I admit that I listened to Netsuite's earnings call yesterday with a bit of anticipation. If you read this blog you know how far out on the SaaS limb I am for this year's predictions. In addition I've worked with my SaaS analyst, Robert Mahowald to raise the SaaS forecast for the third time in a year so we're very bullish on the success of the market, even when the rest of the traditional vendors are reporting a slow down (or in some cases a halt) in growth. Concur reported last week and its earnings were strong through the very period that should have been the slowest in this crisis, Oct - Dec, so far so good. Netsuite is the second benchmark company to report out, and if they held up as good or better during the same period then I felt like our prediction was in fact playing out exactly as we thought. The day after the announcement I'm still digesting the finer points but let's just say I'm more than pleased with what I heard. I'll summarize the key points:
1. Record results on both top and bottom line
2. 1st net profitable quarter
3. 30.5% growth over Q3
4. 40.5% growth over 2007
5. >350 net new customers in Q4
6. Increased average street price (ASP) by ~20% in Q4
7. Bookings up 20% over Q3 and 30% over 2007
8. Customers are negotiating to pay monthly or quarterly rather than annually as a result of the economic situation
All in all a strong quarter and exactly on track with what we had expected to see this year. Customers are increasingly interested in SaaS solutions because of the financial crunch (no credit, reducing capital expenses) and are very attracted to the pay as you go model (operating expenses versus capital expenses). In addition customers still need to invest in IT for cost reductions, competitive advantage, better business visibility, etc., just like in good times except that in this economy these imperatives are providing even more reason to invest in systems like Netsuite.
