Shares of software-monitoring company New Relic (NEWR -0.01%) were up on Friday after financial results for the first quarter of its fiscal 2023 surpassed expectations. New Relic stock finished the session up 10%.
At the end of its fiscal 2022, New Relic management guided for Q1 revenue of $214 million on the high end. Today management announced it generated Q1 revenue of $216 million. Not only did this beat guidance, it also represented a strong year-over-year growth rate of 20%.
New Relic's adjusted profitability was also better than expected. Its guidance was not in accordance with generally accepted accounting principles (GAAP). But it had guided for a non-GAAP loss from operations of $23 million to $25 million. Q1 was much better than this in reality, with a non-GAAP loss from operations of $17 million.
CEO Bill Staples was upbeat about performance in Q1 and says the company is on a path to achieve non-GAAP profitability in this fiscal year. And the market loves it.
One of the most encouraging takeaways from New Relic's Q1 results was its customer growth. Overall, its customer count was up from last quarter and up 7% year over year. Moreover, customers spending over $100,000 annually (which make up 83% of revenue) were up a whopping 18% from the prior-year period.
Winning these high-dollar customers at a time when some companies are cutting back spending is a good sign for New Relic. For this reason, I think the market was right to celebrate today.