Photo Credit: Danae Pollack/Flickr.com

The recent acquisition of AppDynamics by Cisco has brought the application performance monitoring (APM) market to the forefront. According to IDC, the APM market was worth $2.6 billion in 2015. The market is led by Dynatrace with 15% share and New Relic (NYSE: NEWR) came in sixth with 6.2% market share. AppDynamics accounted for 5.5% market share. New Relic has traditionally focused on Tier II and Tier III applications for small and medium-sized enterprises. But now, it appears to be changing gears. 

New Relic’s Financials

New Relic’s third quarter revenues grew 43% to $68.1 million, ahead of the market’s forecast of $66.35 million. Net loss of $0.09 per share compared with the market’s forecast of $0.14 per share.

It ended the quarter with nearly 14,915 paid business accounts. The new customers added during the quarter included names like Bupa UK, Cox Enterprises, Freshdesk, Gannett, Morningstar, and Viacom International.

For the current quarter, it forecast revenues of $70.3-$71.3 million, with a net loss of $0.14-$0.16 per share. The market was expecting revenues of $69.3 million and a loss of $0.15 per share.

New Relic’s Enterprise Focus

APM market leader Dynatrace provides monitoring and root cause analysis to larger enterprise customers and deals with Tier I applications that account for about 20% of the total number of enterprise applications. New Relic, on the other hand, has focused on Tier II and Tier III applications for SMEs. But now, it is expanding its target market to bigger enterprises and is seeing strong traction.

As part of this focus, it has announced updates to the New Relic Digital Intelligence Platform. The updated platform allows New Relic to publish company-wide dashboards for enterprise deployments and delivers expanded visibility into the application performance monitoring module. Organizations will also be able to receive alerts for dynamic infrastructure.