Dynatrace (DT) Q3 2026 earnings summary

Executive summary

• Achieved Annual Recurring Revenue (ARR) of $1.97 billion as of Q3 FY26, with year-over-year growth reported as 16% at constant currency and up to 20% as reported, and maintained double-digit net new ARR growth for three consecutive quarters.

• Total Q3 revenue was $515 million, with subscription revenue at $493–$494 million, both up 16–18% year-over-year, and a subscription revenue mix of 96%.

• Non-GAAP operating margin reached 29–30%, with non-GAAP net income of $135–$153 million ($0.44 per diluted share), and GAAP income from operations was $73 million.

• Free cash flow for the trailing 12 months was $463 million (24% of revenue), with pre-tax free cash flow at 30% of revenue; quarterly free cash flow was $27 million.

• Announced Dynatrace Intelligence, an agentic AI-powered operations system, and highlighted strong customer momentum with large enterprise wins, new logo additions, and deepening partnerships.

Financial highlights

• Q3 ARR reached $1.97 billion, up 16–20% year-over-year, with net new ARR of $75 million, up 11% from the prior year.

• Total Q3 revenue was $515 million, subscription revenue was $493–$494 million, both up 16–18% year-over-year.

• Non-GAAP operating margin was 29–30%, and non-GAAP net income per diluted share was $0.44; GAAP net income per diluted share was $0.13.

• Free cash flow for the quarter was $27 million (5% margin); trailing 12 months was $463 million (24% margin); pre-tax FCF margin was 30%.

• Gross retention rate remained in the mid-90s, and net retention rate was 111% for the third consecutive quarter.

Outlook and guidance

• Raised full-year ARR guidance to $2.05–$2.06 billion (15.5%–16% YoY growth at constant currency), and total revenue guidance to $2.00–$2.01 billion.

• Increased guidance for non-GAAP operating income to $582–$587 million (29% margin) and free cash flow to $520–$525 million (26% margin).

• Non-GAAP EPS guidance raised to $1.67–$1.69 per diluted share.

• Q4 FY26 revenue guidance: $518–$523 million, up 16–17% year-over-year.

• Foreign exchange expected to be a $49 million tailwind on ARR and $37 million on revenue for FY26.