12.1.14 - New Relic S1 - For Roadshow

12/1/2014 AmendmentNo.1toFormS1

https://www.sec.gov/Archives/edgar/data/1448056/000119312514428453/d709327ds1a.htm 1/163

S1/A1d709327ds1a.htmAMENDMENTNO.1TOFORMS1

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AsfiledwiththeSecuritiesandExchangeCommissiononDecember1,2014.RegistrationNo.333200078

UNITEDSTATESSECURITIESANDEXCHANGECOMMISSION

Washington,D.C.20549

AmendmentNo.1to

FormS1REGISTRATIONSTATEMENT

UnderTheSecuritiesActof1933

NewRelic,Inc.(ExactnameofRegistrantasspecifiedinitscharter)

Delaware 7372 262017431

(Stateorotherjurisdictionofincorporationororganization)

(PrimaryStandardIndustrialClassificationCodeNumber)

(I.R.S.EmployerIdentificationNumber)

NewRelic,Inc.188SpearStreet,Suite1200

SanFrancisco,California94105(650)7777600

(Address,includingzipcode,andtelephonenumber,includingareacode,ofRegistrantsprincipalexecutiveoffices) LewisCirne

ChiefExecutiveOfficerNewRelic,Inc.

188SpearStreet,Suite1200SanFrancisco,California94105

(650)7777600(Name,address,includingzipcode,andtelephonenumber,includingareacode,ofagentforservice)

Copiesto: CraigD.Jacoby,Esq.

DavidG.Peinsipp,Esq.AndrewS.Williamson,Esq.

CooleyLLP101CaliforniaStreet,5 FloorSanFrancisco,California94111

(415)6932000

RobinJ.Schulman,Esq.VicePresident,GeneralCounsel,andSecretary

NewRelic,Inc.188SpearStreet,Suite1200

SanFrancisco,California94105(650)7777600

JeffreyR.Vetter,Esq.JamesD.Evans,Esq.Fenwick&WestLLP801CaliforniaStreet

MountainView,California94041(650)9888500

Approximatedateofcommencementofproposedsaletothepublic:Assoonaspracticableafterthisregistrationstatementbecomeseffective. IfanyofthesecuritiesbeingregisteredonthisFormaretobeofferedonadelayedorcontinuousbasispursuanttoRule415undertheSecuritiesAct,checkthefollowingbox: IfthisFormisfiledtoregisteradditionalsecuritiesforanofferingpursuanttoRule462(b)undertheSecuritiesAct,pleasecheckthefollowingboxandlisttheSecuritiesActregistrationstatementnumberoftheearliereffectiveregistrationstatementforthesameoffering. IfthisFormisaposteffectiveamendmentfiledpursuanttoRule462(c)undertheSecuritiesAct,checkthefollowingboxandlisttheSecuritiesActregistrationstatementnumberoftheearliereffectiveregistrationstatementforthesameoffering. IfthisFormisaposteffectiveamendmentfiledpursuanttoRule462(d)undertheSecuritiesAct,checkthefollowingboxandlisttheSecuritiesActregistrationstatementnumberoftheearliereffectiveregistrationstatementforthesameoffering. Indicatebycheckmarkwhether theregistrant isa largeacceleratedfiler,anacceleratedfiler,anonacceleratedfiler,orasmallerreportingcompany.Seethedefinitionsoflargeacceleratedfiler,acceleratedfilerandsmallerreportingcompanyinRule12b2oftheExchangeAct.(Checkone):Largeacceleratedfiler AcceleratedfilerNonacceleratedfiler (Donotcheckifasmallerreportingcompany) Smallerreportingcompany CALCULATIONOFREGISTRATIONFEE

th



TitleofEachClassofSecuritiestobeRegistered

AmounttobeRegistered

ProposedMaximum

OfferingPricePerShare

ProposedMaximumAggregate

OfferingPrice Amountof

RegistrationFeeCommonStock,$0.001parvaluepershare 5,750,000 $20.00 $115,000,000 $13,363(1) Includesanadditional750,000sharesthattheunderwritershavetherighttopurchasetocoveroverallotments,ifany.(2) EstimatedsolelyforthepurposeofcomputingtheamountoftheregistrationfeepursuanttoRule457(a)undertheSecuritiesActof1933,asamended.(3) TheRegistrantpreviouslypaid$11,620of the total registrationfee inconnectionwith theprior filingof thisRegistrationStatement. InaccordancewithRule457(a),an

additionalregistrationfeeof$1,743isbeingpaidinconnectionwiththisamendmenttotheRegistrationStatement. TheRegistrantherebyamendsthisRegistrationStatementonsuchdateordatesasmaybenecessarytodelay itseffectivedateuntil theRegistrantshall fileafurtheramendmentwhichspecificallystates that thisRegistrationStatementshall thereafterbecomeeffective inaccordancewithSection8(a)of theSecuritiesActof1933oruntiltheRegistrationStatementshallbecomeeffectiveonsuchdateastheCommission,actingpursuanttosaidSection8(a),maydetermine.

(1) (2) (2) (3)



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Theinformationinthisprospectusisnotcompleteandmaybechanged.Thesesecuritiesmaynotbesolduntil theregistrationstatementfiledwiththeSecuritiesandExchangeCommissioniseffective.Thisprospectusisnotanoffertosellthesesecuritiesandwearenotsolicitingofferstobuythesesecuritiesinanyjurisdictionwheretheofferorsaleisnotpermitted.PROSPECTUS(SubjecttoCompletion)IssuedDecember1,2014

5,000,000Shares

COMMONSTOCK NewRelic,Inc.isoffering5,000,000sharesofcommonstock.Thisisourinitialpublicofferingandnopublicmarketcurrentlyexistsforourshares.Weanticipatethattheinitialpublicofferingpricewillbebetween$18.00and$20.00pershare. WehaveappliedtohaveourcommonstocklistedontheNewYorkStockExchangeunderthesymbolNEWR. We are an emerging growth company as defined under the federal securities laws. Investing in ourcommonstockinvolvesrisks.SeeRiskFactorsbeginningonpage11.

PRICE$ASHARE

PricetoPublic

UnderwritingDiscountsandCommissions

ProceedstoNewRelic

Pershare $ $ $Total $ $ $(1) SeeUnderwritingforadescriptionofthecompensationpayabletotheunderwriters.We have granted the underwriters the right to purchase up to an additional 750,000 shares of common stock to cover overallotments.The Securities and Exchange Commission and any state securities regulators have not approved or disapproved of thesesecurities,ordeterminedifthisprospectusistruthfulorcomplete.Anyrepresentationtothecontraryisacriminaloffense.Theunderwritersexpecttodeliverthesharesofcommonstocktopurchaserson,2014.

MORGANSTANLEY J.P.MORGANALLEN&COMPANYLLC UBSINVESTMENTBANKJMPSECURITIES RAYMONDJAMES,2014

(1)



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Neitherwenortheunderwritershaveauthorizedanyonetoprovideanyinformationortomakeanyrepresentationsotherthanthosecontained in thisprospectusor inanyfreewritingprospectuseswehaveprepared.Wetakenoresponsibility for,andcanprovidenoassuranceastothereliabilityof,anyotherinformationthatothersmaygiveyou.Weareofferingtosell,andseekingoffers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information in thisprospectusisaccurateonlyasofthedateofthisprospectus,regardlessofthetimeofdeliveryofthisprospectusoranysaleofsharesofourcommonstock.Ourbusiness,financialcondition,resultsofoperations,andprospectsmayhavechangedsincethatdate.

Until,2015(25daysafterthecommencementofthisoffering),alldealersthatbuy,sell,ortradesharesofourcommon stock, whether or not participating in this offering, may be required to deliver a prospectus. This deliveryrequirementisinadditiontotheobligationofdealerstodeliveraprospectuswhenactingasunderwritersandwithrespecttotheirunsoldallotmentsorsubscriptions.

ForinvestorsoutsidetheUnitedStates:Neitherwenortheunderwritershavedoneanythingthatwouldpermitthisofferingorpossessionordistributionofthisprospectusinanyjurisdictionwhereactionforthatpurposeisrequired,otherthanintheUnitedStates.PersonsoutsidetheUnitedStateswhocomeintopossessionofthisprospectusmustinformthemselvesabout,andobserveanyrestrictionsrelatingto,theofferingofthesharesofourcommonstockandthedistributionofthisprospectusoutsideoftheUnitedStates.

Page ProspectusSummary 1RiskFactors 11SpecialNoteRegardingForwardLookingStatements 31IndustryandMarketData 32UseofProceeds 33DividendPolicy 33Capitalization 34Dilution 36SelectedConsolidatedFinancialData 39ManagementsDiscussionandAnalysisofFinancial

ConditionandResultsofOperations 41LetterfromtheFounder 64Business 65

Page Management 83ExecutiveCompensation 90CertainRelationshipsandRelatedPartyTransactions 99PrincipalStockholders 102DescriptionofCapitalStock 104SharesEligibleforFutureSale 110MaterialU.S.FederalIncomeandEstateTax

ConsequencestoNonU.S.HoldersofOurCommonStock 112

Underwriting 115LegalMatters 121Experts 121AdditionalInformation 121IndextoConsolidatedFinancialStatements F1



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PROSPECTUSSUMMARY

Thissummaryhighlightsinformationcontainedelsewhereinthisprospectus.Thissummaryisnotcompleteanddoesnotcontain all of the information you should consider in making your investment decision. You should read the followingsummary together with the more detailed information appearing elsewhere in this prospectus, including Risk Factors,ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations,andourconsolidatedfinancialstatementsandrelatednotesbeforedecidingwhethertopurchasesharesofourcommonstock.Unlessthecontextotherwiserequires, the termsNewRelic,thecompany,we,us,andour in thisprospectusrefer toNewRelic, Inc.and itssubsidiaries.

NEWRELIC,INC.OurMission Software isbecoming the lifebloodof almost everyorganization, largeand small, around theworld.Ourmission is toempowerorganizationstobuildthebestmodernsoftwarepossibleandtoimprovetheirbusinessintelligenceusingthedataflowing through and about that software. This software data contains massive amounts of information about customerbehaviors,userexperiences,andoverallsoftwareperformance.NewRelicenablesorganizationstogainvisibilityintothisdatatomakebetter,faster,datadrivendecisions.Overview We are building a new category of enterprise softwarewe call SoftwareAnalytics. Our cloudbased suite of productsenablesorganizationstocollect,store,andanalyzemassiveamountsofsoftwaredatainrealtime.Wedesignallourproductstobehighlyintuitiveandfrictionlesstheyareeasytodeploy,andcustomerscanrapidly,oftenwithinminutes,realizebenefitsandresults.Withourproducts,technologyuserscanquicklyfindandfixperformanceproblemsaswellaspredictandpreventfutureissues.Businessuserssuchasproductmanagerscangetanswerstohowtheirnewproductlaunchisbeingreceived,orhow a pricing change impacted customer retention,withoutwaiting for help from IT.Software developers can build betterapplicationsfaster,astheycanseehowtheirsoftwarewillperformandisactuallyperformingforendusers.AsofSeptember30,2014,wecollected,stored,andanalyzedover690billiondatapointsdailyacrossmorethan4millionapplicationinstancesandmonitoreduserexperiencesonoveramillionwebsitedomainsandfromoveronebillionmobileapplicationinstalls.AsofSeptember30,2014,wehadover250,000users.Wedefine auser as an email address associatedwith an account thathasdeployedoursoftwarecode,calledagents,andfromwhichwereceivedatafromatleastoneapplication.AsofSeptember30,2014,wehad10,590paidbusinessaccounts.

