Dynatrace Earnings: Robust End to a Year Marred by Macroeconomic Pressures

We are maintaining our $50 fair value estimate for narrow-moat Dynatrace after the firm closed out fiscal 2024 with a set of strong financial results, largely in line with our above-consensus prior estimates. While fiscal 2024 has been affected by the tough macroeconomic backdrop, leading to customers pushing out purchasing decisions and being cost conscious, we expect fiscal 2025 to be marginally better as some of the macro uncertainty subsides. Beyond the near term, however, we continue to see Dynatrace as a leader in the observability space. With Cisco’s recent acquisition of Splunk, the number of publicly traded observability vendors has whittled down to three, Datadog, Dynatrace, and Elastic. For investors seeking observability exposure at a reasonable price, we’d recommend Dynatrace which is a moaty company trading in the 3-star range.