10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________

FORM 10-Q

_________________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-36766

_________________________________________________

New Relic, Inc.

(Exact name of registrant as specified in its charter) 

_________________________________________________

Delaware	26-2017431
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

188 Spear Street, Suite 1000

San Francisco, California 94105

(Address of principal executive offices, including zip code)

(650) 777-7600

(Registrant’s telephone number, including area code)

__________________________________________________________________   

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	NEWR	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of July 30, 2021, there were 64,847,793 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

NEW RELIC, INC.

Form 10-Q Quarterly Report

TABLE OF CONTENTS

 

		Page
Special Note Regarding Forward-Looking Statements		2
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets as of June 30, 2021 and March 31, 2021	4
	Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2021 and 2020	5
	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended June 30, 2021 and 2020	6
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended June 30, 2021 and 2020	7
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2021 and 2020	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	37
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 3.	Defaults Upon Senior Securities	62
Item 4.	Mine Safety Disclosures	62
Item 5.	Other Information	62
Item 6.	Exhibits	63
	Signatures	65

Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “New Relic,” “we,” “Company,” “us,” and “our” refer to New Relic, Inc. and its subsidiaries. “New Relic,” the New Relic logo, and other trademarks or service marks of New Relic that may appear in this Quarterly Report on Form 10-Q are the property of the Company. This Quarterly Report on Form 10-Q contains additional trade names, trademarks, and service marks of other companies. The Company does not intend its use or display of other companies’ trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of the Company by, these other companies, and all such third-party trade names, trademarks, and service marks are the property of their respective owners.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “would,” “shall,” “might,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•the impact of natural disasters and actual or threatened public health emergencies, such as the COVID-19 pandemic;

•our future financial performance, including our revenue, cost of revenue, gross profit, gross margin, operating expenses, ability to generate positive cash flow, and ability to achieve and maintain GAAP (as defined below) and non-GAAP profitability;

•our key operating metrics;

•use and limitations of non-GAAP financial measures;

•the sufficiency of our cash and cash equivalents to meet our working capital, capital expenditure, and liquidity needs;

•our ability to attract and retain customers to use our products, to optimize the pricing for our products, to expand our sales to our customers, and to convince our existing customers to remain on our platform and increase their spend with us;

•our product and pricing strategies and their anticipated impacts on our business and results of operations;

•our growth strategy, including increasing usage within our installed base, addition of new customers, penetration of international markets, and expansion of our platform and capabilities;

•the evolution of technologies affecting our products and markets;

•our ability to innovate and provide a superior user experience and our intentions and strategy with respect thereto;

•our ability to successfully expand in our existing markets and into new markets, including international markets;

•the attraction and retention of key personnel;

•our ability to effectively manage our growth and future expenses;

•our ability to maintain, protect, and enhance our intellectual property rights;

•worldwide economic conditions and their impact on spending; and

•our ability to comply with modified or new laws and regulations applying to our business, including privacy and data security regulations.

We caution you that the foregoing list does not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

2

SELECTED RISKS AFFECTING OUR BUSINESS

Investing in our common stock involves a high degree of risk because we are subject to numerous risks and uncertainties that could negatively impact our business, financial condition and results of operations, as more fully described below. These risks and uncertainties include, but are not limited to, the following:

•We have limited experience with respect to determining the optimal prices and pricing strategies for our products.

•The ongoing global coronavirus (“COVID-19”) pandemic could harm our business and results of operations.

•We have a history of losses and our revenue growth rate could continue to decline over time, and as our costs increase, we may not be able to generate sufficient revenue to achieve and sustain profitability.

•We have a limited operating history with our current business model, which makes it difficult to evaluate our current business and future prospects and increases the risk of your investment.

•If we are not able to manage our growth and expansion, or if our business does not grow as we expect, our operating results may suffer.

•Our business depends on our customers remaining on our platform and increasing their spend with us.

•If we are not able to develop enhancements to our products, increase adoption and usage of our products, and introduce new products that achieve market acceptance, our business could be harmed.

•If customers do not expand their use of our products beyond the current predominant use cases, our ability to grow our business and operating results may be adversely affected.

•Our quarterly results may fluctuate, and if we fail to meet the expectations of analysts or investors, our stock price and the value of your investment could decline substantially.

•If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, and changing customer needs, requirements, or preferences, our products may become less competitive.

•The markets in which we participate are intensely competitive, and if we do not compete effectively, our operating results could be harmed.

•Interruptions or performance problems associated with our technology and infrastructure may adversely affect our business and operating results.

•Our ongoing and planned investments in data center hosting facilities and expenditures on cloud hosting providers are expensive and complex, may result in a negative impact on our cash flows, and may negatively impact our financial results.

•Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand.

•Our reliance upon open source software could negatively affect our ability to sell our products and subject us to possible litigation.

•If we lose key members of our management team or are unable to attract and retain executives and employees we need to support our operations and growth, our business may be harmed.

•If we cannot continue to maintain and develop our corporate culture as we grow, we could lose the innovation, teamwork, passion, and focus on execution that we believe contribute to our success.

•Changes in privacy and security laws, regulations, and standards may cause our business to suffer.

•We have incurred substantial indebtedness that may decrease our business flexibility, access to capital, and/or increase our borrowing costs.

•Because our long-term growth strategy involves further expansion of our sales to customers outside the United States, our business will be susceptible to risks associated with international operations.

•We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate these controls.

3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NEW RELIC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)

	June 30, 2021		March 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	259,897	$	240,821
Short-term investments	557,223		575,254
Accounts receivable, net of allowances of $2,464 and $2,633, respectively	93,477		174,027
Prepaid expenses and other current assets	22,172		21,944
Deferred contract acquisition costs	33,032		36,210
Total current assets	965,801		1,048,256
Property and equipment, net	84,645		91,308
Restricted cash	5,642		5,642
Goodwill	163,677		144,253
Intangible assets, net	21,610		12,986
Deferred contract acquisition costs, non-current	25,707		32,579
Lease right-of-use assets	55,034		57,425
Other assets, non-current	5,976		6,170
Total assets	$	1,328,092	$	1,398,619
Liabilities, redeemable non-controlling interest and stockholders’ equity
Current liabilities:
Accounts payable	$	27,631	$	24,171
Accrued compensation and benefits	32,319		37,196
Other current liabilities	15,779		19,174
Deferred revenue	316,458		373,594
Lease liabilities	7,714		7,886
Total current liabilities	399,901		462,021
Convertible senior notes, net	495,893		449,380
Lease liabilities, non-current	57,578		59,924
Deferred revenue, non-current	1,044		1,674
Other liabilities, non-current	15,789		8,256
Total liabilities	970,205		981,255
Commitments and contingencies (Note 10)
Redeemable non-controlling interest	7,744		3,389
Stockholders’ equity:
Common stock, $0.001 par value; 100,000 shares authorized at June 30, 2021 and March 31, 2021; 64,966 shares and 64,019 shares issued at June 30, 2021 and March 31, 2021; and 64,706 shares and 63,759 shares outstanding at June 30, 2021 and March 31, 2021	64		64
Treasury stock - at cost (260 shares)	(263)		(263)
Additional paid-in capital	962,512		1,001,309
Accumulated other comprehensive loss	(850)		(19)
Accumulated deficit	(611,320)		(587,116)
Total stockholders’ equity	350,143		413,975
Total liabilities, redeemable non-controlling interest and stockholders’ equity	$	1,328,092	$	1,398,619

See notes to condensed consolidated financial statements.

4

NEW RELIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

	Three Months Ended June 30,
	2021		2020
Revenue	$	180,484	$	162,585
Cost of revenue	59,264		33,273
Gross profit	121,220		129,312
Operating expenses:
Research and development	48,730		40,844
Sales and marketing	102,813		85,136
General and administrative	43,565		29,434
Total operating expenses	195,108		155,414
Loss from operations	(73,888)		(26,102)
Other income (expense):
Interest income	938		2,781
Interest expense	(1,226)		(6,104)
Other expense	(336)		(395)
Loss before income taxes	(74,512)		(29,820)
Income tax provision (benefit)	(453)		332
Net loss	$	(74,059)	$	(30,152)
Net loss and adjustment attributable to redeemable non-controlling interest	(4,355)		396
Net loss attributable to New Relic	$	(78,414)	$	(29,756)
Net loss attributable to New Relic per share, basic and diluted	$	(1.24)	$	(0.50)
Weighted-average shares used to compute net loss per share, basic and diluted	63,339		59,927

See notes to condensed consolidated financial statements.

5

NEW RELIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

	Three Months Ended June 30,
	2021		2020
Net loss attributable to New Relic	$	(78,414)	$	(29,756)
Other comprehensive loss:
Unrealized loss on available-for-sale securities	(831)		(759)
Comprehensive loss	$	(79,245)	$	(30,515)

See notes to condensed consolidated financial statements.

6

NEW RELIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Three Months Ended June 30, 2021														Three Months Ended June 30, 2020
	Common Stock			Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity		Common Stock			Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount				Shares	Amount								Shares	Amount				Shares	Amount
Balance at beginning of period	64,019	$	64	$	1,001,309	260	$	(263)	$	(19)	$	(587,116)	$	413,975	60,098	$	60	$	780,479	260	$	(263)	$	4,869	$	(394,506)	$	390,639
Effect of adoption of ASU 2020-06	—	—		(100,136)		—	—		—		54,210		(45,926)		—	—		—		—	—		—		—		—
Issuance of common stock upon exercise of stock options	192	—		4,832		—	—		—		—		4,832		50	—		1,474		—	—		—		—		1,474
Issuance of common stock for vested restricted stock units	354	—		—		—	—		—		—		—		354	—		—		—	—		—		—		—
Issuance of common stock related to employee stock purchase plan	—	—		—		—	—		—		—		—		—	—		—		—	—		—		—		—
Issuance of common stock related to acquisition of business	401	—		13,487		—	—		—		—		13,487		—	—		—		—	—		—		—		—
Stock-based compensation expense	—	—		43,020		—	—		—		—		43,020		—	—		31,259		—	—		—		—		31,259
Other comprehensive loss, net	—	—		—		—	—		(831)		—		(831)		—	—		—		—	—		(759)		—		(759)
Net loss attributable to New Relic	—	—		—		—	—		—		(78,414)		(78,414)		—	—		—		—	—		—		(29,756)		(29,756)
Balance at end of period	64,966	$	64	$	962,512	260	$	(263)	$	(850)	$	(611,320)	$	350,143	60,502	$	60	$	813,212	260	$	(263)	$	4,110	$	(424,262)	$	392,857

See notes to condensed consolidated financial statements.

7

NEW RELIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended June 30,
	2021		2020
Cash flows from operating activities:
Net loss attributable to New Relic	$	(78,414)	$	(29,756)
Net loss and adjustment attributable to redeemable non-controlling interest (Note 3)	4,355		(396)
Net loss:	$	(74,059)	$	(30,152)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	23,025		21,051
Stock-based compensation expense	42,187		31,208
Amortization of debt discount and issuance costs	587		5,466
Other	(922)		(222)
Changes in operating assets and liabilities, net of acquisition of business:
Accounts receivable, net	80,550		36,065
Prepaid expenses and other assets	18		(3,155)
Deferred contract acquisition costs	(190)		(9,388)
Lease right-of-use assets	2,692		(2,249)
Accounts payable	4,894		(3,923)
Accrued compensation and benefits and other liabilities	(8,627)		5,573
Lease liabilities	(2,517)		1,347
Deferred revenue	(57,766)		(16,473)
Net cash provided by operating activities	9,872		35,148
Cash flows from investing activities:
Purchases of property and equipment	(2,226)		(8,225)
Cash paid for acquisition, net of cash acquired	(7,192)		—
Purchases of short-term investments	(23,828)		(73,422)
Proceeds from sale and maturity of short-term investments	40,513		13,100
Capitalized software development costs	(2,860)		(3,668)
Net cash provided by (used in) investing activities	4,407		(72,215)
Cash flows from financing activities:
Proceeds from exercise of employee stock options	4,797		1,424
Net cash provided by financing activities	4,797		1,424
Net increase (decrease) in cash, cash equivalents and restricted cash	19,076		(35,643)
Cash, cash equivalents and restricted cash at beginning of period	246,463		298,164
Cash, cash equivalents and restricted cash at end of period	$	265,539	$	262,521
Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets:
Cash and cash equivalents	$	259,897	$	256,879
Restricted cash	5,642		5,642
Total cash, cash equivalents and restricted cash	$	265,539	$	262,521
Supplemental disclosure of cash flow information:
Cash paid for interest and income taxes	$	1,890	$	1,415
Noncash investing and financing activities:
Property and equipment purchased but not yet paid	$	3	$	1,265
Issuance of common stock for the acquisition of business	$	13,487	$	—
Acquisition holdback	$	7,250	$	—

See notes to condensed consolidated financial statements.

8

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.Description of Business and Summary of Significant Accounting Policies

New Relic, Inc. (the “Company” or “New Relic”) was incorporated in Delaware on February 20, 2008, when it converted from a Delaware limited liability company called New Relic Software, LLC, which was formed in Delaware in September 2007. The Company delivers the observability platform for engineers to plan, build, deploy and operate more perfect software. New Relic One is the Company’s purpose-built offering for customers to land all of their telemetry data quickly and affordably in one place, and to translate that data into actionable insights.

Basis of Presentation —These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021, as filed with the SEC on May 14, 2021 (the “Annual Report”).

In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, stockholders’ equity and cash flows for the interim period, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year ending March 31, 2022. The condensed consolidated balance sheet as of March 31, 2021 included herein was derived from the audited financial statements as of that date.

Use of Estimates—The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Significant items subject to such estimates and assumptions include the fair value of share-based awards, fair value of purchased intangible assets and goodwill, fair value of debt and equity components related to the 0.5% convertible senior notes due 2023 (the “Notes”), useful lives of purchased intangible assets, unrecognized tax benefits, expected benefit period for deferred commissions, incremental borrowing rate used for operating lease liabilities, and the capitalization and estimated useful life of the Company’s software development costs.

These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from management’s estimates.

COVID-19—The COVID-19 pandemic has resulted in a global slowdown of economic activity that is expected to continue and which is likely to decrease demand for a broad variety of goods and services, while also disrupting sales channels and marketing activities for an unknown period of time until the disease is contained. The Company’s revenue and deferred revenue have been negatively impacted by the slowdown in activity associated with the COVID-19 pandemic, but at this point, the extent of any continuing impact to the Company’s financial condition or results of operations is uncertain, particularly as the COVID-19 pandemic continues to persist for an extended period of time, and as of the date of issuance of these financial statements, management is not aware of any specific event or circumstance that would require an update to estimates and judgments or revising the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information is obtained, and will be recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the financial statements.

Concentration of Risk—There was one customer that represented more than 10% of the Company’s accounts receivable balance as of June 30, 2021 and no customers that represented more than 10% of the Company’s accounts receivable balance as of March 31, 2021. There was no customer that individually exceeded 10% of the Company’s revenue during the three months ended June 30, 2021 or 2020.

Revenue Recognition—The Company generates revenue from subscription-based arrangements and usage-based arrangements that allow customers to access its products and/or platform. The Company determines revenue recognition through the following steps:

•identification of the contract, or contracts with a customer;

9

•identification of the performance obligations in the contract;

•determination of the transaction price;

•allocation of the transaction price to the performance obligations in the contract; and

•recognition of revenue, when, or as, the Company satisfies a performance obligation.

Revenue from subscription-based arrangements is recognized on a ratable basis over the contractual subscription period of the arrangement beginning when or as control of the promised goods or services is transferred to the customer.

Beginning in the second quarter of fiscal 2021, the Company started offering usage-based pricing to its customers. Customers have the option to be charged upon their incurred usage in arrears (“Pay as You Go”), or they may commit to a minimum spend over their contracted period (“Annual Pool of Funds”). Revenue related to Pay as You Go contracts are recognized based on the customers’ actual usage. Revenue related to Annual Pool of Funds contracts are recognized on a ratable basis over the contract period including an estimate of the usage above the minimum commitment. The estimated usage-based revenues are constrained to the amount the Company expects to be entitled to receive in exchange for providing access to its platform.

Recently Issued Accounting Pronouncements Not Yet Adopted

There have been no new accounting pronouncements issued during the three months ended June 30, 2021 that are of significance to the Company.

Recently Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, Accounting for Convertible Instruments and Contract on an Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This will result in more convertible debt instruments being accounted for as a single liability instrument and more convertible preferred stock being accounted for as a single equity instrument with no separate accounting for embedded conversion features. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (“EPS”) and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards.

The Company early adopted ASU 2020-06 effective April 1, 2021, using the modified retrospective basis. Adoption resulted in a $54.2 million decrease to the opening balance of accumulated deficit, a $100.1 million decrease to the opening balance of additional paid-in capital, and a $45.9 million increase to the opening balance of the Notes, net on the consolidated balance sheet.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. The Company adopted this standard on April 1, 2020. The adoption of this standard did not have a material impact on its condensed consolidated financial statements or disclosures.

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which amends ASC 820, Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company adopted this standard on April 1, 2020. The adoption of this standard did not have a material impact on its condensed consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. The Company adopted this standard on April 1, 2020. The adoption of this standard did not have a material impact on its condensed consolidated financial statements.

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2.    Business Combinations

CodeStream Inc.

On June 8, 2021, the Company acquired all of the equity interests in CodeStream Inc. (“CodeStream”), a company that provides an integrated developer collaboration platform. The aggregate purchase price of $28.6 million consisted of approximately $15.1 million in cash (of which the Company held back approximately $7.3 million from the aggregate purchase price for 18 months after the transaction closing date, and which has been accrued as a long-term liability) and 202,561 shares of the Company’s common stock with an aggregate fair value of approximately $13.5 million. The fair value of the consideration transferred was determined based on a $66.58 per share price of the Company’s common stock on the closing date of the acquisition.

The total purchase price was allocated to the developed technology acquired with an estimated useful life of three years, net assets assumed, and a deferred tax liability related to the developed technology. The excess purchase price was recorded as goodwill, as set forth below. Goodwill generated from the acquisition is attributable to expected synergies from future growth and is not deductible for tax purposes.

The following table presents the purchase price allocation related to the acquisition (in thousands):

Cash consideration	$	15,140
Fair value of common shares	$	26,768
Total consideration	$	41,908
Post-business combination compensation expense	$	(13,282)
Total purchase price	$	28,626
Net assets assumed	$	(113)
Deferred tax liabilities	$	1,211
Developed technology acquired	$	(10,300)
Goodwill	$	19,424

The acquisition has been accounted for as a business combination in accordance with ASC 805. The estimated fair value of developed technology acquired of $10.3 million was determined through the use of a third-party valuation firm using cost approach methodology. The direct transaction costs of the acquisition have been accounted for separately from the business combination and expensed as incurred. Total direct transaction costs incurred by the Company were $0.4 million, which were included in general and administrative expenses in the Company’s condensed consolidated statement of operations for the three months ended June 30, 2021. The Company paid $0.8 million in acquisition-related expenses incurred by CodeStream related to CodeStream’s advisors which were included as part of the purchase consideration. The business combination did not have a material impact on the condensed consolidated financial statements and therefore historical and proforma disclosures have not been presented.

The acquisition also included a holdback arrangement with certain employees of CodeStream, totaling approximately 199,492 shares of the Company’s common stock, contingent upon their continued employment with the Company. The fair value of these awards, which are subject to the recipients’ continued service, was $13.3 million and was excluded from the aggregate purchase price. These awards will be recognized as stock-based compensation expense over the vesting period, which is 42 months.

Pixie Labs Inc.

On December 22, 2020, the Company acquired all of the equity interests in Pixie Labs Inc., a company that provides a next-generation machine intelligence observability solution for developers using Kubernetes. The aggregate purchase price of $107.9 million consisted of approximately $45.6 million in cash (of which $15.0 million is being held in escrow for 12 months after the transaction closing date) and 884,269 shares of the Company’s common stock with an aggregate fair value of approximately $62.4 million. The fair value of the consideration transferred was determined based on a $70.53 per share price of the Company’s common stock. Of the total purchase price, $4.8 million was allocated to acquired technology with an estimate useful life of three years, net assets assumed, and a deferred tax liability related to the developed technology. The excess $99.1 million of the purchase price over the fair value of the intangible assets acquired was recorded as goodwill. The acquisition has been accounted for as a business combination under the acquisition method. The business combination did not

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have a material impact on the condensed consolidated financial statements and therefore historical and proforma disclosures have not been presented.

IOpipe, Inc.

On October 31, 2019, the Company acquired certain assets of IOpipe, Inc., a company that provides monitoring tools for serverless applications, for $5.1 million in cash. The Company held back approximately $0.9 million from the aggregate purchase price which has been accrued as a liability. Of the total purchase price, $1.5 million was allocated to acquired technology with an estimated useful life of three years with the excess $3.6 million of the purchase price over the fair value of the intangible assets acquired recorded as goodwill. The acquisition has been accounted for as a business combination under the acquisition method. Goodwill and other intangibles generated from the acquisition are attributable to expected synergies from future growth and potential future monetization opportunities, and are deductible for tax purposes. The business combination did not have a material impact on the condensed consolidated financial statements and therefore historical and proforma disclosures have not been presented.

3.     Joint Venture

On July 13, 2018, the Company entered into an agreement with Japan Cloud Computing L.P. and M30 LLC (collectively, the “Investors”) to engage in the investment, organization, management and operation of New Relic K.K., a Japanese subsidiary of the Company that is focused on the sale of the Company’s products and services in Japan. On August 21, 2018, the investors initially contributed approximately $3.6 million (396,000,000 Japanese Yen) in exchange for 40% of the outstanding common stock of New Relic K.K. On August 21, 2019, the Company and Investors additionally contributed approximately $1.5 million (156,000,000 Japanese Yen) and approximately $1.0 million (104,000,000 Japanese Yen), respectively, to subscribe to additional shares. As of June 30, 2021, the Company owned approximately 60% of the outstanding common stock in New Relic K.K.

All of the common stock held by the Investors may be callable by the Company or puttable by the Investors upon certain contingent events. Should the call or put option be exercised, the redemption value would be determined based on a prescribed formula derived from the discrete revenues of New Relic K.K. and the Company and may be settled, at the Company’s discretion, with Company stock or cash. As a result of the put right available to the redeemable non-controlling interest holders in the future, the redeemable non-controlling interest in New Relic K.K. is classified outside of permanent equity in the Company’s consolidated balance sheet as of June 30, 2021, and the balance is reported at the greater of the initial carrying amount adjusted for the redeemable non-controlling interest’s share of earnings or losses, or its estimated redemption value. Accordingly, the Company adjusted the redeemable non-controlling interest by $4.4 million at June 30, 2021.

The following table summarizes the activity in the redeemable non-controlling interest for the periods indicated below:

	Three Months Ended June 30,
	2021		2020
Balance, beginning of period	$	3,389	$	1,669
Net loss attributable to redeemable non-controlling interest	(40)		(396)
Adjustment to redeemable non-controlling interest	4,395		—
Balance, end of period	$	7,744	$	1,273

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4.     Fair Value Measurements

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2021 and March 31, 2021 based on the three-tier fair value hierarchy (in thousands):

	Fair Value Measurements as of June 30, 2021
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Money market funds	$	119,534	$	—	$	—	$	119,534
Short-term investments:
Certificates of deposit	—		43,193		—		43,193
Commercial paper	—		15,083		—		15,083
Corporate notes and bonds	—		42,508		—		42,508
U.S. treasury securities	456,439		—		—		456,439
Restricted cash:
Money market funds	5,642		—		—		5,642
Total	$	581,615	$	100,784	$	—	$	682,399
Included in cash and cash equivalents							$	119,534
Included in short-term investments							$	557,223
Included in restricted cash							$	5,642
	Fair Value Measurements as of March 31, 2021
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Money market funds	$	101,626	$	—	$	—	$	101,626
Short-term investments:
Certificates of deposit	—		48,099		—		48,099
Commercial paper	—		11,681		—		11,681
Corporate notes and bonds	—		39,873		—		39,873
U.S. treasury securities	475,601		—		—		475,601
Restricted cash:
Money market funds	5,642		—		—		5,642
Total	$	582,869	$	99,653	$	—	$	682,522
Included in cash and cash equivalents							$	101,626
Included in short-term investments							$	575,254
Included in restricted cash							$	5,642

There were no transfers between fair value measurement levels during the three months ended June 30, 2021 and 2020.

The Company invests in certificates of deposit, commercial paper, corporate debt securities, U.S. treasury securities, and U.S. agency securities, which are classified as available-for-sale securities.

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The following table presents the Company’s available-for-sale securities as of June 30, 2021 (in thousands):

	Available-for-sale Investments as of June 30, 2021
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Short-term investments:
Certificates of deposit	$	43,201	$	14	$	(22)	$	43,193
Commercial paper	15,072		11		—		15,083
Corporate notes and bonds	42,364		165		(21)		42,508
U.S. treasury securities	455,730		934		(225)		456,439
Total available-for-sale investments	$	556,367	$	1,124	$	(268)	$	557,223

The following table presents the Company’s available-for-sale securities as of March 31, 2021 (in thousands):

	Available-for-sale Investments as of March 31, 2021
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Short-term investments:
Certificates of deposit	$	48,100	$	18	$	(19)	$	48,099
Commercial paper	11,676		5		—		11,681
Corporate notes and bonds	39,620		261		(8)		39,873
U.S. treasury securities	474,171		1,575		(145)		475,601
Total available-for-sale investments	$	573,567	$	1,859	$	(172)	$	575,254

As of June 30, 2021 and March 31, 2021, securities that were in an unrealized loss position for more than 12 months were not significant. In addition, the Company did not consider any available-for-sale securities to be impaired as of June 30, 2021 and March 31, 2021.

The following table classifies the Company’s available-for-sale short-term investments by contractual maturities as of June 30, 2021 and March 31, 2021 (in thousands):

	June 30, 2021		March 31, 2021
Due within one year	$	306,103	$	299,032
Due after one year and within three years	251,120		276,222
Total	$	557,223	$	575,254

For certain other financial instruments, including accounts receivable, accounts payable and other current liabilities, the carrying amounts approximate their fair value due to the relatively short maturity of these balances.

Convertible Senior Notes

As of June 30, 2021, the fair value of the Notes was $448.7 million. The fair value was determined based on the quoted price of the Notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2 in the fair value hierarchy.

5.     Contract Acquisition Costs

The Company capitalizes certain contract acquisition costs primarily consisting of commissions. The balances of deferred costs to obtain customer contracts were $58.7 million and $68.8 million as of June 30, 2021 and March 31, 2021, respectively. In the three months ended June 30, 2021 and 2020, amortization from amounts capitalized was $10.2 million and $9.0 million, respectively. In the three months ended June 30, 2021 and 2020, amounts expensed as incurred were $14.1 million and $3.4 million, respectively. The Company had no impairment loss in relation to costs capitalized.

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6.     Property and Equipment

Property and equipment, net, consisted of the following (in thousands):

	June 30, 2021		March 31, 2021
Computers, software, and equipment	$	14,567	$	14,270
Site operation equipment	83,148		87,479
Furniture and fixtures	5,772		5,758
Leasehold improvements	49,700		49,751
Capitalized software development costs	69,740		66,451
Total property and equipment	222,927		223,709
Less: accumulated depreciation and amortization	(138,282)		(132,401)
Total property and equipment, net	$	84,645	$	91,308

Depreciation and amortization expense related to property and equipment was $10.8 million and $10.5 million for the three months ended June 30, 2021 and 2020, respectively.

7.    0.5% Convertible Senior Notes and Capped Call

In May 2018, the Company issued $500.25 million in aggregate principal amount of Notes in a private offering, including $65.25 million in aggregate principal amount of Notes pursuant to the exercise in full of the initial purchasers’ option to purchase additional Notes. The Notes are the Company’s senior unsecured obligations and bear interest at a fixed rate of 0.5% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2018. The Notes will mature on May 1, 2023, unless earlier converted or repurchased. Each $1,000 principal amount of the Notes will initially be convertible into 9.0244 shares of the Company’s common stock (the “Conversion Option”), which is equivalent to an initial conversion price of approximately $110.81 per share. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the indenture governing the Notes. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate, in certain circumstances, for a holder who elects to convert its Notes in connection with such a corporate event. During the three months ended June 30, 2021, the conditions allowing holders of the Notes to convert have not been met. The Notes were therefore not convertible during the three months ended June 30, 2021 and were classified as long-term debt for such period.

The Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding November 1, 2022, only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2018 (and only during such fiscal quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price (as defined in the indenture governing the Notes) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the Notes on each such trading day; or (3) upon the occurrence of specified corporate events as set forth in the indenture governing the Notes. On or after November 1, 2022 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances. Upon conversion, the Company may satisfy its conversion obligation by paying and/or delivering, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the indenture governing the Notes.

In accounting for the transaction, the Notes were separated into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated conversion feature. The carrying amount of the equity component representing the Conversion Option was $102.5 million and was determined by deducting the fair value of the liability component from the proceeds received upon issuance of the Notes. The equity component was recorded in additional paid-in capital and is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the Notes over the liability component (the “Debt Discount”) and the debt issuance costs were amortized to interest expense over the contractual term of the Notes at an effective interest rate of 5.74%. This rate is inclusive of the issuance costs.

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In accounting for the debt issuance costs of $11.6 million related to the Notes, the Company allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds of the Notes. Issuance costs attributable to the liability component were $9.2 million and were amortized to interest expense using the effective interest method over the contractual term of the Notes. Issuance costs attributable to the equity component were $2.4 million and netted with the equity component in additional paid-in capital.

In connection with the offering of the Notes, the Company entered into privately negotiated capped call transactions with certain financial institutions (the “Capped Calls”). The Capped Calls each have an initial strike price of approximately $110.81 per share, subject to certain adjustments, which correspond to the initial conversion price of the Notes. The Capped Calls have initial cap prices of $173.82 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, approximately 4.5 million shares of our common stock. Conditions that cause adjustments to the initial strike price of the Capped Calls mirror conditions that result in corresponding adjustments for the Notes. The Capped Calls are generally intended to reduce potential dilution to holders of the Company’s common stock upon any conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset, as the case may be, subject to a cap based on the cap price. For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $63.2 million incurred in connection with the Capped Calls was recorded as a reduction to additional paid-in capital. The net impact related to stockholders’ equity has been included in additional paid-in capital and was a result of the issuance costs of $2.4 million and the purchase of Capped Calls noted above in the amount of $63.2 million.

Effective April 1, 2021 the Company adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contract on an Entity’s Own Equity. As a result of the adoption, the Conversion Option of $102.5 million and issuance costs of $2.4 million previously attributable to the equity component will no longer be presented in equity. Similarly, the debt discount, which is equal to the carrying value of the embedded conversion feature upon issuance, will no longer be amortized into income as interest expense over the life of the instrument. This resulted in a $54.2 million decrease to the opening balance of accumulated deficit, a $100.1 million decrease to the opening balance of additional paid-in capital, and a $45.9 million increase to the opening balance of the Notes, net on the consolidated balance sheet.

The net carrying amount of the liability component of the Notes was as follows (in thousands):

	June 30, 2021		March 31, 2021
Principal	$	500,250	$	500,250
Unamortized debt discount	—		(46,378)
Unamortized issuance costs	(4,357)		(4,492)
Net carrying amount	$	495,893	$	449,380

Interest expense related to the Notes was as follows (in thousands):

	Three Months Ended June 30,
	2021		2020
Amortization of debt discount	$	—	$	5,030
Amortization of issuance costs	587		436
Contractual interest expense	625		625
Total interest expense	$	1,212	$	6,091

8.     Goodwill and Purchased Intangibles Assets

The changes in the carrying amount of goodwill for the three months ended June 30, 2021 consisted of the following (in thousands):

Goodwill as of March 31, 2021	$	144,253
Goodwill acquired	19,424
Goodwill as of June 30, 2021	$	163,677

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Purchased intangible assets subject to amortization as of June 30, 2021 consisted of the following (in thousands):

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	$	30,416	$	(8,806)	$	21,610

Purchased intangible assets subject to amortization as of March 31, 2021 consisted of the following (in thousands):

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	$	20,116	$	(7,130)	$	12,986

Amortization expense of purchased intangible assets was $1.7 million and $1.3 million for the three months ended June 30, 2021 and 2020, respectively and is included in cost of revenue on the Company’s condensed consolidated statements of operations.

Estimated future amortization expense as of June 30, 2021 was as follows (in thousands):

Fiscal Years Ending March 31,	Estimated Future Amortization Expense
2022 (remaining nine months)	$	6,260
2023	9,000
2024	4,633
2025	1,717
	$	21,610

9.     Leases

The Company leases office space under non-cancelable operating leases, which expire from 2021 to 2031. All of its office leases are classified as operating leases with lease expense recognized on a straight-line basis over the lease term.

Lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As these leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company considers information including, but not limited to, the lease term, the Company's credit rating and interest rates of similar debt instruments with comparable credit ratings. The lease right-of-use assets are also increased by any lease prepayments made and reduced by any lease incentives such as tenant improvement allowances. Options to extend the lease term are included in the lease term when it is reasonably certain that the Company will exercise the extension option.

The Company’s operating leases typically include nonlease components such as common-area maintenance costs. The Company has elected to include nonlease components with lease payments for the purpose of calculating lease right-of-use assets and liabilities, to the extent that they are fixed. Nonlease components that are not fixed are expensed as incurred as variable lease payments.

Leases with a term of one year or less are not recognized on the Company’s condensed consolidated balance sheet.

The following table presents information about leases on the condensed consolidated balance sheet (in thousands):

	June 30, 2021		March 31, 2021
Assets
Lease right-of-use-assets	$	55,034	$	57,425
Liabilities
Lease liabilities	$	7,714	$	7,886
Lease liabilities, non-current	57,578		59,924
Total operating lease liabilities	$	65,292	$	67,810

As of June 30, 2021, the weighted average remaining lease term was 6.0 years and the weighted average discount rate was 6.9%.

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The following table presents information about leases on its condensed consolidated statement of operations (in thousands):

	Three Months Ended June 30,
	2021		2020
Operating lease expense	$	3,473	$	3,388
Short-term lease expense	150		228
Variable lease expense	632		699

The following table presents supplemental cash flow information about the Company’s leases (in thousands):

	Three Months Ended June 30,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities	$	3,810	$	4,484
Operating lease assets obtained in exchange for new lease liabilities (1)	—		4,411

(1) Includes the impact of new leases as well as remeasurements and modifications to existing leases.

As of June 30, 2021, remaining maturities of lease liabilities were as follows (in thousands):

Fiscal Years Ending March 31,	Operating Leases
2022 (remaining nine months)	$	8,408
2023	14,268
2024	13,358
2025	11,738
2026	11,936
2027	12,542
Thereafter	8,417
Total operating lease payments	$	80,667
Less imputed interest	(15,375)
Total operating lease liabilities	$	65,292

10.    Commitments and Contingencies

Purchase Commitments—As of June 30, 2021 and March 31, 2021, the Company had purchase commitments of $464.5 million and $494.6 million, respectively, primarily related to data center, cloud and hosting services.

In September 2020, the Company entered into an agreement with a public cloud hosting provider, under which it now has a total five-year minimum commitment of $500.0 million, which is included in the commitment balance as of June 30, 2021 above.

Other Contingencies—In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Company’s products when used for their intended purposes infringe the intellectual property rights of such other third parties, or other claims made against certain parties. To date, the Company has not incurred any costs as a result of such obligations and has not accrued any liabilities related to such obligations in the consolidated financial statements. In addition, the Company indemnifies its officers, directors, and certain key employees while they are serving in good faith in their respective capacities. The Company does not currently believe there is a reasonable possibility that a loss may have been incurred under these indemnification obligations. To date, there have been no claims under any such indemnification provisions.

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11.    Common Stock and Stockholders’ Equity

Employee Stock Purchase Plan—The Company’s board of directors adopted, and the Company’s stockholders approved, the Company’s 2014 Employee Stock Purchase Plan (the “ESPP”), which became effective in December 2014. The ESPP initially reserved and authorized the issuance of up to 1,000,000 shares of common stock. The ESPP provides that the number of shares reserved and available for issuance under the ESPP automatically increases each April, beginning on April 1, 2015, by the lesser of 500,000 shares, 1% of the number of the Company’s common stock shares issued and outstanding on the immediately preceding March 31, or such lesser number of shares as determined by the Company’s board of directors. For the three months ended June 30, 2021, no shares of common stock were purchased under the ESPP. Stock-based compensation expense recognized related to the ESPP was $0.9 million and $1.0 million for the three months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, 3,201,577 shares of common stock were available for issuance under the ESPP.

2008 Equity Incentive Plan—The Company’s board of directors adopted, and the Company’s stockholders approved, the 2008 Equity Incentive Plan, or the 2008 Plan, in February 2008. The 2008 Plan was terminated in connection with the Company’s initial public offering (“IPO”), and accordingly, no shares are available for future issuance under this plan. The 2008 Plan continues to govern outstanding awards granted thereunder.

2014 Equity Incentive Plan—The Company’s board of directors adopted, and the Company’s stockholders approved, the Company’s 2014 Equity Incentive Plan (the “2014 Plan”), which became effective in December 2014. The 2014 Plan serves as the successor to the Company’s 2008 Plan. The 2014 Plan initially reserved and authorized the issuance of 5,000,000 shares of the Company’s common stock. Additionally, shares not issued or subject to outstanding grants under the 2008 Plan upon its termination became available under the 2014 Plan, resulting in a total of 5,184,878 available shares under the 2014 Plan as of the effective date of the 2014 Plan. Pursuant to the terms of the 2014 Plan, any shares subject to outstanding stock options or other stock awards under the 2008 Plan that (i) expire or terminate for any reason prior to exercise or settlement, (ii) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise return to the Company or (iii) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award will become available for issuance pursuant to awards granted under the 2014 Plan. The 2014 Plan provides that the number of shares reserved and available for issuance under the plan automatically increases each April 1, beginning on April 1, 2015, by 5% of the outstanding number of shares of the Company’s common stock shares issued and outstanding on the immediately preceding March 31, or such lesser number of shares as determined by the Company’s board of directors. As of June 30, 2021, there were 14,310,072 shares available for issuance under the 2014 Plan.

The following table summarizes the Company’s stock option, restricted stock unit (“RSU”), and performance unit (“PSU”) award activities for the three months ended June 30, 2021 (in thousands, except exercise price, contractual term and fair value information):

	Options Outstanding						RSUs Outstanding						PSUs Outstanding
	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value		Number of Shares	Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value		Number of Shares	Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding - April 1, 2021	2,718	$	50.55	6.2	$	48,064	3,293	$	67.76	2.8	$	202,459	112	$	99.05	2.0	$	6,884
Granted	—	—					1,558	59.46					241	82.89
Exercised/vested	(192)	25.24			7,235		(354)	65.77					(33)	99.05
Canceled/forfeited	(131)	71.16					(510)	66.71					—
Outstanding - June 30, 2021	2,395	$	51.44	5.6	$	49,335	3,987	$	64.82	3.0	$	267,008	320	$	86.88	2.5	$	21,459

PSUs granted under the 2014 Plan are contingent upon the achievement of pre-determined market and service conditions. The number of shares of common stock to be issued at vesting will range from 0% to 200% of the target number based on the Company’s total shareholder return (“TSR”) relative to the performance of peer companies for each measurement period, over a one-year, two-year cumulative, and three-year cumulative period. If these market conditions are not met but service conditions are met, the PSUs will not vest; however, any stock-based compensation expense recognized to date will not be reversed. The Company uses a Monte Carlo simulation model to determine the fair value of its PSUs and recognizes expense using the accelerated attribution method over the requisite service period.

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Stock-Based Compensation Expense—Stock-based compensation expense for employees and nonemployees was $42.2 million and $31.2 million for the three months ended June 30, 2021 and 2020. Cost of revenue, research and development, sales and marketing, and general and administrative expenses were as follows (in thousands):

	Three Months Ended June 30,
	2021		2020
Cost of revenue	$	1,072	$	1,502
Research and development	10,964		8,804
Sales and marketing	11,534		13,308
General and administrative (1)	18,617		7,594
Total stock-based compensation expense (2)	$	42,187	$	31,208

(1) Includes $9.6 million acceleration of share-based payment expense for one of the Company’s executives due to his departure at the end of June 2021.

(2) Includes $0.5 million expense for the three months ended June 30, 2021 due to the restructuring activities commenced in April 2021. Refer to Note 16. Restructuring for more information.

As of June 30, 2021, unrecognized stock-based compensation cost related to outstanding unvested stock options was $17.4 million, which is expected to be recognized over a weighted-average period of approximately 2.0 years. As of June 30, 2021, unrecognized stock-based compensation cost related to outstanding unvested stock units was $290.4 million, which is expected to be recognized over a weighted-average period of approximately 3.0 years. As of June 30, 2021, unrecognized stock-based compensation cost related to PSUs was $21.5 million, which is expected to be recognized over a weighted-average period of approximately 2.5 years.

12.    Accounts Receivable, Deferred Revenue and Performance Obligations

In a response to the COVID-19 pandemic, the Company performed additional procedures to evaluate the creditworthiness of its customers and assess collectability of accounts. Using a current expected credit loss model, the Company determined that, while there may be a delay in collections due to the downturn in economic activity, there has not been a material impact to the risk of credit loss on accounts receivables as of June 30, 2021.

The Company receives payments from customers based upon billing cycles. As the Company performs under customer contracts, its right to consideration that is unconditional is considered to be accounts receivable. If the Company’s right to consideration for such performance is contingent upon a future event or satisfaction of additional performance obligations, the amount of revenues the Company has recognized in excess of the amount it has billed to the customer is considered to be a contract asset. Contract assets were $4.1 million and $0.3 million as of June 30, 2021 and June 30, 2020, respectively. The Company has no asset impairment charges related to contract assets for the periods presented. Deferred revenue represents consideration received from customers in excess of revenues recognized.

The following table presents the changes to the Company’s deferred revenue (in thousands):

	Three Months Ended June 30,
	2021		2020
Deferred revenue, beginning of period	$	375,268	$	316,327
Contributions from contract asset	1,541		215
Billings	121,177		145,897
Revenue recognized	(180,484)		(162,585)
Deferred revenue, end of period	$	317,502	$	299,854

For the three months ended June 30, 2021 and 2020, the majority of revenue recognized was from the deferred revenue balances at the beginning of each period.

The aggregate unrecognized transaction price of remaining performance obligations as of June 30, 2021 was $654.3 million. The Company expects to recognize more than 93% of the balance as revenue in the 24 months following June 30, 2021 and the remainder thereafter. The aggregate balance of remaining performance obligations represents contracted revenue that

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has not yet been recognized and does not include contract amounts which are cancellable by the customer and amounts associated with optional renewal periods.

13.    Income Taxes

The Company is subject to income tax in the United States as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax. The Company does not provide for federal income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are to be reinvested indefinitely.

The Company recorded an income tax benefit of $0.5 million and provision of $0.3 million for the three months ended June 30, 2021 and 2020, respectively, related to foreign income taxes, research tax credits, and the tax benefit from the acquisition of CodeStream related to the partial release of valuation allowance. Based on the available objective evidence during the three months ended June 30, 2021, the Company believes it is more likely than not that the tax benefits of U.S. and Japan losses incurred during the three months ended June 30, 2021 may not be realized. Accordingly, the Company did not record the tax benefits of U.S. and Japan losses incurred during the three months ended June 30, 2021. The primary difference between the effective tax rate and the statutory tax rate relates to the valuation allowance on the U.S. and Japan losses, foreign tax rate differences, generation of research tax credits, and the tax benefit from the acquisition of CodeStream.

14.    Net Loss Per Share

Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period, less shares subject to repurchase, and excludes any dilutive effects of employee share-based awards and warrants. Diluted net loss per share is computed giving effect to all potential dilutive common shares, including common stock issuable upon exercise of stock options and unvested restricted common stock. As the Company had net losses for each of the three months ended June 30, 2021 and 2020, all potential common shares were determined to be anti-dilutive, resulting in basic and diluted net loss per share being equal. Additionally, the 4.5 million shares underlying the Conversion Option in the Notes were not considered in the calculation of diluted net loss per share as the effect would be anti-dilutive. The Notes were not convertible as of June 30, 2021. 