Software has become critical to businesses and consumers worldwide, from online retailing to social networking tocustomer relationshipmanagement.This software is found in applications and throughout the architecturesonwhich thoseapplicationsrun:servers,websites,operatingsystems,mobiledevices,andotherITassets.Theuseofthissoftwaregenerateshuge volumes of data, but historically, organizations collected and analyzed only a small fraction of this data due totechnologyandbusinessconstraints.Legacysoftwareproductswere typicallycustomized,expensive, required training,andwerethuslimitedtobusinesscriticalapplicationswithinlargeorganizations.Asaresult,thevastmajorityofsoftwaredatahasbeenunderutilized.

We saw the opportunity for Software Analytics to empower technology and business users to make use of thisunderutilizedsoftwaredata.Weprovidedeveloperswithouragentstoaddtotheirapplicationsandinfrastructurequicklyandeasily. Our cloudbased, big data database collects and organizes our users data for analysis through a simple dashboardinterface that users can easily configure tomonitor their keymetrics and quicklymake queries using simple phrases. Ourintuitiveandfrictionlessproductdesignresultsinusersbeingabletoquicklyreceiveanalysisoftheirdata.Withthisvisibility,developerscansignificantlyimprovethequalityoftheirsoftware,andbusinessandtechnologyuserscangetrealtimeinsightsintotheirdata.

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jziemannSticky NotePaid Users and Data Points- 690Bn datapoints a daycomprised of 4MM app instances, 1 million web domains, and 1 bn mobile app installs- 250K users, 10,590 paid



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OurSoftwareAnalyticssolutioniscomprisedofanintegratedsuiteofproducts,abigdatadatabase,andanopenplatform.Allofourproductshaveasimpleuserinterface,andrequireminimaltrainingorintegration.Ourproductsfortechnologyusersfocuson softwareperformancemanagement andmonitoring and consist ofNewRelicAPM,NewRelicMobile,NewRelicServers,NewRelicBrowser,andNewRelicSynthetics.NewRelicInsightsprovidesbigdataanalyticstobothbusinessandtechnologyusers that enable them to easily extract actionable information from themassivequantitiesofunstructured andstructured data flowing through their software. New Relic Platform offers a plugin architecture including applicationprogramminginterfaces,orAPIs,andsoftwaredevelopmentkits,orSDKs,forcustomersandpartnerstoembedandextendoursolution into their products. Today, there are over 475 New Relic Platform plugins to extend our functionality to otherapplicationsandinfrastructures.

Ourgotomarketstrategycombinesgrassrootsuseradoptionwithbothlowtouchandhightouchsalesapproaches.Ourproductsareeasytodownloadanduse,whichhasallowedustobuildalargebaseofusersandsmallerorganizationswithoutanenterprisesalesorganization.Wearebuildingadirectenterprisesalesandsupportoperationinordertobettermarkettoandsupporttheselargerorganizations,whichrepresentagrowingportionofourrevenue.

Wehaveachievedrapidcustomeradoption,highcustomerretention,andsignificantgrowthsinceourfounding.Forourfiscal years ended March 31, 2012, 2013, and 2014, our revenue was $11.7 million, $29.7 million, and $63.2 million,respectively,representingyearoveryeargrowthof154%fromthefiscalyearendedMarch31,2012tothefiscalyearendedMarch31,2013,and113%fromthefiscalyearendedMarch31,2013tothefiscalyearendedMarch31,2014.ForthesixmonthsendedSeptember30,2013and2014,ourrevenuewas$26.1millionand$48.0million,respectively,representingyearoveryear growth of 83%.We had net losses of $7.5million, $22.5million, and $40.2million for our fiscal years endedMarch31,2012,2013,and2014,respectively,and$18.6millionand$19.4millionforthesixmonthsendedSeptember30,2013and2014,respectively.IndustryBackground

ImportanceofSoftwareforBusinessesandConsumers Softwarehasbecomeacentralelementofbusinessandconsumerlife.Businessesrelyupontheirsoftwareapplicationstointeractwiththeircustomers,employees,andpartnerstoincreaserevenueandimproveoperationalefficiency.Businessesandconsumersusesoftwareonavarietyofdevicesinmoreoftheirdaytodayactivities.Usersincreasinglyexpecttheirsoftwaretobefastandreliable,andtheycanquicklyreplacetheapplicationstheyuseiftheyareunsatisfiedwiththeirexperience.

AdventofCloudArchitecturesandSaaS Historically, legacy onpremise architectures required companies to purchase and maintain the complete IT stackincludingstorage,servers,networking,andapplications.Incontrast,cloudarchitecturesenablecompaniestosubscribeforandaccess computing resources as needed. This has provided a wide range of economic and technology benefits includingapplicationsthatareeasiertodeploy,maintain,use,andintegrate.

ExplosionofMobility Thegreatlyincreasedfunctionalityofsmartphonesandtablets,andtheubiquityofhighbandwidthInternetaccess,haveled to an explosion in mobile devices and mobile applications. These devices and the applications they run need to besupportedbycompletelynewsoftwarearchitecturesthatarefundamentallydifferentandseparatefromlegacy,onpremiseITarchitectures.Mobilityhasincreasedpressuresonsoftwareperformanceandgreatlyexpandedthevariety,velocity,andvolumeofdataavailableforanalysis.

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GrowingImportanceofDevelopers Theincreasingubiquityofsoftwarehasledtogreaterimportanceandrolesforthedeveloperswhobuildandmaintainthatsoftware.Thesedevelopersare increasinglyable tocreateand influencemajor technology trendssuchasadoptionofcloudarchitectures,opensource,andnewprogramminglanguagesandframeworkstoimprovethetimetomarketandperformanceoftheirapplications.

EmergenceofBigDataTechnologiesforUnstructuredandStructuredData Historically,companieshavereliedononpremisedatabasesfromvendorssuchasOracle,IBM,andMicrosoft.Overthepastfewyears,awidevarietyoftechnologieshavebeenintroducedtogreatlyincreasetheabilitytocollectandanalyzetherapidly growing variety, velocity, and volume of data, commonly referred to as big data. Today, an increasing number ofcompaniesareinvestingintechnologyandpersonneltogainacompetitiveadvantageusingbigdatatoenablerealtime,datadrivendecisions.

NewComplexitiesforTechnologyUsers,BusinessUsers,andSoftwareDevelopers Businessandconsumerapplicationsarerunningonbothcloudandlegacyarchitecturesandarebuiltwithamultitudeofprogramming languages.This has created significant challenges and complexities for technologyusers, businessusers, andsoftwaredevelopers.Thesuccessorfailureofbusinessesisincreasinglydeterminedbytheavailability,accessibility,responsetime,andqualityoftheirusersexperience.OurSolution WehavedevelopedourSoftwareAnalyticssuiteofproducts,bigdatadatabase,andopenplatformtohelptechnologyandbusinessusersmakerealtime,datadrivendecisionstoimprovebusinessandITperformance.Inaddition,developerscanbuildbetter software, build it faster, and keep it running optimally for enduser experiences. Our solution collects, stores, andanalyzesvastquantitiesofunstructuredandstructureddataflowingthroughandaboutouruserssoftware.Wecurrentlyofferanintegratedsuiteofsevenproductsthatwecontinuetoenhanceandexpand: NewRelicAPM:Applicationperformancemanagement NewRelicMobile:Mobileapplicationperformancemanagement NewRelicServers:Servermonitoringforcloudanddatacenters NewRelicBrowser:Enduserexperiencemonitoringandperformancemonitoring NewRelicSynthetics:Softwaretestingthroughsimulatedusage NewRelicPlatform:Platformthatextendsourfunctionalityintootherapplications NewRelicInsights:Realtimebigdataanalyticsforbusinessmanagers

Thissuiteofproductsusesacommoninfrastructuretoenablecustomersto:

Collect. Our intelligent agents are software code that developers can easily deploy. These agents configure

automatically to theirparticular ITenvironment andcollect and sendevent andperformancedata securely toourproprietaryclouddatabase.

Store.Datacollectedfromouragentsisstoredinourhighlysecureandscalablecloudbased,bigdatadatabase.Our

databasehasbeenoptimizedtostoreunstructuredandstructureddataaswellashandletheanalyticsandqueriesthatwebelieveareimportanttodrivedecisionmaking.

Analyze. Our simple and intuitive user interface consists of a dashboard of graphical charts for key performanceindicators,whichareeasilyconfigurableandenabledeepdrilldownandrootcause

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analysis. Our New Relic Insights product also includes a field for realtime adhoc queries with correspondinganswersinarangeofvisualandgraphicalformats.Wealsointendtoreleaseplatformfeaturesthatenableuserstocreateandpublishcustomizeddataappsandmakethemavailabletonontechnicalbusinessusers.

KeyElementsofOurSolution

BuiltonCloudArchitecture.WedesignedourproductsbasedonacloudarchitectureandaSaaSdeliverymodel.We

areable toprovide frequentupdates toour softwareenablingus tocontinuously improve it to reflect technologydevelopments.

FlexibilitytoManageCloud,Hybrid,andOnPremiseArchitectures.Inadditiontomoderncloudarchitectures,our

SaaSsolutioncanalsomanagehybridcloudandheterogeneousarchitectures,includingonpremisesoftware.UsersareabletorapidlydeployouragentsgloballyacrosstheirITenvironment.

BuiltforModernSoftware.Wesupportabroadrangeofsoftwaredevelopmentlanguagesandframeworksaswellas

mobile operating systems. Our agents are easily embedded into applications built using all of these languages,withouttheneedforcustomizedcoding.

MobileEnabled.WeprovideanativemobileversionofourSoftwareAnalyticsproductswithnearlyallfunctionality

accessibleandusablethroughmobiledevices.Ourproductsaredesignedtoanticipateandhandlethecomplexityofmobilearchitectures,suchasmobilecarrierperformanceanduserlocation.

BigDataDatabaseandAnalytics.Ourproprietary, cloudbaseddatabase leveragesmodernbigdata technologies

thatenablecollectionandstorageofbillionsofeventsandmetricseachday.Ourdatabasestructureallowscustomerstoeasilybuilddashboardsormakequeriestodeliverrealtimeinsights.

EasyandIntuitive.Wedesignourproductstobesimple,intuitive,anduserfriendly.Usersareabletolearn,deploy,andbeginusingourproductswithminimalornotraining,oftenwithinafewminutes.

