Note: All financial data in this article reflects figures available as of August 2019, sourced from MarketBeat via mayfieldrecorder.com. Carbon Black was subsequently acquired by VMware in 2019. New Relic later underwent significant business model changes. This article is preserved for historical reference.
Overview
Carbon Black (NASDAQ: CBLK) and New Relic (NYSE: NEWR) were both publicly traded technology companies operating in overlapping areas of enterprise software — security and observability, respectively. This comparison examines how they stacked up in mid-2019 across revenue, profitability, analyst sentiment, institutional ownership, and market volatility.
Revenue and Valuation
The table below compares gross revenue, net income, earnings per share, and key valuation ratios for both companies.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
|---|---|---|---|---|---|
| Carbon Black | $209.72 million | 7.69 | -$82.06 million | ($1.40) | -15.66 |
| New Relic | $479.23 million | 7.68 | -$40.89 million | ($0.31) | -203.19 |
New Relic generated significantly higher revenue than Carbon Black — more than double — while posting a smaller net loss in absolute terms. Both companies carried similar price-to-sales ratios (approximately 7.7x), reflecting comparable market premium expectations for growth-stage software businesses. Neither company was profitable at the time of this comparison.
The widely divergent price-to-earnings ratios are a consequence of both companies operating at a loss; the P/E figures are negative and not directly comparable in the traditional sense. Investors in this segment typically focus on price-to-sales or price-to-gross-profit multiples rather than P/E when evaluating unprofitable SaaS and security companies.
Analyst Recommendations
The following breakdown reflects analyst ratings and consensus price targets as reported by MarketBeat at the time of publication.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
|---|---|---|---|---|---|
| Carbon Black | 0 | 3 | 2 | 1 | 2.67 |
| New Relic | 1 | 5 | 10 | 0 | 2.56 |
Carbon Black carried a consensus price target of $18.30 at the time, implying a potential downside of approximately 16.54% from its then-current price. New Relic, by contrast, had a consensus price target of $99.08, representing a potential upside of approximately 57.29%. The broader analyst community leaned more bullish on New Relic, driven largely by a higher number of outright buy ratings (10 vs. 2 for Carbon Black).
Insider and Institutional Ownership
Institutional ownership can serve as a proxy for large-fund confidence in a company’s long-term growth prospects.
- Carbon Black: 64.5% of shares held by institutional investors; 21.6% held by insiders.
- New Relic: 78.3% of shares held by institutional investors; 17.4% held by insiders.
New Relic had meaningfully higher institutional ownership, suggesting greater interest from hedge funds, endowments, and large asset managers. Carbon Black had a higher insider ownership percentage, which can indicate management confidence — but also a less liquid float. Neither metric alone is a definitive signal; they are most useful when considered alongside the other factors in this comparison.
Volatility and Risk (Beta)
Beta measures a stock’s price sensitivity relative to the broader market (S&P 500), where a beta of 1.0 means the stock moves in line with the index.
- Carbon Black: Beta of 1.28 — approximately 28% more volatile than the S&P 500.
- New Relic: Beta of 0.83 — approximately 17% less volatile than the S&P 500.
New Relic offered a comparatively smoother ride for investors concerned about short-term price swings. Carbon Black’s higher beta reflected its smaller size, more concentrated product portfolio, and the inherent uncertainty of the cybersecurity growth market at the time.
Profitability Metrics
The table below compares net margins, return on equity (ROE), and return on assets (ROA) — three standard measures of how efficiently a company converts revenue and assets into profit.
| Net Margin | Return on Equity | Return on Assets | |
|---|---|---|---|
| Carbon Black | -30.69% | -37.82% | -17.26% |
| New Relic | -9.93% | -8.74% | -2.85% |
Both companies were operating at a loss, but New Relic’s losses were significantly smaller as a percentage of revenue and assets. Carbon Black’s deeply negative margins reflected heavy investment in sales, marketing, and R&D relative to its revenue base — a common pattern for early-stage security vendors scaling aggressively. New Relic’s comparatively tighter losses suggested a more mature cost structure.
Summary
Across the 15 factors examined in the original comparison, New Relic outperformed Carbon Black on 9 of them. New Relic held advantages in revenue scale, profitability metrics, institutional ownership, analyst upside targets, and lower market volatility. Carbon Black was favoured in neither category decisively, though its insider ownership and niche focus in endpoint security were notable differentiators.
It is worth noting that both companies were loss-making growth businesses at the time, and direct stock comparisons in this context carry significant uncertainty. Shortly after this analysis, Carbon Black was acquired by VMware for approximately $2.1 billion in October 2019, rendering the public equity comparison moot.
About Carbon Black
Carbon Black, Inc. (formerly Bit9, Inc., renamed in January 2016) was a cybersecurity company founded in 2002 and headquartered in Waltham, Massachusetts. It developed the CB Predictive Security Cloud, a big-data analytics platform for endpoint security. Key products included CB Defense (next-generation antivirus and EDR), CB ThreatHunter (threat hunting and incident response), CB LiveOps (real-time endpoint querying and remediation), and CB Protection (application control for critical infrastructure). The company served enterprises, government agencies, and mid-market organizations globally. Carbon Black was acquired by VMware in 2019 and subsequently rebranded as VMware Carbon Black.
About New Relic
New Relic, Inc. is a software-as-a-service observability company founded in 2007 and headquartered in San Francisco, California. Its cloud-based platform provides application performance monitoring (APM), infrastructure monitoring, browser performance tracking, mobile monitoring, and synthetic testing. New Relic’s tools are used by engineering and operations teams to collect, store, and analyze telemetry data — including metrics, events, logs, and traces — across distributed software environments. The company sells primarily through a direct sales model supplemented by online and self-serve channels. New Relic subsequently transitioned to a consumption-based pricing model and made significant portions of its platform available under a free tier, representing a major strategic shift from its subscription model of the 2019 era.