Third-Quarter 2015 Total Revenues Increase 40
Percent to $13.1 Million, with Total Service Revenue More than
Doubling to $8.8 Million for the Quarter
Third-Quarter 2015 GAAP EPS Loss Narrows to
$(0.17) from $(0.31) Last Year
Non-GAAP EPS Improves to a Gain of $0.09 from
$0.07 Last Year
Conference Call Scheduled Today at 8:30 a.m. ET
(5:30 a.m. PT)
NetSol Technologies, Inc. (Nasdaq:NTWK), a global business services
and enterprise application solutions provider, today reported
financial results for its fiscal 2015 third quarter ended March 31,
2015.
Fiscal 2015 Third-Quarter Financial Results
The following comparison refers to results for the fiscal 2015
third quarter versus the fiscal 2014 third quarter.
Total net revenues increased 40 percent to $13.1 million, from
$9.4 million last year, reflecting strength in services revenue
related to the implementation of NetSol's next-generation financing
and leasing solution, NFS Ascent TM.
- License fees were $1.2 million, down from $2.1 million, related
to the mix of sales between NFS TM and NFS Ascent TM, which carries
a higher service revenue component;
- Maintenance fees were $3.0 million, compared to $2.4 million
last year;
- Services revenue more than doubled to $7.0 million, up from
$3.2 million last year; and
- Services revenue - related party (Netsol-Innovation and
Investec) were $1.8 million, up from $1.5 million last year.
On a GAAP basis, net loss from continuing operations was $1.6
million, equal to $(0.17) per share. This compares with a net loss
from continuing operations of $2.8 million, equal to $(0.31) per
share.
Adjusted EBITDA (a non-GAAP measure) was $883,000, or $0.09 per
adjusted diluted share, which removed $2.5 million in depreciation
and amortization. This compares with adjusted EBITDA of $658,000 or
$0.07 per adjusted diluted share, last year, which removed $2.0
million in depreciation and amortization.
The reconciliation of adjusted EBITDA to net income, the most
comparable financial measure based upon GAAP, as well as a further
explanation of adjusted EBITDA, is included in the financial tables
at the end of this press release.
Management Commentary
"The quarter reflects continued progress in the implementation
of our large NFS Ascent contract, as well as investment to enhance
our strategic position and delivery capability in Europe," said
Najeeb Ghauri, CEO of NetSol. "Today we are at a pivotal stage for
the company, approaching a time of record revenue, with further
momentum highlighted by a healthy new business pipeline for NFS
Ascent TM and NFS TM, continued upgrades and demand for our legacy
region-specific solutions, and new agreements in Europe that have
yet to contribute to results.
"Adding to our confidence is the relaxation of restrictions for
new finance and leasing market entrants into China, where our NFS
solution has the dominant market share; improved finance and
leasing markets in the U.S. and Europe, where we continue to make
progress; and China's investment in Pakistan, which is expected to
help the overall business environment, quality of life and security
profile of the country," Ghauri said.
Following is additional detail for the quarter:
- Increase in cost of revenues, related to the hiring and
training of technical employees, as well as the timing of salary
increases. Operational expenses also increased as a result of new
business activities. Expenses are expected to remain at the current
level as new hiring has slowed, with the addition of seven people
in the quarter;
- Cash and cash equivalents were $10.9 million, of which
approximately $7.3 million were held by the company's foreign
subsidiaries;
- Accounts receivable were $7.6 million, compared to $5.4 million
last year. The quality of receivables remains strong; and
- The company purchased 1.58 million shares of NetSol PK common
stock from the open market for $577,000, resulting in an overall
decrease in non-controlling interest from 36.6% to 34.9%.
Fiscal 2015 First Nine Months Financial
Results
For the first nine months of fiscal 2015, total net revenue rose
to $35.7 million, compared to $26.8 million for the first nine
months of fiscal 2014. The company reported a GAAP net loss from
continuing operations of $4.8 million, or $(0.51) per share,
compared with a GAAP net loss from continuing operation of $5.2
million, or $(0.57) per share, in the comparable period last
year.
