NetSol Technologies Reports Fiscal 2016 First-Quarter Results
November 12 2015 - 8:30AM
Total Revenue for the 2016 First Quarter Rose 30%
to $13.3 Million
2016 First Quarter EBITDA more than Doubles to
$1.4 Million, or $0.14 per Adjusted Diluted Share; GAAP Loss
Narrows to $0.04 per share from a loss of $0.20 per share in Fiscal
2015 First Quarter
Conference Call Scheduled Today at 11:30 a.m. ET
(8:30 a.m. PT)
NetSol Technologies, Inc. (Nasdaq:NTWK), a global business services
and enterprise application solutions provider, today reported
non-GAAP adjusted diluted earnings per share for the first fiscal
quarter ended September 30, 2015 of $0.14 on total revenue of $13.3
million, compared with $0.07 on total revenue of $10.2 million in
same quarter last year. GAAP net loss narrowed to $411,000, or
$0.04 per share, compared with a net loss of $1.8 million, or $0.20
per share, in the comparable period last year.
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.
"We are off to a very strong start for the fiscal year, building
upon a base of revenue in what is typically our slowest quarter of
the year," said Najeeb Ghauri, CEO of NetSol. "New wins in China,
additional requests and increased utilization by current customers,
growth in our joint-venture with the Innovation Group, and
continued delivery of multiple contracts fueled our results in the
quarter.
"Given the strength of our global new business pipeline, we
expect our growth trajectory to continue, and to further accelerate
once some of the new NFS Ascent contracts are executed in APAC and
Europe," added Ghauri.
Fiscal 2016 First-Quarter Financial Results
The following comparison refers to results for the fiscal 2016
first quarter versus the fiscal 2015 first quarter.
Total net revenues rose 30% to $13.3 million from $10.2 million
last year, led by strength in total services revenue.
- License fees were $1.2 million compared with $1.6 million;
- Total maintenance fees, which includes related-party
(joint-venture) maintenance fees, increased to $3.2 million from
$2.8 million last year;
- Total services revenue, which includes related-party
(joint-venture) services revenue increased to $8.9 million from
$5.8 million last year
Following is additional detail for the quarter:
- As a percentage of total revenue, total cost of revenue for the
first quarter of 2016 decreased to 59% from 69% of total revenues
for the same period last year;
- Gross profit rose to $5.4 million from $3.2 million last
year;
- Operational expenses were nearly flat year-over-year, with an
increase in selling and marketing expenses related to new business
efforts, offset by a decrease in general and administrative
expenses as a result of cost rationalization initiatives.
At September 30, 2015, cash and cash equivalents were $10.1
million, versus $14.2 million at June 30, 2015. Accounts receivable
and accounts receivable, net-related party combined were $11.9
million, up from $10 million, for the same period last year. The
quality of receivables remains strong.
Fiscal 2016 First Quarter Conference Call
When: |
Thursday, November 12,
2015 |
Time: |
11:30 a.m.
Eastern Time |
Phone: |
1-888-359-3627
(domestic) |
|
1-719-325-2144
(international) |
A live webcast will be available online within the investor
relations section of NetSol's website at http://www.netsoltech.com.
A replay of the webcast will be available one hour following the
conclusion of the live call, and 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 1000 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.
