Shares of the observability company New Relic Inc. soared in extended trading today after it posted strong third-quarter financial results that easily beat expectations and followed with a bullish forecast for the three months ahead.

The company reported a net loss for the quarter of $26 million, lower than the $62.7 million loss it delivered in the same period a year earlier. Earnings before certain costs such as stock compensation came to 32 cents per share, versus an 18-cent-per-share loss last year, while revenue rose 18%, to $239.8 million.

The numbers easily beat Wall Street’s forecast of 15 cents per share in earnings on revenue of $232.7 million. New Relic’s stock shot up, gaining more than 15% in the wake of the report, adding to a minor gain made during the regular trading session.

New Relic is considered a leading player in the application and infrastructure observability market. It sells software that’s used by enterprises to monitor their apps, DevOps environments and the infrastructure they run on. It’s especially popular with developers because it gives them an easy way to identify problems with their apps and resolve them.

“We executed the quarter with relentless focus on our customers, product innovation and operations, and beat the high end of our guidance for revenue and profitability,” said New Relic Chief Executive Bill Staples (pictured).

The report provides a welcome respite for New Relic, which had struggled over the previous couple of years. With growth failing to meet shareholder expectations, New Relic introduced a revamped business model a couple of years back, consequently suffering a big drop in active customer accounts and taking a hit on revenue in the short term.

But the company is finally bouncing back. Its revenue is clearly growing and it said today it was able to add more than 800 net new paid platform customers during the third quarter. Those new customers included enterprises like BlackLine Inc., Pandora Media Inc., Veritas Technologies LLC and the Hong Kong Airport Authority, which all committed to using New Relic’s all-in-one platform as their main observability tool.

“We are well positioned for continued growth with our all-in-one observability platform and consumption business model,” Staples said. “We are attracting new customers at a rapid pace and growing with our existing customer base as they expand their observability practices and continue with their digital transformation and cloud adoption. Profitability is turning into a strength for New Relic as we continue to accelerate our focus on profitable growth.”

“For the longest time New Relic looked like a vendor that was doing everything to get it right, only for everything to go wrong,” said Holger Mueller of Constellation Research Inc. “It has finally turned it around though and, remarkably, it is one of the few enterprises that has been able to grow its revenues while keeping sales and marketing costs down. That speaks to a well-tuned marketing to sales handoff and an efficient process. If New Relic can keep this going it will be close to break even at last.”

Looking to its fiscal fourth quarter, New Relic believes it will continue to grow. It’s forecasting earnings of between 20 and 23 cents per share on revenue of between $240 million and $242 million, compared with the analyst consensus estimate of a 15-cent-per-share profit on $238.8 million in sales.

Photo: New Relic