Fourth quarter total revenue of $242.5 million,
up 18% year over year
Focused execution led to consumption revenue of
$203.8 million in the quarter, up 55% year over year
Fourth quarter GAAP operating margin increased
4.3 pts, non-GAAP operating margin improved to 10.7%
New Relic, Inc. (NYSE: NEWR), the all-in-one observability
platform for every engineer, announced financial results for the
fourth quarter and full fiscal year 2023 ended March 31, 2023.
“We finished the fiscal year with consumption revenue growing in
excess of 30% excluding the impact of migrations, with
profitability at a new high watermark, and with our innovation
leadership recognized broadly. I’m very grateful for such committed
customers and all the hard work across the company which made
fiscal 2023 a terrific year,” said New Relic CEO Bill Staples. “We
look forward to fiscal 2024 and the innovation roadmap, continued
customer growth and expansion, and the final chapter of our
subscription business which will result in a simpler, more
profitable, and high-growth New Relic.”
Fourth Quarter Fiscal Year 2023 Financial Results:
- Revenue: Total revenue was $242.5 million, up 18% from
$205.8 million one year ago. Consumption revenue was $203.8
million, up 55% year over year.
- Gross Margin and Non-GAAP Gross Margin(1): Gross margin
was 76.7%, compared to 68.9% one year ago, an increase of 7.8
percentage points year over year. Non-GAAP gross margin was 79.0%,
compared to 71.0% one year ago, an increase of 8.0 percentage
points year over year.
- Operating Income and Non-GAAP Operating Income(1): Loss
from operations was $(55.2) million, compared to $(55.7) million
one year ago. The fourth quarter included a $31.8 million
restructuring charge related to the exit of some of our real estate
facilities. Non-GAAP operating income was $26.1 million, compared
to $(16.0) million loss one year ago, an increase of $42.0 million
year over year.
- Operating Margin and Non-GAAP Operating Margin(1):
Operating margin was (22.8%), compared to (27.1%) one year ago, an
increase of 4.3 percentage points year over year. Non-GAAP
operating margin was 10.7%, compared to (7.8%) one year ago, up
18.5 percentage points year over year.
- Net Income Per Share and Non-GAAP Net Income Per
Share(1): Fully diluted net loss per share was $(0.83),
compared to $(0.84) one year ago, while non-GAAP fully diluted net
income per share was $0.42, compared to $(0.24) loss per share one
year ago.
Fiscal Year 2023 Financial Results:
- Revenue: Total revenue was $925.6 million, up 18% from
$785.5 million one year ago. Consumption revenue was $707.7
million, up 60% year over year.
- Gross Margin and Non-GAAP Gross Margin(1): Gross margin
was 73.4%, compared to 67.4% one year ago, an increase of 6.0
percentage points year over year. Non-GAAP gross margin was 75.9%,
compared to 69.4% one year ago, an increase of 6.5 percentage
points year over year.
- Operating Income and Non-GAAP Operating Income(1): Loss
from operations was $(185.2) million, compared to $(228.6) million
one year ago. Non-GAAP operating income was $34.5 million, compared
to $(49.1) million one year ago, an increase of $83.6 million year
over year.
- Operating Margin and Non-GAAP Operating Margin(1):
Operating margin was (20.0%), compared to (29.1%) one year ago, an
increase of 9.1 percentage points year over year. Non-GAAP
operating margin was 3.7%, compared to (6.3%) one year ago, up 10.0
percentage points year over year.
- Net Income Per Share and Non-GAAP Net Income Per
Share(1): Fully diluted net loss per basic share was $(2.67),
compared with $(3.88) one year ago, while non-GAAP fully diluted
net income per share was $0.63, compared to $(0.78) one year
ago.
- Cash, Cash Equivalents and Short-Term Investments: Cash,
cash equivalents and short-term investments were $879.8 million as
of March 31, 2023.
- Cash Flows From Operating Activities and Free Cash Flow:
Cash flows from operating activities was $53.8 million, compared to
$3.6 million one year ago, an increase of $50.1 million year over
year. Free cash flow was $33.8 million, compared to $(14.8) million
one year ago, an increase of $48.6 million year over year.
Recent Business Highlights:
- Landing New Customers — Its product-led growth (PLG)
engine again added more than 800 net new paid platform customers
during the fourth quarter.
