Shares of Dynatrace, a security-technology company based in Waltham, Massachusetts, took a hit on Wednesday. Despite surpassing expectations in the latest quarter, the company maintained its guidance for full-year subscription revenue.

Stock Performance

In midmorning trading, Dynatrace’s stock dropped 12% to $48.46. Despite this recent decline, the shares have still seen a year-to-date increase of 26%.

Forecast and Guidance

Dynatrace decided to keep its guidance for total annualized recurring revenue, which measures subscription revenue, at $1.475 billion to $1.49 billion. However, the company did raise its guidance for total revenue and subscription revenue after releasing its quarterly results.

Reasoning Behind Decision

Chief Financial Officer Jim Benson explained that Dynatrace chose not to raise guidance for annual subscription revenue due to the early stage of the year. Although demand showed strength in the quarter, the company exercised caution by maintaining a level of prudence.

Strong Performance in First Quarter

Dynatrace reported a fiscal first-quarter profit of $38.2 million, or 13 cents a share. This exceeded expectations as analysts had predicted per-share earnings of 4 cents. In addition, the company’s revenue rose 25% to $333 million, beating the forecast of $327 million.

Constant Currency Basis

On a constant currency basis, Dynatrace’s annualized recurring revenue also experienced a 25% increase during the first quarter.

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