NetSuite Recruits European Solution Providers, Reports 31 Percent Q4 Growth

NetSuite continues to beef up its channel partner ranks in Europe, recruiting a U.K. solution provider – Microsoft's largest Dynamics applications VAR – to sell its ERP and omnichannel commerce cloud applications.

The news Thursday came two days after NetSuite said it had recruited new channel partners in Belgium, Bulgaria, Italy, Finland and the Netherlands.

NetSuite also reported its fiscal 2015 fourth-quarter and year-end financial results Thursday, including 30 percent year-over-year quarterly revenue growth, but bigger bottom-line losses for both the quarter and the year.

[Related: Former Microsoft Dynamics Channels Exec Joins NetSuite]

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NetSuite reported revenue of $206.2 million for its fourth quarter ended Dec. 31, up 31 percent from $157.9 million in the fourth quarter of 2014. Subscription and support revenue grew 30 percent to $164.5 million from $157.9 million one year before.

But the San Mateo, Calif.-based company continues to report losses on the bottom line as it focuses on growth. For the fourth quarter the company reported a loss of $32.4 million, up 28 percent from a loss of $25.3 million in the fourth quarter of 2014.

During an earnings call with financial analysts Thursday, NetSuite CEO Zach Nelson said the company's ability to deliver and implement complex cloud systems is a key factor in its growth and that its channel ecosystem is a critical part of that go-to-market strategy.

"Our partner community and ecosystem plays a major role in our customers' success," he said. "Whether you look at our large base of traditional midmarket value-added resellers, probably the largest third-party channel built around any cloud ERP product, or our very successful engagements with large systems integrators, our decade-long strategy of creating an army of skilled partners around the globe who are sharing in our success and helping our customers succeed is paying off."

Nelson later commented further on NetSuite's channel strategy in response to an analyst's question.

"I think we have one of the greatest channel programs on the planet. I mean we sort of invented cloud sales through third-party channels 10 years ago. And I think that's part of the reason you see such strength in our channel. We always felt that, particularly in the midmarket, the channel was going to be very important, but it would take a long time for them to get there. So we created a very incentive-laden [program] – they get to share in the recurring revenue of the customer over time."

Nelson said about 40 percent of NetSuite's new business is now done through the channel. "That is pretty amazing. And you look at the channel partners we added this year, some of Microsoft's largest channel partners."

The new U.K. partner, Manchester-based M-hance Ltd., is currently a Microsoft Gold partner that works with that vendor's Dynamics GP and Dynamics CRM applications. By joining the NetSuite Solution Provider Partner Program, the company aims to gain an immediate presence in the cloud enterprise ERP market.

M-hance is creating a new division called HighCloud Solutions specifically for its cloud ERP practice. The company will provide implementation, support, customization, integration and training services around NetSuite's applications for midmarket customers in wholesale distribution, manufacturing, professional services, retail, financial services, media and publishing, and nonprofit vertical industries, according to NetSuite.

"It is imperative that we offer our customers and our prospects a 'true cloud' solution," said M-hance CEO Stephen Driscoll in a statement. "The creation of HighCloud Solutions will allow us to meet that objective."

NetSuite's new European partners, meanwhile, include Audaxis in Belgium, Balkan Services in Bulgaria, Extra SRL in Italy, Mepco in Finland and Solmate in the Netherlands. NetSuite said they all will be broadening their product portfolios beyond the on-premise ERP applications they currently work with from SAP, Microsoft and Sage.

For all of 2015 NetSuite reported revenue of $741.1 million, up 33 percent from $556.3 million in 2014. The vendor reported a loss of $124.7 million for 2015, up 25 percent from the $100 million loss reported in 2014.

CFO Ron Gill, on the earnings call, said NetSuite expects to generate revenue of between $212 million and $214 million in the current first quarter of fiscal 2016 and revenue between $950 million and $970 million – representing growth of 28 percent to 31 percent – for the entire year.