- Recognizing Technology Leadership — GigaOm named New
Relic a Leader and Outperformer in the 2023 GigaOm Radar for Cloud
Observability Solutions. GigaOm placed New Relic closest to the
center and as a leader in innovation, representing the highest
overall value to customers.
- First to Market Generative AI Innovations — Launched New
Relic Grok, the industry’s first generative AI observability
assistant which makes it easier for customers to use more of New
Relic’s capabilities, consolidate their data in New Relic, and
ingest data more rapidly. First to market with OpenAI GPT
integration to instantly monitor performance and cost of
applications built with OpenAI’s GPT Series APIs.
- Updating Infrastructure Monitoring to Drive
Standardization — New, deeply integrated experience for
infrastructure monitoring and APM capabilities helps customers
correlate the health and performance of applications and hosts in
real-time at one-third the cost of competitors.
- Reaching More Developers — Launched New Relic CodeStream
for all core coding languages. As CodeStream delivers insights into
software performance all the way down to the code level, it allows
more developers to quickly identify issues before they hit
production and accelerate engineering velocity.
- Growing its Technology Partner Ecosystem — New Relic
continued to grow its technology partner ecosystem, and now offers
integrations with 600+ cloud services, open-source tools, and
enterprise technologies. Furthermore, New Relic now offers 50+
Azure monitoring quickstarts to make it easier for engineers to
instrument their Azure-based stack.
- Committing to Net-Zero — New Relic announced its goal
for net-zero greenhouse gas emissions by 2030. New Relic’s GHG
emissions targets will be submitted to the Science Based Target
initiative (SBTi), joining the more than 2,200 companies worldwide
that are leading the transition to a net-zero economy.
Financial Outlook:
New Relic is providing guidance for its fiscal first quarter
ending June 30, 2023 as follows:
- Total revenue between $238 million and $240 million,
representing year-over-year growth of 10% and 11%
respectively.
- Consumption revenue year-over-year growth of approximately
38%.
- Non-GAAP operating income between $26 million and $28 million,
representing Non-GAAP operating margins between 11% and 12%
respectively(2).
- Weighted-average diluted shares used in computing net income
per share of approximately 72 million(2). Non-GAAP tax rate of
approximately 24.5%(2).
New Relic is providing guidance for its fiscal year ending March
31, 2024 as follows:
- Total revenue between $1.02 billion and $1.03 billion,
representing year-over-year growth of 10% and 11%
respectively.
- Consumption revenue year-over-year growth of approximately
30%.
- Non-GAAP operating income between $145 million and $155
million, representing Non-GAAP operating margins between 14% and
15% respectively(2).
- Weighted-average diluted shares used in computing net income
per share of approximately 75 million(2). Non-GAAP tax rate of
approximately 24.5%(2).
Conference Call Information:
New Relic will host a conference call at 2:00 p.m. PT / 5:00
p.m. ET to review the financial results and business outlook with
the investment community. A live webcast and replay of the event
will be available on the New Relic Investor Relations website at
http://ir.newrelic.com.
What:
New Relic fourth quarter of fiscal year
2023 results conference call
When:
May 23, 2023 at 2:00 p.m. Pacific Time /
5:00 p.m. Eastern Time
Online Registration:
https://events.q4inc.com/attendee/989640133
Participation at Upcoming Investor Conferences:
New Relic announced that members of its management team will
participate in the following investor conferences:
Event: TD Cowen’s 51st Annual Technology, Media and Telecom
Conference Date: Wednesday, May 31, 2023, at 6:05 a.m. PT / 9:05
a.m. ET Details: Fireside chat and one-on-one meetings (David
Barter, CFO)
Event: Baird 2023 Global Consumer, Technology & Services
Conference Date: Tuesday, June 6, 2023, at 5:30 a.m. PT / 8:30 a.m.
ET Details: Fireside chat and one-on-one meetings (David Barter,
CFO)
The live webcasts of the fireside chat presentations will be
accessible under the “Events & Presentations” section of the
New Relic investor relations page at http://ir.newrelic.com.
Following the events, replays will be made available at the same
location.
_______
(1) This press release uses non-GAAP financial metrics that are
adjusted for the impact of various GAAP items. See the section
titled “Non-GAAP Financial Measures” and the tables entitled
“Reconciliation from GAAP to Non-GAAP Results” below for
details.
