/// NetSuite Sales Surge, Making for a Good Day in the Cloud

November 3, 2011  |  All Things Digital


NetSuite, the software outfit that’s proving so popular with companies that want to move their operations software into the cloud, just reported earnings, and let’s just say it was a good day for the cloud. Revenue grew by 23 percent year-over-year to $61 million, while earnings per share on a non-GAAP basis were five cents. Those are just two of the eight records that NetSuite set in the quarter. Recurring revenue — a key metric that combines both subscriptions and ongoing support — was $51.3 million, also up 23 percent. Cash flow from operations was $9.4 million. I had a chance to talk with CEO Zach Nelson about the results and the state of NetSuite’s business, and as usual he had a lot to say, especially about his biggest competitor, SAP. NetSuite started small but as its software has grown more complex, its customers have gotten bigger and bigger, lured by the promise that they can not only run their expensive enterprise resource planning (ERP) software cheaper in the cloud than in their own data centers, but do it better. NetSuite, which last year did $193 million in sales, has already done $172 million for the first nine months of the year, and that’s ahead of the historically strong fourth quarter. AllThingsD: Zach, NetSuite is setting records on a lot of fronts this quarter. What’s driving the business? Is it companies swapping other stuff out for yours? Nelson: In our case because we do all the back office stuff, someone is always swapping something out for NetSuite. And what’s changing is the profile of what they’re swapping out. In the old days when we were getting started it used to be Quickbooks. Today it’s SAP and Great Plains, and Infor, the very large, mid-market and enterprise ERP. We also set a record for average selling price, and that’s because we keep selling to larger and larger companies. It’s funny you should mention SAP. I visited with its co-CEO Bill McDermott the other day and he was talking about SAP’s new cloud-based offerings. What kind of a threat do you see there? I think when SAP talks about the cloud its enormously helpful to our business

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NetSuite Sales Surge, Making for a Good Day in the Cloud



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