Business Wire | Nov 5, 2020 04:06PM EST

New Relic Announces Second Quarter Fiscal Year 2021 Results

Nov. 05, 2020

SAN FRANCISCO--(BUSINESS WIRE)--Nov. 05, 2020--New Relic, Inc. (NYSE: NEWR), the observability platform company, today announced financial results for the second quarter of fiscal year 2021.

"In 2Q, we delivered a radically simplified version of the New Relic One observability platform to the market, and the early response from customers has been encouraging," said Lew Cirne, CEO and founder, New Relic. "At the low end of the market, we're seeing a whole new generation of individual developers adopt our free offering. And, at the high end of the market, companies of all sizes have been leveraging our offer of free and full entitlements to evaluate New Relic as their complete observability platform. While customer experimentation with the new product and pricing model slowed sales cycles in the quarter, on average, customers that are renewing on the new pricing model are growing their commitment to New Relic by double digits."

Second Quarter Fiscal Year 2021 Financial Highlights:

* Revenue of $166 million, compared to $146 million for the second quarter of fiscal 2020. * GAAP gross margin of 73% and non-GAAP gross margin of 75%. * GAAP loss from operations was $(42.9) million, compared to $(16.9) million for the second quarter of fiscal 2020. * Non-GAAP income (loss) from operations was $(5.3) million, compared to $11.2 million for the second quarter of fiscal 2020. * GAAP net loss attributable to New Relic per basic share was $(0.79), compared to a loss of $(0.32) per basic share for the second quarter of fiscal 2020. * Non-GAAP net income (loss) attributable to New Relic per diluted share was $(0.07), compared to $0.24 per diluted share for the second quarter of fiscal 2020. * Cash provided by operating activities was $12.9 million and free cash flow was $5.3 million for the second quarter of fiscal 2021. * Cash, cash equivalents and short-term investments were $840 million at the end of the second quarter of fiscal 2021, compared with $829 million at the end of the first quarter of fiscal 2021. * Remaining performance obligations were $602 million at the end of the second quarter of fiscal 2021, compared with $635 million at the end of the first quarter of fiscal 2021. This represents the aggregate unrecognized transaction price of remaining performance obligations as of each of September 30, 2020 and June 30, 2020.

Key Operating Metrics*:

Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21

Annual Recurring Revenue, or ARR (in $569 $591 $608 $642 $648 $649millions)

Dollar-Based Net Expansion Rate 109% 112% 109% 116% 100% 98%

Percentage of ARR from Paid Business 70% 71% 72% 75% 76% 77%Accounts > $100,000

Paid Business Accounts > $100,000 881 908 927 995 1,025 1,039

* In the fourth quarter of fiscal 2020, we adjusted the way we define ARR to include partner revenue and revenue from support subscriptions. This change results in immaterial differences in the presentation of some numbers in the chart above compared to our disclosures in historical filings. Please refer to our Annual Report on Form 10-K for the fiscal year ended March 31, 2020 for our definition of ARR and the differences between these disclosures.

Recent Business Highlights:

* Expanded Global Strategic Collaboration Agreement with AWS to Help Companies Accelerate Their Cloud Adoption Journey. * Rated highest in 2020 Gartner Peer Insights "Voice of the Customer": Application Performance Monitoring Suites. * Introduced "Observability for Good" Nonprofit Donation Program. * Partnered with Grafana Labs to Advance Open Instrumentation. * Appointed Anne DelSanto and David Henshall to the Board of Directors; Hope Cochran Named Chair of the Board. * Delivered Reimagined Observability Platform With Unified User Experience, and Simple, Predictable Pricing to Help Companies Create More Perfect Software.

Outlook:

* Third Quarter Fiscal 2021 Outlook: Revenue between $163 million and $165 million, representing year-over-year growth of approximately 7%. Non-GAAP loss from operations of between $(9.0) million and $(11.0) million. Non-GAAP net loss attributable to New Relic per diluted share between $(0.13) and $(0.17). ARR between $661 million and $663 million, representing year-over-year growth of approximately 9%, compared to $608 million as of December 31, 2019.

New Relic has not reconciled its expectations as to non-GAAP income (loss) from operations or non-GAAP net income (loss) per diluted share to their most directly comparable GAAP measures as a result of uncertainty regarding, and the potential variability of, reconciling items such as stock-based compensation expense, lawsuit litigation cost and other expense, employer payroll taxes on equity incentive plans and gain or loss from lease modification. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these factors could be material to New Relic's results computed in accordance with GAAP.

Conference Call and Investor Letter Details:

* What: New Relic financial results for the second quarter of fiscal year 2021 and outlook for the third quarter of fiscal 2021. * When: November 5, 2020 at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time) * Dial in: To access the call in the United States, please dial (866) 652-5200, and for international callers, please dial (412) 317-6060. Callers may provide confirmation number 10148780 to access the call more quickly, and are encouraged to dial into the call at least 15 minutes prior to the start to prevent any delay in joining. * Webcast: http://ir.newrelic.com (live and replay) * Investor Letter: Available at http://ir.newrelic.com * Replay: Following the completion of the call through 11:59 PM Eastern Time on November 12, 2020, a telephone replay will be available by dialing (877) 344-7529 from the United States or (412) 317-0088 internationally with conference ID 10148780.

About New Relic

The world's best engineering teams rely on New Relic to visualize, analyze and troubleshoot their software. New Relic One is the most powerful cloud-based observability platform built to help companies create more perfect software. Learn why customers trust New Relic for improved uptime and performance, greater scale and efficiency, and accelerated time to market at newrelic.com.

Forward-Looking Statements

This press release and the earnings call referencing this press release contain "forward-looking" statements, as that term is defined under the federal securities laws, including but not limited to statements regarding: New Relic's future financial performance, including its outlook on financial results for the third quarter of fiscal 2021, such as revenue, non-GAAP loss from operations, non-GAAP net loss attributable to New Relic per diluted share, ARR, gross margins, free cash flows; potential improvements in customer churn, dollar based net expansion rate and sales momentum; anticipated customer commitments to New Relic's new pricing model; and expectations that New Relic's simplified pricing and transition to a consumption-based pricing model will accelerate demand, make observability more affordable and broaden its prospective market opportunities. These forward-looking statements are based on New Relic's current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause New Relic's actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement.