(2) New Relic has not reconciled its expectations as to non-GAAP
income from operations or non-GAAP net income per diluted share to
their most directly comparable GAAP measures as a result of
uncertainty regarding, and the potential variability of,
reconciling items such as stock-based compensation expense, lawsuit
litigation cost and other expense, employer payroll taxes on equity
incentive plans and gain or loss from lease modification.
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.
About New Relic
As a leader in observability, New Relic empowers engineers with
a data-driven approach to planning, building, deploying, and
running great software. New Relic delivers the only unified data
platform that empowers engineers to get all telemetry—metrics,
events, logs, and traces—paired with powerful full stack analysis
tools to help engineers do their best work with data, not opinions.
Delivered through the industry’s first usage-based consumption
pricing that’s intuitive and predictable, New Relic gives engineers
more value for the money by helping improve planning cycle times,
change failure rates, release frequency, and mean time to
resolution. This helps the world’s leading brands including adidas
Runtastic, American Red Cross, Australia Post, Banco Inter, Chegg,
GoTo Group, Ryanair, Sainsbury’s, Signify Health, TopGolf, and
World Fuel Services (WFS) improve uptime, reliability, and
operational efficiency to deliver exceptional customer experiences
that fuel innovation and growth. https://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: (a) our innovation pipeline and
anticipated impact on our future business and financial results;
(b) the expected timing and results of our conversion of customers
to our consumption plans; (c) the impact of our product launches
and integrations, including New Relic Grok and others, and our
expectations for availability, benefits, and customer adoption; (d)
our expectations for the results of our broader platform and
technology partnership initiatives, including availability on Azure
Native and integration of features; (e) our net-zero goal and the
anticipated impacts thereof; (f) our expectations regarding future
financial performance, including our revenue outlook, and our
underlying assumptions about demand, customer behavior, and our
positioning for growth and continued profitability; (g) our plans
and intentions to win new customers, expand existing relationships,
and further expand our platform; (h) our commitment to certain
initiatives and strategic plans and our ability to accomplish them,
including our areas of focus and plans for growth; (i) our outlook
on financial results for the first quarter and the full year of
fiscal 2024, including as to total revenue, consumption revenue,
and expected year-over-year growth for each, non-GAAP operating
income and non-GAAP operating margin, and non-GAAP net income per
diluted share, and the drivers and various factors related thereto;
and (j) our expectations for the impact of macroeconomic factors on
our business and financial results. 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.
The risks and uncertainties referred to above include, but are
not limited to, New Relic’s ability to determine optimal prices for
its products and the potential challenges presented by New Relic’s
evolving pricing models; the effect of the macroeconomic factors on
New Relic’s business and on global economies and financial markets
generally; unfavorable movements in foreign currency exchange
rates; New Relic’s ability to generate sufficient revenue to
achieve and sustain profitability, particularly in light of its
significant ongoing expenses; New Relic’s short operating history
in an evolving industry; New Relic’s ability to manage its
significant recent growth; the dependence of New Relic’s business
on its customers remaining on its platform and increasing their
spend with New Relic; New Relic’s ability to develop enhancements
to its products, increase adoption and usage of its products and
introduce new products that achieve market acceptance; the
dependence on customers expanding their use of New Relic’s products
beyond the current predominant use cases; New Relic’s ability to
expand its marketing and sales capabilities and increase sales of
its solutions; privacy concerns, including changes in privacy laws
and regulations, which could result in additional cost and
liability to New Relic or inhibit sales; New Relic’s ability to
effectively compete in intensely competitive markets and respond
effectively to rapidly changing technology, evolving industry
standards and changing customer needs, requirements or preferences;
fluctuation of New Relic’s quarterly results; New Relic’s
dependence on lead generation strategies to drive sales and
revenue; interruptions or performance problems associated with New
Relic’s technology and infrastructure; New Relic’s dependence on
SaaS technologies and related services from third parties; defects
or disruptions in New Relic’s products; estimates or judgments
relating to New Relic’s critical accounting policies; the expense
and complexity of New Relic’s ongoing and planned investments in
cloud hosting providers and expenditures on transitioning its
services and customers from its data center hosting facilities to
public cloud providers; risks associated with international
operations; New Relic’s ability to protect its intellectual
property rights; risks related to the acquisition and integration
of businesses or technologies; risks related to sales to government
entities and highly regulated organizations; certain risks
associated with incurring indebtedness; and other “Risk Factors”
set forth in New Relic’s most recent filings with the Securities
and Exchange Commission (the “SEC”).
