Dynatrace’s (DT - Free Report) second-quarter fiscal 2021 adjusted earnings of 18 cents per share beat the Zacks Consensus Estimate by 80% and also bettered 7 cents reported in the year-ago quarter.
Further, revenues of $168.6 million trumped the consensus mark by 5%. The top line improved 30.3% year over year as well. At constant currency (cc), revenues increased 30% year over year.
Top-Line Details
Subscription revenues surged 36.2% year over year to $157.7 million. At cc, subscription revenues surged 35% year over year.
Service revenues decreased 3.3% from the year-ago quarter to $10.5 million.
Moreover, license revenues plummeted 83.9% from the year-ago quarter to $0.4 million.
Dynatrace added 133 new logo customers, ending the second quarter with 2,594 customers. Moreover, net expansion rate remained more than 120% for the 10th consecutive quarter.
Total annual recurring revenues (“ARR”) at the end of fiscal second quarter soared 35.5% year over year to $638.1 million. At cc, ARR jumped 33% to $628.6 million.
ARR per Dynatrace customer also increased to $234K, up 14% year over year.
Operating Details
Gross margin expanded 280 basis points (bps) year over year to 85.4% in the reported quarter, driven by higher subscription gross margin.
Research & development (R&D) expenses increased 24.7% year over year to $23.9 million. However, as a percentage of revenues, R&D expenses declined 60 bps to 14.2%.
Sales & marketing (S&M) expenses were $50 million, up 16.7% year over year. However, as percentage of revenues, S&M expenses decreased 350 bps to 29.7%.
General & administrative (G&A) expenses increased 11.7% year over year to $16.8 million. As a percentage of revenues, G&A decreased 170 bps to 9.9%.
Non-GAAP operating margin improved to 32.7% compared with 23% in the year-ago quarter. The solid expansion was driven by higher revenues and gross margin, as well as improving operating efficiency.
Balance Sheet & Other Details
As of Sep 30, 2020, Dynatrace had cash and cash equivalents worth $248.4 million compared with $250.4 million as of Jun 30.
Long-term debt, as of Sep 30, 2020, was $480.9 million compared with $510.5 million as of Jun 30.
Dynatrace made a principal repayment of $30 million early in the reported quarter. The company also made a principal repayment of $30 million during October that further reduced its debt to $451 million.
The company’s quarterly unlevered free cash flow came in at $40.5 million compared with free cash flow of $27.2 million in the year-ago quarter.
Guidance
For third-quarter fiscal 2021, revenues are expected between $171 million and $173 million, implying 18-20% increase year over year.
The Zacks Consensus Estimate for the ongoing quarter’s revenues is currently pegged at $165.8 million, indicating 15.7% growth from the figure reported in the year-ago quarter.
Subscription revenues are expected between $160.5 million and $162 million, implying a 24-25% increase year over year.
Non-GAAP operating income is expected between $43 million and $45 million (25-26% of revenues).
Non-GAAP earnings are expected between 12 cents and 13 cents per share. The consensus mark for current-quarter earnings is pegged at 13 cents per share, suggesting a 30% surge from the figure reported in the year-ago quarter.
For fiscal 2021, revenues are expected between $721 million and $727 million (up from previous guidance range of $646-$656 million), implying a 25-26% year-over-year increase.
The Zacks Consensus Estimate for the current fiscal year’s revenues is pegged at $653.2 million, indicating a rise of 19.7% from the year-earlier reported number.
Subscription revenues are expected in the range of $624-$630 million (up from previous guidance range of $603- $612 million), indicating growth of 28-29%.
Total ARR is projected between $721 million and $727 million (up from $698- $708 million)
Non-GAAP operating income is envisioned between $186 million and $191 million (up from previous guidance range of $166-$175 million).
Management expects healthy operating margins in the second half of the fiscal year, but lower than the reported second-quarter figure.
Moreover, non-GAAP earnings are anticipated between 55 cents and 57 cents per share (up from previous guidance range of 46-49 cents per share). The consensus mark for current-year earnings stands at 47 cents per share, suggesting a 51.6% improvement from the figure reported in the year-ago period.
Further, unlevered free cash flow is predicted in the band of $192-$200 million (up from $187-$195 million).
Zacks Rank & Stocks to Consider
Dynatrace currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are CDW Corporation (CDW - Free Report) , Qorvo (QRVO - Free Report) and Himax Technologies (HIMX - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CDW, Qorvo and Himax are scheduled to report their quarterly earnings on Nov 2, 4 and 12, respectively.
