NetSuite sales surge in Q3

The cloud ERP vendor handily topped expectation as deferred revenue swelled compared to a year ago.

NetSuite's third quarter highlights how the company is landing more big deals and increasingly becoming a cloud enterprise resource planning option.

The company reported a third quarter loss of $29.3 million, or 38 cents a share, on revenue of $143.7 million, up 34 percent from a year ago. Non-GAAP earnings came in at 11 cents a share for the third quarter.

Wall Street was looking for a non-GAAP profit of 4 cents a share on revenue of $141.6 million.

One caveat on the results. The company benefited from a stronger U.S. dollar. When the dollar rises, NetSuite sees lower expenses in its international subsidiaries. NetSuite benefits even more because only 25 percent of its revenue is generated outside of the U.S.

As for the outlook, NetSuite projected fourth quarter sales of about $154.6 million with non-GAAP earnings of 8 cents to 10 cents a share. For the year, NetSuite sees revenue between $545 million and $555 million with non-GAAP earnings between 24 cents a share and 26 cents a share.

Zach Nelson, CEO of NetSuite, said on the company's earnings conference call:

  • 380 customers moved to NetSuite across multiple verticals including retailing, manufacturing, technology and wholesale distribution.
  • NetSuite OneWorld had a record average selling price and percentage of new business. 
  • The company saw a record number of $1 million deals.

By the numbers:

  • Deferred revenue as of Sept. 30 was $256.9 million, up from $211.7 million a year ago.
  • NetSuite had cash and equivalents of $387.4 million at the end of quarter.
  • Subscription and support revenue was $115.8 million for the third quarter and $27.83 million was professional services.
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