Revenue of $36.6 Million Up 43% Over Q2 2007
Short-Term Deferred Revenue Growth Rate More than Doubles Quarter-Over-Quarter
Reiterates Fiscal Year 2008 Outlook
SAN MATEO, Calif.—August 5, 2008—NetSuite Inc. (NYSE: N), a leading vendor of on-demand, integrated business management software suites for mid-market enterprises and divisions of large companies, today announced operating results for its second quarter, which ended June 30, 2008.
Total revenue for the second quarter was $36.6 million, a 43% increase over the second quarter of 2007, and a 7% increase over the first quarter of 2008. The second quarter of 2008 marked the 35th consecutive quarter of increased revenue for NetSuite.
On a GAAP basis, net loss for the second quarter of 2008 was $(3.1 million), or $(0.05) per share, compared to $(9.6 million), or $(1.22) per share in the second quarter of 2007, an improvement of 67%.
Net loss on a non-GAAP basis for the second quarter of 2008 was $(0.9 million), or $(0.01) per share, compared with $(1.4 million), or $(0.02) per share in the second quarter of 2007, an improvement of 34%.
Net loss on a non-GAAP basis excludes expenses related to stock-based compensation and the amortisation of acquisition-related intangible assets. A reconciliation of net loss and net loss per share on a non-GAAP basis to their comparable measures on a GAAP basis is provided below in a table immediately following the Condensed Consolidated Statements of Operations.
Revenue from the Americas for the second quarter of 2008 was $29.2 million, while revenue from international regions outside of the Americas was $7.4 million, and now comprises 20% of total revenue. The Company added more than 400 new customers in the second quarter.
Short-term deferred revenue grew by 5% to $63.9 million over the first quarter of 2008. This is compared to a growth rate of 2% in the first quarter of 2008 over the fourth quarter of 2007, a 127% improvement in the rate of growth. These comparisons exclude the accounting impact of the Company's 2006 partnership agreements related to its Japanese subsidiary.
"While traditional mid-market application vendors struggle, our growth and record Q2 results validate our belief that mid-sized companies are hungry for an integrated suite of applications delivered on demand," said Zach Nelson, CEO of NetSuite. "Our continued success indicates that adding industry-specific functionality to support the needs of larger organisations, and investing in the services and support that make customers successful with NetSuite, are the right strategies and will continue to expand our market."
Based on information as of August 5, 2008, NetSuite is providing the following outlook for its third quarter of 2008 and its full fiscal year 2008:
Q3 FY08: For thethird quarter of2008, NetSuite expects total revenue in the range of $40.0 million to $40.7 million. Non-GAAP net loss, which excludes the impact of stock-based compensation expense and the amortisation of acquisition-related intangible assets, is expected to be in the range of $(1.5 million) to $(0.9 million). Non-GAAP net loss per share is expected to be in the range of approximately $(0.02) to $(0.01). Weighted average shares for the quarter are estimated to be approximately 62.3 million shares.
Full Year FY08: For thefull year 2008, NetSuite expects total revenue in the range of $156 million to $159 million. Non-GAAP net loss, which excludes the impact of stock-based compensation expense and the amortisation of acquisition-related intangible assets, is expected to be in the range of $(3.5 million) to $(2.5 million). Non-GAAP net loss per share is expected to be in the range of approximately $(0.06) to $(0.04). Weighted average shares for the year are estimated to be approximately 61.3 million shares.
NetSuite will host a conference call to discuss its second quarter 2008 results at 2:00 p.m. Pacific Daylight Time (PDT) today. A live audio webcast of the conference call, together with detailed financial information, can be accessed through the company's Investor Relations Web site at http://www.netsuite.co.uk/investors. In addition, an archive of the webcast can be accessed through the same link for at least 30 days. Participants may also call into the conference call by calling 888-726-2470 domestically and 913-312-0733 internationally. A replay of the call will be available at 888-203-1112 or 719-457-0820, passcode 5391436, until 12:00 midnight PDT on August 7, 2008.
NetSuite Inc. is a leading vendor of on-demand, integrated business management software suites for mid-sized businesses and divisions of large companies. NetSuite enables mid-market companies to manage core business operations in a single system, which includes accounting / enterprise resource planning (ERP), customer relationship management (CRM), and ecommerce. NetSuite's patent-pending "real-time dashboard" technology provides an easy-to-use view into up-to-date, role-specific business information.
Cautionary Note Regarding Forward-Looking Statements
This press release and the scheduled conference call contain forward-looking statements relating to expectations, plans, prospects, or financial results for NetSuite, which include but are not limited to the outlook stated above. These forward-looking statements are based upon current expectations and beliefs of NetSuite's management as of August 5, 2008, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. All forward-looking statements in this press release are based on information available to the Company as of the date hereof, and NetSuite disclaims any obligation to update these forward-looking statements.
In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the market for on-demand services may develop more slowly than expected; quarterly operating results may fluctuate more than expected; unexpected disruptions of service at the Company's data centre may occur; a security breach may impact operations; risks associated with material defects or errors in the Company's software or the effect of undetected computer viruses could impact operations; the risk of technological developments and innovations by others; our ability to successfully integrate and manage OpenAir, Inc. ("OpenAir") after our recently completed acquisition; our ability to identify and successfully integrate other businesses and technologies; the risk of loss of power or disruption in Internet service; failure to manage growth; the ability to manage operations when faced with competitive pricing and marketing strategies by competitors; the risk of losing key employees; increased demands on employees and costs associated with operating as a public company; evolving government regulation of the Internet and Ecommerce; changes to current accounting rules; general political, economic and market conditions and events, including war, conflict or acts of terrorism; and other risks and uncertainties.
For a detailed discussion of these and other cautionary statements, please refer to the risk factors discussed in filings with the U.S. Securities and Exchange Commission ("SEC"), including but not limited to the Company's Quarterly Report on Form 10-Q filed on May 13, 2008, and any subsequently filed reports on Forms 10-Q and 8-K. All documents are available through the SEC's Electronic Data Gathering Analysis and Retrieval system (EDGAR) at www.sec.gov or NetSuite's website at www.netsuite.co.uk.
Non-GAAP Financial Measures
The Company's stated results include certain non-GAAP financial measures, including net loss, weighted average shares outstanding, and net loss per share. Non-GAAP net loss also excludes expenses related to the amortisation of acquisition-related intangible assets. Non-GAAP net loss excludes these expenses as they are non-cash items, can be difficult to predict, and are often excluded by other companies. Additionally, non-GAAP weighted average shares outstanding, the denominator for the non-GAAP net loss per share calculation for the periods during 2007, assumes that the conversion of preferred stock and the issuance of common stock as part of the Company's Initial Public Offering had occurred at the beginning of the applicable period. The Company considers these events to be non-routine, and believes these adjustments provide useful comparative information to investors.
The Company considers these non-GAAP financial measures to be important because they provide useful measures of the operational performance of the Company and are used by the Company's management for that purpose. In addition, investors often use measures such as these to evaluate the financial performance of a company. Non-GAAP results are presented for supplemental informational purposes only for understanding the Company's operating results. The non-GAAP results should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies.
A copy of this press release can be found on the company's Investor Relations Website at www.netsuite.co.uk/investors.
Click here to download press release, financial tables, and non-GAAP reconciliation.
NOTE: NetSuite and the NetSuite logo are registered service marks of NetSuite Inc.