Shares of software vendors New Relic and Twilio surged on Wednesday after reporting revenue that topped analysts' estimates and showing investors that they can continue to get more spending from existing customers.
New Relic, which helps companies track and quickly fix software bugs, jumped $13.55, or 18 percent, to $90.67 as of mid-day. Twilio, a provider of communications software for clients including Airbnb and Intuit, rose $9.12, or 21 percent, to $53.49.
Both companies have more than doubled in value in the past year by sticking with the subscription software playbook: Land big customers and then get them to buy more stuff. It's a model that was pioneered by Salesforce almost two decades ago and is now being employed by dozens of companies, including many like New Relic and Twilio that have gone public in recent years.
"We'll obviously be getting new customers, but the average spend we expect to continue to go up in our existing folks," said Mark Sachleben, New Relic's chief financial officer, during Tuesday's earnings call with analysts. "We saw some great metrics around that this past year."