Dynatrace Earnings: Solid Start to Fiscal 2025 as Demand for Observability Remains Strong

We maintain our $50 per share fair value estimate for narrow-moat Dynatrace after the firm kicked off fiscal 2025 with strong financial results, showcasing solid top-line growth supported by continued upmarket customer penetration. While the company has been affected by elongated sales cycles in recent quarters as customers have sought to rationalize and push forward their spending on software-as-a-service vendors, we forecast a rebound in Dynatrace's as macro conditions improve. Beyond the near term, we reiterate our view that Dynatrace is a leading observability vendor with long-term secular tailwinds. Within the observability space (software to monitor the state of a system or application) we continue to like Dynatrace as well as Datadog, both moaty SaaS names that trade in 3-star territory.