NETSUITE ANNOUNCES RECORD SECOND QUARTER 2008 RESULTS
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 amortization 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 organizations, and investing in the services and support that make customers successful with NetSuite, are the right strategies and will continue to expand our market."
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 amortization 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 amortization 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.
Cautionary Note Regarding 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 center 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.com.
Non-GAAP Financial Measures
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.com/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.