Dynatrace (DT) demonstrated stable annual recurring revenue, or ARR, growth and may see continued consolidation success as its positioning with large enterprise customers provides an incumbency advantage, Truist Securities said Monday in a note.

Dynatrace reported fiscalQ3 annual recurring revenue of $1.97 billion, up 16% on a constant-currency basis. The company's management said ARR should exceed $2 billion by the end of fiscal 2026. The brokerage said the outlook is supported by strong close rates in the enterprise segment and a healthy pipeline of large-scale deals.

The company raised its fiscal 2026 subscription revenue guidance. However, Truist said management remains cautious given macro uncertainty and the uneven timing of large deals.

Dynatrace has refocused its sales efforts on enterprise customers, which Truist said is translating into larger new-logo wins and expansion activity.

The brokerage said Dynatrace Intelligence, which combines deterministic and agentic AI, offers a dual monetization path through increased platform usage and usage-based agentic execution fees.

Truist maintained a buy rating on Dynatrace with a $55 price target.

Shares of the company were up nearly 9% in recent trading.

Price: 36.63, Change: +2.92, Percent Change: +8.65