 Famed historian Yuval Noah Harari recently issued a warning that should send a shiver down the spine of every American. He predicts the emergence of a massive new “useless class.” These aren’t just people who are temporarily unemployed. These are people who have become economically irrelevant. As Luke Lango and I just exposed in our recent interview, we have reached the “Singularity.” For the first time in 250 years, intelligence has been decoupled from labor. During America’s first 1776 moment, the steam engine replaced muscle. In this new 1776 moment, AI is replacing the human mind. If a machine is faster, cheaper, and smarter than you at your specific job... the economic reason to hire you simply vanishes. This is why you see the "Magnificent 7" tech giants adding trillions in value while the "real" economy feels like it’s in a death spiral. And the divide is widening. On one side: The "Useless Class" who cling to old-world skills. On the other: The "New Aristocracy" who own the assets of the Technological Republic. Which side will you be on? Luke and I have identified the three specific money moves our research indicates you must make to ensure you stay on the winning side of this divide. Click here for the full story. Good investing, Porter Stansberry
Further Reading from MarketBeat.com Dynatrace's Earnings Win Makes One Thing Clear: This Software Is EssentialSubmitted by Jeffrey Neal Johnson. Article Published: 2/11/2026. 
Key Points- Dynatrace's management authorized a new share repurchase program to return capital to shareholders while raising revenue guidance for the full fiscal year.
- The company continues to innovate by launching new agentic artificial intelligence capabilities designed to automate complex software operations without human intervention.
- Strong customer retention rates and rapid adoption of new log management tools demonstrate that large enterprises view the platform as essential utility infrastructure.
- Special Report: Elon Musk's New 1,000X Opportunity (From Brownstone Research)
In a sector recently defined by volatility and skepticism, Dynatrace (NYSE: DT) has separated itself from the pack. While many software companies struggle to justify valuations amid slowing IT budgets, the observability leader delivered a decisive beat-and-raise for its third fiscal quarter of 2026. The market responded enthusiastically, sending shares up about 8% in early trading on February 10, 2026. The company reported quarterly revenue of $515.5 million, an 18% year-over-year increase that comfortably surpassed Wall Street estimates. On the bottom line, non-GAAP earnings per share (EPS) were $0.44, beating the consensus of $0.41. Management also raised full-year revenue guidance to roughly $2.01 billion, bucking the broader narrative of a software slowdown. I Called Black Monday. Now I'm Calling March 26!
I predicted the 1987 crash six weeks early. I called the fall of the Berlin Wall. I pinpointed the exact bottom in 2009.
Now I'm staking my reputation on March 26, 2026 - the day I believe Elon will announce the SpaceX IPO.
Bloomberg is calling it "the biggest listing of ALL TIME."
A $1.5 TRILLION valuation... the "wealth-building" moment of the decade.
Today, I'll show you how to get in before the big announcement. Click Here to See How to Secure Your "SpaceX Access Code" For investors tired of speculative artificial intelligence stocks without tangible revenue, Dynatrace offers a different profile. By showing that managing cloud complexity is a necessary expense for large enterprises, the company is positioning itself as a defensive growth name — combining double-digit growth, profitability, and substantial capital returns. Breaking the $2 Billion Barrier: The Power of Recurring RevenueThe standout metric was Annual Recurring Revenue (ARR), which climbed to $1.97 billion — a 20% increase on a reported basis and 16% in constant currency. ARR is often considered the heartbeat of a subscription software business because it reflects the predictable, recurring income the company can rely on. This growth is supported by a loyal customer base. The company's retention metrics indicate that Dynatrace has become essential infrastructure for modern businesses: - Net Retention Rate (NRR): 111%. Existing customers are, on average, spending 11% more year-over-year.
- Gross Retention Rate: Mid-90s%. Companies are cutting discretionary tools but retaining software that keeps digital operations running.
- New Customer Growth: Dynatrace added 164 new logos in the quarter, with average ARR per new customer exceeding $160,000.
A key driver of retention is tool consolidation. Enterprises are retiring niche monitoring tools in favor of Dynatrace's unified platform. That trend is visible in the rapid adoption of its Log Management product, which has surpassed $100 million in annualized consumption revenue, rising more than 100% year-over-year. As customers entrust more critical infrastructure data to Dynatrace, the company's competitive moat widens, insulating the business from macroeconomic headwinds. Moving From Monitoring to Agentic ActionStability reduces downside risk, but investors also want catalysts for future growth. For Dynatrace, that catalyst is the shift from passive monitoring to active automation. During the quarter, the company introduced Dynatrace Intelligence, a system built for agentic AI operations. Historically, observability tools provided alerts that required a human engineer to diagnose and fix problems. Agentic AI changes that paradigm: instead of merely flagging issues, the software can take autonomous actions to remediate them without human intervention. This capability positions Dynatrace as a critical control plane for the AI era. As enterprises deploy their own generative AI models, they need ways to ensure those models are reliable, accurate, and secure. Dynatrace supplies the infrastructure to monitor and manage these complex systems, creating a new monetization layer. By automating remediation, the company moves from a diagnostic tool to an operational necessity, increasing its chances of benefiting from AI-driven demand rather than suffering from software saturation. Dynatrace is also expanding deeper into the developer workflow. After the acquisition of DevCycle in early 2026, the company integrated feature management into its platform, allowing developers to toggle features on or off in real time based on performance data. This shift-left approach embeds Dynatrace earlier in the software lifecycle, making displacement by competitors more difficult. Putting Cash to Work: A $1 Billion Stock Price FloorPerhaps the clearest signal to investors was about capital allocation: the Dynatrace board authorized a new $1 billion share repurchase program, replacing a prior $500 million program the company had substantially completed. Share buybacks are an important tool for mature software companies and serve two main purposes: - Supply and Demand: Buybacks return cash to shareholders by reducing shares outstanding. With fewer shares, earnings per share (EPS) rise mathematically.
- Confidence Signal: They indicate management believes the stock is undervalued. With more than $1 billion in cash and cash equivalents and robust free cash flow ($27 million in the quarter; $463 million trailing 12 months), Dynatrace has the financial firepower to support its stock.
This move arrives as analyst reactions remain mixed amid broader sector concerns about valuation multiples. - The Bulls: Firms such as Guggenheim and KeyCorp remain constructive, with price targets of $68 and $52, respectively, citing consistent execution.
- The Bears: Others, including Morgan Stanley and Wells Fargo, have lowered targets to $43 and $50. These cuts appear driven more by valuation compression across the market — lower multiples due to the interest rate environment — than by issues with Dynatrace's fundamentals.
By launching a $1 billion buyback, management is countering bearish sentiment. They're backing their own stock, offsetting risks from recent insider selling (roughly $10.4 million over the last year), and providing a price-supporting mechanism that many speculative competitors cannot match. A Rare Mix of Growth and ValueThe third-quarter results confirm Dynatrace is navigating a challenging software environment. Delivering roughly 20% ARR growth while maintaining strong profit margins demonstrates the company can balance expansion with financial discipline. The investment case is straightforward. As cloud environments get more complex and AI workloads expand, the software required to manage them becomes non-discretionary. Dynatrace has positioned itself as a utility-grade provider to global enterprises. Combined with a $1 billion buyback, the stock presents a compelling option for investors seeking exposure to cloud and AI trends without the extreme volatility of unproven speculative names. Valuation multiples remain a sector-wide risk, but Dynatrace's solid balance sheet and essential product suite provide a durable foundation for long-term performance.
| 
No comments:
Post a Comment