from wall street financial analyst to saas leader: the economics of the recurring revenue business...

© NetSuite Inc. 20161

From Wall Street Financial Analystto SaaS Leader:

Jason Maynard on the Economics of the Recurring Revenue Business Model

Jason Maynard, EVP Strategy, NetSuite (NYSE:N)@jasonamaynardMarch 22, 2016


Cautionary Note: Forward Looking Statement

This presentation contains “forward-looking” statements that involve risks and uncertainties and assumptions. 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, risks associated with quarterly fluctuations in our business and results of operations;; current macro-economic conditions and the possibility they could deteriorate;; changes in business plans of our SuiteCloud partners and other strategic partners;; and the effects of competition1. These and other risks and uncertainties associated with our business are described in our most recently filed annual report on Form 10-K for the year ending 12/31/152 and any subsequently filed reports on Form 10-K, 10-Q or 8-K. These filings are available on the SEC’s website at www.sec.gov and on NetSuite’s website at www.netsuite.com.

We assume no obligation and do not intend to update any forward looking statements. Customers who purchase our services should make sure the decisions are based on features that are currently available. Please be advised that any unreleased services or features from NetSuite that are not currently available may not be delivered on time, or at all.3

(1)These factors should be tailored to the specific forward looking statements in the presentation.(2)This date needs to be updated to refer to the year for which the most recent 10-K has been filed or else remove the reference to the date.(3)This language can be removed from internal presentations where no customers or prospects will be present like the internal all hands presentation (but there is no harm if it is left in).


• Etiam ultricies nisi sed ipsumamquam nvel augue

• Curabiturullamcorperultricies nisi

• Nam egetdui etiam rhoncusmaecenas tempus tellus ege

• Tcondimentumrhoncus, semquam semper libero sit am

• Adipiscingsemneque sed ipsumamquam nun, blandit vel, luctus pulvinarhendrerit idomur

• oremMaecenas nec odio et ante tincidunt tempuson

• Vitae sapien ut libero venenatis faucibusNullamquis ante

• Etiam sit ametorci eget eros faucibus tincidunt sed ipsumamquuis leoed

Economics is extremely useful as a form of employment for economists.

John Kenneth Galbraith


CUSTOMER SUCCESS

COST, TIME & RISK

PREDICTABLE

Economics of the Cloud Model


COST, TIME & RISKFAVOR THE CUSTOMER


IT’S THE END OF LEGACY SOFTWARE AS WE KNOW IT

COSTLY CUSTOMIZATIONS

IMPLEMENT ONCE, NEVER UPGRADEUGLY SOFTWARE MONOLITHIC

CLOSED SYSTEMS


REAL ROI

QUICK USER ADOPTIONUsers get the KPIs, Reports, Workflows, Alerts, UX that gets them loving the product immediately and wanting more

CONCENTRATE ON ADDING VALUELeading Practice allow project teams and users to spend time on value add processes rather than basic configuration

Improve business immediately rather than re-implementing the old system

QUICKER TIME TO VALUE


PREDICTABLE REVENUE STREAM FOR VENDORS


SUBSCRIPTION MODEL IS AN INVESTMENT

•Revenue is recognized over the course of the contract•While this results in a cash flow trough since expenses are still recognized up front, after reaching break even, the returns are significant

-‐2

-‐1.5

-‐1

-‐0.5

0

0.5

1

1.5

2

2.5

Year 1 Year 2 Year 3 Year 4


**Midpoint of the range of FY2016 outlook of $950 to $970 million provided on NetSuite’s Q4 2015 earnings call as of January 28, 2016

THRIVING THROUGH UNCERTAIN TIMES

$109$153 $167

$193$236

$309

$415

$556

$741

$960Outlook**

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E

NetSuite Fiscal Year Annual Revenue ($M)

NetSuite IPO

NetSuite grew 16% Recurring Revenue & 9% Topline Revenue

Great Recession

Greek Debt Crisis 2015

US Government Shutdown 2013

US Debt Downgrade

2011


THIS ONLY WORKS IF CUSTOMERS REMAIN SUCCESSFUL


TRUSTED BY 30,000 ORGANIZATIONSEVERY SIZE. EVERY INDUSTRY. IN EVERY PART OF THE WORLD.

GLOBAL LEADERS EVERY INDUSTRY NEXT GEN DISRUPTORS


STARTUP STATE OF MIND

THINK GLOBAL DELIVER LOCAL

ADAPTABLE TO CHANGE

THE POWER OF DATA

AGGREGATION

EVERY COMPANY IS A CLOUD COMPANY

Pillars of Customer Success

1 2 3 4 5


Lesson 1: EVERY COMPANY IS A CLOUD COMPANY


RIDESFRIENDSRESUMES SPORTS

YOU

THINGS


CHANGING EVERY INDUSTRY

ManufacturingSell B2B, B2C, retail, on marketplaces.Direct access to customers

ServicesUnified billingInternet and new media

WDB2B, digital supply chain and B2C. Selling outcomes.

SoftwareSubscription managementUsage-based billing

RetailOmnichannel as a matter of survival


Lesson 2: ADAPTABLE TOCHANGE


NEW MARKETS

NEW PRICING

NEW PRODUCTS, SERVICES, & BUNDLES

NEW CHANNELS

BUSINESS MODEL INNOVATION


RELEASE PREVIEW

RELEASE PREVIEW

RELEASE PREVIEW

RELEASE PREVIEW

NETSUITE UPGRADE

10% UPGRADE

30% UPGRADE

REMAINING UPGRADED

PHASE 1 PHASE 2 PHASE 3 PHASE 4

PHASE 1 CUSTOMERS

PHASE 2 CUSTOMERS

PHASE 3 CUSTOMERS

PHASE 4 CUSTOMERS

ACCOUNT SNAPSHOT

CUSTOMIZATION ISN’T A DIRTY WORD


Lesson 3: POWER OF DATA AGGREGATION


RIDESFRIENDSRESUMES SPORTS

YOU

THINGS


156,981,866Sales Orders

20,711,450Purchase Orders

150,858,709Items SKUs

186,757,955Invoices

2,328,287Services Projects

YTD: Jan – Aug FY15

500,000,000+Application Requests/day

9+ Terabytes of data added every day

CLOUD ONLY SCALE


Lesson 4: THINK GLOBAL & DELIVER LOCAL


GLOBAL OPPORTUNITY

MULTI-CURRENCY

MULTI-TAX

MULTI-LINGUAL

MULTI-SUBSIDIARY


Lesson 5: STARTUP STATE OF MIND


DIGITAL DISRUPTION IS THIS GENERATIONS Y2K


SMALL COMPANIES MUST ACT BIG


BIG COMPANIES

MUST ACT SMALL


THANK YOU

from wall street financial analyst to saas leader: the economics of the recurring revenue business...

Technology