What To Expect From New Relic’s (NEWR) Q4 Earnings

Radek Strnad /
2022/05/11 7:53 am EDT
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Application performance management software company New Relic (NYSE:NEWR) will be reporting earnings tomorrow after the bell. Here's what investors should know.

Last quarter New Relic reported revenues of $203.5 million, up 22.3% year on year, beating analyst revenue expectations by 1.56%. It was a mixed quarter for the company, with a significant improvement in net revenue retention rate but a decline in gross margin. The company added 53 enterprise customers paying more than $100,000 annually to a total of 1,064.

Is New Relic buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting New Relic's revenue to grow 18.8% year on year to $205.1 million, improving on the 8.14% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted loss is expected to come in at -$0.20 per share.

New Relic Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 3.09%.

Looking at New Relic's peers in the software development segment, some of them have already reported Q4 earnings results, giving us a hint of what we can expect. Datadog delivered top-line growth of 82.8% year on year, beating analyst estimates by 7.46% and Akamai reported revenues up 7.23% year on year, missing analyst estimates by 0.13%. Datadog traded down 11.4% on the results, and Akamai was down 6.8%. Read our full analysis of Datadog's results here and Akamai's results here.

Tech stocks have been facing declining investor sentiment in 2022 and software stocks have been swept alongside with it, with share price down on average 24.4% over the last month. New Relic is down 23.8% during the same time, and is heading into the earnings with analyst price target of $108.9, compared to share price of $50.49.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.