Dynatrace stock soared Wednesday after the software maker reported fiscal third-quarter earnings and revenue that topped estimates. Shares in rival Datadog also gained as worries over slowing cloud-computing growth eased.
Waltham-Mass.-based Dynatrace reported earnings before the market open. In the December quarter, Dynatrace earnings were adjusted 25 cents a share, up 38% from a year earlier. Revenue climbed 24% to $97.5 million, the company said.
Analysts had estimated profit of 21 cents on revenue of $285 million. Further, a key revenue growth metric also beat Wall Street predictions.
Annual recurring revenue, or ARR, rose 25% to $1.163 billion, topping analyst estimates for $1.115 billion. ARR growth is tied to subscription services.
For the current quarter ending in March, Dynatrace predicted revenue in a range of $304 million to $307 million vs. estimates of $292 million.
Dynatrace Stock: Slowing Cloud Computing Growth?
Shares of Dynatrace popped 15.9% to close at 44.54 on the stock market today. Dynatrace stock had been flat in 2023. Shares were down nearly 32% from a year ago as of Tuesday's market close.
The company's computer network monitoring tools measure and analyze the performance of business-critical applications. Many of its customers use cloud computing platforms, such as Amazon Web Services, part of Amazon.com. Microsoft last week warned of slowing growth for its Azure cloud business.
Heading into the earnings report, Dynatrace stock owned a Relative Strength Rating of 39 out of a best-possible 99, according to IBD Stock Check-up.
Dynatrace competes in the application performance monitoring market vs. Cisco Systems, Datadog, New Relic and others. DDOG stock popped 10.6% to 82.70 on Wednesday.
"(Dynatrace's) December quarter results should buoy shares near term as we wait for confirming evidence of strength in observability from other key vendors including Datadog in the coming weeks," said Sterling Auty, analyst at SVB MoffettNathanson, in a report. Datadog reports earnings on Feb. 16.
Dynatrace stock went public Aug. 1, 2019, backed by private equity firm Thoma Bravo. Further, the Dynatrace IPO raised $570 million.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