Adjusted EBITDA (a non-GAAP measure) for the first nine months
of fiscal 2015 increased to $2.4 million, or $0.25 per adjusted
diluted share, which removed $7.1 million in depreciation and
amortization. This compares with adjusted EBITDA of $968,000, or
$0.11 per adjusted diluted share, last year, which removed $4.9
million in depreciation and amortization.
Fiscal 2015 Third-Quarter Conference Call
When: Monday, May 11, 2015
Time: 8:30 a.m. Eastern
Time
Phone: 1-888-572-7034
(domestic)
1-719-325-2329 (international)
A live Webcast will be available online within the investor
relations section of NetSol's website at http://www.netsoltech.com,
where it will be archived for 90 days.
To sign up to receive news alerts and regulatory filing
notifications, please visit
http://ir.netsoltech.com/email-alerts.
About NetSol Technologies
NetSol Technologies, Inc. (Nasdaq:NTWK) is a worldwide provider
of IT and enterprise software solutions primarily serving the
global leasing and financing industry. The Company's suite of
applications are backed by 40 years of domain expertise and
supported by a committed team of more than 1500 professionals
placed in eight strategically located support and delivery centers
throughout the world.
Forward-Looking Statements
This press release may contain forward-looking statements
relating to the development of the Company's products and services
and future operation results, including statements regarding the
Company that are subject to certain risks and uncertainties that
could cause actual results to differ materially from those
projected. The words "expects," "anticipates," variations of such
words, and similar expressions, identify forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, but their absence does not mean that the statement is not
forward-looking. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties, and
assumptions that are difficult to predict. Factors that could
affect the Company's actual results include the progress and costs
of the development of products and services and the timing of the
market acceptance. The subject Companies expressly disclaim any
obligation or undertaking to update or revise any forward-looking
statement contained herein to reflect any change in the company's
expectations with regard thereto or any change in events,
conditions or circumstances upon which any statement is based.
NetSol Technologies,
Inc. and Subsidiaries |
Consolidated Balance
Sheets |
|
|
|
ASSETS |
As of March 31, 2015 |
As of June 30, 2014 |
Current assets: |
|
|
Cash and cash equivalents |
$10,887,358 |
$11,462,695 |
Restricted cash |
90,000 |
2,528,844 |
Accounts receivable, net of allowance of
$959,333 and $1,088,172 |
7,520,921 |
5,403,165 |
Accounts receivable, net - related
party |
2,498,160 |
2,232,610 |
Revenues in excess of billings |
4,837,306 |
2,377,367 |
Revenues in excess of billings - related
party |
188,426 |
-- |
Other current assets |
2,515,154 |
2,857,879 |
Total current assets |
28,537,325 |
26,862,560 |
Property and equipment, net |
26,410,815 |
29,721,128 |
Intangible assets, net |
24,777,549 |
28,803,018 |
Goodwill |
9,516,568 |
9,516,568 |
Total assets |
$89,242,257 |
