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Why Dynatrace Stock Jumped 23.8% in January

By Keith Noonan - Feb 8, 2020 at 2:10AM

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The cloud software company is up roughly 37% since its August IPO.

What happened

Shares of Dynatrace (DT 3.98%) rose 23.8% in January, according to data from S&P Global Market Intelligence. The stock climbed late in the month after the software company delivered third-quarter results that came in ahead of expectations.

DT Chart

DT data by YCharts.

Dynatrace reported third-quarter earnings on Jan. 29, topping the average analyst sales and earnings estimates. The cloud software company recorded non-GAAP (adjusted) earnings per share of $0.10 on revenue of $143.3 million, which was significantly ahead of the market's target for adjusted earnings per share of $0.07 and sales of $137.6 million.

A person using a tablet.

Image source: Getty Images.

So what

Dynatrace's total third-quarter sales were up roughly 25% year over year, driven by strong growth for its subscription and services segment -- which climbed 36% year over year to reach $139.4 million. Annualized recurring revenue came in at $534.5 million, up 44% year over year. Dynatrace ended the quarter with 2,208 enterprise customers, up 380 on a sequential basis.

In the company's third-quarter press release, CEO John Van Siclen commented on Dynatrace's outlook:

As companies continue to digitally transform and move to enterprise clouds, Dynatrace remains well positioned to grow market share globally. Consequently, while we continue to execute efficiently and focus on profitability, we remain committed to maintaining our leadership position through ongoing innovation and further expansion of sales and marketing.

Now what

Dynatrace stock has continued to climb in February, with shares up roughly 4.6% in the month's trading so far.

DT Chart

DT data by YCharts.

Dynatrace is guiding for fourth-quarter revenue to come in between $147 million and $148 million, and adjusted earnings are projected to come in at $0.08 per diluted share based on a share count of 284 million. Shares trade at roughly 16.8 times this year's expected sales and roughly 121 times this year's expected earnings. 

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