- **16% ARR Growth**: Driven by log management (100%+ YoY) and 50%+ of customers on DPS model. 
- **Financial Strength**: Non-GAAP EPS $1.08, 31% operating margin, $28M Q2 free cash flow. 
- **Strategic Momentum**: 7-figure deals up 53%, ServiceNow partnership for autonomous IT, logs nearing $100M ARR. 
- **Execution Excellence**: 139 new logos, 45% YoY pipeline growth, 20%+ consumption growth.

**【CEO Summary Section】**
- Delivered strong Q2 results with ARR growth of 16% and subscription revenue up 17%, driven by log management (100%+ YoY growth) and strategic partnerships (e.g., ServiceNow, Atlassian). 
- Emphasized AI-powered observability for autonomous operations, with 50% of customers on the DPS model (double the capabilities and 2x consumption growth vs. SKU-based contracts). 
- Highlighted 7-figure deals, including a major U.S. airline consolidating tools and a Japanese bank adopting end-to-end observability.

**【CFO Financial Commentary】**
- Q2 ARR: $1.9B (16% YoY), Subscription Revenue: $473M (17% YoY), Non-GAAP EPS: $1.08 (vs. $1.05 guidance), Free Cash Flow: $28M (TTM: $473M, 26% of revenue). 
- Raised FY26 guidance: ARR growth 14-15%, revenue 15-15.5%, Non-GAAP EPS $1.62-1.64. 
- ODC revenue: $7M (Q2) vs. $10M+ prior quarters, reflecting early renewals under DPS model. 
- Share buybacks: $268M (5.3M shares) at $50 avg price since program launch.

**【Q&A Key Highlights】**
- **Net Retention Rate (NRR):** 111% (Q2), stable vs. prior quarter, lagging due to 12-month trailing metric but improving with 45% YoY pipeline growth. 
- **Consumption Growth:** 20%+ YoY, logs approaching $100M ARR, 4x YoY increase in >$500K spenders. 
- **ServiceNow Collaboration:** Integrating Dynatrace observability with ServiceNow workflows for proactive IT operations, with ServiceNow adopting Dynatrace internally. 
- **GoToMarket Execution:** 139 new logos (>$140K ARR avg), 53% YoY growth in 7-figure deals, 45% YoY pipeline expansion for strategic accounts.

Dynatrace, Inc. (DT) Q2 2026 Earnings Call Transcript

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DT

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