(Tables Follow)
NetSol Technologies,
Inc. and Subsidiaries |
Consolidated Balance
Sheets |
|
|
As of September 30, |
As of June 30, |
ASSETS |
2015 |
2015 |
Current assets: |
|
|
Cash and cash equivalents |
$ 10,075,324 |
$ 14,168,957 |
Restricted cash |
90,000 |
90,000 |
Accounts receivable, net of
allowance of 518,657 and 524,565 |
7,485,807 |
6,480,344 |
Accounts receivable, net -
related party |
4,409,186 |
3,491,899 |
Revenues in excess of
billings |
6,560,754 |
5,267,275 |
Other current assets |
2,279,083 |
2,012,190 |
Total current assets |
30,900,154 |
31,510,665 |
Property and equipment, net |
24,053,908 |
25,119,634 |
Intangible assets, net |
21,837,105 |
22,815,467 |
Goodwill |
9,516,568 |
9,516,568 |
Total
assets |
$ 86,307,735 |
$ 88,962,334 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable and accrued
expenses |
$ 5,030,352 |
$ 5,952,561 |
Current portion of loans and
obligations under capitalized leases |
4,241,836 |
3,896,353 |
Unearned revenues |
4,302,524 |
4,897,327 |
Common stock to be issued |
88,324 |
88,324 |
Total current liabilities |
13,663,036 |
14,834,565 |
Long term loans and obligations under
capitalized leases; less current maturities |
329,834 |
487,492 |
Total
liabilities |
13,992,870 |
15,322,057 |
Commitments and
contingencies |
|
|
Stockholders' equity: |
|
|
Preferred stock, $.01 par
value; 500,000 shares authorized; |
-- |
-- |
Common stock, $.01 par value;
14,500,000 shares authorized; 10,322,826 shares issued and
10,295,547 outstanding as of September 30, 2015 and
10,307,826 shares issued and 10,280,547 outstanding as of
June 30, 2015 |
103,228 |
103,078 |
Additional paid-in-capital |
119,287,407 |
119,209,807 |
Treasury stock (27,279
shares) |
(415,425) |
(415,425) |
Accumulated deficit |
(41,137,149) |
(40,726,121) |
Stock subscription
receivable |
(1,139,672) |
(1,204,603) |
Other comprehensive loss |
(18,130,300) |
(17,167,100) |
Total NetSol stockholders'
equity |
58,568,089 |
59,799,636 |
Non-controlling interest |
13,746,776 |
13,840,641 |
Total stockholders'
equity |
72,314,865 |
73,640,277 |
Total liabilities and
stockholders' equity |
$ 86,307,735 |
$ 88,962,334 |
|
NetSol Technologies,
Inc. and Subsidiaries |
Consolidated Statement
of Operations |
|
|
For the Three
Months |
|
Ended September
30, |
|
2015 |
2014 |
Net Revenues: |
|
|
License fees |
$ 1,193,354 |
$ 1,584,553 |
Maintenance fees |
3,012,238 |
2,708,528 |
Services |
6,753,873 |
4,249,080 |
Maintenance fees - related
party |
158,231 |
140,113 |
Services - related party |
2,187,408 |
1,544,877 |
Total net revenues |
13,305,104 |
10,227,151 |
|
|
|
Cost of revenues: |
|
|
Salaries and
consultants |
4,999,890 |
4,116,217 |
Travel |
481,453 |
421,871 |
Depreciation and
amortization |
1,474,235 |
1,801,567 |
Other |
938,797 |
674,863 |
Total cost of revenues |
7,894,375 |
7,014,518 |
|
|
|
Gross profit |
5,410,729 |
3,212,633 |
|
|
|
Operating expenses: |
|
|
Selling and marketing |
1,698,404 |
1,132,360 |
Depreciation and
amortization |
291,172 |
580,773 |
General and administrative |
3,366,047 |
3,675,755 |
Research and development
cost |
112,070 |
66,265 |
Total operating expenses |
5,467,693 |
5,455,153 |
|
|
|
Loss from operations |
(56,964) |
(2,242,520) |
|
|
|
Other income and
(expenses) |
|
|
Loss on sale of assets |
(11,873) |
(11,052) |
Interest expense |
(68,173) |
(73,093) |
Interest income |
52,112 |
57,919 |
Gain (loss) on foreign currency
exchange transactions |
(113,719) |
79,220 |
Other income |
