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Dynatrace’s (DT - Free Report) fourth-quarter fiscal 2020 adjusted earnings of 11 cents per share beat the Zacks Consensus Estimate by 37.5% and also bettered 3 cents reported in the year-ago quarter.
Further, revenues of $150.6 million trumped the consensus mark by 3%. The top line improved 29.6% year over year as well.
Top-Line Details
Subscription revenues surged 38.3% year over year to $135.4 million. Service revenues increased 20.3% from the year-ago quarter to $12.9 million.
Overall, subscription and services revenues jumped 37% year over year to $148.3 million, accounting for more than 98% of total revenues
However, license revenues plummeted 70% from the year-ago quarter to $2.3 million.
Dynatrace ended fiscal 2020 with 2,373 customers, up 74% year over year. Moreover, net expansion rate was 123%. This was the 8th consecutive quarter when net expansion rate was at or above 120%.
Total annual recurring revenues (ARR) at the end of the fiscal fourth quarter soared 42% year over year to $572.8 billion. Approximately, 80-85% of ARR is from enterprise customers belonging to industries that showed resilience despite the coronavirus crisis.
Dynatrace platform accounted for 92% of total ARR in the quarter under review.
Moreover, remaining performance obligation (RPO) at the end of the quarter was approximately $860 million, up 56% year over year. Dynatrace expects to realize $495 million of RPO over the next 12 months.
Operating Details
Gross margin expanded 510 basis points (bps) year over year to 79.3% in the reported quarter, driven by higher subscription gross margin.
Research & development (R&D) expenses increased 13.8% year over year to $24.5 million However, as a percentage of revenues, R&D expenses declined 230 bps to 16.3%.
Sales & marketing (S&M) expenses were $55.6 million, up 15.3% year over year. However, as percentage of revenues, S&M expenses decreased 460 bps to 36.9%.
General & administrative (G&A) expenses fell 21.3% year over year to $21.3 million. As a percentage of revenues, G&A dropped to 14.1% from 23.3% reported in the year-ago quarter.
Non-GAAP operating margin expanded 210 bps on a year-over-year basis to 23.9%.
Balance Sheet & Other Details
As of Mar 31, 2020, Dynatrace had cash and cash equivalents worth $213.2 million compared with $51.3 million as of Dec 31, 2019.
Long-term debt as of Mar 31, 2020 was $510 million compared with $1.01 billion as of Dec 31, 2019.
The company’s quarterly unlevered free cash flow came in at $63.30 million compared with free cash flow of $75.7 million in the year-ago quarter.
Guidance
For first-quarter fiscal 2021, revenues are expected between $148 million and $150 million, implying a 24-25% increase year over year, adjusted for forex. The company expects the negative impact of coronavirus to be maximum on first-quarter revenues.
The Zacks Consensus Estimate for the ongoing quarter’s revenues is currently pegged at $150.5 million, indicating 22.8% growth from the figure reported in the year-ago quarter.
Non-GAAP operating income is expected between $38 million and $40 million.
Non-GAAP earnings are expected between 9 cents and 10 cents per share. The consensus mark for current-quarter earnings is pegged at 7 cents per share, suggesting a 75% surge from the figure reported in the year-ago quarter.
For fiscal 2021, revenues are expected between $630 million and $643 million, implying a 17-20% year-over-year increase, adjusted for forex.
The Zacks Consensus Estimate for the current fiscal year’s revenues is pegged at $655 million, indicating a rise of 21% from the year-earlier quarter’s reported number.
Subscription revenues are expected in the range of $591- $601 million, up 23-25%, adjusted for forex.
Total ARR is projected between $680 million and $692 million.
Non-GAAP operating income is envisioned between $146 million and $156 million.
Moreover, non-GAAP earnings are anticipated between 39 cents and 42 cents per share. The consensus mark for current-year earnings stands at 34 cents per share, suggesting a 22.6% improvement from the figure reported in the year-ago quarter.
Further, unlevered free cash flow is predicted in the band of $180-$190 million.
AudioEye, NVIDIA and Nutanix are set to report quarterly results on May 14, 21 and 27, respectively.
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Dynatrace (DT) Q4 Earnings Beat Estimates, Revenues Rise Y/Y
Dynatrace’s (DT - Free Report) fourth-quarter fiscal 2020 adjusted earnings of 11 cents per share beat the Zacks Consensus Estimate by 37.5% and also bettered 3 cents reported in the year-ago quarter.
