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TRANSCRIPT
As of October 23, 2014
NetSuite: Global Leader in Cloud ERP NYSE : N
Safe Harbor Statement This presentation contains “forward-looking” statements that involve risks, uncertainties and assumptions relating to expectations, plans, and prospects including expectations relating to NetSuite’s future growth and the future growth of the cloud computing market. These statements are based on information available to NetSuite management at the time of this presentation. Actual results could differ materially from our current expectations as a result of many factors, including, but not limited to: the market for on-demand services may develop more slowly than expected or than it has in the past; and adverse or unpredictable macro-economic conditions or reduced investments in on-demand applications and information technology spending. These and other risks and uncertainties associated with our business are described in our annual report on Form 10-K for the period ending December 31, 2013 and any subsequently filed periodic reports on Form 10-K or 10-Q. We assume no obligation to, and do not intend to, update any forward looking statements. Customers who purchase our services should make sure that their decisions are based on features that are currently available. Please be advised that any unreleased services or features from NetSuite referenced in this presentation or other public statements are not currently available and may not be delivered on time or at all.
© NetSuite Inc. 2014 2
NetSuite Named on Forbes’ 2014 List of World’s Most Innovative Growth Companies
© NetSuite Inc. 2014 3
NetSuite Receives 89% Innovation Premium on the 2014 List of Most Innovative Growth Companies —Forbes, June 2014
Rank Company 5-year
Avg Sales Growth (%)
Enterprise Value
($billion)
Innovation Premium
(%) Industry
1 Xero 210.2 4.4 91.7 IT SW & SVCS
2 NetSuite 22.3 7.8 89.0 IT SW & SVCS
3 Monitise 115.5 2.1 85.6 IT SW & SVCS
4 Insulet 47.3 2.7 82.4 Health Care Equip & Svcs
5 DexCom 67.4 3.3 82.3 Health Care Equip & Svcs
6 ASOS 34.3 8.1 78.3 Retailing
7 athenahealth 32.6 6.7 77.2 Health Care Equip & Svcs
8 Ultimate Software Group 18.4 4.3 74.3 IT SW & SVCS
9 M3 34.6 5.0 74.3 Health Care Equip & Svcs
10 Concur Technologies 20.6 6.0 72.1 IT SW & SVCS
Source, Forbes, June 2014 List of World’s Most Innovative Growth Company less than $10B market capitalization
• The World’s Leading Pure-play Software-as-a-Service (SaaS) Provider of ERP Software Suites
- >20,000 customer organizations across 100+ countries
• Large and Expanding Addressable Market - ERP has largest TAM of any business app category - Suite approach expands TAM to multiple categories
• Decade of Sustained Revenue Growth - 12+ year head-start, not even a close #2 - Powerful SaaS financial model; high visibility; strong renewals
• Winning Growth Strategy - Verticalization of the suite - Moving up market and going global with OneWorld - Platform Expanded to omnichannel with SuiteCommerce - Large and growing partner ecosystem
Investment Highlights
© NetSuite Inc. 2014 4
Software-As-A-Service (SaaS) Adoption Disrupting Enterprise Software Landscape
© NetSuite Inc. 2014 5
Source: Companies with dark blue bars represent the thirteen largest enterprise software vendors by total annual revenue according to Gartner March 2014 report; listed in order of respective growth rates Revenue growth figures have been retrieved from the publicly filed annual reports of the above companies Consensus estimates have been used for those companies yet to report FY13 results.