The risks and uncertainties referred to above include, but are not limited to, New Relic's ability to determine optimal prices for its products and the potential challenges presented by New Relic's evolving pricing models; the effect of the COVID-19 pandemic on New Relic's business and on global economies and financial markets generally; New Relic's ability to generate sufficient revenue to achieve and sustain profitability, particularly in light of its significant ongoing expenses; New Relic's short operating history in an evolving industry; New Relic's ability to manage its significant recent growth; the dependence of New Relic's business on its customers remaining on its platform and increasing their spend with New Relic; New Relic's ability to develop enhancements to its products, increase adoption and usage of its products and introduce new products that achieve market acceptance; the dependence on customers expanding their use of New Relic's products beyond the current predominant use cases; New Relic's ability to expand its marketing and sales capabilities and increase sales of its solutions; privacy concerns, including changes in privacy laws and regulations, which could result in additional cost and liability to New Relic or inhibit sales; New Relic's ability to effectively compete in intensely competitive markets and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs, requirements or preferences; fluctuation of New Relic's quarterly results; New Relic's dependence on lead generation strategies to drive sales and revenue; interruptions or performance problems associated with New Relic's technology and infrastructure; New Relic's dependence on SaaS technologies and related services from third parties; defects or disruptions in New Relic's products; the expense and complexity of New Relic's ongoing and planned investments in data center hosting facilities and expenditures on cloud hosting providers; risks associated with international operations; New Relic's ability to protect its intellectual property rights; risks related to the acquisition and integration of businesses or technologies; risks related to sales to government entities and highly regulated organizations; certain risks associated with incurring indebtedness, including risks related to servicing New Relic's convertible senior notes and related capped call transactions; and other "Risk Factors" set forth in New Relic's most recent filings with the Securities and Exchange Commission (the "SEC").

Further information on these and other factors that could affect New Relic's financial results and the forward-looking statements in this press release and in the earnings call referencing this press release is included in the filings New Relic makes with the SEC from time to time, particularly under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," including our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and subsequent filings. Copies of these documents may be obtained by visiting New Relic's Investor Relations website at http://ir.newrelic.com or the SEC's website at www.sec.gov.

All information provided in this press release and in the earnings call is as of the date hereof and New Relic assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Non-GAAP Financial Measures

New Relic discloses the following non-GAAP financial measures in this press release and the earnings call referencing this press release: non-GAAP income (loss) from operations, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (sales and marketing, research and development, general and administrative), non-GAAP operating margin, non-GAAP net income (loss) attributable to New Relic, non-GAAP net income (loss) attributable to New Relic per diluted share, non-GAAP net income (loss) attributable to New Relic per basic share and free cash flow. New Relic uses each of these non-GAAP financial measures internally to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate New Relic's financial performance. In addition, New Relic's bonus plan for eligible employees and executives is based in part on non-GAAP income (loss) from operations. New Relic believes these non-GAAP financial measures are useful to investors, as a supplement to GAAP measures, in evaluating its operational performance, as further discussed below. New Relic's non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in its industry may calculate non-GAAP financial results differently, particularly related to non-recurring and unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on New Relic's reported financial results.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.

New Relic defines non-GAAP income (loss) from operations, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (sales and marketing, research and development, general and administrative), non-GAAP operating margin, non-GAAP net income (loss) attributable to New Relic, non-GAAP net income (loss) attributable to New Relic per diluted share and non-GAAP net income (loss) attributable to New Relic per basic share as the respective GAAP balances, adjusted for, as applicable: (1) stock-based compensation expense, (2) lease exit costs and accelerated depreciation, (3) amortization of stock-based compensation capitalized in software development costs, (4) the amortization of purchased intangibles, (5) employer payroll tax expense on equity incentive plans, (6) amortization of debt discount and issuance costs, and in certain periods (7) the transaction costs related to acquisitions, (8) lawsuit litigation cost and other expense and (9) gain or loss from lease modification. Non-GAAP net income (loss) per basic and diluted share is calculated as non-GAAP net income (loss) attributable to New Relic divided by weighted-average shares used to compute net income (loss) attributable to New Relic per share, basic and diluted, with the number of weighted-average shares decreased to reflect the anti-dilutive impact of the capped call transactions entered into in connection with the 0.50% Convertible Senior Notes due 2023 issued in May 2018. New Relic defines free cash flow as GAAP cash from operations, minus capital expenditures and minus capitalized software. Investors are encouraged to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.

Management believes these non-GAAP financial measures are useful to investors and others in assessing New Relic's operating performance due to the following factors:

Stock-based compensation expense and amortization of stock-based compensation capitalized in software development costs. New Relic utilizes share-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of its stockholders and at long-term retention, rather than to address operational performance for any particular period. As a result, share-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period.

Lease exit costs and accelerated depreciation. In fiscal year 2020, New Relic entered into an agreement to exit the lease of its 123 Mission premises in San Francisco, California. In connection with this agreement and subsequent relocation, New Relic accelerated depreciation and other expenses associated with the remaining lease term. New Relic believes it is useful to exclude this depreciation and these other expenses because it does not consider such amounts to be part of the ongoing operation of its business.

Amortization of purchased intangibles and transaction costs related to acquisitions. New Relic views amortization of purchased intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of purchased intangibles is an expense that is not typically affected by operations during any particular period. Similarly, New Relic views acquisition-related expenses as events that are not necessarily reflective of operational performance during a period.

Lawsuit litigation cost and other expense. New Relic may from time to time incur charges or benefits related to litigation that are outside of the ordinary course of New Relic's business. New Relic believes it is useful to exclude such charges or benefits because it does not consider such amounts to be part of the ongoing operation of New Relic's business and because of the singular nature of the claims underlying the matter.

