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New Relic’s sale tells us much about the value of middling growth today on July 31, 2023 at 6:03 pm

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Monitoring service New Relic this morning said it has agreed to be acquired by Francisco Partners and TPG for $6.5 billion in cash.

Shares of the company, which went public back in 2014, are up around 13.5% on the news.

The Exchange explores startups, markets and money.

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The deal is interesting because of its size, but we’re more interested in the insight it provides on the current state of the tech landscape as it pertains to valuations. Given the dry IPO climate, we are bereft of new data regarding exit values, so this deal is like a fresh, cool breeze on a sultry summer afternoon.

New Relic’s $87-per-share sale price gives it a valuation that’s less than seven times its current run-rate revenue. The question we have to answer is whether or not that price seems parsimonious, reasonable or indulgent given current market data and our valuation expectations based on recent private and public-market data.

This morning, we’ll start with a look at New Relic’s latest quarterly results, compare that information to its sale price, and then relate what we’ve learned back to everyone’s favorite corporate cohort: Richly-valued startups that have yet to leave their parents’ basements.

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A business based on consumption

New Relic reported revenue of $242.6 million in the quarter ended June 30 (its fiscal first quarter), up 12% from a year earlier. The company has been shifting from a subscription model to a usage-based (consumption-based) pricing setup, and you can see that in the results: Consumption revenue increased 39% $213.9 million, while subscription revenue declined by 54% to $28.7 million.

​ It appears single-digit revenue multiples are all that’s within reach of unprofitable tech companies with growth rates in the low double-digits. 

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World News

Niremia Collective closes inaugural fund with $22.5M focused on well-being technology on February 2, 2024 at 1:59 pm

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Niremia Collective intends to provide capital and management resources to high-growth well-being startups as well as incubate new businesses.

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​ [[{“value”:”Niremia Collective intends to provide capital and management resources to high-growth well-being startups as well as incubate new businesses.
© 2024 TechCrunch. All rights reserved. For personal use only.”}]] 

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FTC orders Blackbaud to overhaul ‘reckless’ security practices in wake of 2020 breach on February 2, 2024 at 1:20 pm

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Education tech company Blackbaud agreed to settle with the U.S. Federal Trade Commission over the company’s security practices that resulted in a 2020 data breach. The FTC alleges that Blackbaud, a U.S.-based company that provides financial and administrative software to colleges, nonprofits, healthcare organizations, and far-right organizations, had “lax” security protocols that allowed attackers to […]

© 2024 TechCrunch. All rights reserved. For personal use only.

​ [[{“value”:”Education tech company Blackbaud agreed to settle with the U.S. Federal Trade Commission over the company’s security practices that resulted in a 2020 data breach. The FTC alleges that Blackbaud, a U.S.-based company that provides financial and administrative software to colleges, nonprofits, healthcare organizations, and far-right organizations, had “lax” security protocols that allowed attackers to
© 2024 TechCrunch. All rights reserved. For personal use only.”}]] 

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Apple says it’ll show its GenAI efforts ‘later this year’ on February 2, 2024 at 12:14 pm

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Apple has tossed another crumb to investors wondering when the world will get to see some ‘Made in Cupertino’ GenAI: Expect Apple to reveal what it’s been working on in this buzzy slice of artificial intelligence “later this year”, per CEO Tim Cook. During an earnings call yesterday, Apple’s chief exec emphasized its ongoing investment […]

© 2024 TechCrunch. All rights reserved. For personal use only.

​ [[{“value”:”Apple has tossed another crumb to investors wondering when the world will get to see some ‘Made in Cupertino’ GenAI: Expect Apple to reveal what it’s been working on in this buzzy slice of artificial intelligence “later this year”, per CEO Tim Cook. During an earnings call yesterday, Apple’s chief exec emphasized its ongoing investment
© 2024 TechCrunch. All rights reserved. For personal use only.”}]] 

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