Dynatrace (DT) Q2 2027 earnings summary

Executive summary

• Q2 FY27 revenue was $579.9M, up 17% YoY; ARR reached $2.207B, up 16%, while net new ARR was $70M and flat YoY as large expansions shifted into H2.

• Non-GAAP operating margin was 32%; GAAP operating income was $95.6M and net income was $67.8M.

• Platform consumption grew more than 20%, logs grew well over 100%, and AI customer cohorts consumed at more than twice the rate of other customers.

Financial highlights

• Q2 subscription revenue was $553.1M, up 17%; service revenue was $26.8M, up 29%.

• Non-GAAP net income was $161.6M and diluted EPS was $0.54; GAAP diluted EPS was $0.23.

• H1 revenue was $1.134B, up 17%; operating cash flow was $347.3M and adjusted FCF was $351.5M.

• Q2 gross margin was 81%, versus 82% a year earlier; subscription gross margin was 84%, versus 86%.

Outlook and guidance

• FY27 ARR guidance is $2.393B–$2.413B; standalone constant-currency growth guidance remains 15.5%–16.5%, and including Arize growth is expected at 17.5%–18.5%.

• FY27 revenue guidance is $2.330B–$2.340B and subscription revenue guidance is $2.227B–$2.237B, each implying 15.5%–16.5% constant-currency growth.

• FY27 non-GAAP operating income guidance is $653M–$661M, with a 28%–28.25% margin; non-GAAP diluted EPS is $1.88–$1.90.

• FY27 adjusted FCF guidance is $600M–$605M, or 26% of revenue; Arize is expected to contribute $16M of revenue and dilute operating margin by ~175 bps.

• Q3 revenue guidance is $591M–$596M and subscription revenue is $567M–$572M; diluted EPS guidance is $0.44–$0.45.