Employer payroll tax expense on equity incentive plans. New Relic excludes employer payroll tax expense on equity incentive plans as these expenses are tied to the exercise or vesting of underlying equity awards and the price of New Relic's common stock at the time of vesting or exercise. As a result, these taxes may vary in any particular period independent of the financial and operating performance of New Relic's business.

Amortization of debt discount and issuance costs. In May 2018, New Relic issued $500.25 million of convertible senior notes due in 2023, which bear interest at an annual fixed rate of 0.50%. The effective interest rate of the convertible senior notes was approximately 5.74%. This is a result of the debt discount recorded for the conversion feature that is required to be separately accounted for as equity, and debt issuance costs, which reduce the carrying value of the convertible debt instrument. The debt discount is amortized as interest expense together with the issuance costs of the debt. The expense for the amortization of debt discount and debt issuance costs is a non-cash item, and we believe the exclusion of this interest expense will provide for a more useful comparison of our operational performance in different periods.

Gain or loss from lease modification. New Relic may incur a gain or loss from modification related to lease agreements. New Relic believes it is useful to exclude such charges or benefits because it does not consider such amounts to be part of the ongoing operation of New Relic's business and because of the singular nature of benefit or charge from such events.

Anti-dilutive impact of capped call transactions. In connection with the issuance of its convertible senior notes due in 2023, New Relic entered into capped call transactions to offset potential dilution from the embedded conversion feature in the notes. Although New Relic cannot reflect the anti-dilutive impact of the capped call transactions under GAAP, New Relic does reflect the anti-dilutive impact of the capped call transactions in non-GAAP net income (loss) attributable to New Relic per share, basic and diluted, to provide investors with useful information in evaluating the financial performance of the company on a per share basis.

Additionally, New Relic's management believes that the non-GAAP financial measure free cash flow is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures and the capitalization of software development costs due to the fact that these expenditures are considered to be a necessary component of ongoing operations.

Operating Metrics

New Relic defines the number of paid business accounts at the end of any particular period as the number of accounts at the end of the period as identified by a unique account identifier for which New Relic has recognized revenue on the last day of the period indicated. A single organization or customer may have multiple paid business accounts for separate divisions, segments, or subsidiaries.

New Relic's monthly recurring revenue represents the revenue that New Relic would contractually expect to receive from those customers over the following month, including partner revenue or revenue from support subscriptions, without any increase or reduction in any of their subscriptions.

Similarly, annual recurring revenue ("ARR") represents the revenue New Relic would contractually expect to receive from those customers over the following 12-month period, including partner revenue or revenue from support subscriptions, without any increase or reduction in any of their contractual commitments. The net change New Relic reports in ARR reflects any increase in ARR from existing customers and new customers, which is referred to as "new ARR," as well as any reduction in ARR from customers who reduced their spend or terminated their relationship with New Relic, which is referred to as "lost ARR."

For contracts entered into under the new pricing model announced on July 30, 2020, New Relic only recognizes as ARR the committed contractual amount for customers under the Annual Pool of Funds model; therefore, the definition of ARR would not include contracts under the Pay as You Go model. Meanwhile, ARR for contracts under Annual Pool of Funds is calculated as the original dollar commitment for the annual contract period, plus any incremental additional dollar commitments added during the term of the period. ARR is measured without reference or adjustments for historic data usage, and therefore excludes assumptions related to overage spend or expected or received overages above committed amounts.

New Relic's dollar-based net expansion rate compares its recurring subscription revenue from customers from one period to the next. It is increased when customers increase their use of New Relic's products or use additional products. New Relic's dollar-based net expansion rate is reduced when customers decrease their use of New Relic's products or use fewer products.

New Relic is a registered trademark of New Relic, Inc.

All product and company names herein may be trademarks of their registered owners.

* In the fourth quarter of fiscal 2020, we adjusted the way we define ARR toinclude partner revenue and revenue from support subscriptions. This changeresults in immaterial differences in the presentation of some numbers in thechart above compared to our disclosures in historical filings. Please refer toour Annual Report on Form 10-K for the fiscal year ended March 31, 2020 for ourdefinition of ARR and the differences between these disclosures.

Recent Business Highlights:

* Expanded Global Strategic Collaboration Agreement with AWS to Help Companies Accelerate Their Cloud Adoption Journey. * Rated highest in 2020 Gartner Peer Insights "Voice of the Customer": Application Performance Monitoring Suites. * Introduced "Observability for Good" Nonprofit Donation Program. * Partnered with Grafana Labs to Advance Open Instrumentation. * Appointed Anne DelSanto and David Henshall to the Board of Directors; Hope Cochran Named Chair of the Board. * Delivered Reimagined Observability Platform With Unified User Experience, and Simple, Predictable Pricing to Help Companies Create More Perfect Software.

Outlook:

* Third Quarter Fiscal 2021 Outlook: Revenue between $163 million and $165 million, representing year-over-year growth of approximately 7%. Non-GAAP loss from operations of between $(9.0) million and $(11.0) million. Non-GAAP net loss attributable to New Relic per diluted share between $(0.13) and $(0.17). ARR between $661 million and $663 million, representing year-over-year growth of approximately 9%, compared to $608 million as of December 31, 2019.

New Relic has not reconciled its expectations as to non-GAAP income (loss) from operations or non-GAAP net income (loss) per diluted share to their most directly comparable GAAP measures as a result of uncertainty regarding, and the potential variability of, reconciling items such as stock-based compensation expense, lawsuit litigation cost and other expense, employer payroll taxes on equity incentive plans and gain or loss from lease modification. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these factors could be material to New Relic's results computed in accordance with GAAP.

Conference Call and Investor Letter Details:

* What: New Relic financial results for the second quarter of fiscal year 2021 and outlook for the third quarter of fiscal 2021. * When: November 5, 2020 at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time) * Dial in: To access the call in the United States, please dial (866) 652-5200, and for international callers, please dial (412) 317-6060. Callers may provide confirmation number 10148780 to access the call more quickly, and are encouraged to dial into the call at least 15 minutes prior to the start to prevent any delay in joining. * Webcast: http://ir.newrelic.com (live and replay) * Investor Letter: Available at http://ir.newrelic.com * Replay: Following the completion of the call through 11:59 PM Eastern Time on November 12, 2020, a telephone replay will be available by dialing (877) 344-7529 from the United States or (412) 317-0088 internationally with conference ID 10148780.

