New Relic, Inc. revenue growth decelerated to 34.8% in FY2018 vs. 45.3% a year earliner
05/08/2018 • About New Relic, Inc. (
$NEWR) • By InTwits
New Relic, Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- New Relic, Inc. is a fast growth stock: FY2018 revenue growth was 34.8%, 5 year revenue CAGR was 64.3% at FY2018 ROIC -23.1%
- The company operates at negative EBITDA Margin: -6.6%
- New Relic, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 is 11.7%. Average EBITDA Margin for the same period was -20.0%
- New Relic, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 14.5%. At the same time it's in pair with industry average of 13.2%
- CAPEX is quite volatile: $25m in 2018, $30m in 2017, $7m in 2016, $5m in 2015, $6m in 2014
- The company has unprofitable business model: ROIC is -23.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 34.8%. Revenue growth showed small slowdown in FY18Q4 - it was 34.2% YoY. Revenue decline was accelerating on average at -18.6 pp per annum in the last 5 years. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.6 pp from 20.0% to 21.7% in 2018. EBITDA Margin followed a growing trend at 11.8 pp per annum in the last 5 years.
Gross Margin increased slightly on 1.3 pp from 81.0% to 82.3% in FY2018. During the last 5 years Gross Margin bottomed in FY2016 at 79.5% and was growing since that time. SG&A as a % of Revenue decreased on 6.6 pp from 81.1% to 74.6% in FY2018. SG&A as a % of Revenue stuck to a declining trend at -11.2 pp per annum in the last 5 years. Stock Based Compensation (SBC) as a % of Revenue decreased slightly on 0.69 pp from 12.1% to 11.4% in FY2018. During the last 5 years SBC as a % of Revenue topped in FY2016 at 12.8% and was declining since that time.
Net Income margin jumped on 10.4 pp from -23.2% to -12.8% in FY2018. Net Income margin followed a growing trend at 12.4 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
New Relic, Inc.'s CAPEX/Revenue was 7.4% in FY2018. New Relic, Inc. showed big decline in CAPEX/Revenue of 12.2 pp from 19.6% in FY2015 to 7.4% in FY2018. Average CAPEX/Revenue for the last three years was 9.1%. CAPEX as a % of Revenue stuck to a declining trend at -4.7 pp per annum in the last 5 years.
Accounts receivable as a % of Revenue increased on 4.5 pp from 23.5% to 28.0% in FY2018. Accounts payable as a % of Revenue decreased on 8.3 pp from 13.0% to 4.8% in FY2018.
Return on investment
The company operates at negative ROIC (-23.1%) and ROE (-22.6%). ROIC increased on 9.0 pp from -32.1% to -23.1% in FY2018. ROE increased on 9.6 pp from -32.1% to -22.6% in FY2018. ROIC followed a growing trend in FY2014-FY2018.
Leverage (Debt)
The company has no debt. Cash surged on 50.0%.
Management team
New Relic, Inc.'s CEO Lewis Cirne "Lew" is a founder and has spent 11 years with the company. CEO total compensation was
$3,163,466 in FY2018 which included
$315,000 salary. The company's CFO Mark Sachleben has spent 1 year with the company.
At the end of financial year the company had 12.2% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 1,284 employees. The number of employees jumped on 18.0%. Average revenue per employee in FY2018 was
$276,525 and it jumped on 14.2%.
