Bought Dynatrace (DT) - Imagine a “control center” for all the apps, websites, and cloud systems a company uses!

 

What Dynatrace does (and why it matters)

Dynatrace is a software company that helps businesses keep their digital systems running smoothly by using AI to monitor, analyze, and fix problems in real time.

 Imagine a “control center” for all the apps, websites, and cloud systems a company uses—Dynatrace’s platform watches everything, spots issues before they cause trouble, and even helps automatically fix them. It also tracks how customers are experiencing a company’s services, so businesses can make them faster, safer, and more efficient.

Dynatrace sells an AI-powered observability platform used by large enterprises to monitor, secure, and optimize complex, cloud-native applications. The platform’s core pieces are:

• Grail™ – a massively parallel data lakehouse that unifies logs, metrics, traces, events, and business data for fast analytics at scale. Techzine GlobalDynatrace

• Davis® AI (hypermodal AI) – blends predictive, causal, and generative AI to pinpoint root causes, forecast issues, and automate remediation; now extending to AI/LLM observability and agentic-AI use cases. Dynatrace+2

• Newest features (2025) – “3rd-generation” platform push; Live Debugger GA; expanded log analytics; cost & carbon optimization; NVIDIA collaboration for AI/LLM observability; new Google Cloud/AWS initiatives. Dynatrace, Inc

Customers (representative logos)

Dynatrace highlights blue-chip users across finance, telecom, government, and airlines, including TD Bank, Air Canada, BT, Virgin Money, and the Australian Government. (Logos shown on Dynatrace’s customer page.) Dynatrace

Competitors

Key rivals in observability and APM include Datadog, Splunk (Cisco), New Relic, and SolarWinds. Gartner peer pages and alternative lists place these as primary alternatives vs. Dynatrace. Gartner
Recent analyst/industry reads also position Dynatrace as a Leader (highest on “Execution”) in Gartner’s 2025 Observability MQ and #1 across four of six Critical Capabilities use cases. Dynatrace, Inc.

Financials (latest quarter & outlook)

Q1 FY26 (quarter ended Jun 30, 2025):

• Revenue: $477M (+20% Y/Y)

• Subscription revenue: $458M (+20% Y/Y)

• ARR: $1.822B (+18% Y/Y)

• Non-GAAP OP margin: 30% ; Non-GAAP EPS: $0.42

• Closed 12 $1M+ ACV expansion deals; DPS licensing now over 45% of customers / 65%+ of ARR.

• Repurchased 905k shares for $45M in the quarter (cumulative $218M since program start). Dynatrace, Inc.

FY26 guidance (updated Aug 6, 2025):

• Revenue: $1.97B–$1.985B (as-reported +16–17%; constant-currency +14–15%)

• ARR: $1.988B–$2.003B (+15–16% as-reported)

• Non-GAAP OP margin: ~29% ; FCF: $505–$515M (~26% margin). Dynatrace, Inc.

Context: Prior FY25 finished with ARR $1.734B (+15%) and revenue $445M in Q4 (+17%). Dynatrace, Inc.

Growth drivers (next 2 years)

• AI/LLM Observability & agentic AI: New modules and NVIDIA partnership make DT a “picks-and-shovels” play on enterprise AI, expanding wallet share with existing customers. Dynatrace, Inc.

• Grail unification & data economics: Storing traces in Grail and unified analytics can consolidate point tools (log management, APM, DEM), improving competitive wins/expansions. Dynatrace

• Platform subscription (DPS): Mix shift to platform-wide licensing (already >65% of ARR) supports durable ARR growth and visibility. Dynatrace, Inc.

• Third-party validation: Leader positions from Gartner, Forrester, and GigaOm support enterprise adoption cycles. Dynatrace, Inc.Dynatrace+1

Risks / watch-items

• Competitive intensity (especially Datadog in cloud-native accounts; Splunk/Cisco in SIEM/logs). Gartner

• Large-deal timing (expansion-led growth can be lumpy; management noted seven-figure expansions as a driver). Dynatrace, Inc.

• Valuation vs. growth (keep an eye on multiple vs. mid-teens growth and macro IT spend).

