Exhibit 99.1

 

 

 

 NETSOL Technologies Reports Fiscal Fourth Quarter and

Full Year 2021 Financial Results

 

  Sequential Revenue Growth Throughout the Entire Fiscal Year, Combined with Improved Cost Structures and Expense Management, Lead to 154% Increase in Operating Income and 90% Increase in Net Income for Fiscal 2021
  Subscription and Support Revenue Eclipses $20 Million Annual Run Rate, Providing Predictable, Recurring Base to Support Anticipated New Sales Growth in Fiscal 2022
  Company Introduces Fiscal 2022 Total Revenues and Subscription and Support Revenues Guidance of at Least 10% and 20%, Respectively

 

CALABASAS, Calif., September 28, 2021 – NETSOL Technologies, Inc. (Nasdaq: NTWK), a global business services and enterprise application solutions provider, reported results for the fiscal fourth quarter and full year ended June 30, 2021.

 

Fiscal Fourth Quarter 2021 and Recent Operational Highlights

 

  Subscription (SaaS and Cloud) and support revenues reached $22.2 million, a nearly 10% increase over the prior year and a $23+ million run rate projected over the coming twelve months with opportunities for upside.
  Generated over $2.5 million by successfully implementing change requests from various customers across multiple regions during the fiscal fourth quarter. Throughout fiscal 2021, the Company generated over $7.7 million in change requests.
  NETSOL’s U.S. based mobility startup Otoz launched its digital automotive retail platform for BMW Group Financial Services in the U.S. for its key brand MINI Anywhere. MINI Anywhere is now live with five MINI dealerships; Otoz is also scheduled to onboard additional California-based dealers before an expansion into Florida. Long term, the solution has the potential to be rolled out to over 100 MINI dealerships across all 50 states.
  Signed an agreement with Motorcycle Group to deploy the cloud-based version of NETSOL’s flagship NFS Ascent® platform across the customer’s entire operations. This agreement marks the first official sale for NFS Ascent in the U.S. market.
  Joined the Russell Microcap® Index at the conclusion of the 2021 Russell indexes annual reconstitution, effective June 28.
  Became an associate member of the Consumer Bankers Association (“CBA”). CBA is the only member-driven trade association focused exclusively on retail banking, representing the nation’s largest financial institutions and the top providers of goods and services to banks.

 

Fiscal Fourth Quarter 2021 Financial Results

 

Total net revenues for the fourth quarter of fiscal 2021 were $15.4 million, compared with $13.6 million in the prior year period. The increase in total net revenues was primarily driven by an increase in total license fees of $1.0 million, an increase in subscription and support revenues of $212,000, and an increase in total services revenues of $564,000.

 

 

 

 

  Total license fees were $1.5 million, compared with $530,000 in the prior year period.
  Total subscription (SaaS and Cloud) and support revenues were $5.6 million, compared with $5.4 million in the prior year period.
  Total services revenues were $8.2 million, compared with $7.7 million in the prior year period.

 

Gross profit for the fourth quarter of fiscal 2021 increased 6.8% to $7.5 million (or 48.8% of net revenues), compared to $7.0 million (or 51.8% of net revenues) in the fourth quarter of fiscal 2020. The increase in gross profit was primarily due to increases in revenue, offset by increases in cost of sales of $1.3 million. The increases in cost of sales were primarily due to increases in salaries and consultant fees of $885,000, depreciation of $104,000 and other costs of $289,000.

 

Operating expenses for the fourth quarter of fiscal 2021 increased 8.7% to $6.4 million (or 41.4% of sales) from $5.9 million (or 43.2% of sales) for the fourth quarter of fiscal 2020. The increase in operating expenses was primarily due to increases in selling and marketing and research and development, slightly offset by a decrease in general administrative expenses.

 

GAAP net income attributable to NETSOL for the fourth quarter of fiscal 2021 totaled $1.9 million or $0.17 per diluted share, compared with GAAP net income of $1.2 million or $0.10 per diluted share in the fourth quarter of fiscal 2020. GAAP net income attributable to NETSOL included a $918,000 gain on foreign currency exchange transactions in the fourth quarter of fiscal 2021, which was an increase from a gain of $327,000 in the prior year period.

 

Non-GAAP adjusted EBITDA for the fourth quarter of fiscal 2021 totaled $2.9 million or $0.26 per diluted share, compared with non-GAAP adjusted EBITDA of $2.0 million or $0.17 per diluted share in the fourth quarter of fiscal 2020 (see note regarding “Use of Non-GAAP Financial Measures,” below for further discussion of this non-GAAP measure).

 

At June 30, 2021, cash and cash equivalents were $33.7 million, an increase from $20.2 million at June 30, 2020.

