• Delivers Record Revenue of $57.8 Million, a 23% Year-over-Year Increase;
• Grows Calculated Billings 30% Year-over-Year;
• Posts Record Quarterly Operating Cash Flow of $8.4 Million;
• Reports Largest Number of New Customer Wins in Two Years;
• Inks Largest Customer Deal in Company History.
Total revenue for the second quarter of 2011 was $57.8 million, representing a 23% increase over the second quarter of 2010. Subscription and support revenue for the second quarter was $48.2 million, representing 21% growth over the same period in the prior year.
Calculated billings were $62.6 million for the quarter, a 30% increase over the second quarter of 2010. Calculated billings are defined as revenue plus the change in deferred revenue.
Cash flow from operations was $8.4 million in the quarter, an increase of $4.0 million, or 88%, over the same period last year.
On a GAAP basis, net loss for the second quarter of 2011 was $9.8 million, or $(0.15) per share, as compared to a net loss of $7.2 million, or $(0.11) per share, in the second quarter of 2010.
Non-GAAP net income for the second quarter of 2011 was $1.6 million, or $0.02 per share, as compared to non-GAAP net income of $1.9 million, or $0.03 per share, for the second quarter of 2010.
"NetSuite's strong financial results and the quality and quantity of our customer wins tell the story of how NetSuite is transforming the business capabilities of small, medium and large companies around the globe," said Zach Nelson, CEO of NetSuite. "Q2 also showed our continued success in moving up market with the announcement of customer wins at billion-dollar revenue companies like Groupon and Qualcomm. NetSuite also marked a milestone during Q2 by signing our largest ever recurring revenue contract with a 45,000 employee global organization that plans to use NetSuite to automate its entire operation including ERP and industry specific functionality."
In conjunction with this announcement, NetSuite will host a conference call at 2:00 pm. PDT (5:00 pm. EDT) today to discuss the Company's second quarter 2011 financial results. A live audio webcast and replay of the call, together with detailed financial information, will be available in the Investor Relations section of NetSuite's Website at netsuite.com/investors. The live call can be accessed by dialing 888-500-6955 (U.S.) or 719-325-2491 (outside the U.S.) and referencing passcode: 712-3580. A replay of the call can also be accessed by dialing 888-203-1112 (U.S.) or 719-457-0820 (outside the U.S.), and referencing passcode: 712-3580.
NetSuite, Inc. (netsuite.com) is the industry's leading provider of cloud-based financials / Enterprise Resource Planning (ERP) software suites. In addition to financials/ERP software suites, NetSuite offers a broad suite of applications, including accounting, Customer Relationship Management (CRM), Professional Services Automation (PSA) and Ecommerce that enables companies to manage most of their core business operations in its single integrated suite. NetSuite's "real-time dashboard" technology provides an easy-to-use view into up-to-date, role-specific business information.
Cautionary Note Regarding Forward-Looking Statements
This press release and NetSuite's scheduled conference call contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to, among other things, expectations, plans, prospects and financial results for NetSuite, including, but not limited to, our expectations regarding our products, market demand, future earnings, revenue and market share growth. These forward-looking statements are based upon the current expectations and beliefs of NetSuite's management as of the date of this press release and conference call, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. All forward-looking statements made in this press release and during the conference call are based on information available to the Company as of the date thereof, and NetSuite disclaims any obligation to update these 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 or than it has in the past; continued adverse and unpredictable macro-economic conditions or reduced investments in on-demand applications and information technology spending; quarterly operating results may fluctuate more than expected; unexpected disruptions of service at our data center may occur; a security breach may impact operations; risks associated with material defects or errors in our software or the effect of undetected computer viruses could impact operations; the risk of technological developments and innovations by others; our ability to successfully identify other businesses 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; failure to protect and enforce our intellectual property rights; assertions by third parties that we infringe their intellectual property; 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; changes in foreign exchange rates, and general political or destabilizing events, including war, conflict or acts of terrorism; and other risks and uncertainties.
Customers who purchase our services should make sure the decisions are based on features that are currently available. Please be advised that any unreleased services or features from NetSuite referenced in today's discussion or other public statements are not currently available and may not be delivered on time or at all.
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 5, 2011, and any subsequently filed reports on Forms 10-K, 10-Q and 8-K. All documents are available through the SEC's Electronic Data Gathering Analysis and Retrieval system ("EDGAR") at sec.gov or NetSuite's Website.
Non-GAAP Financial Measures
The Company's stated results include certain non-GAAP financial measures, including non-GAAP operating income/(loss), net income/(loss), weighted average shares outstanding, and net income/(loss) per share. Non-GAAP operating income/(loss) and non-GAAP net income/(loss) excludes expenses related to stock-based compensation expense, amortization of acquisition related intangible assets, transaction costs for business combinations, and costs associated with settlement of patent dispute. Non-GAAP operating income/(loss) and non-GAAP net income/(loss) excludes these expenses as they are often excluded by other companies to help investors understand the operational performance of their business, and in the case of stock-based compensation, can be difficult to predict. The Company believes these adjustments provide useful comparative information to investors.
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 operating 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 netsuite.com/investors. The contents of the Website are not incorporated by reference into this press release.
NetSuite and the NetSuite logo and where business is going are service marks of NetSuite Inc.