gross Margin

Gross profit is revenue less cost of revenue, and gross margin is gross profit as a percentage of revenue. Gross profit has been and will continue to be affected by various factors, including the mix of our subscription and service revenue, the costs associated with third-party cloud-based hosting services for our cloud-based subscriptions, and the extent to which we expand our customer support and services organizations. We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors.

Operating Expenses

Personnel costs, which consist of salaries, benefits, bonuses, share-based compensation and, with regard to sales and marketing expenses, sales commissions, are the most significant component of our operating expenses. We also incur other non-personnel costs, such as an allocation of our general overhead expenses, including depreciation, facilities, IT, and other costs.

Research and development. Research and development expenses primarily consist of the cost of programming personnel. We focus our research and development efforts on developing new solutions, core technologies, and to further enhance the functionality, reliability, performance and flexibility of existing solutions. We believe that our software development teams and our core technologies represent a significant competitive advantage for us and we expect that our research and development expenses will continue to increase in absolute dollars as we invest in research and development headcount to further strengthen and enhance our solutions.

Sales and marketing. Sales and marketing expenses primarily consist of personnel and facility-related costs for our sales, marketing, and business development personnel, commissions earned by our sales personnel, and the cost of marketing and business development programs. We expect that sales and marketing expenses will continue to increase in absolute dollars as we continue to hire additional sales and marketing personnel and invest in marketing programs.

General and administrative. General and administrative expenses primarily consist of the personnel and facility-related costs for our executive, finance, legal, people and culture and administrative personnel, and other corporate expenses, including those associated with our ongoing public reporting obligations. We anticipate continuing to incur additional expenses as we continue to invest in the growth of our operations.

Amortization of other intangibles. Amortization of other intangibles primarily consists of amortization of customer relationships and tradenames acquired when our former controlling stockholder (the Thoma Bravo Funds) acquired our company in 2014 and from business combinations. As the customer relationships and tradenames acquired from the Thoma Bravo Funds’ acquisition of our company became fully amortized during the year ended March 31, 2025, we expect amortization expense to decrease as compared to historical periods.

Interest Income, Net

Interest income, net, consists primarily of interest income from money market funds, bank deposits, and debt securities held as investments, partially offset by interest expense associated with fees on our Credit Facility (as defined later in this section) and amortization of debt issuance costs.

Other Income (Expense), Net

Other income (expense), net, consists primarily of foreign currency realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency, including balances between subsidiaries.

Income Tax Benefit

We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in determining the consolidated income tax benefit.

Our income tax rate varies from the U.S. federal statutory rate mainly due to (1) the net global intangible low-taxed income (“GILTI”) inclusion, (2) foreign withholding taxes, (3) nondeductible executive compensation, and (4) the recognition of royalty income in the U.S. as a result of the “IP Transfer” (as defined below) in fiscal 2025, partially offset by the generation of U.S. foreign tax credits. We expect these items to continue to affect our income tax rate and income tax benefit.

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During the three months ended December 31, 2024, we completed an intra-entity asset transfer of the global economic rights of our IP from a wholly-owned U.S. subsidiary to a wholly-owned Swiss subsidiary, more closely aligning our IP rights with our business operations (the “IP Transfer”). The transaction is taxable in the U.S. through 2044. In Switzerland, the transaction resulted in a step-up of tax-deductible basis in the transferred assets, and accordingly, created a temporary difference where the tax basis exceeded the financial statement basis of such intangible assets, which resulted in the recognition of a tax benefit and related deferred tax asset of $320.9 million. We determined the estimated value of the transferred IP based principally on the present value of projected income related to the IP, requiring management to make significant assumptions related to the discount rate and the forecast of future revenues and expenses. The tax-deductible amortization related to the transferred IP rights will be recognized through 2035. The deferred tax asset and tax benefit were measured based on the enacted tax rates expected to apply in the years the asset is expected to be realized. We expect to realize the deferred tax asset resulting from the IP Transfer.