LowTotalCostofOwnership.Wepriceourproductsonamonthlysubscriptionbasis,withflexiblepricingplansso

eachcustomerisonlypayingfortheproductsandusagetheyareconsuming.Ourcustomersdonotneedtoinvestinadditionalhardware,infrastructure,orservicestoutilizeourproducts.

IntegratedSuite.Oursuitecurrentlyconsistsofsevenproductsthatareintegrated,shareacommondesignanduser

interface,andaccess thesamecloudbaseddatabasestructure.Userscanmoveseamlesslyamongdifferentanalyticcategoriesandusecasesfortheirsoftwaredata.

ExtensiblePlatform.WeprovideAPIsandSDKsforcustomers,partners,anddeveloperstoeasilybuildapplicationswhichintegratewithandembedourproductfunctionalityintootherapplications.

EnterpriseScalabilityandSecurity.Ourproductsaredesignedtobescalableandsecure.AsofSeptember30,2014,wecollected,stored,andanalyzedover690billiondatapointsperday.Bydefault,oursoftwaredatatransmissionsareencryptedintransitandstoredinoursecuretier3SSAE16certifieddatacenter.WealsoperformanannualSOC2type2audit.

BenefitsofOurSolution

TechnologyUsers.Technologyuserscanmorerapidlyidentifyproblems,isolaterootcauses,andaddressproblems.Ouranalyticstoolsalsoenablethemtopredictandpreventfutureissues.

BusinessUsers.Businessuserscanuseourproductstoobtainrealtimeanalyticsabouttheirbusiness.

Software Developers. Software developers can use our products to better monitor software performance tocontinuouslyimproveitaswellasfixandpreventproblems.

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OurMarketOpportunity For technologyusers,we believeGartners category of ITOperationsManagement, or ITOM, captures a subset of ourmarketopportunity.AccordingtoGartner,Inc.,aglobalmarketresearchfirm,theworldwideITOMmarketwas$19.1billionin2013andisprojectedtogrowto$27.9billionin2018.Webelievethisgenerallycapturesthepurchasesbylargerenterprisesofexistinglegacysolutions,butdoesnot includetheopportunitywithsmallerenterprisesthatcannotaffordsuchsolutionsorpotentialdeploymentsbylargerenterprisesmadefeasiblebyemergingsolutionslikeours.

Webelieveourmarketopportunitywithbusinessusersislargelyuntapped.AccordingtoGartner,theworldwidemarketforbusinessintelligencesoftwarewas$14.4billionin2013andisprojectedtogrowto$21.9billionin2018.However,webelievethemajorityofourmarketopportunitywithbusinessusersexistswithusecasesforwhichaviablesolutionhasnotbeenhistoricallyavailable.OurGrowthStrategy

MaintainOurTechnologyLeadership.WewillcontinuetoinvestinbuildingtheSoftwareAnalyticscategory.Weplantocontinuetoimproveourexistingproductsaswellasdevelopnewproducts.

DeepenExistingCustomerRelationships.Wehaveobservedthatouraccountstypicallymakeaninitialpurchasefor

aspecificandimmediateneedandthensubsequentlyexpandtoadditionalusersorapplications.Wemakeitsimpleforpotentialandexistingaccountstotrynewapplications.

GrowOurBaseofLargeandSmallCustomers.Weplan to growour base of paid business accounts from larger

businesses through our direct sales organization.We also plan to grow our base of paid business accounts fromsmallerbusinessesbycontinuingourmarketingandsalesprograms,partnerships,andgrassrootsadoption.

IncreaseOurFootprint.Wecurrentlyofferandplantocontinueofferingfreeversionsofourproductssocustomerscontinuetospreadourfootprintrapidlyandglobally.

ExpandOurPlatformandEcosystem.WeintendtoexpandourofferingofAPIsandSDKsthatallowspartners to

easilyintegratewithotherapplicationsandservicesaswellascombineourapplicationperformanceandeventdatawithinformationfromothersources.

ExtendOur InternationalFootprint.We are increasingly investing in our international operations and intend toinvestinfurtherexpandingourfootprintininternationalmarkets.

RisksAssociatedWithOurBusiness Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled RiskFactorsimmediatelyfollowingthisprospectussummary.Someoftheserisksare:

wehaveahistoryoflossesandweexpectourrevenuegrowthratetodecline,andasourcostsincrease,wemaynotbeabletogeneratesufficientrevenuetoachieveandsustainprofitability

wehavealimitedoperatinghistory

ifwearenotabletomanageourgrowthandexpansion,orifourbusinessdoesnotgrowasweexpect,ouroperatingresultsmaysuffer

ourquarterlyresultsmayfluctuate,andourstockpriceandthevalueofyourinvestmentcoulddeclinesubstantially

ourbusinessdependsonourcustomerspurchasingadditionalsubscriptionsandproductsfromusandrenewingtheirsubscriptions

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if we are not able to develop enhancements to our products, increase adoption and usage of our products, and

introducenewproductsthatachievemarketacceptance,ourbusinesscouldbeharmed

ifcustomersdonotexpandtheiruseofourproductsbeyondthecurrentpredominantusecases,ourabilitytogrowourbusinessandoperatingresultsmaybeadverselyaffectedand

upon the closing of this offering, our directors, officers, and principal stockholders will beneficially own in the

aggregateapproximately70.0%ofouroutstandingvotingstockandwillbeable toexert significantcontrolovermatterssubjecttostockholderapproval.

CorporateInformation Wewere formed inDelaware in September 2007 asNewRelic Software,LLC.We converted from aDelaware limitedliability company to a Delaware corporation and changed our name to New Relic, Inc. in February 2008. Our principalexecutiveofficesare locatedat188SpearStreet,Suite1200,SanFrancisco,California94105,andour telephonenumber is(650) 7777600. Our website address iswww.newrelic.com. Information contained on or that can be accessed through ourwebsitedoesnotconstitutepartofthisprospectusandinclusionsofourwebsiteaddressinthisprospectusareinactivetextualreferencesonly.

NewRelic,theNewReliclogo,andothertrademarksorservicemarksofNewRelicappearinginthisprospectusareourproperty.Thisprospectuscontainsadditionaltradenames,trademarks,andservicemarksofothercompanies.Wedonotintendouruseordisplayofothercompaniestradenames,trademarks,orservicemarkstoimplyarelationshipwith,orendorsementorsponsorshipofusby,theseothercompanies.ImplicationsofBeinganEmergingGrowthCompany As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an emerging growthcompanyasdefinedintheJumpstartOurBusinessStartupsActof2012,ortheJOBSAct.Anemerginggrowthcompanymaytakeadvantageofspecifiedreducedreportingrequirementsthatareotherwiseapplicablegenerallytopubliccompanies.Theseprovisionsinclude:

anexemptionfromcompliancewiththeauditorattestationrequirementontheeffectivenessofourinternalcontroloverfinancialreporting

an exemption fromcompliancewith any requirement that thePublicCompanyAccountingOversightBoardmay

adopt regarding mandatory audit firm rotation or a supplement to the auditors report providing additionalinformationabouttheauditandthefinancialstatements

reduceddisclosureaboutourexecutivecompensationarrangementsand

exemptionsfromtherequirementstoobtainanonbindingadvisoryvoteonexecutivecompensationorastockholderapprovalofanygoldenparachutearrangements.

Wewillremainanemerginggrowthcompanyuntiltheearliesttooccurof:thelastdayofthefiscalyearinwhichwehave

morethan$1.0billioninannualrevenuethedatewequalifyasalargeacceleratedfiler,withatleast$700millionofequitysecuritiesheldbynonaffiliatestheissuance,inanythreeyearperiod,byusofmorethan$1.0billioninnonconvertibledebtsecuritiesandthelastdayofthefiscalyearendingafterthefifthanniversaryofourinitialpublicoffering.Wemaychoosetotakeadvantageofsome,butnotall,oftheavailablebenefitsundertheJOBSAct.WearechoosingtoirrevocablyoptoutoftheextendedtransitionperiodsavailableundertheJOBSActforcomplyingwithneworrevisedaccountingstandards,butweintend to take advantage of the other exemptions discussed above.Accordingly, the information contained hereinmay bedifferentthantheinformationyoureceivefromotherpubliccompaniesinwhichyouholdstock.

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THEOFFERINGCommonstockofferedbyus 5,000,000sharesCommonstocktobeoutstandingafterthisoffering 46,095,833sharesOverallotmentoptionofferedbyus 750,000sharesUseofproceeds Weestimatethatthenetproceedsfromthesaleofsharesof

ourcommonstockthatwearesellinginthisofferingwillbeapproximately $85.6 million (or approximately $98.9million if the underwriters overallotment option isexercised in full), based upon an assumed initial publicofferingpriceof$19.00pershare,whichis themidpointofthepricerangesetforthonthecoverpageofthisprospectus,and after deducting estimated underwriting discounts andcommissionsandestimatedofferingexpenses.

The principal purposes of this offering are to increase ourcapitalization and financial flexibility, create a publicmarketforourcommonstock,therebyenablingaccesstothepublic equitymarkets by our employees and stockholders,obtain additional capital, and increase our visibility in themarketplace.Weintendtousethenetproceedsreceivedfromthis offering for general corporate purposes, includingheadcount expansion,working capital, sales andmarketingactivities, productdevelopment, general andadministrativematters,andcapitalexpenditures.SeeUseofProceeds.

Concentrationofownership Upontheclosingofthisoffering,ourexecutiveofficersand

directors and stockholders holding more than 5% of ourcapitalstock,andtheiraffiliates,willbeneficiallyown,intheaggregate,approximately70.0%ofouroutstandingsharesofcommonstock.

ProposedNewYorkStockExchangetradingsymbol NEWR

The number of shares of common stock that will be outstanding after this offering is based on 41,095,833 sharesoutstandingasofSeptember30,2014,andexcludes:

8,251,617sharesofcommonstockissuableupontheexerciseofstockoptionsoutstandingasofSeptember30,2014,withaweightedaverageexercisepriceof$7.81pershare

28,000sharesofcommonstockissuableupontheexerciseofaconvertiblepreferredstockwarrantoutstandingasofSeptember30,2014,withanexercisepriceof$0.50pershare

777,450sharesofcommonstockissuableupontheexerciseofstockoptionsgrantedafterSeptember30,2014,withanexercisepriceof$19.00pershare(whichdoesnotincludethestockoptionsandrestrictedstockunitsdescribedbelowthatwillbegrantedonthedatethattheregistrationstatementofwhichthisprospectusformsapartisdeclaredeffective)

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approximately1,194,000sharesofcommonstocktobeissuedupontheexerciseofstockoptions,withanexercise

price equal to the initial public offeringprice, or thatwill be subject to vestingof restricted stockunits, thatweexpecttograntonthedatethattheregistrationstatementofwhichthisprospectusformsapartisdeclaredeffective

108,234sharesofcommonstockissuedafterSeptember30,2014,andupto141,766additionalsharesofcommonstockthatmaysubsequentlybeissued,inconnectionwithouracquisitionofFewDucks,S.L.,orDucksboard

5,618,383sharesofourcommonstocktobereservedforfutureissuanceunderour2014EquityIncentivePlan,or2014Plan(which(i)includes618,383sharesofcommonstockasofSeptember30,2014reservedforfuturegrantsunderour2008EquityIncentivePlan,or2008Plan,(ii)doesnotreflectthestockoptionsandrestrictedstockunitsgranted after September 30, 2014, as described above, and (iii) excludes an increase to the 2008 Plan reserve of1,600,000sharesofcommonstockinNovember2014,whichshares,inthecaseof(i)and(iii),willbeaddedtothesharesreservedforfutureissuanceunderour2014Planuponeffectivenessofthatplanifthesharesarenotissuedorsubjecttooutstandinggrantsunderthe2008Planatthattime),whichwillbecomeeffectiveatthetimeofexecutionoftheunderwritingagreementforthisofferingandcontainsprovisionsthatautomaticallyincreaseitssharereserveeachyear,asmorefullydescribedinExecutiveCompensationEquityIncentivePlansand

1,000,000 shares of common stock reserved for issuanceunder our 2014EmployeeStockPurchasePlan, or 2014

ESPP,whichwillbecomeeffectiveupontheeffectivenessoftheregistrationstatementofwhichthisprospectusformsapart,andwhichcontainsprovisionsthatautomaticallyincreaseitssharereserveeachyear.

