What To Expect From Dynatrace's (DT) Q3 Earnings

Cloud observability platform Dynatrace (NYSE:DT) will be announcing earnings results this Wednesday before market hours. Here’s what to expect.

Dynatrace beat analysts’ revenue expectations by 2.1% last quarter, reporting revenues of $477.3 million, up 19.6% year on year. It was a very strong quarter for the company, with a solid beat of analysts’ billings estimates and an impressive beat of analysts’ EBITDA estimates.

Is Dynatrace a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members.

This quarter, analysts are expecting Dynatrace’s revenue to grow 16.6% year on year to $487.4 million, slowing from the 18.9% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.41 per share.

Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Dynatrace has a history of exceeding Wall Street’s expectations, beating revenue estimates every single time over the past two years by 2.1% on average.

Looking at Dynatrace’s peers in the software development segment, some have already reported their Q3 results, giving us a hint as to what we can expect. Twilio delivered year-on-year revenue growth of 14.7%, beating analysts’ expectations by 3.8%, and Cloudflare reported revenues up 30.7%, topping estimates by 3.2%. Twilio traded up 19.5% following the results while Cloudflare was also up 13.8%.

Read our full analysis of Twilio’s results here and Cloudflare’s results here.

Investors in the software development segment have had fairly steady hands going into earnings, with share prices down 1.2% on average over the last month. Dynatrace is up 2.7% during the same time and is heading into earnings with an average analyst price target of $62.94 (compared to the current share price of $50.50).

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