Further information on these and other factors that could affect
New Relic’s financial results and the forward-looking statements in
this press release and in the earnings call referencing this press
release is included in the filings New Relic makes with the SEC
from time to time, particularly under the captions “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” including our Annual Report on Form
10-K and subsequent Quarterly Reports on Form 10-Q and subsequent
filings. Copies of these documents may be obtained by visiting New
Relic’s Investor Relations website at http://ir.newrelic.com or the
SEC’s website at www.sec.gov.
All information provided in this press release and in the
earnings call is as of the date hereof and New Relic assumes no
obligation and does not intend to update these forward-looking
statements, except as required by law.
Non-GAAP Financial Measures
New Relic discloses the following non-GAAP financial measures in
this press release and the earnings call referencing this press
release: non-GAAP income (loss) from operations, non-GAAP gross
profit, non-GAAP gross margin, non-GAAP operating expenses (sales
and marketing, research and development, general and
administrative), non-GAAP operating margin, non-GAAP net income
(loss), non-GAAP net income (loss) per diluted share, non-GAAP net
income (loss) per basic share and free cash flow. New Relic uses
each of these non-GAAP financial measures internally to understand
and compare operating results across accounting periods, for
internal budgeting and forecasting purposes, for short- and
long-term operating plans, and to evaluate New Relic’s financial
performance. In addition, New Relic’s bonus plan for eligible
employees and executives is based in part on non-GAAP income (loss)
from operations. New Relic believes these non-GAAP financial
measures are useful to investors, as a supplement to GAAP measures,
in evaluating its operational performance, as further discussed
below. New Relic’s non-GAAP financial measures may not provide
information that is directly comparable to that provided by other
companies in its industry, as other companies in its industry may
calculate non-GAAP financial results differently, particularly
related to non-recurring and unusual items. In addition, there are
limitations in using non-GAAP financial measures because the
non-GAAP financial measures are not prepared in accordance with
GAAP and may be different from non-GAAP financial measures used by
other companies and exclude expenses that may have a material
impact on New Relic’s reported financial results.
Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. A reconciliation of the
historical non-GAAP financial measures to their most directly
comparable GAAP measures has been provided in the financial
statement tables included below in this press release.
New Relic defines non-GAAP income (loss) from operations,
non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating
expenses (sales and marketing, research and development, general
and administrative), non-GAAP operating margin, non-GAAP net income
(loss), non-GAAP net income (loss) per diluted share and non-GAAP
net income (loss) per basic share as the respective GAAP balances,
adjusted for, as applicable: (1) stock-based compensation expense,
(2) amortization of stock-based compensation capitalized in
software development costs, (3) the amortization of purchased
intangibles, (4) employer payroll tax expense on equity incentive
plans, (5) amortization of debt discount and issuance costs, (6)
the transaction costs related to acquisitions, (7) lawsuit
litigation cost and other expense, and (8) restructuring charges.
Non-GAAP net income (loss) per basic and diluted share is
calculated as non-GAAP net income (loss) divided by
weighted-average shares used to compute net income (loss) per
share, basic and diluted, with the number of weighted-average
shares decreased to reflect the anti-dilutive impact of the capped
call transactions entered into in connection with the 0.50%
Convertible Senior Notes due 2023 issued in May 2018. New Relic
defines free cash flow as GAAP cash from operations, minus capital
expenditures and minus capitalized software. Investors are
encouraged to review the reconciliation of these historical
non-GAAP financial measures to their most directly comparable GAAP
financial measures.
Management believes these non-GAAP financial measures are useful
to investors and others in assessing New Relic’s operating
performance due to the following factors:
Stock-based compensation expense and amortization of stock-based
compensation capitalized in software development costs. New Relic
utilizes share-based compensation to attract and retain employees.
It is principally aimed at aligning their interests with those of
its stockholders and at long-term retention, rather than to address
operational performance for any particular period. As a result,
share-based compensation expenses vary for reasons that are
generally unrelated to financial and operational performance in any
particular period.
Amortization of purchased intangibles. New Relic views
amortization of purchased intangible assets as items arising from
pre-acquisition activities determined at the time of an
acquisition. While these intangible assets are evaluated for
impairment regularly, amortization of the cost of purchased
intangibles is an expense that is not typically affected by
operations during any particular period.
