Dynatrace shares surged more than 10% in premarket trading Monday after the AI-powered observability platform provider reported better-than-expected third-quarter fiscal 2026 results and raised its full-year guidance. The company posted earnings per share of $0.44, beating analyst estimates of $0.41, while revenue climbed to $515 million, surpassing expectations of $505.8 million.

Annual recurring revenue grew 16% on a constant currency basis, with subscription revenue showing similar growth. For the fourth quarter, Dynatrace projects EPS of $0.38 to $0.39, ahead of the $0.37 consensus estimate, with revenue guidance of $518 million to $523 million topping analyst expectations of $514.4 million.

The company significantly raised its full-year fiscal 2026 outlook, increasing EPS guidance to $1.67 to $1.69 from the previous $1.62 to $1.64 range, and boosting revenue forecasts to $2.0 billion to $2.01 billion from $1.98 billion to $1.99 billion. Full-year ARR expectations were also raised to $2.05 billion to $2.06 billion from $2.01 billion to $2.02 billion, reflecting strong demand for its AI-driven enterprise software solutions.