FY 2013 YOY Revenue Growth % 35% 34%
17% 15%
13% 13% 12% 10% 10% 10% 10%
6% 4% 4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
NetSuite: World’s #1 Cloud ERP
© NetSuite Inc. 2014 6
Background
• Founded 1998; IPO in 2007
• Publicly traded on NYSE: “N”
• 3,000+ employees
• Offices in 11 countries
• $414M revenue in FY13
• $143.7M revenue in 3Q14
Performance
• World’s most deployed cloud ERP
• Used by 20,000+ organizations
• Fastest growing top 10 Financial Management
Software Worldwide
• Used across 100+ countries
#1 Cloud ERP Suite
NetSuite: Fastest Growing Top 10 Financial Management System Vendor Worldwide
© NetSuite Inc. 2014 7
Market Share: All Software Markets, Worldwide, 2013, Published on March 28, 2014 Chart created by NetSuite based on Gartner Market Share Note
Top 10 WW FMS Vendors: 2013 YoY Market Share Growth Rate % • NetSuite is the only pure Cloud
vendor in Top 20
• NetSuite is #10 overall by Market Share
41.6%
11.5% 7.7%
5.2% 5.3% 0.9% 0.0% 0.0% -1.5% -4.0%
-10%
0%
10%
20%
30%
40%
50%
NetSuite Unit4 VismaSoftware
Microsoft Deltek Sage InforGlobal
Solutions
Yonyou SAP Oracle
Cloud Opportunity: The Big Land Grab
© NetSuite Inc. 2014 8
$25 $27 $29 $31 $33
$0
$20
$40
2013 2014 2015 2016 2017
ERP
In B
illio
ns
Source: Gartner, Total Enterprise Software Markets Worldwide, 1Q14 Update
Massive Market Opportunity
23%
17%
16%
13%
7%
0% 5% 10% 15% 20% 25%
ERP
Cloud Advertising
CRM
Cloud Payments
HR
Rapid Cloud ERP Growth
Source: Gartner, Feb 2013, Public Cloud Service Subsegment, CAGR% (2011-16)
Cloud is the Future
Sources: Gartner 2011 CIO Survey; Forrester The ROI of Cloud Apps, June 2011; IDC WW and Regional Public IT Cloud Service Forecast 2011-15
Source: BofA Report, The Cloud Wars, May 2013
Enterprise >1,000 employees
Mid-Market 100 - 1,000 employees
Small <100 employees
~9,000 firms
~116,000 firms
~6,000,000
Target Market
Fortune 5 Million: US Enterprise & Mid-Market SMBs
#1 Technology affecting IT 50+%
Of companies plan to increase cloud spend over next 12 months
4x Faster growth than worldwide IT market
NetSuite SuiteCommerce: Addresses Accelerating Global Shift to Ecommerce
© NetSuite Inc. 2014 9
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2012 2013 2014 2015 2016
US Ecommerce
Europe Ecommerce
China Ecommerce
Latam Ecommerce
ROW Ecommerce
16% 16% 15% 13% 12% US
Europe
China
Latam
ROW
9% 15% 15% 13% 12%
45% 43% 30% 20% 17%
11% 14% 11% 9% 9%
107% 17% 16% 15% 15%
ROW = Australia, Japan, Russia, India and Other ROW
Global Ecommerce Sales Forecast: 2012-2016 (in $billions)
Source: BAML Ecommerce /Industry Forecast, Dec 2013
2012 2013 2014 2015 2016
% = Year-over-Year Growth Rate
Decade of Sustained Revenue Growth
© NetSuite Inc. 2014 10
$8 $18 $36 $67
$109 $153 $167
$193 $236
$309
$415
$553M Outlook*
$720M
$0
$100
$200
$300
$400
$500
$600
$700
$800
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Outlook**
NetSuite IPO
NetSuite Fiscal Year Annual Revenue (M)
In Millions
* Midpoint of the range of FY2014 outlook of $552 to $554 million provided on NetSuite’s Q3 2014 earnings call as of October 23, 2014 **Midpoint of the range of FY2015 outlook of $715 to $725 million provided on NetSuite’s Q3 2014 earnings call as of October 23, 2014
Accelerating Recurring Revenue
© NetSuite Inc. 2014 11
16% YoY
$139.1M 18% YoY
$163.9M 22% YoY $199.6M 27% YoY
$252.9M 32% YoY
$333.6M
NetSuite Recurring Revenue Growth
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13
Leading Businesses Choose NetSuite
© NetSuite Inc. 2014 12
10,000
12,000
16,000
>20,000
0
5,000
10,000
15,000
20,000
25,000
2010 2011 2012 2013
Total # of Companies, Subs and Organizations (NetSuite Customers)
Source: NetSuite public disclosure of customer count
Leading Brands Across Industries
Best Known Brands Run NetSuite
© NetSuite Inc. 2014 13
Selected NetSuite OneWorld for business management in subsidiaries and emerging markets.
