Why Dynatrace Stock Climbed Today
Key Points
Cloud partnerships are fueling Dynatrace's growth.
Dynatrace is buying back its shares as its free cash flow swells.
- 10 stocks we like better than Dynatrace ›
Shares of Dynatrace (NYSE: DT) rose on Monday after the artificial intelligence (AI)-powered observability platform reported solid quarterly results and issued an optimistic growth forecast.
By the close of trading, Dynatrace's stock price was up more than 7%.
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Rising enterprise adoption
Dynatrace's revenue jumped 18% year over year to $515 million in its fiscal 2026 third quarter, which ended on Dec. 31. Better still, the software provider's annual recurring revenue (ARR) leaped 20% to nearly $2 billion.
Dynatrace uses AI-derived insights to help its customers analyze their applications and automate their businesses. By integrating with cloud computing platforms offered by the likes of Amazon, Microsoft, and Alphabet, Dynatrace has positioned itself to profit from the AI boom.
"As organizations broadly deploy AI, observability is mission critical to managing the reliability and performance of those workloads," CEO Rick McConnell said in a press release.
All told, Dynatrace's adjusted net income increased 21% to $134.7 million, or $0.44 per share. That bested Wall Street's estimates, which had called for per-share profits of $0.41.
A bullish forecast
These strong results prompted Dynatrace to lift its full-year financial outlook.
Management now expects adjusted earnings per share of $1.67 to $1.69, up from a prior forecast of $1.62 to $1.64. Dynatrace also boosted its free cash flow guidance to $520 million to $525 million, up from $505 million to $515 million.
Additionally, Dynatrace announced a new $1 billion share repurchase program.
"Our scale, balance sheet, and proven ability to generate strong cash flow allow us to invest for durable long-term growth, while also returning capital to shareholders," chief financial officer Jim Benson said.
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Joe Tenebruso has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool has a disclosure policy.
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