ASU 2020-06 eliminates the treasury stock method and instead requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share when the instruments may be settled in cash or shares. The required use of the if-converted method did not impact the diluted net loss per share as the Company was in a net loss position.

The following table sets forth the computation of net loss per share, basic and diluted (in thousands, except per share amounts):

	Three Months Ended June 30,
	2021		2020
Numerator:
Net loss attributable to New Relic	$	(78,414)	$	(29,756)
Denominator:
Weighted average shares used to compute net loss per share, basic and diluted	63,339		59,927
Net loss attributable to New Relic per share—basic and diluted	$	(1.24)	$	(0.50)

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The following outstanding options, unvested shares, and ESPP shares were excluded (as common stock equivalents) from the computation of diluted net loss per common share for the periods presented as their effect would have been antidilutive (in thousands):

	As of June 30,
	2021	2020
Options to purchase common stock	2,395	3,254
RSUs	3,987	4,370
PSUs	320	112
ESPP shares	89	117
	6,791	7,853

15.    Revenue by Geographic Location

The following table shows the Company’s revenue by geographic areas, as determined based on the billing address of its customers (in thousands):

	Three Months Ended June 30,
	2021		2020
United States	$	123,035	$	112,410
EMEA	28,165		25,196
APAC	17,193		14,965
Other	12,091		10,014
Total revenue	$	180,484	$	162,585

Substantially all of the Company’s long-lived assets were attributable to operations in the United States as of June 30, 2021 and March 31, 2021.

16.    Restructuring

On April 6, 2021, the Company commenced a restructuring plan to realign its cost structure to better reflect significant product and business model innovation over the past 12 months. As a result of the restructuring plan, the Company incurred charges of approximately $12.8 million for employee terminations and other costs associated with the restructuring plan. Most of these charges consisted of cash expenditures and stock-based compensation expense which were recognized and mostly paid off in the first quarter of fiscal 2022.

The following table shows the Company’s restructuring charges for the three months ended June 30, 2021 (in thousands):

	Three Months Ended June 30, 2021
	Severance and other employee costs		Stock-based compensation		Asset impairment		Total
Sales and marketing	$	10,965	$	406	$	104	$	11,475
General and administrative	1,183		87		26		1,296
Total	$	12,148	$	493	$	130	$	12,771

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business. In particular, we encourage you to review the risks and uncertainties described in Part II, Item 1A “Risk Factors” included elsewhere in this report. These risks and uncertainties could cause actual results to differ materially from those projected in forward-looking statements contained in this report or implied by past results and trends. Forward-looking statements are statements that attempt to forecast or anticipate future developments in our business, financial condition or results of operations. See the section titled “Special Note Regarding Forward-Looking Statements” in this report. These statements, like all statements in this report, speak only as of their date (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments, except as required by law.

Overview

New Relic delivers the observability platform for engineers to plan, build, deploy and operate more perfect software. We offer a comprehensive suite of products delivered on an open and extensible cloud-based platform that enables organizations to collect, store and analyze massive amounts of data in real time so they can better operate their applications and infrastructure and improve their digital customer experience.

New Relic One is our purpose-built offering for customers to land all of their telemetry data quickly and affordably in one place, and to translate that data into actionable insights. We believe a truly unified front-end that sits on top of a single database helps our users avoid complexity and confusion that would be associated with relying instead upon multiple different but related products.

Our revenue for the three months ended June 30, 2021 and 2020 was $180.5 million and $162.6 million, respectively, representing year-over-year growth of 11%. Although we have experienced substantial revenue growth in historical periods, we have had difficulty maintaining our historical growth rates as our business has scaled, even in the periods where our revenue grew in absolute terms. Meanwhile, we have continued to make significant expenditures and investments, including in personnel-related costs, sales and marketing, infrastructure and operations, and have incurred net losses in each period since our inception, including net losses attributable to New Relic of $78.4 million and $29.8 million for the three months ended June 30, 2021 and 2020, respectively. Our accumulated deficit as of June 30, 2021 was $611.3 million.

Internationally, we currently offer our products in Europe, the Middle East, and Africa, (“EMEA”); Asia-Pacific, (“APAC”); and other non-U.S. locations, as determined based on the billing address of our customers, and our revenue from those regions constituted 16%, 10%, and 7%, respectively, of our revenue for the three months ended June 30, 2021, and 16%, 9%, and 6%, respectively, of our revenue for the three months ended June 30, 2020. We believe there is an opportunity to increase our international revenue overall and as a proportion of our revenue, and we are increasingly investing in our international operations and intend to invest in further expanding our footprint in international markets.     

Our employee headcount has decreased to 1,934 employees as of June 30, 2021 from 2,232 as of June 30, 2020, partially as a result of the restructuring plan we implemented in April 2021 to realign our cost structure and resources.

The COVID-19 pandemic continues to affect the U.S. and the world and has resulted in authorities implementing numerous measures to contain the virus. The extent of the impact of the COVID-19 pandemic on our operational and financial performance will continue to depend on certain developments, including the duration of the pandemic; impact on our customers and our sales cycles; impact on our customer, employee, and industry events; impact on our employee recruitment and attrition; and effect on our vendors, all of which remain uncertain and cannot be predicted at this time.

We will continue to actively monitor the situation and have taken and may take further actions that alter our business operations as may be required or recommended by federal, state, or local authorities, or that we determine are in the best interests of our employees, customers, partners, suppliers, and stockholders. As the development, distribution and public acceptance of treatments and vaccines progress, we continue to evaluate and refine our operational strategies. Our revenue and deferred revenue have been, in part, negatively impacted by the slowdown in activity associated with the COVID-19 pandemic, but at this point, the extent of any continuing impact to our financial condition or results of operations, including cash flows, is uncertain, particularly as the COVID-19 pandemic continues to persist for an extended period of time. Furthermore, due to our historical reliance upon a subscription-based business model, the effect of the COVID-19 pandemic may not be fully reflected in our results of operations until future periods. Other factors affecting our performance are discussed below, although we caution you that the COVID-19 pandemic may also further impact these factors.

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In addition, on July 30, 2020, we announced an updated pricing strategy that prices customer spend based upon their consumption; customers may be charged upon their usage in arrears, which we refer to as “Pay as You Go,” or they may commit to a minimum spend over their contracted period in exchange for a discount on their usage pricing, which we refer to as “Annual Pool of Funds.” Consumption under this model is measured by the number of users and data ingested into our system, thereby collapsing what had previously been a number of different products priced in individualized ways into a simplified strategy that is intended to drive consumption across our platform. Although we have seen, in the near term, that this transition has had a negative impact on our results of operations, we believe that this pricing model transition will continue to increase our new and existing customer adoption and allow us to better retain and expand within our existing customer accounts over the long term, and thereby have a positive impact on sales and marketing productivity. However, due to our historical reliance upon a subscription-based business model, improvement in the market adoption of our products due to this pricing model transition would not be fully reflected in our results of operations until future periods.

On April 6, 2021, we announced a restructuring plan to realign our cost structure to better reflect the significant product and business model innovation that occurred over the past 12 months. We expect that go-to-market operations in our consumption-based business model will be more efficient, thus requiring less investment, than our former more traditional subscription model. In furtherance of this strategy shift, we have reallocated some spending to increase our investment on research and development. We believe these initiatives will better align resources to provide further operating flexibility and position the business for its long-term success.

Factors Affecting Our Performance

Market Adoption of Our Platform. Our success, including our rate of customer expansions and renewals, is dependent on the market adoption of our platform. With the introduction of new technologies, the evolution of our platform and new market entrants, competition has intensified and we expect competition to intensify in the future. We employ a land, expand, and standardize business model centered around offering a platform that is open, connected and programmable. We believe that we have built a highly differentiated platform and we intend to continue to invest in building additional offerings, features and functionality that expand our capabilities and facilitate the extension of our platform to new use cases. We also intend to continue to evaluate strategic acquisitions and investments in businesses and technologies to drive product and market expansion. Our ability to improve market adoption of our platform will also depend on a number of other factors, including the competitiveness and pricing of our products, offerings of our competitors, success of international expansion, and effectiveness of our sales and marketing efforts. With the shift in our pricing strategy, which will now rely primarily upon a per-user license fee and payment based on the quantity of data ingested, we will be more closely tying our revenue to the usage of our platform. Together with our new pricing strategy, we also launched a new, robust free tier and improved self-service capabilities, which we expect to result in a material increase to our marketing opportunities in converting free users into new paying customers.

Retention and Expansion. A key factor in our success is the retention and expansion of our platform usage with our existing customers. In order for us to continue to grow our business, it is important to generate additional revenue from our existing customers, and we intend to do this in several ways. As we improve our existing products and platform capabilities and introduce new products, we believe that the demand for our products will generally grow. We also believe that there is a significant opportunity for us to increase our revenue from sales to our current customers as they become more familiar with our products and adopt our products to address additional business use cases. In addition, we believe the shift in our pricing strategy will allow sales resources to focus energy on helping customers increase their data ingestion and the number of users and use cases.

Key Operating Metrics

The pricing changes announced in the second quarter of fiscal 2021 shifted our business model away from a reliance upon subscription-based revenue to a reliance upon consumption-based revenue.

As such, beginning with this fiscal quarter ended June 30, 2021, we retired annual recurring revenue (“ARR”) and all of our traditional subscription-based key operating metrics that rely upon ARR. In place of ARR and ARR-derived metrics, we are providing metrics that we believe provide better insight into our business now that we are entering into contracts that rely primarily upon consumption-based revenue. We believe the change in methodology and focus on consumption-based metrics provide improved disclosures for our investors by better aligning our key operating metrics with our financial statements and will provide a better representation of these important components of our operating model and business performance as we continue to grow our business. The calculation of the key operating metrics discussed below may differ from other similarly titled metrics used by other companies, securities analysts, or investors.

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Number of Active Customer Accounts. We believe that the number of Active Customer Accounts is an important indicator of the growth of our business, the market acceptance of our platform and future revenue trends. We define an Active Customer Account at the end of any period as an individual account, as identified by a unique account identifier, aggregated at the parent hierarchy level, for which we have recognized any revenue in the fiscal quarter. As our customers grow their businesses and extend the use of our platform, they sometimes create multiple customer accounts with us for operational or other reasons. As such, when we identify a parent organization that has created a new Active Customer Account, this new Active Customer Account is combined with, and revenue from this new Active Customer Account is included with, the original Active Customer Account. In addition, our Active Customer Accounts metric is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity. We round the number of Active Customer Accounts that we report as of a particular date down to the nearest hundred.

For the three-month period ended June 30, 2021, we had 14,100 Active Customer Accounts, which is down from 15,400 Active Customer Accounts for the three-month period ended June 30, 2020 and remained flat sequentially from the three-month period ended March 31, 2021.

Number of Active Customer Accounts with Revenue Greater than $100,000. Large customer relationships generally lead to scale and operating leverage in our business model. Compared with smaller customers, large customers present a greater opportunity for us to sell additional capacity because they often have larger budgets, a wider range of potential use cases, and greater potential for migrating new workloads to our platform over time. As a measure of our ability to scale with our customers and attract large enterprises to our platform, we count the number of Active Customer Accounts for which we have recognized greater than $100,000 in revenue in the trailing 12-months.

For the three-month period ended June 30, 2021, we had 964 Active Customer Accounts with trailing 12-month revenue over $100,000, which was a 12% increase compared to 862 for the three-month period ended as of June 30, 2020 and a 2% increase compared to 945 for the three-month period ended March 31, 2021.

Percentage of Revenue from Active Customer Accounts Greater than $100,000. In addition to the number of Active Customer Accounts with revenue greater than $100,000, we also look at our percentage of overall revenue we receive from those accounts in any given quarter as an indicator of our relative performance when selling to our large customer relationships or our smaller revenue accounts. An increase in the percentage of revenue reflects relative higher growth in our large customer relationships, whereas a decrease in the percentage reflects relative higher growth in our performance with smaller revenue customers.

Our percentage of revenue from Active Customers with trailing 12-month revenue greater than $100,000 was 79% for the three-month period ended June 30, 2021, compared to 76% for the three-month period ended June 30, 2020 and 79% for the three-month period ended March 31, 2021.

Net Revenue Retention Rate. We believe the growth in use of our platform by our existing Active Customer Accounts is an important measure of the health of our business and our future growth prospects. We monitor our net revenue retention rate (“NRR”) to measure this growth. We expect our NRR to increase when Active Customer Accounts increase their usage of a product, extend their usage of a product to new applications or adopt a new product. We expect our NRR to decrease when Active Customer Accounts cease or reduce their usage of a product.

To calculate NRR, we first identify the cohort of Active Customer Accounts that were Active Customer Accounts in the same quarter of the prior fiscal year. Next, we identify the measurement period as the 12-month period ending with the period reported and the prior comparison period as the corresponding period in the prior year. NRR is the quotient obtained by dividing the revenue generated from a cohort of Active Customer Accounts in the measurement period by the revenue generated from that same cohort in the prior comparison period.

Our NRR decreased to 111% for the period ended June 30, 2021 from 122% for the period ended June 30, 2020 and from 112% for the period ended March 31, 2021. The decrease was expected in part due to historical customer churn and in part due to our shift to consumption pricing.

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Key Components of Results of Operations

Revenue

For the periods presented, we offered access to our products and/or platform under subscription and usage-based plans that include service and support for one or more of our products. For our paying customers, we offer a variety of pricing plans based on the particular product purchased. Our plans typically have terms of one year, although some of our customers commit for shorter or longer periods.

Most of our revenue comes from contracts that are non-cancellable over the contract term. We had remaining performance obligations in the amount of $654.3 million and $726.8 million as of June 30, 2021 and March 31, 2021, respectively, consisting of both billed and unbilled consideration.

Deferred revenue consists of billings or payments received in advance of revenue being recognized, and can fluctuate with changes in billing frequency and other factors. As a result of our mix of subscription plans and billing frequencies, we do not believe that changes in our deferred revenue in a given period are directly correlated with our revenue growth in that period.

The first two quarters of each fiscal year usually have lower or potentially negative sequential remaining performance obligations and deferred revenue growth than the third and fourth fiscal quarters, during which we generally benefit from a larger renewal pool and opportunity to upsell existing customers. As a result, over time we have seen stronger sequential revenue results in our fourth and first fiscal quarters as our deferred revenue is recognized. We expect that this seasonality will continue to affect our sales and operating results in the future, as a portion of our overall revenue continues to be derived from our subscription-based contracts that remain in our install base, which can make it difficult to achieve sequential growth in certain financial metrics or could result in sequential declines on a quarterly basis as we continue to convert our customers to the new consumption model.

With our shift in pricing strategy, we may experience additional variation from the seasonality trends we have seen in the past for revenue, remaining performance obligations, and deferred revenue. Our shift to a consumption model will allow our customers to choose lower up-front commitments and to instead pay for their consumption in excess of their commitments. In addition, when we recognize variable consideration, we accelerate the drawdown of deferred revenue, if applicable. Furthermore, because our sales representatives are now compensated based on customers’ level of consumption, there may be less incentive to obtain early renewals. Should all of these occur as we expect, we may experience downward pressure on our remaining performance obligations and deferred revenue. Meanwhile, in the event our customers’ consumption usage exceeds their up-front commitments in a meaningful amount, we would expect to see a step up in revenue growth. In addition, our transactions vary by quarter, and within each quarter, a significant portion of our transactions typically close in the last two weeks of that quarter. In the past, prior to our shift in pricing strategy, if we were unable to close one or more transactions in a particular period, or if an expected transaction was delayed until a subsequent period, our results of operations for that period and for any future periods may have been harmed. However, since our change in pricing strategy, we expect less financial impact from end-of-quarter concentration of our transactions.

In addition, our revenue and deferred revenue have been negatively impacted, in part, by the slowdown in activity associated with the COVID-19 pandemic as well as by our change in pricing strategy announced on July 30, 2020. Meanwhile, although we have seen indications of improved market acceptance of our platform and new pricing strategy, due to our historical reliance upon a subscription-based business model, improvement in the market adoption of our products due to this pricing model transition would also not be fully reflected in our results of operations until future periods.

Cost of Revenue

Cost of revenue consists of expenses relating to data center operations, hosting-related costs, payment processing fees, depreciation and amortization, consulting costs, and salaries and benefits of operations and global customer support personnel. Salaries and benefits costs associated with our operations and global customer support personnel consist of salaries, benefits, bonuses, and stock-based compensation. We plan to continue increasing the capacity, capability, and reliability of our infrastructure to support the growth of our customer adoption and the number of products we offer, as customer usage continues to grow. Additionally, we are continuing to build out services and functionality in the public cloud with a view to migrating our entire platform over time from third-party data center hosting facilities to public cloud hosting providers. We have decreased the amount of capital expenditures on hosting equipment for use in our data center hosting facilities as we transition to greater dependence on cloud hosting providers. This public cloud migration has resulted and will continue to result in significant increased costs in the short term as we are incurring cloud migration costs as well as costs to maintain our data center operations.

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Gross Profit and Margin

Gross profit is revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of revenue. Our gross margin has been, and will continue to be, affected by a number of factors, including the timing and extent of our investments in our operations and global customer support personnel, hosting-related costs, and the amortization of capitalized software. Although we expect our gross margin to fluctuate from period to period as a result of these factors, our recent public cloud migration and, to a lesser extent, our pricing transition, have contributed to lower gross margins and we expect to continue to experience additional downward pressure on margins in the short-term.

Operating Expenses

Personnel costs, which consist of salaries, benefits, bonuses, stock-based compensation and, with regard to sales and marketing expenses, sales commissions, are the most significant component of our operating expenses. We also incur other non-personnel costs such as an allocation of our general overhead expenses.

Research and Development. Research and development expenses consist primarily of personnel costs and an allocation of our general overhead expenses. We continue to focus our research and development efforts on adding new features and products, and increasing the functionality and enhancing the ease of use of our existing products. We capitalize the portion of our software development costs that meets the criteria for capitalization.

We plan to continue to hire employees for our engineering, product management, and design teams to support our research and development efforts. As a result, we expect our research and development expenses to continue to increase in absolute dollars for the foreseeable future. Although our research and development expenses may fluctuate from period to period depending on fluctuations in our revenue and the timing and extent of our research and development expenses.

Sales and Marketing. Sales and marketing expenses consist of personnel costs for our sales, marketing, and business development employees and executives. Commissions are considered incremental and recoverable costs of acquiring customer contracts. These costs are capitalized and amortized on a straight-line basis over the anticipated period of benefit. With our shift to a consumption model and shift in pricing strategy, we expect that a significant majority of commissions will no longer be capitalized and will instead mostly be expensed as incurred. Sales and marketing expenses also include the costs of our marketing and brand awareness programs, including our free tier offering.

We expect that go-to-market operations in our new consumption-based business model will be more efficient, and requires less investment, than in our former more traditional subscription model. In furtherance of this strategy shift, we have reallocated some spending from sales and marketing to increase our investment on research and development. While we expect our sales and marketing expenses to decrease as a percentage of our revenue over the long term, our sales and marketing expenses may fluctuate from period to period depending on fluctuations in our revenue and the timing and extent of our sales and marketing expenses.

General and Administrative. General and administrative expenses consist primarily of personnel costs for our administrative, legal, human resources, information technology, finance and accounting employees, and executives. Also included are non-personnel costs, such as legal and other professional fees.

We plan to continue to expand our business both domestically and internationally, and we expect to increase the size of our general and administrative function to support the growth of our business. As a result, we expect our general and administrative expenses to continue to increase in absolute dollars for the foreseeable future. However, we expect our general and administrative expenses to remain flat or decrease modestly as a percentage of our revenue over the long term, although our general and administrative expense may fluctuate from period to period depending on the timing and extent of our general and administrative expenses, such as litigation or accounting costs.

Other Income (Expense)

Other income (expense) consists primarily of interest income, interest expense, foreign exchange gains and losses, and gains on lease modifications.

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Results of Operations

The following tables summarize our consolidated statements of operations data for the periods presented and as a percentage of our revenue for those periods.

	Three Months Ended June 30,
	2021		2020
	(in thousands, except per share amounts)
Revenue	$	180,484	$	162,585
Cost of revenue (1)	59,264		33,273
Gross profit	121,220		129,312
Operating expenses:
Research and development (1)	48,730		40,844
Sales and marketing (1)	102,813		85,136
General and administrative (1)	43,565		29,434
Total operating expenses	195,108		155,414
Loss from operations	(73,888)		(26,102)
Other income (expense):
Interest income	938		2,781
Interest expense	(1,226)		(6,104)
Other expense	(336)		(395)
Loss before income taxes	(74,512)		(29,820)
Income tax provision (benefit)	(453)		332
Net loss	$	(74,059)	$	(30,152)
Net loss and adjustment attributable to redeemable non-controlling interest	(4,355)		396
Net loss attributable to New Relic	$	(78,414)	$	(29,756)
Net loss attributable to New Relic per share, basic and diluted	$	(1.24)	$	(0.50)
Weighted-average shares used to compute net loss per share, basic and diluted	63,339		59,927

(1) Includes stock-based compensation expense as follows:

	Three Months Ended June 30,
	2021		2020
	(in thousands)
Cost of revenue	$	1,072	$	1,502
Research and development	10,964		8,804
Sales and marketing	11,534		13,308
General and administrative (2)	18,617		7,594
Total stock-based compensation expense (3)	$	42,187	$	31,208

(2) Includes $9.6 million acceleration of share-based payment expense for one of our executives due to his departure at the end of June 2021.

(3) Includes $0.5 million expense for the three months ended June 30, 2021 due to the restructuring activities commenced in April 2021. Refer to Note 16. Restructuring for more information.

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	Three Months Ended June 30,
	2021		2020
	(as a percentage of revenue)
Revenue	100	%	100	%
Cost of revenue (1)	33		20
Gross profit	67		80
Operating expenses:
Research and development (1)	27		25
Sales and marketing (1)	57		53
General and administrative (1)	24		18
Total operating expenses	108		96
Loss from operations	(41)		(16)
Other income (expense):
Interest income	1		2
Interest expense	(1)		(4)
Other income (expense), net	—		—
Loss before income taxes	(41)		(18)
Income tax provision	—		—	%
Net loss	(41)	%	(18)	%
Net loss and adjustment attributable to redeemable non-controlling interest	(2)		—
Net loss attributable to New Relic	(43)	%	(18)	%

 (1) Includes stock-based compensation expense as follows:

	Three Months Ended June 30,
	2021		2020
	(as a percentage of revenue)
Cost of revenue	1	%	1	%
Research and development	6		5
Sales and marketing	6		8
General and administrative	10		5
Total stock-based compensation expense	23	%	19	%

Revenue

	Three Months Ended June 30,				Change
	2021		2020		Amount		%
	(dollars in thousands)
United States	$	123,035	$	112,410	$	10,625	9	%
EMEA	28,165		25,196		2,969		12
APAC	17,193		14,965		2,228		15
Other	12,091		10,014		2,077		21
Total revenue	$	180,484	$	162,585	$	17,899	11	%

Total revenue increased $17.9 million, or 11%, in the three months ended June 30, 2021 compared to the same period of 2020. Our revenue from the United States increased $10.6 million, or 9%, our revenue from EMEA increased $3.0 million, or 12%, our revenue from APAC increased $2.2 million, or 15%, and our revenue from other regions increased $2.1 million, or 21% in the three months ended June 30, 2021 compared to the same period of 2020, primarily as a result of growth in the existing customer base.

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Cost of Revenue

	Three Months Ended June 30,				Change
	2021		2020		Amount		%
	(dollars in thousands)
Cost of revenue	$	59,264	$	33,273	$	25,991	78	%

Cost of revenue increased $26.0 million, or 78%, in the three months ended June 30, 2021 compared to the same period of 2020. The increase was primarily a result of a $27.4 million increase in hosting-related costs as a result of the additional expenses incurred in connection with our public cloud migration. The remaining increase was due to an increase in depreciation and amortization expense of $0.6 million as a result of site equipment at our third-party data centers. This was partially offset by a $2.2 million decrease in personnel-related costs and a $0.1 million decrease in payment processing fees.

Research and Development

	Three Months Ended June 30,				Change
	2021		2020		Amount		%
	(dollars in thousands)
Research and development	$	48,730	$	40,844	$	7,886	19	%

Research and development expenses increased $7.9 million, or 19%, in the three months ended June 30, 2021 compared to the same period of 2020. The increase was primarily a result of an increase in personnel-related costs of $6.6 million, driven by headcount and merit-based compensation increases. The remaining increase was mostly due to a $1.1 million increase in facilities and depreciation expenses.

Sales and Marketing

	Three Months Ended June 30,				Change
	2021		2020		Amount		%
	(dollars in thousands)
Sales and marketing	$	102,813	$	85,136	$	17,677	21	%

Sales and marketing expenses increased $17.7 million, or 21%, in the three months ended June 30, 2021 compared to the same period of 2020. The increase was primarily a result of an increase in personnel-related costs of $10.8 million, driven by severance charges resulting from the restructuring activities commenced in April 2021. The remaining increase was due to a $2.9 million increase in allocated costs, including facilities, depreciation, and costs associated with our free tier offering, a $2.8 million increase in marketing programs, a $1.5 million increase in software subscription and consulting expenses, and a $1.2 million increase in travel expenses as COVID-19 travel restrictions ease.

General and Administrative

	Three Months Ended June 30,				Change
	2021		2020		Amount		%
	(dollars in thousands)
General and administrative	$	43,565	$	29,434	$	14,131	48	%

General and administrative expenses increased $14.1 million, or 48%, in the three months ended June 30, 2021 compared to the same period of 2020. The increase was primarily a result of an increase in personnel-related costs of $12.2 million, driven by a $10.2 million stock-based compensation charge mostly from the acceleration of share-based payment expense for one of our executives due to his departure from the company at the end of June 2021. The remaining increase was due to a $1.4 million increase in legal and accounting expenses, a $0.3 million increase in software subscription and consulting expenses, and a $0.1 million increase in travel expense.

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Other Income (Expense)

	Three Months Ended June 30,				Change
	2021		2020		Amount		%
	(dollars in thousands)
Other expense	$	(624)	$	(3,718)	$	3,094	(83)	%

Other expense decreased by $3.1 million, or 83% in the three months ended June 30, 2021 compared to the same period of 2020. The decrease was primarily due to a decrease in interest expense for our convertible debt due to the adoption of ASU 2020-06, Accounting for Convertible Instruments and Contract on an Entity’s Own Equity.

Provision for (Benefit from) Income Tax

	Three Months Ended June 30,				Change
	2021		2020		Amount		%
	(dollars in thousands)
Income tax provision (benefit)	$	(453)	$	332	$	(785)	236	%

We had an income tax benefit of $0.5 million for the three months ended June 30, 2021 as compared to an income tax expense of $0.3 million for the same period of 2020. The change of $0.8 million, or 236%, was mostly due to the income tax benefit recognized as a result of our CodeStream acquisition.

Net Loss and Adjustment Attributable to Redeemable Non-controlling Interest

	Three Months Ended June 30,				Change
	2021		2020		Amount		%
	(dollars in thousands)
Net loss and adjustment attributable to redeemable non-controlling interest	$	(4,355)	$	396	$	(4,751)	1,200	%

Net loss and adjustment attributable to redeemable non-controlling interest decreased by $4.8 million or 1,200%, in the three months ended June 30, 2021 compared to the same period of 2020. The decrease is related to the redeemable non-controlling interest’s adjustment to estimated redemption value of our joint venture in New Relic K.K. offset by share of associated losses.

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Non-GAAP Financial Measures

Non-GAAP (Loss) Income From Operations    

To supplement our consolidated financial statements presented in accordance with GAAP, we provide investors with certain non-GAAP financial measures, including non-GAAP income (loss) from operations and non-GAAP net income (loss) attributable to New Relic. We define non-GAAP income (loss) from operations and non-GAAP net income (loss) attributable to New Relic as the respective GAAP balance, adjusted for, as applicable: (1) stock-based compensation expense, (2) amortization of stock-based compensation capitalized in software development costs, (3) the amortization of purchased intangibles, (4) employer payroll tax expense on equity incentive plans, (5) amortization of debt discount and issuance costs, (6) the transaction costs related to acquisitions, (7) lawsuit litigation cost and other expense, (8) gain or loss from lease modification, and (9) adjustment to redeemable non-controlling interest. We use non-GAAP financial measures, including non-GAAP income (loss) from operations and non-GAAP net income (loss) attributable to New Relic, 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 our financial performance. In addition, our bonus opportunity for eligible employees and executives is based in part on non-GAAP income (loss) from operations.

We believe these measures are useful to investors, as a supplement to GAAP measures, in evaluating our operational performance. We have provided below a reconciliation of GAAP loss from operations to non-GAAP income (loss) from operations and a reconciliation of GAAP net loss attributable to New Relic to non-GAAP net income (loss) attributable to New Relic. We believe non-GAAP income (loss) from operations and non-GAAP net income (loss) attributable to New Relic are useful to investors and others in assessing our operating performance due to the following factors:

Stock-based compensation expense and amortization of stock-based compensation capitalized in software development costs. We utilize share-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of our 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.

Amortization of purchased intangibles and transaction costs related to acquisitions. We view 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, we view acquisition-related expenses as events that are not necessarily reflective of operational performance during a period.

Employer payroll tax expense on equity incentive plans. We exclude 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 our 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 our business.

Amortization of debt discount and issuance costs. In May 2018, we issued $500.25 million of our 0.50% convertible senior notes due 2023 (the “Notes”), which bear interest at an annual fixed rate of 0.5%. The effective interest rate of the Notes was 5.74%. Effective April 1, 2021 the Company adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contract on an Entity’s Own Equity. As a result of the adoption, the debt conversion option and debt issuance costs previously attributable to the equity component will no longer be presented in equity. Similarly, the debt discount, which is equal to the carrying value of the embedded conversion feature upon issuance, will no longer be amortized into income as interest expense over the life of the instrument. This resulted in a $54.2 million decrease to the opening balance of accumulated deficit, a $100.1 million decrease to the opening balance of additional paid-in capital, and a $45.9 million increase to the opening balance of the Notes, net on the consolidated balance sheet. The debt issuance costs were amortized as interest expense. The expense for the amortization of 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.

Transaction costs related to acquisitions. We may from time to time incur direct transaction costs related to acquisitions. We believe it is useful to exclude such charges because it does not consider such amounts to be part of the ongoing operation of our business.

Lawsuit litigation cost and other expense. We may from time to time incur charges or benefits related to litigation that are outside of the ordinary course of our business. We believe it is useful to exclude such charges or benefits because we do not

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consider such amounts to be part of the ongoing operation of our business and because of the singular nature of the claims underlying the matter.

Gain or loss from lease modification. We may incur a gain or loss from modification related to lease agreements. We believe it is useful to exclude such charges or benefits because we do not consider such amounts to be part of the ongoing operation of our business and because of the singular nature of benefit or charge from such events.

Adjustment to redeemable non-controlling interest. In fiscal year 2021, we made an adjustment to the value of redeemable non-controlling interest in connection with our joint venture in New Relic K.K. We believe it is useful to exclude the adjustment to redeemable non-controlling interest because it may not be indicative of our future operating results and that investors benefit from an understanding of our operating results without giving effect to this adjustment.

Restructuring charges. In April 2021, we commenced a restructuring plan to realign our cost structure to better reflect significant product and business model innovation over the past 12 months. As a result of the restructuring plan, we incurred charges of approximately $12.8 million for employee terminations and other costs associated with the restructuring plan. Most of these charges consisted of cash expenditures and stock-based compensation expense and were recognized in the first quarter of fiscal 2022. We believe it is appropriate to exclude the restructuring charges because they are not indicative of our future operating results.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. 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 differ from non-GAAP financial measures used by other companies in our industry and exclude expenses that may have a material impact on our reported financial results.

The following tables present our non-GAAP income (loss) from operations and our non-GAAP net income (loss) attributable to New Relic and reconcile our GAAP loss from operations to non-GAAP income (loss) from operations and our GAAP net loss attributable to New Relic to our non-GAAP net income (loss) attributable to New Relic for the three months ended June 30, 2021 and 2020 (in thousands):

	Three Months Ended June 30,
	2021		2020
GAAP loss from operations	$	(73,888)	$	(26,102)
Plus: Stock-based compensation expense	42,187		31,208
Plus: Amortization of purchased intangibles	1,676		1,276
Plus: Transaction costs related to acquisitions	361		—
Plus: Amortization of stock-based compensation capitalized in software development costs	420		239
Plus: Employer payroll tax on employee equity incentive plans	813		948
Plus: Restructuring charges (1)	12,279		—
Non-GAAP income (loss) from operations	$	(16,152)	$	7,569

	Three Months Ended June 30,
	2021		2020
GAAP net loss attributable to New Relic	$	(78,414)	$	(29,756)
Plus: Stock-based compensation expense	42,187		31,208
Plus: Amortization of purchased intangibles	1,676		1,276
Plus: Transaction costs related to acquisitions	361		—
Plus: Amortization of stock-based compensation capitalized in software development costs	420		239
Plus: Employer payroll tax on employee equity incentive plans	813		948
Plus: Amortization of debt discount and issuance costs	587		5,466
Plus: Adjustment to redeemable non-controlling interest	4,395		—
Plus: Restructuring charges (1)	12,279		—
Non-GAAP net income (loss) attributable to New Relic	$	(15,696)	$	9,381

(1) Restructuring related charge for the stock-based compensation expense of $0.5 million is included on its respective line items.

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Non-GAAP income (loss) from operations and non-GAAP net income (loss) attributable to New Relic for the periods presented reflects the same trends discussed above in “Results of Operations.” Although we have generated non-GAAP income from operations and non-GAAP net income attributable to New Relic in past quarters and while we expect with increased efficiencies for these numbers to improve, we expect to remain in a loss position in the near future as we continue to incur additional expenses during our public cloud migration and due to an increase in commission expense. In prior periods, commissions were mostly capitalized and amortized in future periods. With our shift to a consumption model and shift in pricing strategy, a significant majority of commissions will no longer be capitalized and will instead mostly be expensed as incurred.

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Liquidity and Capital Resources

	Three Months Ended June 30,
	2021		2020
	(in thousands)
Cash provided by operating activities	$	9,872	$	35,148
Cash provided by (used in) investing activities	4,407		(72,215)
Cash provided by financing activities	4,797		1,424
Net increase (decrease) in cash, cash equivalents and restricted cash	$	19,076	$	(35,643)

To date, we have financed our operations primarily through the issuance of the Notes, private and public equity financings and customer payments. We believe that our existing cash, cash equivalents, and short-term investment balances, together with cash generated from operations, will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months.

Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the timing of our public cloud migration and the related decreased spending on capital expenditures, the introduction of new and enhanced products, seasonality of our billing activities, the timing and extent of spending to support our growth strategy, the continued market acceptance of our products, and competitive pressures. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, technologies and intellectual property rights. We may need or choose to raise additional funds from equity or debt securities in order to meet those capital requirements. In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results, and financial condition would be adversely affected.

Operating Activities

During the three months ended June 30, 2021, cash provided by operating activities was $9.9 million as a result of a net loss of $74.1 million, adjusted by non-cash charges of $64.9 million and a change of $19.1 million in our operating assets and liabilities. The change in our operating assets and liabilities was primarily the result of a $80.6 million decrease in accounts receivable, a $4.9 million increase in accounts payable, and a $2.7 million decrease in lease right-of-use assets. This was partially offset by a $57.8 million decrease in deferred revenue, a $8.6 million decrease in accrued compensation and benefits and other liabilities, and a $2.5 million decrease in lease liabilities.

During the three months ended June 30, 2020, cash provided by operating activities was $35.1 million as a result of a net loss of $30.2 million, adjusted by non-cash charges of $57.5 million and a change of $7.8 million in our operating assets and liabilities. The change in our operating assets and liabilities was primarily the result of a $36.1 million decrease in accounts receivable, a $5.6 million increase in accrued compensation and benefits and other liabilities due to increased headcount, and a $1.3 million increase in lease liabilities. This was partially offset by a $16.5 million decrease in deferred revenue, a $9.4 million increase in deferred contract acquisition costs, a $3.9 million decrease in accounts payable, a $3.2 million increase in prepaid expenses and other assets, and a $2.2 million increase in lease right-of-use assets.

Investing Activities

Cash used in investing activities during the three months ended June 30, 2021 was $4.4 million, primarily as a result of purchases of short-term investments of $23.8 million, cash paid for acquisition, net of cash acquired, of $7.2 million, purchases of property and equipment of $2.2 million, and increases in capitalization of software development costs of $2.9 million. This was partially offset by proceeds from the maturity and sale of short-term investments of $40.5 million.

Cash used in investing activities during the three months ended June 30, 2020 was $72.2 million, primarily as a result of purchases of short-term investments of $73.4 million, purchases of property and equipment of $8.2 million, and increases in capitalization of software development costs of $3.7 million. This was partially offset by proceeds from the maturity and sale of short-term investments of $13.1 million.

Financing Activities

Cash provided by financing activities during the three months ended June 30, 2021 was $4.8 million, which was the result of proceeds from the exercise of stock options.

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Cash provided by financing activities during the three months ended June 30, 2020 was $1.4 million, which was the result of proceeds from the exercise of stock options.

Contractual Obligations and Commitments

Our principal contractual commitments primarily consist of obligations under leases for office space and purchase commitments. Except as set forth in Note 9 — Leases and Note 10 — Commitments and Contingencies contained in the “Notes to Condensed Consolidated Financial Statements” in Item 1 of Part I of this Quarterly Report on Form 10-Q, there were no material changes in our commitments under contractual obligations, as disclosed in our audited consolidated financial statements for the fiscal year ended March 31, 2021 in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021 (our “Annual Report”), as filed with the Securities and Exchange Commission, (“SEC”), on May 14, 2021.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Critical Accounting Policies

We prepare our consolidated financial statements in accordance with United States generally accepted accounting principles, (“GAAP”). In the preparation of these consolidated financial statements, we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from our estimates. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates.

Except for the early adoption of ASU 2020-06, Accounting for Convertible Instruments and Contract on an Entity’s Own Equity (Subtopic 815-40), there have been no significant changes in our critical accounting policies and estimates during the three months ended June 30, 2021 as compared to the critical accounting policies and estimates described in our Annual Report.

Recent Accounting Pronouncements

See Note 1, Description of Business and Summary of Significant Accounting Policies contained in the “Notes to Condensed Consolidated Financial Statements” in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Risk

Our subscription and usage-based agreements are primarily denominated in U.S. dollars. A portion of our operating expenses are incurred outside the United States and are denominated in foreign currencies and subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro and Japanese Yen. Additionally, fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our statements of operations. To date, foreign currency transaction gains and losses have not been material to our financial statements, and we have not engaged in any foreign currency hedging transactions. As our international operations grow, we will continue to reassess our approach to managing the risks relating to fluctuations in currency rates. The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our historical consolidated financial statements.

Interest Rate Risk

We had cash and cash equivalents of $259.9 million as of June 30, 2021, consisting of bank deposits and money market funds. These interest-earning instruments carry a degree of interest rate risk. To date, fluctuations in our interest income have not been significant. We have an agreement to maintain cash balances at a financial institution of no less than $5.6 million as collateral for several letters of credit in favor of our landlords. The letters of credit carry a fixed interest rate of 1%.

We had short-term investments of $557.2 million as of June 30, 2021, consisting of certificates of deposit, commercial paper, corporate notes and bonds, and U.S. treasury securities. Our investments in marketable securities are made for capital

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preservation purposes. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. Due to the short-term nature of these investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates.

A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our consolidated financial statements.

In March 2018, we issued $500.25 million aggregate principal amount of the Notes. The fair value of the Notes is subject to interest rate risk, market risk and other factors due to the conversion feature in the Notes. The fair value of the Notes will generally increase as our common stock price increases and will generally decrease as our common stock price declines. The interest and market value changes affect the fair value of the Notes but do not impact our financial position, cash flows or results of operations due to the fixed nature of the debt obligation. Additionally, we carry the Notes at face value less unamortized issuance on our balance sheet, and we present the fair value for required disclosure purposes only.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2021, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Controls

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be subject to legal proceedings and claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, financial condition or cash flows. We have received, and may in the future continue to receive, claims from third parties asserting, among other things, infringement of their intellectual property rights. Future litigation may be necessary to defend ourselves, our partners and our customers by determining the scope, enforceability and validity of third-party proprietary rights, or to establish our proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Item 1A. Risk Factors

We have identified the following risks and uncertainties that may have a material adverse effect on our business, financial condition, or results of operations. This description includes any material changes to and supersedes the description of the risk factors disclosed in Part I, Item 1A of our Annual Report. We have marked with an asterisk (*) those risks described below that reflect material substantive changes from the risks disclosed in Part I, Item 1A of our Annual Report.

The risks described below are not the only ones we face. Additional risks not presently known to us or that we currently believe are immaterial may also significantly impair our business operations. Our business could be harmed by any of these risks. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. In assessing these risks, you should also refer to the other information contained in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and accompanying notes.

Risks Related to Our Business and Our Industry

We have limited experience with respect to determining the optimal prices and pricing structures for our products and have employed evolving pricing models, which subject us to challenges that could make it difficult for us to derive value from our customers and may adversely affect our operating results. *

We have evolved our pricing models over time and we expect that they will continue to evolve. For example, we have offered a variety of pricing plans based on the particular product purchased by an account, number of servers monitored, number of applications monitored, or number of mobile devices monitored; and we offer access to our products under subscription plans that include service and support for one or more of our products. However, on July 30, 2020, we announced an updated pricing strategy that prices customer spend based upon their consumption; customers may be charged upon their usage in arrears, which we refer to as “Pay as You Go,” or they may commit to a minimum spend over their contracted period in exchange for a discount on their usage pricing, which we refer to as “Annual Pool of Funds.” Consumption under this model is measured by number of users and data ingested into our system, thereby collapsing what had previously been a number of different products priced in individualized ways into a simplified strategy that is intended to drive consumption across our platform.

This updated pricing strategy may ultimately result in a higher total cost to our customers generally as data volumes increase over time, or may cause our customers to limit or decrease usage in order to stay within budgeted amounts or lower their costs, making it more difficult for us to compete in our markets or negatively impacting our financial results. We have seen that the pricing transition has negatively impacted our revenue and deferred revenue for certain customers at the time of their renewal. For example, some customers have decided to take advantage of our new pricing model and choose smaller upfront commitments in favor of spending on actual consumption in excess of committed amounts. Whether our pricing model transition will prove successful is subject to numerous uncertainties, including but not limited to: customer demand, renewal and expansion rates, our ability to further develop and scale infrastructure, the ability of our sales force to successfully execute new sales strategies, tax and accounting implications, pricing, and our costs. In addition, the metrics we use to gauge the status and success of our pricing model transition may continue to evolve over the course of the transition as significant trends emerge. For example, beginning with the fiscal quarter ended June 30, 2021, we retired annual recurring revenue (“ARR”) and all of our traditional subscription-based key operating metrics that rely upon ARR. In place of ARR and ARR-derived metrics, we are providing metrics that we believe provide better insight into our business now that we are entering into contracts that rely primarily upon consumption-based revenue.

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We have seen indications of acceptance of our pricing model from our customers and the market in general; however if our pricing model fails to gain continued or broader customer and market acceptance, our business and results of operations could be harmed. In addition, our evolving pricing models may allow competitors with different pricing models to attract customers unfamiliar or uncomfortable with our pricing models, which would cause us to lose business or modify our pricing models, both of which could adversely affect our revenues and operating margins.

We expect that we will continue to evolve our pricing model, including as a result of global economic conditions; reductions in our customers’ spending levels generally; the introduction of new products and services; the evolution of existing products and services; or changes in how computing infrastructure is broadly consumed. We have introduced and expect to continue to introduce variations to our pricing models and other pricing programs that provide broader usage and cost predictability for our customers. Although we may believe that these pricing changes will drive net new customers, increase customer adoption, and support our transition to a new model, it is possible that they will not and may potentially cause confusion with our customers, which could negatively impact our business, revenue, and other financial results. If we have difficulty determining the appropriate price structure for our products, we may be required from time to time to further revise our pricing structure or reduce our prices, which could adversely affect our business.

