What happened
Shares of Dynatrace (DT 2.70%) were moving higher today after the cloud-based data intelligence platform posted a strong third-quarter earnings report, beating estimates on the top and bottom lines.
As a result, the stock was up 12.1% as of 2:24 p.m. EST.
Image source: Getty Images.
So what
Dynatrace, whose tools help companies monitor their software stacks, said revenue in the quarter rose 28% to $182.9 million, topping estimates at $172.3 million. Annual recurring revenue, which is a better representation of cloud-based growth, jumped 35% to $722 million, while subscription revenue in the quarter increased 33% to $170.3 million.
Additionally, Dynatrace's net expansion rate was more than 120%, showing that sales from existing customers grew more than 20%, a promising sign for long-term growth.
Further down the income statement, the company gained operating leverage across several expense items as adjusted operating income rose from $37.7 million to $53.4 million. On the bottom line, adjusted earnings per share rose from $0.10 to $0.17, beating expectations of $0.13.
CEO John Van Siclen summed up the performance, saying in a statement, "The value of the Dynatrace platform is resonating with customers, evidenced by strong new logo growth and net expansion rate again above 120%."
Dynatrace also entered the cloud application security market in the period, which has an addressable market of $18 billion, and expanded its partnerships with Google Cloud Platform and Microsoft Azure.
Now what
The company sees its momentum continuing into the fourth quarter, calling for revenue growth of 26% to 28%, or $190 million to $192 million, and adjusted EPS of $0.13 to $0.14, both of which were also ahead of analyst forecasts.
Dynatrace doesn't get as much attention as some higher-growth cloud stocks, but the company has been a reliable winner during the pandemic as shares are up 59% over the past year. Given that Dynatrace provides necessary services to major corporations that rely on it to keep mission-critical applications online, the company looks well positioned for continued growth.