$94,903,274 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable and accrued
expenses |
$5,310,510 |
$5,234,887 |
Current portion of loans and obligations
under capitalized leases |
2,989,520 |
5,791,258 |
Unearned revenues |
5,646,287 |
3,192,203 |
Unearned revenues - related party |
50,490 |
47,649 |
Common stock to be issued |
88,324 |
347,518 |
Total current liabilities |
14,085,131 |
14,613,515 |
Long term loans and obligations under
capitalized leases; less current maturities |
594,166 |
1,532,080 |
Total liabilities |
14,679,297 |
16,145,595 |
Commitments and
contingencies |
|
|
Stockholders' equity: |
|
|
Preferred stock, $.01 par value; 500,000
shares authorized; |
-- |
-- |
Common stock, $.01 par value; 14,500,000
shares authorized; 10,145,207 shares issued and 10,117,928
outstanding as of March 31, 2015 and 9,150,889 shares issued and
9,123,610 outstanding as of June 30, 2014 |
101,452 |
91,509 |
Additional paid-in-capital |
118,387,488 |
115,394,097 |
Treasury stock (27,279 shares) |
(415,425) |
(415,425) |
Accumulated deficit |
(40,018,743) |
(35,177,303) |
Stock subscription receivable |
(1,298,307) |
(2,280,488) |
Other comprehensive loss |
(15,669,755) |
(14,979,223) |
Total NetSol stockholders' equity |
61,086,710 |
62,633,167 |
Non-controlling interest |
13,476,250 |
16,124,512 |
Total stockholders'
equity |
74,562,960 |
78,757,679 |
Total liabilities and
stockholders' equity |
$89,242,257 |
$94,903,274 |
|
NetSol Technologies,
Inc. and Subsidiaries |
Consolidated Statement
of Operations |
|
For the Three
Months Ended March 31, |
For the Nine Months
Ended March 31, |
|
2015 |
2014 |
2015 |
2014 |
Net Revenues: |
|
|
|
|
License fees |
$ 1,215,201 |
$ 2,118,015 |
$ 4,900,469 |
$ 4,826,198 |
Maintenance fees |
2,978,587 |
2,412,419 |
8,963,240 |
7,451,584 |
Services |
7,022,982 |
3,241,057 |
16,650,646 |
10,403,978 |
Maintenance fees - related party |
43,948 |
143,598 |
237,523 |
352,037 |
Services - related party |
1,813,197 |
1,447,962 |
4,901,792 |
3,804,297 |
Total net revenues |
13,073,915 |
9,363,051 |
35,653,670 |
26,838,094 |
|
|
|
|
|
Cost of revenues: |
|
|
|
|
Salaries and consultants |
4,895,515 |
4,106,150 |
13,310,632 |
10,526,701 |
Travel |
760,065 |
354,554 |
1,772,289 |
1,090,809 |
Depreciation and
amortization |
1,912,492 |
1,471,126 |
5,514,812 |
3,517,804 |
Other |
792,737 |
985,075 |
2,129,646 |
2,680,084 |
Total cost of revenues |
8,360,809 |
6,916,905 |
22,727,379 |
17,815,398 |
|
|
|
|
|
Gross profit |
4,713,106 |
2,446,146 |
12,926,291 |
9,022,696 |
|
|
|
|
|
Operating expenses: |
|
|
|
|
Selling and marketing |
1,712,151 |
1,083,753 |
4,419,466 |
3,032,675 |
Depreciation and amortization |
551,127 |
493,814 |
1,569,903 |
1,351,378 |
General and administrative |
3,997,186 |
3,484,898 |
11,584,696 |
9,889,329 |
Research and development cost |
84,038 |
65,060 |
230,740 |
178,862 |
Total operating expenses |
6,344,502 |
5,127,525 |
17,804,805 |
14,452,244 |
|
|
|
|
|
Loss from operations |
(1,631,396) |
(2,681,379) |
(4,878,514) |
(5,429,548) |
|
|
|
|
|
Other income and
(expenses) |
|
|
|
|
Gain (loss) on sale of assets |
6,496 |
(995) |
(74,099) |
(190,027) |
Interest expense |
(45,234) |
(8,275) |
(165,592) |
(170,230) |
Interest income |
97,094 |
