Market Insider

New Relic shares soar 12% after competitor gets bought out by Cisco

Lewis Cirne, New Relic
David Paul Morris | Bloomberg | Getty Images

New Relic has Cisco to thank for its best trading day since its debut more than two years ago.

Following Cisco's announced $3.7 billion acquisition of AppDynamics on Tuesday night, New Relic shares surged 11 percent, closing at $36.85 on Wednesday. The stock has not had such a big run since its initial public offering in December 2014.

"This acquisition provides tremendous validation of the market opportunity in front of us," New Relic CEO Lew Cirne said in a statement.

AppDynamics and New Relic compete head-to-head in developing software that helps businesses monitor their applications and eliminate bugs. The companies, both based in San Francisco, are roughly the same size.

New Relic generated sales growth of 48 percent in the latest quarter to $63.4 million, while revenue at AppDynamics jumped 54 percent to $60.4 million.

New Relic's stock is up 29 percent in the last 12 months.

CNBC's Anita Balakrishnan contributed to this report.

Correction: A previous version of this story misspelled the last name of New Relic's CEO.