Dynatrace (NYSE:DT) shares climbed more than 7% in pre-market trading after the software company reported first-quarter fiscal 2027 results that topped Wall Street expectations, supported by continued demand for its AI-powered observability platform.
The company posted adjusted earnings of $0.48 per share, beating the analyst consensus estimate of $0.44. Revenue increased 16% year over year to $554.5 million, ahead of the expected $549.3 million.
AI demand drives recurring revenue growth
Chief Executive Officer Rick McConnell said enterprise customers continue to invest heavily in cloud infrastructure and artificial intelligence initiatives.
“Dynatrace delivered an exceptional quarter, led by 41% organic net new ARR growth,” McConnell said. “Demand continues to strengthen as enterprises expand cloud-native workloads and accelerate their AI initiatives.”
Annual recurring revenue (ARR) rose 17% from a year earlier to $2.136 billion on both a reported and constant-currency basis.
Subscription revenue also increased 16% year over year to $530 million.
The company reported record growth in new customer ARR, with new logo ARR increasing by more than 160%, while annualised log consumption nearly doubled to $200 million, representing growth of more than 100%.
Earnings guidance raised for full year
Dynatrace issued fiscal 2027 adjusted earnings guidance of between $1.97 and $1.99 per share.
The midpoint of $1.98 is above the Wall Street consensus estimate of $1.95.
However, the company’s full-year revenue forecast of $2.306 billion to $2.320 billion fell slightly short of the analyst consensus estimate of $2.329 billion.
For the second quarter of fiscal 2027, management expects revenue of between $565 million and $570 million, with adjusted earnings per share of $0.48 to $0.49.
Share buyback continues as CFO prepares retirement
During the quarter, Dynatrace repurchased approximately $275 million of its own shares, acquiring 7.1 million shares at an average price of $38.88.
The company also announced that Chief Financial Officer Jim Benson plans to retire and will step down by 31 March 2027.
Despite the slightly softer revenue outlook, investors focused on the earnings beat, accelerating ARR growth and improving AI adoption, helping push the stock sharply higher before the market opened.
Dynatrace stock price
