Dynatrace Shows No Trace of Slowing Down as Top Line Continues to Accelerate; Maintain FVE

We are maintaining our fair value estimate for Dynatrace after the firm closed out fiscal 2022 with strong financial results narrowly below our estimates. We continue to have a positive outlook on Dynatrace’s ability to penetrate its target market and upsell its existing customers. In our opinion, the firm’s strong execution of its land-and-expand strategy, as evidenced by its solid net retention metric, augments its durable competitive advantage. We believe that this strategy, buoyed by secular tailwinds behind the firm’s back, will allow Dynatrace to deliver shareholder value in the long run. Despite near-term macroeconomic conditions causing mayhem in tech valuations, we’d advise investors to focus on the long-term opportunities companies such as Dynatrace stand to unlock. With that in mind, we still view Dynatrace as attractively priced for investors looking for mid-cap SaaS exposure.