 

Full Year Fiscal 2021 Financial Results

 

Total net revenues for fiscal 2021 were $54.9 million, compared to $56.4 million in fiscal 2020. The decrease in total net revenues was primarily due to a decrease in services revenues of $6.4 million, which was offset by increases in subscription and support revenues of $1.9 million and license fees of $3.0 million.

 

  Total license fees were $6.2 million, compared with $3.3 million in the prior fiscal year.
  Total subscription and support revenues were $22.2 million, compared with $20.3 million in the prior fiscal year.
  Total services revenues were $26.5 million, compared with $32.9 million in the prior fiscal year.

 

Gross profit for fiscal 2021 decreased to $26.4 million (or 48.0% of net revenues) from $27.0 million (or 47.8% of net revenues) for fiscal 2020. The decrease in gross profit was primarily due to a decrease in revenue, offset by a decrease in cost of sales of $841,000. The decreases in cost of sales were primarily due to decrease in travel expenses of $3.5 million, offset by increases in salaries and consultant fees of $2.1 million.

 

Operating expenses for fiscal 2021 decreased to $23.6 million (or 43.0% of net revenues) from $25.9 million (or 45.9% of net revenues) for fiscal 2020. The decrease in operating expenses was primarily due to decreases in general and administrative expenses and research and development costs, offset by a slight increase in selling and marketing expenses.

 

 

 

  

GAAP net income attributable to NETSOL for fiscal 2021 totaled $1.8 million or $0.15 per diluted share, compared with a net income of $937,000 or $0.08 per diluted share for fiscal 2020. GAAP net income attributable to NETSOL included a $597,000 loss on foreign currency exchange transactions in fiscal 2021, which was a decrease from a gain of $399,000 in the prior year period.

 

Non-GAAP adjusted EBITDA for fiscal 2021 totaled $5.4 million or $0.47 per diluted share, compared with $4.3 million or $0.37 per diluted share in fiscal 2020 (see note regarding “Use of Non-GAAP Financial Measures,” below for further discussion of this non-GAAP measure).

 

Stock Repurchase Program

 

On July 30, 2020, NETSOL’s Board of Directors approved a stock repurchase program that authorized potential repurchases of up to $2 million of its common stock over a six-month period. All shares permitted to be purchased under this July 2020 plan were purchased during the plan’s original date and prior to the conclusion of the extension of the plan. On May 21, 2021, the Board of Directors authorized an additional repurchase plan of up to $2 million worth of shares of common stock through November 20, 2021. Under the program, the Company may repurchase its common stock in the open market from time-to-time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions and federal and state laws governing such transactions. NETSOL expects to fund the repurchase with its existing cash balance and cash generated from operations.

 

As of June 30, 2021, the Company had repurchased 669,018 shares of its common stock at an aggregate value of $2,364,781.

 

Fiscal 2022 Financial Outlook

 

For the fiscal year ending June 30, 2022, the Company expects total revenues to increase by at least 10% and subscription and support revenues to increase by at least 20%. The Company’s guidance is based on existing contracts and recurring revenue from its current customer base, performance results tracked through August of this calendar year and other information available as of the date of this report.

 

Management Commentary

 

“In a challenging year, we emerged stronger than before, and we’re entering fiscal 2022 focused on a return to growth,” said NETSOL Co-Founder, Chairman and Chief Executive Officer Najeeb Ghauri. “As the world slowly begins to reopen and with a leaner cost structure to support increased sales and marketing activities, we are making investments to build for long term success in our key growth markets. As a result of several key hires made earlier in the year, we’ve been able to improve our lead generation processes. Our North American and European pipelines have shown continued outsized promise, and we’re now starting to see some of these pending deals come to fruition, most notably shown by our first NFS Ascent contract in the U.S. While we are continuing to pursue high-value, larger deals with incumbent OEMs, our ability to grow a healthy recurring revenue base with subscription contracts in these regions will allow us to more predictably grow our business over time while still maintaining the opportunity for upside.”

 

 

 

  

Company CFO Roger Almond added: “We improved our topline performance in each quarter of the year, all while making significant adjustments to our spending in the face of a travel-restricted sales environment. Our owner-centric emphasis on managing the business has yielded positive results in several key areas, highlighted by a 154% increase in operating income and a record cash position of nearly $34 million. Additionally, subscription and support revenues have now eclipsed a $20 million annual run rate, further validating our investment in a recurring revenue model and providing us stronger visibility into future performance as well.”

 

Conference Call

 

NETSOL Technologies management will hold a conference call today (September 28, 2021) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these financial results. A question and answer session will follow management’s presentation.

