A man down, the Highlanders shifted their defensive system, and cracks started to show. The Waratahs didn't miss them.
Dixon said the home side's backline did well to make the visitors pay when they had the opportunity.
"Israel [Folau] and Kurtley Beale, credit to them, they found a lot more holes in our defence."
When Naholo returned to the pitch the Highlanders were still well in the hunt, down by just four points. Even after Foley put the Waratahs ahead by seven, the Highlanders had their opportunities to tie the match up, especially when the Waratahs lost prop Paddy Ryan to a yellow card in the 74th minute.
But they were unable to capitalise.
"We were calm and collected," Dixon said of the Highlanders falling behind. "We knew we had the chance to win it; but when it came down to it, just the execution ... we just didn't execute like we should and would in a normal game to take it probably to overtime.
"As a player you build up to this point of the season and to have it let down like that it's pretty devastating for us."
With the win, the Waratahs booked a trip to battle the Lions in Johannesburg next weekend, after the Lions beat the Jaguares in their quarter-final.
In the other semifinal, the Hurricanes will make the short trip over Cook Strait to take on the Crusaders in Christchurch.