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Here's a tale of two PC titans: HP and Dell. One executes well every quarter. The other doesn't. Both see big PC upgrade cycles ahead. Both are looking to ride... Continued »
Category: NetSuite
September 29th, 2009
Jesubi streamlines, automates CRM software to wring more productivity from your sales team
Customer relations management upstart Jesubi on Tuesday announced its first product, an eponymous CRM solution that streamlines unwieldy Sales Force Automation programs through a sleek interface, templates and reports.
Designed as both an alternative or complement that piggybacks on existing solutions such as Salesforce.com or NetSuite, Jesubi’s whole goal is to reduce the time wasted inside CRM software so your team can spend more of it working on chasing clients.
I had Bill Johnson, founder and CEO of the company, come to ZDNet HQ in New York to demonstrate his offering in person. Though his company is three years old, Johnson has 25 years of tech solutions under his belt — and he stressed that Jesubi’s primary goal is to make CRM software much easier to work with for the end-user.
For Jesubi, that means far fewer clicks to get data into the system. Users can automatically record inbound responses, record voicemail, log an e-mail, see activity history and view status. Johnson showed me a marked increase of average touches per hour when he first implemented the solution on his own team, helping to increase appointment output and decrease his team’s cost per appointment.
September 24th, 2009
NetSuite launches iPhone app
NetSuite on Thursday said it has launched its cloud ERP system via an application for the iPhone and iPod touch.
With the move, NetSuite has most of its mobile devices covered. NetSuite has apps for the iPhone as well as BlackBerry and Windows Mobile devices.
The NetSuite iPhone app has had more than 1,000 downloads in the first two weeks of availability. The NetSuite app features real-time dashboards that aggregate enterprise resource planning, customer relationship management and e-commerce data. NetSuite also provides access to calendar, lead and prospect data, customer records and productivity tools.
July 31st, 2009
Where's the tipping point for on-demand ERP?
NetSuite delivered a solid quarter, indicated it was gaining traction with its OneWorld ERP suite and took a few jabs at SAP’s Business By Design. The larger question: Where’s the tipping point for on-demand ERP?
That question was raised by JMP Securities analyst Patrick Walravens. The tipping point question is worth asking. The ramp for enterprise resource planning applications delivered as a service has been slower than categories that are easier to implement—such as CRM. However, you can project out to a point where on demand ERP will gain more momentum.
Walravens in a research note indicates that the tipping point for NetSuite may be two to three years away. He said:
July 30th, 2009
NetSuite's second quarter better than expected
NetSuite on Thursday delivered second quarter financial results that were better than expected. The company also said it garnered higher prices.
The company reported a second quarter net loss of $5 million, or 8 cents a share, on revenue of $40.3 million, up 10 percent from a year ago. In the year ago quarter, NetSuite had a net loss of $3.1 million, or 5 cents a share.
Excluding items, NetSuite reported a second quarter non-GAAP profit of $687,000, or a penny a share. Wall Street was expecting NetSuite to break even.
In a statement, NetSuite CEO Zach Nelson said the company garnered more new customers the quarter at a higher average selling price.
Separately, NetSuite announced that Jollibee, a Filipino fast food chain, will implement the company’s OneWorld Suite. Jollibee’s 1,800 restaurants around the world including the U.S., Vietnam and China. NetSuite said the Jollibee roll-out will be completed in August.
May 22nd, 2009
A Real ROI from Twitter? The Start of Social Medical Networks
There may not be a big enough return on tweeting yet to report it to your CFO. But it won’t be long before there’s a clear, return on tweeting to report it to your doctor.
Let’s say your daughter is suffering from autism, as is Sophie Nelson, the daughter of Elizabeth Horn. She could be singing a rendition of her favorite pop song for a gathering of the Parent-Teachers Association at a local school – and start to slur her speech.