Employer payroll tax expense on equity incentive plans. New
Relic excludes employer payroll tax expense on equity incentive
plans as these expenses are tied to the exercise or vesting of
underlying equity awards and the price of New Relic’s common stock
at the time of vesting or exercise. As a result, these taxes may
vary in any particular period independent of the financial and
operating performance of New Relic’s business.
Amortization of debt discount and issuance costs. Following New
Relic’s adoption of ASU No. 2020-06, Accounting for Convertible
Instruments and Contract on an Entity’s Own Equity, the expense for
the amortization of debt issuance costs (including those
attributable to New Relic’s convertible senior notes due in 2023)
is a non-cash item, and New Relic believes the exclusion of this
interest expense will provide for a more useful comparison of our
operational performance in different periods.
Transaction costs related to acquisitions. New Relic may from
time to time incur direct transaction costs related to
acquisitions. New Relic believes it is useful to exclude such
charges because it does not consider such amounts to be part of the
ongoing operation of New Relic’s business.
Lawsuit litigation cost and other expense. New Relic may from
time to time incur charges or benefits related to litigation that
are outside of the ordinary course of New Relic’s business. New
Relic believes it is useful to exclude such charges or benefits
because it does not consider such amounts to be part of the ongoing
operation of New Relic’s business and because of the singular
nature of the claims underlying the matter.
Restructuring charges. In April 2021, New Relic commenced a
restructuring plan to realign its cost structure to better reflect
significant product and business model innovation. In August 2022,
New Relic commenced a restructuring plan to realign its cost
structure with its business needs as New Relic moved to focus its
resources on top priorities, and in March 2023, New Relic approved
a new restructuring plan in connection with the reduction of its
global real estate footprint in line with its Flex First
philosophy. As a result of each of these restructuring plans, New
Relic incurred charges of approximately $39.1 million and $12.6
million for the twelve months ended March 31, 2023 and 2022,
respectively. For the quarter ended March 31, 2023, New Relic
incurred restructuring charges of approximately $31.8 million
consisting primarily of real estate lease terminations and other
associated costs. New Relic believes it is appropriate to exclude
the restructuring charges because they are not indicative of New
Relic’s future operating results.
Anti-dilutive impact of capped call transactions. In connection
with the issuance of its convertible senior notes due in 2023, New
Relic entered into capped call transactions to offset potential
dilution from the embedded conversion feature in the notes.
Although New Relic cannot reflect the anti-dilutive impact of the
capped call transactions under GAAP, New Relic does reflect the
anti-dilutive impact of the capped call transactions in non-GAAP
net loss per share, basic and diluted, to provide investors with
useful information in evaluating the financial performance of the
company on a per share basis.
Additionally, New Relic’s management believes that the non-GAAP
financial measure free cash flow is meaningful to investors because
management reviews cash flows generated from operations after
taking into consideration capital expenditures and the
capitalization of software development costs due to the fact that
these expenditures are considered to be a necessary component of
ongoing operations.
Operating Metrics
Active Customer Accounts. New Relic defines an Active Customer
Account at the end of any period as an individual account, as
identified by a unique account identifier, aggregated at the parent
hierarchy level, for which New Relic has recognized any revenue in
the fiscal quarter. The number of Active Customer Accounts that is
reported as of a particular date is rounded down to the nearest
hundred.
Number of Active Customer Accounts with Revenue Greater than
$100,000. As a measure of New Relic’s ability to scale with its
customers and attract large enterprises to its platform, New Relic
counts the number of Active Customer Accounts for which it has
recognized greater than $100,000 in revenue in the trailing
12-months.
Percentage of Revenue from Active Customer Accounts Greater than
$100,000. New Relic also looks at its percentage of overall revenue
it receives from its Active Customer Accounts with revenue greater
than $100,000 in any given quarter as an indicator of its relative
performance when selling to New Relic’s large customer
relationships or its smaller revenue accounts.
Net Revenue Retention Rate (“NRR”). NRR monitors the growth in
use of New Relic’s platform by its existing active customer
accounts and allows New Relic to measure the health of its business
and future growth prospects. To calculate NRR, New Relic first
identifies the cohort of Active Customer Accounts that were Active
Customer Accounts in the same quarter of the prior fiscal year.