 

U.S. dial-in: 877-407-0789

International dial-in: 201-689-8562

 

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 949-574-3860.

 

The conference call will be broadcasted live and available for replay here and via the Investor Relations section of NETSOL’s website.

 

A replay of the conference call will be available after 7:30 p.m. Eastern time through October 12, 2021.

 

Toll-free replay number: 844-512-2921

International replay number: 412-317-6671

Replay ID: 13722946

 

About NETSOL Technologies

 

NETSOL Technologies, Inc. (Nasdaq: NTWK) is a worldwide provider of IT and enterprise software solutions primarily serving the global leasing and finance industry. The Company’s suite of applications is backed by 40 years of domain expertise and supported by a committed team of more than 1300 professionals placed in eight strategically located support and delivery centers throughout the world. NFS, LeasePak, LeaseSoft or NFS Ascent® – help companies transform their Finance and Leasing operations, providing a fully automated asset-based finance solution covering the complete finance and leasing lifecycle.

 

About Otoz

 

Otoz, a division of NETSOL Technologies Inc. (Nasdaq: NTWK), provides business-to-business, white-label technology solutions for new mobility. The Otoz suite of agile and customizable mobility solutions ranges from car sharing and subscription products to AI-enabled chatbots, allowing businesses to engage consumers and facilitate the complete transaction lifecycle intelligently and digitally. Otoz technologies empower automotive companies and start-ups to launch digital retailing and new mobility models quickly and efficiently. The technology Otoz has developed is cloud-native and supported by artificial intelligence (AI), machine learning (ML), internet of things (IoT) and blockchain. Otoz technology drives utilization, while supporting robust and efficient operations.

 

 

 

  

Forward-Looking Statements

 

This press release may contain forward-looking statements relating to the development of the Company’s products and services and future operating results, including statements regarding the Company that are subject to certain risks and uncertainties such as the effect of disparate stay at home orders and social distancing requirements imposed internationally by COVID-19 and its resultant impact on our financials and the world economy 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, as well as the delay in recovery or a prolonged economic downturn that effects our Company, our customers and the world economy. 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.

 

Use of Non-GAAP Financial Measures

 

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 in Schedule 4 of this press release.

 

Investor Relations Contact:

 

Matt Glover and Tom Colton

Gateway Investor Relations

949-574-3860

investors@netsoltech.com

 

 

 

 

NETSOL Technologies, Inc. and Subsidiaries

Schedule 1: Consolidated Balance Sheets

  

   As of   As of 
   June 30, 2021   June 30, 2020 
ASSETS          
Current assets:          
Cash and cash equivalents  $33,705,154   $20,166,830 
Accounts receivable, net of allowance of $166,231 and $435,611   4,184,096    10,131,752 
Accounts receivable - related party, net of allowance of $1,373,099 and $90,594   -    1,282,505 
Revenues in excess of billings, net of allowance of $136,976 and $188,914   14,680,131    17,198,281 
Revenues in excess of billings - related party, net of allowance of $8,163 and $0   -    8,163 
Other current assets, net of allowance of $1,243,633 and $0   3,009,393    3,108,180 
Total current assets   55,578,774    51,895,711 
Revenues in excess of billings, net - long term   957,603    1,300,289 
Convertible note receivable - related party, net of allowance of $4,250,000 and $0   -    4,250,000 
Property and equipment, net   12,091,812    11,329,631 
Right of use of assets - operating leases   1,345,869    2,360,129 
Long term investment   3,155,852    2,387,692 
Other assets   55,127    41,992 
Intangible assets, net   3,904,656    5,391,077 
Goodwill   9,516,568    9,516,568 
Total assets  $86,606,261   $88,473,089 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable and accrued expenses  $6,696,035   $5,769,161 
Current portion of loans and obligations under finance leases   11,366,171    9,139,561 
Current portion of operating lease obligations   857,729    1,111,912 
Unearned revenue   4,556,626    4,095,472 
Total current liabilities   23,476,561    20,116,106 
Loans and obligations under finance leases; less current maturities   699,841    1,539,975 
Operating lease obligations; less current maturities   564,257    1,339,965 
Total liabilities   24,740,659    22,996,046 
Commitments and contingencies          
Stockholders’ equity:          
Preferred stock, $.01 par value; 500,000 shares authorized;   -    - 
Common stock, $.01 par value; 14,500,000 shares authorized; 12,181,585 shares issued and 11,265,064 outstanding as of June 30, 2021 and 12,122,149 shares issued and 11,874,646 outstanding as of June 30, 2020   121,816    121,222 
Additional paid-in-capital   129,018,826    128,677,754 
Treasury stock (at cost, 916,521 shares and 247,503 shares  as of June 30, 2021 and June 30, 2020, respectively)  
 