Further, revenues of $150.6 million trumped the consensus mark by 3%. The top line improved 29.6% year over year as well.
Top-Line Details
Subscription revenues surged 38.3% year over year to $135.4 million. Service revenues increased 20.3% from the year-ago quarter to $12.9 million.
Overall, subscription and services revenues jumped 37% year over year to $148.3 million, accounting for more than 98% of total revenues
However, license revenues plummeted 70% from the year-ago quarter to $2.3 million.
Dynatrace Inc Price, Consensus and EPS Surprise
Dynatrace Inc price-consensus-eps-surprise-chart | Dynatrace Inc Quote
Dynatrace ended fiscal 2020 with 2,373 customers, up 74% year over year. Moreover, net expansion rate was 123%. This was the 8th consecutive quarter when net expansion rate was at or above 120%.
Total annual recurring revenues (ARR) at the end of the fiscal fourth quarter soared 42% year over year to $572.8 billion. Approximately, 80-85% of ARR is from enterprise customers belonging to industries that showed resilience despite the coronavirus crisis.
Dynatrace platform accounted for 92% of total ARR in the quarter under review.
Moreover, remaining performance obligation (RPO) at the end of the quarter was approximately $860 million, up 56% year over year. Dynatrace expects to realize $495 million of RPO over the next 12 months.
Operating Details
Gross margin expanded 510 basis points (bps) year over year to 79.3% in the reported quarter, driven by higher subscription gross margin.
Research & development (R&D) expenses increased 13.8% year over year to $24.5 million However, as a percentage of revenues, R&D expenses declined 230 bps to 16.3%.
Sales & marketing (S&M) expenses were $55.6 million, up 15.3% year over year. However, as percentage of revenues, S&M expenses decreased 460 bps to 36.9%.
General & administrative (G&A) expenses fell 21.3% year over year to $21.3 million. As a percentage of revenues, G&A dropped to 14.1% from 23.3% reported in the year-ago quarter.
Non-GAAP operating margin expanded 210 bps on a year-over-year basis to 23.9%.
Balance Sheet & Other Details
As of Mar 31, 2020, Dynatrace had cash and cash equivalents worth $213.2 million compared with $51.3 million as of Dec 31, 2019.
Long-term debt as of Mar 31, 2020 was $510 million compared with $1.01 billion as of Dec 31, 2019.
The company’s quarterly unlevered free cash flow came in at $63.30 million compared with free cash flow of $75.7 million in the year-ago quarter.
Guidance
For first-quarter fiscal 2021, revenues are expected between $148 million and $150 million, implying a 24-25% increase year over year, adjusted for forex. The company expects the negative impact of coronavirus to be maximum on first-quarter revenues.
The Zacks Consensus Estimate for the ongoing quarter’s revenues is currently pegged at $150.5 million, indicating 22.8% growth from the figure reported in the year-ago quarter.
Non-GAAP operating income is expected between $38 million and $40 million.
Non-GAAP earnings are expected between 9 cents and 10 cents per share. The consensus mark for current-quarter earnings is pegged at 7 cents per share, suggesting a 75% surge from the figure reported in the year-ago quarter.
For fiscal 2021, revenues are expected between $630 million and $643 million, implying a 17-20% year-over-year increase, adjusted for forex.
The Zacks Consensus Estimate for the current fiscal year’s revenues is pegged at $655 million, indicating a rise of 21% from the year-earlier quarter’s reported number.
Subscription revenues are expected in the range of $591- $601 million, up 23-25%, adjusted for forex.
Total ARR is projected between $680 million and $692 million.
Non-GAAP operating income is envisioned between $146 million and $156 million.
Moreover, non-GAAP earnings are anticipated between 39 cents and 42 cents per share. The consensus mark for current-year earnings stands at 34 cents per share, suggesting a 22.6% improvement from the figure reported in the year-ago quarter.
Further, unlevered free cash flow is predicted in the band of $180-$190 million.
Zacks Rank & Stocks to Consider
Dynatrace currently carries a Zacks Rank #3 (Hold). AudioEye (AEYE - Free Report) , NVIDIA (NVDA - Free Report) and Nutanix (NTNX - Free Report) are some better-ranked stocks in the broader computer and technology sector. While AudioEye and Nutanix (NTNX - Free Report) sport a Zacks Rank #1 (Strong Buy), NVIDIA carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AudioEye, NVIDIA and Nutanix are set to report quarterly results on May 14, 21 and 27, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>