Expanded to international markets with NetSuite OneWorld in under four months.
Girl Scouts has made NetSuite SuiteCommerce central to its strategy to grow its online business while delivering a cohesive Web experience for all customers.
Saving $360,000 annually on IT costs over on-premise ERP, and reduced order management response times more than sixteen-fold.
Using NetSuite across 2,700+ users in 15+ countries – and across 3,000+ client projects and 1,500+ products and skills.
NetSuite Solution
Today’s Businesses Struggle with an Application Hairball
© NetSuite Inc. 2014 15
© NetSuite Inc. 2014 16
MANUFACTURING
WAREHOUSE MANAGEMENT
SUPPLY CHAIN
MANAGEMENT
ERP
INVENTORY MANAGEMENT
SRP
TIME & EXPENSE
PROJECT ACCOUNTING
PROJECT MANAGEMENT
RESOURCE MANAGEMENT
CORE BUSINESS CUSTOMER MANAGEMENT
ORDER MANAGEMENT
GLOBAL FINANCIAL MANAGEMENT
BILLING MANAGEMENT
REVENUE MANAGEMENT
CFO
Sales Rep/ Manager
Support Manager
CEO
Ecommerce Manager
Shipping Manager
Vendors
Customers
Partners
External Systems
NetSuite: One System for Running a Business
• NetSuite: Modular cloud business suite - ERP, CRM, Ecommerce, PSA - For midsize companies to large enterprises
• NetSuite OneWorld: Global management
• NetSuite SuiteCommerce: Ecommerce
• NetSuite OpenAir: Enterprise PSA
• NetSuite SuiteCloud Platform
Solution Overview
© NetSuite Inc. 2014 17
Global Business Management
© NetSuite Inc. 2014 18
NetSuite is the most successful ERP suite SaaS provider operating in terms of active customers, international presence and functionality offered across the product.
Source: Gartner
The Undisputed Cloud ERP Leader
© NetSuite Inc. 2014 19
Local
Currency
Quota
Forecast
Orders
Taxation
Partners
Language
Website
Global
Consolidation
Sales
Revenue
Dashboards
Currency Management
Compliance
Control
Multiple Websites
19+ Languages, 190+ Currencies
• Last ever ERP upgrade – No “version-lock”
• Eliminates application hairball
• Deploys in months, not years
• Modern, flexible and evolving
• Dramatically lowers IT cost
Why Businesses Choose NetSuite
© NetSuite Inc. 2014 20
Enterprise Opportunity: Two-Tier
The Two-Tier Opportunity
© NetSuite Inc. 2014 22
1: Source: Develop a Strategic Road Map for Postmodern ERP in 2013 and Beyond 2: Source: How to Evaluate a Vendor's Commitment to the Cloud and SaaS 3: Source: Understand the Deployment Options for a TwoTier ERP Suite Strategy, May 2013
24%
48%
2009 2011
Rise of the Two-Tier 48% enterprises now
opting for two-tier The concept of a single ERP suite that meets all of an enterprise's needs, particularly in large, complex and diverse organizations, is no longer tenable.2
A tiered ERP suite strategy is the use of ERP suites from different vendors in two or more levels of the organization—for example, corporate headquarters and local subsidiary operations.1
Adopting a two-tier ERP strategy can dramatically reduce regional business unit implementation times, provide greater agility and improve operational costs. CIOs understanding its definition, the rationale for selection and the diverse deployment options is key to a successful implementation.3
NetSuite’s Two-Tier Solution
© NetSuite Inc. 2014 23
CORPORATE Running Oracle/SAP
E-Business Suite Financials
US Operations
NetSuite Cloud Running
NetSuite OneWorld
SuiteCloud Connect
NetSuite Cloud Running
NetSuite OneWorld
China
Worldwide Operations
Vietnam
Two-Tier: Driving Business Velocity
© NetSuite Inc. 2014 24
Emerging Markets & Products: Rapidly deploy ERP with minimal CapEx and IT
Mergers and Acquisitions: Cost effective ERP within subsidiaries
Divestitures: Shed legacy ERP with lean, customizable cloud ERP
Enterprise Partnerships to Drive Success
© NetSuite Inc. 2014 25
Accenture’s unmatched industry expertise and NetSuite’s sophisticated cloud leadership pave the way forward for global enterprises.
