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Oracle NetSuite Ups Ante in ERP Market With New Capabilities

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Oracle ORCL recently updated NetSuite with latest analytics and cloud capabilities across digital commerce, finance, HR, supply chain, and marketing domains. This move is aimed at enhancing user engagement. The innovations were announced at SuiteWorld 2019, held at Las Vegas, NV.

The series of latest enhancements include trade management capabilities to simplify foreign currency exchange and other global trade processes. Notably, NetSuite is loaded with localized product capabilities. For instance, in India, updated NetSuite enables customers to file tax returns in compliance with latest TDS and GST tax criteria.

Oracle’s roll out of NetSuite Brainyard, a free software resource, provides customers with access to latest benchmark data, research and actionable insights. Brainyard is expected to aid enterprises in enhancing business processes with proper decision-making capabilities.

Management is elated that NetSuite is witnessing rapid adoption from retailers and non-profit organizations, among others. The latest additions to NetSuite’s clientele include PetShop.co.uk, elope, Inc., The American Cancer Society, MANA Nutrition, The Second City, to name a few.

We believe that enhancing the functionalities of NetSuite with cloud-based capabilities poises the solutions well to sustain growing clout in the markets served by the company. Moreover, focus on customizing NetSuite to comply with local needs will boost its global market reach.

Coming to price performance, shares of Oracle have returned 20.2% year to date, almost in line with the industry’s 20.1% rally.

NetSuite Adoption to Favor Top-Line Growth

Oracle concluded the NetSuite acquisition in 2016. The buyout enabled the company in penetrating the small and medium-sized business (“SMB”) market in the Enterprise Resource Planning (ERP) segment, wherein it lacked a strong presence.

Moreover, this acquisition aided the company to expand its cloud portfolio and gain foothold in the market dominated by Amazon’s AMZN Amazon Web Services ("AWS") and Microsoft’s MSFT Azure cloud platforms. The latest innovations are expected to enhance the company’s competitive position against ERP peers including SAP SE SAP.

Notably, Oracle is benefiting from the ongoing cloud-based momentum. In the third quarter of fiscal 2019, NetSuite ERP revenues increased 30% in the trailing 12-month period.

Market Prospects Aplenty

Per Gartner, enterprise software spending is likely to experience the highest growth of 8.3% in 2019. Cloud software is likely to grow more than 22% this year compared with 6% growth for all other Software forms, adds Gartner.

Per ResearchAndMarkets data, the global ERP software market is envisioned to grow to $74.2 billion by 2026 from $34.1 billion in 2017, witnessing a CAGR of 9%. Further, ReportBuyer estimates cloud ERP to hit approximately $29.8 billion in 2021.

The aforementioned reports favor the growth prospects of Oracle NetSuite. Also, NetSuite’s growing clout in the ERP market is evident from market research firm Gartner’s latest “Magic Quadrant for Cloud ERP for Product-Centric Midsize Enterprises” report, wherein it placed Oracle ERP Cloud (exclusively) in the “Leaders” quadrant.

We believe robust adoption of NetSuite, driven by new enhancements, will aid Oracle to strengthen its dominance in the cloud ERP market.

Zacks Rank

Oracle currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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