1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Articles (188) 

Benefit From the Proliferation of the Cloud With This Stock

August 04, 2014 | About:

NetSuite (NYSE:N) started the new fiscal year on a positive note, delivering a solid financial performance and operational excellence. NetSuite looks well-positioned to re-platform its core business and build a leadership position in the ERP business. NetSuite is confident of achieving its target as it is among the few application software companies that have delivered about 30% or greater revenue growth on a year-over-year basis over the past seven consecutive quarters.

Focus on product will drive results

NetSuite executes and enables companies to operate their business in the cloud, while other traditional ERP software companies produce power point decks. This is why NetSuite's financial performance was solid in the fourth quarter, while the other companies shrank. On the other hand, NetSuite also seeing healthy growth in its market share, driven by product innovation.

In terms of market share gains, the company is four times faster than its nearest competitor. This is a fundamental reason the company's growth should continue at a solid pace going forward. Further, according to a Gartner study, while other software mid-market client providers such as SAGE and Microsoft have been struggling, the operational efficiencies of NetSuite have allowed it to perform smoothly and grow at a fast pace.

NetSuite is focusing on various aspects to improve its profitability. With its cutting-edge products and innovation, the company is among the top 10 global providers of pure cloud services. NetSuite’s transitioning moves from software to the cloud are gaining good response from consumers. As a result, NetSuite is expecting better results going forward, with revenue to range between $540 million and $545 million.

Better times in the future

NetSuite is expecting gains both in the short-term and the long-term. With a market leading image in cloud ERP systems, it has got access the single-largest total addressable market in the business application space. NetSuite is expecting this market to boom in the future. To make full use of the existing potential of these markets, NetSuite is making considerable investments in the product and the sales model with an aim to improve its standing.

Moreover, having delivered fantastic results in the first quarter, NetSuite is expecting better times ahead as its integrated cloud-based business applications gain more traction at businesses.

Moving forward, NetSuite also has good customer strategies. A customer once won over is satisfied by its best-in-class services, and hence, he stays for many years beyond the initial subscription period. Therefore, each new customer addition strengthens its long-term prospects.

Going forward, NetSuite will be laser-focused on its growth initiatives, as the opportunities in front of it are enormous and growing. To tighten its hold on the opportunities, NetSuite has plans to invest in sales and product development, which will help its business to grow and further strengthen its leadership position in the market.

For example, NetSuite recently landed new customer wins in a new market. According to an official release:

"NetSuite Inc., the industry's leading provider of cloud-based financials / ERP and omnichannel commerce software suites, today announced a number of new customer wins, continuing adoption momentum among the fast-growing pet products industry, which the American Pet Products Association estimates is worth $58.5 billion in the U.S. in 2014, up 21 percent since 2010."


For fiscal 2014 NetSuite is expecting non-GAAP EPS to be in the range of 0.24-$0.26 per share. However, NetSuite’s cash expenses are expected to rise in the quarter due to the company’s Suite World event. However, from a long-term perspective, NetSuite looks like a solid investment as its earnings are expected to grow 26% annually in the coming five years.

Rating: 0.0/5 (0 votes)


Please leave your comment:

More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.

Performances of the stocks mentioned by rusticnomad

User Generated Screeners

canidPE >50th percentile of INDUSTR
brucexoct 17 user defined screen
AngryQuality Growth cheap
EnjoylifeDad 1
punjanoot2007a academy+joe
kltan12LOW PB/PS
carlentValue - Short
carlentValue - Long
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat