Updated:

Application and DevOps monitoring company New Relic Inc. was left reeling today after its stock lost almost a fifth of its value in after-hours trading thanks to a weak second-quarter outlook.

The collapse came despite a reasonably decent first quarter, beating expectations on earnings and saw revenue fall in line with estimates. The company sells a digital intelligence platform that lets developers, operations and technology teams measure and monitor the performance of their applications and infrastructure.

New Relic reported first-quarter earnings before certain costs such as stock compensation of 19 cents per share on revenue of $141 million.

Wall Street had been expecting earnings of just 9 cents per share on revenue of $141.64 million.

The performance is nothing to be sneered at, but second-quarter guidance was another story. Officials said they’re expecting to see a profit of between 14 and 16 cents per share in that period, on revenue of between $143 million and $145 million. Analysts had forecast a profit of 12 cents per share but expected more revenue, estimating $148.56 million.

The revenue shortfall meant New Relic’s stock fell like a house of cards, down almost 20%. Update: Shares fell even further Wednesday, closing down nearly 29%.

Lew Cirne (pictured), New Relic’s founder and chief executive officer, didn’t offer much by way of explanation, instead focusing on the company’s updates in the quarter just gone.

“We launched New Relic One, released monitoring for AWS Lambda, and finalized operating model enhancements to product and sales organizations during the first quarter,” he said in a statement. “Navigating these changes proved challenging and impacted our Q1 results. However, we believe that these strategic initiatives will enable us to drive sustainable growth by delivering incredible products that delight our customers.”

The company did report some good news on the customer acquisition front. It said it had 881 paid business accounts worth more than $100,000 in the last quarter, up from 748 a year before.

Constellation Research Inc. analyst Holger Mueller said the after-hours stock drop shows that it’s not enough for publicly traded companies like New Relic to deliver on expectations. They also need to maintain growth projections, something it clearly failed to do, even if its fundamentals are good, he said.

“The core business of New Relic is healthy and with New Relic One it has just introduced a shiny new DevOps platform,” Mueller said. “Adoption of this platform will be key to watch, as enterprises sometimes wait for DevOps platforms to mature before they trust them with their next-generation applications.”

Going forward, he added, “It will be important for New Relic to deliver on expectations in the next few quarters, with a focus on profitability. Investors don’t like vendors that cannot manage the bottom line.”

Cirne explained more about New Relic’s services and how customers use them in an interview on theCUBE, SiliconANGLE’s livestreaming video studio, in December at the AWS re:Invent conference:

Photo: SiliconANGLE