Dynatrace Surpasses $1.7 Billion in ARR and $1 Billion in DPS ARR, Expands Margins, and Accelerates Observability Market Growth
On a recent conference call, Dynatrace reported a strong finish to fiscal 2025, highlighting several key milestones and accomplishments. The company achieved significant revenue growth, expanded its non-GAAP operating margin, and surpassed $1.7 billion in Annual Recurring Revenue (ARR) and $1 billion in Daily Pricing Subscription ARR (DPS ARR).
Subscription revenue grew by 20%, with Dynatrace expanding its non-GAAP operating margin by more than 100 basis points and its pretax free cash flow margin by roughly 250 basis points. The company also surpassed 4,000 customers and 5,000 employees, demonstrating a significant increase in scale.
"We delivered a strong finish to fiscal 2025," said Rick McConnell, Chief Executive Officer of Dynatrace. "Our subscription revenue grew 20%, and we achieved several noteworthy milestones and accomplishments."
The company also announced major platform innovations, including Grail for GCP, observability for developers, preventive operations, cloud security posture management, AI-powered log management and analytics, and AI observability. Dynatrace was consistently named a leader in all major analyst reports for observability and AI Ops over the past year.
McConnell emphasized that despite the uncertain economic environment, the company sees strength in the observability market as virtually all organizations aspire to have their software work perfectly. With cloud growth remaining healthy, hyperscalers generating nearly $250 billion in annualized revenue growing at a mid-20% rate, and the need for AI-powered observability at scale greater than ever before, Dynatrace expects to see materially greater penetration into hyperscaler workloads.
"We believe these secular tailwinds will fuel an addressable market opportunity that we now size at $65 billion in observability and application security," said McConnell. "Our next major platform release planned for June will further empower cloud and AI native teams to expand their AI Ops and preventive operations."
McConnell also discussed four key Dynatrace growth drivers, including ongoing investments in go-to-market efforts, customer segmentation, partner enablement, and expanding sales motion beyond application performance. The company expects these initiatives to drive sales productivity gains in fiscal 2026 and has seen a consistent trend in total pipeline growth driven primarily by strength in strategic accounts.
"We kicked off these initiatives at the beginning of fiscal 2025 and they continue to gain traction," said McConnell. "We've seen a consistent trend in total pipeline growth, driven primarily by strength in strategic accounts, where pipeline was up 45% compared to last year."
The conference call highlighted Dynatrace's position as a leader in the observability market, with the company's platform innovations and growth drivers poised to fuel an addressable market opportunity of $65 billion.