If you’re Elizabeth, you would pull out your smartphone and send a tweet to a database that is tracking Sophie’s condition, every day. You’d put a hash tag on it, such #AU-EL. “AU” for the autism database, “EL” for “Expressive Language.” You might follow it with a number, like “-3” to rate the performance. The sending of the tweet would put a time stamp on it.
Sound farfetched? It’s not.
On Sunday, the era of social networking gives rise to one of the first steps into an era of medical networking. Where families and friends who barely know each other come together to solve chronic conditions that befall loved ones.
At the Autism One Conference in Chicago, a Web-based program for collecting data on individual cases of the brain development disorder will be unveiled. It’s called ChARMTracker and is designed, at the start, to help ease the burdens of each parent trying to keep track of the drugs, nutritional supplements, physical therapies and dietary tacks being taken to treat their sons or daughters. They will also use it to keep track of any observations about their behaviors that might seem pertinent and how their children are performing academically, as a result of the constantly changing constellation of combinations that are being applied to the still-mystic condition.
ChARMTracker is the product of two software companies whose CEOs have either a son or a daughter afflicted by autism. Both are companies which provide software to consumer or commercial users as a service, from the Web.
Read the rest of this entry »
May 5th, 2009
NetSuite shares plummet day after report of "impressive" growth
Shares of NetSuite, which reported first quarter results yesterday, is taking a beating on Wall Street today, with shares plummeting nearly 20 percent in regular trading, despite the “impressive” growth that the CEO referenced in his earnings statement.
First quarter revenue was up 22 percent for the quarter but analysts today are downgrading the stock. Piper Jaffray, for example, writes in a note to investors:
With the approaching competitive entry of industry giant SAP into NetSuite’s core market, and a likelihood of single-digit revenue growth in 2H:09, the current premium valuation on NetSuite shares is unwarranted, in our opinion.
The Piper Jaffray note also references a weak Q1, noting that revenue - despite being up - missed Wall Street’s estimates and further notes that cash flow was weak and “customer adds plummeted 40 percent” from a year ago. In addition, the guidance for Q2 and the fiscal year were weak - both in revenue and EPS.
In a note to investors, Wedbush analysts wrote:
We remain neutral on NetSuite shares as revenue growth is expected to decelerate materially throughout 2009 stemming from issues associated with the global recession, as well as purchasing delays from larger customers looking to preserve capital. While Q1 results were roughly in line with expectations, the degree to which NetSuite management expects their business to decelerate over the next few quarters is much lower than we believe investors were anticipating.
And in a separate note, JMP Securities analysts note that, while they were disappointed with the performance for the quarter, they “like NetSuite long term.” The analysts wrote:
The stock traded down in the after-market, and we would recommend buying on a dip because, at a fundamental level, we think NetSuite may be the best positioned name in our universe. NetSuite has the strongest on demand ERP product, is well capitalized, and continues to expand its lead over the competition, in our opinion.
May 4th, 2009
Netsuite reports Q1; CEO calls growth "impressive"
NetSuite, which makes Web-based business software, reported a first quarter net loss of $3.7 million, or 6 cents per share, on sales of $41.6 million, a 22 percent increase over the year-ago quarter. Excluding items, the company reported a first quarter profit of $1 million, or 2 cents per share. Wall Street analysts had been expecting a break-even quarter. (Statement)
The company reported a net loss of $2 million, or 3 cents per share, for the year-ago quarter. Excluding items, the year-ago quarter saw a net loss of $420,000, or 1 cent per share.
In a statement, company CEO Zach Nelson said:
We delivered results that not only met our goals, but also indicate that NetSuite continues to take market share and execute on our strategic initiatives of moving up market and extending the NetSuite platform. In particular, our growth of non-GAAP profitability from the prior quarter was impressive.
Last month, the company announced a set of connectors from third party developers that will hook up its enterprise planning software suite with Salesforce.com’s CRM apps. The idea is to allow Salesforce.com customers to integrate NetSuite applications into their arsenal of software as a service applications.