About New Relic

The world's best engineering teams rely on New Relic to visualize, analyze and troubleshoot their software. New Relic One is the most powerful cloud-based observability platform built to help companies create more perfect software. Learn why customers trust New Relic for improved uptime and performance, greater scale and efficiency, and accelerated time to market at newrelic.com.

Forward-Looking Statements

This press release and the earnings call referencing this press release contain "forward-looking" statements, as that term is defined under the federal securities laws, including but not limited to statements regarding: New Relic's future financial performance, including its outlook on financial results for the third quarter of fiscal 2021, such as revenue, non-GAAP loss from operations, non-GAAP net loss attributable to New Relic per diluted share, ARR, gross margins, free cash flows; potential improvements in customer churn, dollar based net expansion rate and sales momentum; anticipated customer commitments to New Relic's new pricing model; and expectations that New Relic's simplified pricing and transition to a consumption-based pricing model will accelerate demand, make observability more affordable and broaden its prospective market opportunities. These forward-looking statements are based on New Relic's current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause New Relic's actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement.

The risks and uncertainties referred to above include, but are not limited to, New Relic's ability to determine optimal prices for its products and the potential challenges presented by New Relic's evolving pricing models; the effect of the COVID-19 pandemic on New Relic's business and on global economies and financial markets generally; New Relic's ability to generate sufficient revenue to achieve and sustain profitability, particularly in light of its significant ongoing expenses; New Relic's short operating history in an evolving industry; New Relic's ability to manage its significant recent growth; the dependence of New Relic's business on its customers remaining on its platform and increasing their spend with New Relic; New Relic's ability to develop enhancements to its products, increase adoption and usage of its products and introduce new products that achieve market acceptance; the dependence on customers expanding their use of New Relic's products beyond the current predominant use cases; New Relic's ability to expand its marketing and sales capabilities and increase sales of its solutions; privacy concerns, including changes in privacy laws and regulations, which could result in additional cost and liability to New Relic or inhibit sales; New Relic's ability to effectively compete in intensely competitive markets and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs, requirements or preferences; fluctuation of New Relic's quarterly results; New Relic's dependence on lead generation strategies to drive sales and revenue; interruptions or performance problems associated with New Relic's technology and infrastructure; New Relic's dependence on SaaS technologies and related services from third parties; defects or disruptions in New Relic's products; the expense and complexity of New Relic's ongoing and planned investments in data center hosting facilities and expenditures on cloud hosting providers; risks associated with international operations; New Relic's ability to protect its intellectual property rights; risks related to the acquisition and integration of businesses or technologies; risks related to sales to government entities and highly regulated organizations; certain risks associated with incurring indebtedness, including risks related to servicing New Relic's convertible senior notes and related capped call transactions; and other "Risk Factors" set forth in New Relic's most recent filings with the Securities and Exchange Commission (the "SEC").

Further information on these and other factors that could affect New Relic's financial results and the forward-looking statements in this press release and in the earnings call referencing this press release is included in the filings New Relic makes with the SEC from time to time, particularly under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," including our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and subsequent filings. Copies of these documents may be obtained by visiting New Relic's Investor Relations website at http://ir.newrelic.com or the SEC's website at www.sec.gov.

All information provided in this press release and in the earnings call is as of the date hereof and New Relic assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Non-GAAP Financial Measures

New Relic discloses the following non-GAAP financial measures in this press release and the earnings call referencing this press release: non-GAAP income (loss) from operations, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (sales and marketing, research and development, general and administrative), non-GAAP operating margin, non-GAAP net income (loss) attributable to New Relic, non-GAAP net income (loss) attributable to New Relic per diluted share, non-GAAP net income (loss) attributable to New Relic per basic share and free cash flow. New Relic uses each of these non-GAAP financial measures internally to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate New Relic's financial performance. In addition, New Relic's bonus plan for eligible employees and executives is based in part on non-GAAP income (loss) from operations. New Relic believes these non-GAAP financial measures are useful to investors, as a supplement to GAAP measures, in evaluating its operational performance, as further discussed below. New Relic's non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in its industry may calculate non-GAAP financial results differently, particularly related to non-recurring and unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on New Relic's reported financial results.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.

New Relic defines non-GAAP income (loss) from operations, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses (sales and marketing, research and development, general and administrative), non-GAAP operating margin, non-GAAP net income (loss) attributable to New Relic, non-GAAP net income (loss) attributable to New Relic per diluted share and non-GAAP net income (loss) attributable to New Relic per basic share as the respective GAAP balances, adjusted for, as applicable: (1) stock-based compensation expense, (2) lease exit costs and accelerated depreciation, (3) amortization of stock-based compensation capitalized in software development costs, (4) the amortization of purchased intangibles, (5) employer payroll tax expense on equity incentive plans, (6) amortization of debt discount and issuance costs, and in certain periods (7) the transaction costs related to acquisitions, (8) lawsuit litigation cost and other expense and (9) gain or loss from lease modification. Non-GAAP net income (loss) per basic and diluted share is calculated as non-GAAP net income (loss) attributable to New Relic divided by weighted-average shares used to compute net income (loss) attributable to New Relic per share, basic and diluted, with the number of weighted-average shares decreased to reflect the anti-dilutive impact of the capped call transactions entered into in connection with the 0.50% Convertible Senior Notes due 2023 issued in May 2018. New Relic defines free cash flow as GAAP cash from operations, minus capital expenditures and minus capitalized software. Investors are encouraged to review the reconciliation of these historical non-GAAP financial measures to their most directly comparable GAAP financial measures.

