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Taking Stock of New Relic’s New Risk Factor
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Taking Stock of New Relic’s New Risk Factor

Shares of software-as-a-service (SAAS) provider New Relic, Inc. (NEWR) have dropped 31% over the past month. NEWR’s recent third-quarter results came in ahead of expectations on its top-line fronts, but its net loss came in wider than estimates.

Revenue jumped 22.4% year-over-year to $203.6 million, beating estimates by $3.1 million. Net loss per share at $0.18 was wider than estimates by $0.01. The remaining performance obligations of the company increased to $610 million, compared to $597 million from the previous quarter.

Active customer accounts increased to 14,600 from 13,900 a year ago. With these developments in mind, let us take a look at the changes in NEWR’s key risk factors that investors should know.

Risk Factors

According to the TipRanks Risk Factors tool, New Relic’s top risk category is Finance & Corporate, contributing 26 of the total 58 risks identified for the stock, compared to a sector average of 16 risk factors under the same category.

In its recent report, the company has added one key risk factor under the Finance & Corporate risk category.

NEWR highlighted that it bases its estimates on historical performance and a number of other assumptions deemed reasonable. The timing of revenue recognition can vary and remains difficult to predict. Additionally, the company is still refining its consumption models, estimates, and assumptions. This model was put in place in July 2020 and the risk remains that if NEWR’s estimates or judgments prove to be incorrect, then its results of operations could see an adverse impact.

Hedge Fund Activity

According to TipRanks data, the Wall Street’s top hedge funds have increased holdings in New Relic by 76.9 thousand shares in the last quarter, indicating a neutral hedge fund confidence signal in the stock based on activities of 5 hedge funds. Notably, Lee Ainslie’s Maverick Capital has a holding worth $513.4 thousand in NEWR.

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