114,141 |
261,091 |
186,926 |
Gain (loss) on foreign currency exchange
transactions |
(247,845) |
(908,192) |
(589,707) |
299,270 |
Share of net loss from equity
investment |
-- |
(203,684) |
-- |
(370,332) |
Other income (expense) |
607,111 |
(5,006) |
625,650 |
(4,341) |
Total other income (expenses) |
417,622 |
(1,012,011) |
57,343 |
(248,734) |
|
|
|
|
|
Net loss before income
taxes |
(1,213,774) |
(3,693,390) |
(4,821,171) |
(5,678,282) |
Income tax provision |
(107,398) |
(98,920) |
(235,157) |
(139,321) |
Net loss from continuing
operations |
(1,321,172) |
(3,792,310) |
(5,056,328) |
(5,817,603) |
Income from discontinued
operations |
-- |
1,480,786 |
-- |
1,158,752 |
Net loss |
(1,321,172) |
(2,311,524) |
(5,056,328) |
(4,658,851) |
Non-controlling
interest |
(315,073) |
1,011,720 |
214,888 |
635,024 |
Net loss attributable to
NetSol |
$ (1,636,245) |
$ (1,299,804) |
$ (4,841,440) |
$ (4,023,827) |
|
|
|
|
|
|
|
|
|
|
Amount attributable to NetSol common
shareholders: |
|
|
|
|
Loss from continuing
operations |
$ (1,636,245) |
$ (2,780,590) |
$ (4,841,440) |
$ (5,182,579) |
Income from discontinued
operations |
-- |
1,480,786 |
-- |
1,158,752 |
Net loss |
$ (1,636,245) |
$ (1,299,804) |
$ (4,841,440) |
$ (4,023,827) |
|
|
|
|
|
Net loss per share: |
|
|
|
|
Net loss per share from continuing
operations: |
|
|
|
|
Basic |
$ (0.17) |
$ (0.31) |
$ (0.51) |
$ (0.57) |
Diluted |
$ (0.17) |
$ (0.31) |
$ (0.51) |
$ (0.57) |
|
|
|
|
|
Net income per share from discontinued
operations: |
|
|
|
|
Basic |
$ -- |
$ 0.16 |
$ -- |
$ 0.13 |
Diluted |
$ -- |
$ 0.16 |
$ -- |
$ 0.13 |
|
|
|
|
|
Net loss per common share |
|
|
|
|
Basic |
$ (0.17) |
$ (0.14) |
$ (0.51) |
$ (0.45) |
Diluted |
$ (0.17) |
$ (0.14) |
$ (0.51) |
$ (0.45) |
|
|
|
|
|
Weighted average number of shares
outstanding |
|
|
|
|
Basic |
9,914,321 |
9,092,834 |
9,573,336 |
9,034,532 |
Diluted |
9,914,321 |
9,092,834 |
9,573,336 |
9,034,532 |
|
NetSol Technologies,
Inc. and Subsidiaries |
Consolidated Statement
of Cash Flows |
|
|
|
|
For the Nine Months
Ended March 31, |
|
2015 |
2014 |
Cash flows from operating
activities: |
|
|
Net loss |
$ (5,056,328) |
$ (4,658,851) |
Adjustments to reconcile net loss
to net cash provided by operating activities: |
|
|
Depreciation and
amortization |
7,084,715 |
4,869,182 |
Provision for bad debts |
-- |
247,530 |
Share of net loss from investment
under equity method |
-- |
370,332 |
Loss on sale of assets |
74,099 |
190,027 |
Gain on sale of
subsidiary |
-- |
(1,870,871) |
Stock issued for
services |
1,119,721 |
817,417 |
Fair market value of warrants and
stock options granted |
466,866 |
189,937 |
Changes in operating assets
and liabilities: |
|
|
Accounts receivable |
(2,369,950) |
2,851,676 |
Accounts receivable - related
party |
(198,640) |
(457,800) |
Revenues in excess of
billing |
(2,533,172) |
10,568,918 |
Revenues in excess of billing -
related party |
(201,616) |
-- |
Other current assets |
188,048 |
144,372 |
Accounts payable and accrued
expenses |
1,008,270 |
1,104,619 |
Unearned revenue |
2,974,637 |
915,428 |
Unearned revenue - related
party |
9,660 |
44,935 |
Net cash provided by
operating activities |
2,566,310 |
15,326,851 |
|
|
|
Cash flows from investing
