Dynatrace Earnings: Strong Finish to Fiscal 2023 as Sales and Profitability Exceed Our Estimates

We are raising our fair value estimate for narrow-moat Dynatrace to $44 from $40 due to it finishing fiscal 2023 with financial results above our estimates and the time value of money following our annual model roll. We remain impressed by Dynatrace’s ability to navigate a challenging macro environment as it continues to add new logos and maintains a strong upsell motion for existing customers. We believe that Dynatrace’s proven land-and-expand strategy during a period where clients are seeking to optimize costs underscores the strong switching costs associated with its platform. With shares around $46, down 1% on May 17, we believe Dynatrace’s shares are fairly valued.