NetSuite Reports Surging Sales, Shrinking Losses In 2007

NetSuite CEO Zach Nelson, in a conference call with analysts, said he has seen few signs of a slowdown in IT spending by customers as a result of the sluggish economy. "The demand seems to be the same and nothing's really changed all that much in discussions with our customers and prospects," he said. NetSuite even provides a cost-effective alternative for companies that may be downsizing from enterprise applications from other vendors, Nelson said, giving the vendor an edge in tough times.

NetSuite expects to add as many as 350 sales representatives, developers, and professional services and support staffers to its current 600 employees in 2008 to meet expected demand, Nelson said. "We think we have a huge opportunity ahead of us. And we're going to invest aggressively to take advantage of it."

For the fourth quarter ended Dec. 31 NetSuite, which just went public in December, recorded revenue of $31.7 million, up 57 percent over the same quarter in 2006. The vendor's net loss for the quarter was $3.3 million, down from $8.1 million one year earlier.

For all of fiscal 2007 NetSuite racked up revenue of $108.5 million, up 62 percent from 2006's sales of $67.2 million. The company's loss for the year stood at $23.9 million, down from $35.7 million in 2006.

NetSuite reported that it added 432 new customers during the fourth quarter for its on-demand ERP, CRM and E-commerce applications, bringing its roster of active customers to more than 5,600. Revenue from customers in the Americas was $89.3 million, about 82 percent of the company's total, while the balance of $19.2 million came from international regions.

During the conference call Nelson took a few digs at NetSuite's competitors. "Some companies' platform strategy is to be a giant database development environment in the sky," he said in a not-so-veiled reference to Salesforce.com. And he maintained that SAP's Business ByDesign on-demand applications for midsize customers are not yet available despite being announced last September. Noting that SAP executives bragged about how complete the product is, Nelson said: "I though completeness included being able to actually purchase and use this product."

For the first quarter of this year NetSuite expects revenue in the range of $33 million to $34 million. For all of 2008 the vendor expects total revenue in the range of $153 million to $156 million. The company also expects to report losses for the current quarter and for the year.