The ongoing global coronavirus (“COVID-19”) pandemic could harm our business and results of operations. *

The COVID-19 pandemic continues to impact worldwide economic activity and financial markets and has resulted in authorities implementing numerous measures to contain the virus. In light of the ongoing uncertainty relating to the COVID-19 pandemic and in compliance with shelter-in-place orders and other government executive orders directing that all non-essential businesses close their physical operations, we have taken precautionary measures intended to minimize the risk of the virus to our employees, our customers, and the communities in which we operate, which could negatively impact our business. These measures include temporarily requiring employees to work remotely, suspending all non-essential travel worldwide for our employees, canceling, postponing or holding virtually sponsored events and discouraging employee attendance at industry events and in-person work-related meetings. While we have a distributed workforce and our employees are accustomed to working remotely, our workforce is not normally fully remote and our employees travel frequently to establish and maintain relationships with one another and with our customers, partners and investors. In addition, our management team has, and will likely continue, to spend significant time, attention and resources monitoring the COVID-19 pandemic and seeking to minimize the risk of the virus and manage its effects on our business and workforce.

The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on certain developments, including the duration of the pandemic and the successful rollout of vaccines; impact on our customers and our sales cycles; impact on our customer, employee, and industry events; and effect on our vendors, all of which are uncertain and cannot be predicted at this time. In addition, COVID-19 may disrupt the operations of our customers and partners for an indefinite period of time, including as a result of travel restrictions and/or business shutdowns, all of which could negatively impact our business and results of operations, including cash flows. Our revenue and deferred revenue have been negatively impacted, in part, by the slowdown in activity associated with the COVID-19 pandemic, but at this point, the extent of the impact to our financial condition or results of operations, including cash flows, is uncertain, particularly as the COVID-19 pandemic continues to persist for an extended period of time. Furthermore, due to our historical reliance on a subscription-based business model, the effect of the COVID-19 pandemic may not be fully reflected in our results of operations until future periods. Meanwhile, our shift to consumption-based pricing contracts, where the revenue we receive is tied to our customers’ actual usage of our products, may further exacerbate the uncertainty with respect to the revenue we receive from our customers. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this ‘‘Risk Factors’’ section.

We have a history of losses and our revenue growth rate could continue to decline over time. As our costs increase, we may not be able to generate sufficient revenue to achieve and sustain profitability. *

We have incurred net losses in each fiscal period since our inception, including net loss attributable to New Relic of $78.4 million and $29.8 million in the three months ended June 30, 2021 and 2020, respectively. At June 30, 2021, we had an accumulated deficit of $611.3 million. We expect to continue to expend substantial financial and other resources on, among other things:

•investments in our research and development team, and the development of new platform offerings, capabilities, features, and functionality;

•expansion of our operations and infrastructure, both domestically and internationally;

•hiring of additional employees; and

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•general administration, including legal, accounting, and other expenses related to our growing operations and infrastructure.

These investments may not result in increased revenue or growth of our business. Our revenue growth rate has declined in recent periods and could continue to decline over time. Accordingly, we may not be able to generate sufficient revenue to offset our expected cost increases and to achieve and sustain profitability. If we fail to achieve and sustain profitability, our operating results and business would be harmed.

We have a limited operating history with our current business model, which makes it difficult to evaluate our current business and future prospects and increases the risk of your investment.

We were founded in 2007, launched our first commercial product in 2008, launched our New Relic One platform in 2019, and introduced our updated pricing strategy in July 2020. This limited operating history with our current business model limits our ability to forecast our future operating results and subjects us to a number of uncertainties, including our ability to plan for and model future growth. Our historical revenue growth should not be considered indicative of our future performance. We have encountered and will encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as determining appropriate investments of our limited resources, market adoption of our existing and future products and platform capabilities, competition from other companies, acquiring and retaining customers, hiring, integrating, training and retaining skilled personnel, developing new products and platform capabilities, determining prices and pricing structures for our products and platform capabilities, unforeseen expenses, and challenges in forecasting accuracy. If our assumptions regarding these risks and uncertainties, which we use to plan our business, are incorrect or change, or if we do not address these risks successfully, our operating and financial results and our business could suffer.

We have experienced significant growth in prior periods and our historical growth rates may not be indicative of our future growth. If we are not able to manage our growth and expansion, or if our business does not grow as we expect, our operating results may suffer.

We have experienced significant growth in our customer adoption and have expanded and intend to continue to significantly expand our operations, including our domestic and international employee headcount. This growth has placed, and will continue to place, significant demands on our management and our operational and financial infrastructure and we may not be able to sustain revenue growth consistent with prior periods, or at all.

To manage our growth effectively, we must continue to improve our operational, financial, and management systems and controls by, among other things:

•effectively attracting, training, integrating, and retaining a large number of new employees, particularly members of our research and development teams and employees and consultants in jurisdictions outside of the United States;

•further improving our key business systems, processes, and information technology infrastructure, including our and third-party hosted data centers and cloud services, to support our business needs;

•enhancing our information, training, and communication systems to ensure that our employees are well-coordinated and can effectively communicate with each other and our customers; and

•improving our internal control over financial reporting and disclosure controls and procedures to ensure timely and accurate reporting of our operational and financial results.

If we fail to manage our expansion, implement and transition to our new systems, implement improvements, or maintain effective internal controls and procedures, our costs and expenses may increase more than we plan and we may lose the ability to increase our customer adoption, enhance our existing solutions, develop new solutions, satisfy our customers, respond to competitive pressures, or otherwise execute our business plan. If we are unable to manage our growth, our operating results likely will be harmed.

Our business depends on our customers remaining on our platform and increasing their spend with us. Any decline in our customer expansions and renewals would harm our future operating results. *

Our future success depends in part on our ability to retain and expand our platform usage with our current customers. If our customers do not remain on our platform or increase their spend with us, our revenue may decline, and our operating results may be harmed.

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In addition, in order for us to maintain or improve our operating results, it is important that our customers renew their commitments or remain on our platform and increase their spend when the contract term expires. Many of our customers may start their accounts on a free tier and have no obligation to enter into a paid commitment or incur spend above the free tier. Our customers that enter into paid commitments have no obligation to renew after the expiration of the contractual term nor an obligation to remain on our platform and incur additional usage fees. Commitments are most often one year in length, and, our customers may renew for lower commitment amounts or instead use our Pay as You Go model, under which they are billed in arrears for their usage. In the past, some of our customers have elected not to renew their agreements with us, and we cannot accurately predict future net expansion rates. Moreover, certain legacy customers with annual subscriptions entered into prior to our pricing announcement on July 30, 2020 have the right to cancel their agreements prior to the termination of the subscription term. Additionally, some customers have decided and may continue to remain within the limitations of our new free-tier or lower-priced offerings. Customers also have canceled or reduced, and may continue to cancel or reduce, their commitments as a result of the impact of the COVID-19 pandemic on their businesses.

Our customer expansions and renewals may decline or fluctuate as a result of a number of factors, including: customer usage, customer satisfaction with our products and platform capabilities and customer support, our prices, including as a result of changes to our pricing strategy, the prices of competing products, mergers and acquisitions affecting our customer base, consolidation of affiliates’ multiple accounts into a single account, the effects of global economic conditions, including as a result of the COVID-19 pandemic, or reductions in our customers’ spending levels generally.

If we are not able to develop enhancements to our products, increase adoption and usage of our products, and introduce new products and capabilities that achieve market acceptance, our business could be harmed.

Our ability to attract new customers and increase revenue from existing customers depends in large part on our ability to enhance and improve our existing products, increase adoption and usage of our products, and introduce new products and capabilities. The success of any enhancement or new products depends on several factors, including timely completion, competitive pricing, adequate quality testing, introduction, integration with existing technologies and our platform, and market acceptance. Any products that we develop may not be introduced in a timely or cost-effective manner, may contain errors or defects, or may not achieve the broad market acceptance necessary to generate sufficient revenue. If we are unable to successfully enhance our existing products to meet customer requirements, increase adoption and usage of our products, or develop new products, our business and operating results will be harmed.

If customers do not expand their use of our products beyond the current predominant use cases, our ability to grow our business and operating results may be adversely affected.

Most of our customers currently use our products to support application performance management functions, and the majority of our revenue to date has been from our application performance management products. Our ability to grow our business depends in part on our ability to persuade current and future customers to expand their use of our software to additional use cases across our entire platform. If we fail to achieve market acceptance of our software, or if a competitor establishes a more widely adopted solution, our ability to grow our business and financial results will be adversely affected. In addition, as the amount of data stored for a given customer grows, that customer may have to limit or decrease usage in order to stay within budgeted amounts or lower their cost. If their fees grow significantly, customers may react adversely to this pricing model, particularly if they perceive that the value of our software has become eclipsed by such fees or otherwise.

Failure to effectively align our marketing and sales capabilities with our new pricing structure and increase sales efficiency could harm our ability to increase our customer adoption and achieve broader market acceptance of our products.

Our ability to increase our customer adoption and achieve broader market acceptance of our products will depend to a significant extent on our ability to align our marketing and sales capabilities with our new pricing structure and increase sales efficiency. In connection with our restructuring plan, we are realigning our cost structure to better reflect significant product and business model innovation with the expectation that go-to-market operations in our new consumption-based business model will be more efficient, thus requiring less investment, than in our former more traditional subscription model.

The effectiveness of our marketing programs has varied over time and may vary in the future due to competition, and we are continuously making adjustments to increase our emphasis on overall product experience and reorient our sales organization around customer success. All of these efforts have required and will continue to require us to invest significant resources. If we are unable to hire, develop, and retain talented sales personnel, if our sales personnel are unable to achieve desired productivity levels in a reasonable period of time or unable to successfully execute sales strategies in connection with our pricing model changes, or if our sales and marketing programs are not effective, our ability to increase our customer adoption and achieve broader market acceptance of our products could be harmed.

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In particular, we may in the future need to further adjust our go-to-market cost structure and target metrics, particularly as they relate to how we structure, effect, and compensate our sales teams to become more efficient and effective at selling under the consumption-based business model. Any adjustments in compensation structure could negatively affect the productivity of our sales teams, and there is no assurance that we will be able to successfully implement the adjustments in a timely or cost-effective manner, or that we will be able to realize all or any of the expected benefits from such adjustments.

If we are unable to develop and grow a broad base of high-spend customers, many of which we expect to be large enterprise customers, while mitigating the risks associated with serving such customers, our business, financial position, and results of operations may suffer. *

Our growth strategy is dependent, in large part, upon developing and growing a broad base of high-spend customers, many of which we expect to be large enterprise customers. Sales to large customers involve risks that may not be present or that are present to a lesser extent with sales to smaller entities, such as longer sales cycles, more complex customer requirements, substantial upfront sales costs, and less predictability in completing some of our sales. For example, enterprise customers may require considerable time to evaluate and test our applications and those of our competitors prior to making a purchase decision and placing an order. A number of factors influence the length and variability of our sales cycle, including the need to educate potential customers about the uses and benefits of our applications, the discretionary nature of purchasing and budget cycles, and the competitive nature of evaluation and purchasing approval processes. As a result, the length of our sales cycle, from identification of the opportunity to deal closure, may vary significantly from customer to customer, with sales to large enterprises typically taking longer to complete. Moreover, large enterprise customers often begin to deploy our products on a limited basis, but nevertheless demand extensive configuration, integration services, and pricing negotiations, which increase our upfront investment in the sales effort with no guarantee that these customers will deploy our products widely enough across their organization to justify our substantial upfront investment.

In addition, our ability to improve our sales of products to large enterprises is dependent on us continuing to attract and retain sales personnel with experience in selling to large organizations. Also, because security breaches with respect to larger, high-profile enterprises are likely to be heavily publicized, there is increased reputational risk associated with serving such customers. If we are unable to continue to increase sales of our products to large enterprise customers while mitigating the risks associated with serving such customers, our business, financial position, and results of operations may suffer.

Our quarterly results may fluctuate, especially as we are transitioning our pricing model, and our recent operating results may not be a good indication of our future performance. If we fail to meet the expectations of analysts or investors, our stock price and the value of your investment could decline substantially.

Our quarterly financial results may fluctuate widely as a result of the risks and uncertainties described in this report, many of which, such as the COVID-19 pandemic, are outside of our control. In addition, given our increasing reliance on consumption to drive revenue, our pricing model transition may give rise to a number of risks reflected in risk factor titled “We have limited experience with respect to determining the optimal prices and pricing structures for our products and have employed evolving pricing models, which subject us to challenges that could make it difficult for us to derive value from our customers and may adversely affect our operating results.” If our financial results fall below the expectations of investors or any securities analysts who follow our stock, the price of our common stock could decline substantially.

We believe that quarter-to-quarter comparisons of our revenue, operating results, and cash flows may not be meaningful and should not be relied upon as an indication of future performance. If our revenue or operating results fall below the expectations of investors or securities analysts in a particular quarter, or below any guidance we may provide, the price of our common stock could decline.

Because users are able to configure our platform to collect and store confidential, personal or proprietary information, security concerns could result in additional cost and liability to us or inhibit sales of our products.

Our operations involve protection of our intellectual property, along with the storage and transmission and processing of our customers’ proprietary data, which customers might choose to have include some personally identifiable information. While we have developed systems and processes to protect the integrity, confidentiality and security of our customers’ data, our security measures or those of our third-party service providers could fail and result in unauthorized access to or disclosure, modification, misuse, loss or destruction of such data. Any security breaches, computer malware, computer hacking, cyber-attacks, ransomware, phishing attacks and other social engineering schemes, denial or degradation of service attacks, unauthorized access or use, device theft, and other types of security incidents experienced by us or our third-party services providers, could expose us to a risk of loss of confidential, personal or proprietary information, loss of business, severe reputational damage adversely affecting customer or investor confidence, regulatory investigations and orders, litigation, demands, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations, and

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significant costs for investigation, remediation and incentives offered to customers or other business partners in an effort to maintain business relationships after a breach and other liabilities.

Cyber-attacks, intrusions and other malicious Internet-based activity including by computer hackers, foreign governments and cyber terrorists, continue to increase generally as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. The costs to us to investigate and mitigate network security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and while we have implemented security measures to protect our data security and information technology systems, our efforts to address these problems may not be successful, and these problems could result in unexpected interruptions, delays, cessation of service, negative publicity and other harm to our business and our competitive position. If our products or security measures are perceived as weak or actually compromised as a result of third-party action, employee or customer error, malfeasance, stolen or fraudulently obtained log-in credentials, or otherwise, our customers may curtail or stop using our products, our reputation could be damaged, our business may be harmed, and we could incur significant liability. We may be unable to anticipate or prevent techniques used to obtain unauthorized access or to sabotage systems because they change frequently and generally are not detected until after an incident has occurred. As we increase our customer adoption and our brand becomes more widely known and recognized, we may become more of a target for third parties seeking to compromise our security systems or gain unauthorized access to our customers’ data. Additionally, with so many of our employees now working remotely due to the COVID-19 pandemic, we may face an increased risk of attempted security breaches and incidents, such as the recently reported cybersecurity attack on SolarWinds and a large number of its customers. Moreover, if a high-profile security breach occurs with respect to another cloud platform provider, our customers and potential customers may lose trust in the security of cloud platforms generally, which could adversely impact our ability to retain existing customers or attract new ones.

If we are not able to detect and indicate activity on our platform that might be nefarious in nature or design processes or systems to reduce the impact of similar activity at a third-party service provider, our customers could suffer harm. In such cases, we could face exposure to legal claims, particularly if the customer suffered actual harm. We cannot assure you that any limitations of liability provisions in our contracts for a security lapse or breach would be enforceable or adequate or would otherwise protect us from any liabilities or damages with respect to any particular claim. We also cannot be sure that our existing insurance coverage will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims related to a security breach, or that the insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our expansion rates, financial condition, operating results, and reputation.

If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, and changing customer needs, requirements, or preferences, our products may become less competitive.

The software industry is subject to rapid technological change, evolving industry standards and practices, and changing customer needs, requirements, and preferences. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis. If we are unable to develop and sell new products that satisfy our customers and provide enhancements and new features for our existing products and platform capabilities that keep pace with rapid technological and industry change, our revenue and operating results could be adversely affected. Further, the value of our platform to customers increases to the extent they are able to use it for all of their telemetry data. We need to continue to invest in technologies, services, and partnerships that increase the ease with which customers can ingest data into our platform. If new technologies emerge that are able to deliver competitive products and applications at lower prices, more efficiently, more conveniently, or more securely, such technologies could adversely impact our ability to compete.

Our platform must also integrate with a variety of network, hardware, mobile, and software platforms and technologies, and we need to continuously modify and enhance our products and platform capabilities to adapt to changes and innovation in these technologies. If developers widely adopt new software platforms, we would have to develop new versions of our products and platform capabilities to work with those new platforms. This development effort may require significant engineering, marketing, and sales resources, all of which would affect our business and operating results. Any failure of our products and platform capabilities to operate effectively with future infrastructure platforms and technologies could reduce the demand for our products. If we are unable to respond to these changes in a cost-effective manner, our products may become less marketable and less competitive or obsolete, and our operating results may be negatively affected. Similarly, application stores such as those operated by Apple and Google, may change their technical requirements or policies in a manner that adversely impacts the way in which we or our partners or customers collect, use, and share data from users. If the use of our products does not comply with these requirements, customers may not be able to use our products for their intended purposes and our business could be harmed.

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We are dependent upon lead generation strategies to drive our sales and revenue. If these marketing strategies fail to continue to generate sales opportunities, our ability to grow our revenue will be adversely affected.

We are dependent upon lead generation strategies to generate sales opportunities. For example, in connection with our pricing changes announced July 30, 2020, we introduced an expanded free tier offering of our product. These strategies may not be successful in continuing to generate sufficient sales opportunities necessary to increase our revenue. To the extent that we are unable to successfully attract and grow paying customers, we will not realize the intended benefits of these marketing strategies and our ability to grow our revenue will be adversely affected.

The markets in which we participate are intensely competitive, and if we do not compete effectively, our operating results could be harmed.

The markets in which we compete are rapidly evolving, significantly fragmented, and highly competitive. Our observability platform combines functionality from numerous traditional product categories, and hence we compete in each of these categories with home-grown and open-source technologies, as well as a number of different vendors.

With respect to application performance monitoring, we compete with providers such as AppDynamics, Inc. (an operating division of Cisco Systems, Inc.) and Dynatrace, Inc. With respect to log management, we compete with Elastic NV and Splunk Inc. With respect to infrastructure monitoring, we compete with diversified technology vendors such as International Business Machines Corporation, BMC Software, Inc. and CA, Inc. (a subsidiary of Broadcom, Inc.); with native solutions from cloud providers such as Amazon Web Services, Inc., Microsoft Corporation, and Google LLC; and with independent vendors such as Datadog, Inc.

Some of our competitors and potential competitors are larger and have greater name recognition, longer operating histories, more established customer relationships, larger budgets, and significantly greater resources than we do, and have the operating flexibility to bundle competing products and services with other software offerings at little or no perceived incremental cost, including offering them at a lower price as part of a larger sale. As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, or customer requirements. In addition, some competitors may offer products or services that address one or a limited number of functions at lower prices or with greater depth than our products. Our current and potential competitors may develop and market new technologies with comparable functionality to our products and platform capabilities, and this could lead to us having to decrease prices in order to remain competitive.

With the introduction of new technologies, the evolution of our products and platform capabilities and new market entrants, we expect competition to intensify in the future. Moreover, as we expand the scope of our solutions, we may face additional competition. Additionally, some potential customers, particularly large organizations, may elect to develop their own internal products. If one or more of our competitors were to merge or partner with another of our competitors or another large diversified technology company, the change in the competitive landscape could also adversely affect our ability to compete effectively. For example, in March 2017, Cisco Systems, Inc. completed its purchase of AppDynamics, Inc., in November 2018, Broadcom Inc. completed its acquisition of CA, Inc., and, in October 2019, Splunk Inc. completed its acquisition of SignalFX, Inc. If we are unable to maintain our current pricing or fail to gain market acceptance of our updated pricing strategy due to the competitive pressures, our margins will be reduced, and our operating results will be negatively affected. In addition, pricing pressures and increased competition generally could result in reduced sales, reduced margins, losses, or the failure of our solutions to achieve or maintain more widespread market acceptance, any of which could harm our business.

Due to our previous subscription-based pricing model and our recent transition to a consumption-based pricing model, we may not have visibility into our financial position and results of operations.

We have historically employed a subscription-based model and for contracts entered into prior to our new pricing model announcement on July 30, 2020, we recognize revenue from customers ratably over the terms of their subscriptions. A portion of the revenue we report in each quarter is derived from the recognition of revenue relating to subscriptions entered into during previous quarters. Consequently, a decline in new or renewed subscriptions in any single quarter may have a small impact on our revenue for that quarter. However, such a decline will negatively affect our revenue in future quarters. Accordingly, the effect of significant downturns in sales and market acceptance of our solutions, and potential changes in our rate of renewals, may not be fully reflected in our results of operations until future periods. As a result, due to this historical reliance on a subscription-based business model, the effects of the COVID-19 pandemic to date were not fully reflected in our results of operations until later periods.

Further, on July 30, 2020, we announced a new pricing model that prices customer spend based upon their consumption. Because our customers now have flexibility in the timing of their consumption, we do not have the same

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visibility into the timing of revenue recognition as we would under a subscription-based model. There is a risk that customers will consume our platform at a different pace than we expect, and our actual results may differ from our forecasts. Meanwhile, although we have seen indications of improved market acceptance of our platform and new pricing strategy, due to our historical reliance upon a subscription-based business model, improvement in the market adoption of our products due to this pricing model transition would also not be fully reflected in our results of operations until future periods.

Seasonality may cause fluctuations in our sales and operating results.

We have experienced seasonality in our sales and operating results in the past, and we believe that we will continue to experience seasonality in the future. The first two quarters of each fiscal year usually have lower or potentially negative remaining performance obligations and sequential deferred revenue growth than the third and fourth fiscal quarters, during which we generally benefit from a larger renewal base and opportunity to up-sell existing customers. We believe that this results from the procurement, budgeting, and deployment cycles of many of our customers, which tend to have a concentration of increased activity in the periods surrounding the change of the Company’s fiscal year. As a result, over time we could potentially see stronger sequential revenue results in our fourth and first fiscal quarters as our deferred revenue is recognized. We expect that this seasonality will continue to affect our sales and operating results in the future, as a portion of our overall revenue continues to be derived from our subscription-based contracts that remain in our install base, which can make it difficult to achieve sequential growth in certain financial metrics or could result in sequential declines on a quarterly basis as we continue to convert our customers to the new consumption model. However, with our shift in pricing strategy, we may experience additional variation from the seasonality trends we have seen in the past for revenue, remaining performance obligations, and deferred revenue. Accordingly, historical patterns should not be considered indicative of our future sales activity or performance.

Interruptions or performance problems associated with our technology and infrastructure may adversely affect our business and operating results.

Our continued growth depends in part on the ability of our existing and potential customers to access our products and platform capabilities at any time and within an acceptable amount of time. We have experienced, and may in the future experience, disruptions, outages, and other performance problems due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, capacity constraints due to an overwhelming number of users accessing our products and platform capabilities simultaneously, denial or degradation of service attacks, computer viruses, natural disasters, terrorism, war, telecommunications and electrical failures, cyberattacks or other security related incidents. It may become increasingly difficult to maintain and improve our performance, especially during peak usage times and as our products and platform capabilities become more complex and our user traffic increases. If our products and platform capabilities are unavailable or if our users are unable to access our products and platform capabilities within a reasonable amount of time or at all, our business would be negatively affected. As we expand our business, our customers increasingly rely on our customer support personnel to realize the full benefits that our platform provides, and if we do not help our customers quickly resolve issues and provide effective ongoing support, our ability to maintain and expand our platform usage to existing and new customers could suffer, and our reputation with existing or potential customers could suffer. In addition, to the extent that we do not effectively address capacity constraints, upgrade our systems as needed, and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business and operating results may be adversely affected.

In addition, we currently serve our customers from third-party data centers and a combination of cloud hosting providers. The continuous availability of our products and platform capabilities depends on the operations of our data center facilities, on our cloud hosting providers, on a variety of network service providers, on third-party vendors, and on our own site operations staff. We depend on our third-party providers’ abilities to protect our data center facilities against damage or interruption from natural disasters, power or telecommunications failures, criminal acts, and similar events. If there are any lapses of service, damage to the facilities, or prolonged cloud hosting provider service disruptions or downtime affecting our platform, we could experience lengthy interruptions in our products and platform capabilities as well as delays and additional expenses in arranging new facilities and services. In addition, we are in the process of migrating our entire platform over time from third-party data center hosting facilities to public cloud hosting providers. After we complete this migration, we will rely extensively on these public cloud providers to provide our clients and their users with fast and reliable access to our products. Even with current and planned disaster recovery arrangements, which, to date, have not been tested in an actual crisis, our business could be harmed. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. These factors in turn could further reduce our revenue, subject us to liability, and cause us to issue credits or cause customers not to renew their commitments or increase their spend with us, any of which could harm our business.

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We depend and rely on SaaS technologies and related services from third parties in order to operate critical functions of our business and interruptions or performance problems with these technologies or services may adversely affect our business and operating results.

We depend and rely on software-as-a-service, or SaaS, technologies and related services from third parties in order to operate critical functions of our business, including billing and order management, financial accounting services, and customer relationship management services. If these services become unavailable due to extended outages or interruptions, security vulnerabilities, or cyber-attacks, because they are no longer available on commercially reasonable terms or prices, or due to other unforeseen circumstances, our expenses could increase, our ability to manage these critical functions could be interrupted, and our processes for and ability to manage sales of our products, recognize revenue, and support our customers could be impaired, all of which could adversely affect our business and operating results.

Defects or disruptions in our products and platform capabilities could diminish demand, harm our financial results, and subject us to liability.

Our customers use our products and platform capabilities for important aspects of their businesses, and any errors, defects, or disruptions to our products and platform capabilities or other performance problems with our products and platform capabilities could hurt our brand and reputation and may damage our customers’ businesses. We provide regular product updates, which may contain undetected errors when first introduced or released. In the past, we have discovered software errors, failures, vulnerabilities, and bugs in our products and platform capabilities after they have been released and new errors in our existing products and platform capabilities may be detected in the future. Real or perceived errors, failures, or bugs in our products and platform capabilities could result in negative publicity, loss of or delay in market acceptance of our products, loss of competitive position, delay of payment to us, lower renewal rates, or claims by customers for losses sustained by them. In such an event, we may be required, or may choose, for customer relations or other reasons, to expend additional resources in order to help correct the problem. In addition, we may not carry insurance sufficient to compensate us for the losses that may result from claims arising from defects or disruptions in our products and platform capabilities. As a result, we could lose future sales and our reputation, and our brand could be harmed.

Our ongoing and planned investments in data center hosting facilities and expenditures on cloud hosting providers are expensive and complex, may result in a negative impact on our cash flows, and may negatively impact our financial results.

We have made and, until our migration to public cloud hosting providers is complete, we will continue to make substantial investments in our data center hosting facilities to support our growth and provide enhanced levels of products and platform capabilities to our customers. We recently decreased the amount of capital expenditures on hosting equipment for use in our data center hosting facilities as we transition to greater dependence on cloud hosting providers but expect to continue to incur significant expense to operate and maintain our data centers. If we are required to make larger investments in our data center hosting facilities than we anticipated or if costs associated with cloud hosting services utilized to support our growth continue to be greater than originally expected, the negative impact on our operating results would likely exceed our expectations. Furthermore, if we determine to no longer utilize our data centers and related property, and equipment sooner than planned, we may be forced to accelerate expense recognition as a result of the shorter estimated life of such assets. In addition, ongoing or future improvements to our cloud infrastructure may be more expensive than we anticipate, and may not yield the expected savings in operating costs or the expected performance benefits. We may not be able to maintain or achieve cost savings from our investments, which could harm our financial results.

We may need to change our current operations infrastructure in order for us to achieve profitability and scale our operations efficiently, which makes our future prospects even more difficult to evaluate. For example, in order to grow our sales in a financially sustainable manner, we may need to further customize our offering and modify our go-to-market strategy to reduce our operating and customer acquisition costs. If we fail to implement these changes on a timely basis or are unable to implement them effectively, our business may suffer.

Because our long-term growth strategy involves further expansion of our sales to customers outside the United States, our business will be susceptible to risks associated with international operations. *

During the three months ended June 30, 2021, we derived approximately 32% of our total revenue from customers outside the United States. A component of our growth strategy involves the further expansion of our operations and customer adoption internationally. Operating in international markets requires significant resources and management attention and subjects us to regulatory, economic, and political risks that are different from those in the United States. We have limited operating experience in international markets, and we cannot assure you that our expansion efforts into international markets will be successful. Our international expansion efforts may not be successful in creating further demand for our products

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outside of the United States or in effectively selling our products in the international markets we enter. Our current international operations and future initiatives involve a variety of risks, including:

•changes in a specific country’s or region’s political or economic conditions;

•unexpected changes in regulatory requirements, taxes, or trade laws;

•economic and political uncertainty around the world, including uncertainty regarding U.S foreign and domestic policies;

•regional data security and privacy laws and regulations and the unauthorized use of, or access to, commercial and personal information;

•differing labor regulations where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations;

•challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs;

•difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems;

•significant reliance upon, and potential disputes with, local business partners;

•increased travel, real estate, infrastructure, and legal compliance costs associated with international operations;

•currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we chose to do so in the future;

•limitations on our ability to repatriate earnings;

•the impact of public health epidemics on our employees, partners and customers, such as the coronavirus epidemic, currently impacting various regions throughout the world;

•laws and business practices favoring local competitors, or general preferences for local vendors;

•limited or insufficient intellectual property protection;

•exposure to liabilities under anti-corruption, export controls and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act, and similar laws and regulations in other jurisdictions; and

•adverse tax burdens and foreign exchange controls that could make it difficult to repatriate earnings and cash or create other collection difficulties.

Our limited experience operating our business internationally increases the risk that recent and any potential future expansion efforts will not be successful. If substantial time and resources invested to expand our international operations do not result in a successful outcome, our operating results and business will suffer.

If we lose key members of our management team or are unable to attract and retain executives and employees we need to support our operations and growth, our business may be harmed. *

Our success and future growth depend largely upon the continued services of our executive officers and other key employees in the areas of research and development, marketing, sales, services, and general administrative functions. From time to time, there may be changes in our executive management team or other key employees resulting from the hiring or departure of these personnel. For example, on July 1, 2021, Lew Cirne, our founder and former Chief Executive Officer, transitioned from his role as Chief Executive Officer to Executive Chairman of our Board of Directors and Williams Staples, our former President and Chief Product Officer was promoted to Chief Executive Officer.

Our executive officers and other key employees are employed on an at-will basis, which means that these personnel could terminate their employment with us at any time. Any changes in our senior management team in particular, even in the ordinary course of business, may be disruptive to our business. While we seek to manage these transitions carefully, including by establishing strong processes and procedures and succession planning, such changes may result in a loss of institutional knowledge and cause disruptions to our business. If our senior management team fails to work together effectively or execute our plans and strategies on a timely basis as a result of management turnover or otherwise, our business could be harmed.

In addition, to execute our growth plan, we must attract and retain highly qualified personnel. Competition for these personnel is intense, especially for engineers experienced in designing and developing software and SaaS, applications and

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experienced sales professionals. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications. Many of the companies with which we compete for experienced personnel have greater resources than we have. If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached their legal obligations, resulting in a diversion of our time and resources. In addition, prospective and existing employees often consider the value of the equity awards they receive in connection with their employment. If the perceived value of our equity awards declines, or experiences significant volatility, it may adversely affect our ability to recruit and retain key employees. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be adversely affected.

If we fail to enhance our brand, or to do so in a cost-effective manner, our ability to expand our customer adoption will be impaired and our financial condition may suffer.

We believe that our development of the New Relic brand is critical to achieving widespread awareness of our existing and future solutions, and, as a result, is important to attracting new customers and maintaining existing customers. We also believe that the importance of brand recognition will increase as competition in our market increases. Successful promotion of our brand will depend largely on the effectiveness of our marketing efforts, including our ability to do so in a cost-effective manner, and on our ability to provide reliable and useful products at competitive prices. In the past, our efforts to build our brand have involved significant expenses. Brand promotion activities may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand.

If we cannot continue to maintain and develop our corporate culture as we grow, we could lose the innovation, teamwork, passion, and focus on execution that we believe contribute to our success, and our business may be harmed. *

We believe that our corporate culture has been a critical component to our success. We have invested substantial time and resources in building our team. As we grow and mature as a public company, and as we continue to expand internationally, we may find it difficult to continue to maintain and develop our corporate culture. There have been recent changes in our senior executive management team resulting from the hiring, promotion or departure of these personnel, and we expect to also recruit and hire other senior executives in the future. Such management changes subject us to a number of risks, such as risks pertaining to the creation of new management systems and processes and differences in management style, any of which could adversely impact our corporate culture. In addition, our restructuring plan commenced in April 2021 may have adverse consequences on our corporate culture which may result in attrition beyond our planned reduction in workforce, decrease employee morale or further impact our ability to retain highly skilled employees. We may need to continue to adapt our corporate culture and work environments to such changing circumstances. Any failure to preserve our culture could negatively affect our future success, including our ability to recruit and retain personnel and effectively focus on and pursue our corporate objectives.

Acquisitions, strategic investments, partnerships, or alliances could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our operating results and financial condition. *

We have in the past and may in the future seek to acquire or invest in businesses, joint ventures, products and platform capabilities, or technologies that we believe could complement or expand our products and platform capabilities, enhance our technical capabilities, or otherwise offer growth opportunities. For example, in the third quarter of fiscal 2021, we acquired Pixie Labs Inc., a company that provides a next generation machine intelligence observability solution for developers using Kubernetes and in the first quarter of fiscal 2022, we acquired CodeStream Inc., a company that provides an integrated developer collaboration platform. Any acquisition or investment may divert the attention of management and cause us to incur various expenses in identifying, investigating, and pursuing suitable opportunities, whether or not the transactions are completed, and may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products and platform capabilities, personnel, or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us, their software is not easily adapted to work with our platform, or we have difficulty retaining the customers of any acquired business due to changes in ownership, management, or otherwise. These transactions may also disrupt our business, divert our resources, and require significant management attention that would otherwise be available for development of our existing business. Any such transactions that we are able to complete may not result in any synergies or other benefits we had expected to achieve, which could result in impairment charges that could be substantial. In addition, we may not be able to find and identify desirable acquisition targets or business opportunities or be successful in entering into an agreement with any particular strategic partner. These transactions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results. In addition, if the resulting business from such a transaction fails to meet our expectations, our operating results, business, and financial condition may suffer or we may be exposed to unknown risks or liabilities.

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We provide service level commitments under some of our customer contracts. If we fail to meet these contractual commitments, we could be obligated to provide credits or refunds for prepaid amounts related to unused portion of our contractual commitments or face contract terminations, which could adversely affect our revenue.

Some of our customer agreements provide service level commitments. If we are unable to meet the stated service level commitments or suffer extended periods of unavailability for our products and platform capabilities, we may be contractually obligated to provide these customers with service credits or refunds for prepaid amounts related to unused portion of our contractual commitments, or we could face contract terminations. Our revenue could be significantly affected if we suffer unscheduled downtime that exceeds the allowed downtimes under our agreements with our customers. Any extended service outages could adversely affect our reputation, revenue, and operating results.

If third parties, such as customers, partners and third-party software developers fail to maintain interoperability, availability, or privacy compliance controls in the integrations and applications that they provide, our services that rely upon such integrations may have less value to customers, become less marketable, or less competitive, and our brand and financial performance could be harmed.

We provide software that enables customers, partners and third-party software developers to build integrations and applications with our products and extend the functionality of our platform capabilities. This presents certain risks to our business, including:

•customers, partners and third-party developers may not continue developing or supporting the integrations and applications that they provide or they may favor a competitor’s or their own competitive offerings over ours;

•we cannot provide any assurance that these integrations and applications meet the same quality standards that we apply to our own development efforts, and, to the extent they contain bugs, defects, or security risks, they may create disruptions in our customers’ use of our software or negatively affect our brand;

•we do not currently provide support or warranties related to the functionality, security, and integrity of the data transmission or processing for integrations and applications developed by customers, partners and third-party software developers, and users may seek warranties or be left without support and potentially cease using our products if the developers do not provide warranties or support for their integrations and applications; and

•these customers, partners and third-party software developers may not possess the appropriate intellectual property rights to develop and share their integrations and applications or the legal basis and privacy and security compliance measures to process or control personal data that flows through our systems.

While many of these risks are not within our control to prevent, our brand and financial performance could be harmed if these integrations and applications do not perform to our customers’ satisfaction and if that dissatisfaction is attributed to us.

Sales to government entities and highly regulated organizations are subject to a number of challenges and risks.

We may sell to U.S. federal, state, and local, as well as foreign, governmental agency customers, as well as to customers in highly regulated industries such as financial services, telecommunications and healthcare. Sales to such entities are subject to a number of challenges and risks. Selling to such entities can be highly competitive, expensive, and time-consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale. Government contracting requirements may change and in doing so restrict our ability to sell into the government sector until we have attained the revised certification. Government demand and payment for our products are affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our products.

Further, governmental and highly regulated entities may demand contract terms that differ from our standard arrangements and are less favorable than terms agreed with private sector customers. Such entities may have statutory, contractual, or other legal rights to terminate contracts with us or our partners for convenience or for other reasons. Any such termination may adversely affect our ability to contract with other government customers as well as our reputation, business, financial condition and results of operations.

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We have incurred substantial indebtedness that may decrease our business flexibility, access to capital, and/or increase our borrowing costs, and we may still incur substantially more debt, which may adversely affect our operations and financial results. *

As of June 30, 2021, we had $500.25 million (undiscounted) principal amount of indebtedness under our 0.50% convertible senior notes due 2023 (the “Notes”). Our indebtedness may:

•limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, or other general business purposes;

•limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions, or other general business purposes;

•require us to use a substantial portion of our cash flow from operations to make debt service payments;

•limit our flexibility to plan for, or react to, changes in our business and industry;

•place us at a competitive disadvantage compared to our less leveraged competitors; and

•increase our vulnerability to the impact of adverse economic and industry conditions.

Further, the indenture governing the Notes does not restrict our ability to incur additional indebtedness and we and our subsidiaries may incur substantial additional indebtedness in the future, subject to the restrictions contained in any future debt instruments existing at the time, some of which may be secured indebtedness.

Servicing our debt will require a significant amount of cash. We may not have sufficient cash flow from our business to pay our substantial debt, and we may not have the ability to raise the funds necessary to settle conversions of the Notes in cash or to repurchase the Notes upon a fundamental change, which could adversely affect our business and results of operations.

Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the amounts payable under the Notes, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our indebtedness and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

Further, holders of the Notes will have the right to require us to repurchase all or a portion of their Notes upon the occurrence of a “fundamental change” (as defined in the indenture governing the Notes, or the indenture) before the maturity date of the Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any. In addition, upon conversion of the Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes being surrendered or pay cash with respect to Notes being converted.

The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the Notes is triggered, holders of the Notes will be entitled to convert their Notes at any time during specified periods at their option. If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity. In addition, even if holders of Notes do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect on our reported financial results. *

In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, Accounting for Convertible Instruments and Contract on an Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which amends the

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accounting standards for convertible debt instruments that may be settled entirely or partially in cash upon conversion. ASU 2020-06 eliminates requirements to separately account for liability and equity components of such convertible debt instruments and eliminates the ability to use the treasury stock method for calculating diluted earnings per share for convertible instruments whose principal amount may be settled using shares. Instead, ASU 2020-06 requires (i) the entire amount of the security to be presented as a liability on the balance sheet and (ii) application of the if-converted method for calculating diluted earnings per share. Under the if-converted method, diluted earnings per share will generally be calculated assuming that all the Notes were converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive, which could adversely affect our diluted earnings per share. However, if the principal amount of the convertible debt security being converted is required to be paid in cash and only the excess is permitted to be settled in shares, the if-converted method will produce a similar result as the treasury stock method prior to the adoption of ASU 2020-06 for such convertible debt security.

We elected to early adopt ASU 2020-06 on April 1, 2021, using the modified retrospective basis. As a result, we no longer separate the liability and equity components of the Notes on our balance sheet and we use the if-converted method of calculating diluted earnings per share. Under the modified retrospective basis, prior periods are not restated. Rather, the cumulative effect of initially applying the new standard was recognized as an adjustment to accumulated deficit. The elimination of the separate accounting reduced the interest expense that we recognized in our fiscal period ended June 30, 2021.

The capped call transactions may affect the value of the Notes and our common stock.

In connection with the pricing of the Notes, we entered into capped call transactions with certain financial institutions (the “Capped Calls”). The Capped Call transactions are generally intended to reduce potential dilution to holders of our common stock upon any conversion of the Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset, as the case may be, subject to a cap.

In connection with establishing their initial hedges of the Capped Calls, these financial institutions or their respective affiliates likely purchased shares of our common stock and/or entered into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the Notes. These financial institutions or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and are likely to do so during any observation period related to a conversion of Notes). This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the Notes.

The potential effect, if any, of these transactions and activities on the price of our common stock or the Notes will depend in part on market conditions and cannot be ascertained at this time. Any of these activities could adversely affect the value of our common stock.

Provisions in the indenture for the Notes may deter or prevent a business combination that may be favorable to our stockholders.

If a fundamental change occurs prior to the maturity date of the Notes, holders of the Notes will have the right, at their option, to require us to repurchase all or a portion of their Notes. In addition, if a “make-whole fundamental change” (as defined in the indenture) occurs prior to the maturity date, we will in some cases be required to increase the conversion rate of the Notes for a holder that elects to convert its Notes in connection with such make-whole fundamental change.

Furthermore, the indenture will prohibit us from engaging in certain mergers or acquisitions unless, among other things, the surviving entity assumes our obligations under the Notes. These and other provisions in the indenture could deter or prevent a third party from acquiring us even when the acquisition may be favorable to our stockholders.

Conversion of the Notes may dilute the ownership interest of existing stockholders, including holders who had previously converted their Notes, or may otherwise depress the price of our common stock.

The conversion of some or all of the Notes will dilute the ownership interests of existing stockholders to the extent we deliver shares of our common stock upon conversion of any of the Notes and the potential dilution is not reduced or offset by the Capped Calls we entered into. The Notes may become in the future convertible at the option of their holders prior to their scheduled terms under certain circumstances. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could be used to satisfy short positions, or anticipated conversion of the Notes into shares of our common stock could depress the price of our common stock.

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Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.

As of our fiscal year ended March 31, 2021, we had U.S. federal and state net operating losses of approximately $707.8 million and $389.0 million, respectively. Other than federal net operating losses arising in tax years beginning after December 31, 2017, the federal and state net operating loss carryforwards will begin to expire, if not utilized, beginning in 2028 and 2022, respectively. These net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities. Under the 2017 federal income tax law, as modified by the federal tax law changes enacted in March 2020, federal net operating losses incurred in tax years beginning after December 31, 2017 may be carried forward indefinitely, but, for taxable years beginning after December 31, 2020, the deductibility of such federal net operating losses is limited. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. If an ownership change occurs and our ability to use our net operating loss carryforwards is materially limited, it would harm our future operating results by effectively increasing our future tax obligations. In addition, for state income tax purposes, there may be periods during which the use of net operating losses is suspended or otherwise limited, including a recent California franchise tax law change limiting the usability of California state net operating losses to offset California taxable income in taxable years beginning on or after January 1, 2020 and before January 1, 2023, which could accelerate or permanently increase state taxes owed.

Our effective tax rate may fluctuate, and we may incur obligations in tax jurisdictions in excess of accrued amounts. *

We are subject to taxation in numerous U.S. states and territories and in non-U.S. countries. As a result, our effective tax rate is derived from a combination of applicable tax rates in the various places that we operate.  In preparing our financial statements, we estimate the amount of tax that will become payable in each of such places. Nevertheless, our effective tax rate may be different than experienced in the past due to numerous factors, including passage of federal income tax law, changes in the mix of our profitability from jurisdiction to jurisdiction, the results of examinations and audits of our tax filings, our inability to secure or sustain acceptable agreements with tax authorities, changes in accounting for income taxes and changes in tax laws. Any of these factors could cause us to experience an effective tax rate significantly different from previous periods or our current expectations and may result in tax obligations in excess of amounts accrued in our financial statements.

