Amid all the Dreamforce fun and games last week, we skipped past the latest set of numbers from New Relic, which show an encouraging uptick in the firm’s enterprise business. CEO Lew Cirne points out:
This focus area continues to grow over 50% year-on-year, and surpassed more than 2,000 paid accounts in the quarter, as we now account over 50% of the Fortune 100 as our customers. Additionally, more than half of our annual recurring revenue now comes from enterprise, up from 43% a year ago. We reached this exciting milestone remarkably only three years after truly starting to build out an enterprise sales presence in the field.
Enterprise customers include the likes of Carnival Cruises, Cisco, Expedia, John Hancock, Nationwide, Morningstar and Scripps, and Cirne reckons to have a good handle on what it is that they are looking for from his firm:
I’ve been traveling around the world and nearly every customer I connect with across with every industry tells me the same thing. They have an imperative to go faster. They want to identify and fix issues faster, deliver value to their customers faster and build high performing DevOps teams faster. But the speed alone introduces risk. New Relic helps our customers manage that risk and gives them confidence so they can accelerate the pace of innovation. New Relic is a catalyst for businesses to deliver better software faster.
Cirne cites the exemplar of the sort of enterprise engagement he’s seeing more of:
We had an amazing win at a large global coffee company that is likely one of your daily addictions. I know it’s my wife’s daily addiction. As part of this partnership, New Relic Infrastructure was selected to monitor the company’s point of sales systems across North America. We began our journey with this company a little over year ago by instrumenting their digital customer experience on their mobile ordering app. And last quarter, we extended our relationship and are now instrumenting the point of sale machines that power their physical in-store customer experience.
Another use case he points to is 21st Century Fox, which has tapped into both the Infrastructure and Insights offerings from New Relic:
The entertainment and media industry is in the middle of a transformation and 21st Century Fox is a leader because they know that the fastest movers will win. A big part of their transformation strategy is via the public cloud, taking advantage of the clouds scalability and instant accessibility to drive amazing digital customer experiences. And they have chosen New Relic infrastructure to give them visibility into performance of their applications and underlying cloud infrastructure. And New Relic insight provides the ability for their CTO and 100s of his employees to drilling into their data to understand the real-time performance of their business. The future of 21st Century Fox is digital, and they’re betting their digital strategy on New Relic.
But we’re not just seeing this at 21st Century Fox we’re seeing this demand from many of our customers, all over the world who are adopting public cloud technology. They are quickly recognizing the importance of putting New Relic everywhere to get a complete picture of their applications and infrastructure performance.
Part of the increasing interest levels can be attributed to New Relic’s partnership with Amazon Web Services. This is serving the firm well, says Cirne:
What really moved the needle on our Amazon partnership is recognition that New Relic customers consume more public cloud than non-New Relic customers. And if a company has existing relationship with the cloud provider, such an Amazon and then they become a New Relic customer, they consume their cloud resources faster because we help them move to the cloud faster with confidence.
That is one of the major reasons why 21st Century Fox decided to go strategic with us, because they had a goal to get out of the data center business and move to the cloud as rapidly as possible. But they have to do that responsibly and they have to manage the risk of doing that. And they were moving forward than they would have liked, because they didn’t have the visibility that we provided everywhere.
We do typically work do best in industries that are going through the most digital transformation change at a given point in time. So it’s no surprise that great media companies, like 21st Century Fox, are classic examples of companies that have to succeed with digital. They’re the type of companies that are moving to us. But more recently, we’ve seen digital impacting things like insurance companies. So that’s why we have Nationwide, as a customer reference. What they’re doing is they’re trying to make claims processing a lot better for their customers and make it so that they can improve the customer experience and reduce the cost of the claims. A
So we do pay attention to verticals that are competing with the most focus in digital and pursue them. The other way we think about it is we’ve got this amazing growth opportunity within the base. Now, that we have half of the Fortune 100 as customers, we don’t believe any of them are nearly at their full potential as New Relic customers.
Despite such enterprise exemplars increasing in number, Cirne is quick to add that this doesn’t mean the firm isn’t still interested in the SMB space:
We like both our enterprise and our SMB business. SMB is growing it’s been profitable for some time. We expect the profitability continue. Our primary strategic goal for SMB is not to drive overall revenue growth for the company. It’s rather ubiquity in that segment. We want lots of people using the product. We want it to help inform our product strategy, because often SMBs are adopting technologies and practices that enterprises will adopt a few years down the road.
So we like the present and as ubiquitous as we can be in that segment, but always with an eye towards that being healthy and efficient business for us. So we expect to continue to grow and we like where we are at in the SMB segment. But obviously, the enterprise segment is where we see the bulk of revenue growth coming from.
Revenues up, non-GAAP losses reduced and some stellar enterprise use case exemplars all point to a company that’s set on the correct course and traveling firmly on an upwards trajectory.
Image credit - Phil Wainewright
Disclosure - At time of writing, New Relic is a premier partner of diginomica.