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NetSuite Q2 Earnings Strong as Sales Rise 30 Percent

The cloud software player reports its first quarter with revenue of more than $100 million.

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Shares of NetSuite, the cloud business software company fell after hours after the company reported profits that were ahead of expectations, but sales that were in line. (Update: And now they’re up by two percent after hours.)

The company reported a per-share profit of six cents on $132 million in revenue in its second fiscal quarter, up 30 percent from the year-ago period. The profit was double the three cents analysts had expected. Revenue was only slightly ahead of expectations.

Recurring revenue for subscriptions and support was almost $106 million, the first time that figure has been north of $100 million. Cloud companies sell their software on a subscription basis, making recurring revenue a key metric. CEO Zach Nelson called it a “breakout moment” in a statement.

Deferred revenue, another key metric for cloud companies representing future software subscription periods, was $238 million.

NetSuite shares rose by nearly three percent ahead of the earnings report to close at $84.74 during the regular trading session. After hours, however, the stock was down about two percent. The shares have fallen by 18 percent this year.

NetSuite was among the publicly trade cloud software companies whose shares fell earlier this year after a run-up in their valuations.

An index of cloud software companies tracked by Bessemer Venture Partners, which includes shares of companies like, Workday and ServiceNow, had recovered by more than 10 percent as of last week since a recent bottom in early May.

While NetSuite’s primary business is cloud-based software that companies use to track the flow of their day-to-day operations — a space known as Enterprise Resource Planning or ERP — it has expanded over the last two years into offering businesses payments and commerce services in the cloud. NetSuite calls it SuiteCommerce.

Last week the company said it would acquire Venda, a London-based digital commerce company whose customers include supermarket giant Tesco and England’s Arsenal Football Club.

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