Jason Carter with
Jason was confronted with a comparison of revenue growth rates leading people to conclude that the Saas vendors like NetSuite (+3.78% last quarter) are really outperforming the on-premise vendors like Dynamics (+1% last quarter). This is proving to not be the case and here are Jason’s findings on why we can no longer take this information at face value:
That's NetSuite's revenue from a year ago, in the fourth quarter of 2008.
That's how much "software" the company says it sold during Q409. Specifically, on the earnings call NetSuite said that during Q409 it added 295 customers at an average sales price of $38,000 each. That equates to $11.2 million in revenue.
Just straight math. Take $41.4 million from last year, add the $11.2 million from new customers, and you get to $52.6 million. In theory, absent churn this is the revenue NetSuite should have delivered in Q409.
Is the amount of revenue the company actually delivered in Q409. It's a 3.8% increase over $41.4 million during Q408. In dollar terms it was an increase of $1.6 million.
Is the difference between those two numbers. What could that be but the amount of revenue NetSuite lost to churn?
This is troubling for NetSuite, and when the pundits compare NetSuite's 3.8% growth with an on-premise vendor that grew at a lower rate, they are not taking these issues into account. From $41.4 million in revenue during 4Q08, NetSuite lost $9.6 million by the end of 4Q09. That's a "revenue churn" of 23%. Ouch.
Microsoft has recently invested a huge amount of time and resources in order to make SaaS easily available for Dynamics ERP. If you’re interested to learn more, please
Specializing in ways to enhance your company’s solutions with