Pillar Two proposal

Many countries have enacted or are in the process of enacting laws based on the Pillar Two proposal relating to a 15% global minimum tax issued by the Organization for Economic Cooperation and Development (“OECD”). For fiscal 2026, we do not expect these provisions to have a material impact on our condensed consolidated financial statements based on the guidance available thus far. On January 5, 2026, the OECD released administrative guidance on a “side-by-side” system that would exempt U.S. parented multinational businesses from certain provisions of Pillar Two, effective for fiscal years beginning on or after January 1, 2026. We will continue to monitor ongoing developments and evaluate any potential impact on future periods.

U.S. Tax Legislation

On July 4, 2025, the “One Big Beautiful Bill Act” (the “OBBBA”) was enacted into law. The OBBBA contains a broad range of tax reform provisions including immediate expensing of domestic research and development expenditures, the reinstatement of 100% bonus depreciation, and modifications to the international tax framework. The OBBBA has multiple effective dates, with certain provisions effective in fiscal 2026 and other provisions effective in subsequent years. The OBBBA does not have a material impact on fiscal 2026. We are evaluating the potential impact of the provisions effective in future years, however we do not anticipate the OBBBA will have a material impact.

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Results of Operations

The following tables set forth our results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods.

Comparison of the Three Months Ended December 31, 2025 and 2024

	Three Months Ended December 31,
	2025				2024
	Amount		Percent		Amount		Percent
	(in thousands, except percentages)
Revenue:
Subscription	$	493,372	96	%	$	417,207	96	%
Service	22,101		4	%	18,962		4	%
Total revenue	515,473		100	%	436,169		100	%
Cost of revenue:
Cost of subscription	73,833		15	%	60,666		14	%
Cost of service	21,137		4	%	18,139		4	%
Amortization of acquired technology	866		—	%	3,756		1	%
Total cost of revenue(1)	95,836		19	%	82,561		19	%
Gross profit	419,637		81	%	353,608		81	%
Operating expenses:
Research and development(1)	120,569		23	%	98,343		23	%
Sales and marketing(1)	174,058		34	%	154,472		35	%
General and administrative(1)	52,260		10	%	49,354		11	%
Amortization of other intangibles	12		—	%	3,975		1	%
Total operating expenses	346,899				306,144
Income from operations	72,738		14	%	47,464		11	%
Interest income, net	12,083				11,726
Other expense, net	(370)				(2,072)
Income before income taxes	84,451				57,118
Income tax (expense) benefit	(44,396)				304,634
Net income	$	40,055			$	361,752

(1) Includes share-based compensation expense as follows:

	Three Months Ended December 31,
	2025		2024
	(in thousands)
Cost of revenue	$	10,792	$	9,821
Research and development	29,160		26,582
Sales and marketing	21,883		20,709
General and administrative	16,083		15,027
Total share-based compensation	$	77,918	$	72,139

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Revenue

	Three Months Ended December 31,				Change
	2025		2024		Amount		Percent
	(in thousands, except percentages)
Subscription	$	493,372	$	417,207	$	76,165	18	%
Service	22,101		18,962		3,139		17	%
Total revenue	$	515,473	$	436,169	$	79,304	18	%

Subscription

Subscription revenue increased by $76.2 million, or 18%, for the three months ended December 31, 2025 as compared to the three months ended December 31, 2024, primarily due to existing customers expanding their use of the Dynatrace platform combined with the adoption of our solutions by new customers.

Service

Service revenue increased by $3.1 million, or 17%, for the three months ended December 31, 2025 as compared to the three months ended December 31, 2024. The increase was primarily due to growth in customer demand for product enablement and adoption services.

Cost of Revenue

	Three Months Ended December 31,				Change
	2025		2024		Amount		Percent
	(in thousands, except percentages)
Cost of subscription	$	73,833	$	60,666	$	13,167	22	%
Cost of service	21,137		18,139		2,998		17	%
Amortization of acquired technology	866		3,756		(2,890)		(77	%)
Total cost of revenue	$	95,836	$	82,561	$	13,275	16	%

Cost of subscription

Cost of subscription increased by $13.2 million, or 22%, for the three months ended December 31, 2025 as compared to the three months ended December 31, 2024. The increase was primarily due to increased cloud-based hosting costs of $9.5 million to support the growing usage of the Dynatrace SaaS platform and increased personnel costs of $2.7 million, inclusive of share-based compensation, largely due to headcount growth to support our growing customer base.