Next, New Relic identifies the measurement period as the 12-month
period ending with the period reported and the prior comparison
period as the corresponding period in the prior year. NRR is the
quotient obtained by dividing the revenue generated from a cohort
of Active Customer Accounts in the measurement period by the
revenue generated from that same cohort in the prior comparison
period.
New Relic is a registered trademark of New Relic, Inc.
All product and company names herein may be trademarks of their
registered owners.
New Relic, Inc.
Consolidated Statements of
Operations
(In thousands, except per share
data; unaudited)
Three Months Ended March
31,
Fiscal Year Ended March
31,
2023
2022
2023
2022
Revenue
$
242,492
$
205,752
$
925,626
$
785,521
Cost of revenue
56,391
63,960
246,383
256,279
Gross profit
186,101
141,792
679,243
529,242
Operating expenses: Research and development
72,539
58,396
275,299
211,856
Sales and marketing
104,015
100,424
400,115
394,027
General and administrative
64,760
38,719
189,072
151,912
Total operating expenses
241,314
197,539
864,486
757,795
Loss from operations
(55,213
)
(55,747
)
(185,243
)
(228,553
)
Other income (expense): Interest income
6,101
625
14,321
2,862
Interest expense
(1,195
)
(1,239
)
(4,943
)
(4,921
)
Other expense
(256
)
(523
)
(66
)
(1,170
)
Loss before income taxes
(50,563
)
(56,884
)
(175,931
)
(231,782
)
Income tax provision (benefit)
1,894
(493
)
2,896
323
Net loss
$
(52,457
)
$
(56,391
)
$
(178,827
)
$
(232,105
)
Net loss and adjustment attributable to redeemable non-controlling
interest
(4,770
)
878
(1,419
)
(18,297
)
Net loss attributable to New Relic
$
(57,227
)
$
(55,513
)
$
(180,246
)
$
(250,402
)
Net loss attributable to New Relic per share, basic and diluted
$
(0.83
)
$
(0.84
)
$
(2.67
)
$
(3.88
)
Weighted-average shares used to compute net loss per share, basic
and diluted
68,791
65,780
67,614
64,592
New Relic, Inc.
Supplemental Revenue
Disaggregation
(In thousands; unaudited)
Three Months Ended March
31,
Fiscal Year Ended March
31,
2023
2022
2023
2022
Subscription
$
38,716
$
74,381
$
217,887
$
343,315
Consumption
203,776
131,371
707,739
442,206
Total revenue
$
242,492
$
205,752
$
925,626
$
785,521
New Relic, Inc.
Consolidated Balance
Sheets
(In thousands, except par value;
unaudited)
March 31, 2023
March 31, 2022
Assets Current assets: Cash and cash equivalents
$
625,727
$
268,695
Short-term investments
254,085
559,984
Accounts receivable, net of allowances of $3,121 and $3,073,
respectively
234,287
226,182
Prepaid expenses and other current assets
17,747
29,447
Deferred contract acquisition costs
14,962
24,058
Total current assets
1,146,808
1,108,366
Property and equipment, net
48,509
68,368
Restricted cash
5,795
5,775
Goodwill
172,298
163,677
Intangible assets, net
11,603
15,636
Deferred contract acquisition costs, non-current
8,558
10,463
Lease right-of-use assets
19,678
50,465
Other assets, non-current
5,759
4,916
Total assets
$
1,419,008
$
1,427,666
Liabilities, redeemable non-controlling interest, and
stockholders’ equity Current liabilities: Accounts payable
$
29,452
$
32,545
Accrued compensation and benefits
37,552
37,023
Other current liabilities
39,424
36,098
Convertible senior notes, current
500,044
-
Deferred revenue
370,987
398,754
Lease liabilities
10,928
11,103
Total current liabilities
988,387
515,523
Convertible senior notes, non-current
-
497,663
Lease liabilities, non-current
38,384
49,809
Deferred revenue, non-current
3,800
108
Other liabilities, non-current
24,897
20,173
Total liabilities
1,055,468
1,083,276
Redeemable non-controlling interest
23,105
21,686
Stockholders’ equity: Common stock, $0.001 par value
69
66
Treasury stock - at cost (260 shares)
(263
)
(263
)
Additional paid-in capital
1,311,615
1,114,221
Accumulated other comprehensive loss
(7,432
)
(8,012
)
Accumulated deficit
(963,554
)
(783,308
)
Total stockholders’ equity
340,435
322,704
Total liabilities, redeemable non-controlling interest and
stockholders’ equity
$
1,419,008
$
1,427,666
New Relic, Inc.