We may face exposure to foreign currency exchange rate fluctuations.

While we have historically transacted in U.S. dollars with substantially all of our customers and vendors, we have transacted in foreign currencies and may transact in foreign currencies in the future. In addition, any international subsidiaries will maintain net assets that are denominated in currencies other than the functional operating currencies of these entities. Accordingly, changes in the value of foreign currencies relative to the U.S. dollar can affect our revenue and operating results due to transactional and translational remeasurement that is reflected in our earnings. As a result of such foreign currency exchange rate fluctuations, it could be more difficult to detect underlying trends in our business and results of operations. In addition, to the extent that fluctuations in currency exchange rates cause our results of operations to differ from our expectations or the expectations of our investors, the trading price of our common stock could be adversely affected. We do not currently maintain a program to hedge transactional exposures in foreign currencies. However, in the future, we may use derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates. The use of such hedging activities may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place. Moreover, the use of hedging instruments may introduce additional risks if we are unable to structure effective hedges with such instruments.

Risks Related to Laws and Regulations

We are subject to stringent and rapidly changing laws, regulations, industry standards, contractual obligations, and other obligations relating to privacy, data protection, and data security. The actual or perceived failure to comply with such obligations by us, our customers, or third parties with whom we work could harm our reputation, subject us to significant fines and liability, or otherwise adversely affect our business. *

We, our customers, and third parties who we work with are subject to numerous evolving and increasingly stringent domestic and foreign laws and other obligations relating to privacy, data protection, and data security that are increasing the cost and complexity of operating our business.

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Foreign laws relating to privacy, data protection, and data security are undergoing a period of rapid change and have become more stringent in recent years. For example, the General Data Protection Regulation (“GDPR”) took effect in the European Union (“EU”) in May 2018 and has also been transposed into national law in the United Kingdom (“UK”). The GDPR subjects noncompliant companies to fines of up to the greater of 20 million Euros or 4% of their global annual revenues, restrictions or prohibitions on processing of personal information, and private litigation. The GDPR requires companies to give detailed disclosures about how they collect, use, and share personal information; contractually commit to data protection measures in contracts with customers and vendors; maintain adequate data security measures; notify regulators and affected individuals of certain data breaches; meet extensive privacy governance and documentation requirements; and honor individuals’ data protection rights, including their rights to access, correct, and delete their personal information. The GDPR also requires controllers to conduct data protection impact assessments for certain types of processing and requires processors to assist controllers with such assessments, which may be complex and burdensome to conduct. Laws in EU member states and the UK also impose restrictions on direct marketing communications and the use of cookies and similar technologies online, and a new regulation proposed in the EU called the e-Privacy Regulation may make such restrictions more stringent.

European privacy, data protection, and data security laws, including the GDPR, also generally restrict the transfer of personal information from Europe, including the European Economic Area (“EEA”), the UK, and Switzerland, to the United States and most other countries unless the parties to the transfer have implemented specific safeguards to protect the transferred personal information. The Court of Justice of the European Union, however, recently invalidated the Privacy Shield framework, one of the primary safeguards used for cross-border data transfers from the EU, and raised questions on the viability of the primary alternative to the Privacy Shield framework, the European Commission’s Standard Contractual Clauses (“SCCs”). Authorities in Switzerland have since raised similar questions about the SCCs as a mechanism for complying with Swiss data transfer requirements. On June 4, 2021, the European Commission adopted new SCCs, which impose on companies additional obligations relating to data transfers, including the obligation to conduct a transfer impact assessment and, depending on a party’s role in the transfer, to implement additional security measures and to update internal privacy practices. If we elect to rely on the new SCCs for data transfers, we may be required to incur significant time and resources to update our contractual arrangements and to comply with new obligations. The new SCCs may increase the legal risks and liabilities under European privacy, data protection, and data security laws. At present, there are few, if any, viable alternatives to the SCCs.

In addition, the regulation of data transfers between the EU and UK remains subject to post-Brexit uncertainty. For example, pursuant to a post-Brexit trade deal between the UK and the EU, transfers of personal information from the EEA to the UK are not considered restricted transfers under the GDPR for a period of up to six months from January 1, 2021. On June 28, 2021, the European Commission issued an adequacy decision under the GDPR which allows transfers of personal information from the EEA to the UK to continue without restriction for a period of four years ending June 27, 2025. During these four years, the European Commission will continue to monitor the legal situation in the UK and can intervene if the UK deviates from the level of data protection in place at the time of issuance of the adequacy decision. If the adequacy decision is withdrawn or not renewed, transfers of personal information from the EEA to the UK will require a valid transfer mechanism and companies making such transfers may be required to implement new processes and put new agreements in place to continue making such transfers.

If our efforts to comply with Europe’s highly dynamic cross-border data transfer requirements are not successful, we will face increased risk of substantial fines by European regulators and prohibitions on data processing. These requirements may also result in reduced demand for our services from customers subject to the GDPR and require us to increase our data processing capabilities and other operations in Europe at significant expense. Other jurisdictions are also passing more stringent privacy, data protection and data security laws. For example, Brazil recently enacted the General Data Protection Law (Lei Geral de Proteção de Dados Pessoais) (Law No. 13,709/2018) (“LGPD”), and Japan recently passed amendments to its Act on the Protection of Personal Information (“APPI”). Both laws broadly regulate the processing of personal information in a manner comparable to the GDPR, and violators of the LGPD and APPI face substantial penalties.

Many states have enacted privacy, data protection, and data security laws. For example, the California Consumer Privacy Act (“CCPA”), which took effect on January 1, 2020, gives California residents expanded rights to access and delete their personal information, opt-out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States. California has already adopted a new law, the California Privacy Rights Act of 2020 (“CPRA”), that will substantially expand the CCPA effective January 1, 2023. Aspects of the CCPA and CPRA and their interpretation and enforcement remain uncertain. Virginia has similarly enacted a comprehensive privacy law, the Consumer Data Protection Act, and Colorado recently enacted the Colorado Privacy Act, both laws of which emulate the CCPA and CPRA in many respects. Further, proposals for comprehensive privacy and data security

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legislation are advancing in several other states. A patchwork of differing state privacy and data security laws would increase the cost and complexity of operating our business and increase our exposure to liability.

Like our legal obligations, the demands our customers place on us relating to privacy, data protection, and data security are becoming more stringent. Laws such as the GDPR and CCPA increasingly require companies to impose specific contractual restrictions on their service providers. We are also subject to the terms of our privacy and security policies, representations, certifications, publications, contractual obligations, and other obligations related to privacy, data protection, and data security, including operating rules and standards imposed by industry organizations such as PCI-DSS. Although we endeavor to comply with our obligations, we and the third parties on which we rely may at times fail to do so or may be perceived to have failed to do so. Such failures could subject us to regulatory enforcement action as well as costly legal claims by affected individuals or our customers.

We strive to comply with applicable privacy, data protection, and data security laws and other obligations, but we cannot fully determine the impact that current or future such laws and other obligations may have on our business or operations. Such laws or obligations may be inconsistent from one jurisdiction to another, subject to differing interpretations, and courts or regulators may deem our efforts to comply as insufficient. If we or the third parties we rely on to operate our business and deliver our services fail to comply, or are perceived as failing to comply, with our legal, contractual, or other obligations relating to privacy, data protection, or data security or, or our policies and documentation relating to personal information, we could face governmental enforcement action; litigation with our customers, individuals or others; fines and civil or criminal penalties for us or company officials; obligations to cease offering our services or to substantially modify them in ways that make them less effective in certain jurisdictions; negative publicity and harm to our brand and reputation; and reduced overall demand for our services. Such developments could adversely affect our business, financial condition, and results of operations.

We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate these controls.

Our products are subject to U.S. export controls, and we incorporate encryption technology into certain of our products. Governmental regulation of encryption technology and regulation of imports or exports of encryption products, or our failure to obtain required import or export authorization for our products, when applicable, could harm our international sales and adversely affect our revenues. Compliance may also create delays in the introduction of our product releases in international markets, prevent our customers with international operations from deploying our products or, in some cases, prevent the export of our products to some countries altogether. If we fail to comply, we could be subject to both civil and criminal penalties, including substantial fines, possible incarceration for employees and managers for willful violations, and the possible loss of export or import privileges. Any decreased use of our products or limitation on our ability to export or sell our products would likely adversely affect our business, financial condition and results of operations.

We are subject to the tax laws of various jurisdictions, which are subject to unanticipated changes and to interpretation, which could harm our future results.

We are subject to income taxes in the United States and foreign jurisdictions, and our domestic and international tax liabilities are subject to the allocation of expenses in differing jurisdictions. Our effective tax rate could be adversely affected by changes in the mix of earnings and losses in countries with differing statutory tax rates, certain non-deductible expenses as a result of acquisitions, the valuation of deferred tax assets and liabilities, and changes in federal, state, or international tax laws and accounting principles.

For example, U.S. tax legislation enacted in December 2017 represents a significant overhaul of the U.S. federal tax code. This tax legislation significantly reduced the U.S. statutory corporate tax rate and made other changes that could have a favorable impact on our overall U.S. federal tax liability in a given period. That 2017 tax legislation was modified in various respects by additional tax legislation enacted in March 2020. However, the 2017 tax legislation also included a number of provisions, including, but not limited to, the limitation or elimination of various deductions or credits (including for interest expense and for performance-based compensation under Section 162(m)), the imposition of taxes on certain cross-border payments or transfers, the changing of the timing of the recognition of certain income and deductions or their character, and the limitation of recovery of asset basis under certain circumstances, that could significantly and adversely affect our U.S. federal income tax liability in the event we become profitable in the future. The legislation also made significant changes to the tax rules applicable to insurance companies and other entities with which we do business.

Further, each jurisdiction has different rules and regulations governing sales and use, value added, and similar taxes, and these rules and regulations are subject to varying interpretations that change over time. Certain jurisdictions in which we did not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties, and interest, and we may be required to collect such taxes in the future. The U.S. Supreme Court’s decision in South Dakota v.

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Wayfair, Inc. may increase that risk by increasing states’ ability to assert taxing jurisdiction on out-of-state retailers. In addition, we may be subject to income tax audits by many tax jurisdictions throughout the world, many of which have not established clear guidance on the tax treatment of SaaS-based companies. Any tax assessments, penalties, and interest, or future requirements may adversely affect our results of operations. Moreover, imposition of such taxes on us going forward would effectively increase the cost of our products to our customers and might adversely affect our ability to retain existing customers or to gain new customers in the areas in which such taxes are imposed.

In addition, the application of the tax laws of various jurisdictions, including the United States, to our international business activities is subject to interpretation and depends on our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements. The taxing authorities of jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements, including our transfer pricing, or determine that the manner in which we operate our business does not achieve the intended tax consequences. As we operate in numerous taxing jurisdictions, the application of tax laws can also be subject to diverging and sometimes conflicting interpretations by tax authorities of these jurisdictions. For instance, it is not uncommon for taxing authorities in different countries to have conflicting views, with respect to, among other things, the manner in which the arm’s length standard is applied for transfer pricing purposes, or with respect to the valuation of intellectual property.

Risks Related to Our Intellectual Property

We may incur significant costs due to claims for alleged infringement of proprietary rights.

There is considerable patent, copyright, trademark, trade secret, and other intellectual property development activity in our industry. Our success depends in part on not infringing upon the intellectual property rights of others and how we prepare for and handle claims of infringement. From time to time, our competitors or other third parties may claim that we are infringing upon their intellectual property rights, and we may be found to be infringing upon such rights. We may receive claims that our products, platform capabilities, and underlying technology infringe or violate the claimant’s intellectual property rights. In addition, agreements with customers and other third parties may include indemnification provisions under which we agree to indemnify them in the event of claims of infringement of certain proprietary rights. Any claims or litigation, regardless of merit, could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our products and platform capabilities, or require that we comply with other unfavorable terms.

Even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results. We expect that the occurrence of infringement claims is likely to grow as the market for our products grows. Accordingly, our exposure to damages resulting from infringement claims could increase and this could further exhaust our financial and management resources.

Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand. *

Our success depends to a significant degree on our ability to protect our proprietary technology and our brand. We rely on a combination of trademarks, trade secret laws, patent, copyrights, service marks, contractual restrictions, and other intellectual property laws and confidentiality procedures to establish and protect our proprietary rights. However, the steps we take to protect our intellectual property may be inadequate. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. If we fail to protect our intellectual property rights adequately, our competitors may gain access to our technology and our business may be harmed. In addition, defending our intellectual property rights might entail significant expense. Any patents, trademarks, or other intellectual property rights that we obtain may be challenged by others or invalidated through administrative process or litigation. As of June 30, 2021, we had 28 issued patents in the United States and abroad and 31 patent applications pending in the United States and abroad. Despite our issued patents and pending patent applications, we may be unable to maintain or obtain patent protection for our technology. In addition, our existing patents and any patents issued in the future may not provide us with competitive advantages, or may be successfully challenged by third parties. Furthermore, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized third parties to copy our products and platform capabilities and use information that we regard as proprietary to create products and services that compete with ours. Effective patent, trademark, copyright, and trade secret protection may not be available to us in every country in which our products are available. The laws of some foreign countries may not be as protective of intellectual property rights as those in the United States, and mechanisms for enforcement of intellectual property rights may be inadequate. As we expand our international activities, our exposure to

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unauthorized copying and use of our products and platform capabilities and proprietary information will likely increase. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property.

We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with other parties. No assurance can be given that these agreements will be effective in controlling access to and distribution of our proprietary information. Further, these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our products and platform capabilities.

In order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect our intellectual property rights. Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets. Litigation brought to protect and enforce our intellectual property rights could be costly, time-consuming, and distracting to management, and could result in the impairment or loss of portions of our intellectual property. Further, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our products and platform capabilities, impair the functionality of our products and platform capabilities, delay introductions of new solutions, result in our substituting inferior or more costly technologies into our products, or injure our reputation.

Our reliance upon open source software could negatively affect our ability to sell our products and subject us to possible litigation.

We rely heavily upon open source software for the operation of our products and platform capabilities and expect to continue to do so in the future. In July 2020, we strengthened this commitment when we announced that we are making our agents, integrations, and SDKs available under an open source license, and that we are standardizing our future observability offerings in OpenTelemetry, a Cloud Native Computing Foundation project that is an emerging standard for software instrumentation. As a result of our use of open source software in our offerings, as well as our contributions of code to open source software projects, we may face claims from others claiming ownership of, or seeking to enforce the terms of, incompatible or conflicting licenses or other rights. This may include a demand to release the open source software, derivative works, or our proprietary source code that was developed using such software. These claims could also result in litigation, require us to purchase a costly license, or require us to devote additional research and development resources to change our platform, any of which would have a negative effect on our business and operating results. In addition, if the license terms for the software we utilize change, additional licenses from third parties may be required or we may be forced to reengineer or discontinue our products and platform capabilities or incur additional costs. In addition, open source licensors generally do not provide warranties, support, indemnity, or assurance of title or controls on origin of the software which may lead to greater risks. Likewise, some open source projects have known security and other vulnerabilities and architectural instabilities and are provided on an “as-is” basis which, if not properly addressed, could negatively affect the performance of our product. While we have established processes to help alleviate these risks, we cannot assure that these measures will reduce or completely shield us from these risks. Moreover, we cannot be certain that we have not incorporated software in our products and platform capabilities in a manner that is inconsistent with the terms of the applicable proprietary rights that may govern their use, or our own policies and procedures.

Our continued shift to increase reliance upon open source software will also present increased risk from the standpoint of competition. Because any software source code we contribute to open source projects is publicly available, our ability to protect our intellectual property rights with respect to such software source code may be limited or lost entirely. Anyone may obtain access to the source code for our open source features and then redistribute it (either in a modified or unmodified form), and we may be unable to prevent our competitors or others from using such software source code for competitive purposes, or for commercial or other purposes beyond what we intended. For instance, our recent conversion of the license terms for our agents, integrations and SDKs from our historical proprietary licenses to open source licenses may allow the use of our previous proprietary code with competitor’s platforms. Additionally, we make the source code of our proprietary features publicly available, which may enable others to compete more effectively. Such competition can develop without the degree of overhead and lead time required by traditional proprietary software companies, due to the permissions allowed under open source licensing. It is possible for competitors to develop their own software, including software based on our products, potentially reducing the demand for our services.

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Risks Related to Ownership of Our Common Stock

Our stock price has been and will likely continue to be subject to fluctuations, which may be volatile and due to factors beyond our control. *

The market price of our common stock is subject to wide fluctuations in response to various factors, some of which are beyond our control. Since shares of our common stock were sold in our initial public offering in December 2014 at a price of $23.00 per share, the reported high and low sales prices of our common stock have ranged from $114.78 to $20.39 through June 30, 2021. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this report, factors that could cause fluctuations in the market price of our common stock include the following:

•actual or anticipated fluctuations in our operating results;

•seasonal and end-of-quarter concentration of our transactions and variations in the number and size of transactions that close in a particular quarter;

•the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections;

•failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates and publication of other news by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

•ratings changes by any securities analysts who follow our company;

•announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;

•changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;

•price and volume fluctuations in the overall stock market from time to time, including as a result of trends in the economy as a whole;

•changes in accounting standards, policies, guidelines, interpretations, or principles;

•actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;

•changes in our pricing models and practices or those of our competitors;

•developments or disputes concerning our intellectual property or our products and platform capabilities, or third-party proprietary rights;

•cybersecurity attacks or incidents;

•announced or completed acquisitions of businesses or technologies by us or our competitors;

•new laws or regulations or new interpretations of existing laws, or regulations applicable to our business;

•changes in our board of directors or management;

•announced or completed equity or debt transactions involving our securities;

•sales of shares of our common stock by us, our officers, directors, or other stockholders;

•lawsuits filed or threatened against us; and

•other events or factors, including those resulting from war, incidents of terrorism, public health epidemics, or responses to these events.

In addition, the market for technology stocks and the stock markets in general have experienced extreme price and volume fluctuations. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. Moreover, fluctuations in our quarterly operating results and the price of our common stock may be particularly pronounced in the current economic environment due to the uncertainty caused by and the unprecedented nature of the COVID-19 pandemic. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business, results of

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operations, financial condition, and cash flows. A decline in the value of our common stock, including as a result of one or more factors set forth above, may result in substantial losses for our stockholders.

Substantial future sales of shares of our common stock could cause the market price of our common stock to decline.

The market price of our common stock could decline as a result of substantial sales of our common stock, particularly sales by our directors, executive officers, and significant stockholders, a large number of shares of our common stock becoming available for sale, or the perception in the market that holders of a large number of shares intend to sell their shares. Further, the Notes may become in the future convertible at the option of their holders prior to their scheduled terms under certain circumstances. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. Additionally, the shares of common stock subject to outstanding options under our equity incentive plans and the shares reserved for future issuance under our equity incentive plans, as well as shares issuable upon vesting of restricted stock awards, will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations. We have also registered shares of common stock that we may issue under our employee equity incentive plans. Accordingly, these shares may be able to be sold freely in the public market upon issuance as permitted by any applicable vesting requirements.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a change of control or changes in our management. Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that:

•authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock;

•require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;

•specify that special meetings of our stockholders can be called only by our board of directors, the Chair of our board of directors, or our Chief Executive Officer;

•establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors;

•provide that our board of directors is divided into three classes, with each class serving three-year staggered terms;

•prohibit cumulative voting in the election of directors;

•provide that our directors may be removed only for cause;

•provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and

•require the approval of our board of directors or the holders of at least seventy-five percent (75%) of our outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, because we are incorporated in Delaware, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder. Any delay or prevention of a change of control transaction or changes in our management could cause the market price of our common stock to decline.

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Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for the adjudication of certain disputes, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for:

•any derivative action or proceeding brought on our behalf;

•any action asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee of New Relic to us or our stockholders;

•any action asserting a claim against us or any of our directors, officers, or other employees arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation, or our amended and restated bylaws; and

•any action asserting a claim against us or any of our directors, officers, or other employees that is governed by the internal affairs doctrine.

This exclusive-forum provision would not apply to suits brought to enforce a duty or liability created by the Securities Act of 1933, as amended, the Exchange Act or any claim for which the U.S. federal courts have exclusive jurisdiction. This exclusive-forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. While the Delaware courts have determined that such choice of forum provision is facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than that designated in the exclusive forum provision. In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provision of our amended and restated certificate of incorporation. This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions. If a court were to find this exclusive-forum provision to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could seriously harm our business.

We do not intend to pay dividends on our common stock so any returns will be limited to changes in the value of our common stock.

We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings for the development, operation, and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. In addition, our ability to pay cash dividends on our common stock may be prohibited or limited by the terms of any future debt financing arrangements. Any return to stockholders will therefore be limited to the increase, if any, of our stock price, which may never occur.

If securities or industry analysts do not continue to publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline. *

The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If industry analysts cease coverage of us, the trading price for our common stock would be negatively affected. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our common stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline. In addition, independent industry analysts, such as Gartner and Forrester, often provide reviews of our products and platform capabilities, as well as those of our competitors, and perception of our offerings in the marketplace may be significantly influenced by these reviews. Further, beginning with the fiscal quarter ended June 30, 2021, we have retired ARR and all of our traditional subscription-based key operating metrics that rely upon ARR. In place of ARR and ARR-derived metrics, we are providing metrics that we believe provide better insight into our business now that we are entering into contracts that rely primarily upon consumption-based revenue. To the extent that industry analysts continue to emphasize or place value on subscription-based metrics or inaccurately reflect our key performance indicators in future analyst research and reports, our stock price and trading volume would decline. We have no control over what these industry analysts report, and because industry analysts may influence current and potential customers, our brand could be harmed if they do not provide a positive review of our products and platform capabilities or view us as a market leader.

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General Risk Factors

Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.

Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate, especially in a volatile economic environment. Our estimates and forecasts relating to the size and expected growth of our market may prove to be inaccurate. Even if the market in which we compete meets our size estimates and forecasted growth, our business could fail to grow at similar rates, if at all.

Natural disasters and other events beyond our control could harm our business.

Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce, and the global economy, and thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics, including the ongoing COVID-19 pandemic, effects of climate change and other events beyond our control. We rely on our network and third-party infrastructure and enterprise applications, internal technology systems, and our website for our development, marketing, operational support, hosted products, and sales activities. The west coast of the United States contains active earthquake zones and this area has also historically experienced, and is projected to continue to experience, climate-related events including drought and water scarcity, warmer temperatures, wildfires and air quality impacts and power shut-offs associated with wildfire prevention. Although we maintain crisis management and disaster response plans, in the event of a major earthquake, hurricane, or catastrophic event such as fire, power loss, telecommunications failure, cyber-attack, war, or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our product development, lengthy interruptions in service, breaches of data security, and loss of critical data, all of which could have an adverse effect on our future operating results.

Weakened global economic conditions may harm our industry, business, and results of operations.

Our overall performance depends in part on worldwide economic conditions. Global financial developments and downturns seemingly unrelated to us or the information technology industry may harm us. The United States and other key international economies have been impacted in the past by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies, and overall uncertainty with respect to the economy.

Furthermore, the revenue growth and potential profitability of our business depends on demand for software applications and products generally, and application performance monitoring and our other offerings specifically. In addition, our revenue is dependent on the number of users of our products and the degree of adoption of such users with respect to our products and platform capabilities. Historically, during economic downturns there have been reductions in spending on information technology systems as well as pressure for extended billing terms and other financial concessions, which would limit our ability to grow our business and negatively affect our operating results. These conditions affect the rate of information technology spending and could adversely affect our customers’ ability or willingness to purchase our products, delay prospective customers’ purchasing decisions, reduce the value or duration of their commitments or amount of their spend, or affect renewal rates, all of which could harm our operating results.

The nature of our business requires the application of complex revenue recognition rules. Significant changes in U.S. GAAP from the adoption of recently issued accounting standards could materially affect our financial position and results of operations.

We prepare our financial statements in accordance with GAAP, which is subject to interpretation or changes by the Financial Accounting Standards Board, the SEC, and other various bodies formed to promulgate and interpret appropriate accounting principles. New accounting pronouncements and changes in accounting principles have occurred in the past and are expected to occur in the future, which may have a significant effect on our financial results. Any difficulties in implementation of changes in accounting principles, including the ability to modify our accounting systems, could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and harm investors’ confidence in us. In addition, certain choices in the method of implementation of any new standard that may be adopted may have an adverse impact on our potential as an acquirer or an acquiree in a business combination.

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We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs. If additional capital is not available, we may have to delay, reduce, or cease certain investments.

We may in the future require additional capital to operate our business and respond to business opportunities that may arise, including the need to develop new products and platform capabilities or enhance our existing products and platform capabilities, enhance our operating infrastructure, protect our intellectual property, pursue possible acquisitions of complementary businesses and technologies, respond to a decline in the level of adoption or usage of our platform, or other circumstances. We may not be able to timely secure additional debt or equity financing on favorable terms, or at all. Any debt financing obtained by us could involve restrictive covenants relating to financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions, and could require us to use a portion of our cash flows to make debt service payments, which could place us at a competitive disadvantage relative to our less leveraged peers. If we raise additional funds through further issuances of equity, convertible debt securities, or other securities convertible into equity, our existing stockholders could suffer significant dilution in their percentage ownership of our company, and any new equity securities we issue could have rights, preferences, and privileges senior to those of holders of our common stock, including registration rights. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to support our business and to respond to business challenges could be significantly limited, and our business, operating results, financial condition, and prospects could be harmed.

The requirements of being a public company and a growing and increasingly complex organization may strain our resources, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members.

We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of the New York Stock Exchange, and other applicable securities rules and regulations. Compliance with these rules and regulations increase our legal and financial compliance costs, make some activities more difficult, time-consuming, or costly, and increase demand on our systems and resources.

In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming. These laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies or as market practices develop. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

As a result of disclosure of information in our filings with the SEC, our business and financial condition have become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results.

From time to time, public companies are subject to campaigns by investors seeking to increase short-term stockholder value through actions such as financial restructuring, increased debt, special dividends, stock repurchases, management changes or sales of assets or the entire company. If stockholders attempt to effect such changes or acquire control over us, responding to such actions would be costly, time-consuming and disruptive, which could adversely affect our results of operations, financial results and the value of our common stock. These factors could also make it more difficult for us to attract and retain qualified employees, executive officers and members of our board of directors.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On June 8, 2021, we issued 402,053 shares of our common stock to former stockholders of CodeStream Inc. as partial consideration for the acquisition. The shares of common stock were exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. See Note 2, Business Combinations contained in the “Notes to Condensed Consolidated Financial Statements” in Item 1 Part I of this Quarterly Report on Form 10-Q.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit No.	Description of Exhibit	Incorporated by Reference				Filed Herewith
		Form	File No.	Exhibit	File Date
3.1	Amended and Restated Certificate of Incorporation of the Registrant.	10-K	001-36766	3.1	May 28, 2015
3.2	Amended and Restated Bylaws of the Registrant.	S-1	333-200078	3.4	November 10, 2014
10.1	Form of Change in Control and Severance Agreement.					X
10.2	Offer Letter between the Registrant and Kristy Friedrichs, dated as of February 1, 2017.					X
10.3	Offer Letter between the Registrant and Steve Hurn, dated as of April 20, 2020.					X
10.4	Addendum to Employment Contract between the Registrant and Steve Hurn, dated as of February 1, 2021.					X
10.5	Separation Agreement by and between New Relic, Inc. and Michael Christenson, dated as of June 24, 2021.					X
10.6	Cooperation Agreement by and among New Relic, Inc. and affiliates of Engaged Capital, LLC, dated as of June 24, 2021.	8-K	001-36766	10.1	June 25, 2021
10.7	New Relic, Inc. Non-Employee Director Compensation Policy, as amended.	8-K	001-36766	99.2	June 25, 2021
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1(1)	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the In-line XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document					X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document					X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document					X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document					X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document					X
104	Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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(1)The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any of the Registrant’s filings under the Securities Act of 1933, as amended, irrespective of any general incorporation language contained in any such filing.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

			NEW RELIC, INC.
Date:	August 3, 2021
		By:	/s/ Mark Sachleben
			Mark Sachleben
			Chief Financial Officer
			(Principal Financial and Accounting Officer and Duly Authorized Signatory)

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EX-10.1

NEW RELIC, INC.

CHANGE IN CONTROL AND SEVERANCE AGREEMENT

This Change in Control and Severance Agreement (this “Agreement”) is entered into by and between [ ] (“Executive”) and New Relic, Inc., a Delaware corporation (the “Company”), with an effective date of [ ].

RECITALS

The Company’s Board of Directors (the “Board”) believes it is in the best interests of the Company and its shareholders to retain Executive and to provide Executive with certain protections in the event of Executive’s termination of employment under certain circumstances.

Now therefore, in consideration of the mutual promises, covenants and agreements contained herein, and in consideration of the continuing employment of Executive by the Company, the parties hereto agree as follows:

1. Effectiveness and Term of Agreement; At-Will Employment. This Agreement shall be effective as of the date first set forth above and shall remain in effect for a term of three years from such date, after which time this Agreement may be renewed by mutual agreement of the parties. Executive’s employment is and shall remain at-will, which means that the Company may terminate Executive’s employment at any time, with or without advance notice, and with or without Cause. Similarly, Executive may resign Executive’s employment at any time, with or without advance notice. Executive shall not receive any compensation of any kind, including, without limitation, stock option or other equity award vesting acceleration and severance benefits, following Executive’s termination of employment with the Company, except as expressly provided herein.

2. Severance Benefits.

(a) Severance Benefits upon a Termination in Connection with or Following a Change in Control. If Executive’s employment is terminated by the Company without Cause (as defined below, and other than as a result of death or disability), or Executive resigns from employment with the Company for Good Reason (as defined below), in either case in connection with or within twelve (12) months following the effective date of a Change in Control, and provided such termination constitutes a “separation from service” (within the meaning of Treasury Regulation Section 1.409A-1(h), a “Separation from Service”), and further provided that Executive delivers an effective release of claims as required under Section 3 below, then Executive shall be entitled to the following severance benefits (the “CIC Benefits”):

(i) The Company shall pay Executive a lump sum amount in cash equal to [ ] months of Executive’s then current base salary, ignoring any decrease in base salary that forms the basis for Good Reason, at the time specified in Section 3 below.

(ii) Subject to Section 9(c), the Company shall pay Executive’s expenses for continuing Executive’s health care coverage and that of any dependents who are covered at the time of Executive’s Separation from Service (the “COBRA Premiums”) under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) for a period ending on the earlier of the [ ] month anniversary of the Separation from Service or the date on which Executive becomes eligible to be covered by the group health care plans of another employer (the “CIC COBRA Period”), provided Executive timely elects such COBRA continuation coverage.

(iii) All outstanding stock awards then held by Executive shall become fully vested and exercisable with respect to all of the shares subject thereto, effective immediately prior to Executive’s Separation from Service under this Section 2(a).

(b) Severance Benefits upon a Termination Not in Connection with or Following a Change in Control. If Executive’s employment is terminated by the Company without Cause (other than as a result of death or disability),

and such termination is not in connection with or within twelve (12) months following the effective date of a Change in Control, and provided such termination constitutes a Separation from Service and that Executive delivers an effective release of claims as required under Section 3 below, then Executive shall be entitled to the following severance benefits (the “Severance Benefits”):

(i) The Company shall pay Executive an amount in cash equal to [ ] months of Executive’s then current base salary, paid over the [ ] month period following Executive’s Separation from Service, in accordance with the Company’s regular payroll schedule, at the time specified in Section 3 below.

(ii) Subject to Section 9(c), the Company shall pay Executive’s COBRA Premiums for a period ending on the earlier of the [ ] month anniversary of the Separation from Service or the date on which Executive becomes eligible to be covered by the group health care plans of another employer (the “Severance COBRA Period”), provided Executive timely elects such COBRA continuation coverage.

(c) Accrued Wages, Bonus and Vacation, Expenses. Without regard to the reason for, or the timing of, Executive’s termination of employment, the Company shall pay (or provide reimbursement to) Executive for (i) any unpaid base salary due for periods prior to and including the date of Separation from Service; (ii) all accrued and unused vacation through the date of Separation from Service, if applicable; (iii) any earned (as determined and approved by the Board prior to the Separation from Service) but not yet paid incentive bonus from the prior fiscal year, which bonus shall be paid in accordance with the Company’s regular bonus payment process and in any event by no later than two and one-half (2 ½) months after the end of such subsequent year; and (iv) following submission of proper expense reports by Executive, all expenses reasonably and necessarily incurred by Executive in connection with the business of the Company prior to the Separation from Service. These payments shall be made promptly upon or following termination (or in the case of an earned bonus, within the time period set forth in the Company’s bonus plan and in any event by no later than two and one-half (2 ½) months after the end of the fiscal year following the year in which the bonus was earned), and in all cases within the period of time mandated by law.

3. Release Required; Timing of Payments.

(a) Requirement of Release. Prior to the payment of any CIC Benefits or Severance Benefits (including the acceleration of equity, if applicable), Executive shall execute and allow to become effective a standard employment release agreement releasing the Company (and its successor) from any and all claims Executive may have against such entities related to or arising in connection with Executive’s employment and the terms of such employment and termination thereof (the “Release”) within the time frame set forth therein, but not later than 60 days following Executive’s Separation from Service (the “Release Effective Date”). No CIC or Severance Benefits shall be paid or provided prior to the Release Effective Date.

(b) Form of Release. The Release shall be in substantially the form attached hereto as Exhibit A, Exhibit B or Exhibit C, as applicable, and shall specifically relate to all of Executive’s rights and claims in existence at the time of such execution and shall confirm Executive’s continuing obligations to the Company (including but not limited to obligations under any confidentiality and/or non-solicitation agreement with the Company). Unless a Change in Control has occurred, the Board, in its sole discretion, may modify the form of the required Release to comply with applicable law and shall determine the form of the required Release, which may be incorporated into a termination agreement or other agreement with Executive.

(c) Timing of Payments. Within five days following the Release Effective Date, the Company will pay (or commence payment of) the CIC Benefits or Severance Benefits Executive would otherwise have received on or prior to such date but for the delay in payment related to the effectiveness of the Release, with the balance of benefits being paid as scheduled. Notwithstanding the foregoing, if the Company (or, if applicable, the successor entity thereto) determines that any of the CIC Benefits or Severance Benefits constitute “nonqualified deferred compensation” under Section 409A (defined below), then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, no CIC Benefits or Severance Benefits will be paid prior to the 60th day following Executive’s Separation from Service. On the 60th day following the date of Separation from Service, the Company will pay to Executive in a lump sum the CIC Benefits or Severance Benefits, as

applicable, that Executive would otherwise have received on or prior to such date, with the balance of the CIC Benefits or Severance Benefits being paid as originally scheduled.

4. Limitation on Payments. If any payment or benefit (including payments and benefits pursuant to this Agreement) that Executive would receive in connection with a Change in Control from the Company or otherwise (“Transaction Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Company shall cause to be determined, before any amounts of the Transaction Payment are paid to Executive, which of the following two alternative forms of payment would result in Executive’s receipt, on an after-tax basis, of the greater amount of the Transaction Payment notwithstanding that all or some portion of the Transaction Payment may be subject to the Excise Tax: (1) payment in full of the entire amount of the Transaction Payment (a “Full Payment”), or (2) payment of only a part of the Transaction Payment so that Executive receives the largest payment possible without the imposition of the Excise Tax (a “Reduced Payment”). For purposes of determining whether to make a Full Payment or a Reduced Payment, the Company shall cause to be taken into account all applicable federal, state and local income and employment taxes and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes). If a Reduced Payment is made, (x) Executive shall have no rights to any additional payments and/or benefits constituting the Transaction Payment, and (y) reduction in payments and/or benefits will occur in the following order: (1) reduction of cash payments; (2) cancellation of accelerated vesting of equity awards other than stock options; (3) cancellation of accelerated vesting of stock options; and (4) reduction of other benefits paid to Executive. In the event that acceleration of vesting of equity award compensation is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant of Executive’s equity awards. In no event will the Company or any stockholder be liable to Executive for any amounts not paid as a result of the operation of this Section 4.

(a) The professional firm engaged by the Company for general tax purposes as of the day prior to the effective date of the Change in Control shall make all determinations required to be made under this Section 4. If the professional firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint a nationally recognized independent registered public accounting firm to make the determinations required hereunder. The Company shall bear all expenses with respect to the determinations by such professional firm required to be made hereunder.

(b) The professional firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and Executive within fifteen (15) calendar days after the date on which Executive’s right to a Transaction Payment is triggered or such other time as reasonably requested by the Company or Executive. If the professional firm determines that no Excise Tax is payable with respect to the Transaction Payment, either before or after the application of the Reduced Amount, it shall furnish the Company and Executive with detailed supporting calculations of its determinations that no Excise Tax will be imposed with respect to such Transaction Payment. Any good faith determinations of the professional firm made hereunder shall be final, binding and conclusive upon the Company and Executive.

5. Successors.

(a) Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s, or ensure that the Company fully performs its, obligations under this Agreement and shall perform the Company’s, or ensure that the Company performs its, obligations, under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any such successor.

(b) Executive’s Successors. Without the written consent of the Company, Executive shall not assign or transfer any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by,

Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

6. Notices.

(a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of Executive, mailed notices shall be addressed to Executive at the home address which Executive most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

(b) Notice of Termination. Any termination by the Company with or without Cause or by Executive as a result of a voluntary resignation for any reason shall be communicated by a notice of termination to the other party hereto given in accordance with this Agreement.

7. Arbitration. The Company and Executive shall attempt to settle any disputes arising in connection with this Agreement through good faith consultation. In the event that Executive and the Company are not able to resolve any such disputes within fifteen (15) days after notification in writing to the other, any dispute or claim arising out of or in connection with this Agreement will be finally settled by binding arbitration in San Francisco, California in accordance with the rules of the American Arbitration Association by one arbitrator mutually agreed upon by the parties. The arbitrator will apply California law, without reference to rules of conflicts of law or rules of statutory arbitration, to the resolution of any dispute, and may award only those remedies that would have applied if the matter had been heard in court. The arbitrator’s decision must be in writing and contain findings of fact and conclusions of law. Except as set forth in Section 9(i) below, the arbitrator shall not have authority to modify the terms of this Agreement. The Company shall pay the costs of the arbitration proceeding. Each party shall, unless otherwise determined by the arbitrator, bear the party’s own attorneys’ fees and expenses, provided however that if Executive prevails in an arbitration proceeding, the Company shall reimburse Executive for reasonable attorneys’ fees and costs. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. All claims in arbitration have the same statutes of limitation that would apply to those claims in a court. Notwithstanding the foregoing, the Company and Executive may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this paragraph, without breach of this arbitration provision. All determinations of final relief, including final injunctive relief, shall be decided in arbitration.

8. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:

(a) Cause. “Cause” for termination of Executive’s employment is defined as any of the following: (i) Executive’s willful failure substantially to perform Executive’s duties and responsibilities to the Company or deliberate violation of a Company policy; (ii) Executive’s commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in material injury to the Company; (iii) unauthorized use or disclosure by Executive of any proprietary information or trade secrets of the Company or any other party to whom Executive owes an obligation of nondisclosure as a result of Executive’s relationship with the Company; or (iv) Executive’s willful breach of any obligations under any written agreement or covenant with the Company. The determination as to whether Executive is being terminated for Cause shall be made in good faith by the Company and shall be final and binding on Executive. The term “Company” will be interpreted to include any subsidiary, parent or affiliate of the Company, as appropriate.

(b) Change in Control. “Change in Control” shall have the meaning set forth in the Company’s 2014 Equity Incentive Plan, as it may be amended from time to time; provided that to the extent required for compliance with Section 409A of the Code, in no event will a Change in Control be deemed to have occurred if such transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a

substantial portion of the assets of” the Company as determined under Treasury Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).

(c) Good Reason. “Good Reason” for Executive’s resignation of employment shall exist following the occurrence of any of the following without Executive’s written consent: (i) a material reduction in job duties, responsibilities or authority inconsistent with Executive’s position with the Company; provided, however, that any such reduction or change after a Change in Control will not constitute Good Reason if Executive retains reasonably comparable duties, position and responsibilities with respect to the Company’s business within the successor entity following a Change of Control; (ii) a material reduction of Executive’s then current base salary, representing a reduction of more than ten percent (10%) of Executive’s then current base salary; provided, that an across-the-board reduction in the salary level of all executive officers of the Company by the same percentage amount as part of a general salary level reduction shall not constitute such a material salary reduction; (iii) the relocation of Executive’s principal place of employment to a place that increases Executive’s one-way commute by more than fifty (50) miles as compared to Executive’s then current principal place of employment immediately prior to such relocation; (iv) any material breach by the Company of this Agreement or any other written agreement between the Company and Executive; or (v) the failure by any successor to the Company to assume this Agreement or any obligations under this Agreement; provided, that Executive gives written notice to the Company of the event forming the basis of the termination for Good Reason within thirty (30) days after the date on which the Company gives written notice to Executive of the Company’s affirmative decision to take an action set forth in clause (i), (ii), (iii), (iv) or (v) above, the Company fails to cure such basis for the Good Reason resignation within thirty (30) days after receipt of Executive’s written notice and Executive terminates from employment within thirty (30) days following the expiration of the cure period.

9. Miscellaneous Provisions.

(a) Executive Obligations. Notwithstanding anything to the contrary contained herein, payment of any of the CIC Benefits or Severance Benefits will be conditioned upon (i) Executive continuing to comply with Executive’s obligations under the Proprietary Information and Inventions Agreement (or such similar form that Executive previously executed in connection with Executive’s employment) during the period of time in which Executive is receiving the CIC Benefits or Severance Benefits; and (ii) Executive’s resignation from all positions with the Company, any subsidiaries and affiliates, and the Board (as applicable), to be effective no later than the date of Separation from Service (or such other date as determined by the Board).

(b) Income and Employment Taxes. All amounts paid or provided under this Agreement shall be net of required withholdings, and Executive shall be responsible for any additional taxes of any nature (including any penalties or interest that may apply to such taxes) that the Company reasonably determines apply to any payment made hereunder. Executive’s receipt of any benefit hereunder is conditioned on Executive’s satisfaction of any applicable withholding or similar obligations that apply to such benefit and any cash payment owed hereunder will be reduced to satisfy any such withholding or similar obligations that may apply.

(c) Alternative Method of Providing COBRA Benefit. If the Company determines, in its sole discretion, that the     Company cannot pay COBRA Premiums as provided in Section 2(a) or 2(b) without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof pay Executive a taxable cash amount, which payment shall be made regardless of whether Executive or Executive’s eligible family members elect group health care continuation coverage (the “Health Care Benefit Payment”). The Health Care Benefit Payment shall be paid in monthly installments on the same schedule and over the same time period that the COBRA Premiums would otherwise have been paid on behalf of Executive. The Health Care Benefit Payment shall be equal to the amount that the Company would have otherwise paid for COBRA Premiums (which amount shall be calculated based on the premium for the first month of coverage), and shall be paid until the expiration of the CIC COBRA Period or the Severance COBRA Period, as applicable.

(d) No Duty to Mitigate. Executive shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that Executive may receive from any other source.

(e) Interaction with Other CIC Benefits. In the event that Executive would be entitled to a greater level of CIC Benefits under the terms and conditions of a severance plan or policy provided by the Company or its successor to other Company employees being terminated in connection with or within twelve (12) months following a Change in Control but for the existence of this Agreement, Executive shall be entitled to receive the greater of the CIC Benefits or the benefits under such other agreement, subject to the applicable terms and conditions thereof.

(f) Waiver. No provision of this Agreement may be waived or discharged unless the waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(g) Integration. This Agreement supersedes all prior or contemporaneous agreements, whether written or oral, with respect to the subject matter of this Agreement; provided that, for clarification purposes, this Agreement shall not affect any agreements between the Company and Executive regarding intellectual property matters, non-solicitation or non-competition restrictions or confidential information of the Company.

