Dynatrace Inc Q2 2026 Earnings Call Transcript

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

Question: Fatima Boolani - Citibank Cameroon SA - Analyst : Jim, I was hoping we could spend a little bit of time on the net retention rate metric. And if you could help peel back the onion, so to speak, on some of the puts and takes there. And really, the spirit of the question is, why is the metric lagging in contrast to otherwise very favorable momentum that you have shared in your prepared remarks on renewals, on expansions, on accelerating customer growth as well as signs that you're seeing that customers are now expanding earlier. So I just wanted to get maybe more granular understanding on why net retention rate looks like it's stuck in the mud when all other factors in the business are pointing to more favorable momentum.

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Congrats on the strong quarter and increased guide. I had a question. You guys have spent a lot of time focused on go-to-market improvements really over the last several years, and it really feels like it's paying dividends right now in terms of large deals. I'm curious, when you think about sort of some of the capacity adds that you've added historically, could you talk to the level of productivity you're seeing there? And secondarily, with a strong Q2, I'm curious to see if the six-months quotas are doing what was intended, sort of improving linearity for the year?

Question: Brad Reback - Stifel, Nicolaus & Company Inc - Analyst : Rick, you alluded to the over 20% consumption growth in the base. So either for you or Jim, how should we think about the convergence of net new ARR and subscription revenue growth towards that 20%? What are the puts and takes as we look out over the next year or two?

Question: Noah Herman - JPMorgan Chase & Co - Analyst : This is Noah Herman on for Mark Murphy from JPMorgan. The constant currency net new ARR results really stood out positively this quarter. Based on the guidance framework, it seems like seasonality between first half and second half of the year is more equally weighted, whereas in prior years, it seems more like a 40-60 split. So can you just maybe unpack that a little bit, the seasonality dynamics we should expect going forward?

Question: Jake Roberge - William Blair Capital Partners - Analyst : Congrats on the solid results. You talked about building some prudence in the back half just related to those large deals that you have in the pipeline. Can you talk about what some of the learnings have been from the past two-years on these larger platform deals and whether you're starting to see an improvement in win rates and close rates as you've been able to kind of tweak and adjust the model?

Question: Matthew Martino - Goldman Sachs Group Inc - Analyst : Great to see the momentum in the business. Rick, you highlighted an AI native win in your prepared remarks. Can you share a bit more on what attracted this customer to the Dynatrace platform? And are you starting to see more potential opportunities within the AI space, if you could contextualize that for us?

Question: Ittai Kidron - Oppenheimer & Co Inc - Analyst : Nice results, guys. A couple of small ones for me. First of all, Rick, do you have a point of view -- clearly, you're making very good progress with DPS adoption, 50% customers, 70% of ARR. But do you have perhaps an updated point of view on where those metrics could peak for you guys, number one? And number two, when you look at the capability uptick and expansion of non-DPS customers, is there a deterioration in that, not because customers are doing less, but because the remaining cohorts are, by definition, less and less attracted to the value proposition for whatever reason that you're selling? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2025 / 1:00PM, DT.N - Q2 2026 Dynatrace Inc Earnings Call

Question: Sanjit Singh - Morgan Stanley - Analyst : On the 16% constant currency net AAR growth. I had a two-parter, I apologize for it, but sort of around the same topic. But I was wondering if you could sort of unpack the strategic collaboration with ServiceNow and what's your hopes for that relationship over the next year from a commercial perspective? And then secondly, more broadly, when we think about making that evolution to that more proactive self-healing type system, when you think about capabilities around ITSM, which you're partnering with the leaders there. But also when you think of like, okay, if we need to drive some code fixes, how do you think about sort of the DevOps platform? Is that another area for partnership or a potential further organic expansion of the Dynatrace platform?

Question: Andrew Sherman - TD Cowen - Analyst : One for Jim. How would you compare and contrast your visibility now versus a year ago given where you've come with the go-to-market changes? Do you have better visibility? It sounds like certainly better sales execution and close rates. Anything else we should consider as we look into the second half?