July 20 (Reuters) - New Relic Inc, the U.S.
business software company targeted by activist hedge fund Jana
Partners, is preparing to explore a potential sale following
interest from private equity firms, sources familiar with the
matter told Reuters.
New Relic is in talks to hire financial advisers to explore
options that would include a sale, the sources said, cautioning
that no deal is certain. The sources requested anonymity because
the matter is confidential.
A spokesperson for New Relic declined to comment.
New Relic has a market capitalization of $3.7 billion. The
San Francisco-based company develops cloud-based software to
help websites and application owners track the performance of
their services. Founded in 2008, the company listed in the stock
market in 2014.
In recent years, New Relic's growth has slowed as it tries
to compete against other Application Performance Monitoring
(APM) vendors such as Dynatrace and Datadog. It
reported 14,800 active customer accounts in the most recent
quarter, down from 15,400 in June 2020.
New Relic generated revenue of $786 million in fiscal year
2022, up 18% year-over-year, while its loss widened to $229
million from $171 million. It shares have lost half of its value
since November 2021.
Last month, New Relic appointed Kevin Galligan, a partner at
Jana Partners, to its board as part of a cooperation agreement,
and Jana has increased their stake in the company to 5.3%,
according to a filing.
Jana Partners is known for pushing for a sale of the
companies it takes a stake in. Zendesk Inc, another Jana
target, agreed to be sold last month for $10.2 billion to a
consortium of private equity firms led by Hellman & Friedman and
(Reporting by Krystal Hu and Anirban Sen in New York; Editing
by Lisa Shumaker)