Greetings, and welcome to the Dynatrace Fourth Quarter and Full Year Fiscal 2025 Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press zero on your telephone keypad. A question-and-answer session will follow the formal presentation. You may be placed into question queue at any time by pressing one on your telephone keypad. In the interest of time, we ask you, please limit yourselves to one question, then return to the queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Noelle Faris, Vice President, Investor Relations. Noelle, please go ahead.
Good morning, and thank you for joining Dynatrace's fourth quarter and full year fiscal 2025 earnings conference call. Joining me today are Rick McConnell, Chief Executive Officer, and Jim Benson, Chief Financial Officer. Before we get *ted, please note that today's comments include forward-looking statements such as statements regarding revenue, earnings guidance, and economic conditions. Actual results may differ materially from our expectations due to a number of risks and uncertainties discussed in Dynatrace's SEC filings, including our most recent quarterly report on Form 10Q and our upcoming annual report on Form 10K that we plan to file later this month. The forward-looking statements contained in this call represent the company's views on May 14, 2025. We assume no obligation to update these statements as a result of new information, future events, or circumstances.
Unless otherwise noted, the growth rates we discuss today are non-GAAP, reflecting constant currency growth, and per-share amounts are on the diluted basis. We will also discuss other non-GAAP financial measures on today's call. To see reconciliations between non-GAAP and GAAP measures, please refer to today's earnings press release and supplemental presentation, which are both posted in the financial results section of our IR web page. With that, let me turn the call over to our Chief Executive Officer, Rick McConnell.
Thanks, Noelle, and good morning, everyone. Thank you for joining us for today's call. Dynatrace delivered a strong finish to Fiscal 2025, having achieved several noteworthy milestones and accomplishments. Subscription revenue grew 20%. We surpassed $1.7 billion in ARR and $1 billion in DPS ARR. We expanded our non-GAAP operating margin by more than 100 basis points and our pre-tax free cash flow margin by roughly 250 basis points, emphasizing the strength of our balanced business model. We surpassed 4,000 customers and 5,000 employees. We announced major platform innovations, including Grail for GCP, observability for developers, preventive operations, cloud security posture management, AI-powered log management and analytics, and AI observability, to name just a few. We were consistently named a leader in all major analyst reports for observability and AI ops over the past year.
Today, I'm going to cover my perspective on the observability market, growth tailwinds and opportunities, our agentic AI vision, and the growing criticality of business observability. Let's begin with the market. While we are clearly in an uncertain economic environment, we continue to see strength in the observability market as virtually all organizations aspire to have their software work perfectly, just as our vision imagines. Now more than ever, customers need to deliver improved productivity and a better user experience at lower cost, which is precisely our value proposition. As such, we see observability spend continuing to be a priority. Additionally, cloud growth remains healthy. Hyperscalers are now generating nearly $250 billion in annualized revenue, growing in the mid-20s. As organizations accelerate cloud and AI-native initiatives, the need for AI-powered observability at scale has never been greater.
We expect to see materially greater penetration in the coming year into hyperscaler workloads, where we expect the majority of observability market growth to occur. We are innovating to capture this opportunity. Our next major platform release planned for June will further empower cloud and AI-native teams to expand their AIOps and preventive operations. These new capabilities will provide development teams with easy access to hyperscaler and Kubernetes telemetry, leverage Davis to analyze all data with AI assistance, and leverage Davis Copilot for remediation workflows or instant response. We believe these secular tailwinds will fuel an addressable market opportunity that we now size at $65 billion in observability and application security. Beyond these market dynamics, I'd like to talk next about four key Dynatrace growth drivers. Each of these represents an intentional area of focus to drive consumption growth across the Dynatrace platform.
First are the ongoing investments in our go-to-market efforts, including customer segmentation, partner enablement, and expanding our sales motion beyond application performance to include end-to-end observability and cloud modernization. We kicked off these initiatives at the beginning of Fiscal 2025, and they continue to gain traction. We expect them to drive sales productivity gains in Fiscal 2026. We've seen a consistent trend in total pipeline growth, driven primarily by strength in strategic accounts, where pipeline was up 45% compared to last year, highlighting the traction in our customer segmentation efforts. More than 80% of our ACV closed in the quarter were partner-influenced, with over 40% of those coming from GSIs and hyperscalers. The expansion of our sales motion beyond our proven land and expand approach resulted in more than 50% of our anchor deals in the quarter driving end-to-end observability.
These investments are gaining traction and contributed to large deal closures in the quarter, including 15 deals with incremental ACV of over $1 million. Second, our Dynatrace platform subscription, or DPS licensing model, continues to build momentum, with over 40% of our customer base and more than 60% of ARR leveraging this approach as of the end of the fourth quarter. With access to the full platform, customers are adopting Dynatrace more broadly across their IT environments, resulting in increased consumption. We expect this DPS adoption to materialize over time in early expansions or on-demand consumption beyond customer commit levels. Third is the massive opportunity in log management. We believe the logs market remains ripe for disruption, given expensive legacy solutions that largely operate independently from existing observability tools and result in lower value.