In a post last month, ZDNet Editor-in-Chief Larry Dignan wrote about the announcement:
For NetSuite, the connection to Salesforce.com just makes sense. For starters, Salesforce is much larger in terms of annual revenue and has a larger installed base. If NetSuite can tap into an already SaaS-savvy audience it can add more customers.
Shares of NetSuite were up not quite three percent in regular trading, closing at $14.38. Shares slipped slightly in after-hours trading.
May 1st, 2009
Oracle about to step up its SaaS efforts?
Update: Oracle is reportedly getting more aggressive about software as a service with plans to expand its on-demand lineup.
The Wall Street Journal and Reuters report that Oracle has been briefing analysts about its SaaS strategy. And apparently these plans go beyond simply buying NetSuite, which is majority owned by Ellison, or gobbling up Salesforce.com.
The Journal’s Ben Worthen writes:
The software giant is working on seven new online products, including offerings to help business run sales campaigns, keep track of employees and job applicants, according to people briefed on the plans and a company document reviewed by The Wall Street Journal. Oracle is developing online software to handle marketing and product management as well as a product targeted at the insurance industry, the document shows.
Update: There are a few questions about the Journal report. Sources indicate that Oracle isn’t planning any big strategy shift and it’s even questionable whether there are 7 new SaaS products planned.
Also see Dennis Howlett: Oracle’s cloudy announcements
To date, Oracle’s on-demand software efforts have mostly revolved around Siebel. But in recent quarters Oracle appears to have become more serious about SaaS and has continually added features to Siebel CRM On Demand (below). Indeed, the Salesforce.com mentions on Oracle conference calls have skyrocketed. Oracle execs now pan Salesforce.com as much as they do SAP these days.
The move runs counter to Ellison’s previous contention that there’s no money in SaaS. That’s largely true relative to Oracle’s overall business but the database giant is clearly dabbling in SaaS.
Also see: Enterprise vendors: in pursuit of reality
However, the SaaS deployments are getting larger by the day. Once SaaS players are starting to land big deployments Oracle has to start paying attention. For instance, SuccessFactors landed a 300,000 user deployment at a large retailer that is most likely Wal-Mart, according to two sources familiar with the matter. If SaaS is good enough for a massive retailer it’s probably good enough for Oracle too.
Why does Oracle need to make its SaaS move now?
For starters, there’s a big move by CFOs to cut IT costs and that means turning capital expenditures (large ERP implementations) into operating expenses (SaaS). Meanwhile, customers are pushing back on maintenance hikes (see SAP’s retreat). Then there’s good old fashioned competition—Workday, which landed a big wad of VC funding, Salesforce.com, NetSuite and a bevy of others are all threats to Oracle, which has to be getting bored buying struggling companies like Sun and BEA. And the final kicker for Oracle: SAP is still dawdling with its BusinessByDesign SaaS effort and to date is basically still a pilot. Oracle could leapfrog SAP as engineers overthink BusinessByDesign features.
More reading:
April 2nd, 2009
NetSuite aims to connect to Salesforce.com's cloud
NetSuite on Thursday announced a set of connectors from third party developers that will hook up its enterprise planning software suite with Salesforce.com’s CRM apps.
The idea: Allow Salesforce.com customers to integrate NetSuite applications into their arsenal of software as a service applications. The effort is dubbed SuiteCloud Connect for Salesforce.com.
NetSuite CEO Zach Nelson in an interview likened the SuiteCloud Connect effort as a way to link Salesforce.com’s “CRM cloud” with NetSuite’s “business application cloud.” NetSuite and Salesforce.com have hundreds of joint customers and Nelson expects that number to increase going forward. Nelson said:
“We have functionality that’s complimentary to Salesforce.com. What Saleforce.com has done for sales users is what we’ve we done for automating processes. This will be a win for joint customers both can use this to open up the market more.”
