Posted on Monday, Jul 16th 2018
Software application management tools vendor New Relic (NYSE: NEWR) recently announced a strong fourth quarter. Apart from beating analyst estimates, the Billion Dollar Unicorn reported the second straight quarter of non-GAAP profit.
New Relic’s Financials
New Relic’s fourth quarter revenues grew 34% to $98.4 million, ahead of the market’s forecast of $96.2 million. GAAP loss from operations was $(7.5) million or $(0.13) per share, compared to $(15.1) million or $(0.28) per share a year ago. Non-GAAP income was $4.8 million or $0.09 per share compared to analyst estimate of $0.05 per share.
Cash, cash equivalents and short-term investments were $247.9 million at the end of the fourth quarter of fiscal 2018, compared with $233 million at the end of the third quarter of fiscal 2018.
Paid Business Accounts as of March 31, 2018 were over 17,000. $100K+ Paid Business Accounts increased to 703 from 517 a year ago.
For the fiscal 2018, New Relic reported revenues of $355.1 million, up 35%. GAAP loss from operations was $(46.8) million for fiscal 2018, compared with $(61.3) million for fiscal 2017.
For the first quarter, New Relic expects revenue between $104.5 million and $106.5 million, representing y-o-y growth of between 30% and 32%. Non-GAAP income from operations is expected between $5.5 million or $0.10 per share and $6.5 million or $0.12 per share. The Street was looking for revenues of $103 million and EPS of $0.05.
New Relic forecast Full Year Fiscal 2019 revenue between $452 and $458 million, representing y-o-y growth of between 27% and 29%. Non GAAP income is expected between $15 million or $0.29 per share and $20 million or $0.37 per share. The Street was looking for revenues of $457.5 million and EPS of $0.36.
New Relic’s Enterprise Focus
Over the past few years, New Relic has increased its focus on the enterprise segment. To cater to the segment, New Relic has announced new product capabilities, customer enablement, and best practice guidance for organizations leveraging Amazon Web Services. New Relic’s platform integrates real-time metrics from all the components of the application with application and customer experience data to help organizations understand how the configuration and deployment of AWS services impacts the rest of their technology stack.
This enterprise focus has paid off. When New Relic went public around three years ago, annualized recurring revenue from enterprise was just 25% of revenue. During the recent fourth quarter, it accounted for 54% of the revenue.
New Relic had gone public in December 2014 and raised $115 million by selling 5 million shares at a price of $23 each. Prior to the listing, it had raised $214.5 million in venture funding from investors including Fidelity Investments, Wellington Management, T. Rowe Price, Passport Capital, BlackRock, Dragoneer Investment Group, Benchmark, Passport Ventures, Tenaya Capital, Trinity Ventures, DAG Ventures, Allen & Company, and Four Rivers Group. Its valuation had grown steadily from $750 million in 2013 to $1 billion as of April 2014.
New Relic is one of the very few Billion Dollar Unicorns in the APM market to have gone public. Early last year, before it could go public, Billion Dollar Unicorn and rival AppDynamics was acquired by Cisco for $3.7 billion.
Other than Cisco’s AppDynamics, New Relic’s competitors include performance monitoring providers such as Dynatrace, Datadog, and Splunk, large enterprise software and service companies such as BMC Software, and CA; diversified technology companies such as IBM, Microsoft, and Oracle; and companies offering analytics products competing with its New Relic Insights product, including Amazon Web Services and Google.
Its stock is trading at $109.25 with a market cap of $6.1 billion. It touched a 52-week high of $111.59 last month. Over the last year, it has been steadily climbing from the 52-week low of $42.68.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns.
Photo Credit: Danae Pollack/Flickr.com
This segment is a part in the series : Billion Dollar Unicorns
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