Exceptasotherwiseindicated,allinformationinthisprospectusreflectsandassumes:

theconversionofalloutstandingsharesofourconvertiblepreferredstockasofSeptember30,2014intoanaggregateof 24,931,796 shares of common stock immediately upon the closing of this offering, assuming an initial publicoffering price of $19.00 per share, which is the midpoint of the price range set forth on the cover page of thisprospectus,andgivingeffecttotheconversionpriceadjustmentrelatingtoourSeriesFconvertiblepreferredstockdescribedinDescriptionofCapitalStock

the conversion of an outstanding warrant to purchase 28,000 shares of our convertible preferred stock as of

September30,2014intoawarranttopurchasethesamenumberofsharesofcommonstockupontheclosingofthisoffering

noexerciseofoutstandingoptionsorwarrantsafterSeptember30,2014,exceptforthenetexerciseofanoutstandingwarrantforanaggregateof10,362sharesofcommonstockassuminganinitialpublicofferingpriceof$19.00pershare,whichisthemidpointofthepricerangesetforthonthecoverpageofthisprospectus,upontheclosingofthisoffering

the filing and effectiveness of our amended and restated certificate of incorporation and the effectiveness of ouramendedandrestatedbylaws,eachofwhichwilloccurinconnectionwiththeclosingofthisofferingand

noexercisebytheunderwritersoftheiroptiontopurchaseuptoanadditional750,000sharesofcommonstockfromustocoveroverallotments.

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SUMMARYCONSOLIDATEDFINANCIALDATA

Thefollowingtablessummarizeourhistoricalconsolidatedfinancialdata.WehavederivedtheconsolidatedstatementsofoperationsdataforthefiscalyearsendedMarch31,2012,2013,and2014andtheconsolidatedbalancesheetdataasofMarch31, 2014 from our audited consolidated financial statements included elsewhere in this prospectus. The consolidatedstatementsofoperationsdataforthesixmonthsendedSeptember30,2013and2014andtheconsolidatedbalancesheetdataasofSeptember30,2014arederivedfromourunauditedconsolidatedfinancialstatementsthatareincludedelsewhereinthisprospectus.Wehavepreparedtheunauditedconsolidatedfinancialstatementsonthesamebasisastheauditedconsolidatedfinancialstatementsandhaveincludedalladjustments,consistingonlyofnormalrecurringadjustments,whichinouropinionarenecessary to state fairly the financial information set forth in those statements.Ourhistorical results arenotnecessarilyindicativeoftheresultsweexpectinthefuture,andourinterimresultsarenotnecessarilyindicativeoftheresultsweexpectforthefullfiscalyearoranyotherperiod.Thefollowingsummaryofconsolidatedfinancialdatashouldbereadinconjunctionwith the section titledManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsandourconsolidatedfinancialstatementsandrelatednotesincludedelsewhereinthisprospectus.

YearEndedMarch31, SixMonthsEndedSeptember30,

2012 2013 2014 2013 2014 (inthousands,exceptpersharedata) ConsolidatedStatementsofOperationsData: Revenue $11,663 $ 29,664 $ 63,174 $ 26,146 $ 47,974Costofrevenue 1,904 5,078 10,780 4,467 9,061Grossprofit 9,759 24,586 52,394 21,679 38,913Operatingexpenses:

Researchanddevelopment 4,300 8,565 16,496 7,734 10,248Salesandmarketing 10,748 28,365 58,156 25,007 37,635Generalandadministrative 2,180 10,053 17,178 7,161 10,609

Totaloperatingexpenses 17,228 46,983 91,830 39,902 58,492Lossfromoperations (7,469) (22,397) (39,436) (18,223) (19,579)Otherincome(expense):

Interestincome 2 9 16 10 12Interestexpense (10) (48) (64) (34) (29)Other(expense)income,net (65) (105) (741) (322) 201

Netloss $ (7,542) $(22,541) $(40,225) $(18,569) $(19,395)Netlosspershareattributabletocommonstockholders,

basicanddiluted $ (0.51) $ (1.49) $ (2.58) $ (1.20) $ (1.22)Weightedaveragesharesusedtocomputenetlosspershare

attributabletocommonstockholders,basicanddiluted 14,683 15,096 15,596 15,515 15,917Proformanetlosspershareattributabletocommon

stockholders,basicanddiluted $ (1.07) $ (0.48)Proformaweightedaveragesharesusedtocomputenetloss

pershareattributabletocommonstockholders,basicanddiluted 37,082 40,859

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(1) Includesstockbasedcompensationexpenseasfollows:

YearEndedMarch31, SixMonthsEndedSeptember30,

2012 2013 2014 2013 2014 (inthousands) Costofrevenue $ 11 $ 212 $ 159 $ 58 $ 194Researchanddevelopment 126 1,620 1,425 988 457Salesandmarketing 143 2,060 1,373 390 1,904Generalandadministrative 323 4,794 3,263 2,003 1,611Totalstockbasedcompensationexpense $ 603 $ 8,686 $ 6,220 $ 3,439 $ 4,166(2) Seenote12of thenotes toourconsolidatedfinancialstatements foradescriptionofhowwecomputenet losspershareattributable tocommonstockholders,basic

anddiluted,andproformanetlosspershareattributabletocommonstockholders,basicanddiluted. AsofSeptember30,2014

Actual Pro

Forma ProFormaAsAdjusted

(inthousands) ConsolidatedBalanceSheetData: Cashandcashequivalents $ 92,370 $ 92,370 $ 177,985Workingcapital 82,255 82,255 167,870Totalassets 143,462 143,462 229,077Deferredrevenue 15,732 15,732 15,732Convertiblepreferredstockwarrantliability 578 Convertiblepreferredstock 193,160 Totalstockholders(deficit)equity (79,015) 114,723 200,338(1) The pro forma column in the consolidated balance sheet data table above reflects (i) the automatic conversion of all outstanding shares of our convertible preferred

stockasofSeptember30,2014intoanaggregateof24,931,796sharesofcommonstockwhichconversionwilloccurimmediatelyupontheclosingofthisoffering,assuminganinitialpublicofferingpriceof$19.00pershare,whichisthemidpointofthepricerangesetforthonthecoverpageofthisprospectus,andgivingeffecttotheconversionpriceadjustmentrelatingtoourSeriesFconvertiblepreferredstockdescribedinDescriptionofCapitalStock,(ii)theresultingreclassificationofthe preferred stockwarrant liability to additional paidin capital, and (iii) the net exercise of an outstandingwarrant into an aggregate of 10,362 shares of commonstockupon theclosingof thisoffering,assumingan initialpublicofferingpriceof$19.00pershare,which is themidpointof thepricerangeset forthon thecoverpageofthisprospectus,asifsuchconversion,reclassification,andnetexercisehadoccurredonSeptember30,2014.

(2) Thepro formaasadjustedcolumngiveseffect to (i) thepro formaadjustments set forthaboveand (ii) the saleand issuancebyusof5,000,000sharesofcommonstock in this offering at an assumed initial public offering price of $19.00 per share, which is themidpoint of the price range set forth on the cover page of thisprospectus,afterdeductingtheestimatedunderwritingdiscountsandcommissionsandestimatedofferingexpenses.

(3) Each$1.00increaseordecreaseintheassumedinitialpublicofferingpriceof$19.00pershare,whichisthemidpointofthepricerangesetforthonthecoverpageofthisprospectus,wouldincreaseordecrease,asapplicable,thecashandcashequivalents,workingcapital, totalassets,andtotalstockholders(deficit)equityby$4.7million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimatedunderwritingdiscountsandcommissions.Theproformaasadjustedinformationpresentedintheconsolidatedbalancesheetdata is illustrativeonlyandwillchangebasedontheactualinitialpublicofferingpriceandothertermsofthisofferingdeterminedatpricing.

(4) Does not reflect our acquisition ofDucksboard for $2.3million in cash and 108,234 shares of our common stock inOctober 2014, and up to 141,766 additionalsharesofourcommonstockthatmaysubsequentlybeissuedinconnectionwiththeacquisition.

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RISKFACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertaintiesdescribedbelow,togetherwithalloftheotherinformationinthisprospectus,includingourconsolidatedfinancialstatementsandrelatednotes,beforeinvestinginourcommonstock.Ifanyofthefollowingrisksarerealized,inwholeorinpart,ourbusiness,financialcondition,resultsofoperations,andprospectscouldbemateriallyandadverselyaffected.Inthatevent,thepriceofourcommonstockcoulddecline,andyoucouldlosepartorallofyourinvestment.RisksRelatedtoOurBusinessWehaveahistoryof losses andwe expect our revenuegrowth rate to decline.Asour costs increase,wemaynot beable togeneratesufficientrevenuetoachieveandsustainprofitability. Wehaveincurrednetlossesineachfiscalperiodsinceourinception,includingnetlossesof$7.5million,$22.5million,and$40.2millioninthefiscalyearsendedMarch31,2012,2013,and2014,respectively,and$18.6millionand$19.4millioninthesixmonthsendedSeptember30,2013and2014,respectively.Wehadanaccumulateddeficitof$100.8millionatSeptember30,2014.Weexpecttocontinuetoexpendsubstantialfinancialandotherresourceson,amongotherthings: investmentsinourresearchanddevelopmentteam,andthedevelopmentofnewproducts,features,andfunctionality

salesandmarketing,includingexpandingourdirectsalesorganizationandmarketingprograms,particularlyforlargercustomers

expansionofouroperationsandinfrastructure,bothdomesticallyandinternationally hiringofadditionalemployeesand generaladministration,includinglegal,accounting,andotherexpensesrelatedtobeingapubliccompany.