The move is notable given the hubbub last week over IBM’s Open Cloud Manifesto, which didn’t garner sign-offs from major cloud players such as Amazon, Salesforce, Google and Microsoft. Meanwhile, other cloud companies including NetSuite and SuccessFactors didn’t sign on either.
Why the holdouts? These companies argue that customers will demand that clouds connect anyway and ultimately pick the standards.
For NetSuite, the connection to Salesforce.com just makes sense. For starters, Salesforce is much larger in terms of annual revenue and has a larger installed base. If NetSuite can tap into an already SaaS-savvy audience it can add more customers.
Also see: Salesforce.com: Pondering the next 10 years
In a nutshell, SuiteCloud Connect is a group of integration applications that meld Salesforce.com’s salesforce automation and customer relationship management software with NetSuite’s ERP suite. NetSuite is hoping that the connection allows for best-of-breed SaaS deployments. Vendors such as Boomi, Celigo, Pervasive Software and Cast Iron Systems are the developers and integrators tying NetSuite and Salesforce together. These go-between vendors worked closely with NetSuite and Salesforce.com to align the data models. Nelson noted that NetSuite didn’t build the connectors directly.
For the customer, NetSuite says its back office ERP and e-commerce apps such as order management, fulfillment and accounting will be seen within Salesforce.com’s CRM software. Account information is also synchronized. This synchronization will be carried out with a series of SaaS integration experts.
Here’s how NetSuite sees these connections happening:
A few thoughts on this development:
- For starters, NetSuite’s move highlights the maturity of the SaaS market. Nelson noted that SaaS has come a long way in the last decade and has now reached the point where it can give serious competition to the incumbent on-premise software players.
- On the other hand, SaaS can become complicated and you still may find systems integrators and consultants mixed up in your deployments.
- Look for multiple connections like this as customers cobble together SaaS suites. On this point, Nelson made a few notable comments. He expects a little swing to a best-of-breed approach, but ultimately the suite approach will win out again.
- “The best of breed approach depends on the size of customers. If you have three SaaS providers that’s three administration panels to manage,” said Nelson. “The small customers prefer one suite. Larger companies are used to multi-vendor environments, but still have one system of record and that tends to be the ERP system. In very large companies the market is opening for SaaS, but ultimately it’s still about suites.” That suite approach is likely to remain dominant because it’s easier to synchronize data.
- And then there’s another layer to ponder. HP this week announced a SaaS suite that manages other SaaS provider s. A service to manage your services if you will. HP’s suite aims to ensure security policies and service level agreements are kept.
- The risk here is that SaaS gets so complicated that it starts to mimic the problems involved with on-premise software implementations.
March 16th, 2009
Salesforce.com: Pondering the next 10 years
Salesforce.com turns 10 Monday and in the last decade it has cemented its standing as a leading enterprise software vendor and leader of the software as a service and cloud computing charge. However, the next 10 years may be much more interesting.
Salesforce.com, officially launched in a San Francisco apartment March 16, 1999, finds itself at an inflection point. The company is posting solid financial results, saw fourth quarter sales jump 34 percent from a year ago and continues to poach customers who are sick of high maintenance costs. And the company is the first of its ilk to hit the $1 billion revenue mark.
The big question: Where does the company go from here? It has developed Force.com a platform for on-demand applications and a marketplace for software, but is largely a SaaS customer relationship management software firm (its ticker is “CRM”). Salesforce.com is increasingly targeting large enterprises—the playground of Oracle and SAP, two companies with a lot more sales resources. Here’s a look at my five top unresolved issues for Salesforce.com in the years ahead:
February 10th, 2009
NetSuite fourth quarter better than expected
NetSuite, an enterprise software as a service company, reported a fourth quarter profit excluding charges–its first ever.
The company reported a net loss of $4.5 million, or 7 cents a share, on revenue of $41.4 million, up 30 percent from a year ago. Excluding noncash charges, NetSuite had a profit of $534,000, or a penny a share. Wall Street was expecting a loss of a penny a share.