Cost of service

Cost of service increased by $3.0 million, or 17%, for the three months ended December 31, 2025 as compared to the three months ended December 31, 2024. The increase was primarily the result of increased personnel costs, inclusive of share-based compensation, as our service delivery organization has scaled to support our product enablement and adoption within our customer base.

Amortization of acquired technology

Amortization of acquired technology decreased by $2.9 million, or 77%, for the three months ended December 31, 2025 compared to the three months ended December 31, 2024. The decrease was primarily the result of certain acquired technology becoming fully amortized during fiscal 2025.

Table of Contents

Gross Profit and Gross Margin

	Three Months Ended December 31,						Change
	2025			2024			Amount		Percent
	(in thousands, except percentages)
Gross profit:
Subscription	$	419,539		$	356,541		$	62,998	18	%
Service	964			823			141		17	%
Amortization of acquired technology	(866)			(3,756)			2,890		(77	%)
Total gross profit	$	419,637		$	353,608		$	66,029	19	%
Gross margin:
Subscription	85		%	85		%
Service	4		%	4		%
Amortization of acquired technology	(100		%)	(100		%)
Total gross margin	81		%	81		%

Subscription

Subscription gross profit increased by $63.0 million, or 18%, during the three months ended December 31, 2025 as compared to the three months ended December 31, 2024. Subscription gross margin remained consistent at 85%.

Service

Service gross profit increased by $0.1 million, or 17%, during the three months ended December 31, 2025 as compared to the three months ended December 31, 2024. Service gross margin remained consistent at 4%.

Operating Expenses

	Three Months Ended December 31,				Change
	2025		2024		Amount		Percent
	(in thousands, except percentages)
Operating expenses:
Research and development	$	120,569	$	98,343	$	22,226	23	%
Sales and marketing	174,058		154,472		19,586		13	%
General and administrative

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Held by

holders ( registered funds via N-PORT, institutional investors via 13F). Showing top by dollar value.

Holder	Type	ETF	MF	Position ($)	% of holder	Δ % of holder	Holder AUM

Recent insider activity

Last 90 days. Open-market trades (purchases & sales) by directors, officers, and 10%+ owners. 2 transactions across 2 insiders. Net: +2,915 shares, $103,917.

Date	Insider	Role	Action	Shares	Price	Value
2026-03-05	Greifeneder Bernd indirect	EVP, Chief Technology Officer	Sell	-85 ×3	$39.21	-$3,333
2026-03-03	McMahon Stephen A	EVP, Chief Customer Officer	Buy	+3,000	$35.75	$107,250

Source: SEC Form 4 filings.

Next expected filings

~2026-05-21 10-K expected by 2026-05-26 (in 1 day)
~2026-08-06 10-Q expected by 2026-08-11 (in 78 days)
~2026-11-05 10-Q expected by 2026-11-10 (in 169 days)
~2027-02-09 10-Q expected by 2027-02-14 (in 265 days)

Predicted from historical filing cadence; not an SEC commitment.

Recent SEC filings

2026-05-13 8-K Earnings Release; Financial Statements and Exhibits
2026-02-09 10-Q Quarterly Report
2026-02-09 8-K Earnings Release; Other Events; Financial Statements and Exhibits
2025-11-05 10-Q Quarterly Report
2025-11-05 8-K Earnings Release; Financial Statements and Exhibits
2025-08-06 10-Q Quarterly Report
2025-08-06 8-K Earnings Release; Financial Statements and Exhibits
2025-05-22 10-K Annual Report
2025-05-14 8-K Earnings Release; Financial Statements and Exhibits
2025-04-22 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
2025-01-30 10-Q Quarterly Report
2025-01-30 8-K Earnings Release; Financial Statements and Exhibits
2024-11-07 10-Q Quarterly Report
2024-11-07 8-K Earnings Release; Financial Statements and Exhibits
2024-09-04 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits

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