Theseinvestmentsmaynotresultinincreasedrevenueorgrowthofourbusiness.Wealsoexpectthatourrevenuegrowthratewilldeclineovertime.Accordingly,wemaynotbeabletogeneratesufficientrevenuetooffsetourexpectedcostincreasesandtoachieveandsustainprofitability.Ifwefailtoachieveandsustainprofitability,ouroperatingresultsandbusinesswouldbeharmed.Wehavealimitedoperatinghistory,whichmakesitdifficulttoevaluateourcurrentbusinessandfutureprospectsandincreasestheriskofyourinvestment. Wewerefoundedin2007andlaunchedourfirstcommercialproductin2008.Thislimitedoperatinghistorylimitsourabilitytoforecastourfutureoperatingresultsandsubjectsustoanumberofuncertainties, includingourabilitytoplanforandmodelfuturegrowth.Ourhistoricalrevenuegrowthshouldnotbeconsideredindicativeofourfutureperformance.Wehaveencounteredandwillencounterrisksanduncertaintiesfrequentlyexperiencedbygrowingcompaniesinrapidlychangingindustries,suchasdeterminingappropriate investmentsofour limited resources,marketadoptionofourexistingand futureproducts, competitionfromothercompanies,acquiringandretainingcustomers,hiring,integrating,trainingandretainingskilledpersonnel,developingnewproducts,determiningpricesforourproducts,unforeseenexpenses,andchallengesinforecastingaccuracy.Ifourassumptionsregardingtheserisksanduncertainties,whichweusetoplanourbusiness,areincorrectorchange,orifwedonotaddresstheseriskssuccessfully,ouroperatingandfinancialresultsandourbusinesscouldsuffer.

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Wehaveexperiencedrapidgrowthinrecentperiodsandexpectourgrowthtocontinue.Ifwearenotabletomanagethisgrowthandexpansion,orifourbusinessdoesnotgrowasweexpect,ouroperatingresultsmaysuffer. Wehaveexperiencedrapidgrowthinourcustomerbaseandhaveexpandedandintendtocontinuetosignificantlyexpandouroperations.Forexample,ouremployeeheadcounthasincreasedfrom315employeesasofSeptember30,2013to534asofSeptember 30, 2014, and we expect our headcount to continue to grow significantly. Our number of paid business accountsincreased from 7,552 to 10,590 over the same period. In addition, we have established operations in Ireland and the UnitedKingdom,and,asaresultoftheacquisitionofDucksboard,wealsohaveasubsidiaryinSpain.Thisrapidgrowthhasplaced,andwillcontinuetoplace,significantdemandsonourmanagementandouroperational,financialinfrastructure,andcompanyculture.

Tomanage thisgrowtheffectively,wemust continue to improveouroperational, financial, andmanagement systemsandcontrolsby,amongotherthings:

effectively attracting, training, and integrating a large number of new employees, particularly members of ourmanagementandsalesteams

further improvingour key business systems, processes, and information technology infrastructure, includingour datacenter,tosupportourbusinessneeds

enhancing our information and communication systems to ensure that our employees are wellcoordinated and caneffectivelycommunicatewitheachotherandourcustomersand

improving our internal control over financial reporting and disclosure controls and procedures to ensure timely andaccuratereportingofouroperationalandfinancialresults.

Ifwefailtomanageourexpansion,implementandtransitiontoournewsystems,orifwefailtoimplementimprovementsor

maintaineffectiveinternalcontrolsandprocedures,ourcostsandexpensesmayincreasemorethanweplanandwemaylosetheability to expand our customer base, enhance our existing solutions, develop new solutions, satisfy our customers, respond tocompetitivepressures,orotherwiseexecuteourbusinessplan.Ifweareunabletomanageourgrowth,ouroperatingresultslikelywillbeharmed.Ourquarterlyresultsmayfluctuate,andifwefailtomeettheexpectationsofanalystsorinvestors,ourstockpriceandthevalueofyourinvestmentcoulddeclinesubstantially. Ourquarterlyfinancialresultsmayfluctuatewidelyasaresultoftherisksanduncertaintiesdescribedinthisprospectus,manyofwhich are outside of our control. If our quarterly financial results fall below the expectations of investors or any securitiesanalystswhofollowourstock,thepriceofourcommonstockcoulddeclinesubstantially.

Webelievethatquartertoquartercomparisonsofourrevenue,operatingresults,andcashflowsmaynotbemeaningfulandshouldnotberelieduponasanindicationoffutureperformance.Ifourrevenueoroperatingresultsfallbelowtheexpectationsofinvestorsorsecuritiesanalystsinaparticularquarter,orbelowanyguidancewemayprovide,thepriceofourcommonstockcoulddecline.Our business depends on our customers purchasing additional subscriptions and products from us and renewing theirsubscriptions.Anydeclineinourcustomerexpansionsandrenewalswouldharmourfutureoperatingresults. Ourfuturesuccessdependsinpartonourabilitytosellmoresubscriptionsandadditionalproductstoourcurrentcustomers.Ifourcustomersdonotpurchaseadditionalsubscriptionsandproductsfromus,ourrevenuemaydeclineandouroperatingresultsmaybeharmed.

Inaddition, inorder forus tomaintainor improveouroperating results, it is important thatourcustomersenter intopaidsubscriptionsandrenewtheirsubscriptionswhenthecontracttermexpires.Thelargemajorityofourcustomersstarttheiraccountsonafreetrialandhavenoobligationtobeginapaidsubscription.Our

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customersthatenterintopaidsubscriptionshavenoobligationtorenewtheirsubscriptionsaftertheexpirationoftheirsubscriptionperiod,which is typically onemonth to one year. In addition, our customersmay renew for lower subscription amounts or forshortercontractlengths.Someofourcustomershaveelectednottorenewtheiragreementswithusandwecannotaccuratelypredictfuturenetexpansionrates.Moreover,manyofourcustomerswithannualsubscriptionshavetherighttocanceltheiragreementswiththreemonthsnoticepriortotheexpirationofthesubscriptionterm.

Ourcustomerexpansionsandrenewalsmaydeclineorfluctuateasaresultofanumberoffactors,including:customerusage,customer satisfaction with our products and customer support, our prices, the prices of competing products, mergers andacquisitionsaffectingourcustomerbase,theeffectsofglobaleconomicconditions,orreductionsinourcustomersspendinglevelsgenerally.Thesefactorsmayalsoincreaseasourcustomerbasegrowstoencompasslargerenterprises.Ifwearenotabletodevelopenhancementstoourproducts, increaseadoptionandusageofourproducts,andintroducenewproductsthatachievemarketacceptance,ourbusinesscouldbeharmed. Our ability to attract newcustomers and increase revenue fromexisting customersdepends in largepart onour ability toenhanceandimproveourexistingproducts,increaseadoptionandusageofourproducts,andintroducenewproducts.Thesuccessof any enhancement or new products depends on several factors, including timely completion, adequate quality testing,introduction, and market acceptance. Any new products that we develop may not be introduced in a timely or costeffectivemanner,maycontainerrorsordefects,ormaynotachievethebroadmarketacceptancenecessarytogeneratesufficientrevenue.Ifweareunable tosuccessfullyenhanceourexistingproducts tomeetcustomerrequirements, increaseadoptionandusageofourproducts,ordevelopnewproducts,ourbusinessandoperatingresultswillbeharmed.Ifcustomersdonotexpandtheiruseofourproductsbeyondthecurrentpredominantusecases,ourabilitytogrowourbusinessandoperatingresultsmaybeadverselyaffected. Mostofourcustomerscurrentlyuseourproductstosupportapplicationperformancemanagementfunctions,andthemajorityofourrevenuetodatehasbeenfromourapplicationperformancemanagementproducts.Ourabilitytogrowourbusinessdependsinpartonourabilitytopersuadecurrentandfuturecustomerstoexpandtheiruseofoursoftwaretoadditionalusecases,suchasbusiness analytics and customer usage analytics. If we fail to achieve market acceptance of our software, or if a competitorestablishesamorewidelyadoptedsolution,ourability togrowourbusinessand financial resultswillbeadverselyaffected. Inaddition,astheamountofdatastoredforagivencustomergrows,thatcustomermayhavetoagreetohighersubscriptionfeesforour softwareor limit the amount of data stored in order to staywithin the limits of its existing subscription. If their fees growsignificantly,customersmayreactadverselytothispricingmodel,particularlyiftheyperceivethatthevalueofoursoftwarehasbecomeeclipsedbysuchfeesorotherwise.Wehavelimitedexperiencewithrespecttodeterminingtheoptimalpricesforourproducts. Weexpectthatwemayneedtochangeourpricingmodelfromtimetotime.Asnewcompetitorsintroducenewproductsorservicesthatcompetewithours,wemaybeunabletoattractnewcustomersatthesamepriceorbasedonthesamepricingmodelaswe have used historically.Moreover, as we target selling our products to larger organizations, these larger organizationsmaydemandsubstantialpriceconcessions.Asaresult, in thefuturewemayberequiredtoreduceourprices,whichcouldadverselyaffectourbusiness.Failure toeffectivelyexpandourmarketingandsalescapabilitiescouldharmourability to increaseourcustomerbaseandachievebroadermarketacceptanceofourproducts. Ourabilitytoincreaseourcustomerbaseandachievebroadermarketacceptanceofourproductswilldependtoasignificantextent on our ability to expand our marketing and sales operations. We plan to continue expanding our sales force, bothdomesticallyandinternationally.Wealsoplantodedicatesignificantresourcestosalesand