Management believes these non-GAAP financial measures are useful to investors and others in assessing New Relic's operating performance due to the following factors:

Stock-based compensation expense and amortization of stock-based compensation capitalized in software development costs. New Relic utilizes share-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of its stockholders and at long-term retention, rather than to address operational performance for any particular period. As a result, share-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period.

Lease exit costs and accelerated depreciation. In fiscal year 2020, New Relic entered into an agreement to exit the lease of its 123 Mission premises in San Francisco, California. In connection with this agreement and subsequent relocation, New Relic accelerated depreciation and other expenses associated with the remaining lease term. New Relic believes it is useful to exclude this depreciation and these other expenses because it does not consider such amounts to be part of the ongoing operation of its business.

Amortization of purchased intangibles and transaction costs related to acquisitions. New Relic views amortization of purchased intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of purchased intangibles is an expense that is not typically affected by operations during any particular period. Similarly, New Relic views acquisition-related expenses as events that are not necessarily reflective of operational performance during a period.

Lawsuit litigation cost and other expense. New Relic may from time to time incur charges or benefits related to litigation that are outside of the ordinary course of New Relic's business. New Relic believes it is useful to exclude such charges or benefits because it does not consider such amounts to be part of the ongoing operation of New Relic's business and because of the singular nature of the claims underlying the matter.

Employer payroll tax expense on equity incentive plans. New Relic excludes employer payroll tax expense on equity incentive plans as these expenses are tied to the exercise or vesting of underlying equity awards and the price of New Relic's common stock at the time of vesting or exercise. As a result, these taxes may vary in any particular period independent of the financial and operating performance of New Relic's business.

Amortization of debt discount and issuance costs. In May 2018, New Relic issued $500.25 million of convertible senior notes due in 2023, which bear interest at an annual fixed rate of 0.50%. The effective interest rate of the convertible senior notes was approximately 5.74%. This is a result of the debt discount recorded for the conversion feature that is required to be separately accounted for as equity, and debt issuance costs, which reduce the carrying value of the convertible debt instrument. The debt discount is amortized as interest expense together with the issuance costs of the debt. The expense for the amortization of debt discount and debt issuance costs is a non-cash item, and we believe the exclusion of this interest expense will provide for a more useful comparison of our operational performance in different periods.

Gain or loss from lease modification. New Relic may incur a gain or loss from modification related to lease agreements. New Relic believes it is useful to exclude such charges or benefits because it does not consider such amounts to be part of the ongoing operation of New Relic's business and because of the singular nature of benefit or charge from such events.

Anti-dilutive impact of capped call transactions. In connection with the issuance of its convertible senior notes due in 2023, New Relic entered into capped call transactions to offset potential dilution from the embedded conversion feature in the notes. Although New Relic cannot reflect the anti-dilutive impact of the capped call transactions under GAAP, New Relic does reflect the anti-dilutive impact of the capped call transactions in non-GAAP net income (loss) attributable to New Relic per share, basic and diluted, to provide investors with useful information in evaluating the financial performance of the company on a per share basis.

Additionally, New Relic's management believes that the non-GAAP financial measure free cash flow is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures and the capitalization of software development costs due to the fact that these expenditures are considered to be a necessary component of ongoing operations.

Operating Metrics

New Relic defines the number of paid business accounts at the end of any particular period as the number of accounts at the end of the period as identified by a unique account identifier for which New Relic has recognized revenue on the last day of the period indicated. A single organization or customer may have multiple paid business accounts for separate divisions, segments, or subsidiaries.

New Relic's monthly recurring revenue represents the revenue that New Relic would contractually expect to receive from those customers over the following month, including partner revenue or revenue from support subscriptions, without any increase or reduction in any of their subscriptions.

Similarly, annual recurring revenue ("ARR") represents the revenue New Relic would contractually expect to receive from those customers over the following 12-month period, including partner revenue or revenue from support subscriptions, without any increase or reduction in any of their contractual commitments. The net change New Relic reports in ARR reflects any increase in ARR from existing customers and new customers, which is referred to as "new ARR," as well as any reduction in ARR from customers who reduced their spend or terminated their relationship with New Relic, which is referred to as "lost ARR."

For contracts entered into under the new pricing model announced on July 30, 2020, New Relic only recognizes as ARR the committed contractual amount for customers under the Annual Pool of Funds model; therefore, the definition of ARR would not include contracts under the Pay as You Go model. Meanwhile, ARR for contracts under Annual Pool of Funds is calculated as the original dollar commitment for the annual contract period, plus any incremental additional dollar commitments added during the term of the period. ARR is measured without reference or adjustments for historic data usage, and therefore excludes assumptions related to overage spend or expected or received overages above committed amounts.

New Relic's dollar-based net expansion rate compares its recurring subscription revenue from customers from one period to the next. It is increased when customers increase their use of New Relic's products or use additional products. New Relic's dollar-based net expansion rate is reduced when customers decrease their use of New Relic's products or use fewer products.

New Relic is a registered trademark of New Relic, Inc.

All product and company names herein may be trademarks of their registered owners.

Condensed Consolidated Statements of Operations(In thousands, except per share data; unaudited) Three Months Ended Six Months Ended September 30, September 30,

2020 2019 2020 2019

Revenue $ 166,054 $ 145,815 $ 328,639 $ 286,825

Cost of revenue 45,198 25,149 78,471 48,762

Gross profit 120,856 120,666 250,168 238,063

Operating expenses:Research and development 44,628 34,132 85,472 68,471

Sales and marketing 89,378 80,157 174,514 157,007

General and administrative 29,798 23,278 59,232 46,378

Total operating expenses 163,804 137,567 319,218 271,856

Loss from operations (42,948) (16,901) (69,050) (33,793)

Other income (expense):Interest income 2,220 4,011 5,001 8,151

Interest expense (6,216) (5,888) (12,320) (11,707)

Other income (expense), net (604) 315 (999) 3,293

Loss before income taxes (47,548) (18,463) (77,368) (34,056)

Income tax provision 380 660 712 624

Net loss $ (47,928) $ (19,123) $ (78,080) $ (34,680)