Institutional ownership (who owns DT)

Latest 13G/A filings and trackers show:

• BlackRock ~11.9% (35.5M shares; 13G/A filed Feb 5, 2025)

• Vanguard ~10.1% (30.2M; 13G/A Jan 8, 2025)

• T. Rowe Price ~6.0% (17.8M; 13G/A Feb 14, 2025)
  (Additional large holders include State Street, Janus Henderson; Thoma Bravo remains a sizable shareholder.) Fintel+1MarketBeatCapEdge

Analyst Sentiment & Targets

• Consensus Rating: Analysts continue to lean bullish, with a consensus of “Buy” or “Moderate Buy.” The 12-month average price target ranges between ~$62 to $63, implying upside of around 25–35% from current levels.
  TipRanks+15Investors+15

• Recent Analyst Actions: Notable firms like Goldman Sachs, BMO, DA Davidson, and UBS have either raised price targets or maintained optimistic ratings. 21 of 25 Analysts covering say Buy!
  MarketBeat+1

Recent insider activity (last few months)

• CFO (James M. Benson) – multiple sales reported in June 2025 (e.g., ~59,661 shares at ~$54.75).

• CRO (Dan Zugelder) – option exercises and sales in May–July 2025 (e.g., ~15.8k shares around ~$54–55).

• CTO (Bernd Greifeneder) – small sale in June 2025.
  Note: Many transactions are associated with scheduled plans/option events; Form 4s filed with the SEC. Insider ScreenerSec Form 4

Quick take on why we bought DT shares!

• Business quality: High ARR, sticky enterprise base, expanding AI/LLM observability surface area.

• Execution: Consistent beats; raising FY26 outlook; strong FCF and active buybacks. Dynatrace, Inc.

• Moat signals: Unified data plane (Grail) + deterministic AI (Davis) + platform licensing help differentiate vs. point tools. GlobalDynatrace

• Trading this week below it's 50 and 200 day moving average

  Fundamental Performance

  • Latest Earnings (Q1, quarter ending June 30):

    • EPS: $0.42 (+27% year-over-year, beat expectations of $0.38)

    • Revenue: $477M (+20%, beat ~$467M estimate)

    • Subscription ARR: $1.822B (+18%, exceeded $1.779B forecast)
      Zacks+15Investors+15MarketBeat+15

  • Q4 Results (quarter ending March 31): Strong beats on both EPS and sales; 2026 guidance was raised to above expectations.
    Investors

  Technical & Momentum Signals

  • Composite Rating: Dynatrace’s IBD SmartSelect rating climbed to 96—a strong score, outperforming 96% of all stocks. It’s also trading just beyond a possible cup‑with‑handle breakout point.
    Barron's+15Investors+15Yahoo Finance+15

  • Relative Strength (RS) Rating: Recently hit 81, surpassing the 80 threshold typically seen in early upward trends.
    Investors+1

  • Recent Upgrade: RS Rating was previously at 73, showing improving momentum.
    Investors

  Institutional Activity

  • Several institutions, including Goldman Sachs and Coronation Fund Managers, have increased their stakes recently.
    MarketBeat+2MarketBeat+2

  Cautionary Notes

  • Short-Term Technicals: Some sources note negative signals—such as sell signals from moving averages, and RSI suggesting possible short-term overbought conditions.
    Morningstar+8StockInvest+8Directors Talk Interviews+8

  • Stock Price Below Averages: Despite strong earnings, DT remains below its 50- and 200-day moving averages, possibly indicating less bullish momentum in the short term.
    MarketBeat+6Investors+6

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  Bottom Line

  • Fundamentals are strong: Revenue growth, earnings beats, and recurring revenue expansion all support a healthy business trajectory.

  • Analyst confidence is solid: Price targets suggest 25–35% upside.

  • Momentum is building: High composite and RS ratings indicate growing technical strength.

  • Watch for short-term volatility: Technical and chart indicators suggest potential short-term consolidation or correction.

  So, while the stock may have some near-term technical headwinds, the overall picture—fundamentals, outlook, and institutional support—leans positive. Holding for the medium to long term appears reasonable; if you're cautious, a stop-loss or scaling strategy could help manage risk.