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Dynatrace’s (DT - Free Report) second-quarter fiscal 2021 adjusted earnings of 18 cents per share beat the Zacks Consensus Estimate by 80% and also bettered 7 cents reported in the year-ago quarter.
Further, revenues of $168.6 million trumped the consensus mark by 5%. The top line improved 30.3% year over year as well. At constant currency (cc), revenues increased 30% year over year.
Top-Line Details
Subscription revenues surged 36.2% year over year to $157.7 million. At cc, subscription revenues surged 35% year over year.
Service revenues decreased 3.3% from the year-ago quarter to $10.5 million.
Moreover, license revenues plummeted 83.9% from the year-ago quarter to $0.4 million.
Dynatrace added 133 new logo customers, ending the second quarter with 2,594 customers. Moreover, net expansion rate remained more than 120% for the 10th consecutive quarter.
Total annual recurring revenues (“ARR”) at the end of fiscal second quarter soared 35.5% year over year to $638.1 million. At cc, ARR jumped 33% to $628.6 million.
ARR per Dynatrace customer also increased to $234K, up 14% year over year.
Operating Details
Gross margin expanded 280 basis points (bps) year over year to 85.4% in the reported quarter, driven by higher subscription gross margin.
Research & development (R&D) expenses increased 24.7% year over year to $23.9 million. However, as a percentage of revenues, R&D expenses declined 60 bps to 14.2%.
Sales & marketing (S&M) expenses were $50 million, up 16.7% year over year. However, as percentage of revenues, S&M expenses decreased 350 bps to 29.7%.
General & administrative (G&A) expenses increased 11.7% year over year to $16.8 million. As a percentage of revenues, G&A decreased 170 bps to 9.9%.
Non-GAAP operating margin improved to 32.7% compared with 23% in the year-ago quarter. The solid expansion was driven by higher revenues and gross margin, as well as improving operating efficiency.
Balance Sheet & Other Details
As of Sep 30, 2020, Dynatrace had cash and cash equivalents worth $248.4 million compared with $250.4 million as of Jun 30.
Long-term debt, as of Sep 30, 2020, was $480.9 million compared with $510.5 million as of Jun 30.
Dynatrace made a principal repayment of $30 million early in the reported quarter. The company also made a principal repayment of $30 million during October that further reduced its debt to $451 million.
The company’s quarterly unlevered free cash flow came in at $40.5 million compared with free cash flow of $27.2 million in the year-ago quarter.
Guidance
For third-quarter fiscal 2021, revenues are expected between $171 million and $173 million, implying 18-20% increase year over year.
The Zacks Consensus Estimate for the ongoing quarter’s revenues is currently pegged at $165.8 million, indicating 15.7% growth from the figure reported in the year-ago quarter.
Subscription revenues are expected between $160.5 million and $162 million, implying a 24-25% increase year over year.
Non-GAAP operating income is expected between $43 million and $45 million (25-26% of revenues).
Non-GAAP earnings are expected between 12 cents and 13 cents per share. The consensus mark for current-quarter earnings is pegged at 13 cents per share, suggesting a 30% surge from the figure reported in the year-ago quarter.
For fiscal 2021, revenues are expected between $721 million and $727 million (up from previous guidance range of $646-$656 million), implying a 25-26% year-over-year increase.
The Zacks Consensus Estimate for the current fiscal year’s revenues is pegged at $653.2 million, indicating a rise of 19.7% from the year-earlier reported number.
Subscription revenues are expected in the range of $624-$630 million (up from previous guidance range of $603- $612 million), indicating growth of 28-29%.
Total ARR is projected between $721 million and $727 million (up from $698- $708 million)
Non-GAAP operating income is envisioned between $186 million and $191 million (up from previous guidance range of $166-$175 million).
Management expects healthy operating margins in the second half of the fiscal year, but lower than the reported second-quarter figure.
Moreover, non-GAAP earnings are anticipated between 55 cents and 57 cents per share (up from previous guidance range of 46-49 cents per share). The consensus mark for current-year earnings stands at 47 cents per share, suggesting a 51.6% improvement from the figure reported in the year-ago period.
Further, unlevered free cash flow is predicted in the band of $192-$200 million (up from $187-$195 million).
Zacks Rank & Stocks to Consider
Dynatrace currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are CDW Corporation (CDW - Free Report) , Qorvo (QRVO - Free Report) and Himax Technologies (HIMX - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CDW, Qorvo and Himax are scheduled to report their quarterly earnings on Nov 2, 4 and 12, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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