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marketingprograms,includingInternetandotheronlineadvertising.Forexample,inthefiscalyearendedMarch31,2014,salesandmarketingexpensesrepresented92%ofourrevenue.Theeffectivenessofouronlineadvertisinghasvariedovertimeandmayvaryinthefutureduetocompetition.Moreover,wehavehistoricallysoldmostofourproductstosmallandmidsizedbusinessesandwehaverelatively littleexperiencesellingourproducts to largerorganizations.Weareexpandingourmarketingandsalescapabilitiestotargetlargerorganizationsbutthereisnoguaranteethatwewillbesuccessfulattractingandmaintainingtheselargerorganizationsascustomers,andevenifwearesuccessful,theseeffortsmaydivertourresourcesawayfromandnegativelyimpactour ability to attract and maintain small and midsized businesses as customers. All of these efforts will require us to investsignificant financial andother resources. Ifweareunable tohire,develop, and retain talented salespersonnel, ifournewsalespersonnelareunabletoachievedesiredproductivitylevelsinareasonableperiodoftime,orifoursalesandmarketingprogramsarenoteffective,ourabilitytoincreaseourcustomerbaseandachievebroadermarketacceptanceofourproductscouldbeharmed.Ifweareunable to increasesalesofoursolutionsto largeenterpriseswhilemitigatingtherisksassociatedwithservingsuchcustomers,ourbusiness,financialposition,andresultsofoperationsmaysuffer. Historically, we have not focused our sales efforts on large enterprises. Our growth strategy is dependent, in part, uponincreasingsalesofourproductstosuchenterprises.Salestolargecustomersinvolverisksthatmaynotbepresentorthatarepresenttoalesserextentwithsalestosmallerentities.Asweseektoincreaseoursalestolargeenterprisecustomers,wefacelongersalescycles,morecomplexcustomerrequirements,substantialupfrontsalescosts,andlesspredictabilityincompletingsomeofoursalesthan we do with smaller customers. Large enterprise customers often begin to deploy our products on a limited basis, butneverthelessdemandextensiveconfiguration,integrationservices,andpricingnegotiations,whichincreaseourupfrontinvestmentin the sales effortwith no guarantee that these customerswill deploy our productswidely enough across their organization tojustifyoursubstantialupfrontinvestment.Inaddition,ourabilitytosuccessfullysellourproductstolargeenterprisesisdependentonusattractingandretainingsalespersonnelwithexperienceinsellingtolargeorganizations.Also,becausesecuritybreacheswithrespect to larger,highprofileenterprisesare likely tobeheavilypublicized, there is increasedreputational riskassociatedwithservingsuchcustomers.Ifweareunabletoincreasesalesofourproductstolargeenterprisecustomerswhilemitigatingtherisksassociatedwithservingsuchcustomers,ourbusiness,financialposition,andresultsofoperationsmaysuffer.Becauseusersareable toconfigureourplatform tocollectandstorepersonal informationof theiremployeesandendusers,privacyconcernscouldresultinadditionalcostandliabilitytousorinhibitsalesofourproducts. Ouroperationsinvolveprotectionofourintellectualproperty,alongwiththestorageandtransmissionandprocessingofourcustomers proprietary data, including some personally identifiable information, and security breaches, computermalware, andcomputer hacking attacks could expose us to a risk of loss of this information, loss of business, severe reputational damageadversely affecting customer or investor confidence, regulatory investigations and orders, litigation, indemnity obligations,damages forcontractbreach,penalties forviolationofapplicable lawsor regulations, andsignificantcosts for remediationandincentivesofferedtocustomersorotherbusinesspartnersinanefforttomaintainbusinessrelationshipsafterabreachandotherliabilities.

Cyber attacks and other malicious Internetbased activity continue to increase generally. If our security measures areperceivedasweakoractuallycompromisedasa resultof thirdpartyaction,employeeorcustomererror,malfeasance, stolenorfraudulentlyobtainedlogincredentialsorotherwise,ourcustomersmaycurtailorstopusingourproducts,ourreputationcouldbedamaged, our business may be harmed, and we could incur significant liability. We may be unable to anticipate or preventtechniques used to obtain unauthorized access or to sabotage systems because they change frequently and generally are notdetecteduntilafteranincidenthasoccurred.Asweincreaseourcustomerbaseandourbrandbecomesmorewidelyknownandrecognized,wemaybecomemoreofa target for thirdpartiesseeking tocompromiseoursecuritysystemsorgainunauthorizedaccesstoourcustomersdata.

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Ifwearenotabletodetectandindicateactivityonourplatformthatmightbenefariousinnature,ourcustomerscouldsufferharm.Insuchcases,wecouldfaceexposure,particularlyifthecustomersufferedactualharm.

Wecannot assureyou that any limitationsof liabilityprovisions inour contracts for a security lapseor breachwouldbeenforceableoradequateorwouldotherwiseprotectusfromanyliabilitiesordamageswithrespecttoanyparticularclaim.Wealsocannot be sure that our existing insurance coveragewill continue to be available on acceptable terms orwill be available insufficientamountstocoveroneormorelargeclaimsrelatedtoasecuritybreach,orthattheinsurerwillnotdenycoverageastoanyfuture claim. The successful assertion of one ormore large claims against us that exceed available insurance coverage, or theoccurrenceofchangesinourinsurancepolicies,includingpremiumincreasesortheimpositionoflargedeductibleorcoinsurancerequirements,couldhaveamaterialadverseeffectonourbusiness,includingexpansionrates,financialcondition,operatingresults,andreputation.Changesinprivacylaws,regulations,andstandardsmaycauseourbusinesstosuffer. Personal privacy and data security have become significant issues in the United States, Europe, and in many otherjurisdictionswhereweofferourproducts.Theregulatoryframeworkforprivacyandsecurityissuesworldwideisrapidlyevolvingandislikelytoremainuncertainfortheforeseeablefuture.Federal,state,orforeigngovernmentbodiesoragencieshaveinthepastadopted, andmay in the future adopt, laws and regulations affecting data privacy and the use of the Internet as a commercialmedium.Industryorganizationsalsoregularlyadoptandadvocatefornewstandardsinthisarea.IntheUnitedStates,theseincluderulesandregulationspromulgatedundertheauthorityoffederalagenciesandstateattorneysgeneralandlegislaturesandconsumerprotection agencies. Internationally, virtually every jurisdiction inwhichwe operate has established its own data security andprivacylegalframeworkwithwhichweorourcustomersmustcomply,includingbutnotlimitedtotheDataProtectionDirective,ortheDirective,established in theEuropeanUnionanddataprotection legislationof the individualmember states subject to theDirective. The Directivemay be replaced in time with the pending European General Data Protection Regulation whichmayimpose additional obligations and risk upon our business. In many jurisdictions, enforcement actions and consequences fornoncompliancearealsorising.Inadditiontogovernmentregulation,privacyadvocatesandindustrygroupsmayproposenewanddifferentselfregulatorystandardsthateitherlegallyorcontractuallyapplytous.OneexampleofsuchselfregulatorystandardstowhichwemaybecontractuallyboundisthePaymentCardIndustryDataSecurityStandard,orPCIDSS.Further,totheextentweacceptandhandlecreditcardnumbers,wemaybesubjecttovariousaspectsofthePCIDSS.Intheeventwefailtobecompliantwith thePCIDSS, fines and other penalties could result. Further, our customersmay require us to complywithmore stringentprivacyanddatasecurityrequirements.Becausetheinterpretationandapplicationofmanyprivacyanddataprotectionlawsalongwithmandatoryindustrystandards,areuncertain,itispossiblethattheselawsmaybeinterpretedandappliedinamannerthatisinconsistentwithourexistingdatamanagementpracticesorthefeaturesofourproducts.Ifso,inadditiontothepossibilityoffines,lawsuits,andotherclaimsandpenalties,wecouldbe required to fundamentallychangeourbusinessactivitiesandpracticesormodifyourproducts,whichcouldhaveanadverseeffectonourbusiness.Anyinabilitytoadequatelyaddressprivacyandsecurityconcerns,evenifunfounded,orcomplywithapplicableprivacyanddatasecuritylaws,regulations,andpolicies,couldresultinadditionalcostandliabilitytous,damageourreputation,inhibitsales,andadverselyaffectourbusiness.Furthermore,thecostsofcompliancewith,andotherburdens imposedby, the laws, regulations,andpolicies thatareapplicable to thebusinessesofourcustomersmaylimittheuseandadoptionof,andreducetheoveralldemandfor,ourproducts.Privacyanddatasecurityconcerns,whethervalidornotvalid,mayinhibitmarketadoptionofourproducts,particularlyincertainindustriesandforeigncountries.Ifwearenotabletoadjusttochanginglaws,regulations,andstandardsrelatedtotheInternet,ourbusinessmaybeharmed.

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Ifwefailtoadaptandrespondeffectivelytorapidlychangingtechnology,evolvingindustrystandards,andchangingcustomerneeds,requirements,orpreferences,ourproductsmaybecomelesscompetitive. The software industry is subject to rapid technological change, evolving industry standards, and practices, and changingcustomerneeds,requirements,andpreferences.Thesuccessofourbusinesswilldepend,inpart,onourabilitytoadaptandrespondeffectively to thesechangesona timelybasis. Ifweareunable todevelopandsellnewproducts thatsatisfyourcustomersandprovideenhancementsandnewfeaturesforourexistingproductsthatkeeppacewithrapidtechnologicalandindustrychange,ourrevenueandoperatingresultscouldbeadverselyaffected.Ifnewtechnologiesemergethatareabletodelivercompetitiveproductsandapplicationsatlowerprices,moreefficiently,moreconveniently,ormoresecurely,suchtechnologiescouldadverselyimpactourabilitytocompete.

Ourplatformmustalsointegratewithavarietyofnetwork,hardware,mobile,andsoftwareplatforms,andtechnologies,andweneedtocontinuouslymodifyandenhanceourproductstoadapttochangesandinnovationinthesetechnologies.Ifdeveloperswidelyadoptnewsoftwareplatforms,wewouldhavetodevelopnewversionsofourproductstoworkwiththosenewplatforms.Thisdevelopmenteffortmayrequiresignificantengineering,marketing,andsalesresources,allofwhichwouldaffectourbusinessandoperatingresults.Anyfailureofourproductstooperateeffectivelywithfutureinfrastructureplatformsandtechnologiescouldreduce thedemand forourproducts. Ifweareunable to respond to thesechanges inacosteffectivemanner,ourproductsmaybecomelessmarketableandlesscompetitiveorobsolete,andouroperatingresultsmaybenegativelyaffected.Wearedependentuponleadgenerationstrategiestodriveoursalesandrevenue,includingfreetrialsofourproducts.Ifthesemarketingstrategiesfailtocontinuetogeneratesalesopportunities,ourabilitytogrowourrevenuewillbeadverselyaffected. Wearedependentuponleadgenerationstrategies,includingourmarketingstrategyofofferingfreetrialsofourproducts,togenerate sales opportunities. These strategies may not be successful in continuing to generate sufficient sales opportunitiesnecessarytoincreaseourrevenue.Manyusersneverconvertfromthetrialversiontothepaidversionofourproducts.Totheextentthatusersdonotbecome,orweareunabletosuccessfullyattractpayingcustomers,wewillnotrealizetheintendedbenefitsofthesemarketingstrategiesandourabilitytogrowourrevenuewillbeadverselyaffected.Themarketinwhichweparticipateisintenselycompetitive,andifwedonotcompeteeffectively,ouroperatingresultscouldbeharmed. Themarket for applicationperformancemonitoring is rapidlyevolving, significantly fragmented, andhighlycompetitive,withrelativelylowbarrierstoentryinsomesegments.Ourcompetitorsfallintofourprimarycategories: diversifiedtechnologycompaniessuchasHP,IBM,Microsoft,andOracle

largeenterprisesoftwareandservicescompaniessuchasBMCSoftware,CA,Inc.,Compuware,RiverbedTechnology,andSAP

softwareperformanceproviderssuchasAppDynamicsandSplunkand companiesofferinganalyticsproductscompetingwithourNewRelicInsightsproduct,includingGoogleandWebtrends.

Someofourcompetitorsandpotentialcompetitorsarelargerandhavegreaternamerecognition,longeroperatinghistories,more establishedcustomer relationships, largerbudgets, and significantlygreater resources thanwedo, andhave theoperatingflexibility to bundle competing products and services with other software offerings at little or no perceived incremental cost,includingofferingthematalowerpriceaspartofalargersale.Asaresult,ourcompetitorsmaybeabletorespondmorequicklyandeffectivelythanwecantoneworchangingopportunities,technologies,standards,orcustomerrequirements.Inaddition,somecompetitorsmay

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offerproductsorservicesthataddressoneoralimitednumberoffunctionsatlowerpricesorwithgreaterdepththanourproducts.Ourcurrentandpotentialcompetitorsmaydevelopandmarketnewtechnologieswithcomparablefunctionalitytoourproducts,andthiscouldleadtoushavingtodecreasepricesinordertoremaincompetitive.

