Dynatrace ended fiscal 2026 with annual recurring revenue above $2 billion, posting $2.054 billion in ARR in the fourth quarter, up 18% from $1.734 billion a year earlier, or 16% on a constant-currency basis.
Fourth-quarter revenue rose 19% to $531.7 million from $445.2 million, while subscription revenue increased 19% to $505.8 million from $423.6 million. For the full year, revenue climbed 19% to $2.018 billion from $1.699 billion, and subscription revenue increased 19% to $1.930 billion from $1.622 billion.
Profitability improved on a full-year basis. GAAP operating income rose to $245.4 million from $179.4 million, lifting GAAP operating margin to 12% from 11%. Non-GAAP operating income increased to $591.9 million from $493.5 million, with non-GAAP operating margin holding at 29%.
Quarterly operating profit moved lower on a GAAP basis, with fourth-quarter GAAP income from operations of $37.3 million, down from $42.9 million a year earlier, and GAAP operating margin slipping to 7% from 10%. Non-GAAP income from operations rose to $142.6 million from $117.9 million, and non-GAAP operating margin edged up to 27% from 26%.
Net income per diluted share fell in the fourth quarter on a GAAP basis to $0.06 from $0.13, while non-GAAP diluted EPS increased to $0.41 from $0.33. For the full year, GAAP diluted EPS declined to $0.54 from $1.59, while non-GAAP diluted EPS rose to $1.70 from $1.39.
Cash generation strengthened. Fourth-quarter operating cash flow increased to $226.4 million from $162.8 million, and free cash flow rose to $212.4 million from $145.5 million. For the full year, operating cash flow reached $561.9 million versus $459.4 million, while free cash flow climbed to $529.5 million from $430.6 million.
Dynatrace also accelerated share repurchases in the quarter, buying back $224 million of stock, up 40% sequentially. That included 5.9 million shares at an average price of $37.71, with $151 million of the purchases made under its new $1 billion authorization announced in February 2026.
On the business side, the company said it closed a record 22 deals above $1 million in annual contract value in the fourth quarter, including nine new logos. Log management remained the fastest-growing major product category, with fourth-quarter consumption growth topping 100% year over year. Dynatrace also said it surpassed $1 billion in AWS Marketplace sales during the year.
For fiscal 2027, Dynatrace projected first-quarter revenue of $547 million to $551 million, up 15% at the midpoint, and full-year revenue of $2.317 billion to $2.335 billion, up 15% to 16%. It forecast full-year ARR of $2.382 billion to $2.402 billion and full-year non-GAAP operating margin of 29.5%. Today the company's shares have moved -11.02% to a price of $34.89. Check out the company's full 8-K submission here.
