Intacct’s market success continues

It’s an interesting time in the cloud accounting and ERP software markets. Some of the consultants I check in with report a tough time getting clients to engage them in software selections and/or implementations; others say differently. Yet, when I get briefed by the software vendors, the numbers of new clients is still growing at a good clip. Vendors tell me of growing customer size, customer counts, etc.  I suspect what’s happening is that:

• Some prospective software buyers feel they can do more selection activity on their own or that they don’t trust some consultants especially those with a tight relationship with a key vendor or two
• Customers need less implementation help because that’s part of the value that multi-tenant cloud solutions offer. I confirmed that in some panels I did the other week with several Plex customers.

In just the last few weeks, I’ve been updated on the customer wins and revenues from Adaptive Insights, Host Analytics and Intacct, to name a few. Next week, I’ll be at NetSuite’s user conference and I already know they’re doing well judging by their latest financial results. Den Howlett tells me that FinancialForce is chugging along nicely, Xero showed up some extraordinary numbers while Business ByDesign is invigorating its marketing.

All in all, it’s a good time in the cloud business applications and, surprising to some perhaps, the financials space. The only struggles I’m seeing are from older ERP vendors who are still fighting their own clumsy way to the cloud.

Intacct continues to gain market share and close deals with marquee clients. I’m not surprised. Last year, I led a major software selection for a client where the finalists were NetSuite and Intacct.  Both firms have consistently improved their solutions since their founding. While both can count thousands of customers, many of which were smaller firms, they both possess capabilities that can solve mid and large enterprise customer needs - a fact one notices when you see the delta in new customer logos and sizes. This market continues to mature in very good directions.

Specific to Intacct, they are reporting:

• Total customer count now exceeds 11,000
• One customer now has over 600 legal entities in the system
• Another customer has over 3,000 users
• Another customer processes over 1,000,000 transaction line items per month in Intacct
• 34% YOY growth in new bookings
• Substantial in-fill sales to existing customers (i.e., sales of new modules and expanded user counts/subscribers) – this increases Average Customer Recurring Revenue

Intacct also reports that it recently closed a $40 million debt financing round with Silicon Valley Bank. While I expect Intacct to do an IPO before long, the market for such a transaction is not very hospitable on Wall Street these days. Debt financing is still a low cost option for now. This funding method will likely get more costly before too long. Now is the time to lock in cheap debt.

Intacct also reports advances in its channel partner network with new or expanded deals with Salesforce.com, AthenaHealth and American Express.  The Amex deal expands their previous check payment processing deal. ACH payments are now available via this relationship.

 

I see Accounts Payable functionality getting seriously overhauled from many different directions. Solutions like nVoicePay, MineralTree and others can help firms save significant amounts in bank fees, processing costs, paper stock costs, etc. Intacct's Amex deal has the potential to save firms in payables/payment costs and possibly payroll costs. If your firm has looked at making Accounts Payable more cost effective lately, you should now.

My Take

Intacct’s 34% growth shows how vibrant the cloud accounting software space can be and is in line with the market gains others in the same space are also seeing. New revenue recognition functionality (see previous Intacct story), new AMEX services, etc. point to a continuing investment in the product line and an evolving maturity of the financial solutions.

Vendors that are still struggling to produce modern accounting solutions are in trouble especially those that still can’t offer:

• An all-cloud financials product line that does not require any local servers or on-premises software
• A multi-tenant application suite
• Multi-national functionality
• Consolidation/budgeting/planning solutions

Moreover, CFO’s are recognizing that they need to modernize their Finance/Accounting organizations and systems. This is the time to replace the mess of spreadsheets, best of breed on-premises apps and other detritus from a bygone era. These factors alone point to a booming replacement wave of back office applications.