Dynatrace Inc Q4 2025 Earnings Call Summary

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

Question: Patrick Colville - Scotiabank GBM - Analyst : I'm going to ask this one to both Rick and Jim. In our field work, logs is performing very well, was interesting to hear in your prepared remarks, similar commentary. If I rewind back to this time last year, the logs target for $100 million of ARR was pushed out slightly. So I guess, could you kind of wrap around some quantitative context to that qualitative logs commentary? And any update if possible on where we are versus that target and what we should expect in fiscal '26 in logs?

Question: Matt Hedberg - RBC Capital Markets Wealth Management - Analyst : Rick, I wanted to drill into the go-to-market. It looks like you had a lot of success this past year with GSIs and hyperscalers in particular. So that's great to see. I guess, first of all, how would you talk about sales productivity? You guys obviously made a lot of changes last year, including new six-month quotas and you also realigned some territories. I guess, how did that fare versus your expectations? And are there any other significant changes you're planning on making this year

Question: Brent Thill - Jefferies - Analyst : Just on the strategic account growth, I think you mentioned over 45% pipeline growth just remind us, when have you seen that level of strength? And maybe to Matt's question on the close, the pipeline seems like it's growing at a much higher rate. When do the close rate start to come up to kind of match that pipeline growth you're seeing?

Question: Rob Owens - Piper Sandler - Analyst : Great. I'd love to pivot a little bit to the security opportunity. And what you think needs to happen to unlock it more broadly? Is this

Question: Raimo Lenschow - Barclays Capital Inc. - Analyst : Jim, you have the not so easy task to think about on the (inaudible) revenue for next year. Can you talk a little bit about how you went about it? Because obviously, as you said, you don't have a lot of historic data. Like how should we think about how you kind of frame that?

Question: Kast Rangan - Goldman Sachs - Analyst : Congrats on finishing up the fiscal year very solidly. As you look at the on-demand revenue, how do you trade off the upside where you want to do better? And maybe talk about the sales incentives that are going into the consumption aspect of the business versus, also at the same level, raising the bar for what is predictable and increasingly trying to get the upside into the customer contracts, so you lock them up and you get even more visibly. So trading off the upside versus the predictability at a higher level is what I wanted to get your thoughts on.

Question: Andrew Nowinski - Wells Fargo Securities, LLC - Analyst : And a nice quarter results. I wanted to ask maybe on the net retention rates. So I know the ODC component seems to distort that real net retention rate given that it's not included in ARR. But I'm wondering given that it is a growing piece of your business, what would NRR look like if -- or would it have increased if you would use subscription revenue instead of ARR as part of the NRR calculation? And then how are you thinking about the trajectory of the net retention rate in fiscal '26?

Question: Sanjit Singh - Morgan Stanley - Analyst : A bit higher level question. Kind of on your AI theme, Rick, in your script, we're hearing more about autonomous or maybe nearly autonomous SRE agents. Two questions there. One, any sort of trend line that you're seeing about customers wanting to move to this sort of operational cadence, having agents execute a lot of the observability workflows? And if that is the case, what do you think the impact is on overall observability demand and sort of how products are built if agents are going to be executing the workflows and an observability platform versus human SRE engineers?

Question: Pinjalim Bora - J.P. Morgan Securities LLC - Analyst : Congrats on the quarter. Jim, I just want to go back to a see a bit. How are you thinking of kind of the -- how should we, I guess, should think about the customer behavior and on-demand consumption going forward in this macro? And as you look towards kind of building the guide, how do you thread the needle between the assumptions around incremental ODC component versus last year's ODC leading to larger committed contracts? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 14, 2025 / 12:00PM, DT.N - Q4 2025 Dynatrace Inc Earnings Call

Question: Will Power - Robert W. Baird & Co., Inc. - Analyst : Okay. Great. Rick, you've called out the strength you're seeing in partner relationships from a go-to-market strategy perspective. And I think in your prepared remarks, you called out the expectation for material hyperscaler growth in particular. I wonder if you could just kind of drill down for us kind of what really is underpinning the confidence around the hyperscaler trends what you're seeing today versus what you've maybe seen in the past?

Question: Jacob Roberge - William Blair & Company, L.L.C. - Analyst : Just on DPS -- great to hear those customers are still expanding at pretty healthy rates, can you talk about how behavior has trended across the different cohorts that you've onboarded on to DPS? I know early on, there may have been some selection bias there, but now that you've started to get a larger base of customers on the DPS, are you seeing those same types of expansion rates play out across the longer tail of the base?

Question: Keith Bachman - BMO Capital Markets - Analyst : I also want to ask about DPS in two different guards. A, on the more near term, how are you thinking about the uptake rate for DPS in the next fiscal year? In other words, where do you think you'll end up either as a percent of customers or a percent of ARR? And then part B of the question is, one of the key benefits of DPS is the ability of customers to adopt your portfolio more rapidly just it reduces friction to buying. And I was wondering if you could just talk a little bit about how you're thinking about thereby portfolio expansion? And you have a couple of key building blocks, obviously, with Grail getting widespread adoption and AI, candidly probably requiring and enabling more adoption. And part of the context of the question is Datadog candidly, just has a broader portfolio of solutions. And I just wanted to hear you speak a little bit about how you're thinking about your portfolio expansion given the building of the box and given DPS over -- not just the next year, but over the next number of years?