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Why New Relic Stock Rose Today

By Timothy Green – May 15, 2020 at 2:27PM

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The cloud software company is growing despite the pandemic.

What happened

Shares of New Relic (NEWR 1.16%) jumped on Friday after the cloud software company reported its fiscal fourth-quarter results. New Relic beat analyst estimates across the board, and it provided guidance calling for double-digit growth in the first quarter. The stock was up about 11.4% at 2:30 p.m. EDT.

So what

New Relic reported fourth-quarter revenue of $159.7 million, up 21% year over year and about $6 million higher than the average analyst estimate. Annual recurring revenue reached $636 million at the end of the quarter, and the company recorded a dollar-based net expansion rate of 116%. The net expansion rate is down from 131% in the prior-year period, which could indicate that existing customers are pulling back.

A rising stock chart.

Image source: Getty Images.

Non-GAAP (adjusted) earnings per share came in at $0.14, up from $0.13 in the prior-year period and $0.11 higher than analysts were expecting. The company lost $0.47 per share on a GAAP basis, worse than a $0.30 per-share loss in the fourth quarter of last year.

Now what

New Relic sees a slow down in the first quarter, but revenue is still expected to grow. The company expects first-quarter revenue between $158 million and $160 million, up between 12% and 13% year over year. Annualized recurring revenue is expected to grow by 13% to 14% year over year, and expected non-GAAP EPS is between a loss of $0.01 and a profit of $0.04.

While growth will be more sluggish in the months ahead, investors found enough good news to push up the stock.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends New Relic. The Motley Fool has a disclosure policy.

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