Consolidated Statements of
Cash Flows
(In thousands; unaudited)
Fiscal Year Ended March
31,
2023
2022
Cash flows from operating activities: Net loss attributable
to New Relic:
$
(180,246
)
$
(250,402
)
Net loss and adjustment attributable to redeemable non-controlling
interest
$
1,419
$
18,297
Net loss:
$
(178,827
)
$
(232,105
)
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization
63,380
86,065
Stock-based compensation expense
160,015
153,039
Amortization of debt discount and issuance costs
2,381
2,357
Loss on facilities exit
10,840
-
Non-cash charges related to restructuring activities
23,840
-
Other
3,555
1,429
Changes in operating assets and liabilities, net of acquisition of
businesses: Accounts receivable, net
(9,356
)
(53,319
)
Prepaid expenses and other assets
8,493
(5,796
)
Deferred contract acquisition costs
(14,417
)
(2,345
)
Lease right-of-use assets
11,442
8,294
Accounts payable
(3,634
)
9,745
Accrued compensation and benefits and other liabilities
11,733
19,564
Lease liabilities
(11,600
)
(6,898
)
Deferred revenue
(24,075
)
23,594
Net cash provided by operating activities
53,770
3,624
Cash flows from investing activities: Purchases of property
and equipment
(3,114
)
(5,778
)
Proceeds from sale of property and equipment
2,198
1,001
Cash paid for acquisition, net of cash acquired
(7,508
)
(7,192
)
Purchases of short-term investments
(50,373
)
(301,068
)
Proceeds from sale and maturity of short-term investments
355,556
305,942
Capitalized software development costs
(16,878
)
(12,662
)
Net cash provided by (used in) investing activities
279,881
(19,757
)
Cash flows from financing activities: Proceeds from employee
stock purchase plan
13,593
12,272
Proceeds from exercise of employee stock options
9,808
31,868
Net cash provided by financing activities
23,401
44,140
Net increase in cash, cash equivalents and restricted cash
357,052
28,007
Cash, cash equivalents and restricted cash at beginning of period
274,470
246,463
Cash, cash equivalents and restricted cash at end of period
$
631,522
$
274,470
New Relic, Inc.
Reconciliation from GAAP to
Non-GAAP Results
(In thousands, except per share
data; unaudited)
Three Months Ended March
31,
Fiscal Year Ended March
31,
2023
2022
2023
2022
Reconciliation of gross profit and gross
margin: GAAP gross profit
$
186,101
$
141,792
$
679,243
$
529,242
Plus: Stock-based compensation
1,256
1,285
5,307
5,042
Plus: Amortization of purchased intangibles
2,383
2,291
11,433
7,649
Plus: Amortization of stock-based compensation capitalized in
software development costs
560
722
4,077
2,402
Plus: Employer payroll tax on employee equity incentive plans
87
75
253
243
Plus: Restructuring charges (1)
1,268
-
1,675
-
Non-GAAP gross profit
$
191,655
$
146,165
$
701,988
$
544,578
GAAP gross margin
76.7
%
68.9
%
73.4
%
67.4
%
Non-GAAP adjustments
2.3
%
2.1
%
2.5
%
2.0
%
Non-GAAP gross margin
79.0
%
71.0
%
75.9
%
69.4
%
Reconciliation of operating
expenses: GAAP research and development
$
72,539
$
58,396
$
275,299
$
211,856
Less: Stock-based compensation expense
(15,141
)
(12,127
)
(57,846
)
(48,355
)
Less: Employer payroll tax on employee equity incentive plans
(845
)
(571
)
(1,694
)
(1,432
)
Less: Restructuring charges (1)
(2,173
)
-
(3,608
)
-
Non-GAAP research and development
$
54,380
$
45,698
$
212,151
$
162,069
GAAP sales and marketing
$
104,015
$
100,424
$
400,115
$
394,027
Less: Stock-based compensation expense
(13,466
)
(11,367
)
(49,479
)
(48,986
)
Less: Employer payroll tax on employee equity incentive plans
(550
)
(374
)
(1,038
)
(944
)
Less: Restructuring charges (1)
(5,973
)
-
(9,731
)
(10,925
)
