Dynatrace, Inc. (DT) September 2026 Conference Transcript

logs consumption they also have a secondary measure which is logs bookings and so i think we were able to bring it all together matt and you get the product and you get the pricing and the packaging right great value proposition and then on top of that you introduced i'd say a selling motion uh with while they're not a specialist team in the sense that some companies are specialists they just sell a particular product category these are these are people that drive consumption, and so I'd say we brought it all together, and I'd say it's, you know, hard to find a customer to have a discussion with them and say, are you happy with your current logs provider? You know, the answer is no. There's a gap between the value and the cost, and so it's a pretty easy conversation to Would you be interested in trialing us? And the benefit of DPS is you don't have to have a separate sales contract, that they're able to do that. So these strike teams can help with that. And so, you know, I view $200 million as a milestone. You know, this isn't the destination. This is a billion-dollar-plus category for the company. So this is going to continue to be a very, very fast-growing category.

I mean, it comes down to, in logs, really, two core elements of value proposition. One is if you have logs, traces, metrics, all these other data types, you actually don't need as many logs. You get better outcomes from fewer logs if you combine them with other data types. And the result of that is you can actually reduce cost because you don't need to store as many logs on vendor A while you're doing all the observability types on vendor B. And some of the logs vendors in the market are delivering meteoric increases in logs prices anyway. So the bar is not so hard to get over in terms of coming up with a lower price point. The second is you want to deliver integrated value. And if you have all of the collection of end-to-end observability together inclusive of logs, you get better answers, and that delivers better outcomes, which ultimately delivers this autonomous operations opportunity that I described previously. If logs are over at vendor A, but all the other observability types are over at vendor B, the integration of that is going to impede your progress toward delivering automation. And that is going to get in your way over the course of time, which is why you need to combine them to deliver better outcomes, which is why we're seeing some of the logs growth that we are.

Perfect. Jim, let's talk about just the strategic account model. It's producing larger lands and broader platform deals after several years of investment. So just kind of give us a mark to market as to where we are on sort of that go-to-market productivity.

Yeah, you're right. I mean, it was two years ago that we had outlined for you that we were making pretty substantive go-to-market changes where we're investing more in the top of the pyramid. Your largest customer is where Dynatrace really shines. And so we reduce the number of accounts per rep in the top of the pyramid. We call it the Global 500. That has been a huge success. You know, our fastest growing area and our what we call strategic accounts that are up there. We're not done. We've now extended that model down from the Global 500 I think we've added 200 to 250 more accounts with a similar model. So think of it as same density, same level of, you know, resource alignment. And that's resource alignment on the sales side. That's resource alignment on your solution engineers. That's resource alignment on some of these strike teams. So you have dedicated teams of people that are focused on these large accounts. And so I expect that that will continue to be the fastest growing product category for us. Having said that, we're not seeding what we call the enterprise, which is think of that as the accounts that are below the 750 global accounts, to call it 5,000. So we have a territory motion there where I think we're continuing to get good traction. I'd say below that, so think of accounts in the 5,000 and 1 to 15,000 as we target the global 15,000. We have work to do on building a velocity motion. Right now, we have a great land motion with customers that have a high propensity to spend, which are our larger customers. We need a better land motion. There's some things we're doing. We've introduced the Dynatrace starter pack to make it easier to introduce Dynatrace to smaller teams, lower ASP, easier kind of onboarding process. And so across the board, we're trying to make sure that we can address kind of the build-a-volume motion. And I think we have a little bit more work to do in that regard, but I think we have the ingredients in place and continue to sustain the growth rates that we're seeing and improve them in both the strategic accounts and the enterprise accounts.

And so would you just say, broadly speaking, we're in a better place in terms of sort of the baseline around sales productivity, pipeline generation, and we can talk about those.

100 percent that we had outlined very clearly when we put this in place that we thought sales productivity in our fiscal 25 would probably drop you know you moved a lot of accounts you caused a lot of disruption um within your your customer base with accounts moving and actually for us it was uh that disruption was less than what we expected but there was a sales productivity drop matt if you look at it around how much bookings or arr was generated per rep up and then we said in fiscal 26, you'd start to see some productivity improvement and that we would see ARR growth rate stabilized. We saw that. And we also laid out, we said in fiscal 27, if we're successful with this journey, you will see an improvement in productivity and you will see an acceleration in the growth rate of the business. And that's where we're at right now. And I think to Rick's point, we've shown some proof points. I think the better measure of progress is what I call trailing 12-month net new ARR. Sometimes when you look at a quarter, quarters can be lumpy just because of large enterprise accounts. We've had four quarters in a row of trailing 12-month net new ARR productivity, to your point, which is the sales motion changes that we put in place are really starting to drive productivity improvements, and I expect that that's going to continue.

Well, in the last two minutes that we have, Rick, I want to bring it back to you. The market is evolving very rapidly. Dynatrace has advanced the platform significantly over the last two years. You've improved things operationally. When you look out over the next five years, what would define success for Dynatrace?

Well, the principal financial indicator that Jim and I look at is ARR growth. And the ingredient to that that drives it is net new ARR. So those are the financial factors. And so success is how do we find a way to continue to accelerate ARR growth? To Jim's point, we saw ARR growth come down in FY25. FY26, we stabilized it. FY27, we want to see that ramp. And as we look to the future, our expectation is for ongoing ramp. We went from 16% to 17% with the buying plan acquisition. Arise will help further. We have organic elements that we're driving, like things like pricing and packaging adjustments that we believe can add. new ARR growth. So I think it's really that simple as go deliver accelerated ARR growth as a core metric for success. And in so doing, continue to be a leader in observability broadly in the combination of traditional observability, as well as emerging categories like AI observability to come.

All right. Fantastic. It's a great place to leave it. Thank you very much, Rick and Jim, for joining us.

Thank you. All right. Thanks, everybody.