Here's Why Dynatrace Stock Is Falling Today
What happened
Shares of Dynatrace (NYSE: DT) were tumbling this morning after the company reported its third-quarter results. While Dynatrace beat analysts' consensus estimates for both revenue and earnings in the quarter, investors seemed dissatisfied with the company's annual recurring revenue.
The tech stock was down by 21.5% as of 10:59 a.m. ET.
So what
Dynatrace, which provides a software intelligence platform for businesses, reported revenue of $241 million, up 32% from the year-ago quarter, which outpaced Wall Street's expectation of $234.5 million. Additionally, the company's non-GAAP (adjusted) earnings per share of $0.18 was higher than analysts' consensus estimate of $0.16.
Image source: Getty Images.
This was the first earnings report under Dynatrace's new CEO, Rick McConnell, following longtime CEO John Van Siclen's departure from the company in December.
McConnell said in a press release that he was "very pleased with our third quarter performance, beating the high end of guidance across our key operating metrics."
But despite the strong result in the quarter, investors seemed to be concerned that Dynatrace's annual recurring revenue fell below Wall Street's estimate. Dynatraces' annual recurring revenue increased 29% year over year, to $930 million, but analysts had expected $942.9 million.
Now what
Investors' strong reaction to Dynatrace's third-quarter results seems a bit extreme. Generally, the company had a strong quarter, despite missing analysts' consensus estimate for annual recurring revenue.
Today's drop may be part of a growing negative sentiment toward Dynatrace's stock. The company's share price has fallen 40% over the past three months. Tech stocks in general began stumbling in January because of inflation worries and talk of the Federal Reserve raising interest rates this year. All of which may be causing Dynatrace investors to go searching for other places to invest their money.
10 stocks we like better than Dynatrace, Inc.
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Dynatrace, Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of January 10, 2022
Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