Non-GAAP sales and marketing
$
84,026
$
88,683
$
339,867
$
333,172
GAAP general and administrative
$
64,760
$
38,719
$
189,072
$
151,912
Less: Stock-based compensation expense
(14,739
)
(10,711
)
(47,383
)
(50,656
)
Less: Transaction costs related to acquisitions
-
-
(929
)
(361
)
Less: Lawsuit litigation cost and other expense
-
69
(88
)
10
Less: Employer payroll tax on employee equity incentive plans
(430
)
(339
)
(1,158
)
(1,292
)
Less: Restructuring charges (1)
(22,435
)
-
(24,045
)
(1,194
)
Non-GAAP general and administrative
$
27,156
$
27,738
$
115,469
$
98,419
Reconciliation of income (loss) from
operations and operating margin: GAAP loss from
operations
$
(55,213
)
$
(55,747
)
$
(185,243
)
$
(228,553
)
Plus: Stock-based compensation expense
44,602
35,490
160,015
153,039
Plus: Amortization of purchased intangibles
2,383
2,291
11,433
7,649
Plus: Transaction costs related to acquisitions
-
-
929
361
Plus: Amortization of stock-based compensation capitalized in
software development costs
560
722
4,077
2,402
Plus: Lawsuit litigation cost and other expense
-
(69
)
88
(10
)
Plus: Employer payroll tax on employee equity incentive plans
1,912
1,359
4,143
3,911
Plus: Restructuring charges (1)
31,849
-
39,059
12,119
Non-GAAP income (loss) from operations
$
26,093
$
(15,954
)
$
34,501
$
(49,082
)
GAAP operating margin
(22.8
%)
(27.1
%)
(20.0
%)
(29.1
%)
Non-GAAP adjustments
33.5
%
19.3
%
23.7
%
22.8
%
Non-GAAP operating margin
10.7
%
(7.8
%)
3.7
%
(6.3
%)
Reconciliation of net income
(loss): GAAP net loss
$
(52,457
)
$
(56,391
)
$
(178,827
)
$
(232,105
)
Plus: Stock-based compensation expense
44,602
35,490
160,015
153,039
Plus: Amortization of purchased intangibles
2,383
2,291
11,433
7,649
Plus: Transaction costs related to acquisitions
-
-
929
361
Plus: Amortization of stock-based compensation capitalized in
software development costs
560
722
4,077
2,402
Plus: Lawsuit litigation cost and other expense
-
(69
)
88
(10
)
Plus: Employer payroll tax on employee equity incentive plans
1,912
1,359
4,143
3,911
Plus: Amortization of debt discount and issuance costs
558
591
2,381
2,357
Plus: Restructuring charges (1)
31,849
-
39,059
12,119
Non-GAAP net income (loss)
$
29,407
$
(16,007
)
$
43,298
$
(50,277
)
Non-GAAP net income (loss) per share: Basic
$
0.43
$
(0.24
)
$
0.64
$
(0.78
)
Diluted
$
0.42
$
(0.24
)
$
0.63
$
(0.78
)
Shares used in non-GAAP per share calculations: Basic
68,791
65,780
67,614
64,592
Diluted
70,184
65,780
68,300
64,592
(1) For the fiscal year ended March 31, 2022, restructuring
related charge for the stock-based compensation expense of $0.5
million was included on its respective line items. There was no
corresponding expense for the fiscal year ended March 31, 2023.
New Relic, Inc.
Reconciliation of GAAP Cash
Flows from Operating Activities to Free Cash Flow
(In thousands; unaudited)
Three Months Ended March
31,
Fiscal Year Ended March
31,
2023
2022
2023
2022
Net cash provided by operating activities
$
73,035
$
49,952
$
53,770
$
3,624
Capital expenditures
(340
)
(2,601
)
(3,114
)
(5,778
)
Capitalized software development costs
(4,684
)
(3,256
)
(16,878
)
(12,662
)
Free cash flows (Non-GAAP)
$
68,011
$
44,095
$
33,778
$
(14,816
)
Net cash provided by (used in) investing activities
$
36,981
$
(36,642
)
$
279,881
$
(19,757
)
Net cash provided by financing activities
$
8,905
$
9,558
$
23,401
$
44,140
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230522005781/en/
Investor Contact Ingo Friedrichowitz New Relic, Inc.
IR@newrelic.com
Media Contact Kerry Baker New Relic, Inc
PR@newrelic.com
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