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Dynatrace (DT) to Report Q4 Earnings: What's in the Cards?

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Dynatrace (DT - Free Report) is set to report fourth-quarter fiscal 2021 results on May 12.

For the fiscal fourth quarter, non-GAAP earnings are projected between 13 cents and 14 cents per share.

Revenues are estimated to be between $190 million and $192 million, indicating 26-28% increase year over year, adjusted for forex.

The Zacks Consensus Estimate for fiscal fourth-quarter has been unchaned at 14 cents per share over the past 30 days, suggesting 27.2% growth from the figure reported in the year-ago quarter.

The consensus mark for revenues is pegged at $191.2 million, calling for an increase of 27.01% from the year-ago quarter’s reported figure.

Notably, Dynatrace’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 44.5%.

Let’s see how things have shaped up prior to the upcoming announcement.

Dynatrace, Inc. Price and EPS Surprise

Dynatrace, Inc. Price and EPS Surprise

Dynatrace, Inc. price-eps-surprise | Dynatrace, Inc. Quote

Factors to Note

Dynatrace’s fiscal fourth-quarter results are expected to benefit from strong demand for its APM solutions, DEM module and an expanding clientele. Markedly, the company’s target addressable market is worth more than $32 billion and comprises 15K global large enterprises with greater than $1 billion in revenues.

Subscription revenues are estimated between $178 million and $180 million, calling for a 32-33% increase year over year.

Moreover, the coronavirus-led disruption has accelerated digital transformation among global enterprises. Dynatrace’s robust portfolio is anticipated to have helped it tap into this massive opportunity, thereby driving top-line growth in the fiscal third quarter.

Additionally, Dynatrace continues to expand its product portfolio by introducing capabilities and enhancements, which is likely to have been a key growth driver.

In the fiscal fourth quarter, the company rolled out its new Software Intelligence Hub, making it easier for Dynatrace customers to leverage out-of-the-box integrations from an extensive array of over 500 technologies, and to create custom Dynatrace integrations without coding.

Further, the company ventured into the cloud application security market by launching the Dynatrace Application Security Module, which offers runtime application self-protection (RASP) capabilities for production and pre-production environments.

During the fiscal fourth quarter, the company rolled out enhancements to its Application Security Module, which the company released in December 2020. These include extending Dynatrace’s AI-powered risk assessment for applications running on Node.js, the runtime environment underpinning the cloud-native applications of many of the world’s leading brands.

In addition, Dynatrace is extending automatic software vulnerability detection in Kubernetes environments from workloads to the platform itself, and linking vulnerabilities discovered by Dynatrace to individual containers to streamline assessment and increase the speed of remediation.

Moreover, the company started enhancing its infrastructure monitoring capabilities to search and analyze logs from Kubernetes and multicloud environments, as well as the most widely used open-source log data frameworks during the fiscal fourth quarter.

Apart from this, extension of its Software Intelligence Platform to support all services from Amazon Web Services as well as the integration with ServiceNow’s (NOW - Free Report) Service Graph Connector Program are expected to have fortified Dynatrace’s portfolio, thereby helping it win new customers.

During the fiscal fourth quarter, the company announced the addition of a Cloud Automation Module to its Software Intelligence Platform. This new Module will leverage the automation and intelligence at the core of the Dynatrace Platform to orchestrate the application development lifecycle process, including automating code tests and quality checks, against an organization’s service level objectives (SLOs).

Moreover, growing strategic partnerships are expected to remain key catalysts. In the to-be- reported quarter, Dynatrace expanded strategic collaboration with Microsoft MSFT and Google Cloud.

As part of this, Dynatrace now delivers its observability platform for purchase through the Microsoft Azure and Google Cloud Marketplace. This integration is anticipated to have driven the adoption of Dynatrace’s monitoring capabilities.

Apart from this, the company’s solid recurring-revenue base is a key catalyst. Total annual recurring revenues (ARR) at the end of the fiscal third quarter surged 32% year on year (at constant currency) to $703.6 million.

This trend is likely to have continued in the fiscal fourth quarter as well, thereby boosting subscription revenues.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Dynatrace has an Earnings ESP of 0.00% and carries a Zacks Rank #3 currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stock to Consider

Here is a company worth considering as our model shows that it has the right combination of elements to beat on earnings in its upcoming release:

Agilent Technologies, Inc. (A - Free Report) has an Earnings ESP of +1.57% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Dynatrace, Inc. (DT) - free report >>