Dynatrace Inc Q1 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Koji Ikeda - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Yeah. Hey, guys. Thanks so much for taking the question. Really nice performance here. I did want to ask you a question on the guide. Jim, you gave a lot of color, and I appreciate that (technical difficulty) in the prepared remarks. But why not raise the constant currency guide? DPS is sounding strong, logs is sounding strong, ODC is ramping nicely. And so just wanted to hopefully get additional color there on the guidance. And then one additional question on the guidance methodology. Could we, as investors just always anticipate in fiscal 1Q going forward that we will not be getting updates to the constant currency ARR guidance? Thanks so much.

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Thank you. Congrats from me as well. I wanted to talk a little bit about -- you talked about the bigger deals, Rick and the consolidation -- can you speak a little bit of like who you're consolidating there? I would assume on the logs is going to be Splunk, but it does feel like it's broader than that. And as part of that, like what's the appetite in the market for these deals. Thank you.

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Okay. Makes sense. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 12:00PM, DT.N - Q1 2026 Dynatrace Inc Earnings Call

Question: Matthew Hedberg - RBC Capital Markets Inc - Analyst : All right, guys. Thanks for taking my question. Congrats on the results. Realizing DPS contracts are typically three years. I'm wondering if you're seeing anything different with this year's DPS cohort versus last year. And anything different about ODC as last year's cohort like moving to year two?

Question: Sanjit Singh - Morgan Stanley - Analyst : Thank you for taking the questions. In your comments, Rick, and as you -- we go through the Q&A, I think definitely sends a lot of optimism and you guys feeling pretty good about the go-to-market changes. I'm trying to like dig into like how the go-to-market changes are like manifesting? And you mentioned the strategic account pipeline up 50%. Is there any way to compare that, like, say, if we wind back to this time last year, is that an improvement versus this time last year? And how are the composition of deals, whether from a deal size perspective or the number of product perspective, any way to contextualize like how the deals are changing. And I think -- the other thing I would add is that we've talked about large deal uncertainty in the past you guys famously signed a $100 million TCV deal a couple of years ago. Are we saying that there's more of these types of deals in the pipeline driven by some of the go-to-market changes that you guys have been implementing over the past several quarters? Thanks.

Question: William Power - Robert W. Baird & Co Inc - Analyst : Hey. Thanks. I guess I want to come back a little bit perhaps to the previous question. I mean it sounds like you're clearly reaping some of the benefits of the go-to-market changes put in place about 1.5 years ago or so. Maybe you could just share any more color on where we are in that journey. Is there anything with respect to sales tenure or sales productivity? I'm just trying to figure out how much more there might be still to go as we

Question: Noah Herman - JPMorgan Chase & Co - Analyst : Hey, guys. This is Noah on for Mark Murphy. You noted that the enterprise pipeline, I think, is up about 50%, and that log management remains a major opportunity, reiterating the $100 million milestone. Can you unpack how much of that pipeline strength is being driven by log-related demand specifically or potentially other adjacent solutions? Thank you.

Question: Andrew Sherman - Cowen and Company LLC - Analyst : Great. Thanks. Congrats. Jim, the NRR of 111% was a nice uptick. Now that DPS is 60% of ARR, is there any reason why we wouldn't see NRR continue to increase a little bit throughout the year.

Question: Andrew Sherman - Cowen and Company LLC - Analyst : Great. Thank you.

Question: Brent Thill - Jefferies LLC - Analyst : Thanks. Good morning. Just on AI, there was a view about last year that many enterprises were confused and trying to figure things out. They seem to be on a bigger route and making better decisions. Do you think this is starting to aid and help in some of the decisions that you're seeing and REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 12:00PM, DT.N - Q1 2026 Dynatrace Inc Earnings Call fall through in your own core business? How would you characterize just the enterprise AI adoption demand? And what tailwind that's starting to add to your business?

Question: Keith Bachman - Bank of Montreal - Analyst : Hi. Thank you very much. I actually wanted to discuss the competitive landscape and seeing given the expansion of your portfolio the dynamics surrounding it seems to be a market consolidated to two primary vendors. What do you think the current dynamics of the market suggests about the competitive landscape? I know Brent asked about the growth of AI, your logs, fundamentals. And in particular, if we think about open-source solutions and how customers may be looking at that, one of your competitors deals with startups, including AIs and it understood they may be going -- one of their customers may be going more towards do-it-yourself and/or leveraging some open-source technologies. What are you guys seeing? If I break it down into the two parts, it seems like your net retention rate is steady, but what about some of the deals that are more new greenfield? Are you seeing any changes there in the competitive dynamics particularly from open-source projects. And then, Jim, just a quickie for you. Your free cash flow was strong this quarter, certainly above our estimates by a reasonable amount. Anything that you want us to keep in mind as we look for the next three quarters, you didn't change the free cash flow guidance for the year despite strong results. So anything you want to call out or ask us to keep in mind for our free cash flow targets for the year. Thank you.

Question: Brad Reback - Stifel, Nicolaus & Company Inc - Analyst : Great. Just building on the hyperscaler comment a minute ago. Can you remind us how your business skews? Does it skew more towards Azure? Or is it fairly evenly weighted across the 3?

Question: Brad Reback - Stifel, Nicolaus & Company Inc - Analyst : Great. Thank you very much.

Question: Patrick O'Neill - Wolfe Research LLC - Analyst : Hey. This is Patrick on for Josh. Thanks for taking our question. I wanted to touch on the new logo adds in the quarter, which were down quite a bit year over year and sequentially. And it sounds like maybe the pipeline on the new logo side is a little weaker or at least relative to the expansion opportunities. Can you just comment on why that is? And should we think about this as the new run rate this year? Or anything to call out related to what you might be doing to improve those customer adds going forward? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 12:00PM, DT.N - Q1 2026 Dynatrace Inc Earnings Call

Question: Miller Jump - Truist Securities - Analyst : Hey. Great. Thank you for squeezing me in. So obviously, it's early on this, but I'm just curious if there's any contribution to pipeline and early assessment you could give us on the rollout of the strike teams. And maybe as we think about opportunities for additional strike teams down the road, what are the key criteria that you're using to determine if the strike team is beneficial to the technology? Thanks.