Arik Hesseldahl

Recent Posts by Arik Hesseldahl

NetSuite Beats Expectations and Raises 2013 Sales Outlook

Don’t look now, but Netsuite, the cloud-based software company that runs businesses large and small, just reported quarterly results, and when compared to traditional enterprise IT companies like IBM and EMC that have reported in the last few days, their fortunes couldn’t be more different — in a good way.

A little less than an hour ago, NetSuite reported a 32 percent jump in revenue to $91.6 million, while recurring revenue — a key metric for cloud companies that sell their software on a subscription basis — grew by 28 percent to $74 million. Cash flow from operations was also up by 39 percent to $14.7 million.

On a non-GAAP basis, NetSuite earned $2.8 million, or 4 cents a share, which was down slightly from the year-ago period of 6 cents, but it also beat the expectations of analysts, who had forecast EPS of 3 cents on sales of $90.9 million. On a GAAP basis, it lost $13 million, or 18 cents a share, versus $7.7 million, or 11 cents a share, in the year-ago quarter.

While NetSuite has traditionally served small and medium businesses, the company started going after bigger fish last year, selling its ERP software that competes with offerings from software giant SAP and Oracle to global subsidiaries. In time, enough of those subsidiaries will come to rely on NetSuite that some will standardize on it across the entire company. “We have a lot of pilot projects going, and those pilots are starting to expand,” Nelson told me in a call earlier today. “As they begin to see the product and start to like it, a lot of those large enterprises are beginning to look for other places within the organization that they can deploy NetSuite.”

That’s probably why NetSuite just raised its guidance for the rest of the year. On a conference call with analysts moments ago, CEO Zach Nelson just boosted the company’s outlook on fiscal 2013 sales. The company now expects to report FY13 sales in the range of $404 million to $408 million. The old range was $397 million to $402 million. A bad sign of doings in the cloud business it is not.

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