NetSuite thanks ‘unstoppable’ cloud computing demand for record Q4 results

NetSuite has posted record results for the fourth quarter and the whole of 2013, thanks to “unstoppable” demand for cloud computing among businesses.

In the firm’s fourth quarter, which ran from October to December 2013, the firm made sales worth $115m, up eight percent from the third quarter, and an increase of 35 percent compared with the same quarter the previous year. The on-demand enterprise resource planning (ERP) firm also saw similarly impressive growth for the whole year, increasing 2013 sales by $106m or 34 percent to $414.5m.

Zach Nelson, chief executive of NetSuite, pointed out during a conference call on Thursday that 2013 was the fourth consecutive year of record revenue growth, a feat he said is matched by very few other public companies.

However, the firm has some way to go before it posts a healthy profit. NetSuite made a net loss of $20.2m during the fourth quarter, up from $9.6m during the same quarter in 2012. Across the whole year, NetSuite posted a net loss of $70.4m, compared to $35.2m in 2012.

The results were still received positively by investors, with shares trading at four percent higher late on Thursday. NetSuite managed to beat analysts’ expectations, with the market expecting $111.4m revenue for the fourth quarter, while the company increased its low-end forecast for 2014 from $525m to $535m, ahead of previous analyst expectations of $533m.

Nelson said the positive results have been enabled by the rush to the cloud. “It’s the strongest demand environment we’ve seen since we went public, as the move to the cloud by companies of all sizes became unstoppable,” he said during a conference call on Thursday.

The firm’s raised outlook for 2014 indicates it expects the cloud market to continue its growth this year, a realistic prospect based on its new business wins last year. NetSuite added 430 new companies during the fourth quarter, making a total of 20,000 organisations now using the firm’s product or with plans to.

Nelson could not resist the opportunity to have a dig at other traditional software houses during the call – although Oracle unsurprisingly avoided such criticism, seeing as both firms were founded by Oracle chief executive Larry Ellison, who also used to be Nelson’s boss. Oracle and NetSuite have also entered into a cloud partnership recently.  

“While the work of our customers and employees must get the lion’s share for the credit for our success in 2013 and over the last several years, I also feel I must thank our legacy ERP competitors as well,” Nelson quipped.

“They continue to talk about how important the cloud is, how they are all in on the cloud, all the while having little in the way of native cloud ERP products to deliver on the rosy pictures they are painting for customers. So SAP and Microsoft, thank you for creating all this demand, and keep it up – our data centres are standing by.”