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<p>NETSUITE ANNOUNCES RECORD FOURTH QUARTER AND FISCAL YEAR 2008 RESULTS
• Q4 Marks First Quarter of Profitability in Company History by both Non-GAAP Operating and Non-GAAP Net Income Measures
• Record 2008 Revenue of US$152.5M, an Increase of Over 40 per cent Year-over-Year</p>
<p>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 fourth quarter and fiscal year ended December 31, 2008.</p>
<p>Total revenue for the year was US$152.5 million, a year-over-year increase of 40.5 per cent. Total revenue for the fourth quarter was US$41.4 million, a 30.5 per cent increase over the fourth quarter of 2007.</p>
<p>On a GAAP basis, net loss for the fourth quarter of 2008 was US$(4.5 million), or US$(0.07) per share, compared to US$(3.3 million), or US$(0.22) per share in the fourth quarter of 2007. On a GAAP basis, net loss for the year ended December 31, 2008 was US$(15.9 million), or US$(0.26) per share, compared to US$(23.9 million), or US$(2.45) per share in 2007.</p>
<p>Non-GAAP net income for the fourth quarter of 2008 was US$534,000, or US$0.01 per share, as compared to a non-GAAP net loss of US$(1.7 million), or US$(0.03) per share, for the third quarter of 2008 and compared to a non-GAAP net loss of US$(842,000), or US$(0.01) per share, for the fourth quarter of 2007. Non-GAAP net loss for the year ended December 31, 2008 improved 56 per cent to US$(2.5 million), or US$(0.04) per share, compared to US$(5.7 million), or US$(0.10) per share in 2007.</p>
<p>Items presented on a non-GAAP basis exclude expenses related to stock-based compensation and the amortization of intangible assets. A reconciliation of GAAP net loss to non-GAAP net income/(loss) is provided below in a table immediately following the Condensed Consolidated Statements of Operations, along with an explanation of why these non-GAAP financial measures are useful to investors and how they are used by management.</p>
<p>Revenue from the Americas for the year ended 2008 was US$123.4 million, while revenue from international regions was US$29.1 million. NetSuite added approximately 350 new customers in the fourth quarter and ended the year with over 6,600 active companies.</p>
<p>“I’m delighted that NetSuite delivered one of our best quarters to date in what has been a very difficult economic environment. I am especially excited that we posted the first non-GAAP profitable quarter in the Company’s history even against the headwinds of global economic challenges,” said Zach Nelson, CEO of NetSuite. “Furthermore, we posted record quarterly and annual revenue, reached a record average selling price and grew our bookings significantly quarter over quarter. This is a strong performance in any quarter, and is especially impressive with business spending on equipment and software falling 27.8 per cent, the worst in a half century.</p>
<p>“What led to this remarkable success in the fourth quarter and fiscal 2008, and what we believe will drive the Company in 2009, is our unique business strategy and great tactical execution. Our strategy of providing an integrated suite of applications delivered on-demand to small- and medium-sized businesses is even more applicable in times when cost-reduction and productivity improvements are necessary for survival,” concluded Nelson.</p>
<p>NetSuite’s Fourth Quarter 2008 Highlights Include:</p>
<p>• Entered into strategic partnership with Hewlett-Packard Company (“HP”) to deliver software as a service (“SaaS”) business applications to the small and mid-size business (“SMB”) market. This enables the HP channel of 15,000 value-added resellers in the United States to offer cloud computing services to SMB customers.</p>
<p>• Continued rapid international adoption with international revenue growing 51 per cent in absolute dollars over the prior year.</p>
<p>• Launched NetSuite Release J, to our knowledge the first available SaaS enterprise resource planning (“ERP”) suite for the Japanese market.</p>
<p>• Introduced “Business ByNetSuite” Program to offer current SAP customers the opportunity to cut costs by 50 per cent or more.</p>
<p>• Received several awards including: 2008 Product of the Year Award from Customer Interaction Solutions magazine for NetSuite OneWorld; “Customers’ Top Choice” in UK’s Software Satisfaction Awards 2008 for NetSuite CRM+; inclusion in Accounting Today’s Top 100 Products for 2008 within the “High-End and Mid-Market Accounting” category; and ranked number 22 in Deloitte’s Technology Fast 50 Program for Silicon Valley Software and Information Technology Companies.</p>
<p>• Unveiled the industry’s first and only on-demand enterprise application for Services Resource Planning (“SRP”).</p>
<p>• Hosted OpenAir User Summit 2008.</p>
<p>NetSuite Inc. is a leading vendor of on-demand, integrated business management software suites for mid-sized businesses and divisions of large companies. NetSuite enables mid-market companies to manage core business operations in a single system, which includes accounting/ERP, customer relationship management (“CRM”), and Ecommerce. NetSuite’s patent-pending “real-time dashboard” technology provides an easy-to-use view into up-to-date, role-specific business information.</p>
<p>Cautionary Note Regarding Forward-Looking Statements
This press release and the scheduled conference call contain forward-looking statements relating to expectations, plans, prospects, or financial results for NetSuite, including our stated expectation for future earnings, revenue and market share growth. These forward-looking statements are based upon current expectations and beliefs of NetSuite’s management as of the date of this release, 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 in this press release are based on information available to the Company as of the date hereof, 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 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; 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; 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.
Customers who purchase our service 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 November 13, 2008, 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 www.sec.gov or NetSuite’s Web site at www.netsuite.com.
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 net income/(loss) excludes expenses related to stock-based compensation expense and the amortization of intangible assets. Non-GAAP net income / (loss) excludes these expenses as they are non-cash items, 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. Additionally, non-GAAP weighted average shares outstanding, the denominator for the non-GAAP net loss per share calculation, for the periods during 2007 assumes that the conversion of preferred stock and the issuance of common stock as part of the Company’s Initial Public Offering had occurred at the beginning of the applicable period. The Company considers these events to be non-routine, and 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 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. The contents of the website are not incorporated by reference into this press release.
NetSuite and the NetSuite logo are registered service marks of NetSuite Inc.</p>