(h) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California.

(i) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

(j) Code Section 409A. It is intended that each installment of the payments and benefits provided for in this Agreement shall be treated as a separate “payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i). For the avoidance of doubt, it is intended that this Agreement and payment of the amounts set forth in this Agreement shall (a) satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (Section 409A of the Code, together, with any state law of similar effect, “Section 409A”), including under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), or (b) be construed and administered in accordance with Section 409A. However, if the Company (or, if applicable, the successor entity thereto) determines that the severance payments and benefits provided under this Agreement (the “Agreement Payments”) constitute “nonqualified deferred compensation” under Section 409A and Executive is, on the date of Executive’s Separation from Service, a “specified employee” of the Company or any successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of the Code (a “Specified Employee”), then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, the timing of the payments and benefits provided for in this Agreement shall be delayed as follows: on the earlier to occur of (i) the date that is six (6) months and one day after Executive’s Separation from Service or (ii) the date of Executive’s death (such earlier date, the “Delayed Initial Payment Date”), the Company (or the successor entity thereto, as applicable) shall pay to Executive a lump sum amount equal to the applicable payment or benefit that Executive would otherwise have received through the Delayed Initial Payment Date if the commencement of the payment of the payment or benefit had not been so delayed pursuant to this Section 9(j). Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by Executive on account of non-compliance with Section 409A.

(k) Legal Fees and Expenses. The parties shall each bear their own expenses, legal fees and other fees incurred in connection with the execution of this Agreement.

(l) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.

EXECUTIVE

[Insert name]

Date:

NEW RELIC, INC.

By:

Name:

Title:

Date:

For Executive Age 40 or Older

Group Termination

EXHIBIT A

RELEASE AGREEMENT1

In consideration of receiving certain benefits under my Change in Control and Severance Agreement with New Relic, Inc. (the “Company”) dated [ ] (the “Agreement”), I have agreed to sign this Release. I understand that I am not entitled to benefits under the Agreement unless I sign this Release.

I understand that this Release, together with the Agreement, constitutes the complete, final and exclusive embodiment of the entire agreement between the Company, affiliates of the Company and me with regard to the subject matter hereof. I am not relying on any promise or representation by the Company that is not expressly stated therein. Certain capitalized terms used in this Release are defined in the Agreement.

I hereby confirm my obligations under my Proprietary Information and Inventions Agreement (or such similar form that I previously executed in connection with my employment) with the Company.

    Except as otherwise set forth in this Release, I hereby generally and completely release the Company and its current and former directors, officers, executives, shareholders, shareholders, partners, agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers, affiliates, and assigns (collectively, the “Released Parties”) from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to my signing this Release (collectively, the “Released Claims”). The Released Claims include, but are not limited to: (1) all claims arising out of or in any way related to my employment with the Company or its affiliates, or the termination of that employment; (2) all claims related to my compensation or benefits, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company or its affiliates; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (4) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (5) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (as amended) (“ADEA”), the federal Employee Retirement Income Security Act of 1974 (as amended), the Worker Adjustment and Retraining Notification Act, and the California Fair Employment and Housing Act (as amended). Notwithstanding the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (1) any rights or claims for indemnification I may have pursuant to any written indemnification agreement with the Company to which I am a party, the charter or bylaws of the Company, or under applicable law; (2) any rights related to vested securities of the Company that were granted to me during the course of my employment with the Company or any shares of capital stock or other securities of the Company that I purchased other than pursuant to a Company stock option or stock plan; or (3) any rights which are not waivable as a matter of law. In addition, nothing in this Release prevents me from filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission, the Department of Labor, the Securities and Exchange Commission, the California Department of Fair Employment and Housing, or any other local, state, or federal administrative body or government agency that is authorized to enforce or administer laws related to employment, against the Company, except that I hereby waive my right to any monetary benefits in connection with any such claim, charge or proceeding brought by me or on my behalf by any third party, except for any right I may have to receive a payment from a government agency (and not the Company) for information provided to the government agency. I hereby represent and warrant that, other than the Excluded Claims, I am not

1This Agreement contemplates application of California law. Actual release agreements to be customized for other states, as necessary

aware of any claims I have or might have against any of the Released Parties that are not included in the Released Claims.

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA. I also acknowledge that the consideration given for the Released Claims is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (a) the Released Claims do not apply to any rights or claims that arise after the date I sign this Release; (b) I should consult with an attorney prior to signing this Release (although I may choose voluntarily not to do so); (c) I have forty-five (45) days to consider this Release (although I may choose to voluntarily sign it sooner); (d) I have seven (7) days following the date I sign this Release to revoke the Release by providing written notice to an officer of the Company; and (e) the Release will not be effective until the date upon which the revocation period has expired unexercised, which will be the eighth day after I sign this Release (“Release Effective Date”).

I have received with this Release all of the information required by the ADEA, including without limitation a detailed list of the job titles and ages of all employees who were terminated in this group termination and the ages of all employees of the Company in the same job classification or organizational unit who were not terminated, along with information on the eligibility factors used to select employees for the group termination and any time limits applicable to this group termination program.

I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release, and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.” I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims hereunder.

I hereby represent that I have been paid all compensation owed and for all hours worked, I have received all the leave and leave benefits and protections for which I am eligible, and I have not suffered any on-the-job injury for which I have not already filed a workers’ compensation claim.

I hereby agree not to disparage the Company, any of the Released Parties, Company products or services, or the Company’s business, reputation, practices, strategies, or prospects in any manner likely to be harmful to its or their business, business reputation, or personal reputation; provided, however, that I will respond accurately and fully to any question, inquiry or request for information when required by legal process.

I acknowledge that to become effective, I must sign and return this Release to the Company so that it is received not later than forty-five (45) days following the date it is provided to me, and I must not revoke it thereafter.

[EXECUTIVE NAME]

Date:

For Executive Age 40 or Older

Individual Termination

EXHIBIT B

RELEASE AGREEMENT

In consideration of receiving certain benefits under my Change in Control and Severance Agreement with New Relic, Inc. (the “Company”) dated [ ] (the “Agreement”), I have agreed to sign this Release. I understand that I am not entitled to benefits under the Agreement unless I sign this Release.

I understand that this Release, together with the Agreement, constitutes the complete, final and exclusive embodiment of the entire agreement between the Company, affiliates of the Company and me with regard to the subject matter hereof. I am not relying on any promise or representation by the Company that is not expressly stated therein. Certain capitalized terms used in this Release are defined in the Agreement.

I hereby confirm my obligations under my Proprietary Information and Inventions Agreement (or such similar form that I previously executed in connection with my employment) with the Company.

Except as otherwise set forth in this Release, I hereby generally and completely release the Company and its current and former directors, officers, executives, shareholders, shareholders, partners, agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers, affiliates, and assigns (collectively, the “Released Parties”) from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to my signing this Release (collectively, the “Released Claims”). The Released Claims include, but are not limited to: (1) all claims arising out of or in any way related to my employment with the Company or its affiliates, or the termination of that employment; (2) all claims related to my compensation or benefits, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company or its affiliates; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (4) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (5) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (as amended) (“ADEA”), the federal Employee Retirement Income Security Act of 1974 (as amended), and the California Fair Employment and Housing Act (as amended). Notwithstanding the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (1) any rights or claims for indemnification I may have pursuant to any written indemnification agreement with the Company to which I am a party, the charter or bylaws of the Company, or under applicable law; (2) any rights related to vested securities of the Company that were granted to me during the course of my employment with the Company or any shares of capital stock or other securities of the Company that I purchased other than pursuant to a Company stock option or stock plan; or (3) any rights which are not waivable as a matter of law. In addition, nothing in this Release prevents me from filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission, the Department of Labor, the Securities and Exchange Commission, the California Department of Fair Employment and Housing, or any other local, state, or federal administrative body or government agency that is authorized to enforce or administer laws related to employment, against the Company, except that I hereby waive my right to any monetary benefits in connection with any such claim, charge or proceeding brought by me or on my behalf by any third party, except for any right I may have to receive a payment from a government agency (and not the Company) for information provided to the government agency. I hereby represent and warrant that, other than the Excluded Claims, I am not aware of any claims I have or might have against any of the Released Parties that are not included in the Released Claims.

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA. I also acknowledge that the consideration given for the Released Claims is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the

ADEA, that: (a) the Released Claims do not apply to any rights or claims that arise after the date I sign this Release; (b) I should consult with an attorney prior to signing this Release (although I may choose voluntarily not to do so); (c) I have twenty-one (21) days to consider this Release (although I may choose to voluntarily sign it sooner); (d) I have seven (7) days following the date I sign this Release to revoke the Release by providing written notice to an officer of the Company; and (e) the Release will not be effective until the date upon which the revocation period has expired unexercised, which will be the eighth day after I sign this Release (“Release Effective Date”).

I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release, and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.” I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims hereunder.

I hereby represent that I have been paid all compensation owed and for all hours worked, I have received all the leave and leave benefits and protections for which I am eligible, and I have not suffered any on-the-job injury for which I have not already filed a workers’ compensation claim.

I hereby agree not to disparage any of the Released Parties, Company products or services, or the Company’s business, reputation, practices, strategies, or prospects in any manner likely to be harmful to its or their business, business reputation, or personal reputation; provided, however, that I will respond accurately and fully to any question, inquiry or request for information when required by legal process.

I acknowledge that to become effective, I must sign and return this Release to the Company so that it is received not later than twenty-one (21) days following the date it is provided to me, and I must not revoke it thereafter.

[EXECUTIVE NAME]

Date:

For Executive Under Age 40

Individual and Group Termination

EXHIBIT C

RELEASE AGREEMENT

In consideration of receiving certain benefits under my Change in Control and Severance Agreement with New Relic, Inc. (the “Company”) dated [ ] (the “Agreement”), I have agreed to sign this Release. I understand that I am not entitled to benefits under the Agreement unless I sign this Release.

I understand that this Release, together with the Agreement, constitutes the complete, final and exclusive embodiment of the entire agreement between the Company, affiliates of the Company and me with regard to the subject matter hereof. I am not relying on any promise or representation by the Company that is not expressly stated therein. Certain capitalized terms used in this Release are defined in the Agreement.

I hereby confirm my obligations under my Proprietary Information and Inventions Agreement (or such similar form that I previously executed in connection with my employment) with the Company.

Except as otherwise set forth in this Release, I hereby generally and completely release the Company and its current and former directors, officers, executives, shareholders, shareholders, partners, agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers, affiliates, and assigns (collectively, the “Released Parties”) from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to my signing this Release (collectively, the “Released Claims”). The Released Claims include, but are not limited to: (1) all claims arising out of or in any way related to my employment with the Company or its affiliates, or the termination of that employment; (2) all claims related to my compensation or benefits, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company or its affiliates; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (4) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (5) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Employee Retirement Income Security Act of 1974 (as amended), the Worker Adjustment and Retraining Notification Act, and the California Fair Employment and Housing Act (as amended). Notwithstanding the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (1) any rights or claims for indemnification I may have pursuant to any written indemnification agreement with the Company to which I am a party, the charter or bylaws of the Company, or under applicable law; (2) any rights related to vested securities of the Company that were granted to me during the course of my employment with the Company or any shares of capital stock or other securities of the Company that I purchased other than pursuant to a Company stock option or stock plan; or (3) any rights which are not waivable as a matter of law. In addition, nothing in this Release prevents me from filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission, the Department of Labor, the Securities and Exchange Commission, the California Department of Fair Employment and Housing, or any other local, state, or federal administrative body or government agency that is authorized to enforce or administer laws related to employment, against the Company, except that I hereby waive my right to any monetary benefits in connection with any such claim, charge or proceeding brought by me or on my behalf by any third party, except for any right I may have to receive a payment from a government agency (and not the Company) for information provided to the government agency. I hereby represent and warrant that, other than the Excluded Claims, I am not aware of any claims I have or might have against any of the Released Parties that are not included in the Released Claims.

I acknowledge that the consideration given for the Released Claims is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing that: (a) the Released Claims do not apply to any rights or claims that arise after the date I sign this Release; (b) I should consult with an

attorney prior to signing this Release (although I may choose voluntarily not to do so); (c) I have seven (7) days to consider this Release (although I may choose to voluntarily sign it sooner); and (d) the Release will be effective upon timely receipt by the Company (“Release Effective Date”)

I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release, and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.” I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims hereunder.

I hereby represent that I have been paid all compensation owed and for all hours worked, I have received all the leave and leave benefits and protections for which I am eligible, and I have not suffered any on-the-job injury for which I have not already filed a workers’ compensation claim.

I hereby agree not to disparage the Company, any of the Released Parties, Company products or services, or the Company’s business, reputation, practices, strategies, or prospects in any manner likely to be harmful to its or their business, business reputation, or personal reputation; provided, however, that I will respond accurately and fully to any question, inquiry or request for information when required by legal process.

I acknowledge that to become effective, I must sign and return this Release to the Company so that it is received not later than seven (7) days following the date it is provided to me.

[EXECUTIVE NAME]

Date:

EX-10.2

February 1, 2017

Ms. Kristy Friedrichs

Dear Kristy:

We are very pleased to offer you a position with New Relic, Inc. ("Company") on the following terms. Please let us know if you have any questions at all about this offer. When ready to execute, please sign in the places indicated. Your appointment and your compensation package as outlined herein are subject to approval by our Board of Directors (or its delegate).

1.Position. Your employment shall be with Company in the position of Chief People Officer, reporting to Lew Cirne. You shall devote your full time, ability, attention, energy and skills solely and exclusively to performing all duties as assigned and delegated to you by Company.

2.Start Date. If you accept this offer, your employment with Company shall begin on February 1, 2017, or other such date as is mutually agreed. You will work out of our San Francisco office.

3.Compensation. In consideration for your services to Company, you will receive compensation of $12,500 twice a month (equivalent to an annual salary of $300,000), subject to applicable state and federal withholdings and deductions. In addition, you will be eligible for an annual performance bonus, paid quarterly and targeted at 40% of your annual base salary per year, based on individual, group and/or corporate goals to be determined following the commencement of your employment. Your position is classified as exempt from overtime.

4.Additional Benefits.

a. Equity. In connection with your commencement of employment, we will recommend that the Company's Board of Directors (or its delegate) grant you equity awards with an initial value of $1,850,000 pursuant to the terms of the Company's 2014 Equity Incentive Plan. If approved, 50% of this value will be awarded in the form of Restricted Stock Units ("RSUs"), with the remaining value awarded in the form of options to purchase shares of our common stock ("Stock Options"). The number of RSUs will be determined using the average closing price of the Company's common stock as quoted on the New York Stock Exchange (the "NYSE") for the 30-day calendar period immediately preceding the grant date. The exercise price of your Stock Options will be the closing price of the Company's common stock on the date of grant, with the number of shares of stock subject to your Stock Options determined based on the dollar amount divided by the average closing price of the Company's common stock as quoted on the NYSE for the 30-day calendar period immediately preceding the grant date divided by the value obtained using the assumptions used by the Company in its financial statements.

In addition, when you have been at New Relic for at least one year, you will be eligible for a merit increase at the same time as other senior executives at New Relic. As part of your initial merit increase, you shall receive an equity award with equity value, at the time such award is granted, of at least $800,000. Such award shall be split between RSUs and Stock Options in a similar proportion to the awards granted to peer senior executives.

Your awards will vest, subject to your continued employment with the Company through each vesting date, as follows

•For RSUs, 25% of the units will vest on the first anniversary of the RSU Vesting Commencement Date, with 1/ 16th of the units vesting quarterly thereafter. Your RSU Vesting Commencement Date will be the first February 15, May 15, August 15 or November 15 on or after the date your RSUs are approved for grant.

•For your Stock Options, 25% of the shares subject to the Stock Options will vest on the first anniversary of your employment commencement date, with 1/48th of the total number of shares vesting monthly thereafter.

Schwab will notify you via email when your new award has been posted to your account. Once received, please be sure to follow the link and instructions included therein so you can read and accept your grant agreement in the Schwab system.

b.Insurance. The Company's benefits package includes health, dental, vision and life insurance. Additional details of insurance benefits shall be provided separately. Your insurance benefits start on the first day of employment.

c.401(k) Plan. You will be eligible to participate in the Company sponsored 401 (k) investment plan immediately upon starting employment.

d.Paid Time Off and Holidays. Company paid holidays generally are: New Year's Day, Presidents' Day, Memorial Day, 4th of July, Labor Day, Thanksgiving, the Friday after Thanksgiving, and Christmas Day, plus two (2) annual floating holidays determined by Company. You will be eligible for Tracking Free Paid Time Off, which means that you will not accrue paid time off. Instead, you may take a reasonable amount of time off with pay, as permitted by tour duties and responsibilities, and as approved in advance by your manager.

e.Business Expenses. You shall be entitled to reimbursement by Company for such customary, ordinary and necessary business expenses as are incurred by you in the performance of your duties and consistent with the policies of the Company.

5.Proprietary Information and Inventions. The Company conditions this offer upon you signing and returning with this letter the Proprietary Information and Inventions Agreement attached as Exhibit A.

6.At-Will Employment. Your employment with Company will be at-will. This means that either you or Company may terminate the employment relationship at any time, without advance notice, and for any reason or for no reason at all. Also, Company retains its discretion to make all other decisions concerning your employment (e.g. demotions, transfers, job responsibilities, compensation or any other managerial decisions) with or without good cause. This "at-will" employment relationship can only be modified in writing by the CEO of Company. This paragraph 6 contains the entire agreement between you and Company regarding the right and ability of either you or Company to terminate your employment with Company. Notwithstanding the foregoing, you shall be included as a Tier 2 executive and entitled to the same severance and change of control provisions as other Tier 2 executives at Company.

7.Representation and Warranty. You represent and warrant to us that the performance of your duties for the Company will not violate any agreement with or trade secrets of any other person or entity and that your duties for the Company, unless we are notified in writing in advance, will not be limited or restricted by any other agreements or understandings between you and other persons or companies. You specifically agree to ensure that you do not use or infringe on the confidentiality or intellectual property rights of any previous employer. You agree to indemnify the Company against a breach of the representations and warranties in paragraph 7.

8.Post-Offer Conditions. In accordance with law, the Company conditions this offer upon your providing appropriate documentation within three (3) business days of your hire date demonstrating that you have authorization to work in the United States. If you have questions about this requirement, which applies to U.S. citizens and non-U.S. citizens alike, you may contact the People Operations Department. Also, the Company conditions this offer upon acceptable reference checks and successfully passing a criminal background check.

9.Arbitration. The Company conditions this offer upon you signing and returning with this letter the enclosed Arbitration Agreement.

This offer, once accepted, constitutes the complete and exclusive agreement between you and Company with respect to the subject matter hereof and supersedes and replaces any and all prior agreements or representations relating to such subject.

In order to accept this offer, you must sign this letter and the other documents enclosed for your signature, and I must receive them back before close of business on February 1, 2017.

By so signing, you acknowledge that you have received no inducements or representations other than those set forth in this letter that caused you to accept this offer of employment.

We look forward to your favorable reply, and to a productive and enjoyable working relationship.

Very truly yours,

/s/ Mark J. Sachleben

Mark J. Sachleben

Chief Financial Officer

Offer Accepted:

/s/ Kristy Friedrichs

Kristy Friedrichs

February 1, 2017

Date

EXHIBIT A - NEW RELIC, INC.

EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

In consideration of my employment or continued employment with NEW RELIC, INC. ("Company"), and the compensation now and hereafter paid to me, I hereby agree as follows:

1.NONDISCLOSURE

1.1 Recognition of Company's Rights; Nondisclosure. I agree that at all times in perpetuity, both during my employment and thereafter, I will hold in strictest confidence and will not disclose, use, copy, summarize, remove from the premises of the Company, lecture upon or publish any of the Company's Proprietary Information (defined below), except (a) as required in connection with my work for the Company, and (b) after termination of my employment, only if an officer of the Company expressly authorizes such in writing. I agree to take all reasonable measures to protect the Proprietary Information of the Company from falling into the public domain or the possession of persons other than those persons authorized to have any such Proprietary Information. I will obtain Company's written approval before publishing or submitting for publication any material (written, verbal, or otherwise) that relates to my work at Company and/or incorporates any Proprietary Information. I hereby assign to the Company any rights I may have or acquire in such Proprietary Information and recognize that all Proprietary Information shall be the sole property of the Company and its assigns.

1.2 Proprietary Information. The term "Proprietary Information" shall mean any and all confidential and/or proprietary knowledge, data or information of the Company. By way of illustration but not limitation, "Proprietary Information" includes (a) trade secrets, inventions, mask works,

ideas, processes, formulas, source and object codes, data, programs, other works of authorship, know-how, improvements, discoveries, developments, designs and techniques (hereinafter collectively referred to as "Inventions"); and (b) information regarding plans for research, development, new products, marketing and selling, business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers; and (c) lists of names or classes of customers or personnel. Notwithstanding the foregoing, it is understood that, at all such times, I am free to use information which is generally known in the trade or industry, which is not gained as result of a breach of this Agreement, and my own skill, knowledge, know-how and experience to whatever extent and in whichever way I wish.

1.3 Third Party Information. I understand, in addition, that the Company has received and in the future will receive from third parties confidential or proprietary information ("Third Party Information") subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. During the term of my employment and thereafter, I will hold Third Party Information in the strictest confidence and will not disclose to anyone (other than Company personnel who need to know such information in connection with their work for the Company) or use, except in connection with my work for the Company, Third Party

Information unless expressly authorized by an officer of the Company in writing.

1.4 No Improper Use of Information of Prior Employers and Others. During my employment with the Company I will not improperly use or disclose any confidential information or trade secrets, if any, of any former employer or any other person to whom I have an obligation of confidentiality, and I will not bring onto the premises of the Company any unpublished documents or any property belonging to any former employer or any other person to whom I have an obligation of confidentiality unless consented to in writing by that former employer or person. I will use in the performance of my duties only information which is generally known and used by persons with training and experience comparable to my own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company.

2.ASSIGNMENT OF INVENTIONS.

2.1Proprietary Rights. The term "Proprietary Rights" shall mean all trade secret, patent, copyright, mask work and other intellectual property rights throughout the world.

2.2Prior Inventions. Inventions, if any, patented or unpatented, which I made prior to the commencement of my employment with the Company are excluded from the scope of this Agreement. To preclude any possible uncertainty, I have set forth on Exhibit C (Previous Inventions) attached hereto a complete list of all Inventions that I have, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice prior to the commencement of my employment with the Company, that I consider to be my property

or the property of third parties and that I wish to have excluded from the scope of this Agreement (collectively referred to as "Prior Inventions"). If disclosure of any such Prior Invention would cause me to violate any prior confidentiality agreement, I understand that I am not to list such Prior Inventions in Exhibit C but am only to disclose a cursory name for each such invention, a listing of the party(ies) to whom it belongs and the fact that full disclosure as to such inventions has not been made for that reason. A space is provided on Exhibit C for such purpose. If no such disclosure is attached, I represent that there are no Prior Inventions. If, in the course of my employment with the Company, I incorporate a Prior Invention into a Company product, process or machine, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with rights to sublicense through multiple tiers of sublicensees) to make, have made, modify, use and sell such Prior Invention. Notwithstanding the foregoing, I agree that I will not incorporate, or permit to be incorporated, Prior Inventions in any Company Inventions without the Company's prior written consent.

2.3Assignment of Inventions. Subject to Sections 2.4, and 2.6, I hereby assign and agree to assign in the future (when any such Inventions or Proprietary Rights are first reduced to practice or first fixed in a tangible medium, as applicable) to the Company all my right, title and interest in and to any and all Inventions (and all Proprietary Rights with respect thereto) whether or not patentable or registrable under copyright or similar statutes, made or conceived or reduced to practice or learned by me, either alone or jointly with others, during the period of my employment with the Company. Inventions assigned to the Company, or to a third party as directed by the Company pursuant to this Section 2, are hereinafter referred to as "Company Inventions."

2.4Nonassignable Inventions. This Agreement does not apply to an Invention which qualifies fully as a nonassignable Invention under Section 2870 of the California Labor Code (hereinafter "Section 2870"). I have reviewed the notification on Exhibit B (Limited Exclusion Notification) and agree that my signature acknowledges receipt of the notification.

2.5Obligation to Keep Company Informed. During the period of my employment and for six (6) months thereafter, I will promptly disclose to the Company fully and in writing all Inventions authored, conceived or reduced to practice by me, either alone or jointly with others. In addition, I will promptly disclose to the Company all patent applications filed by me or on my behalf within a year after the end of my employment. At the time of each such disclosure, I will advise the Company in writing of any Inventions that I believe fully qualify for protection under Section 2870; and I will at that time provide to the Company in writing all evidence necessary to substantiate that belief. The Company will keep in confidence and will not use for any purpose or disclose to third parties without my consent any confidential information disclosed in writing to the Company pursuant to this Agreement relating to Inventions that qualify fully for protection under the provisions of Section 2870. I will preserve the confidentiality of any Invention that does not fully qualify for protection under Section 2870.

2.6Government or Third Party. I also agree to assign all my right, title and interest in and to any particular Company Invention to a third party, including without limitation the United States, as directed by the Company.

2.7Works for Hire. I acknowledge that all original works of authorship which are made by me (solely or

jointly with others) within the scope of my employment and which are protectable by copyright are "works made for hire," pursuant to United States Copyright Act (17 U.S.C., Section 101).

2.8Enforcement of Proprietary Rights. I will assist the Company in every proper way to obtain, and from time to time enforce, United States and foreign Proprietary Rights relating to Company Inventions in any and all countries. To that end I will execute, verify and deliver such documents and perform such other acts (including appearances as a witness) as the Company may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary Rights and the assignment thereof. In addition, I will execute, verify and deliver assignments of such Proprietary Rights to the Company or its designee. My obligation to assist the Company with respect to Proprietary Rights relating to such Company Inventions in any and all countries shall continue beyond the termination of my employment, but the Company shall compensate me at a reasonable rate after my termination for the time actually spent by me at the Company's request on such assistance.

In the event the Company is unable for any reason, after reasonable effort, to secure my signature on any document needed in connection with the actions specified in the preceding paragraph, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, which appointment is coupled with an interest, to act for and in my behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of the preceding paragraph with the same legal force and effect as if executed by me. I hereby waive and quitclaim to the Company any and all claims, of any nature whatsoever, which I now or may hereafter have for

infringement of any Proprietary Rights assigned hereunder to the Company.

3.Records. I agree to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that may be required by the Company) of all Proprietary Information developed by me and all Inventions made by me during the period of my employment at the Company, which records shall be available to and remain the sole property of the Company at all times.

4.Non-Competition & Non-Solicitation. I agree that during the period of my employment with the Company I will not, without the Company's written consent, engage in any employment or business activity which is competitive with, or would otherwise conflict with, my employment with the Company. I agree further that for the period of my employment with the Company and for one (l) year thereafter, I will not, either directly or through others, solicit or attempt to solicit any employee, independent contractor or consultant of the company to terminate his or her relationship with the Company in order to become an employee, consultant or independent contractor to or for any other person or entity. In addition, I agree that I will not at any time after my employment with the Company use Company trade secrets to either solicit business from, or enter into a business relationship or transaction with, any person or entity that has or has had a business relationship with the Company (including, but not limited to, customers) or disrupt, or attempt to disrupt, any relationship, contractual or otherwise, between Company and any such person or entity.

5.No Conflicting Obligation. I represent that my performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement to keep in confidence

information acquired by me in confidence or in trust prior to my employment with the Company.

I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict herewith.

6.Return Of Company Documents. When I leave the employ of the Company, I will deliver to the Company any and all drawings, notes, memoranda, specifications, devices, formulas, and documents, together with all copies thereof, and any other material containing or disclosing any Company Inventions, Third Party Information or Proprietary Information of the Company. I further agree that any property situated on the Company's premises and owned by the Company, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company personnel at any time with or without notice. Prior to leaving, I will cooperate with the Company in completing and signing the Company's termination statement to confirm my understanding and compliance with my obligations under this agreement.

7.Legal And Equitable Remedies. Because my services are personal and unique and because I may have access to and become acquainted with the Proprietary Information of the Company, the Company shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that the Company may have for a breach of this Agreement.

8.Notices. Any notices required or permitted hereunder shall be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing. Such notice shall be deemed given upon personal delivery to the appropriate address or if sent by certified or

registered mail, three (3) days after the date of mailing.

9.Notification of New Employer. In the event that I leave the employ of the Company, I hereby consent to the notification of my new employer of my rights and obligations under this Agreement.

10.General Provisions.

10.1Governing Law; Consent to Personal Jurisdiction. This Agreement will be governed by and construed according to the laws of the State of California, as such laws are applied to agreements entered into and to be performed entirely within California between California residents. hereby expressly consent to the personal jurisdiction of the state and federal courts located in San Francisco County, California, for any lawsuit filed there against me by Company arising from or related to this Agreement.

10.2Severability. In case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. If moreover, any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.

10.3Successors and Assigns. This Agreement will be binding upon my heirs, executors, administrators and other legal

representatives and will be for the benefit of the Company, its successors, and its assigns.

10.4Survival. The provisions of this Agreement shall survive the termination of my employment and the assignment of this Agreement by the Company to any successor in interest or other assignee.

10.5At-Will Employment. I agree that my employment relationship with the Company is one of employment at will. I agree and understand that nothing in this Agreement shall confer any right with respect to continuation of employment with the Company, nor shall it interfere in any way with my right or the Company's right to terminate my employment at any time without advance notice, with or without cause.

10.6Waiver. No waiver by the Company of any breach of this Agreement shall be a waiver of any preceding or succeeding breach. No waiver by the Company of any right under this Agreement shall be construed as a waiver of any other right. The Company shall not be required to give notice to enforce strict adherence to all terms of this Agreement.

10.7Advice    of Counsel.    

I ACKNOWLEDGE THAT,    IN EXECUTING THIS AGREEMENT, I HAVE HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND I

HAVE READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

10.8 Entire Agreement. The obligations pursuant to Sections 1 and 2 of this Agreement shall apply to any time during which I was previously employed, or am in

the future employed, by the Company if no other agreement governs nondisclosure and assignment of inventions during such period. This Agreement is the final, complete and exclusive agreement of the parties with respect to the subject matter hereof and supersedes and merges all prior discussions between us. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing and signed by the party to be charged. Any subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement.

This Agreement shall be effective as of the first day of my employment with the Company, namely: February 1, 2017.

I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE COMPLETELY FILLED OUT EXHIBIT B AND C TO THIS AGREEMENT.

Dated: February 1, 2017

/s/ Kristy Friedrichs

Kristy Friedrichs

ACCEPTED AND AGREED To: NEW RELIC, INC.

By: /s/ Mark Sachleben

Title: Chief Financial Officer

188 Spear Street, Suite 1200 (Address)

San Francisco, California 94105

Dated: February 1, 2017

EXHIBIT B

LIMITED EXCLUSION NOTIFICATION

THIS IS TO NOTIFY you in accordance with Section 2872 of the California Labor Code that the foregoing Agreement between you and the Company does not require you to assign or offer to assign to the Company any invention that you developed entirely on your own time without using the Company's equipment, supplies, facilities or trade secret information except for those inventions that either:

1.Relate at the time of conception or reduction to practice of the invention to the Company's business, or actual or demonstrably anticipated research or development of the Company; or

2.Result from any work performed by you for the Company.

To the extent a provision in the foregoing Agreement purports to require you to assign an invention otherwise excluded from the preceding paragraph, the provision is against the public policy of this state and is unenforceable.

This limited exclusion does not apply to any patent or invention covered by a contract between the Company and the United States or any of its agencies requiring full title to such patent or invention to be in the United States.

I ACKNOWLEDGE RECEIPT of a copy this notification.

By: /s/ Kristy Friedrichs

Kristy Friedrichs

Date: February 1, 2017

WITNESSED BY:

/s/ Mark J. Sachleben

Mark J. Sachleben

(PRINTED NAME OF REPRESENTATIVE)

EXHIBIT C

TO:	New Relic, Inc.
FROM: SIGNED:	Kristy Friedrichs /s/ Kristy Friedrichs
DATE:	February 1, 2017
SUBJECT:	Previous Inventions

1. Except as listed in Section 2 below, the following is a complete list of all inventions or improvements relevant to the subject matter of my employment with New Relic, Inc. (the "Company") that have been made or conceived or first reduced to practice by me alone or jointly with others prior to my engagement by the Company:

    X    No inventions or improvements.

☐ See below:

☐ Additional sheets attached.

2. Due to a prior confidentiality agreement, I cannot complete the disclosure under Section I above with respect to inventions or improvements generally listed below, the proprietary rights and duty of confidentiality with respect to which I owe to the following party(ies):

    Invention or Improvement    Party(ies)    Relationship

1.    None

2.

3.

☐Additional sheets attached.

EX-10.3

20 April 2020

Steve Hurn

Dear Steve:

Further to our recent discussions, we are very pleased to offer you employment at New Relic UK Limited.

I have enclosed your Agreement of Terms and Conditions of Employment (your employment contract). This offer is conditional upon:

This offer is conditional upon:

1.Receipt of satisfactory original evidence of your right to work legally in the UK (for example, UK/EEA passport or identity card, or non-EEA passport supported by further immigration documents that clearly establish that you have the right to live and work in the UK). To satisfy this condition, please bring the original evidence of your right to work on or before your first day (a copy is not acceptable).

2.Satisfactory criminal record checks.

3.Satisfactory completion of professional references.

The Company reserves the right to withdraw this offer if one or all of the above conditions are not satisfied by the proposed Commencement Date.

By accepting this offer, you confirm that you are able to accept this employment and carry out the work that it would involve without breaching any legal restrictions on your activities, such as restrictions imposed by a current or former employer.

By accepting this offer you agree to the processing by the Company of your personal data (including, where appropriate, sensitive personal data) in connection with your proposed employment by the Company.

This offer, if not accepted, will expire three (3) business days from the date of this letter.

I very much hope that you will accept this offer of employment. If you do so, we would like you to start on 30 April 2020 in a training function and assume the role of EVP & GM - EMEA on 6 July 2020, as described in the enclosed agreements.

We look forward to hearing from you.

Yours sincerely,

/s/ Kristy Friedrichs

Kristy Friedrichs

Chief People Officer

Enclosed: Agreement of Terms and Conditions of Employment including Employee Proprietary Information and Inventions Agreement

2.

Agreement of Terms and Conditions of Employment

This Agreement sets out the terms and conditions of employment agreed between New Relic UK Limited (“the Employer”) and Steve Hurn (“you”), meeting the requirements of Section 1 of the Employment Rights Act 1996. This Agreement will replace in its entirety all existing terms and conditions, agreements, and arrangements, whether in writing or otherwise.

You warrant that you are entitled to work in the UK without any additional approvals and will notify the Employer if you cease to be so entitled.

1. Job title

You will report to Michael Christenson, President and Chief Operating Officer. From 30 April 2020 through 5 July 2020, you will be employed as a Consultant, responsible for self-directed training on the Company’s products and systems. Effective 6 July 2020, you will be employed as EVP & GM - EMEA Sales, with commensurate responsibilities. You may be required to undertake other duties consistent with your position or skills from time to time as the Employer may reasonably require.

2. Commencement

Your period of continuous employment with the Employer will commence on 30 April 2020. No employment with any previous employer counts towards your period of continuous employment with the Employer.

3. Probationary period

The first six months of your employment will be a probationary period and your employment may be terminated during this period at any time on one week’s written notice. At the end of the probationary period your performance, conduct, and suitability for continued employment will be reviewed and if found satisfactory your appointment will be confirmed. If, however, your performance or conduct is deemed unsatisfactory at that time in the opinion of the Employer or for other business reasons, the probationary period may be extended or your employment terminated in the Employer's absolute discretion.

4. Duties

Your specific duties will be as agreed with your line manager.

You undertake to work to the best of your ability and to use your best endeavours to promote, develop, and extend the Employer’s business and interests consistent with your role with the Company. You may not without first obtaining the prior written consent of the Employer accept or hold any office or directly or indirectly be interested in any other trade, business, or occupation whilst working for the Employer.

5. Place of work

You will work remotely from your home office in the UK. You may be required to remain at home on paid leave at any time and in particular during any period of notice whether given by you or the Employer (“Garden Leave”). The Company reserves the right to require you, and by this contract you hereby agree, to carry out your work, either on a temporary or permanent

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basis, at such other locations in Britain as the Company may reasonably require, from time to time.

6. Working hours

Normal working hours are 9:00 a.m. to 5:30 p.m., Monday to Friday inclusive, with a one-hour unpaid lunch break, normally to be taken between 12:00 p.m. and 2:00 p.m. You are, however, expected to work additional hours as required in accordance with the needs and the requirements of the Employer, for which you will not be paid overtime.

From 30 April through 5 July 2020, you will work approximately 20 hours per month in the Consulting function during normal working hours. Thereafter, your employment will be on a full-time basis.

The Employer reserves the right to change your normal working days and hours according to the needs of the Employer from time to time.

For the purpose of the Working Time Regulations 1998 (“Regulations”) as amended from time to time, by signing this agreement you agree that the limit of an average over 17 weeks of 48 hours working time in a seven-day period as set out in the regulations shall not apply to you. You must give the Company three months’ written notice if you decide, (a) to terminate your agreement to waive the limit on your average working time under the regulations, and (b) that you wish the average 48-hour limit on working time to apply to you.

7. Salary and benefits

Effective 6 July 2020, your salary will be paid monthly in arrears at the rate of £288,750 per annum by direct transfer to your bank/building society account.

The months of April, May, and June 2020 will be paid at the flat rate of £500, representing a training rate for the limited duties and hours expected of you during this period (annualized at £6000 or £25 hourly). You will not be entitled to additional compensation for 1-5 July 2020.

For the purposes of the Employment Rights Act 1996, you authorise the Employer to deduct from your salary any sums due to the Employer including, without limitation, any over-payment of salary and any advances or loans made to you by the Employer. In the event of such sums being due to the Employer on the termination of your employment, and if your final salary payment is insufficient to allow for the whole of any such deduction, you will be required to repay the outstanding amount due to the Employer within one month of the date of the termination of your employment.

Upon assuming the role of EVP & GM - EMEA Sales, you will be eligible for the Sales Incentive Plan, targeted at £236,250 per annum, based on individual, group, and/or corporate goals to be determined during your employment.You will receive details of this plan separately. The Employer reserves the right at any time to suspend, modify, reduce, or withdraw this scheme or to amend the terms upon which it is provided.

In addition, for Fiscal Year 2021 (beginning with your assuming the role of EVP & GM EMEA Sales on 6 July 2020 and ending 31 March 2021) you will be guaranteed a minimum of 80% of your FY21 target sales incentive amount. You will receive a monthly commission adjustment (when applicable) to true your year-to-date actual commissions paid up to a

4.

minimum of 80% of your year-to-date target sales incentive amount. In months where your year-to-date actual commissions paid exceeds 80% of your year-to-date target sales incentive, no adjustment payment will be made. This guarantee will cease with the close of FY21 and will not be repeated in future years.

Upon assuming the role of EVP & GM - EMEA Sales, you will be eligible for a one-time bonus of £50,000 if 100% of Fiscal Year 2021 (beginning 6 July 2020 and ending 31 March 2021) quota is achieved. If your performance meets the quota standard, this bonus payment will be issued on a regular payroll date between 1 April 2021 and 31 May 2021. The FY21 quotas will be communicated in advance, are subject to periodic review and may be revised at the discretion of management. The bonus will be issued less all standard deductions as required by applicable laws. The bonus described in this paragraph is a one-time conditional bonus, is not eligible for prorating, will not be due if conditions are not met, and will not be due in any subsequent year.

You will further be entitled to the following benefits from the commencement of your employment:

● Insurance. The Employer’s benefits package includes health insurance subject to theterms and conditions of the relevant scheme. Additional details of insurance benefits shall be provided separately. The Employer reserves the right at any time to change or withdraw all or any of these benefits.

Any benefits supplied to you or your family from time to time that are not expressly referred to in this statement are provided entirely at the Employer’s discretion and shall not form part of your contract of employment.

8. Sickness absence and sick pay

If you are unable to come to work on account of sickness or injury (or for any other reason), you must inform your manager by telephone of the reason for your absence within 30 minutes of your normal start time, unless there is a substantial reason why this communication is not possible. You must provide details of the likely length of and the reason for the absence and describe any outstanding or urgent work that requires attention. When you return to work from any sickness, you will need to complete a self-certification form covering the first seven calendar days of your absence. If your sickness absence lasts longer than seven calendar days, you must provide your manager with a Fit Note (previously called a medical certificate) stating the reason for your absence. Further certificates must be obtained if the absence continues for longer than the period of the original certificate. If you are absent for four or more working days, you will be entitled to Statutory Sick Pay (SSP), subject to meeting the SSP eligibility conditions.

You agree on request by the Employer to undergo, at the Employer’s expense, medical examination(s) by such doctor or doctors as the Employer shall nominate. You agree that any report produced in connection with any such examination may be disclosed to the Employer and the Employer may discuss the contents of the report with the relevant doctor.

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9. Holiday

You will be entitled to 25 days’ paid holiday every calendar year (1st January – 31st December), to be taken at such time or times as may be approved by your manager. In addition to your annual holiday entitlement, you will be entitled to 8 public holidays as paid leave days each year.

If your employment commences or terminates part-way through a holiday year and/or you are contracted to work less than 5 days per week, your entitlement to holidays and public holidays during that year will be prorated accordingly.

You shall give at least2 weeks’ notice of any proposed holiday dates and these must be agreed by your manager in advance. No more than 10 days’ holiday may be taken at any one time. You may, with prior written consent, be entitled to carry forward up to 5 days unused holiday entitlement from one calendar year to the next. Any holiday carried forward must be taken by 31st March the following year.

In the event of the termination of your employment for any reason, you consent to a deduction being made from your salary equivalent to any holiday taken in excess of accrued entitlement.

If your final salary payment is insufficient to allow for the whole of any such deduction, you will be required to repay the outstanding amount due to the Employer within one month of the termination of your employment.

Pay in lieu of holidays not taken will not be made except (where appropriate) on termination of employment. On the termination of your employment (except for termination for gross misconduct or if the Employer exercises its option to place you on Garden Leave), you will be entitled to pay in lieu of accrued but untaken holiday. The Employer may require you to take any accrued but untaken holiday during your notice period.

You will, if required by the Employer, work on any public holiday (except for Christmas Day and Easter Day). Where you work on a public holiday, you will be entitled to a day’s holiday in lieu.

10. Notice

During the first month of your employment by the Employer, either party may terminate your employment without notice. During the remainder of your Probationary Period, your employment may be terminated by either the Employer or you giving one week’s written notice.

Thereafter you must give and are entitled to receive three months’ written notice (or statutory notice if longer) to terminate your employment.

11. Termination

The Employer shall be entitled to terminate your employment summarily (without notice or pay in lieu of notice), without prejudice to any rights or claims it may have against you if at any time you are guilty of any type of gross misconduct, for example dishonesty, gross

6.

negligence, or breach of duty or if you commit any serious breach of a material term of your contract of employment.

The Employer reserves the right to terminate your employment without notice and to make a payment in lieu of notice. This provision, which is at the Employer’s discretion, applies whether notice to terminate the Contract is given by you or by the Employer.

For the avoidance of doubt, the payment in lieu shall not include any element in relation to:

•any bonus or other payments that might otherwise have been due during the period for which the payment in lieu is made;

•any payment in respect of commission or any other variable payment which could have been earned during the period for which the payment in lieu is made (had the employee been at work);

•any payment in respect of benefits which you would have been entitled to receive during the period for which the payment in lieu is made; and

•any payment in respect of any holiday entitlement that would have accrued during the period for which the payment in lieu is made.

The Employer shall be entitled to dismiss you at any time without notice (or payment in lieu of notice) if you commit a serious breach of your obligations as an employee or if you cease to be entitled to work in the UK.

12. Confidentiality & intellectual property

You may not disclose or make use of, either during or after the termination of your employment, any trade secrets or information of a confidential nature relating to the Employer, its business, its employees, its customers or suppliers, or any third party which may have been obtained in the course of your employment without first obtaining the written permission of the Employer.

