Dynatrace Earnings: Strong Top-Line Growth and Focus on Profitability Amid Macro Pressures

We are maintaining our $44 fair value estimate for narrow-moat Dynatrace after the firm finished its second quarter of fiscal 2024 with results and guidance slightly above our prior expectations. Much like previous quarters, macro pressures continued to weigh on financial results and the company's near-term outlook as customers scrutinize their IT spending amidst macroeconomic uncertainty. Despite the macro pressures, we remain impressed by the firm's ability to maintain a healthy net retention rate, add new customers, and increase profitability during this period. From a long-term perspective, we continue to view Dynatrace as a strong player in the observability space and have a positive outlook on the company's long-term financial prospects. Shares traded slightly up after the earnings report, and we view them as fairly valued.