For the year, NetSuite reported revenue of $152.5, up 40 percent from 2007, with a loss of $15.9 million, or 26 cents a share (statement).
By the numbers:
- Revenue from the Americas was $123.4 million with international sales of $29.1 million.
- NetSuite added 350 new customers and ended with 6,600 active companies.
- The company ended the year with $123.6 million, compared to $169.4 million a year ago.
- Accounts receivables were $26.7 million as of Dec. 31, up from $18.7 million at the end of 2007.
In a statement, NetSuite CEO Zach Nelson said the quarter was its “best to date.”
January 30th, 2009
Tipping Point Reached For Cloud Computing?
Has the tipping point come for software to be widely adopted as an online service?
William S. McNee, president and CEO of Saugatuck Technology in Westport, CT, believes it has.
He says that mainstream adoption within small and medium-sized businesses is “accelerating” – and that 20 percent of enterprise IT workloads will be run “in the cloud” by 2013.
This will lower operating costs, reduce IT staffs and cut down on carbon footprints, he says.
Speaking recently at a forum sponsored by a software-as-a-service purveyor, NetSuite, held at the New York Stock Exchange, McNee said, “On-premise solutions are going to drop off the cliff.”
Basing his comments on a survey by Saugatuck of 150 chief financial officers with budget authority, he said the movement toward what increasingly is being called “cloud computing” will put not just payroll and other administrative processes on remote servers and software, but “mission-critical computing,” as well.
The chart atop this story shows, in red, the applications that Saugatuck expects to see the greatest acceleration in adoption this year and next. Whereas only 18.3 percent of companies said they would use some form of software as a service in their finance and accounting operations by the end of 2008, twice as many, or 39.3%, expect to by the end of 2010. Also rising rapidly: Compliance and risk management, procurement, and business intelligence applications.
Driving the movement is an expectation that new services can be unrolled faster, improvements made behind the scene without staff, ease of integrating services not just by application but across geographies and countries, and lower total costs, compared to in-house applications. That will help the CFOs fill in an estimated two-thirds of the gaps they face in meeting their ROI goals over this span of time, he said.
The survey was taken in summer 2008, before the Fall brought a credit crisis and global economic slowdown. So the gaps could be bigger, now.
Nonetheless, by the end of 2010, in fact, he expects 70% of companies will have deployed at least one application in the service “cloud.”
Putting computing into the cloud makes it easier to update and integrate services. McNee asserted that more than 70 percent of SAP’s installations of its R/3 set of business applications predate 1998.
December 15th, 2008
Enterprise software: A tour of the year ahead
Despite the recession 2009 is going to be a critical year for all of those key vendors that best describe their turf in acronyms–CRM, ERP, BPO and perhaps a relatively new one VRM.
Those acronyms, which stand for customer relationship management, enterprise resource planning, business process outsourcing and vendor relationship management, respectively, are going to be more than just a jargon in the year ahead. They are going to be critical to your business as you either ponder upgrades, stand pat or try to figure out how they can help you revamp your business.
As I go around the horn among our ZDNet bloggers, there are a few thoughts that stick out.
November 11th, 2008
NetSuite snags HP partnership, expands channel
NetSuite now has a big brother to expand its footprint: Hewlett-Packard.
In a partnership announced Tuesday (statement), NetSuite and HP said they will partner to offer software as a service applications to small and midsized businesses. In a nutshell, NetSuite will tap into HP’s 15,000 value-added resellers.
Whether the HP deal expands NetSuite’s customer base remains to be seen, but a channel deal of that size certainly isn’t going to hurt. The partnership with HP could become key for NetSuite, which is seeing the effects of an economic downturn just like other enterprise software vendors.
As for the details, NetSuite’s apps will be bundled into HP’s portfolio and deployed by channel partners. In the future, HP will be able to offer a mix of SaaS and traditional applications.
