Rising losses on rising revenues are the norm for SaaS pure-plays and Netsuite is a firm participant in this trend. Q113 was no different but the level of increase across both metrics was notable. Revenue was up 32% yoy to $91.6m (Q4 saw a 31% increase) while the net loss worsened by 68% to hit $13m. The all important cash flow figure is improving appreciably however, up 39% to $14.7m.
At TechMarketView we think 2013 will be a ‘make or break’ year for back office SaaS, particularly in large enterprises. Netsuite’s progress is a window on this area. The average selling price was 14% up yoy in the period ending March 31 2013 which is indicative of larger sales but they will still be small compared to SAP and Oracle contracts. However, Netsuite’s growth substantially outpaces SAP (7% in its last quarter – see here) and Oracle (1% revenue decline – see here) so it is no doubt taking business from these providers and becoming more established within organisations.
It has intensified its two-tier ERP strategy approach (typically where SAP or Oracle are in deployed in the HQ but subsidiaries run something like Netsuite) with the aim of encouraging multiple subsidiaries to standardise on Netsuite and have the tier two solutions encroach into HQ. It is a long road however – CEO Zach Nelson points to pilot projects rather than implementations, although he said they are starting to expand as organisations look for other places to deploy Netsuite. Elsewhere, channel sales grew 50%, indicating increased commitment and activity levels from partners which will help further scale the Netsuite business and widen windows of opportunity within HQ’s and subsidiaries