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Oracle (ORCL) NetSuite Ups Ante in ERP With New Capabilities

Oracle ORCL recently updated NetSuite with the latest analytics and cloud capabilities in multiple domains, including HR, supply chain, banking, finance and sales. This move is aimed at enhancing user engagement by driving efficiencies in businesses and making them more profitable. The innovations were announced at SuiteWorld 2022, held in Las Vegas, NV.

The highlights include improved accounts payable automation, a configure/price/quote or CPQ utility, and a mobile application that aids in packing and shipping.

NetSuite AP Automation embeds banking services into a cloud enterprise resource planning system to make it faster and easier for users to process bills and pay from the application.

NetSuite Ship Central is a new mobile application that helps organizations streamline and automate operations. It gives warehouse workers packing and shipping capabilities on a mobile device or kiosk.

NetSuite CPQ is aimed at helping sales teams quickly configure and price complex products by selecting from a menu of product features and applying customizable business rules. It’s integrated with the company’s Enterprise Resource Planning (ERP), customer relationship management and e-commerce modules to allow pre-configured inventory and profitability data.

The latest SuitePeople Workforce Management helps organizations manage labor costs and profitability. The solution enhances employee engagement by automating routine tasks, such as scheduling staff, tracking employee hours worked and calculation of wages.

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

Oracle Corporation Price and Consensus

Oracle Corporation Price and Consensus
Oracle Corporation Price and Consensus

Oracle Corporation price-consensus-chart | Oracle Corporation Quote

NetSuite Adoption to Favor Top-Line Growth

Oracle concluded the NetSuite acquisition in 2016. The buyout enabled the company to penetrate the small and medium-sized business market in the ERP segment, wherein it lacked a strong presence.

Notably, Oracle is benefiting from the ongoing cloud-based momentum. In first-quarter fiscal 2023, NetSuite ERP revenues increased 30% in the trailing 12-month period.

Per Gartner, price increases and delivery uncertainty, exacerbated by the Russian invasion of Ukraine, have accelerated the transition in purchasing preference among enterprises in general, from ownership to service — pushing cloud spending to 18.4% growth in 2021 with an expected growth of 22.1% in 2022.

Per Fortune Business Insights data, the global ERP software market is envisioned to grow to $90.63 billion by 2029, exhibiting a CAGR of 9.1% during the forecast period.

The aforementioned reports favor the growth prospects of Oracle NetSuite. Markedly, Oracle has been named a Leader in the 2022 Gartner Magic Quadrant for Cloud ERP for Service-Centric Enterprises for Oracle Fusion Cloud ERP.

Management is elated that NetSuite is witnessing rapid adoption from retailers and non-profit organizations, among others. NetSuite AP Automation will initially ship with automated payment services provided by HSBC HSBC, although other banking partners are likely to be added in the future. Last month, HSBC launched variable recurring payments for open banking customers, and earlier this year, Oracle NetSuite announced a cashflow management service, Cash 360.

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

Besides, partnerships with Microsoft MSFT and VMware VMW are helping Oracle win new clientele. The company’s share buybacks and dividend policy are noteworthy.

Last quarter, Microsoft and Oracle delivered a high-speed interconnection between Azure and Oracle's cloud to give Azure customers direct access to Oracle databases.

Oracle’s partnership with VMware for Oracle Cloud VMware Solution has been gaining prominence, which is expected to have aided customer growth in the to-be-reported quarter. The solution has gained popularity among leading enterprises in retail, telecommunication, finance and banking, manufacturing, government and others.

However, this Zacks Rank #4 (Sell) company’s higher spending on product enhancements, especially on the cloud platform, amid increasing competition, is likely to limit margin expansion in the near term.

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

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