Also see: Software as a service: It should be the best of times, but it isn’t
November 5th, 2008
Software as a service: It should be the best of times, but it isn't
It’s a big week for the software as a service industry: Salesforce.com is establishing itself as a leading cloud computing provider, NetSuite is planning to take on SAP head on and Success Factors is upping its outlook. But underneath the surface there are more than a few questions marks lurking.
In theory, companies like Salesforce.com and NetSuite should thrive in a downturn. Customers can take what was a capital expense and turn IT into an operational cost. Forrester argues that the bean counters may give cloud computing and software as a service (SaaS) a boost. Gartner argues that software megavendors like SAP and Oracle will have trouble squeezing more revenue out of customers.
But a funny thing is happening along the way to SaaS domination: These companies were hit with the same IT spending freeze as their larger rivals. Exhibit A is NetSuite. The company was widely panned for its fourth quarter outlook. As Dennis Howlett notes NetSuite reported a mixed third quarter that fell a penny short of Wall Street estimates. However, the outlook was shaky at best.
September 5th, 2008
NetSuite moves early to support Chrome
NetSuite said Friday that it will offer native support for Google’s Chrome browser, which is in beta and may not be enterprise strength yet.
In a statement, NetSuite said its CRM, e-commerce, accounting and OpenAir unit will support Chrome in phases with support being complete in mid-October. The enterprise implications of Chrome are a bit unclear at the moment and it’s notable that NetSuite is moving so early to a browser that still has plug-in problems and open ended security questions.
Also see: Google Chrome vulnerable to carpet-bombing flaw
Security-wise, Google Chrome is (potentially very) Good
DoS vulnerability hits Google’s Chrome, crashes with all tabs
When asked whether NetSuite was moving too early a company spokesperson noted that the company is cautioning that Chrome (all coverage) is in the beta stage and there are bugs. In other words, NetSuite knows it is early, but thinks the rewards outweigh the risks. All things considered NetSuite said it is “determined to try to be everywhere customers want to be.”
I outlined the enterprise playbook on Chrome’s launch and noted how it may make sense to give it a spin and hang back to see how it develops. The thinking went like this: Your users will download Chrome so you’ll have to support it anyway. The problem is Google has a penchant for perpetual betas. Dennis Howlett noted that no CEO, CFO, CIO etc. should pay much attention to it. ReadWriteWeb offers similar findings.
Yet here’s NetSuite going whole hog on Chrome. NetSuite’s argument is that it’s about choice. If a customer wants to go Chrome, NetSuite will be ready to roll with it–and Firefox 3 and iPhone apps–with native support.
NetSuite’s company line:
Since it is optimized for Web 2.0, the new Google Chrome Browser enhances the performance speed for AJAX-powered features of NetSuite, such as eXtreme list editing, type-ahead lookups, rich text editing, drag-and-drop and quick-add portlets. OpenAir experiences similar performance gains for dynamic workflows, such as assigning project resources and managing project tasks. NetSuite and OpenAir support three other Web browsers: Internet Explorer, Firefox and Safari.
Fair enough and given NetSuite’s customers are the early adopter types it makes sense. What’s unclear is whether NetSuite’s customers actually are standardizing on browsers other than IE and Firefox.
August 8th, 2008
The Tech I.P.O. 2008, R.I.P.
There was not a single fresh offering of stock in a technology company to the public in the quarter ended June 30. That kind of goose egg hasn’t been laid since 1978.
Don’t expect that to change any time, soon.
Let’s look at the last darling of Silicon Valley to go public with the gusto of ‘investors’ behind it.
That would be NetSuite, the corporate-software-as-an-online-service company that is a Larry Ellison offspring.
The company, now 10 years old, used the auction system to run its initial take up to $26 a share, double the expected $13.
That was December 20. The next day, shares almost doubled again, to $46 (see “52-week high”).
Christmas was great. But the new year has been wholly unkind. Sure, NetSuite is still losing money. That wasn’t news then and it’s not now. It’s narrowing the losses, and revenue is up 43% over a year earlier. Including payments for stock-based compensation, the company lost $3 million on revenue of $36.6 million in the second quarter.