Information of a confidential nature includes, but is not limited to: (i) information relating to business plans or dealings, technical data, existing and potential projects, financial information, dealings and plans, sales specifications or targets, customer lists or specifications, business developments and plans, research plans or reports, sales or marketing programmes or policies or plans, price lists or pricing policies, source codes, computer systems, software, designs, formula, prototypes, past and proposed business dealings or transactions, product lines, services, or research activities belonging to or which relate to the affairs of the Employer; (ii) any document marked “Confidential” (or with a similar expression); (iii) any information which you have been told is confidential; (iv) any information which you might reasonably expect the Employer would regard as confidential; and (v) any information which has been given in confidence to the Employer by a third party. Your obligation shall not apply to any disclosures required by law or to any information in the public domain (unless by way of unauthorised disclosure).

All documents, notes, reports, documentation, drawings, computer programs (source code, object code, and listings), customer lists, inventions, creations, works, devices, models, and work-in-progress which are created by you or come into your possession during the course of your employment shall be and remain the property of the Employer. You hereby assign to the Employer with full title guarantee by way of assignment of present and future copyright

7.

for the entire period of copyright (and any extensions thereto) all your rights, title, and interest in and to all material written, devised, or created in the course of your employment by you in relation to the operations or business from time to time of the Employer or of any of its associated or group companies.

On termination of your employment, you must return to the Employer all such documents, correspondence, memoranda, papers, computer disks, object or source codes, writings, credit cards, keys, computers, mobile telephones, and other property of the Employer which may be in your possession or under your control by reason of this agreement or your employment, and you must not retain any copies.

You are required to complete Exhibit A before starting work with the Employer.

13. Disciplinary procedure

The Employer's disciplinary rules and procedures are set out in a separate Disciplinary

Procedure document which is available from Human Resources and will be detailed in the Employee Handbook. This procedure does not form part of your contract of employment and the Employer reserves the right to amend the policy or to omit stages of the procedure as is considered appropriate in the Employer’s absolute discretion.

The disciplinary procedure will not apply to you during your probationary period. The Employer reserves the right to suspend you at any time, with pay, whilst investigating any disciplinary matter.

14. Grievance procedure

The Employer's grievance procedure is set out in a separate Grievance Procedure document which is available from Human Resources and will be detailed in the Employee Handbook. This procedure does not form part of your contract of employment.

15. Business Expenses

You shall be entitled to reimbursement by Company for such customary, ordinary, and necessary business expenses as are incurred by you in the performance of your duties and consistent with the policies of the Company. No reimbursement will be made for mobile phone and internet expenses.

16. Collective agreements

There are no collective agreements governing your terms and conditions of employment.

17. Data protection

In relation to the Data Protection Act 1998, you agree to the processing of personal data by the Employer for the purposes of calculating your remuneration and maintaining records on attendance, health, discipline, and grievances such as are necessary for the performance of your contract.

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18. Consent to monitoring

You acknowledge and agree that the Employer may monitor and/or record your use of office equipment including, but not limited to, email and internet, facsimile machines, photocopiers, in-application communications, and telephone and mobile telephones, in order to monitor performance, to ascertain compliance with the Company’s electronic resources policy and bullying and harassment policy, to prevent or determine, investigate, or detect the unauthorised use of the Company’s systems, to ascertain or demonstrate standards which ought to be achieved, and to ensure the effective operation of the systems.

19. Restrictions

For the purposes of this clause:

“Person” means any individual person, firm, company, partnership, unincorporated

association, joint venture, or other legal entity;

“Relevant Business” means the business or businesses from time to time carried on by the Employer, limited to the activities with which you were materially concerned or involved in the course of your employment during the 12-month period prior to the termination of your employment with the Employer; and

“Restricted Area” means the UK and Ireland.

During the continuance of this agreement and for a period of 12months after its termination (however caused) you shall not within the Restricted Area, without the prior written consent of the Employer directly or indirectly in any capacity, either on your own behalf or in conjunction with or on behalf of any other person:

•be engaged, concerned, or interested in the Relevant Business or in any business wholly or partly in competition with the Relevant Business;

•solicit or entice or endeavour to solicit or entice away from the Employer or employ any person who was employed by the Employer, at any time in the 12-month period prior to your termination date; or

•canvass, solicit, or approach or cause to be canvassed or solicited or approached for orders in respect of any services provided or any goods dealt in by the Employer any person who is or was at any time during the period of 12 months immediately preceding the termination of your employment a customer of or supplier to or in the habit of dealing with the Employer or who is or had been during the said 12-month period negotiating with the Employer for the supply of such services or goods.

You agree that you will not after the date of termination of your employment, whether directly or indirectly, use in connection with any business any name that includes the name of the Employer, or any imitation of such name. Furthermore, you agree that if during the continuance in force of the restrictions set out in this clause you receive an offer of employment from any person, you will immediately provide that person with a complete and accurate copy of this clause. Nothing contained in this clause shall act to prevent you from

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using generic skills learnt while employed by the Employer in any business or activity which is not in competition with the Company.

20. Third Party Rights

The Contracts (Rights of Third Parties) Act 1999 shall not apply to this contract and no person or party other than you and the Employer shall have any rights under it. The terms of this contract may be varied, amended, or modified or this contract may be suspended, cancelled, or terminated by agreement in writing between the parties or this contract may be rescinded (in each case), without the consent of any third party.

21. Variation of terms

The Employer may amend or vary your terms of employment from time to time and shall notify you of such amendments or variation by general company communication if the change is minor, or by informing you in writing if the change is more substantial.

22. Governing law and jurisdiction

This agreement shall be governed by and construed in accordance with the laws of England and the courts of England shall have exclusive jurisdiction to deal with all disputes arising from or touching this agreement.

23. Acceptance

Please sign and return a copy of this agreement to indicate your acceptance of its terms.

Signed by the Employer:

/s/ Kristy Friedrichs Date: 20 April 2020

Kristy Friedrichs, Chief People Officer

Accepted and agreed by you:

/s/ Steve Hurn                     Date: 20April 2020

Steve Hurn

Attached for completion:

EXHIBIT A – New Relic, Inc. EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

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EXHIBIT A - NEW RELIC, INC.

EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS (“PIIA”)

AGREEMENT

In consideration of my employment or continued employment by NEW RELIC UK LIMITED

(“Company”), and the compensation now and hereafter paid to me, I hereby agree as

follows:

NONDISCLOSURE

Recognition of Company’s Rights; Nondisclosure. At all times during my employment and anytime thereafter, I will hold in strictest confidence and will not disclose, use, lecture upon, or publish any of the Company’s Proprietary Information (defined below), except as such disclosure, use, or publication may be required in connection with my work for the Company, or unless an officer of the Company expressly authorizes such in writing. I will obtain Company’s written approval before publishing or submitting for publication any material (written, verbal, or otherwise) that relates to my work at Company and/or incorporates any Proprietary Information. I hereby assign to the Company any rights I may have or acquire in such Proprietary Information and recognize that all Proprietary Information shall be the sole property of the Company and its assigns and shall be delivered by me to the Company forthwith upon request.

Proprietary Information. The term “Proprietary Information” shall mean any and all confidential and/or proprietary knowledge, data, or information of the Company. By way of illustration but not limitation, “Proprietary Information” includes: (a) trade secrets, inventions, mask works, ideas, processes, formulas, source and object codes, data, programs, other works of authorship, know-how, improvements, discoveries, developments, designs, and techniques (hereinafter collectively referred to as “Inventions”);

and (b) information regarding plans for research, development, new products,

marketing and selling, business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers; and (c) information regarding the skills and compensation of other employees of the Company. Notwithstanding the foregoing, it is understood that, at all such times, I am free to use information which is generally known in the trade or industry, which is not gained as result of this PIIA Agreement, and my own skill, knowledge, know-how, and experience to whatever extent and in whichever way I wish.

Third Party Information. I understand, in addition, that the Company has received and in the future will receive from third parties confidential or proprietary information (“Third Party Information”) subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. During the term of my employment and thereafter, I will hold Third Party Information in the strictest confidence and will not disclose to anyone (other than Company personnel who need to know such information in connection with their work for the Company) or use, except in connection with my work for the Company, Third Party Information unless expressly authorized by an officer of the Company in writing.

No Improper Use of Information of Prior Employers and Others. During my employment by the Company, I will not

11.

improperly use or disclose any confidential information or trade secrets, if any, of any former employer or any other person to whom I have an obligation of confidentiality, and I will not bring onto the premises of the Company any unpublished documents or any property belonging to any former employer or any other person to whom I have an obligation of confidentiality unless consented to in writing by that former employer or person. I will use in the performance of my duties only information which is generally known and used by persons with training and experience comparable to my own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company.

ASSIGNMENT OF INVENTIONS.

Proprietary Rights. The term “Proprietary Rights” shall mean all trade secret, patent, copyright, registered and unregistered trademarks, rights in inventions, designs, mask work, and other intellectual property rights throughout the world.

Prior Inventions. Inventions, if any, patented or unpatented, which I made prior to the commencement of my employment with the Company are excluded from the scope of this PIIA Agreement. To preclude any possible uncertainty, I have set forth on Exhibit A (Previous Inventions) attached hereto a complete list of all Inventions that I have, alone or jointly with others, conceived, developed, or reduced to practice or caused to be conceived, developed, or reduced to practice prior to the commencement of my employment with the Company, that I consider to be my property or the property of third parties and that I wish to have excluded from the scope of this PIIA Agreement (collectively referred to as “Prior Inventions”). If disclosure of any such Prior Invention

would cause me to violate any prior confidentiality agreement, I understand that I am not to list such Prior Inventions in Exhibit A but am only to disclose a cursory name for each such invention, a listing of the party(ies) to whom it belongs and the fact that full disclosure as to such inventions has not been made for that reason. A space is provided on Exhibit A for such purpose. If no such disclosure is attached, I represent that there are no Prior Inventions. If, in the course of my employment with the Company, I incorporate a Prior Invention into a Company product, process, service, or machine, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with rights to sublicense through multiple tiers of sublicensees) to make, have made, modify, use, and sell such Prior Invention. Notwithstanding the foregoing, I agree that I will not incorporate, or permit to be incorporated, Prior Inventions in any Company Inventions without the prior written consent of an officer of the Company.

Assignment of Inventions. All Proprietary Rights to which this clause applies shall to the fullest extent permitted by law belong to, vest in, and be the absolute sole and unencumbered property of the Company. To the extent that by law Proprietary Rights do not vest in the Company, I hereby assign and agree to assign in the future (when any such Inventions or Proprietary Rights are first reduced to practice or first fixed in a tangible medium, as applicable) to the Company all my right, title, and interest in and to any and all Inventions (and all Proprietary Rights with respect thereto), whether or not patentable or registrable under copyright or similar statutes, made or conceived or reduced to practice or learned by me, either alone or jointly with others, during the period of my employment with the Company. Inventions

12.

assigned to the Company, or to a third party as directed by the Company pursuant to this section, are hereinafter referred to as “Company Inventions.” I hereby undertake to hold on trust for the benefit of the Company any Proprietary Rights to which this clause applies to the extent that same may not be, and until the same is, vested absolutely in the Company.

Obligation to Keep Company Informed. During the period of my employment with the Company, I will promptly disclose to the Company fully and in writing all Inventions authored, conceived, or reduced to practice by me, either alone or jointly with others.

Government or Third Party. I also agree to assign all my right, title, and interest in and to any particular Company Invention to a third party, including without limitation the United States or a specified government entity, as directed by the Company. Enforcement of Proprietary Rights. I will assist the Company in every proper way to obtain, and from time to time enforce, Irish and foreign Proprietary Rights relating to Company Inventions in any and all countries. To that end I will execute, verify, and deliver such documents and perform such other acts (including appearances as a witness) as the Company may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining, and enforcing such Proprietary Rights and the registration or assignment thereof. In addition, I will execute, verify, and deliver assignments of such Proprietary Rights to the Company or its designee. My obligation to assist the Company with respect to Proprietary Rights relating to such Company Inventions in any and all countries shall continue beyond the termination of my employment, but the Company shall compensate me at a reasonable rate after my termination for the time actually spent by me at the Company’s request on such assistance. In the event the

Company is unable for any reason, after reasonable effort, to secure my signature on any document needed in connection with the actions specified in the preceding paragraph, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, which appointment is coupled with an interest, to act for and on my behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of the preceding paragraph with the same legal force and effect as if executed by me. I hereby waive any and all claims, of any nature whatsoever, which I now or may hereafter have for infringement of any Proprietary Rights assigned hereunder to the Company. I acknowledge that, save as provided in this PIIA Agreement, no further remuneration or compensation is or may become due to me in respect of the performance of my obligations under this clause.

RECORDS. I agree to keep and maintainadequate and current records (in the form of notes, sketches, drawings, and in any other form that may be required by the Company) of all Proprietary Information developed by me and all Inventions made by me during the period of my employment at the Company, which records shall be available to and remain the sole property of the Company at all times.

NO CONFLICTING OBLIGATION. I represent that my performance of all the terms of this PIIA Agreement and as an employee of the Company does not and will not breach any agreement to keep in confidence information acquired by me in confidence or in trust prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict herewith.

13.

LEGALAND EQUITABLE REMEDIES. Becausemy services are personal and unique and because I may have access to and become acquainted with the Proprietary Information of the Company, the Company shall have the right to enforce this PIIA Agreement and any of its provisions by injunction, specific performance, or other equitable relief, without bond and without prejudice to any other rights and remedies that the Company may have for a breach of this PIIA Agreement.

NOTICES. Any notices required or permitted hereunder shall be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing. Such notice shall be deemed given upon personal delivery to the appropriate address or if sent by certified or registered mail, three (3) days after the date of mailing.

GENERALPROVISIONS.

Governing Law; Consent to Personal Jurisdiction. This PIIA Agreement will begoverned by and construed in accordance with the laws of England and the Courts of England shall have exclusive jurisdiction to deal with all disputes arising from and touching upon this PIIA Agreement. Severability. In case any one or more ofthe provisions contained in this PIIA Agreement shall, for any reason, be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect the other provisions of this PIIA Agreement, and this PIIA Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. If moreover, any one or more of the provisions contained in this PIIA Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity, or subject, it shall be construed by limiting and reducing

it, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.

Successors and Assigns. This PIIAAgreement will be binding upon my heirs, executors, administrators, and other legal representatives and will be for the benefit of the Company, its successors, and its assigns.

Survival. The provisions of this PIIA Agreement shall survive the termination of my employment and the assignment of this PIIA Agreement by the Company to any successor in interest or other assignee. Employment. I agree and understand thatnothing in this PIIA Agreement shall confer any right with respect to continuation of employment by the Company, nor shall it interfere in any way with my right or the Company’s right to terminate my employment.

Waiver. No waiver by the Company of any breach of this PIIA Agreement shall be a waiver of any preceding or succeeding breach. No waiver by the Company of any right under this PIIA Agreement shall be construed as a waiver of any other right. The Company shall not be required to give notice to enforce strict adherence to all terms of this PIIA Agreement.

Advice of Counsel. I ACKNOWLEDGE THAT,    IN EXECUTING THIS PIIA AGREEMENT, I HAVE HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND I HAVE READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS PIIA AGREEMENT. THIS PIIA AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

Entire Agreement. The Non-Disclosure and Assignment of Inventions obligations pursuant to this PIIA Agreement shall

14.

apply to any time during which I was previously employed, or am in the future employed, by the Company as a consultant if no other agreement governs such matters during such period. This PIIA Agreement is the final, complete, and exclusive agreement of the parties with respect to the subject matter hereof and supersedes and merges all prior discussions between us. No modification of or amendment to this PIIA Agreement, nor any waiver of any rights under this PIIA Agreement, will be effective unless in writing and signed by the parties (and as to the Company, by an officer) referencing this PIIA Agreement. Any subsequent change or changes in my duties, salary, or compensation will not affect the validity or scope of this PIIA Agreement.

This PIIA Agreement shall be effective as of the first day of my employment with the Company, namely:

30-05-2020,

I HAVEREADTHISPIIA AGREEMENTCAREFULLY ANDUNDERSTANDITSTERMS. I HAVE COMPLETELYFILLEDOUTEXHIBITA TOTHIS PIIA AGREEMENT.

Dated: 22 April 2020

Steve Hurn: /s/ Steve Hurn

ACCEPTEDANDAGREEDTO:

NEWRELICUK LIMITED

By: /s/ Mark Sachleben

Title: Director

Address: 188 Spear Street, Suite 1200

San Francisco, California 94105

Dated: 24 April 2020

15.

EXHIBIT A

TO:    New Relic UK Limited

FROM:    Steve Hurn

Signature:     /s/ Steve Hurn

DATE:    22 April 2020

SUBJECT:    Previous Inventions

1.Except as listed in Section 2 below, the following is a complete list of all inventions or improvements relevant to the subject matter of my employment by New Relic UK Limited (the “Company”) that have been made or conceived or first reduced to practice by me alone or jointly with others prior to my engagement by the Company:

☐X    No inventions or improvements.

☐See below:

☐Additional sheets attached.

2.Due to a prior confidentiality agreement, I cannot complete the disclosure under Section 1 above with respect to inventions or improvements generally listed below, the proprietary rights and duty of confidentiality with respect to which I owe to the following party(ies):

Invention or Improvement    Party(ies)    Relationship

1.    

2.    

3.    

☐Additional sheets attached.

INVENTIONS APPROVED BY:

Mark Sachleben, CFO

(PRINTED NAME OF REPRESENTATIVE)

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EX-10.4

CHANGE IN CONTROL AND SEVERANCE AGREEMENT –ADDENDUM TO YOUR EMPLOYMENT CONTRACT

Steve Hurn

1 February 2021

Dear Steve:

This letter agreement (“Addendum”) is presented further to our recent discussions in order to set out below the terms which apply to you in relation to a Change in Control of New Relic, Inc, a Delaware corporation (the “Parent Company”) or your termination without cause.

This Addendum shall be effective as of the date above and shall remain in effect for a period of three years from such date, after which time this Addendum may be renewed by mutual agreement.

Your employment is and shall remain subject to the terms your contract of employment with New Relic UK Limited (the “Company”) dated 20 April 2020 (“Employment Contract”), and this Addendum shall have no effect on the terms of the Employment Contract, other than as provided herein.

1.DEFINITIONS

1.1“Cause” for termination of your employment with the Company will exist under this Addendum if your employment terminates for any of the following reasons:

(i)your wilful failure to substantially to perform your duties and responsibilities to the Company or deliberate violation of a Company policy;

(ii)your commission of any act of fraud, embezzlement, dishonesty, or any other wilful misconduct that has caused or is reasonably expected to result in material injury to the Company;

(iii)unauthorised use or disclosure by you of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of non-disclosure as a result of your relationship with the Company; or

(iv)your wilful breach of any of your obligations under any written agreement or covenant with the Company.

The determination as to whether your employment is being terminated for Cause shall be made in good faith by the Company and shall be final and binding on you.

1.2“Change in Control” shall have the meaning set forth in the Parent Company’s 2014 Equity Incentive Plan, as it may be amended from time to time; provided that to the extent required for compliance with applicable US law (Section 409A of the Internal Revenue Code of 1986), in no event will a Change in Control be deemed to have occurred if such transaction is not also a “change in the ownership or effective control of” the Parent Company or “a change in the ownership of a substantial portion of the assets of” the Parent Company as

determined under US Treasury Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).

1.3“Good Reason” for resignation of your employment shall exist under this Addendum following the occurrence of any of the following without your written consent:

(i)a material reduction in job duties, responsibilities, or authority inconsistent with your position with the Company; provided, however, that any such reduction or change after a Change in Control will not constitute Good Reason if you retain reasonably comparable duties, position, and responsibilities with respect to the Company’s business within the successor entity (or any successor to the Parent Company) following a Change in Control;

(ii)a material reduction of your then current base salary, representing a reduction of more than 10% of your then current base salary; provided, that an across-the-board reduction in the salary level of all executive officers of the Parent Company by the same percentage amount as part of a general salary level reduction shall not constitute such a material salary reduction;

(iii)the relocation of your principal place of employment to a place that increases your one-way commute by more than 50 miles as compared to your then current principal place of employment immediately prior to such relocation;

(iv)any material breach by the Company of this Addendum or any other written agreement between the Company or any Group Company and you; or

(v)the failure by any successor to the Company to assume this Addendum or any obligations under this Addendum; provided, that you give written notice to the Company of the event forming the basis of the termination for Good Reason within 30 days after the date on which the Company gives written notice to you of the Company’s affirmative decision to take an action set forth in clause (i), (ii), (iii), (iv), or (v) above, the Company fails to remedy such basis for the Good Reason resignation within 30 days after receipt of your written notice and you terminate your employment within 30 days following the expiration of the remedy period. For the avoidance of doubt, this Agreement shall be rendered null and void in circumstances where your employment transfers to a third party by reason of the Transfer of Undertakings (Protection of Employment) Regulations 2006 as amended from time to time.

1.4“Group Company” is the Company and its Parent Undertakings, its Subsidiary Undertakings and the Subsidiary Undertakings of any of its Parent Undertakings from time to time (“Parent Undertaking” and “Subsidiary Undertaking” having the meanings set out in section 1162 Companies Act 2006).

1.5“PAYE deductions” are deductions made to comply with or to meet any liability of the Company to account for tax pursuant to regulations made under Chapter 2 of Part 11 of the Income Tax (Earnings and Pensions) Act 2003 and to comply with any obligation to make a deduction in respect of national insurance contributions.

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1.6“Settlement Agreement” is a settlement agreement in the Company’s chosen form to be provided prior to the Termination Date which complies with the requirements of s203 of the Employment Rights Act 1996 and which includes express provisions in relation to your ongoing obligations of confidentiality, non-derogatory remarks, return of Company property, protection of confidential information, cooperation in legal matters, and compliance with the post-termination restrictions of your Employment Contract.

1.7“Termination Date” is the date on which your employment under the Employment Contract terminates.

2. TERMINATION PAYMENTS

2.1    If your employment is terminated by the Company without Cause (other than as a result of death or incapacity), or you resign your employment with the Company for Good Reason, in either case in connection with or within 12 months following the effective date of a Change in Control provided that you sign a Settlement Agreement waiving all claims against the Company or any Group Company as specified in clause 3 below, the Company shall pay you, subject to clause 2.3, a lump sum amount in cash equal to twelve (12) months of your then current base salary, ignoring any decrease in base salary that would form the basis for Good Reason, as at the Termination Date less PAYE deductions (the “CIC Payment”). The date that the settlement agreement executed under this clause 2.1 is effective will be the “Settlement Agreement Effective Date” for purposes of section 2 of your Change in Control and Severance Agreement with the Parent Company, executed contemporaneously with this Addendum.

2.2    In the event that the termination of your employment does not trigger a payment pursuant to clause 2.1 and if your employment is terminated by the Company without Cause (other than as a result of death or disability), and such termination is not in connection with or within twelve (12) months following the effective date of a Change in Control, provided that you sign a Settlement Agreement waiving all claims against the Company or any Group Company as specified in clause 3 below, the Company shall pay you, subject to clause 2.3, a lump sum amount in cash equal to six (6) months of your then current base salary as at the Termination Date less PAYE deductions to be paid over the six (6) month period following the Termination Date in accordance with the Company’s regular payroll schedule (the “Enhanced Severance Payment”). Any execution of a Settlement Agreement under this clause 2.2 will have no effect on your Change in Control and Severance Agreement with the Parent Company.

2.3    The CIC Payment or the Enhanced Severance Payment (whichever applies), shall be reduced by the equivalent of any sums paid to you as a payment in lieu of notice (as defined in the Employment Contract) upon the termination of your employment and/or by any sums paid to you for your then current base salary during your notice period including for the avoidance of doubt any period when you are placed on garden leave pursuant to the Employment Contract.

2.4    You shall not be required to mitigate the amount of any payment contemplated by this Addendum, nor shall any such payment be reduced by any earnings that you may receive from any other source.

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2.5    This clause 2 supersedes clause 11 of your Employment Contract (“Termination”) only in the event of the occurrence of all conditions described in clause 2.1 or 2.2. In the event that clause 2.1 or 2.2 is not operative, clause 11 of your Employment Contract shall govern the termination of your employment.

3. WAIVER OF CLAIMS AND CONDITIONS

3.1    It is a condition of this Addendum that prior to the payment of any CIC Payment or Enhanced Severance Payment, you shall prior to the Termination Date allow to become effective a Settlement Agreement releasing the Company, any Group Company, and their successors from any and all claims you may have against such entities related to or arising in connection with your employment, the terms of such employment, and/or the termination of your employment. No CIC Payment or Enhanced Severance Payment shall be paid or provided prior to the receipt of a validly executed Settlement Agreement in the form approved by the Company prior to the Termination Date.

3.2    Payment of the CIC Payment or the Enhanced Severance Payment is subject to and conditional upon you resigning any executive positions you may hold with the Company or any Group Company and you complying with (and continuing to comply with) your obligations relating to confidentiality, intellectual property, and post termination restrictive covenants as set out in your Employment Contract and the Employee Proprietary Information and Inventions Agreement.

4.    TIMING OF PAYMENT

4.1The Company will pay (or commence payment of) the CIC Payment or Enhanced Severance Payment within 28 days of the Termination Date.

4.2For the avoidance of doubt, the payment of CIC Payment or Enhanced Severance Payment shall not affect your entitlement to any of the following:

(a)any accrued but unpaid salary;

(b)any payment in lieu of accrued but unused holiday;

(c)any earned (as determined and approved by the Company prior to the Termination Date having regard to the rules of the relevant scheme) but not yet paid incentive bonus from the prior fiscal year, which bonus shall be paid in accordance with the Company’s regular bonus payment process;

(d)the reimbursement of expenses, provided that all claims for reimbursement are submitted within two weeks after the Termination Date,

in relation, in each case, to the period before Termination Date.

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5.SUCCESSORS

1.1Any successor to the Company or Parent Company(whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation, or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s, or ensure that the Company fully performs its, obligations under this Addendum and shall perform the Company’s, or ensure that the Company performs its, obligations, under this Addendum in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession.

1.2Without the written consent of the Company, you shall not assign or transfer any right or obligation under this Addendum to any other person or entity. Notwithstanding the foregoing, the terms of this Addendum and all your rights hereunder shall inure to the benefit of, and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees.

6.WAIVER

No provision of this Addendummay be waived or discharged unless the waiver or discharge is agreed to in writing and signed by you and by an authorized officer of the Company (other than you) and an authorised officer of the Parent Company. No waiver by either party of any breach of, or of compliance with, any condition or provision of this Addendumby the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

7.INTEGRATION

This Addendum supersedes all prior or contemporaneous agreements, whether written or oral, with respect to this Addendum; provided that, for clarification purposes, this Addendum shall not affect any agreements between the Company and you regarding intellectual property matters, non-solicitation or non-competition restrictions, or confidential information of the Company or between you and the Parent Company relating to a Change in Control.

8.CHOICE OF LAW

The validity, interpretation, construction and performance of this Addendumshall be governed by the internal substantive laws, but not the conflicts of law rules, of England and Wales.

9.COUNTERPARTS

This Addendummay be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

Signed by the Company:

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/s/ Mark Sachleben                    Date: 15 February 2021

Mark Sachleben, Director

Accepted and agreed by you:

/s/ Steve Hurn                    Date: 15 February 2021

Steve Hurn

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EX-10.5

June 24, 2021

Via Email

Mike Christenson

Re:    Separation Agreement

Dear Mike:

This letter sets forth the terms of the separation agreement (the “Agreement”) that New Relic, Inc. (the “Company”) is offering to you to aid in your employment transition in connection with the termination of your services as Advisor to the Chief Executive Officer (“Advisor”) to the Company.

1.Separation Date. Your last day of employment shall be June 30, 2021 (the “Separation Date”). On the Separation Date, the Company will pay you all accrued salary earned through the Separation Date, subject to standard payroll deductions and withholdings. You will be paid these amounts regardless of whether or not you sign this Agreement. Since the Company has a nonaccrual PTO policy, you do not have any accrued vacation or other paid time off and thus will not be paid out for any accrued vacation or other paid time off.

2.Resignation; Continuing Obligations. After the Separation Date, you will no longer be employed as Advisor of the Company and shall be deemed to have resigned from any other employment, office, and any other position or role you hold with the Company and all of its subsidiaries and affiliated entities, including but not limited to, the Company’s Board of Directors. You acknowledge all of your statutory and contractual obligations to the Company, including, without limitation, your obligations under your Employee Confidential Information and Inventions Assignment Agreement (a copy of which is attached hereto as Exhibit A), which you acknowledge and agree is a contractual commitment that remains binding upon you following the Separation Date.

3.Severance Benefits. If you: (i) timely sign and return this Agreement to the Company no later than June 25, 2021; (ii) comply fully with your obligations hereunder; and (iii) on or within twenty-one (21) days after the Separation Date, execute and return to the Company the release of claims in the form attached hereto as Exhibit B (the “Separation Date Release”) and allow the releases contained therein to become effective; then the Company will characterize your separation as a “Termination Not in Connection with or Following a Change in Control” for purposes of the Company’s Change in Control and Severance Agreement (the “Severance Agreement”) and provide you with the following severance benefits (the “Severance Benefits”), in full satisfaction of any obligations to provide you with severance benefits under the terms of the Severance Agreement or otherwise:

(a)Severance Pay. The Company will pay you severance in an amount equal to six (6) months of your base salary in effect as of the Separation Date (in the total amount of $50,000), subject to standard payroll deductions and withholdings (“Severance Pay”). The Severance Pay will be paid in a lump sum within thirty (30) days following the Release Effective Date (as defined in the Separation Date Release).

(b)Health Care Continuation Coverage.

(i)COBRA. To the extent provided by the federal COBRA law or, if applicable, state insurance laws (collectively, “COBRA”), and by the Company’s current group health insurance policies, you will be eligible to continue your group health insurance benefits at your own expense. Later, you may be able to convert to an individual policy through the provider of the Company’s health insurance, if you wish. You may be eligible for a 100% COBRA premium subsidy if you are on COBRA continuation coverage for any month during the period starting April 1, 2021, through September 30, 2021, as described in your COBRA notice, to be provided separately (the

New Relic, Inc.

188 Spear Street, Suite 1000, San Francisco, CA 94105

“COBRA Subsidy”). You are eligible for the COBRA Subsidy regardless of whether or not you sign this Agreement.

(ii)COBRA Premiums. If you timely elect continued coverage under COBRA, the Company will pay your COBRA premiums to continue your coverage (including coverage for eligible dependents, if applicable) (“COBRA Premiums”) such that, after taking account of any period of time during which you are receiving any COBRA Subsidy, you will receive COBRA coverage through the period (the “COBRA Premium Period”) starting on the Separation Date and ending on the earliest to occur of: (i) the date that is six (6) months following the Separation Date; (ii) the date you become eligible for group health insurance coverage through a new employer; or (iii) the date you cease to be eligible for COBRA continuation coverage for any reason, including plan termination. In the event you become covered under another employer’s group health plan or otherwise cease to be eligible for COBRA during the COBRA Premium Period, you must immediately notify the Company in writing of such event.

(iii)Special Cash Payments in Lieu of COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay the COBRA Premiums without a substantial risk of violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company instead shall pay to you, on the first day of each calendar month, a fully taxable cash payment equal to the applicable COBRA premiums for that month (including premiums for you and your eligible dependents who have elected and remain enrolled in such COBRA coverage), subject to applicable tax withholdings (such amount, the “Special Cash Payment”), for the remainder of the COBRA Premium Period. You may, but are not obligated to, use such Special Cash Payments toward the cost of COBRA premiums. On the thirtieth (30th) day following your Separation from Service, the Company will make the first payment to you under this paragraph, in a lump sum, equal to the aggregate Special Cash Payments that the Company would have paid to you through such date had the Special Cash Payments commenced on the first day of the first month following the Separation from Service through such thirtieth (30th) day, with the balance of the Special Cash Payments paid thereafter on the schedule described above.

(c)Equity Acceleration; Extended Option Post-Termination Exercise Period. During your employment with the Company, you were granted the equity awards set forth on Exhibit C hereto (your “Equity Awards”) pursuant to the Company’s 2014 Equity Incentive Plan (the “Plan”). Notwithstanding anything to the contrary in the applicable grant notice, the applicable award agreement or the Plan, effective on the Release Effective Date (as defined in the Separation Date Release), the Company will (i) accelerate the vesting as to 100% of any unvested portion of your Equity Awards (with your PSU award(s) set forth on Exhibit C deemed vested as to 100% of the target number of PSUs and with the remainder of your PSU award(s) forfeited) and (ii) extend the period of time during which you may exercise any vested, outstanding and unexercised stock options to the earlier of: (A) the second (2nd) anniversary of the Separation Date, (B) the applicable expiration date(s) of your stock options and (C) such earlier date as provided or permitted under the Plan. Except as expressly modified by this Section 3(c), each of your Equity Awards shall continue to be governed by the terms and conditions of the applicable grant notice, the applicable award agreement and the Plan.

4.No Other Compensation or Benefits. You acknowledge and agree that eligibility for the Severance Benefits and other benefits provided herein fulfills and exceeds all of the Company’s obligations to provide you with severance benefits pursuant to the Severance Agreement or any other agreements, plans or policies between you and the Company and as of your execution of this Agreement, your only eligibility for or entitlement to any severance benefits will be as set forth in this Agreement. You acknowledge that, except as expressly provided in this Agreement, you have not earned and will not receive from the Company any additional compensation (e.g., salary, commissions, bonuses or equity), severance or benefits after the Separation Date, with the exception of any vested benefits you may have under the express terms of a written ERISA-qualified benefit plan (e.g., 401(k) account).

5.Expense Reimbursements. You agree that, within ten (10) days after the Separation Date, you will submit your final documented expense reimbursement statement reflecting all business expenses (including legal fees related to the review of materials related to your separation from the Company, not to exceed $10,000 in the aggregate) you incurred through the Separation Date, if any, for which you seek reimbursement. The Company will reimburse you for these expenses pursuant to its regular business practice.

6.Return of Company Property. Within five (5) business days after the Separation Date, you shall return to the Company all Company documents (and all copies thereof) and other Company property in your possession or control. You agree that you will make a diligent search to locate any such documents, property and information within the timeframe referenced above. In addition, if you have used any personally owned computer, server, or e-mail system to receive, store, review, prepare or transmit any confidential or proprietary data, materials or information of the Company, then within five (5) business days after the Separation Date, you must provide the Company with a computer-useable copy of such information and then permanently delete and expunge such confidential or proprietary information from those systems without retaining any reproductions (in whole or in part); and you agree to provide the Company or, to the extent that you deem it necessary to protect the attorney-client privilege or other privilege with respect to any material on those systems a mutually selected third party, access to your system, as requested, to verify that the necessary copying and deletion is done. Your timely compliance with the provisions of this paragraph is a precondition to your receipt of the Severance Benefits and other benefits provided hereunder.

7.Non-Disparagement. You agree not to disparage the Company or the Company’s officers, directors, employees, shareholders, parents, subsidiaries, affiliates, and agents, in any manner likely to be harmful to them or their business, business reputation or personal reputation. The Company agrees that it will instruct its officers and directors to not disparage you, either publicly or privately. Notwithstanding the foregoing, nothing herein shall prevent a party from responding accurately and fully to any question, inquiry or request for information when response is required by legal process or in connection with any government agency or commission investigation or proceeding or making any other disclosure protected under the applicable provisions of law or regulation (including but not limited to “whistleblower” statutes or other similar provisions that protect such disclosure), nor prevent anyone from disclosing information about unlawful acts in the workplace, including, but not limited to, sexual harassment.

8.Cooperation. You agree to cooperate fully with the Company in connection with its actual or contemplated defense, prosecution, or investigation of any claims or demands by or against third parties, or other matters arising from events, acts, or failures to act that occurred during the period of your employment by the Company. Such cooperation includes, without limitation, making yourself available to the Company upon reasonable notice, without subpoena, to provide complete, truthful and accurate information in witness interviews, depositions, and trial testimony. The Company will reimburse you for reasonable out-of-pocket expenses you incur in connection with any such cooperation (excluding foregone wages, salary, or other compensation) and will make reasonable efforts to accommodate your scheduling needs.

9.No Admissions. You understand and agree that the promises and payments in consideration of this Agreement shall not be construed to be an admission of any liability or obligation by the Company to you or to any other person, and that the Company makes no such admission.

10.Release of Claims.

(a)    General Release. In exchange for the consideration provided to you under this Agreement to which you would not otherwise be entitled, you hereby generally and completely release the Company, its affiliated, related, parent and subsidiary entities, and its and their current and former directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, insurers, affiliates, and assigns (collectively, the “Released Parties”) from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related

to events, acts, conduct, or omissions occurring prior to or on the date you sign this Agreement (collectively, the “Released Claims”).

(b)    Scope of Release. The Released Claims include, but are not limited to: (i) all claims arising out of or in any way related to your employment with the Company, or the termination of that employment; (ii) all claims related to your compensation or benefits from the Company, including salary, bonuses, commissions, vacation, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership, equity, or profits interests in the Company; (iii) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (iv) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (v) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the California Labor Code (as amended), the Texas Commission on Human Rights Act (as amended), the Texas Labor Code (as amended), New Jersey Law Against Discrimination (as amended), and the New Jersey Political Activities of Employees Law (as amended).

(c)    Section 1542 Waiver. YOU UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. In giving the release herein, which includes claims which may be unknown to you at present, you acknowledge that you have read and understand Section 1542 of the California Civil Code, which reads as follows:

“A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.”

You hereby expressly waive and relinquish all rights and benefits under that section and any law of any other jurisdiction of similar effect with respect to your release of any unknown or unsuspected claims herein.

(d)    Excluded Claims. Notwithstanding the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (i) any rights or claims for indemnification you may have pursuant to any written indemnification agreement with the Company to which you are a party or under applicable law; (ii) any rights which are not waivable as a matter of law, such as any rights you have to file or pursue a claim for workers’ compensation or unemployment insurance; and (iii) any claims for breach of this Agreement. You hereby represent and warrant that you are not aware of any claims you have or might have against any of the Released Parties that are not included in the Released Claims. You understand that nothing in this Agreement limits your ability to file a charge or complaint with any Governmental Agency. While this Agreement does not limit your right to receive an award for information provided to the Securities and Exchange Commission, you understand and agree that, to maximum extent permitted by law, you are otherwise waiving any and all rights you may have to individual relief based on any claims that you have released and any rights you have waived by signing this Agreement.

11.Representations. You hereby represent that you have been paid all compensation owed and for all hours worked, have received all the leave and leave benefits and protections for which you are eligible, pursuant to the Family and Medical Leave Act or otherwise, and have not suffered any on-the-job injury for which you have not already filed a claim.

12.Section 409A. To the extent any payment under this Agreement may be classified as a “short-term deferral” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the treasury regulations thereunder (“Section 409A”), such payment will be deemed a
short-term deferral, even if it may also qualify for another exemption from Section 409A.  To the extent that any provision of this Agreement is ambiguous as to its exemption from or compliance with Section 409A, the provision will be read in such a manner that the applicable payments or issuances hereunder are exempt from Section 409A to the maximum permissible extent, and for any payments

or issuances where such construction is not tenable, that those payments or issuances comply with Section 409A to the maximum permissible extent. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2). The Company makes no representation or warranty and shall have no liability to you or any other person if any provisions of this letter are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of such Section.

13.General. This Agreement, including the exhibits, constitutes the complete, final and exclusive embodiment of the entire agreement between you and the Company with regard to this subject matter. It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other agreements, promises, warranties or representations concerning its subject matter. This Agreement may not be modified or amended except in a writing signed by both you and a duly authorized officer of the Company. This Agreement will bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company, their heirs, successors and assigns. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question will be modified by the court so as to be rendered enforceable to the fullest extent permitted by law, consistent with the intent of the parties insofar as possible under applicable law. This Agreement shall be construed and enforced in accordance with the laws of the State of California without regard to conflicts of law principles. Any ambiguity in this Agreement shall not be construed against either party as the drafter. Any waiver of a breach of this Agreement, or rights hereunder, shall be in writing and shall not be deemed to be a waiver of any successive breach or rights hereunder. This Agreement may be executed in counterparts which shall be deemed to be part of one original, and facsimile and electronic signatures shall be equivalent to original signatures.

If this Agreement is acceptable to you, please sign below and return the original to me on or before June 25, 2021. The Company’s offer contained herein will automatically expire if we do not receive the fully signed Agreement within this timeframe.

[Signature Page to Follow]

I wish you good luck in your future endeavours.

Sincerely,

New Relic, Inc.

By: /s/ Mark Sachleben

Mark Sachleben

Chief Financial Officer

Exhibit A - Confidential Information and Inventions Assignment Agreement

Exhibit B – Separation Date Release

Exhibit C - Outstanding Equity Awards

I UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS, EVEN THOSE UNKNOWN CLAIMS THAT IF KNOWN BY ME, WOULD AFFECT MY DECISION TO ACCEPT THIS AGREEMENT.

/s/ Mike Christenson

Mike Christenson

6/24/2021                

Date

Exhibit A

CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT

Exhibit B

SEPARATION DATE RELEASE

To be signed and returned to the Company on or within twenty-one (21) days after the Separation Date

In exchange for the consideration to be provided to me pursuant to that certain letter separation agreement between me and New Relic, Inc. (the “Company”) dated June 24, 2021 (the “Agreement”), I hereby provide the following Separation Date Release. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement.

I hereby represent that: (i) I have been paid all compensation owed and have been paid for all hours worked for the Company through the Separation Date; (ii) I have received all the leave and leave benefits and protections for which I am eligible pursuant to the federal Family and Medical Leave Act or otherwise; and (iii) I have not suffered any on-the-job injury for which I have not already filed a claim.

I agree not to disparage the Company or the Company’s officers, directors, employees, shareholders, parents, subsidiaries, affiliates, and agents, in any manner likely to be harmful to them or their business, business reputation or personal reputation. Notwithstanding the foregoing, nothing herein shall prevent me from responding accurately and fully to any question, inquiry or request for information when response is required by legal process or in connection with any government agency or commission investigation or proceeding or making any other disclosure protected under the applicable provisions of law or regulation (including but not limited to “whistleblower” statutes or other similar provisions that protect such disclosure).

I hereby generally and completely release the Company, and its affiliated, related, parent and subsidiary entities, and its and their current and former directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, insurers, affiliates, and assigns (collectively, the “Released Parties”) from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to or on the date I sign this Agreement (collectively, the “Released Claims”).

The Released Claims include, but are not limited to: (i) all claims arising out of or in any way related to my employment with the Company, or the termination of that employment; (ii) all claims related to my compensation or benefits from the Company, including salary, bonuses, commissions, vacation, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership, equity, or profits interests in the Company; (iii) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (iv) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (v) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (as amended) (the “ADEA”), the California Labor Code (as amended), the California Fair Employment and Housing Act (as amended), the California Labor Code (as amended), the Texas Commission on Human Rights Act (as amended), the Texas Labor Code (as amended), New Jersey Law Against Discrimination (as amended), and the New Jersey Political Activities of Employees Law (as amended).

Notwithstanding the foregoing, I acknowledge and understand that the following are not included in the Released Claims (the “Excluded Claims”): (i) any rights or claims for indemnification I may have pursuant to any written indemnification agreement with the Company to which I am a party or under applicable law; (ii) any rights which are not waivable as a matter of law; and (iii) any claims for breach of this Agreement. I hereby represent and warrant that I am not aware of any claims I have or might have against any of the Released Parties that are not included in the Released Claims. I understand that nothing in this Agreement limits my ability to file a charge or complaint with any Government Agency. I further understand this Agreement does not limit my ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. While this Agreement does not limit my right to receive an award for information provided to the Securities and Exchange Commission, I understand and agree that, to maximum extent permitted by law, I am otherwise waiving any and all rights I may have to individual relief based on any claims that I have released and any rights I have waived by signing this Agreement.

