July 27, 2012, 3:44 PM

NetSuite reports a 29% rise in revenue

Despite net loss, CEO Zachary Nelson says Q2 was best quarter ever.

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NetSuite Inc., provider of Internet-hosted e-commerce software and back-end applications including financial accounting and customer relationship management, reports total revenue of $74.7 million for the second quarter ended June 30, up 29% from $57.8 million in the same quarter last year.

“I would say it was arguably our best quarter ever. But hopefully, we're off to arguably our next best quarter,” Zachary Nelson, NetSuite’s CEO and president, said in a call with stock analysts.

NetSuite also reported for Q2:



● Software subscription and support revenue rose 27% year over year to $61.0 million from $48.2 million;

● Revenue from professional services and other sources rose 43% to $13.7 million from $9.6 million a year earlier;

● Net loss figured under general accepted accounting principles widened by 1% to $9.9 million from $9.8 million;

● Non-GAAP figures showed net income of $4.8 million, up about 200% from $1.6 million a year earlier. Non-GAAP figures exclude $14.7 million in non-cash expenses related to stock-based compensation and other items.

● Cash flow from operations rose about 80% to $15.2 million from $8.5 million a year earlier. Nelson said in the earnings call that the company does not have immediate plans for the extra cash but is always keeping an eye out for acquisitions.

In May, NetSuite unveiled a new comprehensive platform of e-commerce software, called SuiteCommerce, aimed at mid-sized and larger online retailers; previously the vendor’s e-retail clients were mainly smaller. In Q2, NetSuite added 329 new customers, including consumer products companies Land O’Lakes Inc. and Proctor & Gamble Co.

NetSuite hosts its software with client companies connecting to it via the Internet, in a model called software as a service or, increasingly, cloud hosting, which is key to the company’s growth, Nelson said.  “I think that's why you see us outperforming the market as opposed to other folks whose business model is basically built on shipping customers discs and daring them to install them,” he said in the earnings call. “That business model is fatally broken.” By the end of the year, NetSuite’s product development team will be more than double its size in 2010, he added.

Globally, 30% of NetSuite’s revenue growth in Q2 was in the United States, which accounts for about 74% of total revenue. Its fastest-growing region, however, is, is Asia-Pacific, chief financial officer Ronald Gill said in the conference call.

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