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NETSUITE SALES UP; ALSO EXPENSES

zach nelsonThe best way to look at NetSuite's results for the second quarter ended June 30, is that it took the nearly $7 million increase in revenue over last year's corresponding period and pumped it into growing the company. That meant an extra $2.2 million went into product development, up 18.4 percent over a year ago, while an additional $3.6 million went into sales and marketing, up 19.8 percent and another $1 million into G&A, or plus 16 percent.

That's a fancy way of explaining how the loss rose by 40 percent while revenue increase by 16.8 percent in the most recently ended period. The red ink grew to $7.2 million, a rise from $5.2 million a year earlier and revenue was $47.1 million, compared to $40.3 million. It's clearly a signal for aggressive growth, although sometimes I think CEO Zach Nelson can look at a half-full glass and convince you it's completely full. The company hired more account managers to reduce the number of accounts served by each and added to the professional services staff. Nelson said the hiring will continue. "In the next six months, we are going to add resources to our direct sales organization, our channel sales reorganization and in our R&D team to stay in front of the needs of our customers," he said. There also will be more development money for all products. Nelson said reseller revenue also grew, although I don’t think he ever answered a question about the percentage coming from resellers. He did say resellers contributed 27 percent of new business, but that's not the same as total revenue. Historically, the reseller total has been stuck at 20 percent of sales. Nelson noted growth in the channel, referring to a class he had attended with 20 new VARs. There haven’t been any names released about new resellers recently.
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