activities: |
|
|
Purchases of property and
equipment |
(2,499,314) |
(9,583,663) |
Sales of property and
equipment |
209,718 |
61,080 |
Sale of subsidiary |
-- |
1,810,700 |
Purchase of non-controlling
interest in subsidiaries |
(577,222) |
(17,852) |
Increase in intangible
assets |
-- |
(3,158,083) |
Net cash used in investing
activities |
(2,866,818) |
(10,887,818) |
|
|
|
Cash flows from financing
activities: |
|
|
Proceeds from sale of common
stock |
1,863,000 |
-- |
Proceeds from the exercise of stock
options and warrants |
116,400 |
709,436 |
Proceeds from exercise of
subsidiary options |
12,306 |
376,811 |
Restricted cash |
2,438,844 |
(620,117) |
Dividend paid by subsidiary to Non
controlling interest |
(780,106) |
(1,008,543) |
Proceeds from bank loans |
-- |
1,366,226 |
Payments on capital lease
obligations and loans - net |
(3,459,143) |
(610,822) |
Net cash provided by
financing activities |
191,301 |
212,991 |
Effect of exchange rate
changes |
(466,130) |
(142,647) |
Net increase (decrease) in cash
and cash equivalents |
(575,337) |
4,509,377 |
Cash and cash equivalents, beginning of
the period |
11,462,695 |
7,874,318 |
Cash and cash equivalents, end
of period |
$ 10,887,358 |
$ 12,383,695 |
|
NetSol Technologies,
Inc. and Subsidiaries |
Reconciliation to
GAAP |
|
|
|
|
|
|
Three Months Ended March 31,
2015 |
Three Months Ended March 31,
2014 |
Nine Months Ended March 31, 2015 |
Nine Months Ended March 31, 2014 |
|
|
|
|
|
Net Income (loss) before preferred
dividend, per GAAP |
$ (1,636,245) |
$ (1,299,804) |
$ (4,841,440) |
$ (4,023,827) |
Income Taxes |
107,398 |
98,920 |
235,157 |
139,321 |
Depreciation and
amortization |
2,463,619 |
1,964,940 |
7,084,715 |
4,869,182 |
Interest expense |
45,234 |
8,275 |
165,592 |
170,230 |
Interest (income) |
(97,094) |
(114,141) |
(261,091) |
(186,926) |
EBITDA |
$ 882,912 |
$ 658,190 |
$ 2,382,933 |
$ 967,980 |
|
|
|
|
|
Weighted Average number of
shares outstanding |
|
|
|
Basic |
9,914,321 |
9,092,834 |
9,573,336 |
9,034,532 |
Diluted |
9,914,321 |
9,102,777 |
9,573,336 |
9,044,476 |
|
|
|
|
|
Basic EBITDA |
$ 0.09 |
$ 0.07 |
$ 0.25 |
$ 0.11 |
Diluted EBITDA |
$ 0.09 |
$ 0.07 |
$ 0.25 |
$ 0.11 |
Although the net EBITDA income is a non-GAAP measure of
performance, we are providing it because we believe it to be an
important supplemental measure of our performance that is commonly
used by securities analysts, investors, and other interested
parties in the evaluation of companies in our industry. It
should not be considered as an alternative to net income, operating
income or any other financial measures calculated and presented,
nor as an alternative to cash flow from operating activities as a
measure of our liquidity. It may not be indicative of the
Company's historical operating results nor is it intended to be
predictive of potential future results.
Investor Contacts:
PondelWilkinson Roger Pondel | Matt Sheldon
investors@netsoltech.com (310) 279-5980
Media Contacts:
PondelWilkinson George Medici |
gmedici@pondel.com (310) 279-5968
NetSol Technologies (NASDAQ:NTWK)
Historical Stock Chart
From Mar 2024 to Apr 2024
NetSol Technologies (NASDAQ:NTWK)
Historical Stock Chart
From Apr 2023 to Apr 2024