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA (the “Release ADEA Waiver”). I also acknowledge that the consideration given for this waiver is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (a) this waiver does not apply to any rights or claims that arise after the date I sign this Separation Date Release; (b) I should consult with an attorney prior to signing this Separation Date Release; (c) I have had twenty-one (21) days to consider this Separation Date Release; (d) I have seven (7) days following the date I sign this Separation Date Release to revoke (in a written revocation sent to the Company’s CEO); and (e) this Separation Date Release will not be effective until the date upon which the revocation period has expired, which will be the eighth day after I sign this Separation Date Release (the “Release Effective Date”).

In giving the general release of claims herein, which includes claims that may be unknown to me at present, I acknowledge that I have read and understand Section 1542 of the California Civil Code, which reads as follows: “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.” I hereby expressly waive and relinquish all rights and benefits under that section and any law of any other jurisdiction of similar effect with respect to the releases granted herein, including, without limitation, the release of unknown and unsuspected claims granted in this Separation Date Release.

This Separation Date Release, together with the Agreement and its exhibits, constitutes the entire agreement between me, and the Company with respect to the subject matter hereof. I am not relying on any representation not contained herein or in the Agreement.

I UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS, EVEN THOSE UNKNOWN CLAIMS THAT IF KNOWN BY ME, WOULD AFFECT MY DECISION TO ACCEPT THIS AGREEMENT.

/s/ Mike Christenson                    6/30/2021

_____________________________________    _____________________

Mike Christenson                    Date

Exhibit C

OUTSTANDING EQUITY AWARDS

(AS OF JUNE 21, 2021)

Award Date	Award ID	Award Type	Award Amount	Award Price	Vested	Unvested	Exercisable	Expiration Date
08/21/2018	13343	NQ	2,164	$99.8300	2,164	0	2,164	08/20/2028
08/22/2019	19681	NQ	3,987	$57.0000	3,987	0	3,987	08/21/2029
11/15/2019	22135	NQ	189,412	$67.3000	78,921	110,491	78,921	11/14/2029
11/15/2019	22215	RSU	79,118	$0.0000	29,669	49,449	n/a	n/a
05/15/2020	28155	RSU	32,931	$0.0000	8,232	24,699	n/a	n/a
05/15/2020	28160	PSU	32,931	$0.0000	0	32,931	n/a	n/a

EX-31.1

Exhibit 31.1

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William Staples, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of New Relic, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 3, 2021	By:	/s/    William Staples
			William Staples
			Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark Sachleben, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of New Relic, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 3, 2021	By:	/s/    Mark Sachleben
			Mark Sachleben
			Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, William Staples, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of New Relic, Inc. for the fiscal quarter ended June 30, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of New Relic, Inc.

Date:	August 3, 2021	By:	/s/    William Staples
			William Staples
			Chief Executive Officer

I, Mark Sachleben, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of New Relic, Inc. for the fiscal quarter ended June 30, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of New Relic, Inc.

Date:	August 3, 2021	By:	/s/    Mark Sachleben
			Mark Sachleben
			Chief Financial Officer

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of New Relic, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Cover Page - shares	3 Months Ended
	Jun. 30, 2021	Jul. 30, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity File Number	001-36766
Entity Registrant Name	New Relic, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	26-2017431
Entity Address, Address Line One	188 Spear Street
Entity Address, Address Line Two	Suite 1000
Entity Address, City or Town	San Francisco
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94105
City Area Code	650
Local Phone Number	777-7600
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	NEWR
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		64,847,793
Entity Central Index Key	0001448056
Current Fiscal Year End Date	--03-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021
Current assets:
Cash and cash equivalents	$ 259,897	$ 240,821
Short-term investments	557,223	575,254
Accounts receivable, net of allowances of $2,464 and $2,633, respectively	93,477	174,027
Prepaid expenses and other current assets	22,172	21,944
Deferred contract acquisition costs	33,032	36,210
Total current assets	965,801	1,048,256
Property and equipment, net	84,645	91,308
Restricted cash	5,642	5,642
Goodwill	163,677	144,253
Intangible assets, net	21,610	12,986
Deferred contract acquisition costs, non-current	25,707	32,579
Lease right-of-use assets	55,034	57,425
Other assets, non-current	5,976	6,170
Total assets	1,328,092	1,398,619
Current liabilities:
Accounts payable	27,631	24,171
Accrued compensation and benefits	32,319	37,196
Other current liabilities	15,779	19,174
Deferred revenue	316,458	373,594
Lease liabilities	7,714	7,886
Total current liabilities	399,901	462,021
Convertible senior notes, net	495,893	449,380
Lease liabilities, non-current	57,578	59,924
Deferred revenue, non-current	1,044	1,674
Other liabilities, non-current	15,789	8,256
Total liabilities	970,205	981,255
Commitments and contingencies (Note 10)
Redeemable non-controlling interest	7,744	3,389
Stockholders’ equity:
Common stock, $0.001 par value; 100,000 shares authorized at June 30, 2021 and March 31, 2021; 64,966 shares and 64,019 shares issued at June 30, 2021 and March 31, 2021; and 64,706 shares and 63,759 shares outstanding at June 30, 2021 and March 31, 2021	64	64
Treasury stock - at cost (260 shares)	(263)	(263)
Additional paid-in capital	962,512	1,001,309
Accumulated other comprehensive loss	(850)	(19)
Accumulated deficit	(611,320)	(587,116)
Total stockholders’ equity	350,143	413,975
Total liabilities, redeemable non-controlling interest and stockholders’ equity	$ 1,328,092	$ 1,398,619

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 2,464	$ 2,633
Common stock, par value (in usd per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	64,966,000	64,019,000
Common stock, shares outstanding (in shares)	64,706,000	63,759,000
Treasury stock, shares (in shares)	260,000	260,000

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Income Statement [Abstract]
Revenue	$ 180,484	$ 162,585
Cost of revenue	59,264	33,273
Gross profit	121,220	129,312
Operating expenses:
Research and development	48,730	40,844
Sales and marketing	102,813	85,136
General and administrative	43,565	29,434
Total operating expenses	195,108	155,414
Loss from operations	(73,888)	(26,102)
Other income (expense):
Interest income	938	2,781
Interest expense	(1,226)	(6,104)
Other expense	(336)	(395)
Loss before income taxes	(74,512)	(29,820)
Income tax provision (benefit)	(453)	332
Net loss	(74,059)	(30,152)
Net loss and adjustment attributable to redeemable non-controlling interest	(4,355)	396
Net loss attributable to New Relic	$ (78,414)	$ (29,756)
Net loss attributable to New Relic per share, basic (in dollars per share)	$ (1.24)	$ (0.50)
Net loss attributable to New Relic per share, diluted (in dollars per share)	$ (1.24)	$ (0.50)
Weighted-average shares used to compute net loss per share, basic (in shares)	63,339	59,927
Weighted-average shares used to compute net loss per share, diluted (in shares)	63,339	59,927

XML

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Statement of Comprehensive Income [Abstract]
Net loss attributable to New Relic	$ (78,414)	$ (29,756)
Other comprehensive loss:
Unrealized loss on available-for-sale securities	(831)	(759)
Comprehensive loss	$ (79,245)	$ (30,515)

XML

Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Stock	Additional Paid-In Capital	Additional Paid-In Capital Cumulative Effect, Period of Adoption, Adjustment	Treasury Stock	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment
Beginning balance (in shares) at Mar. 31, 2020			60,098			260
Beginning balance at Mar. 31, 2020	$ 390,639		$ 60	$ 780,479		$ (263)	$ 4,869	$ (394,506)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of stock options (in shares)			50
Issuance of common stock upon exercise of stock options	1,474			1,474
Issuance of common stock for vested restricted stock units (in shares)			354
Stock-based compensation expense	31,259			31,259
Other comprehensive loss, net	(759)						(759)
Net loss attributable to New Relic	(29,756)							(29,756)
Ending balance (in shares) at Jun. 30, 2020			60,502			260
Ending balance at Jun. 30, 2020	392,857		$ 60	813,212		$ (263)	4,110	(424,262)
Beginning balance (in shares) at Mar. 31, 2020			60,098			260
Beginning balance at Mar. 31, 2020	$ 390,639		$ 60	780,479		$ (263)	4,869	(394,506)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Accounting Standards Update [Extensible List]	newr:AccountingStandardsUpdate202006Member
Ending balance (in shares) at Mar. 31, 2021			64,019			260
Ending balance at Mar. 31, 2021	$ 413,975	$ (45,926)	$ 64	1,001,309	$ (100,136)	$ (263)	(19)	(587,116)	$ 54,210
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of stock options (in shares)	192		192
Issuance of common stock upon exercise of stock options	$ 4,832			4,832
Issuance of common stock for vested restricted stock units (in shares)			354
Issuance of common stock for vested restricted stock units			$ 0	0
Issuance of common stock related to employee stock purchase plan (in shares)			0
Issuance of common stock related to employee stock purchase plan	0			0
Issuance of common stock related to acquisition of business (in shares)			401
Issuance of common stock related to acquisition of business	13,487		$ 0	13,487
Stock-based compensation expense	43,020			43,020
Other comprehensive loss, net	(831)						(831)
Net loss attributable to New Relic	(78,414)							(78,414)
Ending balance (in shares) at Jun. 30, 2021			64,966			260
Ending balance at Jun. 30, 2021	$ 350,143		$ 64	$ 962,512		$ (263)	$ (850)	$ (611,320)

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities:
Net loss attributable to New Relic	$ (78,414)	$ (29,756)
Net loss and adjustment attributable to redeemable non-controlling interest (Note 3)	4,355	(396)
Net loss	(74,059)	(30,152)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	23,025	21,051
Stock-based compensation expense	42,187	31,208
Amortization of debt discount and issuance costs	587	5,466
Other	(922)	(222)
Changes in operating assets and liabilities, net of acquisition of business:
Accounts receivable, net	80,550	36,065
Prepaid expenses and other assets	18	(3,155)
Deferred contract acquisition costs	(190)	(9,388)
Lease right-of-use assets	2,692	(2,249)
Accounts payable	4,894	(3,923)
Accrued compensation and benefits and other liabilities	(8,627)	5,573
Lease liabilities	(2,517)	1,347
Deferred revenue	(57,766)	(16,473)
Net cash provided by operating activities	9,872	35,148
Cash flows from investing activities:
Purchases of property and equipment	(2,226)	(8,225)
Cash paid for acquisition, net of cash acquired	(7,192)	0
Purchases of short-term investments	(23,828)	(73,422)
Proceeds from sale and maturity of short-term investments	40,513	13,100
Capitalized software development costs	(2,860)	(3,668)
Net cash provided by (used in) investing activities	4,407	(72,215)
Cash flows from financing activities:
Proceeds from exercise of employee stock options	4,797	1,424
Net cash provided by financing activities	4,797	1,424
Net increase (decrease) in cash, cash equivalents and restricted cash	19,076	(35,643)
Cash, cash equivalents and restricted cash at beginning of period	246,463	298,164
Cash, cash equivalents and restricted cash at end of period	265,539	262,521
Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets:
Cash and cash equivalents	259,897	256,879
Restricted cash	5,642	5,642
Total cash, cash equivalents and restricted cash	265,539	262,521
Supplemental disclosure of cash flow information:
Cash paid for interest and income taxes	1,890	1,415
Noncash investing and financing activities:
Property and equipment purchased but not yet paid	3	1,265
Issuance of common stock for the acquisition of business	13,487	0
Acquisition holdback	$ 7,250	$ 0

XML

Description of Business and Summary of Significant Accounting Policies

3 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Description of Business and Summary of Significant Accounting Policies

Description of Business and Summary of Significant Accounting Policies

New Relic, Inc. (the “Company” or “New Relic”) was incorporated in Delaware on February 20, 2008, when it converted from a Delaware limited liability company called New Relic Software, LLC, which was formed in Delaware in September 2007. The Company delivers the observability platform for engineers to plan, build, deploy and operate more perfect software. New Relic One is the Company’s purpose-built offering for customers to land all of their telemetry data quickly and affordably in one place, and to translate that data into actionable insights.

Basis of Presentation —These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021, as filed with the SEC on May 14, 2021 (the “Annual Report”).

In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, stockholders’ equity and cash flows for the interim period, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year ending March 31, 2022. The condensed consolidated balance sheet as of March 31, 2021 included herein was derived from the audited financial statements as of that date.

Use of Estimates—The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Significant items subject to such estimates and assumptions include the fair value of share-based awards, fair value of purchased intangible assets and goodwill, fair value of debt and equity components related to the 0.5% convertible senior notes due 2023 (the “Notes”), useful lives of purchased intangible assets, unrecognized tax benefits, expected benefit period for deferred commissions, incremental borrowing rate used for operating lease liabilities, and the capitalization and estimated useful life of the Company’s software development costs.

These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from management’s estimates.

COVID-19—The COVID-19 pandemic has resulted in a global slowdown of economic activity that is expected to continue and which is likely to decrease demand for a broad variety of goods and services, while also disrupting sales channels and marketing activities for an unknown period of time until the disease is contained. The Company’s revenue and deferred revenue have been negatively impacted by the slowdown in activity associated with the COVID-19 pandemic, but at this point, the extent of any continuing impact to the Company’s financial condition or results of operations is uncertain, particularly as the COVID-19 pandemic continues to persist for an extended period of time, and as of the date of issuance of these financial statements, management is not aware of any specific event or circumstance that would require an update to estimates and judgments or revising the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information is obtained, and will be recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the financial statements.

Concentration of Risk—There was one customer that represented more than 10% of the Company’s accounts receivable balance as of June 30, 2021 and no customers that represented more than 10% of the Company’s accounts receivable balance as of March 31, 2021. There was no customer that individually exceeded 10% of the Company’s revenue during the three months ended June 30, 2021 or 2020.

Revenue Recognition—The Company generates revenue from subscription-based arrangements and usage-based arrangements that allow customers to access its products and/or platform. The Company determines revenue recognition through the following steps:

•identification of the contract, or contracts with a customer;

•identification of the performance obligations in the contract;

•determination of the transaction price;

•allocation of the transaction price to the performance obligations in the contract; and

•recognition of revenue, when, or as, the Company satisfies a performance obligation.

Revenue from subscription-based arrangements is recognized on a ratable basis over the contractual subscription period of the arrangement beginning when or as control of the promised goods or services is transferred to the customer.

Beginning in the second quarter of fiscal 2021, the Company started offering usage-based pricing to its customers. Customers have the option to be charged upon their incurred usage in arrears (“Pay as You Go”), or they may commit to a minimum spend over their contracted period (“Annual Pool of Funds”). Revenue related to Pay as You Go contracts are recognized based on the customers’ actual usage. Revenue related to Annual Pool of Funds contracts are recognized on a ratable basis over the contract period including an estimate of the usage above the minimum commitment. The estimated usage-based revenues are constrained to the amount the Company expects to be entitled to receive in exchange for providing access to its platform.

Recently Issued Accounting Pronouncements Not Yet Adopted

There have been no new accounting pronouncements issued during the three months ended June 30, 2021 that are of significance to the Company.

Recently Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, Accounting for Convertible Instruments and Contract on an Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This will result in more convertible debt instruments being accounted for as a single liability instrument and more convertible preferred stock being accounted for as a single equity instrument with no separate accounting for embedded conversion features. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (“EPS”) and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards.

The Company early adopted ASU 2020-06 effective April 1, 2021, using the modified retrospective basis. Adoption resulted in a $54.2 million decrease to the opening balance of accumulated deficit, a $100.1 million decrease to the opening balance of additional paid-in capital, and a $45.9 million increase to the opening balance of the Notes, net on the consolidated balance sheet.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. The Company adopted this standard on April 1, 2020. The adoption of this standard did not have a material impact on its condensed consolidated financial statements or disclosures.

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which amends ASC 820, Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company adopted this standard on April 1, 2020. The adoption of this standard did not have a material impact on its condensed consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. The Company adopted this standard on April 1, 2020. The adoption of this standard did not have a material impact on its condensed consolidated financial statements.

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Business Combinations

3 Months Ended

Jun. 30, 2021

Business Combinations [Abstract]

Business Combinations

Business Combinations

CodeStream Inc.

On June 8, 2021, the Company acquired all of the equity interests in CodeStream Inc. (“CodeStream”), a company that provides an integrated developer collaboration platform. The aggregate purchase price of $28.6 million consisted of approximately $15.1 million in cash (of which the Company held back approximately $7.3 million from the aggregate purchase price for 18 months after the transaction closing date, and which has been accrued as a long-term liability) and 202,561 shares of the Company’s common stock with an aggregate fair value of approximately $13.5 million. The fair value of the consideration transferred was determined based on a $66.58 per share price of the Company’s common stock on the closing date of the acquisition.

The total purchase price was allocated to the developed technology acquired with an estimated useful life of three years, net assets assumed, and a deferred tax liability related to the developed technology. The excess purchase price was recorded as goodwill, as set forth below. Goodwill generated from the acquisition is attributable to expected synergies from future growth and is not deductible for tax purposes.

The following table presents the purchase price allocation related to the acquisition (in thousands):

Cash consideration	$	15,140
Fair value of common shares	$	26,768
Total consideration	$	41,908
Post-business combination compensation expense	$	(13,282)
Total purchase price	$	28,626
Net assets assumed	$	(113)
Deferred tax liabilities	$	1,211
Developed technology acquired	$	(10,300)
Goodwill	$	19,424

The acquisition has been accounted for as a business combination in accordance with ASC 805. The estimated fair value of developed technology acquired of $10.3 million was determined through the use of a third-party valuation firm using cost approach methodology. The direct transaction costs of the acquisition have been accounted for separately from the business combination and expensed as incurred. Total direct transaction costs incurred by the Company were $0.4 million, which were included in general and administrative expenses in the Company’s condensed consolidated statement of operations for the three months ended June 30, 2021. The Company paid $0.8 million in acquisition-related expenses incurred by CodeStream related to CodeStream’s advisors which were included as part of the purchase consideration. The business combination did not have a material impact on the condensed consolidated financial statements and therefore historical and proforma disclosures have not been presented.

The acquisition also included a holdback arrangement with certain employees of CodeStream, totaling approximately 199,492 shares of the Company’s common stock, contingent upon their continued employment with the Company. The fair value of these awards, which are subject to the recipients’ continued service, was $13.3 million and was excluded from the aggregate purchase price. These awards will be recognized as stock-based compensation expense over the vesting period, which is 42 months.

Pixie Labs Inc.

On December 22, 2020, the Company acquired all of the equity interests in Pixie Labs Inc., a company that provides a next-generation machine intelligence observability solution for developers using Kubernetes. The aggregate purchase price of $107.9 million consisted of approximately $45.6 million in cash (of which $15.0 million is being held in escrow for 12 months after the transaction closing date) and 884,269 shares of the Company’s common stock with an aggregate fair value of approximately $62.4 million. The fair value of the consideration transferred was determined based on a $70.53 per share price of the Company’s common stock. Of the total purchase price, $4.8 million was allocated to acquired technology with an estimate useful life of three years, net assets assumed, and a deferred tax liability related to the developed technology. The excess $99.1 million of the purchase price over the fair value of the intangible assets acquired was recorded as goodwill. The acquisition has been accounted for as a business combination under the acquisition method. The business combination did not

have a material impact on the condensed consolidated financial statements and therefore historical and proforma disclosures have not been presented.

IOpipe, Inc.

On October 31, 2019, the Company acquired certain assets of IOpipe, Inc., a company that provides monitoring tools for serverless applications, for $5.1 million in cash. The Company held back approximately $0.9 million from the aggregate purchase price which has been accrued as a liability. Of the total purchase price, $1.5 million was allocated to acquired technology with an estimated useful life of three years with the excess $3.6 million of the purchase price over the fair value of the intangible assets acquired recorded as goodwill. The acquisition has been accounted for as a business combination under the acquisition method. Goodwill and other intangibles generated from the acquisition are attributable to expected synergies from future growth and potential future monetization opportunities, and are deductible for tax purposes. The business combination did not have a material impact on the condensed consolidated financial statements and therefore historical and proforma disclosures have not been presented.

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Joint Venture

3 Months Ended

Jun. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

Joint Venture

Joint Venture

On July 13, 2018, the Company entered into an agreement with Japan Cloud Computing L.P. and M30 LLC (collectively, the “Investors”) to engage in the investment, organization, management and operation of New Relic K.K., a Japanese subsidiary of the Company that is focused on the sale of the Company’s products and services in Japan. On August 21, 2018, the investors initially contributed approximately $3.6 million (396,000,000 Japanese Yen) in exchange for 40% of the outstanding common stock of New Relic K.K. On August 21, 2019, the Company and Investors additionally contributed approximately $1.5 million (156,000,000 Japanese Yen) and approximately $1.0 million (104,000,000 Japanese Yen), respectively, to subscribe to additional shares. As of June 30, 2021, the Company owned approximately 60% of the outstanding common stock in New Relic K.K.

All of the common stock held by the Investors may be callable by the Company or puttable by the Investors upon certain contingent events. Should the call or put option be exercised, the redemption value would be determined based on a prescribed formula derived from the discrete revenues of New Relic K.K. and the Company and may be settled, at the Company’s discretion, with Company stock or cash. As a result of the put right available to the redeemable non-controlling interest holders in the future, the redeemable non-controlling interest in New Relic K.K. is classified outside of permanent equity in the Company’s consolidated balance sheet as of June 30, 2021, and the balance is reported at the greater of the initial carrying amount adjusted for the redeemable non-controlling interest’s share of earnings or losses, or its estimated redemption value. Accordingly, the Company adjusted the redeemable non-controlling interest by $4.4 million at June 30, 2021.

The following table summarizes the activity in the redeemable non-controlling interest for the periods indicated below:

	Three Months Ended June 30,
	2021		2020
Balance, beginning of period	$	3,389	$	1,669
Net loss attributable to redeemable non-controlling interest	(40)		(396)
Adjustment to redeemable non-controlling interest	4,395		—
Balance, end of period	$	7,744	$	1,273

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Fair Value Measurements

3 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2021 and March 31, 2021 based on the three-tier fair value hierarchy (in thousands):

	Fair Value Measurements as of June 30, 2021
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Money market funds	$	119,534	$	—	$	—	$	119,534
Short-term investments:
Certificates of deposit	—		43,193		—		43,193
Commercial paper	—		15,083		—		15,083
Corporate notes and bonds	—		42,508		—		42,508
U.S. treasury securities	456,439		—		—		456,439
Restricted cash:
Money market funds	5,642		—		—		5,642
Total	$	581,615	$	100,784	$	—	$	682,399
Included in cash and cash equivalents							$	119,534
Included in short-term investments							$	557,223
Included in restricted cash							$	5,642
	Fair Value Measurements as of March 31, 2021
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Money market funds	$	101,626	$	—	$	—	$	101,626
Short-term investments:
Certificates of deposit	—		48,099		—		48,099
Commercial paper	—		11,681		—		11,681
Corporate notes and bonds	—		39,873		—		39,873
U.S. treasury securities	475,601		—		—		475,601
Restricted cash:
Money market funds	5,642		—		—		5,642
Total	$	582,869	$	99,653	$	—	$	682,522
Included in cash and cash equivalents							$	101,626
Included in short-term investments							$	575,254
Included in restricted cash							$	5,642

There were no transfers between fair value measurement levels during the three months ended June 30, 2021 and 2020.

The Company invests in certificates of deposit, commercial paper, corporate debt securities, U.S. treasury securities, and U.S. agency securities, which are classified as available-for-sale securities.

The following table presents the Company’s available-for-sale securities as of June 30, 2021 (in thousands):

	Available-for-sale Investments as of June 30, 2021
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Short-term investments:
Certificates of deposit	$	43,201	$	14	$	(22)	$	43,193
Commercial paper	15,072		11		—		15,083
Corporate notes and bonds	42,364		165		(21)		42,508
U.S. treasury securities	455,730		934		(225)		456,439
Total available-for-sale investments	$	556,367	$	1,124	$	(268)	$	557,223

The following table presents the Company’s available-for-sale securities as of March 31, 2021 (in thousands):

	Available-for-sale Investments as of March 31, 2021
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Short-term investments:
Certificates of deposit	$	48,100	$	18	$	(19)	$	48,099
Commercial paper	11,676		5		—		11,681
Corporate notes and bonds	39,620		261		(8)		39,873
U.S. treasury securities	474,171		1,575		(145)		475,601
Total available-for-sale investments	$	573,567	$	1,859	$	(172)	$	575,254

As of June 30, 2021 and March 31, 2021, securities that were in an unrealized loss position for more than 12 months were not significant. In addition, the Company did not consider any available-for-sale securities to be impaired as of June 30, 2021 and March 31, 2021.

The following table classifies the Company’s available-for-sale short-term investments by contractual maturities as of June 30, 2021 and March 31, 2021 (in thousands):

	June 30, 2021		March 31, 2021
Due within one year	$	306,103	$	299,032
Due after one year and within three years	251,120		276,222
Total	$	557,223	$	575,254

For certain other financial instruments, including accounts receivable, accounts payable and other current liabilities, the carrying amounts approximate their fair value due to the relatively short maturity of these balances.

Convertible Senior Notes

As of June 30, 2021, the fair value of the Notes was $448.7 million. The fair value was determined based on the quoted price of the Notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2 in the fair value hierarchy.

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Contract Acquisition Costs

3 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

Contract Acquisition Costs

Contract Acquisition CostsThe Company capitalizes certain contract acquisition costs primarily consisting of commissions. The balances of deferred costs to obtain customer contracts were $58.7 million and $68.8 million as of June 30, 2021 and March 31, 2021, respectively. In the three months ended June 30, 2021 and 2020, amortization from amounts capitalized was $10.2 million and $9.0 million, respectively. In the three months ended June 30, 2021 and 2020, amounts expensed as incurred were $14.1 million and $3.4 million, respectively. The Company had no impairment loss in relation to costs capitalized.Accounts Receivable, Deferred Revenue and Performance Obligations

In a response to the COVID-19 pandemic, the Company performed additional procedures to evaluate the creditworthiness of its customers and assess collectability of accounts. Using a current expected credit loss model, the Company determined that, while there may be a delay in collections due to the downturn in economic activity, there has not been a material impact to the risk of credit loss on accounts receivables as of June 30, 2021.

The Company receives payments from customers based upon billing cycles. As the Company performs under customer contracts, its right to consideration that is unconditional is considered to be accounts receivable. If the Company’s right to consideration for such performance is contingent upon a future event or satisfaction of additional performance obligations, the amount of revenues the Company has recognized in excess of the amount it has billed to the customer is considered to be a contract asset. Contract assets were $4.1 million and $0.3 million as of June 30, 2021 and June 30, 2020, respectively. The Company has no asset impairment charges related to contract assets for the periods presented. Deferred revenue represents consideration received from customers in excess of revenues recognized.

The following table presents the changes to the Company’s deferred revenue (in thousands):

	Three Months Ended June 30,
	2021		2020
Deferred revenue, beginning of period	$	375,268	$	316,327
Contributions from contract asset	1,541		215
Billings	121,177		145,897
Revenue recognized	(180,484)		(162,585)
Deferred revenue, end of period	$	317,502	$	299,854

For the three months ended June 30, 2021 and 2020, the majority of revenue recognized was from the deferred revenue balances at the beginning of each period.

The aggregate unrecognized transaction price of remaining performance obligations as of June 30, 2021 was $654.3 million. The Company expects to recognize more than 93% of the balance as revenue in the 24 months following June 30, 2021 and the remainder thereafter. The aggregate balance of remaining performance obligations represents contracted revenue that

has not yet been recognized and does not include contract amounts which are cancellable by the customer and amounts associated with optional renewal periods.

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Property and Equipment

3 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

Property and equipment, net, consisted of the following (in thousands):

	June 30, 2021		March 31, 2021
Computers, software, and equipment	$	14,567	$	14,270
Site operation equipment	83,148		87,479
Furniture and fixtures	5,772		5,758
Leasehold improvements	49,700		49,751
Capitalized software development costs	69,740		66,451
Total property and equipment	222,927		223,709
Less: accumulated depreciation and amortization	(138,282)		(132,401)
Total property and equipment, net	$	84,645	$	91,308

Depreciation and amortization expense related to property and equipment was $10.8 million and $10.5 million for the three months ended June 30, 2021 and 2020, respectively.

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0.5% Convertible Senior Notes and Capped Call

3 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

0.5% Convertible Senior Notes and Capped Call

0.5% Convertible Senior Notes and Capped Call

In May 2018, the Company issued $500.25 million in aggregate principal amount of Notes in a private offering, including $65.25 million in aggregate principal amount of Notes pursuant to the exercise in full of the initial purchasers’ option to purchase additional Notes. The Notes are the Company’s senior unsecured obligations and bear interest at a fixed rate of 0.5% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2018. The Notes will mature on May 1, 2023, unless earlier converted or repurchased. Each $1,000 principal amount of the Notes will initially be convertible into 9.0244 shares of the Company’s common stock (the “Conversion Option”), which is equivalent to an initial conversion price of approximately $110.81 per share. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the indenture governing the Notes. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate, in certain circumstances, for a holder who elects to convert its Notes in connection with such a corporate event. During the three months ended June 30, 2021, the conditions allowing holders of the Notes to convert have not been met. The Notes were therefore not convertible during the three months ended June 30, 2021 and were classified as long-term debt for such period.

The Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding November 1, 2022, only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on September 30, 2018 (and only during such fiscal quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price (as defined in the indenture governing the Notes) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the Notes on each such trading day; or (3) upon the occurrence of specified corporate events as set forth in the indenture governing the Notes. On or after November 1, 2022 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances. Upon conversion, the Company may satisfy its conversion obligation by paying and/or delivering, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the indenture governing the Notes.

In accounting for the transaction, the Notes were separated into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated conversion feature. The carrying amount of the equity component representing the Conversion Option was $102.5 million and was determined by deducting the fair value of the liability component from the proceeds received upon issuance of the Notes. The equity component was recorded in additional paid-in capital and is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the Notes over the liability component (the “Debt Discount”) and the debt issuance costs were amortized to interest expense over the contractual term of the Notes at an effective interest rate of 5.74%. This rate is inclusive of the issuance costs.

In accounting for the debt issuance costs of $11.6 million related to the Notes, the Company allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds of the Notes. Issuance costs attributable to the liability component were $9.2 million and were amortized to interest expense using the effective interest method over the contractual term of the Notes. Issuance costs attributable to the equity component were $2.4 million and netted with the equity component in additional paid-in capital.

In connection with the offering of the Notes, the Company entered into privately negotiated capped call transactions with certain financial institutions (the “Capped Calls”). The Capped Calls each have an initial strike price of approximately $110.81 per share, subject to certain adjustments, which correspond to the initial conversion price of the Notes. The Capped Calls have initial cap prices of $173.82 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, approximately 4.5 million shares of our common stock. Conditions that cause adjustments to the initial strike price of the Capped Calls mirror conditions that result in corresponding adjustments for the Notes. The Capped Calls are generally intended to reduce potential dilution to holders of the Company’s common stock upon any conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset, as the case may be, subject to a cap based on the cap price. For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $63.2 million incurred in connection with the Capped Calls was recorded as a reduction to additional paid-in capital. The net impact related to stockholders’ equity has been included in additional paid-in capital and was a result of the issuance costs of $2.4 million and the purchase of Capped Calls noted above in the amount of $63.2 million.

Effective April 1, 2021 the Company adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contract on an Entity’s Own Equity. As a result of the adoption, the Conversion Option of $102.5 million and issuance costs of $2.4 million previously attributable to the equity component will no longer be presented in equity. Similarly, the debt discount, which is equal to the carrying value of the embedded conversion feature upon issuance, will no longer be amortized into income as interest expense over the life of the instrument. This resulted in a $54.2 million decrease to the opening balance of accumulated deficit, a $100.1 million decrease to the opening balance of additional paid-in capital, and a $45.9 million increase to the opening balance of the Notes, net on the consolidated balance sheet.

The net carrying amount of the liability component of the Notes was as follows (in thousands):

	June 30, 2021		March 31, 2021
Principal	$	500,250	$	500,250
Unamortized debt discount	—		(46,378)
Unamortized issuance costs	(4,357)		(4,492)
Net carrying amount	$	495,893	$	449,380

Interest expense related to the Notes was as follows (in thousands):

	Three Months Ended June 30,
	2021		2020
Amortization of debt discount	$	—	$	5,030
Amortization of issuance costs	587		436
Contractual interest expense	625		625
Total interest expense	$	1,212	$	6,091

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Goodwill and Purchased Intangibles Assets

3 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Purchased Intangibles Assets

Goodwill and Purchased Intangibles Assets

The changes in the carrying amount of goodwill for the three months ended June 30, 2021 consisted of the following (in thousands):

Goodwill as of March 31, 2021	$	144,253
Goodwill acquired	19,424
Goodwill as of June 30, 2021	$	163,677

Purchased intangible assets subject to amortization as of June 30, 2021 consisted of the following (in thousands):

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	$	30,416	$	(8,806)	$	21,610

Purchased intangible assets subject to amortization as of March 31, 2021 consisted of the following (in thousands):

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	$	20,116	$	(7,130)	$	12,986

Amortization expense of purchased intangible assets was $1.7 million and $1.3 million for the three months ended June 30, 2021 and 2020, respectively and is included in cost of revenue on the Company’s condensed consolidated statements of operations.

Estimated future amortization expense as of June 30, 2021 was as follows (in thousands):

Fiscal Years Ending March 31,	Estimated Future Amortization Expense
2022 (remaining nine months)	$	6,260
2023	9,000
2024	4,633
2025	1,717
	$	21,610

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Leases

3 Months Ended

Jun. 30, 2021

Leases [Abstract]

Leases

Leases

The Company leases office space under non-cancelable operating leases, which expire from 2021 to 2031. All of its office leases are classified as operating leases with lease expense recognized on a straight-line basis over the lease term.

Lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As these leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company considers information including, but not limited to, the lease term, the Company's credit rating and interest rates of similar debt instruments with comparable credit ratings. The lease right-of-use assets are also increased by any lease prepayments made and reduced by any lease incentives such as tenant improvement allowances. Options to extend the lease term are included in the lease term when it is reasonably certain that the Company will exercise the extension option.

The Company’s operating leases typically include nonlease components such as common-area maintenance costs. The Company has elected to include nonlease components with lease payments for the purpose of calculating lease right-of-use assets and liabilities, to the extent that they are fixed. Nonlease components that are not fixed are expensed as incurred as variable lease payments.

Leases with a term of one year or less are not recognized on the Company’s condensed consolidated balance sheet.

The following table presents information about leases on the condensed consolidated balance sheet (in thousands):

	June 30, 2021		March 31, 2021
Assets
Lease right-of-use-assets	$	55,034	$	57,425
Liabilities
Lease liabilities	$	7,714	$	7,886
Lease liabilities, non-current	57,578		59,924
Total operating lease liabilities	$	65,292	$	67,810

As of June 30, 2021, the weighted average remaining lease term was 6.0 years and the weighted average discount rate was 6.9%.

The following table presents information about leases on its condensed consolidated statement of operations (in thousands):

	Three Months Ended June 30,
	2021		2020
Operating lease expense	$	3,473	$	3,388
Short-term lease expense	150		228
Variable lease expense	632		699

The following table presents supplemental cash flow information about the Company’s leases (in thousands):

	Three Months Ended June 30,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities	$	3,810	$	4,484
Operating lease assets obtained in exchange for new lease liabilities (1)	—		4,411

(1) Includes the impact of new leases as well as remeasurements and modifications to existing leases.

As of June 30, 2021, remaining maturities of lease liabilities were as follows (in thousands):

Fiscal Years Ending March 31,	Operating Leases
2022 (remaining nine months)	$	8,408
2023	14,268
2024	13,358
2025	11,738
2026	11,936
2027	12,542
Thereafter	8,417
Total operating lease payments	$	80,667
Less imputed interest	(15,375)
Total operating lease liabilities	$	65,292

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Commitments and Contingencies

3 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Purchase Commitments—As of June 30, 2021 and March 31, 2021, the Company had purchase commitments of $464.5 million and $494.6 million, respectively, primarily related to data center, cloud and hosting services.

In September 2020, the Company entered into an agreement with a public cloud hosting provider, under which it now has a total five-year minimum commitment of $500.0 million, which is included in the commitment balance as of June 30, 2021 above.

Other Contingencies—In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Company’s products when used for their intended purposes infringe the intellectual property rights of such other third parties, or other claims made against certain parties. To date, the Company has not incurred any costs as a result of such obligations and has not accrued any liabilities related to such obligations in the consolidated financial statements. In addition, the Company indemnifies its officers, directors, and certain key employees while they are serving in good faith in their respective capacities. The Company does not currently believe there is a reasonable possibility that a loss may have been incurred under these indemnification obligations. To date, there have been no claims under any such indemnification provisions.

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Common Stock and Stockholders' Equity

3 Months Ended

Jun. 30, 2021

Equity [Abstract]

Common Stock and Stockholders' Equity

Common Stock and Stockholders’ Equity

Employee Stock Purchase Plan—The Company’s board of directors adopted, and the Company’s stockholders approved, the Company’s 2014 Employee Stock Purchase Plan (the “ESPP”), which became effective in December 2014. The ESPP initially reserved and authorized the issuance of up to 1,000,000 shares of common stock. The ESPP provides that the number of shares reserved and available for issuance under the ESPP automatically increases each April, beginning on April 1, 2015, by the lesser of 500,000 shares, 1% of the number of the Company’s common stock shares issued and outstanding on the immediately preceding March 31, or such lesser number of shares as determined by the Company’s board of directors. For the three months ended June 30, 2021, no shares of common stock were purchased under the ESPP. Stock-based compensation expense recognized related to the ESPP was $0.9 million and $1.0 million for the three months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, 3,201,577 shares of common stock were available for issuance under the ESPP.

2008 Equity Incentive Plan—The Company’s board of directors adopted, and the Company’s stockholders approved, the 2008 Equity Incentive Plan, or the 2008 Plan, in February 2008. The 2008 Plan was terminated in connection with the Company’s initial public offering (“IPO”), and accordingly, no shares are available for future issuance under this plan. The 2008 Plan continues to govern outstanding awards granted thereunder.

2014 Equity Incentive Plan—The Company’s board of directors adopted, and the Company’s stockholders approved, the Company’s 2014 Equity Incentive Plan (the “2014 Plan”), which became effective in December 2014. The 2014 Plan serves as the successor to the Company’s 2008 Plan. The 2014 Plan initially reserved and authorized the issuance of 5,000,000 shares of the Company’s common stock. Additionally, shares not issued or subject to outstanding grants under the 2008 Plan upon its termination became available under the 2014 Plan, resulting in a total of 5,184,878 available shares under the 2014 Plan as of the effective date of the 2014 Plan. Pursuant to the terms of the 2014 Plan, any shares subject to outstanding stock options or other stock awards under the 2008 Plan that (i) expire or terminate for any reason prior to exercise or settlement, (ii) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise return to the Company or (iii) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award will become available for issuance pursuant to awards granted under the 2014 Plan. The 2014 Plan provides that the number of shares reserved and available for issuance under the plan automatically increases each April 1, beginning on April 1, 2015, by 5% of the outstanding number of shares of the Company’s common stock shares issued and outstanding on the immediately preceding March 31, or such lesser number of shares as determined by the Company’s board of directors. As of June 30, 2021, there were 14,310,072 shares available for issuance under the 2014 Plan.

The following table summarizes the Company’s stock option, restricted stock unit (“RSU”), and performance unit (“PSU”) award activities for the three months ended June 30, 2021 (in thousands, except exercise price, contractual term and fair value information):

	Options Outstanding						RSUs Outstanding						PSUs Outstanding
	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value		Number of Shares	Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value		Number of Shares	Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding - April 1, 2021	2,718	$	50.55	6.2	$	48,064	3,293	$	67.76	2.8	$	202,459	112	$	99.05	2.0	$	6,884
Granted	—	—					1,558	59.46					241	82.89
Exercised/vested	(192)	25.24			7,235		(354)	65.77					(33)	99.05
Canceled/forfeited	(131)	71.16					(510)	66.71					—
Outstanding - June 30, 2021	2,395	$	51.44	5.6	$	49,335	3,987	$	64.82	3.0	$	267,008	320	$	86.88	2.5	$	21,459

PSUs granted under the 2014 Plan are contingent upon the achievement of pre-determined market and service conditions. The number of shares of common stock to be issued at vesting will range from 0% to 200% of the target number based on the Company’s total shareholder return (“TSR”) relative to the performance of peer companies for each measurement period, over a one-year, two-year cumulative, and three-year cumulative period. If these market conditions are not met but service conditions are met, the PSUs will not vest; however, any stock-based compensation expense recognized to date will not be reversed. The Company uses a Monte Carlo simulation model to determine the fair value of its PSUs and recognizes expense using the accelerated attribution method over the requisite service period.

Stock-Based Compensation Expense—Stock-based compensation expense for employees and nonemployees was $42.2 million and $31.2 million for the three months ended June 30, 2021 and 2020. Cost of revenue, research and development, sales and marketing, and general and administrative expenses were as follows (in thousands):

	Three Months Ended June 30,
	2021		2020
Cost of revenue	$	1,072	$	1,502
Research and development	10,964		8,804
Sales and marketing	11,534		13,308
General and administrative (1)	18,617		7,594
Total stock-based compensation expense (2)	$	42,187	$	31,208

(1) Includes $9.6 million acceleration of share-based payment expense for one of the Company’s executives due to his departure at the end of June 2021.

(2) Includes $0.5 million expense for the three months ended June 30, 2021 due to the restructuring activities commenced in April 2021. Refer to Note 16. Restructuring for more information.

As of June 30, 2021, unrecognized stock-based compensation cost related to outstanding unvested stock options was $17.4 million, which is expected to be recognized over a weighted-average period of approximately 2.0 years. As of June 30, 2021, unrecognized stock-based compensation cost related to outstanding unvested stock units was $290.4 million, which is expected to be recognized over a weighted-average period of approximately 3.0 years. As of June 30, 2021, unrecognized stock-based compensation cost related to PSUs was $21.5 million, which is expected to be recognized over a weighted-average period of approximately 2.5 years.

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Accounts Receivable, Deferred Revenue and Performance Obligations

3 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

Accounts Receivable, Deferred Revenue and Performance Obligations

Contract Acquisition CostsThe Company capitalizes certain contract acquisition costs primarily consisting of commissions. The balances of deferred costs to obtain customer contracts were $58.7 million and $68.8 million as of June 30, 2021 and March 31, 2021, respectively. In the three months ended June 30, 2021 and 2020, amortization from amounts capitalized was $10.2 million and $9.0 million, respectively. In the three months ended June 30, 2021 and 2020, amounts expensed as incurred were $14.1 million and $3.4 million, respectively. The Company had no impairment loss in relation to costs capitalized.Accounts Receivable, Deferred Revenue and Performance Obligations

In a response to the COVID-19 pandemic, the Company performed additional procedures to evaluate the creditworthiness of its customers and assess collectability of accounts. Using a current expected credit loss model, the Company determined that, while there may be a delay in collections due to the downturn in economic activity, there has not been a material impact to the risk of credit loss on accounts receivables as of June 30, 2021.

The Company receives payments from customers based upon billing cycles. As the Company performs under customer contracts, its right to consideration that is unconditional is considered to be accounts receivable. If the Company’s right to consideration for such performance is contingent upon a future event or satisfaction of additional performance obligations, the amount of revenues the Company has recognized in excess of the amount it has billed to the customer is considered to be a contract asset. Contract assets were $4.1 million and $0.3 million as of June 30, 2021 and June 30, 2020, respectively. The Company has no asset impairment charges related to contract assets for the periods presented. Deferred revenue represents consideration received from customers in excess of revenues recognized.

The following table presents the changes to the Company’s deferred revenue (in thousands):

	Three Months Ended June 30,
	2021		2020
Deferred revenue, beginning of period	$	375,268	$	316,327
Contributions from contract asset	1,541		215
Billings	121,177		145,897
Revenue recognized	(180,484)		(162,585)
Deferred revenue, end of period	$	317,502	$	299,854

For the three months ended June 30, 2021 and 2020, the majority of revenue recognized was from the deferred revenue balances at the beginning of each period.

