Personal Finance

This Explains Why New Relic Is Soaring Today

Business man holding arrow that goes up.

What happened

In response to reporting fiscal fourth-quarter and full year earnings, shares of New Relic (NYSE: NEWR) , a software-as-a-service business focused on application performance monitoring, rose 17% as of 10:32 a.m. EDT on Wednesday.

So what

Here's a review of the headline numbers from the company's fiscal fourth-quarter:

  • Revenue jumped 34% to $98.4 million. By contrast, analysts were only expecting the company to report $96.3 million in revenue for the quarter.
  • On a Non-GAAP basis operating income was $4.8 million.
  • The company's dollar-based net expansion rate was extremely strong and came in at 141%.
  • Non-GAAP EPS was $0.09. That was also far ahead of the $0.05 that Wall Street had expected.
  • Cash balance at quarter end was $248 million.

Zooming out to the full-year, here's how New Relic performed in fiscal 2018:

  • Revenue jumped 35% to $355 million.
  • Non-GAAP net loss from operations was $1.5 million.
  • Non-GAAP EPS was break-even during the year.
Business man holding arrow that goes up.

Image source: Getty Images.

Turning to guidance, here's what management is projecting:

  • First quarter 2019 revenue will land between $104.5 million and $106.5 million. This implies growth of 30% to 32% and is ahead of the $103.3 million that Wall Street had expected.
  • First quarter 2019 Non-GAAP EPS is expected to land between $0.10 and $0.12. That's far ahead of the $0.01 in EPS that the pros were modeling.
  • Full year fiscal 2019 revenue is expected to grow to between $452 million and $458 million. That represents growth of 27% and 29%. That's also comfortably ahead of the $450 million that analysts were projecting.
  • Full year fiscal 2019 Non-GAAP EPS is expected to come in between $0.29 and $0.37. By contrast, Wall Street was only expecting $0.23.

Given the strong quarterly results and expectation-topping guidance, it isn't hard to figure out why shares are flying high today.

Now what

New Relic's results prove that it is firing on all cylinders. While the company's stock continues to trade at a lofty valuation -- shares are currently trading for about 14 times sales -- this happy shareholder has no plans to part ways with his position anytime soon..

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Brian Feroldi owns shares of New Relic. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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