Dynatrace (DT) Q1 2027 earnings summary

Executive summary

• Q1 FY27 delivered strong momentum with total ARR reaching $2.14 billion, up 17% year-over-year, and total revenue at $555 million, up 15–16% year-over-year.

• Net new ARR was $85 million, up 66% (41% organic), with record new logo growth exceeding 160% and 122 new logos added.

• Non-GAAP operating margin reached 29%, and non-GAAP net income was $140 million ($0.48 per diluted share); GAAP operating margin was 13%.

• AI-driven demand, platform consolidation, and innovation in observability and cloud fueled growth, with over 1,000 customers observing AI and LLM workloads.

• Recognized as a leader in observability and AIOps by Gartner and other analysts for the 16th consecutive year.

Financial highlights

• Total ARR: $2.14 billion, up 17% year-over-year; net new ARR: $85 million, up 66% (41% organic, $13 million from BindPlane acquisition).

• Total revenue: $555 million; subscription revenue: $530 million, both up 15–16%; subscription revenue mix at 96%.

• Non-GAAP operating margin: 29%; GAAP operating margin: 13%; non-GAAP gross margin for subscription revenue: 87%.

• Adjusted free cash flow: $309 million in Q1; trailing 12-month adjusted FCF $579 million (28% of revenue).

• Net income was $36.7 million, down from $48.0 million in the prior year quarter, primarily due to higher tax expense.

Outlook and guidance

• FY27 ARR guidance: $2.359–$2.402 billion (15–16.5% growth), with a $14–23 million FX headwind.

• FY27 total revenue guidance: $2.306–$2.335 billion (14–15% growth); Q2 revenue expected at $565–$570 million.

• Non-GAAP operating margin guidance increased to 29.75% at the high end; non-GAAP EPS guidance raised to $1.97–$1.99 per diluted share.

• Adjusted free cash flow margin guidance maintained at 26.5%.

• Guidance reflects significant FX headwinds and macroeconomic uncertainties.