NetSuite announced record results across all metrics for its second quarter of fiscal 2011. An understandably excited Zach Nelson talked up big customer wins like Groupon and Qualcomm, over performance in professional services and the inking of the company's largest deal.
- Top line revenue reached $57.8 million, a 23% increase on the previous year
- Calculated billings, which represents billings plus or minus the change in deferred revenue was up 30% year over year
- Average deal size rose to $40,000
- Big deal global pipeline is up 85%.
- Operating cash flow jumped $8.4 million leaving the company with $121 million in cash
- Deferred revenue rose to $89.4 million
- 21% of recorded business came from international deals. The company saw some strength returning in Europe.
- The company brought on 328 additional customers, the highest number in more than two years
- Channel contribution grew 50% versus the same quarter last year.
- The revenue outlook is raised from $228-230 million to $233-235 million.
- The company recorded the largest, multi-million dollar, multi-year deal that saw NetSuite expanding its footprint from tier two subsidiares up to the US HQ of a 45,000 person services business. The plan is to implement ERP and industry specific functionality.
As has become par for the earnings call, Zach Nelson, NetSuite CEO used the opportunity to point out what he sees as deficiencies in competitor offerings: "We've been talking to Microsoft partners...as far as I can tell they're seeing dying products. The Dynamics channel is looking for a native web application...we're really happy with what we're seeing in the channel." Talking about the way the company is trading, Nelson said that customers are buying more NetSuite suite based solutions.
Surprisingly, Nelson said that manufacturing was strong. He implied the company enjoys a level of pull through from SAP Business ByDesign not moving heavily into that area. "I think we saw less of ByDesign in the quarter."
Moving forward, Nelson said he believes the newer channels based upon relationships with large accounting based consulting firms provide 'exciting' operations. "The Accenture partnership continues to be strong," he said.
Referring to the competitive landscape as it relates to SAP and Oracle, Nelson said: "We're getting into more deals where they're the other option...as well as deals where they're being replaced." The reality of course is that deals involving those competitors represent a tiny fraction of SAP/Oracle revenue.