Looking at the numbers, NetSuite posted a third quarter net loss of $34.1 million, or 42 cents a share, on revenue of $243.9 million. Non-GAAP earnings for the third quarter were 20 cents per share.
Wall Street was expecting non-GAAP earnings of at least 13 cents a share on revenue of $250 million.
NetSuite’s earnings land as a deadline is approaching for Oracle’s tender offer for the company. Oracle said October 7 that it has extended its tender offer for the last time to November 4. NetSuite’s largest shareholder outside of Oracle CTO Larry Ellison is T. Rowe Price. The institutional shareholder has balked at the Oracle offer.
Where the NetSuite earnings statement gets interesting is the disclosure that it won’t hit its targeted revenue outlook, which was estimated to be in the range of $955 million to $975 million. That disclosure could mean that the Oracle bid has hampered NetSuite’s business. In addition, NetSuite’s outlook, which was withdrawn, may alter shareholder reaction to the Oracle deal.
Oracle’s ties to NetSuite go back to the 1990s, when NetSuite CEO Zach Nelson served as Oracle’s marketing chief. Both companies have had a keen focus on the enterprise resource planning space, but while NetSuite has lived and breathed in the cloud since its inception, Oracle has struggled to transition to an all-cloud business model.
Initially the takeover bid was seen as a way to give Oracle additional muscle in the battle for cloud revenue. NetSuite also helps Oracle fill in cloud gaps across key verticals, namely manufacturing, retail, commerce, and professional services, all of which are areas Oracle still addresses with an on-premises model.
But as the acquisition excitement faded, T. Rowe, in a letter to NetSuite’s board, said it would not tender its 14.5 million shares in favor of the deal and suggested the bid failed to look at potential synergies that could make the case for a higher price.