I guess I must be one of the few still hanging on to New Relic shares here.
Yesterday they announced Q4 earnings (their fiscal year ends on March 31st):
Revenue still growing at 30%+, which pales in comparison to some of the companies we follow here, but is pretty typical based on NEWR’s last few quarters. Looks like it was a beat compared to the consensus on revenue and earnings (earnings were about double the consensus)
However shares are down a few percent today based on guidance, particularly for earnings, which was less than than expected.
At the same time, they announced their new platform New Relic One
The in house press release gives more technical description, but this tech crunch article puts some more layman terms that I could understand around it:
The new platform, called New Relic One, has been designed to replace the original platform, which was developed over the previous decade. The company says that by moving slowly to the new platform, customers will be able to take advantage of new features that it couldn’t have built on the old platform without having to learn a new a way of working.
Jim Gochee, chief product officer at New Relic, says that all of the existing tooling and functionality will eventually be ported over or reimagined on top of New Relic One. “What it is under the covers for us is a new technology stack and a new platform for our offering. We are still running our existing technology stack with our existing products. So we’re [essentially] running two platforms in two stacks in parallel, but all of the new stuff is going to be built on New Relic One over time,” he explained.
By redesigning the existing platform from scratch, New Relic created a new, modern, more extensible model that will allow it to plug in new functionality more easily over time, and eventually even allow customers to do the same thing. For now, it’s about changing what’s happening under the hood and providing a new user experience in a redesigned user interface.
So essentially everything is moving from their existing platform to the new “One” platform which goes live today, although it will be a gradual move so customers can continue to use the old platform for a while. I’m guessing this investment which, although live today, still sounds like it is having features built out over at least the next few quarters, is probably driving some of the earnings guidance miss.
I don’t know if the market was expecting this big rollout or not. I suppose if this is a big upgrade from what they’ve been selling for the past decade, it could potentially lead to a re-acceleration of revenue, but time will tell and we should be able to track its progress from quarter to quarter.
There really isn’t much news or chatter that I could find online about it, so I’m interested to see if Bert chimes in. Overall, I’m happy keeping my small position in NEWR. Once all of our April 30th companies report, I’ll reassess my overall allocations and consider whether I might want to add a little bit here or not, but I’m not in a rush to do so, especially since most of the other companies we follow will report over the next few weeks