Paul Daugherty Chief Technology Architect
SuiteCommerce
• Retail: Omnichannel as a matter of survival
• Manufacturing: Direct access to customers - Sell B2B, B2C, retail, on marketplaces
• Wholesale Distributor: B2B, digital supply chain and B2C
• Software: Subscription management, Usage-based billing
• Services: Unified billing, Internet and new media
• Products are becoming services
Commerce is Changing Every Industry
© NetSuite Inc. 2014 27
© NetSuite Inc. 2014 28
Support Multiple
Touchpoints
Support Any Business
Model
Innovate Rapidly to Embrace an Ever-changing
Landscape
Integrate the Back-office Commerce Operation
Transforms the NetSuite Operational System Into a Commerce Platform That Provides Complete Flexibility to:
SuiteCommerce Powers Global Expansion of Omnichannel
© NetSuite Inc. 2014 29
Financial Highlights
• Record Q3 2014 revenue of $143.7 million, a 34% increase Year-over-Year
• Q3 2014 operating cash flow of $16.3 million, an 11% increase Year-over-Year
• Non-GAAP net income for the third quarter of 2014 was $8.3 million, or $0.11 per share, as compared to non-GAAP net income of $6.9 million, or $0.09 per share, in the third quarter of 2013.
Q3 2014 Financial Highlights
© NetSuite Inc. 2014 31
Note: Reconciliation of Non-GAAP measures to the comparable GAAP measures are available in the quarterly results press releases which can be found on NetSuite’s website in the investor relations section.
Key Financial Trends
© NetSuite Inc. 2014 32
Non-GAAP Net Income ($ Millions)
Short-Term Deferred Revenue ($ Millions)
Non-GAAP Recurring Revenue Gross Margin %
Cash Flow from Operations ($ Millions)
$3.4
$8.5 $10.8
$19.1 $19.9
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
2009 2010 2011 2012 2013
84.3% 85.8% 85.2% 85.3% 85.3%
0.0%
50.0%
100.0%
2009 2010 2011 2012 2013
$66 $76 $106
$154
$212
$0
$50
$100
$150
$200
$250
2009 2010 2011 2012 2013
$4.7
$18.2
$36.3
$54.3 $62.2
$0.0$10.0$20.0$30.0$40.0$50.0$60.0$70.0
2009 2010 2011 2012 2013
Note: Reconciliation of Non-GAAP measures to the comparable GAAP measures are available in the quarterly results press releases which can be found on NetSuite’s website in the investor relations section.
FY 2014 and FY2015 Outlook
© NetSuite Inc. 2014 33
Q4 2014 FY 2014 FY2015
Revenue $154M to $156M $552M to $554M $715M to $725M
Non-GAAP EPS $0.08 to $0.10 $0.31 to $0.33 Not Provided
Operating Cash Flow $15M to $16M $69M to $70M Not Provided
Note: Reconciliation of Non-GAAP measures to the comparable GAAP measures are available in the quarterly results press releases which can be found on NetSuite’s website in the investor relations section.
Q4’14, FY2014 Outlook and FY2015 Outlook ranges provided on NetSuite’s Q3 2014 earnings call as of October 23, 2014
NYSE: N