Withtheintroductionofnewtechnologies,theevolutionofourproductsandnewmarketentrants,weexpectcompetitiontointensifyinthefuture.Moreover,asweexpandthescopeofoursolutions,wemayfaceadditionalcompetition.Additionally,somepotential customers, particularly large enterprises, may elect to develop their own internal products. If one or more of ourcompetitorsweretomergeorpartnerwithanotherofourcompetitors,thechangeinthecompetitivelandscapecouldalsoadverselyaffectour ability to compete effectively. Ifweareunable tomaintainour currentpricingdue to the competitivepressures, ourmargins will be reduced and our operating results will be negatively affected. In addition, pricing pressures and increasedcompetitiongenerallycouldresultinreducedsales,reducedmargins,losses,orthefailureofoursolutionstoachieveormaintainmorewidespreadmarketacceptance,anyofwhichcouldharmourbusiness.Becausewerecognizerevenuefromoursubscriptionsoverthesubscriptionterm,downturnsorupturnsinnewsalesandrenewalsmaynotbeimmediatelyreflectedinouroperatingresultsandmaybedifficulttodiscern. Wegenerally recognize revenue fromcustomers ratablyover the termsof their subscriptions.Aportionof the revenuewereport ineachquarter isderivedfromtherecognitionofrevenuerelatingtosubscriptionsenteredintoduringpreviousquarters.Consequently,adeclineinneworrenewedsubscriptionsinanysinglequartermayhaveasmallimpactonourrevenueforthatquarter. However, such a decline will negatively affect our revenue in future quarters. Accordingly, the effect of significantdownturnsinsalesandmarketacceptanceofoursolutions,andpotentialchangesinourrateofrenewals,maynotbefullyreflectedinour resultsofoperationsuntil futureperiods. In addition, a significantmajorityofour costs are expensedas incurred,whilerevenueisrecognizedoverthelifeoftheagreementwithourcustomer.Asaresult,increasedgrowthinthenumberofourcustomerscouldcontinuetoresultinourrecognitionofmorecoststhanrevenueintheearlierperiodsofthetermsofouragreements.Interruptionsorperformanceproblemsassociatedwithourtechnologyandinfrastructuremayadverselyaffectourbusinessandoperatingresults. Ourcontinuedgrowthdependsinpartontheabilityofourexistingandpotentialcustomerstoaccessourproductsatanytimeandwithinanacceptableamountoftime.Wehaveexperienced,andmayinthefutureexperience,disruptions,outages,andotherperformanceproblemsduetoavarietyoffactors,includinginfrastructurechanges,introductionsofnewfunctionality,humanorsoftware errors, capacity constraints due to an overwhelmingnumber of users accessing our products simultaneously, denial ofserviceattacks,orothersecurityrelatedincidents.Itmaybecomeincreasinglydifficulttomaintainandimproveourperformance,especiallyduringpeakusagetimesandasourproductsbecomesmorecomplexandourusertrafficincreases.Ifourproductsareunavailableorifourusersareunabletoaccessourproductswithinareasonableamountoftimeoratall,ourbusinesswouldbenegatively affected.To the extent thatwe do not effectively address capacity constraints, upgrade our systems as needed, andcontinuallydevelopourtechnologyandnetworkarchitecturetoaccommodateactualandanticipatedchangesintechnology,ourbusinessandoperatingresultsmaybeadverselyaffected.

Inaddition,wecurrentlyserveourcustomersfromathirdpartydatacenterhostingfacilitylocatedinChicago,Illinois.Thecontinuousavailabilityofourproductsdependsontheoperationsofthosefacilities,onavarietyofnetworkserviceproviders,onthirdpartyvendors,andonourownsiteoperationsstaff.Wedependonourthirdpartyfacilityprovidersabilitytoprotectthesefacilities againstdamageor interruption fromnaturaldisasters, poweror telecommunications failures, criminal acts, and similarevents.Ifthereareanylapsesofserviceordamagetoafacility,wecouldexperiencelengthyinterruptionsinourproductsaswellasdelays and additional expenses in arranging new facilities and services. Even with current and planned disaster recoveryarrangements,which,todate,havenotbeentestedinanactualcrisis,ourbusinesscouldbeharmed.Also,inthe

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eventofdamageorinterruption,ourinsurancepoliciesmaynotadequatelycompensateusforanylossesthatwemayincur.Thesefactorsinturncouldfurtherreduceourrevenue,subjectustoliability,andcauseustoissuecreditsorcausecustomersnottorenewtheirsubscriptions,anyofwhichcouldharmourbusiness.Defectsordisruptions inourproducts coulddiminishdemand forourproducts,harmour financial results,and subjectus toliability. Ourcustomersuseourproductsforimportantaspectsoftheirbusinesses,andanyerrors,defects,ordisruptionstoourproductsorotherperformanceproblemswithourproductscouldhurtourbrandandreputationandmaydamageourcustomersbusinesses.Weprovideregularproductupdates,whichfrequentlycontainundetectederrorswhenfirstintroducedorreleased.Inthepast,wehavediscoveredsoftwareerrors,failures,vulnerabilities,andbugsinourproductsaftertheyhavebeenreleasedandnewerrorsinour existing productsmay be detected in the future.Real or perceived errors, failures, or bugs in our products could result innegativepublicity, lossofordelay inmarketacceptanceofourproducts, lossofcompetitiveposition,delayofpayment tous,lowerrenewalrates,orclaimsbycustomersforlossessustainedbythem.Insuchanevent,wemayberequired,ormaychoose,forcustomerrelationsorotherreasons,toexpendadditionalresourcesinordertohelpcorrecttheproblem.Inaddition,wemaynotcarryinsurancesufficienttocompensateusfortheanylossesthatmayresultfromclaimsarisingfromdefectsordisruptionsinourproducts.Asaresult,wecouldlosefuturesalesandourreputationandourbrandcouldbeharmed.Our ongoing and planned investments in data center hosting facilities are expensive and complex,may result in a negativeimpactonourcashflows,andmaynegativelyimpactourfinancialresults. Wehavemadeandwill continue tomake substantial investments innewequipment to supportgrowthatourdata centerhostingfacility,provideenhancedlevelsofproductstoourcustomers,andreducefuturecostsofsubscriptionrevenue.Inaddition,wemayneed toaddadditionaldatacentersor similar resources to supportourgrowth.Ongoingor future improvements toourcloudinfrastructuremaybemoreexpensivethanweanticipate,andmaynotyieldtheexpectedsavingsinoperatingcostsortheexpectedperformancebenefits.Wemaynotbeabletomaintainorachievecostsavingsfromourinvestments,whichcouldharmourfinancialresults.

Wemayneedtochangeourcurrentoperationsinfrastructureinorderforustoachieveprofitabilityandscaleouroperationsefficiently,whichmakesourfutureprospectsevenmoredifficulttoevaluate.Forexample,inordertogrowsalestocommercialandenterprise customers in a financially sustainablemanner,wemayneed to further customizeouroffering andmodifyourgotomarketstrategytoreduceouroperatingandcustomeracquisitioncosts.Ifwefailtoimplementthesechangesonatimelybasisorareunabletoimplementthemeffectively,ourbusinessmaysuffer.Because our longterm growth strategy involves further expansion of our sales to customers outside the United States, ourbusinesswillbesusceptibletorisksassociatedwithinternationaloperations. A component of our growth strategy involves the further expansion of our operations and customer base 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 ininternational markets, and we cannot assure you that our expansion efforts into international markets will be successful. OurinternationalexpansioneffortsmaynotbesuccessfulincreatingfurtherdemandforourproductsoutsideoftheUnitedStatesorineffectivelysellingourproductsintheinternationalmarketsweenter.Ourcurrentinternationaloperations,includingasaresultofourrecentacquisitionofBarcelonabasedDucksboard,andfutureinitiativeswillinvolveavarietyofrisks,including: changesinaspecificcountrysorregionspoliticaloreconomicconditions unexpectedchangesinregulatoryrequirements,taxes,ortradelaws

regional data security and privacy laws and regulations and the unauthorized use of, or access to, commercial andpersonalinformation,particularlyintheEuropeanUnion

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differing labor regulations, especially in the EuropeanUnion, where labor laws are generallymore advantageous to

employeesascomparedtotheUnitedStates,includingdeemedhourlywageandovertimeregulationsintheselocations

challenges inherent in efficiently managing an increased number of employees over large geographic distances,includingtheneedtoimplementappropriatesystems,policies,benefits,andcomplianceprograms

difficultiesinmanagingabusinessinnewmarketswithdiversecultures,languages,customs,legalsystems,alternativedisputesystems,andregulatorysystems

increasedtravel,realestate,infrastructure,andlegalcompliancecostsassociatedwithinternationaloperations

currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk ofenteringintohedgingtransactionsifwechosetodosointhefuture

limitationsonourabilitytorepatriateearnings lawsandbusinesspracticesfavoringlocalcompetitors,orgeneralpreferencesforlocalvendors limitedorinsufficientintellectualpropertyprotection

exposuretoliabilitiesunderanticorruption,exportcontrolsandantimoneylaunderinglaws,includingtheU.S.ForeignCorruptPracticesActandsimilarlawsandregulationsinotherjurisdictionsand

adversetaxburdensandforeignexchangecontrolsthatcouldmakeitdifficulttorepatriateearningsandcashorcreateothercollectiondifficulties.

Ourlimitedexperienceoperatingourbusinessinternationallyincreasestheriskthatanypotentialfutureexpansioneffortsthat

wemayundertakewillnotbesuccessful.Ifweinvestsubstantialtimeandresourcestoexpandourinternationaloperationsandareunabletodososuccessfully,ourbusinessandoperatingresultswillsuffer.Ifwelosekeymembersofourmanagementteamorareunabletoattractandretainexecutivesandemployeesweneedtosupportouroperationsandgrowth,ourbusinessmaybeharmed. Oursuccessandfuturegrowthdependlargelyuponthecontinuedservicesofourexecutiveofficersandotherkeyemployeesintheareasofresearchanddevelopment,marketing,sales,services,andgeneraladministrativefunctions.Fromtimetotime,theremay be changes in our executive management team or other key employees resulting from the hiring or departure of thesepersonnel.Ourexecutiveofficersandotherkeyemployeesareemployedonanatwillbasis,whichmeans that thesepersonnelcould terminate their employmentwith us at any time.The loss of one ormore of our executive officers, especially ourChiefExecutiveOfficer,LewisCirne ourPresident andChiefOperatingOfficer,ChrisCook andourChiefRevenueOfficer,HilarieKoplowMcAdamorthefailurebyourexecutiveteamtoeffectivelyworkwithouremployeesandleadourcompanycouldharmourbusiness.Wealsoaredependentonthecontinuedserviceofourexistingsoftwareengineersbecauseofthecomplexityofourproducts.

