This software company posted EPS of $0.16 per share in its recent quarter, beating analysts’ estimates of $0.14 per share. Revenues of $209.74 million also beat by 3.41%.
Dynatrace, Inc. (DT)
From Cabot Growth Investor
Dynatrace has a straightforward (for a tech company), powerful growth story. The company’s all-in-one platform helps thousands of mid- and large-sized companies that are transitioning their systems and apps to the cloud to get data, context and information about their apps, infrastructure and even the end user experience. And for massive firms, this is a process that can take years. That’s thanks in part to the company’s first-class automation and artificial intelligence capabilities.
And it works no matter what cloud platform(s) a client uses, too. Because of that, the company has garnered a who’s who list of big customers. On average, these customers are boosting their spending with the company by north of 20% per year. And new clients are hopping onboard (135 new logos in Q2; total customers just over 3,000). All of that is creating 30%-plus recurring revenue growth and booming remaining performance obligations (all money owed to it under contract), which rose 46%.
Profits are solidly in the black, but heavy spending means the focus is on capturing business, which Wall Street seems fine with. After a long consolidation, DT has been persistently pushing higher for a few weeks, moving to new highs. It’s not the most volatile name, so we’re going to add a full-sized (10% of the portfolio) position here and use a 15%-ish loss limit. BUY
Michael Cintolo, Cabot Growth Investor, cabotwealth.com, 978-745-5532, August 5, 2021