The aggregate unrecognized transaction price of remaining performance obligations as of June 30, 2021 was $654.3 million. The Company expects to recognize more than 93% of the balance as revenue in the 24 months following June 30, 2021 and the remainder thereafter. The aggregate balance of remaining performance obligations represents contracted revenue that

has not yet been recognized and does not include contract amounts which are cancellable by the customer and amounts associated with optional renewal periods.

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Income Taxes

3 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company is subject to income tax in the United States as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax. The Company does not provide for federal income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are to be reinvested indefinitely.

The Company recorded an income tax benefit of $0.5 million and provision of $0.3 million for the three months ended June 30, 2021 and 2020, respectively, related to foreign income taxes, research tax credits, and the tax benefit from the acquisition of CodeStream related to the partial release of valuation allowance. Based on the available objective evidence during the three months ended June 30, 2021, the Company believes it is more likely than not that the tax benefits of U.S. and Japan losses incurred during the three months ended June 30, 2021 may not be realized. Accordingly, the Company did not record the tax benefits of U.S. and Japan losses incurred during the three months ended June 30, 2021. The primary difference between the effective tax rate and the statutory tax rate relates to the valuation allowance on the U.S. and Japan losses, foreign tax rate differences, generation of research tax credits, and the tax benefit from the acquisition of CodeStream.

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Net Loss Per Share

3 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Net Loss Per Share

Net Loss Per Share

Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period, less shares subject to repurchase, and excludes any dilutive effects of employee share-based awards and warrants. Diluted net loss per share is computed giving effect to all potential dilutive common shares, including common stock issuable upon exercise of stock options and unvested restricted common stock. As the Company had net losses for each of the three months ended June 30, 2021 and 2020, all potential common shares were determined to be anti-dilutive, resulting in basic and diluted net loss per share being equal. Additionally, the 4.5 million shares underlying the Conversion Option in the Notes were not considered in the calculation of diluted net loss per share as the effect would be anti-dilutive. The Notes were not convertible as of June 30, 2021. 

ASU 2020-06 eliminates the treasury stock method and instead requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share when the instruments may be settled in cash or shares. The required use of the if-converted method did not impact the diluted net loss per share as the Company was in a net loss position.

The following table sets forth the computation of net loss per share, basic and diluted (in thousands, except per share amounts):

	Three Months Ended June 30,
	2021		2020
Numerator:
Net loss attributable to New Relic	$	(78,414)	$	(29,756)
Denominator:
Weighted average shares used to compute net loss per share, basic and diluted	63,339		59,927
Net loss attributable to New Relic per share—basic and diluted	$	(1.24)	$	(0.50)

The following outstanding options, unvested shares, and ESPP shares were excluded (as common stock equivalents) from the computation of diluted net loss per common share for the periods presented as their effect would have been antidilutive (in thousands):

	As of June 30,
	2021	2020
Options to purchase common stock	2,395	3,254
RSUs	3,987	4,370
PSUs	320	112
ESPP shares	89	117
	6,791	7,853

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Revenue by Geographic Location

3 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Revenue by Geographic Location

Revenue by Geographic Location

The following table shows the Company’s revenue by geographic areas, as determined based on the billing address of its customers (in thousands):

	Three Months Ended June 30,
	2021		2020
United States	$	123,035	$	112,410
EMEA	28,165		25,196
APAC	17,193		14,965
Other	12,091		10,014
Total revenue	$	180,484	$	162,585

Substantially all of the Company’s long-lived assets were attributable to operations in the United States as of June 30, 2021 and March 31, 2021.

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Restructuring

3 Months Ended

Jun. 30, 2021

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

On April 6, 2021, the Company commenced a restructuring plan to realign its cost structure to better reflect significant product and business model innovation over the past 12 months. As a result of the restructuring plan, the Company incurred charges of approximately $12.8 million for employee terminations and other costs associated with the restructuring plan. Most of these charges consisted of cash expenditures and stock-based compensation expense which were recognized and mostly paid off in the first quarter of fiscal 2022.

The following table shows the Company’s restructuring charges for the three months ended June 30, 2021 (in thousands):

	Three Months Ended June 30, 2021
	Severance and other employee costs		Stock-based compensation		Asset impairment		Total
Sales and marketing	$	10,965	$	406	$	104	$	11,475
General and administrative	1,183		87		26		1,296
Total	$	12,148	$	493	$	130	$	12,771

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Description of Business and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Description of Business

New Relic, Inc. (the “Company” or “New Relic”) was incorporated in Delaware on February 20, 2008, when it converted from a Delaware limited liability company called New Relic Software, LLC, which was formed in Delaware in September 2007. The Company delivers the observability platform for engineers to plan, build, deploy and operate more perfect software. New Relic One is the Company’s purpose-built offering for customers to land all of their telemetry data quickly and affordably in one place, and to translate that data into actionable insights.

Basis of Presentation

Basis of Presentation —These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021, as filed with the SEC on May 14, 2021 (the “Annual Report”).

In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, stockholders’ equity and cash flows for the interim period, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year ending March 31, 2022. The condensed consolidated balance sheet as of March 31, 2021 included herein was derived from the audited financial statements as of that date.

Use of Estimates and COVID-19

Use of Estimates—The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Significant items subject to such estimates and assumptions include the fair value of share-based awards, fair value of purchased intangible assets and goodwill, fair value of debt and equity components related to the 0.5% convertible senior notes due 2023 (the “Notes”), useful lives of purchased intangible assets, unrecognized tax benefits, expected benefit period for deferred commissions, incremental borrowing rate used for operating lease liabilities, and the capitalization and estimated useful life of the Company’s software development costs.

These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from management’s estimates.

COVID-19—The COVID-19 pandemic has resulted in a global slowdown of economic activity that is expected to continue and which is likely to decrease demand for a broad variety of goods and services, while also disrupting sales channels and marketing activities for an unknown period of time until the disease is contained. The Company’s revenue and deferred revenue have been negatively impacted by the slowdown in activity associated with the COVID-19 pandemic, but at this point, the extent of any continuing impact to the Company’s financial condition or results of operations is uncertain, particularly as the COVID-19 pandemic continues to persist for an extended period of time, and as of the date of issuance of these financial statements, management is not aware of any specific event or circumstance that would require an update to estimates and judgments or revising the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information is obtained, and will be recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the financial statements.

Concentration of Risk

Concentration of Risk—There was one customer that represented more than 10% of the Company’s accounts receivable balance as of June 30, 2021 and no customers that represented more than 10% of the Company’s accounts receivable balance as of March 31, 2021. There was no customer that individually exceeded 10% of the Company’s revenue during the three months ended June 30, 2021 or 2020.

Revenue Recognition

Revenue Recognition—The Company generates revenue from subscription-based arrangements and usage-based arrangements that allow customers to access its products and/or platform. The Company determines revenue recognition through the following steps:

•identification of the contract, or contracts with a customer;

•identification of the performance obligations in the contract;

•determination of the transaction price;

•allocation of the transaction price to the performance obligations in the contract; and

•recognition of revenue, when, or as, the Company satisfies a performance obligation.

Revenue from subscription-based arrangements is recognized on a ratable basis over the contractual subscription period of the arrangement beginning when or as control of the promised goods or services is transferred to the customer.

Beginning in the second quarter of fiscal 2021, the Company started offering usage-based pricing to its customers. Customers have the option to be charged upon their incurred usage in arrears (“Pay as You Go”), or they may commit to a minimum spend over their contracted period (“Annual Pool of Funds”). Revenue related to Pay as You Go contracts are recognized based on the customers’ actual usage. Revenue related to Annual Pool of Funds contracts are recognized on a ratable basis over the contract period including an estimate of the usage above the minimum commitment. The estimated usage-based revenues are constrained to the amount the Company expects to be entitled to receive in exchange for providing access to its platform.

Recently Issued Accounting Pronouncements Not Yet Adopted and Recently Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

There have been no new accounting pronouncements issued during the three months ended June 30, 2021 that are of significance to the Company.

Recently Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, Accounting for Convertible Instruments and Contract on an Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This will result in more convertible debt instruments being accounted for as a single liability instrument and more convertible preferred stock being accounted for as a single equity instrument with no separate accounting for embedded conversion features. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (“EPS”) and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards.

The Company early adopted ASU 2020-06 effective April 1, 2021, using the modified retrospective basis. Adoption resulted in a $54.2 million decrease to the opening balance of accumulated deficit, a $100.1 million decrease to the opening balance of additional paid-in capital, and a $45.9 million increase to the opening balance of the Notes, net on the consolidated balance sheet.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. The Company adopted this standard on April 1, 2020. The adoption of this standard did not have a material impact on its condensed consolidated financial statements or disclosures.

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which amends ASC 820, Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company adopted this standard on April 1, 2020. The adoption of this standard did not have a material impact on its condensed consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. The Company adopted this standard on April 1, 2020. The adoption of this standard did not have a material impact on its condensed consolidated financial statements.

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Business Combinations (Tables)

3 Months Ended

Jun. 30, 2021

Business Combinations [Abstract]

Schedule of Aggregate Purchase Price Allocation

The following table presents the purchase price allocation related to the acquisition (in thousands):

Cash consideration	$	15,140
Fair value of common shares	$	26,768
Total consideration	$	41,908
Post-business combination compensation expense	$	(13,282)
Total purchase price	$	28,626
Net assets assumed	$	(113)
Deferred tax liabilities	$	1,211
Developed technology acquired	$	(10,300)
Goodwill	$	19,424

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Joint Venture (Tables)

3 Months Ended

Jun. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Redeemable Non-Controlling Interest

The following table summarizes the activity in the redeemable non-controlling interest for the periods indicated below:

	Three Months Ended June 30,
	2021		2020
Balance, beginning of period	$	3,389	$	1,669
Net loss attributable to redeemable non-controlling interest	(40)		(396)
Adjustment to redeemable non-controlling interest	4,395		—
Balance, end of period	$	7,744	$	1,273

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Fair Value Measurements (Tables)

3 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Information about financial assets measured at fair value on recurring basis

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2021 and March 31, 2021 based on the three-tier fair value hierarchy (in thousands):

	Fair Value Measurements as of June 30, 2021
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Money market funds	$	119,534	$	—	$	—	$	119,534
Short-term investments:
Certificates of deposit	—		43,193		—		43,193
Commercial paper	—		15,083		—		15,083
Corporate notes and bonds	—		42,508		—		42,508
U.S. treasury securities	456,439		—		—		456,439
Restricted cash:
Money market funds	5,642		—		—		5,642
Total	$	581,615	$	100,784	$	—	$	682,399
Included in cash and cash equivalents							$	119,534
Included in short-term investments							$	557,223
Included in restricted cash							$	5,642
	Fair Value Measurements as of March 31, 2021
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Money market funds	$	101,626	$	—	$	—	$	101,626
Short-term investments:
Certificates of deposit	—		48,099		—		48,099
Commercial paper	—		11,681		—		11,681
Corporate notes and bonds	—		39,873		—		39,873
U.S. treasury securities	475,601		—		—		475,601
Restricted cash:
Money market funds	5,642		—		—		5,642
Total	$	582,869	$	99,653	$	—	$	682,522
Included in cash and cash equivalents							$	101,626
Included in short-term investments							$	575,254
Included in restricted cash							$	5,642

Available-for-sale securities

The following table presents the Company’s available-for-sale securities as of June 30, 2021 (in thousands):

	Available-for-sale Investments as of June 30, 2021
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Short-term investments:
Certificates of deposit	$	43,201	$	14	$	(22)	$	43,193
Commercial paper	15,072		11		—		15,083
Corporate notes and bonds	42,364		165		(21)		42,508
U.S. treasury securities	455,730		934		(225)		456,439
Total available-for-sale investments	$	556,367	$	1,124	$	(268)	$	557,223

The following table presents the Company’s available-for-sale securities as of March 31, 2021 (in thousands):

	Available-for-sale Investments as of March 31, 2021
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Short-term investments:
Certificates of deposit	$	48,100	$	18	$	(19)	$	48,099
Commercial paper	11,676		5		—		11,681
Corporate notes and bonds	39,620		261		(8)		39,873
U.S. treasury securities	474,171		1,575		(145)		475,601
Total available-for-sale investments	$	573,567	$	1,859	$	(172)	$	575,254

Classification of available-for-sale short-term investments by contractual maturities

The following table classifies the Company’s available-for-sale short-term investments by contractual maturities as of June 30, 2021 and March 31, 2021 (in thousands):

	June 30, 2021		March 31, 2021
Due within one year	$	306,103	$	299,032
Due after one year and within three years	251,120		276,222
Total	$	557,223	$	575,254

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Property and Equipment (Tables)

3 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment, Net

Property and equipment, net, consisted of the following (in thousands):

	June 30, 2021		March 31, 2021
Computers, software, and equipment	$	14,567	$	14,270
Site operation equipment	83,148		87,479
Furniture and fixtures	5,772		5,758
Leasehold improvements	49,700		49,751
Capitalized software development costs	69,740		66,451
Total property and equipment	222,927		223,709
Less: accumulated depreciation and amortization	(138,282)		(132,401)
Total property and equipment, net	$	84,645	$	91,308

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0.5% Convertible Senior Notes and Capped Call (Tables)

3 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Summary of Convertible Debt

The net carrying amount of the liability component of the Notes was as follows (in thousands):

	June 30, 2021		March 31, 2021
Principal	$	500,250	$	500,250
Unamortized debt discount	—		(46,378)
Unamortized issuance costs	(4,357)		(4,492)
Net carrying amount	$	495,893	$	449,380

Summary of Interest Expense

Interest expense related to the Notes was as follows (in thousands):

	Three Months Ended June 30,
	2021		2020
Amortization of debt discount	$	—	$	5,030
Amortization of issuance costs	587		436
Contractual interest expense	625		625
Total interest expense	$	1,212	$	6,091

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Goodwill and Purchased Intangibles Assets (Tables)

3 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The changes in the carrying amount of goodwill for the three months ended June 30, 2021 consisted of the following (in thousands):

Goodwill as of March 31, 2021	$	144,253
Goodwill acquired	19,424
Goodwill as of June 30, 2021	$	163,677

Schedule of Purchased Intangible Assets Subject to Amortization

Purchased intangible assets subject to amortization as of June 30, 2021 consisted of the following (in thousands):

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	$	30,416	$	(8,806)	$	21,610

Purchased intangible assets subject to amortization as of March 31, 2021 consisted of the following (in thousands):

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	$	20,116	$	(7,130)	$	12,986

Schedule of Estimated Future Amortization Expense

Estimated future amortization expense as of June 30, 2021 was as follows (in thousands):

Fiscal Years Ending March 31,	Estimated Future Amortization Expense
2022 (remaining nine months)	$	6,260
2023	9,000
2024	4,633
2025	1,717
	$	21,610

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Leases (Tables)

3 Months Ended

Jun. 30, 2021

Leases [Abstract]

Schedule of Condensed Consolidated Balance Sheet

The following table presents information about leases on the condensed consolidated balance sheet (in thousands):

	June 30, 2021		March 31, 2021
Assets
Lease right-of-use-assets	$	55,034	$	57,425
Liabilities
Lease liabilities	$	7,714	$	7,886
Lease liabilities, non-current	57,578		59,924
Total operating lease liabilities	$	65,292	$	67,810

Schedule of Condensed Consolidated Statement of Operations and Supplemental Cash Flow Information

The following table presents information about leases on its condensed consolidated statement of operations (in thousands):

	Three Months Ended June 30,
	2021		2020
Operating lease expense	$	3,473	$	3,388
Short-term lease expense	150		228
Variable lease expense	632		699

The following table presents supplemental cash flow information about the Company’s leases (in thousands):

	Three Months Ended June 30,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities	$	3,810	$	4,484
Operating lease assets obtained in exchange for new lease liabilities (1)	—		4,411

(1) Includes the impact of new leases as well as remeasurements and modifications to existing leases.

Remaining Maturities of Lease Liabilities

As of June 30, 2021, remaining maturities of lease liabilities were as follows (in thousands):

Fiscal Years Ending March 31,	Operating Leases
2022 (remaining nine months)	$	8,408
2023	14,268
2024	13,358
2025	11,738
2026	11,936
2027	12,542
Thereafter	8,417
Total operating lease payments	$	80,667
Less imputed interest	(15,375)
Total operating lease liabilities	$	65,292

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Common Stock and Stockholders' Equity (Tables)

3 Months Ended

Jun. 30, 2021

Equity [Abstract]

Schedule of Stock Option and RSU and PSU Award Activities

The following table summarizes the Company’s stock option, restricted stock unit (“RSU”), and performance unit (“PSU”) award activities for the three months ended June 30, 2021 (in thousands, except exercise price, contractual term and fair value information):

	Options Outstanding						RSUs Outstanding						PSUs Outstanding
	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value		Number of Shares	Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value		Number of Shares	Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding - April 1, 2021	2,718	$	50.55	6.2	$	48,064	3,293	$	67.76	2.8	$	202,459	112	$	99.05	2.0	$	6,884
Granted	—	—					1,558	59.46					241	82.89
Exercised/vested	(192)	25.24			7,235		(354)	65.77					(33)	99.05
Canceled/forfeited	(131)	71.16					(510)	66.71					—
Outstanding - June 30, 2021	2,395	$	51.44	5.6	$	49,335	3,987	$	64.82	3.0	$	267,008	320	$	86.88	2.5	$	21,459

Schedule of Stock-based Compensation Expense Attributed to Cost of Revenue, Research and Development, Sales and Marketing and General and Administrative Expenses

Cost of revenue, research and development, sales and marketing, and general and administrative expenses were as follows (in thousands):

	Three Months Ended June 30,
	2021		2020
Cost of revenue	$	1,072	$	1,502
Research and development	10,964		8,804
Sales and marketing	11,534		13,308
General and administrative (1)	18,617		7,594
Total stock-based compensation expense (2)	$	42,187	$	31,208

(1) Includes $9.6 million acceleration of share-based payment expense for one of the Company’s executives due to his departure at the end of June 2021.

(2) Includes $0.5 million expense for the three months ended June 30, 2021 due to the restructuring activities commenced in April 2021. Refer to Note 16. Restructuring for more information.

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Accounts Receivable, Deferred Revenue and Performance Obligations (Tables)

3 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

Contract with Customer, Contract Asset, Contract Liability, and Receivable

The following table presents the changes to the Company’s deferred revenue (in thousands):

	Three Months Ended June 30,
	2021		2020
Deferred revenue, beginning of period	$	375,268	$	316,327
Contributions from contract asset	1,541		215
Billings	121,177		145,897
Revenue recognized	(180,484)		(162,585)
Deferred revenue, end of period	$	317,502	$	299,854

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Net Loss Per Share (Tables)

3 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Computation of Net Loss Per Share, Basic and Diluted

The following table sets forth the computation of net loss per share, basic and diluted (in thousands, except per share amounts):

	Three Months Ended June 30,
	2021		2020
Numerator:
Net loss attributable to New Relic	$	(78,414)	$	(29,756)
Denominator:
Weighted average shares used to compute net loss per share, basic and diluted	63,339		59,927
Net loss attributable to New Relic per share—basic and diluted	$	(1.24)	$	(0.50)

Antidilutive Securities Excluded from Computation of Diluted Net Loss per Common Share of Common Stock Equivalents

The following outstanding options, unvested shares, and ESPP shares were excluded (as common stock equivalents) from the computation of diluted net loss per common share for the periods presented as their effect would have been antidilutive (in thousands):

	As of June 30,
	2021	2020
Options to purchase common stock	2,395	3,254
RSUs	3,987	4,370
PSUs	320	112
ESPP shares	89	117
	6,791	7,853

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Revenue by Geographic Location (Tables)

3 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Schedule of Revenue by Geographic Areas

The following table shows the Company’s revenue by geographic areas, as determined based on the billing address of its customers (in thousands):

	Three Months Ended June 30,
	2021		2020
United States	$	123,035	$	112,410
EMEA	28,165		25,196
APAC	17,193		14,965
Other	12,091		10,014
Total revenue	$	180,484	$	162,585

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Restructuring (Tables)

3 Months Ended

Jun. 30, 2021

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Charges

The following table shows the Company’s restructuring charges for the three months ended June 30, 2021 (in thousands):

	Three Months Ended June 30, 2021
	Severance and other employee costs		Stock-based compensation		Asset impairment		Total
Sales and marketing	$	10,965	$	406	$	104	$	11,475
General and administrative	1,183		87		26		1,296
Total	$	12,148	$	493	$	130	$	12,771

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Description of Business and Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2021	Apr. 01, 2021	Mar. 31, 2021	May 31, 2018
Debt Instrument [Line Items]
Decrease to the opening balance of accumulated deficit	$ (611,320)		$ (587,116)
Increase to the opening balance of Convertible senior notes	$ 495,893		$ 449,380
Cumulative Effect, Period of Adoption, Adjustment
Debt Instrument [Line Items]
Decrease to the opening balance of accumulated deficit		$ 54,200
Decrease to the opening balance of additional paid-in capital		100,100
Increase to the opening balance of Convertible senior notes		$ 45,900
Accounts Receivable | Customer Concentration Risk | One Customer
Debt Instrument [Line Items]
Concentration risk	10.00%
Convertible Debt | Convertible Senior Notes Due 2023
Debt Instrument [Line Items]
Stated interest rate	0.50%			0.50%

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Business Combinations - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended
	Jun. 08, 2021	Dec. 22, 2020	Oct. 31, 2019	Jun. 30, 2021	Mar. 31, 2021
Business Acquisition [Line Items]
Preliminary purchase price allocation, goodwill				$ 163,677	$ 144,253
CodeStream Inc.
Business Acquisition [Line Items]
Total purchase price	$ 28,626
Cash consideration	15,140
Cash held in escrow	$ 7,300
Held in escrow period	18 months
Number of shares issued to acquire capital stock (in shares)	202,561
Aggregate fair value of common stock	$ 13,500
Fair value of shares issued to acquire capital stock (in usd per share)	$ 66.58
Total direct transaction costs				$ 400
Acquisition-related expenses	$ 800
Holdback arrangement, common stock (in shares)	199,492
Amount excluded from the aggregate purchase price	$ 13,300
Vesting period	42 months
Fair value of common shares	$ 26,768
Preliminary purchase price allocation, goodwill	$ 19,424
CodeStream Inc. | Technology
Business Acquisition [Line Items]
Acquired technology, estimated useful life	3 years
Acquired technology	$ 10,300
Pixie Labs Inc.
Business Acquisition [Line Items]
Total purchase price		$ 107,900
Cash consideration		45,600
Cash held in escrow		$ 15,000
Held in escrow period		12 months
Number of shares issued to acquire capital stock (in shares)		884,269
Fair value of shares issued to acquire capital stock (in usd per share)		$ 70.53
Fair value of common shares		$ 62,400
Preliminary purchase price allocation, goodwill		$ 99,100
Pixie Labs Inc. | Technology
Business Acquisition [Line Items]
Acquired technology, estimated useful life		3 years
Acquired technology		$ 4,800
IOpipe, Inc.
Business Acquisition [Line Items]
Cash consideration			$ 5,100
Amount excluded from the aggregate purchase price			900
Preliminary purchase price allocation, goodwill			$ 3,600
IOpipe, Inc. | Technology
Business Acquisition [Line Items]
Acquired technology, estimated useful life			3 years
Acquired technology			$ 1,500

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Business Combinations - Schedule of Aggregate Purchase Price Allocation (Details) - USD ($) $ in Thousands	Jun. 08, 2021	Jun. 30, 2021	Mar. 31, 2021
Business Acquisition [Line Items]
Goodwill		$ 163,677	$ 144,253
CodeStream Inc.
Business Acquisition [Line Items]
Cash consideration	$ 15,140
Fair value of common shares	26,768
Total consideration	41,908
Post-business combination compensation expense	(13,282)
Total purchase price	28,626
Net assets assumed	(113)
Deferred tax liabilities	1,211
Developed technology acquired	(10,300)
Goodwill	$ 19,424

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Joint Venture - Narrative (Details) $ in Thousands, ¥ in Millions					3 Months Ended
	Aug. 21, 2019 USD ($)	Aug. 21, 2019 JPY (¥)	Aug. 21, 2018 USD ($)	Aug. 21, 2018 JPY (¥)	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Aug. 21, 2019 JPY (¥)
Schedule of Equity Method Investments [Line Items]
Additional investor contribution	$ 1,500						¥ 156.0
Adjustment to redeemable non-controlling interest					$ 4,395	$ 0
New Relic K.K
Schedule of Equity Method Investments [Line Items]
Ownership percentage, parent					60.00%
The Investors
Schedule of Equity Method Investments [Line Items]
Contributions for joint venture	$ 1,000	¥ 104.0	$ 3,600	¥ 396.0
The Investors | New Relic K.K
Schedule of Equity Method Investments [Line Items]
Ownership percentage, noncontrolling interest			40.00%	40.00%

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Joint Venture - Schedule of Redeemable Non-Controlling Interest (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Increase (Decrease) in Temporary Equity [Roll Forward]
Balance, beginning of period	$ 3,389	$ 1,669
Net loss attributable to redeemable non-controlling interest	(40)	(396)
Adjustment to redeemable non-controlling interest	4,395	0
Balance, end of period	$ 7,744	$ 1,273

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Fair Value Measurements - Information about financial assets measured at fair value on recurring basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	$ 682,399	$ 682,522
Cash and cash equivalents:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	119,534	101,626
Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	557,223	575,254
Restricted cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	5,642	5,642
Money market funds | Cash and cash equivalents:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	119,534	101,626
Money market funds | Restricted cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	5,642	5,642
Commercial paper | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	15,083	11,681
U.S. treasury securities | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	456,439	475,601
Certificates of deposit | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	43,193	48,099
Corporate notes and bonds | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	42,508	39,873
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	581,615	582,869
Level 1 | Money market funds | Cash and cash equivalents:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	119,534	101,626
Level 1 | Money market funds | Restricted cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	5,642	5,642
Level 1 | Commercial paper | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	0	0
Level 1 | U.S. treasury securities | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	456,439	475,601
Level 1 | Certificates of deposit | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	0	0
Level 1 | Corporate notes and bonds | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	100,784	99,653
Level 2 | Money market funds | Cash and cash equivalents:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	0	0
Level 2 | Money market funds | Restricted cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	0	0
Level 2 | Commercial paper | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	15,083	11,681
Level 2 | U.S. treasury securities | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	0	0
Level 2 | Certificates of deposit | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	43,193	48,099
Level 2 | Corporate notes and bonds | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	42,508	39,873
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	0	0
Level 3 | Money market funds | Cash and cash equivalents:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	0	0
Level 3 | Money market funds | Restricted cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	0	0
Level 3 | Commercial paper | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	0	0
Level 3 | U.S. treasury securities | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	0	0
Level 3 | Certificates of deposit | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	0	0
Level 3 | Corporate notes and bonds | Short-term investments:
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets fair value	$ 0	$ 0

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Fair Value Measurements - Debt Securities, Available-for-sale (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 556,367	$ 573,567
Unrealized Gains	1,124	1,859
Unrealized Losses	(268)	(172)
Total	557,223	575,254
Certificates of deposit
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	43,201	48,100
Unrealized Gains	14	18
Unrealized Losses	(22)	(19)
Total	43,193	48,099
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	15,072	11,676
Unrealized Gains	11	5
Unrealized Losses	0	0
Total	15,083	11,681
Corporate notes and bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	42,364	39,620
Unrealized Gains	165	261
Unrealized Losses	(21)	(8)
Total	42,508	39,873
U.S. treasury securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	455,730	474,171
Unrealized Gains	934	1,575
Unrealized Losses	(225)	(145)
Total	$ 456,439	$ 475,601

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Fair Value Measurements - Classification of available-for-sale short-term investments by contractual maturities (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021
Debt Securities, Available-for-sale [Line Items]
Total	$ 557,223	$ 575,254
Short-term investments:
Debt Securities, Available-for-sale [Line Items]
Due within one year	306,103	299,032
Due after one year and within three years	251,120	276,222
Total	$ 557,223	$ 575,254

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Fair Value Measurements - Narrative (Detail) $ in Millions	Jun. 30, 2021 USD ($)
Convertible Debt | Level 2 | Convertible Senior Notes Due 2023
Debt Instrument [Line Items]
Fair value of Notes	$ 448.7

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Contract Acquisition Costs (Details) - USD ($)	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Mar. 31, 2021
Revenue from Contract with Customer [Abstract]
Capitalized contract cost	$ 58,700,000		$ 68,800,000
Capitalized contract cost, amortization	10,200,000	$ 9,000,000.0
Costs expensed as incurred	14,100,000	3,400,000
Contract asset impairment	$ 0	$ 0

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Property and Equipment - Schedule of Property and Equipment, Net (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 222,927	$ 223,709
Less: accumulated depreciation and amortization	(138,282)	(132,401)
Total property and equipment, net	84,645	91,308
Computers, software, and equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	14,567	14,270
Site operation equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	83,148	87,479
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total property and equipment	5,772	5,758
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	49,700	49,751
Capitalized software development costs
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 69,740	$ 66,451

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Property and Equipment - Narrative (Detail) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 10.8	$ 10.5

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0.5% Convertible Senior Notes and Capped Call - Narrative (Details) $ / shares in Units, shares in Millions	1 Months Ended
	May 31, 2018 USD ($) day $ / shares shares	Jun. 30, 2021 USD ($)	Apr. 01, 2021 USD ($)	Mar. 31, 2021 USD ($)
Debt Instrument [Line Items]
Purchase of capped calls	$ 63,200,000
Decrease to the opening balance of accumulated deficit		$ (611,320,000)		$ (587,116,000)
Increase to the opening balance of Convertible senior notes		$ 495,893,000		449,380,000
Convertible Debt | Notes Price Trigger Measurement
Debt Instrument [Line Items]
Threshold trading days | day	20
Threshold consecutive trading days | day	5
Threshold percentage of stock price trigger (less than)	130.00%
Convertible Debt | Stock Price Trigger Measurement
Debt Instrument [Line Items]
Threshold trading days | day	5
Threshold consecutive trading days | day	30
Threshold percentage of stock price trigger (less than)	98.00%
Convertible Senior Notes Due 2023 | Convertible Debt
Debt Instrument [Line Items]
Debt instrument face amount	$ 500,250,000
Stated interest rate	0.50%	0.50%
Convertible debt, conversion ratio	9.0244
Convertible debt, conversion price (in dollars per share) | $ / shares	$ 110.81
Debt discount for Conversion Option	$ 102,500,000
Effective interest rate	5.74%
Issuance costs	$ 11,600,000	$ 4,357,000		$ 4,492,000
Debt issuance costs, equity component	9,200,000
Unamortized discount issuance costs	2,400,000
Convertible Senior Notes Due 2023, Over-Allotment Option | Convertible Debt
Debt Instrument [Line Items]
Debt instrument face amount	$ 65,250,000
Capped Calls
Debt Instrument [Line Items]
Convertible debt, conversion price (in dollars per share) | $ / shares	$ 110.81
Initial cap price (in dollars per share) | $ / shares	$ 173.82
Number of shares covered by cap call (in shares) | shares	4.5
Capped Calls | Additional Paid-In Capital
Debt Instrument [Line Items]
Cost incurred related to capped calls	$ 63,200,000
Cumulative Effect, Period of Adoption, Adjustment
Debt Instrument [Line Items]
Decrease to the opening balance of accumulated deficit			$ 54,200,000
Decrease to the opening balance of additional paid-in capital			100,100,000
Increase to the opening balance of Convertible senior notes			$ 45,900,000

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0.5% Convertible Senior Notes and Capped Call - Schedule of Liability Component of Convertible Debt (Details) - Convertible Senior Notes Due 2023 - Convertible Debt - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021	May 31, 2018
Debt Instrument [Line Items]
Principal	$ 500,250	$ 500,250
Unamortized debt discount	0	(46,378)
Unamortized issuance costs	(4,357)	(4,492)	$ (11,600)
Net carrying amount	$ 495,893	$ 449,380

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0.5% Convertible Senior Notes and Capped Call - Schedule of Interest Expense (Details) - Convertible Senior Notes Due 2023 - Convertible Debt - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Debt Instrument [Line Items]
Amortization of debt discount	$ 0	$ 5,030
Amortization of issuance costs	587	436
Contractual interest expense	625	625
Total interest expense	$ 1,212	$ 6,091

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Goodwill and Purchased Intangibles Assets - Schedule of Goodwill (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2021 USD ($)
Goodwill [Roll Forward]
Goodwill as of March 31, 2021	$ 144,253
Goodwill acquired	19,424
Goodwill as of June 30, 2021	$ 163,677

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Goodwill and Purchased Intangibles Assets - Schedule of Purchased Intangible Assets Subject to Amortization (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021
Acquired Finite-Lived Intangible Assets [Line Items]
Net Carrying Amount	$ 21,610	$ 12,986
Developed technology
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	30,416	20,116
Accumulated Amortization	(8,806)	(7,130)
Net Carrying Amount	$ 21,610	$ 12,986

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Goodwill and Purchased Intangibles Assets - Narrative (Detail) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 1.7	$ 1.3

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Goodwill and Purchased Intangibles Assets - Schedule of Estimated Future Amortization Expense (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
2022 (remaining nine months)	$ 6,260
2023	9,000
2024	4,633
2025	1,717
Net Carrying Amount	$ 21,610	$ 12,986

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Leases - Assets and Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021
Assets
Lease right-of-use assets	$ 55,034	$ 57,425
Liabilities
Lease liabilities	7,714	7,886
Lease liabilities, non-current	57,578	59,924
Total operating lease liabilities	$ 65,292	$ 67,810

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Leases - Narrative (Details)	Jun. 30, 2021
Leases [Abstract]
Weighted average remaining lease term	6 years
Weighted average discount rate	6.90%

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Leases - Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Leases [Abstract]
Operating lease expense	$ 3,473	$ 3,388
Short-term lease expense	150	228
Variable lease expense	$ 632	$ 699

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Leases - Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Leases [Abstract]
Cash paid for amounts included in the measurement of lease liabilities	$ 3,810	$ 4,484
Operating lease assets obtained in exchange for new lease liabilities	$ 0	$ 4,411

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Leases - Operating Lease Maturity Schedule (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021
Leases [Abstract]
2022 (remaining nine months)	$ 8,408
2023	14,268
2024	13,358
2025	11,738
2026	11,936
2027	12,542
Thereafter	8,417
Total operating lease payments	80,667
Less imputed interest	(15,375)
Total operating lease liabilities	$ 65,292	$ 67,810

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Commitments and Contingencies (Detail) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2021	Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Purchase commitments	$ 464.5	$ 494.6
Minimum purchase commitment, term	5 years
Minimum purchase commitment, term, amount	$ 500.0

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Common Stock and Stockholders' Equity - Narrative (Detail) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Dec. 31, 2014	Jun. 30, 2021	Jun. 30, 2020
Class of Stock [Line Items]
Stock-based compensation expense		$ 42,187	$ 31,208
Unrecognized stock-based compensation cost		$ 17,400
Stock-based compensation cost expected to be recognized over weighted-average period		2 years
PSUs
Class of Stock [Line Items]
Stock-based compensation cost expected to be recognized over weighted-average period		2 years 6 months
Unrecognized stock-based compensation cost related to outstanding unvested stock awards		$ 21,500
PSUs | Share-based Payment Arrangement, One-Year
Class of Stock [Line Items]
Measurement period		1 year
PSUs | Share-based Payment Arrangement, Two-Year
Class of Stock [Line Items]
Measurement period		2 years
PSUs | Share-based Payment Arrangement, Three-Year
Class of Stock [Line Items]
Measurement period		3 years
PSUs | Minimum
Class of Stock [Line Items]
Percentage of total shareholder return		0.00%
PSUs | Maximum
Class of Stock [Line Items]
Percentage of total shareholder return		200.00%
RSUs
Class of Stock [Line Items]
Stock-based compensation cost expected to be recognized over weighted-average period		3 years
Unrecognized stock-based compensation cost related to outstanding unvested stock awards		$ 290,400
ESPP shares
Class of Stock [Line Items]
Shares reserved for issuance under plan (in shares)	1,000,000
Additional shares available for issuance under the plan (in shares)	500,000
Percentage of common stock shares increased under the plan	1.00%
Shares purchased under plan (in shares)		0
Stock-based compensation expense		$ 900	$ 1,000
Shares available for issuance (in shares)		3,201,577
2008 Equity Incentive Plan
Class of Stock [Line Items]
Shares available for issuance (in shares)		0
2014 Equity Incentive Plan
Class of Stock [Line Items]
Shares reserved for issuance under plan (in shares)	5,000,000
Shares available for issuance (in shares)		14,310,072
Shares available for grant under plan (in shares)	5,184,878
Increase in shares available under plan, percentage of outstanding common stock shares	5.00%

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Common Stock and Stockholders' Equity - Schedule of Stock Option, RSU, and PSU Award Activities (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended	12 Months Ended
	Jun. 30, 2021	Mar. 31, 2021
Number of Shares
Beginning balance (in shares)	2,718
Stock options granted (in shares)	0
Stock options exercised (in shares)	(192)
Stock options canceled/forfeited (in shares)	(131)
Ending balance (in shares)	2,395	2,718
Weighted- Average Exercise Price
Beginning balance (in usd per share)	$ 50.55
Stock options granted (in usd per share)	0
Stock options exercised (in usd per share)	25.24
Stock options canceled/forfeited (in usd per share)	71.16
Ending balance (in usd per share)	$ 51.44	$ 50.55
Weighted- Average Remaining Contractual Term (in years)
Weighted- Average Remaining Contractual Term (in years)	5 years 7 months 6 days	6 years 2 months 12 days
Aggregate Intrinsic Value
Beginning aggregate intrinsic value	$ 48,064
Stock options exercised	7,235
Ending aggregate intrinsic value	$ 49,335	$ 48,064
RSUs
Number of Shares
Beginning balance (in shares)	3,293
RSUs and PSUs granted (in shares)	1,558
RSUs and PSUs vested (in shares)	(354)
RSUs and PSUs canceled/forfeited (in shares)	(510)
Ending balance (in shares)	3,987	3,293
Weighted- Average Grant Date Fair Value
Beginning balance (in usd per share)	$ 67.76
RSUs and PSUs granted (in usd per share)	59.46
RSUs and PSUs vested (in usd per share)	65.77
RSUs and PSUs canceled/forfeited (in usd per share)	66.71
Ending balance (in usd per share)	$ 64.82	$ 67.76
Weighted- Average Remaining Contractual Term (in years)
Weighted Average Remaining Contractual Terms (in years)	3 years	2 years 9 months 18 days
Aggregate Intrinsic Value
Aggregate intrinsic value, outstanding	$ 267,008	$ 202,459
PSUs
Number of Shares
Beginning balance (in shares)	112
RSUs and PSUs granted (in shares)	241
RSUs and PSUs vested (in shares)	(33)
RSUs and PSUs canceled/forfeited (in shares)	0
Ending balance (in shares)	320	112
Weighted- Average Grant Date Fair Value
Beginning balance (in usd per share)	$ 99.05
RSUs and PSUs granted (in usd per share)	82.89
RSUs and PSUs vested (in usd per share)	99.05
Ending balance (in usd per share)	$ 86.88	$ 99.05
Weighted- Average Remaining Contractual Term (in years)
Weighted Average Remaining Contractual Terms (in years)	2 years 6 months	2 years
Aggregate Intrinsic Value
Aggregate intrinsic value, outstanding	$ 21,459	$ 6,884

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Common Stock and Stockholders' Equity - Summary of Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands		3 Months Ended
	Apr. 06, 2021	Jun. 30, 2021	Jun. 30, 2020
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense		$ 42,187	$ 31,208
Restructuring charges	$ 12,800	12,771
Executive officer
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Acceleration of share-based payment expense		9,600
Cost of revenue
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense		1,072	1,502
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense		10,964	8,804
Sales and marketing
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense		11,534	13,308
Restructuring charges		11,475
General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense		18,617	$ 7,594
Restructuring charges		$ 1,296

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Accounts Receivable, Deferred Revenue and Performance Obligations - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Revenue from Contract with Customer [Abstract]
Contract assets	$ 4.1	$ 0.3

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Accounts Receivable, Deferred Revenue and Performance Obligations - Schedule of Deferred Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Contract With Customer, Liability [Roll Forward]
Deferred revenue, beginning of period	$ 375,268	$ 316,327
Contributions from contract asset	1,541	215
Billings	121,177	145,897
Revenue recognized	(180,484)	(162,585)
Deferred revenue, end of period	$ 317,502	$ 299,854

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Accounts Receivable, Deferred Revenue and Performance Obligations - Performance Obligation (Details) $ in Millions	Jun. 30, 2021 USD ($)
Revenue from Contract with Customer [Abstract]
Revenue, remaining performance obligation	$ 654.3
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, percentage	93.00%
Revenue, remaining performance obligation, expected timing of satisfaction, period	24 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, percentage	7.00%
Revenue, remaining performance obligation, expected timing of satisfaction, period

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Income Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Income Tax Disclosure [Abstract]
Income tax provision (benefit)	$ (453)	$ 332

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Net Loss Per Share - Narrative (Details) - shares shares in Thousands	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per common share (in shares)	6,791	7,853
Convertible Debt Securities
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per common share (in shares)	4,500	4,500

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Net Loss Per Share - Computation of Net Loss Per Share, Basic and Diluted (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Numerator:
Net loss attributable to New Relic	$ (78,414)	$ (29,756)
Denominator:
Weighted-average shares used to compute net loss per share, basic (in shares)	63,339	59,927
Weighted-average shares used to compute net loss per share, diluted (in shares)	63,339	59,927
Net loss attributable to New Relic per share, basic (in dollars per share)	$ (1.24)	$ (0.50)
Net loss attributable to New Relic per share, diluted (in dollars per share)	$ (1.24)	$ (0.50)

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Net Loss Per Share - Antidilutive Securities Excluded from Computation of Diluted Net Loss per Common Share of Common Stock Equivalents (Detail) - shares shares in Thousands	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per common share (in shares)	6,791	7,853
ESPP shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per common share (in shares)	89	117
RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per common share (in shares)	3,987	4,370
PSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per common share (in shares)	320	112
Options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per common share (in shares)	2,395	3,254

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Revenue by Geographic Location - Schedule of Revenue by Geographic Areas (Detail) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Segment Reporting Information [Line Items]
Revenue	$ 180,484	$ 162,585
United States
Segment Reporting Information [Line Items]
Revenue	123,035	112,410
EMEA
Segment Reporting Information [Line Items]
Revenue	28,165	25,196
APAC
Segment Reporting Information [Line Items]
Revenue	17,193	14,965
Other
Segment Reporting Information [Line Items]
Revenue	$ 12,091	$ 10,014

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Restructuring - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended
	Apr. 06, 2021	Jun. 30, 2021
Restructuring and Related Activities [Abstract]
Restructuring charges	$ 12,800	$ 12,771

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Restructuring - Schedule of Restructuring Charges (Details) - USD ($) $ in Thousands		3 Months Ended
	Apr. 06, 2021	Jun. 30, 2021
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 12,800	$ 12,771
Sales and marketing
Restructuring Cost and Reserve [Line Items]
Restructuring charges		11,475
General and administrative
Restructuring Cost and Reserve [Line Items]
Restructuring charges		1,296
Severance and other employee costs
Restructuring Cost and Reserve [Line Items]
Restructuring charges		12,148
Severance and other employee costs | Sales and marketing
Restructuring Cost and Reserve [Line Items]
Restructuring charges		10,965
Severance and other employee costs | General and administrative
Restructuring Cost and Reserve [Line Items]
Restructuring charges		1,183
Stock-based compensation
Restructuring Cost and Reserve [Line Items]
Restructuring charges		493
Stock-based compensation | Sales and marketing
Restructuring Cost and Reserve [Line Items]
Restructuring charges		406
Stock-based compensation | General and administrative
Restructuring Cost and Reserve [Line Items]
Restructuring charges		87
Asset impairment
Restructuring Cost and Reserve [Line Items]
Restructuring charges		130
Asset impairment | Sales and marketing
Restructuring Cost and Reserve [Line Items]
Restructuring charges		104
Asset impairment | General and administrative
Restructuring Cost and Reserve [Line Items]
Restructuring charges		$ 26