NetSuite bullish on saas business, swipes at SAP, Microsoft and Sage

During the first earnings conference call following its IPO, NetSuite CEO Zach Nelson was in bullish mood, summarizing 2007 as "The year of the suite. By any measure...the move to the on-demand imperative became inevitable." International revenue doubled and now international revenues account for 18 per cent compared to 14 per cent in 2006. The company added 432 customers in the quarter which is in line with its expectations to continue adding customers in the 300-500 range per quarter. E-commerce customers reported 88 per cent increase in revenue and 100 per cent uptime during the holiday season. NetSuite is also adding larger customers, citing Premier Global Services which switched more than 1,000 seats from Salesforce.com to a global solution. Explaining how this works, Nelson said that: "If you look at the competitive landscape we're usually competing against two or more applications...When they [customers] move away from QuickBooks, they're looking for a business suite and not another accounting package."

Asked if economic factors are impacting the business, Nelson said: "We're a counter cyclical business because we can cut your costs and improve efficiency...Not seeing any impact from any change in general economic conditions." Looking more broadly at the market, Nelson took swipes at SAP, Sage and Microsoft. On SAP, he said: "We've got the code pretty well cracked for upselling existing customers. I still don't think you can buy this product (BBD) - we haven't seen it because you can't buy it...I think they're being a bit disingenuous about completeness." On Microsoft he said: "Great Plains will do anything to keep us out of a deal. " Finally, Nelson claims: "People are running away from Sage."

On more general business building issues, he claims the company is: "Seeing a lot of traction for vertical solutions building on top of the main product with Suite Bundler...We've always seen our market as the gap between QuickBooks and SAP. How we build that is based on verticalization...We can handle the larger customers going forward because we've concentrated the edge cases."

Analysts re bullish about NetSuite's prospects with ThinkEquity estimating revenue at $160 million in 2008, an increase of 48 per cent over 2007 raising to $220 million in 2009. According to The Street: shares were up 51 cents, or 2.2 per cent, to $24 in after-hours trading.

None of the analysts on the call raised any questions about service and support issues