NETSUITE ANNOUNCES RECORD THIRD QUARTER 2008 RESULTS
Revenue of $40.4 Million Up 44% Over Q3 2007
Ending Cash Balance of $133.0 Million
SAN MATEO, Calif. — November 3, 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 third quarter, which ended September 30, 2008.
Total revenue for the third quarter was $40.4 million, a 44% increase over the third quarter of 2007, and an 11% increase over the second quarter of 2008. The third quarter of 2008 marked the 36th consecutive quarter of increased revenue for NetSuite.
On a GAAP basis, net loss for the third quarter of 2008 was $(6.2 million), or $(0.10) per share, compared to $(1.8 million), or $(0.21) per share in the third quarter of 2007.
Net loss on a non-GAAP basis for the third quarter of 2008 was $(1.7 million), or $(0.03) per share, compared with $(1.2 million), or $(0.02) per share in the third quarter of 2007. As a result of the strengthening of the US dollar, the Company recorded $874,000 in net foreign exchange rate losses resulting from the revaluation of assets and liabilities during the third quarter of 2008. Excluding the impact of foreign exchange losses, the non-GAAP loss for the quarter was $(826,000) or $(0.01) per share. Foreign exchange gains and losses were not significant in prior periods, and the Company has implemented hedging strategies intended to minimize the impact of foreign exchange rates fluctuations in future quarters.
Items presented on a non-GAAP basis exclude expenses related to stock-based compensation and the amortization of intangible assets. A reconciliation of net loss and net loss per share on a non-GAAP basis and a non-GAAP loss excluding the impact of foreign exchange losses 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 third quarter of 2008 was $33.2 million, while revenue from international regions outside of the Americas was $7.2 million and now comprises 18% of total revenue. The Company added more than 300 new customers in the third quarter.
Short-term deferred revenue grew to $64.2 million as of September 30, 2008, as compared to $59.8 million at December 31, 2007 and $56.0 million at September 30, 2007. These comparisons exclude the accounting impact of the Company's 2006 agreements with distribution partners related to its Japanese subsidiary. A reconciliation of our deferred revenue with and without these agreements is available at the C ompany's Investor Relations Web site at www.netsuite.com/investors.
"We are pleased with our record third quarter results, and we believe our top-line growth makes us the fastest-growing ERP-based suite in the market," said Zach Nelson, CEO of NetSuite. "While market conditions remain unpredictable, we believe that the cost-reduction and productivity enhancements provided by NetSuite's on-demand integrated suite will be highly sought after by customers as they navigate through these turbulent times."
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; general changing and unpredictable macro-economic conditions including recent market volatility; the risk of technological developments and innovations by others; our ability to successfully identify other business and technologies for acquisition that will complement our business and the ability to successfully acquire and integrate those 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 or changing macro-economic conditions; 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; and general political or destabilizing 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 August 13, 2008, and any subsequently filed reports on Forms 10-K, 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 Web site 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 operating 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 Web site at www.netsuite.com/investors.
Click here to download the press release, financial tables, and non-GAAP reconciliation.
NetSuite and the NetSuite logo are registered service marks of NetSuite Inc.