Dynatrace Sees AI Observability Fuelling Growth Acceleration

Dynatrace, a leading provider of AI observability solutions, presented its growth plan at the Goldman Sachs Communacopia + Technology Conference in September 2026. The company's CEO, Rick McConnell, and CFO, Jim Benson, highlighted two key markets: traditional observability and the emerging AI observability category.

Dynatrace reported record Q1 new-logo ARR growth of 160% and organic net new ARR growth of 41%. Consumption growth exceeded 20%, driven by AI workloads that use the platform at a 50% higher rate than non-AI customers. The company's acquisition of Arize is expected to add about 2 percentage points to ARR growth, or roughly $40 million in revenue.

The traditional observability market is valued over $80 billion and growing in the mid-teens. However, the AI observability market could reach $10 billion by the end of the decade with growth above 50% a year. McConnell noted that confidence is the main barrier to wider AI deployment, as companies need to ensure the accuracy and reliability of AI outputs.

Dynatrace's latest quarter showed early signs of a growth inflection, despite overall ARR growth remaining in the 16-17% range. The company's logs business reached an important milestone, but is still early in its growth path. McConnell emphasized that observability will become even more critical as companies deploy AI in production.