NetSuite's Q3 revenues top $40.4 million but...
Today is turning out to be a good day for saas/on-demand fans. Dreamforce got off to a jolly start and NetSuite recorded a third quarter, exactly in line with Wall Street expectations, with revenue at $40.4 million, a 44% increase over the third quarter of 2007 at $28.6 million, and an 11% increase over the second quarter of 2008. On a GAAP basis, net loss for the third quarter of 2008 was $6.2 million compared to $1.8 million in the third quarter of 2007.
During the quarter, NetSuite added 330 new customers, at the lower end of NetSuite's declared 300 to 500 new customers per quarter. The company also said that it beat out its average $30,000 per customers value in the quarter. Short-term deferred revenue grew to $64.2 million compared to $59.8 million at December 31, 2007 and $56.0 million at September 30, 2007.
As has become customary, Zach Nelson, NetSuite's CEO used the earnings call to both call attention to the success of NetSuite as an integrated offering while having a pop at the competition. "Our bookings were good but were impacted by jitters in the markets. In the last two days of our quarter, we saw a freezing of our pipeline due to the inability of the US Congress to pass the initial Wall Street bailout bill...Paying roughly $100 per user per month for basic SFA functionality, will receive scrutiny...in the next few days we will be rolling out a program for SAP customers suffering under the burden of enormous maintenance and support contracts to reduce their costs by at least 50 percent by switching to NetSuite and we will highlight companies that have done exactly that."
Commenting on what has happened in October, Nelson said it felt like a 'normal' quarter though he stressed that it is is too early to draw firm conclusions for the full year outcome. The company is being cautious about the current quarter on new business and churn with a forecast that analysts on the call believe will see the company record around 32% year-on-year growth.
NetSuite noted that during the last main downturn, companies turned to suite offerings rather than continue with point solutions as a way to reduce risk. The company is hoping to capitalize on what it believes will be a revived trend that will allow it to attack both the Salesforce.com and SAP mid-range customer markets. "We are not experiencing any price pressure from our competitors...We expect to put price pressure on our competitors," Nelson concluded