Net loss attributable to 377 509 773 897redeemable non-controllinginterestNet loss attributable to New $ (47,551) $ (18,614) $ (77,307) $ (33,783)RelicNet loss attributable to New $ (0.79) $ (0.32) $ (1.28) $ (0.58)Relic per share, basic anddilutedWeighted-average shares used to 60,545 58,372 60,237 58,161compute net loss per share,basic and dilutedCondensed Consolidated Balance Sheets(In thousands, except par value; unaudited)September 30, 2020

March 31, 2020

AssetsCurrent assets:Cash and cash equivalents$

276,843

$

292,523

Short-term investments562,939

512,574

Accounts receivable, net of allowances of $2,709 and $3,636, respectively101,381

147,361

Prepaid expenses and other current assets14,202

15,979

Deferred contract acquisition costs33,319

32,016

Total current assets988,684

1,000,453

Property and equipment, net98,718

100,294

Restricted cash5,642

5,641

Goodwill45,112

45,112

Intangible assets, net11,139

13,691

Deferred contract acquisition costs, non-current28,016

28,141

Lease right-of-use assets58,769

57,777

Other assets, non-current7,397

7,325

Total assets$

1,243,477

$

1,258,434

Liabilities, redeemable non-controlling interest and stockholders' equityCurrent liabilities:Accounts payable$

26,132

$

12,565

Accrued compensation and benefits24,255

29,054

Other current liabilities14,059

13,120

Deferred revenue273,610

313,161

Lease liabilities5,858

8,682

Total current liabilities343,914

376,582

Convertible senior notes, net438,054

427,044

Lease liabilities, non-current61,226

57,394

Deferred revenue, non-current1,988

3,166

Other liabilities, non-current10,004

1,940

Total liabilities855,186

866,126

Redeemable non-controlling interest896

1,669

Stockholders' equity:Common stock, $0.001 par value61

60

Treasury stock - at cost (260 shares)(263)

(263)

Additional paid-in capital857,011

780,479

Accumulated other comprehensive income2,399

4,869

Accumulated deficit(471,813)

(394,506)

Total stockholders' equity387,395

390,639

Total liabilities, redeemable non-controlling interest, and stockholders' equity$

1,243,477

$

1,258,434

Condensed Consolidated Balance Sheets(In thousands, except par value; unaudited) September March 31, 30, 2020 2020

AssetsCurrent assets:Cash and cash equivalents $ 276,843 $ 292,523

Short-term investments 562,939 512,574

Accounts receivable, net of allowances of $2,709 and 101,381 147,361$3,636, respectivelyPrepaid expenses and other current assets 14,202 15,979

Deferred contract acquisition costs 33,319 32,016

Total current assets 988,684 1,000,453

Property and equipment, net 98,718 100,294

Restricted cash 5,642 5,641

Goodwill 45,112 45,112

Intangible assets, net 11,139 13,691

Deferred contract acquisition costs, non-current 28,016 28,141

Lease right-of-use assets 58,769 57,777

Other assets, non-current 7,397 7,325

Total assets $ 1,243,477 $ 1,258,434

Liabilities, redeemable non-controlling interest andstockholders' equityCurrent liabilities:Accounts payable $ 26,132 $ 12,565

Accrued compensation and benefits 24,255 29,054

Other current liabilities 14,059 13,120

Deferred revenue 273,610 313,161

Lease liabilities 5,858 8,682

Total current liabilities 343,914 376,582

Convertible senior notes, net 438,054 427,044

Lease liabilities, non-current 61,226 57,394

Deferred revenue, non-current 1,988 3,166

Other liabilities, non-current 10,004 1,940

Total liabilities 855,186 866,126

Redeemable non-controlling interest 896 1,669

Stockholders' equity:Common stock, $0.001 par value 61 60

Treasury stock - at cost (260 shares) (263) (263)

Additional paid-in capital 857,011 780,479

Accumulated other comprehensive income 2,399 4,869

Accumulated deficit (471,813) (394,506)

Total stockholders' equity 387,395 390,639

Total liabilities, redeemable non-controlling $ 1,243,477 $ 1,258,434interest, and stockholders' equityCondensed Consolidated Statements of Cash Flows(In thousands; unaudited)Six Months Ended September 30,

2020

2019

Cash flows from operating activities:Net loss attributable to New Relic$

(77,307)

$

(33,783)

Net loss attributable to redeemable non-controlling interest$

(773)

$

(897)

Net loss:$

(78,080)

$

(34,680)

Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization43,404

37,268

Stock-based compensation expense66,575

44,546

Amortization of debt discount and issuance costs11,010

10,404

Gain on lease modification-

(3,006)

Other2,354

(1,465)

Changes in operating assets and liabilities:Accounts receivable, net45,980

43,651

Prepaid expenses and other assets473

368

Deferred contract acquisition costs(19,662)

(18,038)

Lease right-of-use assets(1,086)

17,512

Accounts payable14,870

3,208

Accrued compensation and benefits and other liabilities1,941

275

Lease liabilities1,008

(16,157)

Deferred revenue(40,729)

(38,382)

Net cash provided by operating activities48,058

45,504

Cash flows from investing activities:Purchases of property and equipment(12,641)

(31,570)

Purchases of short-term investments(227,347)

(263,321)

Proceeds from sale and maturity of short-term investments173,950

247,379

Capitalized software development costs(6,843)

(3,053)

Net cash used in investing activities(72,881)

(50,565)

Cash flows from financing activities:Investment from redeemable non-controlling interest-

978

Proceeds from employee stock purchase plan6,494

5,933

Proceeds from exercise of employee stock options2,650

3,054

Net cash provided by financing activities9,144

9,965

Net increase (decrease) in cash, cash equivalents and restricted cash(15,679)

4,904

Cash, cash equivalents and restricted cash at beginning of period298,164

243,161

Cash, cash equivalents and restricted cash at end of period$

282,485

$

248,065

Condensed Consolidated Statements of Cash Flows(In thousands; unaudited) Six Months Ended September 30,

