Dynatrace beats expectations for Q2, reports gains in subscription revenue

Cloud observability and AIOps provider Dynatrace reported better-than-expected second-quarter results and raised its revenue outlook for the year ahead.

The company reported second-quarter revenue of $226 million, up 34% from a year ago, with earnings of 8 cents a share. Non-GAAP earnings in the second quarter were 18 cents a share.

Subscription revenue grew by 35% to $213 million, representing 94% of total revenue. 

Wall Street was expecting Dynatrace to report second-quarter sales of $220 million with non-GAAP earnings of 16 cents a share.

As for the outlook, Dynatrace said it sees third-quarter revenue in the range of $233 to $235 million with non-GAAP earnings around 16 cents a share. For fiscal 2022, Dynatrace projected revenue between $913 and $919 million with non-GAAP earnings between 63 cents and 65 cents a share.

“I am extremely proud of our team’s performance, once again exceeding guidance across all our key operating metrics. ARR, our leading indicator for growth, was up 35% year-over-year, and Subscription Revenue was up 35% year-over-year,” said John Van Siclen, Dynatrace’s CEO. 

“We continue to see robust investment in digital transformation across all industries and all geographies. And our unique approach unifying AIOps capabilities with observability and application security continues to provide us with a powerful value advantage.”

This year, Dynatrace launched additional AI support for Kubernetes, released a new module for its Cloud Automation Module and landed AWS Machine Learning Competency status. The company also completed its purchase of SpectX this quarter. 

Van Siclen added earlier this year that Dynatrace has benefited from go-to-market partnerships with the big three cloud providers: Microsoft Azure, AWS, and Google Cloud.

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The observability space has heated up in recent months as ServiceNow entered the market via the purchase of Lightstep. The market now includes Dynatrace, BMC, Datadog, Sumo Logic, Splunk’s SignalFx, New Relic, and a host of others.