Inaddition,toexecuteourgrowthplan,wemustattractandretainhighlyqualifiedpersonnel.Competitionforthesepersonnelin theSanFranciscoBayAreaand thePortlandarea,whereourheadquartersand themajorityofourresearchanddevelopmentpersonnel are located, respectively, and in other locations where we maintain offices, is intense, especially for engineersexperiencedindesigninganddevelopingsoftwareandSaaSapplicationsandexperiencedsalesprofessionals.Wehave,fromtimeto time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriatequalifications.Manyofthecompanieswithwhichwecompeteforexperiencedpersonnelhavegreaterresourcesthanwehave.Ifwehireemployeesfromcompetitorsorothercompanies,theirformeremployersmayattempttoassertthattheseemployeesorwehavebreachedtheirlegalobligations,resultinginadiversionofourtimeandresources.Inaddition,prospectiveandexistingemployeesoftenconsiderthevalueoftheequityawardstheyreceiveinconnectionwiththeiremployment.Iftheperceivedvalueof

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our equity awards declines, or experiences significant volatility, it may adversely affect our ability to recruit and retain keyemployees.Ifwefailtoattractnewpersonnelorfailtoretainandmotivateourcurrentpersonnel,ourbusinessandfuturegrowthprospectscouldbeadverselyaffected.Ifwefailtoenhanceourbrand,ortodosoinacosteffectivemanner,ourabilitytoexpandourcustomerbasewillbeimpairedandourfinancialconditionmaysuffer. WebelievethatourdevelopmentoftheNewRelicbrandiscriticaltoachievingwidespreadawarenessofourexistingandfutureSoftwareAnalyticssolutions,and,asaresult,isimportanttoattractingnewcustomersandmaintainingexistingcustomers.We also believe that the importance of brand recognition will increase as competition in our market increases. Successfulpromotionofourbrandwilldependlargelyontheeffectivenessofourmarketingefforts,includingourabilitytodosoinacosteffectivemanner,andonourabilitytoprovidereliableandusefulproductsatcompetitiveprices.Inthepast,oureffortstobuildourbrandhaveinvolvedsignificantexpenses.Brandpromotionactivitiesmaynotyieldincreasedrevenue,andeveniftheydo,anyincreasedrevenuemaynotoffsettheexpensesweincurinbuildingourbrand.Ifwecannotmaintainourcorporatecultureaswegrow,wecouldlosetheinnovation,teamwork,passion,andfocusonexecutionthatwebelievecontributetooursuccess,andourbusinessmaybeharmed. Webelievethatourcorporateculturehasbeenacriticalcomponenttooursuccess.Wehaveinvestedsubstantialtimeandresources inbuildingour team.Aswegrowandmatureasapubliccompany,wemayfinditdifficult tomaintainourcorporateculture.Anyfailuretopreserveourculturecouldnegativelyaffectourfuturesuccess, includingourability torecruitandretainpersonnelandeffectivelyfocusonandpursueourcorporateobjectives.Wemaybesuedbythirdpartiesforallegedinfringementoftheirproprietaryrights. Thereisconsiderablepatent,copyright,trademark,tradesecret,andotherintellectualpropertydevelopmentactivityinourindustry.Our success depends in part on not infringing upon the intellectual property rights of others. From time to time, ourcompetitorsorotherthirdpartiesmayclaimthatweareinfringingupontheirintellectualpropertyrights,andwemaybefoundtobeinfringinguponsuchrights.Forexample,wearecurrentlypartytoasuitbroughtagainstusbyCA,Inc.thatalleges,amongotherthings,thatwehaveinfringedoncertainpatentsheldbyCA,Inc.SeeBusinessLegalProceedings.Inthefuture,wemayreceive claims that our products and underlying technology infringe or violate the claimants intellectual property rights.Anyclaimsorlitigation,regardlessofmerit,couldcauseustoincursignificantexpensesand,ifsuccessfullyassertedagainstus,couldrequire thatwepaysubstantialdamagesorongoingroyaltypayments,preventusfromofferingourproducts,or require thatwecomplywithotherunfavorableterms.

Eveniftheclaimsdonotresultinlitigationorareresolvedinourfavor,theseclaims,andthetimeandresourcesnecessarytoresolve them, could divert the resources of ourmanagement and harm our business and operating results.We expect that theoccurrenceofinfringementclaimsislikelytogrowasthemarketforSoftwareAnalyticsproductsgrows.Accordingly,ourexposureto damages resulting from infringement claims could increase and this could further exhaust our financial and managementresources.Any failure toprotectour intellectualproperty rightscould impairourability toprotectourproprietary technologyandourbrand. Oursuccessdependstoasignificantdegreeonourabilitytoprotectourproprietarytechnologyandourbrand.Werelyonacombination of trademarks, trade secret laws, patent, copyrights, service marks, contractual restrictions, and other intellectualpropertylawsandconfidentialityprocedurestoestablishandprotectourproprietaryrights.However,thestepswetaketoprotectourintellectualpropertymaybeinadequate.Wewillnotbeabletoprotectourintellectualpropertyifweareunabletoenforceourrights or ifwe do not detect unauthorized use of our intellectual property. Ifwe fail to protect our intellectual property rightsadequately,ourcompetitorsmaygainaccesstoourtechnologyandourbusinessmaybeharmed.Inaddition,defendingour

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intellectualpropertyrightsmightentailsignificantexpense.Anypatents,trademarks,orotherintellectualpropertyrightsthatweobtainmaybechallengedbyothersorinvalidatedthroughadministrativeprocessorlitigation.AsofSeptember30,2014,weonlyhadonependingpatentapplicationandnoissuedpatents.Despitethependingpatentapplication,wemaybeunabletoobtainanypatentprotectionforourtechnology.Inaddition,anypatentsissuedinthefuturemaynotprovideuswithcompetitiveadvantages,ormaybesuccessfullychallengedbythirdparties.Furthermore,legalstandardsrelatingtothevalidity,enforceability,andscopeofprotectionofintellectualpropertyrightsareuncertain.Despiteourprecautions,itmaybepossibleforunauthorizedthirdpartiestocopy our products 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 ourproductsisavailable.ThelawsofsomeforeigncountriesmaynotbeasprotectiveofintellectualpropertyrightsasthoseintheUnitedStates,andmechanismsforenforcementof intellectualproperty rightsmaybe inadequate.To theextentweexpandourinternationalactivities,ourexposuretounauthorizedcopyinganduseofourproductsandproprietaryinformationmayincrease.Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating ourintellectualproperty.

We enter into confidentiality and invention assignment agreements with our employees and consultants and enter intoconfidentiality agreementswith other parties.No assurance can be given that these agreementswill be effective in controllingaccess to and distribution of our proprietary information. Further, these agreements may not prevent our competitors fromindependentlydevelopingtechnologiesthataresubstantiallyequivalentorsuperiortoourproducts.

Inordertoprotectourintellectualpropertyrights,wemayberequiredtospendsignificantresourcestomonitorandprotectourintellectualpropertyrights.Litigationmaybenecessaryinthefuturetoenforceourintellectualpropertyrightsandtoprotectourtradesecrets.Litigationbroughttoprotectandenforceourintellectualpropertyrightscouldbecostly,timeconsuming,anddistractingtomanagement,andcouldresultintheimpairmentorlossofportionsofourintellectualproperty.Further,oureffortstoenforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity andenforceabilityofourintellectualpropertyrights.Ourinabilitytoprotectourproprietarytechnologyagainstunauthorizedcopyingoruse,aswellasanycostlylitigationordiversionofourmanagementsattentionandresources,coulddelayfurthersalesortheimplementation of our products, impair the functionality of our products, delay introductions of new solutions, result in oursubstitutinginferiorormorecostlytechnologiesintoourproducts,orinjureourreputation.Ouruseofopensourcesoftwarecouldnegativelyaffectourabilitytosellourproductsandsubjectustopossiblelitigation. Weuseopensourcesoftwareinourproductsandexpecttocontinuetouseopensourcesoftwareinthefuture.Wemayfaceclaims fromothers claimingownershipof, or seeking to enforce the termsof, anopen source license, includingbydemandingreleaseoftheopensourcesoftware,derivativeworks,orourproprietarysourcecodethatwasdevelopedusingsuchsoftware.Theseclaims could also result in litigation, require us to purchase a costly license, or require us to devote additional research anddevelopmentresourcestochangeourplatform,anyofwhichwouldhaveanegativeeffectonourbusinessandoperatingresults.Inaddition, if thelicensetermsfor theopensourcesoftwareweutilizechange,wemaybeforcedtoreengineerordiscontinueourproductsorincuradditionalcosts.Wecannotbecertainthatwehavenotincorporatedopensourcesoftwareinourproductsinamannerthatisinconsistentwithourpolicies.Weprovideservicelevelcommitmentsundersomeofourcustomercontracts.Ifwefailtomeetthesecontractualcommitments,wecould be obligated to provide credits or refunds for prepaid amounts related to unused subscriptions or face contractterminations,whichcouldadverselyaffectourrevenue. Some of our customer agreements provide service level commitments. If we are unable to meet the stated service levelcommitmentsorsufferextendedperiodsofunavailabilityforourproducts,wemaybecontractually

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obligated toprovide thesecustomerswith servicecreditsor refunds forprepaidamounts related tounused subscriptions,orwecouldfacecontractterminations.Ourrevenuecouldbesignificantlyaffectedifwesufferunscheduleddowntimethatexceedsthealloweddowntimesunderouragreementswithourcustomers.Anyextendedserviceoutagescouldadverselyaffectourreputation,revenue,andoperatingresults.IfthemarketforourtechnologydeliverymodelandSaaSdevelopsmoreslowlythanweexpect,ourgrowthmaysloworstall,andouroperatingresultswouldbeharmed. ThemarketforSaaSbusinesssoftwareislessmaturethantraditionalonpremisesoftwareapplications,andtheadoptionrateof SaaS business software may be slower among subscribers in industries with heightened data security interests or businesspracticesrequiringhighlycustomizableapplicationsoftware.Oursuccesswilldepend toasubstantialextenton thewidespreadadoptionofSaaSbusinesssoftwareingeneral,butwedonotknowwhetherthetrendofadoptionofSaaSsolutionswillcontinueinthe future. In particular, many organizations have invested substantial personnel and financial resources to integrate legacysoftware into theirbusinessesover time,andsomehavebeen reluctantorunwilling tomigrate toSaaS. It isdifficult topredictcustomeradoptionratesanddemandforourproducts,thefuturegrowthrateandsizeoftheSaaSbusinesssoftwaremarketortheentryofcompetitiveapplications.TheexpansionoftheSaaSbusinesssoftwaremarketdependsonanumberoffactors,includingthecost,performance,andperceivedvalueassociatedwithSaaS,aswellastheabilityofSaaSproviderstoaddressdatasecurityandprivacyconcerns.IfSaaSbusinesssoftwaredoesnotcontinuetoach

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