Along the way, it bought and digested its first acquisition, the project software-as-a-service company, OpenAir.
But you would think the company was holding collateralized debt obligations or some other form of mortgage industry hocus-pocus. You sure can’t blame it on general malaise in the economy – when a company is growing 43%, year over year.
Since it hit that high on Dec. 21, NetSuite’s shares have slid almost 70%, to a low of $15.19. It’s up to $16.15, as this is being typed.
Here’s what the plunge looks like:
Here’s how it compares to the general performance of this bearish market, using the S&P 500 for comparison.
And here’s what the market pretty much equates NetSuite to: A company that has written off about $44 billion of assets since mid-2007 and, today, is ponying up another $10 billion to buy back another exotic instrument that is failing, the auction-rate securities its customers hold.
This would be Merrill Lynch and here is how Zach Nelson’s bear and John Thain’s bull stack up:
Put them all together, and the stock market itself looks pretty good. And NetSuite shares the cellar with an outfit that so far can’t seem to throw the junk out of its house fast enough.
As long as shares of a new tech issue like NetSuite are stuck in this kind of vortex, no software or hardware entrepreneur in right mind should want to get in the water.
June 2nd, 2008
NetSuite acquires OpenAir
NetSuite said Monday that it has acquired OpenAir, which provides on-demand professional services automation software, for $26 million in cash.
The tuck-in acquisition(statement)–all 56 OpenAir employees will continue to work at NetSuite–will give the company a Boston beachhead and an avenue to target the professional services vertical. NetSuite said in a statement that it will integrate OpenAir’s software to target services companies including IT consultants, legal and accounting firms and government contractors.
Also see: NetSuite turns into battlground among analysts; High hopes for OneWorld
NetSuite said it will continue to develop OpenAir’s software stand alone and integrate the software into its SaaS ERP suite later this year. The deal is expected to close this month.
NetSuite said it expects revenue for the second quarter of 2008 to remain in the $36 million to $36.7 million range. The loss excluding charges in the second quarter is expected to be 2 cents a share to a penny a share. NetSuite had projected a loss of two cents a share to break even last month.
For 2008, NetSuite projects revenue of $156 million to $159 million with a loss excluding charges to be about 6 cents a share to 4 cents a share. Last month, NetSuite projected revenue of $154 million to $157 million with a loss in the range of 4 cents a share to a penny a share.
May 2nd, 2008
NetSuite turns into battlground among analysts; High hopes for OneWorld
On the surface NetSuite’s first quarter was pretty good. The company beat its earnings targets by a penny a share and revenue was better than expected. However, the on-demand ERP software provider’s deferred revenue fell short of what analysts expected.
As Credit Suisse analyst Philip Winslow, who was feeling especially punny Friday, put it: The quarter was “suite and sour.” Other analysts weren’t as forgiving. Citigroup analysts Brent Thill maintained his sell rating saying that NetSuite’s growth didn’t match its stock valuation. NetSuite is turning out to be a real battleground for Wall Street with bullish analysts offset by those that doubt the on-demand ERP provider.
NetSuite on Thursday reported a first quarter net loss of $2 million, or 3 cents a share, on revenue of $34.1 million, up 47 percent from a year ago. Excluding items, NetSuite lost a penny a share. Wall Street was expecting a first quarter loss of 2 cents a share on revenue of $33.7 million, according to Thomson Financial.
For the second quarter, NetSuite projected revenue between $36 million to $36.7 million with a loss of 2 cents a share to break even. For 2008, NetSuite projected revenue of $154 million to $157 million with a loss in the range of 4 cents a share to a penny a share. That outlook was in line with expectations. On a conference call with analysts, NetSuite CEO Zach Nelson noted that the company had “excellent execution.”
