Schulz Consulting

Consulting and Upgrades

  • Home
  • Services
  • Contact

NetSuite Earnings Call: We’re Losing Them As Fast As We Replace Them

February 5, 2010 by Wayne Schulz

Netsuite reported another loss yesterday but you’d hardly know it from their earning’s call. They say the average per customer annual revenue is $38,000. I believe their customer license count was flat (so they lose them as quickly as Sage NA recent earnings reports said they do – http://bit.ly/bHw9wI ).

Except for the use of Cloud Computing this seemed like a similar call that Sage or Microsoft could have held.

FULL DISCLOSURE: Schulz Consulting is a Sage Business Partner so we are not independent or impartial with respect to our thoughts. Use the information here as the starting point for your own good independent thinking and forming your own conclusions.

NetSuite is targeting verticals though they didn’t spend much time saying which ones (I believe it’s wholesale distribution, software companies (same vertical as Intacct) and professional services).

The company is definitely moving away from servicing the low end (seemingly those paying $10,000 or under annually) due to churn. They claim that the users they lost were replaced by better (aka higher paying) licenses.

Recurring commissions are 30% (initial sale and renewal) to the channel. Only 20% of sales are through a channel ( a number which I think is unchanged from prior years).

Interestingly if I read the call right – the flagship (aka high end multi-company consolidation in real time) OneWorld offering ended the year with 50 users. Back in April 2008 when it was unveiled ( http://bit.ly/9Ev49E ) they claimed 38. So that’s a growth of 12 in about a 1.5 year time period. I am not 100% certain this is the same OneWorld flavor since on the call they refer to it was OneWorld SRP (services something or other).

UPDATE: I re-read the call and it looks like NetSuite has a product called OneWorld SRP and the 50 users represents those accounts using both OneWorld and Open World. Personally I find these product names too confusing and similar… but then again isn’t that what ERP has evolved to – using smoke and mirrors to sell…

Going forward Netsuite is changing their internal customer account managers so they each manage less customers. Previously it was a 100:1 ratio and Netsuite sees it moving closer to a 40:1. I think this is probably due to increasing complexity of their deals.

Of those buying the suite – 70% implement CRM.

I believe we have one of the best channel programs in the world and during 2010 it will even get better. -Zach Nelson CEO NetSuite

Nothing I read made me think Netsuite was an opportunity for any but the largest VARS with a heavy vertical tilt who would use Netsuite to complement but not be their complete service offering. This is the same thing that has been on display the last two years at the IT Alliance. The NetSuite partners on stage who tell of their experiences are all using NetSuite as a complement to other service offerings (financing, accounting, mergers, venture capital) and not as a traditional VAR model where they sold software/service plus implementation.

I think cloud computing is still coming and as VARS we’ll have to adapt – though adapting probably means developing a model where the services we offer are not the same ones that the publisher will offer (namely support, training, implementation). Unless we can add some “special sauce” there’s little reason to get back on the treadmill of selling a highly commissioned SaaS offering only to see the commission rug be yanked 10 years down the road when growth in the industry slows (as it will).

Read the full transcript:

NetSuite Earnings Call via Seeking Alpha

Share this:

Filed Under: Sage 100 ERP Tagged With: cloud computing, earnings, netsuite

Secure cloud hosting for Sage 100
Call 1-888-244-6559 (toll-free)

About Wayne Schulz

Wayne Schulz is a Sage 100 Consultant located in Connecticut. He has worked with Sage 100 since 1986 and provides advanced support to companies located throughout the United States. If you are experiencing an issue with Sage 100 and would like to schedule a support session - please request assistance here or call 860-657-8544.

Comments

  1. Jason Carter – An independent analyst covering the SMB applications space, primarily for the benefit of Microsoft Dyanmiics resellers and ISVs.
    JasonC says

    February 5, 2010 at 3:03 pm

    In truth they are losing them much faster than they add them, Customer adds for the quarter are down by 16% from last year, ASP is up 10% to $38,000 per customer, and revenue is little better than flat versus last year. The only way the math works is with very large churn in the entry level business. Is it 20%? 30%?

  2. badofficial
    openview says

    February 6, 2010 at 3:45 am

    one interesting thing. If you look at their list of partners at http://www.netsuite.com/portal/partners/main.shtml – they have solution providers (that seem to sell, support, implement), system integrators (that perform a “business function”) and what looks like ISV's (that develop vertical/horizontal solutions). What is even more interesting is that the latter two, the companies are listed. Solution Providers ARE NOT LISTED – you have got to contact NetSuite first. It goes to show that NetSuite sees their own channel as competition. What is the likely-hood that a customer filling out this form actually gets sent to a partner? Probably close to zero. Talk about channel conflict.

Access Sage 100 in the cloud today. 3rd party applications supported Available 24/7 from anywhere. Dedicated hosts

Call 1-888-244-6559 (toll-free)

Search Our Site

Sage 100 Newsletter

Sage 100 News

  • How To Edit 1099 Totals In Sage 100
  • How to Reconcile Sage 100 Accounts Payable Detail to the General ledger
  • Sage 100 Year-End 2022 Training Series
  • Minimum Sage 100 Versions for E-Filing for Tax Year 2022
  • What Are The Differences Between These Sage Fixed Asset Versions: Lite, Single-User, Network and Premier?
  • Sage 100 Paperless Email Electronic Delivery Failing With Rackspace
  • How To Check Sage 100 Compatibility with Avalara’s TLS 1.2 Requirement
  • Sage 100 TLS 1.2 Compliance Update ( Nov 2022)
  • What Are My Sage 100 Mobile Sales Options?
  • Sage 100 Payroll Tax Update Set for 10/27/22 for New York State Health Care Workers Bonus Program (HWB)

Contact Us

Schulz Consulting
Connecticut Office
Click Here To Contact Schulz Consulting
Email Us
Available remotely nationwide.
We are a local branch of DSD Business Systems Connecticut.

Copyright © 2023 · Parallax Pro Theme on Genesis Framework · WordPress · Log in