Financial and operational results
FY ended 03/31/2018
New Relic, Inc. ($NEWR) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 63.2 | 110.4 | 181.3 | 263.5 | 355.1 | 34.8% |
| Gross Profit | 52.4 | 88.6 | 144.1 | 213.5 | 292.3 | 36.9% |
| SG&A | 75.3 | 114.5 | 165.4 | 213.8 | 264.8 | 23.9% |
| EBITDA | -34.9 | -40.9 | -52.5 | -42.5 | -23.6 | |
| EBIT | -39.4 | -49.9 | -67.6 | -61.3 | -46.8 | |
| Interest expence | | 0.1 | 0.1 | 0.1 | 0.1 | -1.1% |
| Tax | | -0.1 | 0.3 | 0.3 | 1.0 | 263.3% |
| Net Income | -40.2 | -50.1 | -67.5 | -61.1 | -45.3 | |
| Stock Based Compensation | 6.2 | 11.7 | 23.3 | 31.9 | 40.6 | 27.1% |
Balance Sheet
|
|---|
| Cash | 19.5 | 105.3 | 65.9 | 88.3 | 132.5 | 50.0% |
| Accounts Receivable | 5.5 | 13.8 | 32.5 | 62.0 | 99.5 | 60.4% |
| Accounts Payable | 4.1 | 5.0 | 4.5 | 6.5 | 3.0 | -54.2% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 16.2 | 21.6 | 18.5 | 25.5 | 26.2 | 3.0% |
| Acquisitions | | 2.3 | 5.5 | | | |
Ratios
|
|---|
| Revenue growth | 113.0% | 74.7% | 64.2% | 45.3% | 34.8% | |
| EBITDA growth | 70.4% | 17.1% | 28.5% | -19.0% | -44.6% | |
|
|---|
| Gross Margin | 82.9% | 80.3% | 79.5% | 81.0% | 82.3% | 1.3% |
| EBITDA Margin | -55.2% | -37.0% | -29.0% | -16.1% | -6.6% | 9.5% |
| EBIT Margin | -62.4% | -45.2% | -37.3% | -23.3% | -13.2% | 10.1% |
| SG&A, % of revenue | 119.2% | 103.7% | 91.2% | 81.1% | 74.6% | -6.6% |
| SBC, % of revenue | 9.8% | 10.6% | 12.8% | 12.1% | 11.4% | -0.7% |
| Net Income Margin | -63.7% | -45.4% | -37.2% | -23.2% | -12.8% | 10.4% |
| CAPEX, % of revenue | 25.7% | 19.6% | 10.2% | 9.7% | 7.4% | -2.3% |
|
|---|
| ROIC | -82.1% | -40.5% | -33.1% | -32.1% | -23.1% | 9.0% |
| ROE | | | -33.1% | -32.1% | -22.6% | 9.6% |
People
|
|---|
| Insider ownership | 12.2% | 12.2% | 12.2% | 12.2% | 12.2% | 0.0% |
| Employees | | 661 | 936 | 1,088 | 1,284 | 18.0% |
| Revenue/Employee, th. $ | | 167 | 194 | 242 | 277 | 14.2% |
New Relic, Inc. ($NEWR) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 80 | 85 | 92 | 98 | | 36.7% | 33.5% | 34.8% | 34.2% |
| EBITDA | -11 | -9 | -2 | -2 | | | | | |
| Net Income | -16 | -15 | -8 | -7 | | | | | |
Balance Sheet
|
|---|
| Cash | 105 | 111 | 125 | 132 | | 29.0% | 17.9% | 56.2% | 50.0% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 81.3% | 81.5% | 82.9% | 83.4% | | 1.2% | 0.0% | 1.5% | 2.4% |
| EBITDA Margin | -13.4% | -10.7% | -2.4% | -1.6% | | 10.2% | 5.1% | 11.0% | 11.5% |
| Net Income Margin | -19.9% | -17.3% | -8.4% | -7.1% | | 10.9% | 4.9% | 12.0% | 13.4% |
Peers in Application Software
Below you can find New Relic, Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (150 companies) | 27.9% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| New Relic, Inc. ($NEWR) | | 74.7% | 64.2% | 45.3% | 34.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (149 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.3% |
|---|
| New Relic, Inc. ($NEWR) | 82.9% | 80.3% | 79.5% | 81.0% | 82.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (151 companies) | -10.1% | -9.4% | -4.7% | -3.3% | -3.1% |
|---|
| New Relic, Inc. ($NEWR) | -55.2% | -37.0% | -29.0% | -16.1% | -6.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (152 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| New Relic, Inc. ($NEWR) | 25.7% | 19.6% | 10.2% | 9.7% | 7.4% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (178 companies) | -14.2% | -11.2% | -9.2% | -10.2% | -9.1% |
|---|
| New Relic, Inc. ($NEWR) | -82.1% | -40.5% | -33.1% | -32.1% | -23.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (70 companies) | -1.4x | -1.0x | -0.9x | -0.8x | -0.7x |
|---|
