What happened
Shares of software company New Relic (NEWR) frequently sell off when it reports financial results. But preliminary commentary for the upcoming third quarter of its fiscal 2021 sent the stock flying today. Along with its updated revenue guidance, the company also announced a change at the president and chief operating officer positions, much to the excitement of investors. New Relic stock gained 16% for the session.
So what
New Relic stock has languished as the rollout of New Relic One platform, its flagship product, failed to meet Wall Street's expectations. Revenue growth has been falling, but it's a little more complicated than that. The company changed from charging its customers for usage to charging them per user, creating an apples-to-oranges comparison of annual recurring revenue (ARR).
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Last quarter, New Relic management guided for Q3 ARR of between $661 million and $663 million, good for 9% year-over-year growth. In today's press release, the company said it expects ARR to be above that guidance -- a nice surprise. With today's gains, New Relic stock is still losing to the market over the past 52 weeks, but it entered positive territory.
Now what
According to today's press release, Bill Staples will take over for Michael Christenson as New Relic's president. Christenson will keep doing his job as COO for the rest of New Relic's fiscal year (roughly four more months) before turning COO responsibilities over to Staples as well. However, Christenson will stay a part of the company as a member of the board of directors.
Staples previously served as the chief product officer of New Relic, and New Relic One is his baby. Going forward, the company will count on both Staples and New Relic One to help it return to growth-stock territory.
New Relic is set to report Q3 earnings on Feb. 4.
