Dynatrace’s ( DT Quick Quote DT - Free Report) first-quarter fiscal 2023 adjusted earnings of 18 cents per share were in line with the Zacks Consensus Estimate and increased 12.5% year over year. Revenues of $267 million beat the consensus mark by 1.72%. The top line improved 27.4% year over year as well. At constant currency (cc), revenues increased 32% year over year. Top-Line Details
Subscription revenues climbed 27% year over year to $249.6 million. At cc, subscription revenues increased 32% year on year.
Service revenues surged 34.5% from the year-ago quarter to $17.7 million. Total annual recurring revenues (“ARR”) at the end of the fiscal first quarter increased 25% year over year to $1.03 billion. At cc, ARR jumped 31% year over year.
The company’s customer base continued to expand in the reported quarter with 135 new logos added to the Dynatrace platform. Moreover, the net expansion rate remained more than 120% for the 17th consecutive quarter.
Gross margin contracted 100 basis points (bps) year over year to 83.8% in the reported quarter.
Research & development (R&D) expenses flared up 34.9% year on year to $40.6 million. Moreover, as a percentage of revenues, R&D expenses increased 80 bps to 15.2%. Sales & marketing (S&M) expenses were $94.3 million, up 30.5% year over year. As a percentage of revenues, S&M expenses increased 80 bps to 35.3%. General & administrative (G&A) expenses went up 31.5% year over year to $28.6 million. As a percentage of revenues, G&A increased 30 bps to 10.7%. Non-GAAP operating margin contracted 30 bps on a year-over-year basis to 10.7% in the reported quarter. Balance Sheet & Other Details
As of Jun 30, 2022, Dynatrace had cash and cash equivalents worth $571.3 million.
Long-term debt, as of Jun 30, 2022, was $244.4 million. The company generated a free cash flow of $136.2 million compared with $80.5 million reported in the year-ago quarter. Guidance
For second-quarter fiscal 2023, revenues are projected between $272 million and $275 million, suggesting a 20-21% increase year over year (26-28% at cc).
Subscription revenues are estimated between $255 million and $257 million, indicating a 20-21% increase year over year (26-27% at cc). Non-GAAP operating income is expected between $62 million and $64.5 million suggesting an operating margin in the range of 23-23.5%. Non-GAAP earnings are anticipated between 18 cents and 19 cents per share. For fiscal 2023, total ARR is projected between $1.213 billion and $1.226 billion (down from the previously guided range of $1.250-$1.265 billion), indicating a 22-23% year-over-year jump. Unfavorable forex is expected to hurt the top line by $40 million. Revenues are expected in the range of $1.125-$1.136 billion, suggesting 21-22% year-over-year growth. Unfavorable forex is expected to hurt the top line by $47 million. Subscription revenues are estimated in the range of $1.053-$1.062 billion, indicating 21-22% growth. Non-GAAP operating income is envisioned between $252 million and $261 million. Moreover, non-GAAP earnings are anticipated between 73 cents and 76 cents per share (down from the previously guided range of 74-77 cents per share). Further, free cash flow is now expected in the band of $310-$325 million. Zacks Rank & Stocks to Consider
Dynatrace currently carries a Zacks Rank #3 (Hold).
Asure Software ( ASUR Quick Quote ASUR - Free Report) , Blink Charging ( BLNK Quick Quote BLNK - Free Report) , and Everbridge ( EVBG Quick Quote EVBG - Free Report) are some better-ranked stocks that investors can consider in the broader sector. All three stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Asure shares are down 32.6% year to date. ASUR is set to report second-quarter 2022 results on Aug 8. Blink shares are up 16.8% year to date. BLNK is set to report second-quarter 2022 results on Aug 8. Everbridge shares are down 51.5% year to date. EVBG is set to report second-quarter 2022 results on Aug 9.