New Relic Announces Second Quarter Of Fiscal Year 2017 Results

Digital Intelligence leader New Relic, Inc. (NYSE: NEWR) today announced financial results for the second fiscal quarter ended September 30, 2016.

"New Relic is rapidly becoming the global enterprise standard for a new category of software we call Digital Intelligence. At the end of our second fiscal quarter, our base of customers spending more than one million dollars per year grew by over 100% year-over-year, and has increased more than tenfold since our IPO. And the number of New Relic customers spending more than $100,000 annually has grown almost threefold since our IPO," said Lew Cirne, founder and CEO, New Relic. "Next week at our annual FutureStack customer event, we will deliver our next major product offering, New Relic Infrastructure, which we believe will further accelerate our strategic position in the enterprise, and meaningfully expand our total addressable market."

"We are pleased to deliver revenue and operating leverage improvement that exceeded our guidance for the second quarter," said Mark Sachleben, CFO, New Relic. "At the same time GAAP and Non-GAAP gross margins reached record levels of 81% and 83%, respectively, and we generated positive cash from operations for the fourth consecutive quarter. As we look ahead, we believe New Relic is well positioned to continue generating rapid growth and delivering bottom line improvement as our subscription-based business model scales."

Second Quarter 2017 Financial Highlights:
  • Revenue of $63.4 million, up 48% compared to the second quarter of fiscal 2016 and 8% from the first quarter of fiscal 2017.
  • GAAP loss from operations was $14.3 million for the second quarter of fiscal 2017, compared to $15.0 million for the second quarter of fiscal 2016. Non-GAAP loss from operations was $4.9 million for the second quarter of fiscal 2017, compared to $8.4 million for the second quarter of fiscal 2016.
  • GAAP net loss per share was $0.28 for the second quarter of fiscal 2017 based on 51.3 million weighted-average shares outstanding, compared to $0.31 for the second quarter of fiscal 2016 based on 48.2 million weighted-average shares outstanding. Non-GAAP net loss per share was $0.09 for the second quarter of fiscal 2017, compared to $0.17 for the second quarter of fiscal 2016.
  • Cash, cash equivalents and short-term investments were $197.3 million at the end of the second quarter of fiscal 2017, compared to $196.1 million at the end of the first quarter of fiscal 2017.

Customer Highlights:
  • Paid Business Accounts as of September 30, 2016 of 14,538.
  • Dollar-Based Net Expansion Rate for the second quarter of fiscal 2017 of 116%.
  • New or expanded customers in the second quarter of fiscal 2017 included: Absa, B2W Companhia Digital, BabyCenter, Canadian Agriculture Lender, CARFAX, Casper Sleep, Cisco Systems, Credit Sense Australia, Domino's Pizza Enterprises Ltd, GIPHY, Hearst, HubSpot, Hyatt Corporation, Interactive Intelligence Group, Ola Cabs, MEC (Mountain Equipment Co-op), News Corp, Nissan Motor Co., Ocado Group PLC, PennymacUSA, ReachLocal, Stitch Fix, Swiss Federal Railway (SBB), VF Corp., Vistaprint and Wix.com.

Second Quarter & Recent Business Highlights:
  • Launched new cloud pricing option to help customers expand and standardize their monitoring coverage across their applications running on cloud infrastructure.
  • Unveiled New Relic Infrastructure, a new monitoring solution designed to provide deep, real-time visibility into a company's dynamic cloud and hybrid infrastructure and integrate seamlessly with New Relic's application performance solutions.
  • Named as the fourth largest application performance monitoring (APM) vendor by revenue according to Gartner's "Market Share Analysis: Performance Monitoring, Worldwide, 2015," increasing four spots from the prior year.

Outlook:

New Relic is initiating its outlook for its third quarter of fiscal 2017, as well as updating its outlook for the full fiscal year 2017. New Relic has not reconciled its expectations as to non-GAAP loss from operations or non-GAAP net loss per share to their most directly comparable GAAP measure because certain items, namely stock-based compensation, lawsuit litigation expenses and employer payroll taxes on equity incentive plans, are out of New Relic's control or cannot be reasonably predicted. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these factors could be material to New Relic's results computed in accordance with GAAP.
  • Third Quarter Fiscal 2017 Outlook:
    • Revenue between $65.5 million and $66.5 million, representing year-over-year growth of between 37% and 39%.
    • Non-GAAP loss from operations of between $7.2 million and $8.2 million.
    • Non-GAAP net loss per share of between $0.14 and $0.16. This assumes 52.4 million weighted average common shares outstanding.
  • Full Year Fiscal 2017 Outlook:
    • Revenue between $255.0 million and $258.0 million, representing year-over-year growth of between 41% and 42%.
    • Non-GAAP loss from operations of between $30.5 million and $32.5 million.
    • Non-GAAP net loss per share of between $0.58 and $0.62. This assumes 52.2 million non-GAAP weighted average common shares outstanding.

Conference Call Details:
  • What: New Relic financial results for the second quarter fiscal 2017 and outlook for the third quarter of fiscal 2017 and the full year of fiscal 2017
  • When: November 7, 2016 at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time)
  • Dial in: To access the call in the U.S., please dial (866) 393-4306, and for international callers, please dial (734) 385-2616. Callers may provide confirmation number 96289804 to access the call more quickly, and are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining.
  • Webcast: http://ir.newrelic.com (live and replay)
  • Replay: Following the completion of the call through 11:59 PM Eastern Time on November 14, 2016, a telephone replay will be available by dialing (855) 859-2056 from the United States or (404) 537-3406 internationally with conference ID 96289804.

About New Relic

New Relic is a leading digital intelligence company, delivering full-stack visibility and analytics with more than 14,000 paid business accounts. The New Relic Digital Intelligence Platform provides actionable insights to drive digital business results. Companies of all sizes trust New Relic to monitor application and infrastructure performance so they can quickly resolve issues, and improve digital customer experiences. Learn more at  newrelic.com.

Forward-Looking Statements

This press release and the earnings call referencing this press release contain "forward-looking" statements, as that term is defined under the federal securities laws, including but not limited to statements regarding New Relic's future financial performance, including its outlook on financial results for the third quarter of fiscal 2017 and for the full year of fiscal 2017, such as revenue, non-GAAP operating loss, non-GAAP net loss per share, non-GAAP operating income, cash from operations, free cash flow, and capital expenditures, New Relic's ability and timing to achieve Non-GAAP operating income break-even and positive free cash flow, market trends and opportunity, potential seasonality, New Relic's customer adoption, momentum, competitive advantages, and value proposition to its customers, the increase in mainstream and larger customers and transaction sizes as well as opportunity for further sales to existing customers, the timing of the general availability release of the New Relic Infrastructure offering, product offerings and pricing plans related thereto, demand therefor, and the timing of potential new revenue and additional benefits therefrom, the timing and matters covered at New Relic's Investor Day, the potential use and benefits from machine learning, New Relic's pipeline as well as any revenue benefits therefrom, resource dedication with respect to international opportunities, the effect of New Relic Essentials and cloud pricing, and changes to New Relic's deferred revenue and overall invoice duration. These forward-looking statements are based on New Relic's current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause New Relic's actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement.

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