Dynatrace earnings and revenue for the September-quarter topped analyst estimates, but DT stock tumbled Wednesday on its own lowered annual recurring revenue outlook.
Waltham-Mass.-based Dynatrace reported fiscal second-quarter earnings before the market open.
Dynatrace earnings came in at 22 cents a share, up 22% from a year earlier, while revenue rose 23% to $279 million, the company said. Analysts had estimated profit of 18 cents on revenue of $272.5 million.
Annual recurring revenue, or ARR, came in at $1.065 billion, just below analyst estimates for $1.07 billion. Dynatrace reduced its annual ARR outlook by about $40 million in August. It again lowered ARR guidance.
DT stock fell 6.4% to close at 31.87 on the stock market today. Meanwhile, Dynatrace stock has retreated 41% in 2022
Guidance For DT Stock
"Guidance for fiscal 2023 ARR moved 500 basis points lower on as reported basis and 300 basis points lower on an adjusted basis, implying 200 basis points of additional currency headwind and 300 basis points of macro headwind," RBC Capital analyst Matthew Hedberg said in a note to clients.
He added: "Fiscal 2023 constant currency adjusted ARR growth (is) now expected to be 24% vs. 27% to 28% previously while operating margins have been expanded by 175 basis points."
For the current quarter ending in December, Dynatrace predicted earnings in a range of 21 cents to 22 cents a share vs. Wall Street estimates of 19 cents. The software maker forecast revenue of $284.5 million vs. estimates of $286.3 million.
The software maker's computer network monitoring tools measure and analyze the performance of business-critical applications.
Heading into the earnings report, DT stock owned a Relative Strength Rating of 29 out of a best-possible 99, according to IBD Stock Check-Up.
Datadog, Cisco Among Competitors
Dynatrace competes in the application performance monitoring market vs. Datadog, Cisco Systems, New Relic and others. Datadog reports earnings Thursday before the market open.
"We believe that much of software is experiencing elongated deal cycles and lower demand levels, which includes observability and Dynatrace specifically," BMO Capital Markets analyst Keith Bachman said in a note published prior to the earnings release.
He added: "While we think DT continues to have the optimal solution for enterprise customers, particularly driven by scalability and AI, we nevertheless think that DT's price points are high both for new lands and expansions, which creates some friction in the buying process."
Dynatrace went public Aug. 1, 2019, backed by private equity firm Thoma Bravo. The initial public offering for DT stock raised $570 million.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