54,314 |
379 |
Total other income
(expenses) |
(87,339) |
53,373 |
|
|
|
Net loss before income
taxes |
(144,303) |
(2,189,147) |
Income tax provision |
(75,223) |
(40,076) |
Net loss |
(219,526) |
(2,229,223) |
Non-controlling
interest |
(191,502) |
391,197 |
Net loss attributable to
NetSol |
$ (411,028) |
$ (1,838,026) |
|
|
|
Amount attributable to NetSol common
shareholders: |
|
|
Loss from continuing
operations |
$ (411,028) |
$ (1,838,026) |
Income from discontinued
operations |
-- |
-- |
Net loss |
$ (411,028) |
$ (1,838,026) |
|
|
|
Net loss per share: |
|
|
Net loss per common share |
|
|
Basic |
$ (0.04) |
$ (0.20) |
Diluted |
$ (0.04) |
$ (0.20) |
|
|
|
Weighted average number of shares
outstanding |
|
|
Basic |
10,281,335 |
9,213,324 |
Diluted |
10,281,335 |
9,213,324 |
|
NetSol Technologies,
Inc. and Subsidiaries |
Consolidated Statement
of Cash Flows |
|
|
For the Three
Months |
|
Ended September
30, |
|
2015 |
2014 |
Cash flows from operating
activities: |
|
|
Net loss |
$ (219,526) |
$ (2,229,223) |
Adjustments to reconcile net loss to net cash used in
operating activities: |
|
Depreciation and
amortization |
1,765,407 |
2,382,340 |
Provision for bad
debts |
36,780 |
-- |
Loss on sale of
assets |
11,873 |
11,052 |
Stock issued for
services |
77,750 |
290,162 |
Fair market value of
warrants and stock options granted |
-- |
155,622 |
Changes in
operating assets and liabilities: |
|
|
Accounts
receivable |
(1,268,570) |
(5,723,728) |
Accounts receivable -
related party |
(975,266) |
(495,357) |
Revenues in excess of
billing |
(912,509) |
133,763 |
Other current
assets |
(322,533) |
479,340 |
Accounts payable and
accrued expenses |
(833,638) |
(326,226) |
Unearned
revenue |
(538,259) |
4,841,230 |
Net cash used in
operating activities |
(3,178,491) |
(481,025) |
|
|
|
Cash flows from investing
activities: |
|
|
Purchases of property and
equipment |
(625,794) |
(1,031,128) |
Sales of property and
equipment |
180,258 |
90,841 |
Net cash used in
investing activities |
(445,536) |
(940,287) |
|
|
|
Cash flows from financing
activities: |
|
|
Proceeds from sale of
common stock |
-- |
850,000 |
Proceeds from stock
subscription receivable |
64,931 |
-- |
Restricted
cash |
-- |
2,438,844 |
Proceeds from bank
loans |
437,070 |
109,211 |
Payments on capital lease
obligations and loans - net |
(174,385) |
(2,591,334) |
Net cash provided
by financing activities |
327,616 |
806,721 |
Effect of exchange rate
changes |
(797,222) |
(465,548) |
Net decrease in cash and cash
equivalents |
(4,093,633) |
(1,080,139) |
Cash and cash equivalents, beginning of
the period |
14,168,957 |
11,462,695 |
Cash and cash equivalents, end
of period |
$ 10,075,324 |
$ 10,382,556 |
|
NetSol Technologies,
Inc. and Subsidiaries |
Reconciliation to
GAAP |
|
|
Three Months |
Three Months |
|
Ended |
Ended |
|
September 30, 2015 |
September 30, 2014 |
|
|
|
Net Income (loss) before preferred
dividend, per GAAP |
$ (411,028) |
$ (1,838,026) |
Income Taxes |
75,223 |
40,076 |
Depreciation and
amortization |
1,765,407 |
2,382,340 |
Interest
expense |
68,173 |
73,093 |
Interest
(income) |
(52,112) |
(57,919) |
EBITDA |
$ 1,445,663 |
$ 599,564 |
|
|
|
Weighted Average number of shares
outstanding |
|
|
Basic |
10,281,335 |
9,213,324 |
Diluted |
10,392,669 |
9,213,324 |
|
|
|
Basic EBITDA |
$ 0.14 |
$ 0.07 |
Diluted EBITDA |
$ 0.14 |
$ 0.07 |
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
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