However, deferred revenue–an indicator of demand in the pipeline–grew at a slower clip than expected. NetSuite’s short-term deferred revenue increased $1.3 million in the quarter and Winslow had expected $1.5 million. Long-term deferred revenue declined by $1.5 million in the first quarter to $8.9 million. Nelson said that NetSuite’s upselling customers to new services offsets any churn that the company is facing.
Here’s a look at NetSuite’s ledger. On the plus side of the equation, analysts say that NetSuite’s OneWorld suite should see strong demand. Meanwhile the OneWorld product cycle is just beginning and could benefit by SAP’s Business ByDesign delay.
Nelson said that SAP’s Business ByDesign marketing ahead of delivering an actual product has helped NetSuite’s demand. He likened it to what Oracle saw back in its early days. Nelson said Oracle’s database business was fine, but really took off when IBM preannounced a relational database. In other words, let your bigger rival do your marketing.
“SAP talking about this market is a good thing. They are creating demand for software that only one company can fulfill and that’s NetSuite,” said Nelson.
He added that SAP’s biggest struggle is that it has to revamp its distribution and services to pitch Business ByDesign, but also questioned how its largest rival is modeling its data. Bottom line: Nelson said OneWorld should fuel growth for NetSuite for “years to come.” NetSuite management also noted that it wasn’t seeing any impact from macroeconomic concerns.
On the negative side of the ledger, NetSuite is arguably more vulnerable to an IT spending fluctuations because the SMB segment may take a bigger economic hit in an economic slowdown. Analysts also expect lower margins from NetSuite than its SaaS peers. Why? It’s harder to sell an on-demand ERP suite than focused applications like CRM. NetSuite’s OneWorld integrates front- and back-office software with e-commerce capabilities. And slower than expected growth in deferred revenue isn’t helping NetSuite’s case.
NetSuite has nothing to be ashamed of–its quarter was solid. But if it is going allay the fears of its skeptics the company is going to have to knock the cover off the ball in future quarters.
April 17th, 2008
NetSuite rolls out OneWorld suite; Eyes ERP in the cloud
NetSuite on Thursday officially launched OneWorld, a cloud computing ERP, CRM and e-commerce suite designed for small and midmarket companies and divisions within large corporations.
The SaaS provider says OneWorld is for multinational companies looking to connect their operations across the globe. According to NetSuite the biggest change with OneWorld is that it operates off of one database instance.
Dan Farber talked to NetSuite CEO Zach Nelson, who noted that OneWorld solves the hairball problem in enterprise applications.
“OneWorld enables our customers to run their global businesses in real time with the click of the button,” Nelson said during the launch event in San Francisco. It solves the “hairball” problem, he explained. Companies with global businesses don’t have to cobble together data from different vendors and applications to get a consolidated P&L or sales forecast across countries or subsidiaries.
In a statement NetSuite said:
This re-architecture is the biggest product enhancement since the introduction of NetSuite itself, to provide the product’s signature capability to deliver deep and locally/nationally appropriate functionality (currency, taxation, language, reporting, dashboards, etc.) while providing for instantaneous global roll-up, visibility and compliance management.
Like NetSuite’s other offerings OneWorld is delivered via a browser. NetSuite’s argument is that a cloud computing approach is the best way to roll-up operational data for global companies relative to SAP or Microsoft Dynamics GP. OneWorld is delivered as an add-on to NetSuite for $1,999 a month. Thus far, 30 companies are using OneWorld and NetSuite says it has another 50 in the process of moving to the new service.
Is that $1,999 price tag too expensive?
Nelson told Dan:
“Our pricing is cheap if you look at the number of services we are replacing. It would cost $100 million to solve the multinational and multi-subsidiary management and consolidation issue if you implemented SAP on a global scale,” Nelson said. “We see companies trading out their existing ERP systems to get this feature. Switching ERP systems is a big deal, but the price point and functionality is compelling.”
Separately, NetSuite cited a handful of reference customers including Six Apart, Kana, Virgin Money Australia and Domin-8 Enterprise Solutions.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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