Sightings in SaaS

I listened to the NetSuite investor con call last night to find out how N made out in the 2nd quarter. Couple of things caught my attention. The average deal during the quarter was $34,000 for conventional NetSuite and $100,000 for NetSuite OneWorld. NetSuite is certainly moving upmarket. OneWorld, the product for companies with multiple subsidiaries, did especially well. This is going to be a real sweetspot for the foreseeable future in our opinion.

Also, Zach Nelson, NetSuite CEO, reiterated his interest in Service Organizations while talking about NetSuite’s recent acquisition of QuickArrow. Nelson said that the service sector would continue to see strong growth in mature economies and this is where NetSuite wants to play. NetSuite has always gone after those sectors of the market where they see strong growth, like e-commerce for example in the late 90’s and earlier this decade, and it’s a useful strategy. With OpenAir, an earlier acquisition, and now QuickArrow NetSuite has the opportunity to make hay in a very attractive sector.

Given the news that came out this morning about software sales continuing to decline, though at a lesser rate, in the US Q2, I also thought it remarkable that N posted growth in the quarter. Not stratospheric growth, but growth nonetheless. From a MarketWatch article on the US Q2:

Business investments fell at an 8.9% annualized rate during the second quarter, shallower than the 36.9% drop in the first quarter

Investments in structures dropped 8.9%, and investments in equipment and software fell at a 9.0% pace. Business fixed investment subtracted 0.94 of a percentage point from GDP, compared with a whopping 5.29 percentage points in the first quarter.

So all together I was impressed by N’s 2nd quarter. I don’t think that they set the world on fire, but they signed up over 200 new customers, and made significant progress moving upstream in customer size.