2020 2019

Cash flows from operating activities:Net loss attributable to New Relic $ (77,307) $ (33,783)

Net loss attributable to redeemable non-controlling $ (773) $ (897)interestNet loss: $ (78,080) $ (34,680)

Adjustments to reconcile net loss to net cash providedby operating activities:Depreciation and amortization 43,404 37,268

Stock-based compensation expense 66,575 44,546

Amortization of debt discount and issuance costs 11,010 10,404

Gain on lease modification - (3,006)

Other 2,354 (1,465)

Changes in operating assets and liabilities:Accounts receivable, net 45,980 43,651

Prepaid expenses and other assets 473 368

Deferred contract acquisition costs (19,662) (18,038)

Lease right-of-use assets (1,086) 17,512

Accounts payable 14,870 3,208

Accrued compensation and benefits and other 1,941 275liabilitiesLease liabilities 1,008 (16,157)

Deferred revenue (40,729) (38,382)

Net cash provided by operating activities 48,058 45,504

Cash flows from investing activities:Purchases of property and equipment (12,641) (31,570)

Purchases of short-term investments (227,347) (263,321)

Proceeds from sale and maturity of short-term 173,950 247,379investmentsCapitalized software development costs (6,843) (3,053)

Net cash used in investing activities (72,881) (50,565)

Cash flows from financing activities:Investment from redeemable non-controlling interest - 978

Proceeds from employee stock purchase plan 6,494 5,933

Proceeds from exercise of employee stock options 2,650 3,054

Net cash provided by financing activities 9,144 9,965

Net increase (decrease) in cash, cash equivalents and (15,679) 4,904restricted cashCash, cash equivalents and restricted cash at 298,164 243,161beginning of periodCash, cash equivalents and restricted cash at end of $ 282,485 $ 248,065periodReconciliation from GAAP to Non-GAAP Results(In thousands, except per share data; unaudited)Three Months Ended September 30,

Six Months Ended September 30,

2020

2019

2020

2019

Reconciliation of gross profit and gross margin:GAAP gross profit$

120,856

$

120,666

$

250,168

$

238,063

Plus: Stock-based compensation expense1,622

1,300

3,124

2,522

Plus: Lease exit costs and accelerated depreciation expense-

73

-

73

Plus: Amortization of purchased intangibles1,276

440

2,552

880

Plus: Amortization of stock-based compensation capitalized in software development costs265

227

504

434

Plus: Employer payroll tax on employee equity incentive plans50

49

141

153

Non-GAAP gross profit$

124,069

$

122,755

$

256,489

$

242,125

GAAP gross margin73%

83%

76%

83%

Non-GAAP adjustments2%

1%

2%

1%

Non-GAAP gross margin75%

84%

78%

84%

Reconciliation of operating expenses:GAAP research and development$

44,628

$

34,132

$

85,472

$

68,471

Less: Stock-based compensation expense(10,450)

(7,434)

(19,254)

(14,462)

Less: Lease exit costs and accelerated depreciation expense-

(326)

-

(326)

Less: Employer payroll tax on employee equity incentive plans(210)

(153)

(559)

(521)

Non-GAAP research and development$

33,968

$

26,219

$

65,659

$

53,162

GAAP sales and marketing$

89,378

$

80,157

$

174,514

$

157,007

Less: Stock-based compensation expense(14,537)

(10,533)

(27,845)

(19,592)

Less: Lease exit costs and accelerated depreciation expense-

(2,240)

-

(2,240)

Less: Employer payroll tax on employee equity incentive plans(157)

(123)

(516)

(438)

Non-GAAP sales and marketing$

74,684

$

67,261

$

146,153

$

134,737

GAAP general and administrative$

29,798

$

23,278

$

59,232

$

46,378

Less: Stock-based compensation expense(8,758)

(4,091)

(16,352)

(7,970)

Less: Lease exit costs and accelerated depreciation expense-

(1,002)

-

(1,002)

Less: Lawsuit litigation cost and other expense(37)

-

(37)

(1,521)

Less: Employer payroll tax on employee equity incentive plans(294)

(61)

(443)

(192)

Non-GAAP general and administrative$

20,709

$

18,124

$

42,400

$

35,693

Reconciliation of income (loss) from operations and operating margin:GAAP loss from operations$

(42,948)

$

(16,901)

$

(69,050)

$

(33,793)

Plus: Stock-based compensation expense35,367

23,358

66,575

44,546

Plus: Lease exit costs and accelerated depreciation expense-

3,641

-

3,641

Plus: Amortization of purchased intangibles1,276

440

2,552

880

Plus: Amortization of stock-based compensation capitalized in software development costs265

227

504

434

Plus: Lawsuit litigation cost and other expense37

-

37

1,521

Plus: Employer payroll tax on employee equity incentive plans711

386

1,659

1,304

Non-GAAP income (loss) from operations$

(5,292)

$

11,151

$

2,277

$

18,533

GAAP operating margin(26)%

(12)%

(21)%

(12)%

Non-GAAP adjustments23 %

20 %

22 %

18 %

Non-GAAP operating margin(3)%

8 %

1 %

6 %

Reconciliation of net income (loss):GAAP net loss attributable to New Relic$

(47,551)

$

(18,614)

$

(77,307)

$

(33,783)

Plus: Stock-based compensation expense35,367

23,358

66,575

44,546

Plus: Lease exit costs and accelerated depreciation expense-

3,641

-

3,641

Plus: Amortization of purchased intangibles1,276

440

2,552

880

Plus: Amortization of stock-based compensation capitalized in software development costs265

227

504

434

Plus: Lawsuit litigation cost and other expense37

-

37

1,521

Plus: Employer payroll tax on employee equity incentive plans711

386

1,659

1,304

Plus: Amortization of debt discount and issuance costs5,544

5,239

11,010

10,404

Less: Gain on lease modification-

-

-

(3,006)

Non-GAAP net income (loss) attributable to New Relic$

(4,351)

$

14,677

$

5,030

$

25,941

Non-GAAP net income (loss) attributable to New Relic per share:Basic$

(0.07)

$

0.25

$

0.08

$

0.45

Diluted$

(0.07)

$

0.24

$

0.08

$

0.43

Shares used in non-GAAP per share calculations:Basic60,545

58,372

60,237

58,161

Diluted60,545

60,174

61,567

60,246

Reconciliation from GAAP to Non-GAAP Results(In thousands, except per share data; unaudited) Three Months Ended Six Months Ended September 30, September 30,

2020 2019 2020 2019

Reconciliation of gross profitand gross margin:GAAP gross profit $ 120,856 $ 120,666 $ 250,168 $ 238,063

Plus: Stock-based compensation 1,622 1,300 3,124 2,522expensePlus: Lease exit costs and - 73 - 73accelerated depreciation expensePlus: Amortization of purchased 1,276 440 2,552 880intangiblesPlus: Amortization ofstock-based compensation 265 227 504 434capitalized in softwaredevelopment costsPlus: Employer payroll tax on 50 49 141 153employee equity incentive plansNon-GAAP gross profit $ 124,069 $ 122,755 $ 256,489 $ 242,125

GAAP gross margin 73% 83% 76% 83%

Non-GAAP adjustments 2% 1% 2% 1%

Non-GAAP gross margin 75% 84% 78% 84%

Reconciliation of operatingexpenses:GAAP research and development $ 44,628 $ 34,132 $ 85,472 $ 68,471

Less: Stock-based compensation (10,450) (7,434) (19,254) (14,462)expenseLess: Lease exit costs and - (326) - (326)accelerated depreciation expenseLess: Employer payroll tax on (210) (153) (559) (521)employee equity incentive plansNon-GAAP research and $ 33,968 $ 26,219 $ 65,659 $ 53,162developmentGAAP sales and marketing $ 89,378 $ 80,157 $ 174,514 $ 157,007

Less: Stock-based compensation (14,537) (10,533) (27,845) (19,592)expenseLess: Lease exit costs and - (2,240) - (2,240)accelerated depreciation expenseLess: Employer payroll tax on (157) (123) (516) (438)employee equity incentive plansNon-GAAP sales and marketing $ 74,684 $ 67,261 $ 146,153 $ 134,737

GAAP general and administrative $ 29,798 $ 23,278 $ 59,232 $ 46,378

Less: Stock-based compensation (8,758) (4,091) (16,352) (7,970)expenseLess: Lease exit costs and - (1,002) - (1,002)accelerated depreciation expenseLess: Lawsuit litigation cost (37) - (37) (1,521)and other expenseLess: Employer payroll tax on (294) (61) (443) (192)employee equity incentive plansNon-GAAP general and $ 20,709 $ 18,124 $ 42,400 $ 35,693administrativeReconciliation of income (loss)from operations and operatingmargin:GAAP loss from operations $ (42,948) $ (16,901) $ (69,050) $ (33,793)

Plus: Stock-based compensation 35,367 23,358 66,575 44,546expensePlus: Lease exit costs and - 3,641 - 3,641accelerated depreciation expensePlus: Amortization of purchased 1,276 440 2,552 880intangiblesPlus: Amortization ofstock-based compensation 265 227 504 434capitalized in softwaredevelopment costsPlus: Lawsuit litigation cost 37 - 37 1,521and other expensePlus: Employer payroll tax on 711 386 1,659 1,304employee equity incentive plansNon-GAAP income (loss) from $ (5,292) $ 11,151 $ 2,277 $ 18,533operationsGAAP operating margin (26)% (12)% (21)% (12)%

Non-GAAP adjustments 23 % 20 % 22 % 18 %

Non-GAAP operating margin (3)% 8 % 1 % 6 %

Reconciliation of net income(loss):GAAP net loss attributable to $ (47,551) $ (18,614) $ (77,307) $ (33,783)New RelicPlus: Stock-based compensation 35,367 23,358 66,575 44,546expensePlus: Lease exit costs and - 3,641 - 3,641accelerated depreciation expensePlus: Amortization of purchased 1,276 440 2,552 880intangiblesPlus: Amortization ofstock-based compensation 265 227 504 434capitalized in softwaredevelopment costsPlus: Lawsuit litigation cost 37 - 37 1,521and other expensePlus: Employer payroll tax on 711 386 1,659 1,304employee equity incentive plansPlus: Amortization of debt 5,544 5,239 11,010 10,404discount and issuance costsLess: Gain on lease modification - - - (3,006)

Non-GAAP net income (loss) $ (4,351) $ 14,677 $ 5,030 $ 25,941attributable to New RelicNon-GAAP net income (loss)attributable to New Relic pershare:Basic $ (0.07) $ 0.25 $ 0.08 $ 0.45

Diluted $ (0.07) $ 0.24 $ 0.08 $ 0.43

Shares used in non-GAAP pershare calculations:Basic 60,545 58,372 60,237 58,161

Diluted 60,545 60,174 61,567 60,246

Reconciliation of GAAP Cash Flows from Operating Activities to Free Cash Flow(In thousands; unaudited)Three Months Ended September 30,

Six Months Ended September 30,

2020

2019

2020

2019

Net cash provided by operating activities$

12,910

$

8,988

$

48,058

$

45,504

Capital expenditures(4,416)

(15,336)

(12,641)

(31,570)

Capitalized software development costs(3,175)

(1,670)

(6,843)

(3,053)

Free cash flow (Non-GAAP)$

5,319

$

(8,018)

$

28,574

$

10,881

Net cash used in investing activities$

(666)

$

(5,176)

$

(72,881)

$

(50,565)

Net cash provided by financing activities$

7,720

$

7,694

$

9,144

$

9,965

View source version on businesswire.com: https://www.businesswire.com/news/home/20201105006088/en/

CONTACT: Investor Contact Peter Goldmacher New Relic, Inc. 503-336-9280 IR@newrelic.com

CONTACT: Media Contact Andrew Schmitt New Relic, Inc. 415-869-7109 PR@newrelic.com