 
 
 
(3,820,750
 
)
 
 
 
 
 
(1,455,969
 
)
Accumulated deficit   (38,801,282)   (34,269,817)
Other comprehensive loss   (31,868,481)   (34,085,047)
Total NetSol stockholders’ equity   54,650,129    58,988,143 
Non-controlling interest   7,215,473    6,488,900 
Total stockholders’ equity   61,865,602    65,477,043 
Total liabilities and stockholders’ equity  $86,606,261   $88,473,089 

 

 

 

  

NETSOL Technologies, Inc. and Subsidiaries

Schedule 2: Consolidated Statement of Operations

 

   For the Years 
   Ended June 30, 
    2021    2020 
Net Revenues:          
License fees  $6,249,924   $3,260,891 
Subscription and support   22,173,745    20,254,917 
Services   26,448,171    32,555,690 
Services - related party   48,775    300,821 
 Total net revenues   54,920,615    56,372,319 
           
Cost of revenues:          
Salaries and consultants   20,969,298    18,821,738 
Travel   663,403    4,181,742 
Depreciation and amortization   2,990,689    2,897,371 
Other   3,944,197    3,508,098 
Total cost of revenues   28,567,587    29,408,949 
           
Gross profit   26,353,028    26,963,370 
           
Operating expenses:          
Selling and marketing   6,555,004    6,450,663 
Depreciation and amortization   965,625    834,583 
General and administrative   15,437,382    17,138,832 
Research and development cost   674,168    1,468,954 
Total operating expenses   23,632,179    25,893,032 
           
Income from operations   2,720,849    1,070,338 
           
Other income and (expenses)          
Gain (loss) on sale of assets   (191,935)   23,103 
Interest expense   (394,289)   (346,856)
Interest income   1,017,432    1,569,536 
Gain (loss) on foreign currency exchange transactions   (597,433)   398,610 
Share of net loss from equity investment   (253,819)   (605,864)
Other income   987,444    224,224 
Total other income (expenses)   567,400    1,262,753 
           
Net income before income taxes   3,288,249    2,333,091 
Income tax provision   (1,026,617)   (1,141,068)
Net income   2,261,632    1,192,023 
Non-controlling interest   (483,375)   (254,942)
Net income attributable to NetSol  $1,778,257   $937,081 
           
Net income per share:          
Net income per common share          
Basic  $0.15   $0.08 
Diluted  $0.15   $0.08 
           
Weighted average number of shares outstanding          
Basic   11,499,983    11,734,648 
Diluted   11,499,983    11,784,414 

 

 

 

  

NETSOL Technologies, Inc. and Subsidiaries

Schedule 3: Consolidated Statement of Cash Flows

 

   For the Years 
   Ended June 30, 
    2021    2020 
Cash flows from operating activities:          
Net income  $2,261,632   $1,192,023 
Adjustments to reconcile net income to net cash provided by operating activities:  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization   3,956,314    3,731,954 
Provision for bad debts   (332,325)   184,944 
Share of net loss from investment under equity method   253,819    605,864 
(Gain) loss on sale of assets   191,935    (23,103)
Gain on forgiveness of loan   (469,721)   - 
Stock based compensation   342,153    808,616 
Changes in operating assets and liabilities:           
Accounts receivable   6,861,454    2,035,843 
Accounts receivable - related party   -    1,957,864 
Revenues in excess of billing   2,839,709    (3,252,704)
Revenues in excess of billing - related party   -    105,441 
Other current assets   (857,708)   (132,175)
Accounts payable and accrued expenses   474,098    (1,399,828)
Unearned revenue   204,563    (1,842,313)
Net cash provided by operating activities    15,725,923    3,972,426 
           
Cash flows from investing activities:          
Purchases of property and equipment   (2,551,283)   (1,377,145)
Sales of property and equipment   188,233    106,180 
Convertible note receivable - related party   -    (600,000)
Investment in associates   (155,500)   (94,500)
Purchase of subsidiary shares   -    (89,425)
Net cash used in investing activities    (2,518,550)   (2,054,890)
           
Cash flows from financing activities:          
Proceeds from exercise of subsidiary options   -    11,621 
Purchase of treasury stock   (2,364,781)   - 
Dividend paid by subsidiary to non-controlling interest   -    (1,920,618)
Proceeds from bank loans   1,898,013    4,221,203 
Payments on finance lease obligations and loans - net   (698,797)   (611,913)
Net cash provided by (used in) financing activities    (1,165,565)   1,700,293 
Effect of exchange rate changes   1,496,516    (817,363)
Net increase in cash and cash equivalents   13,538,324    2,800,466 
Cash and cash equivalents at beginning of the period   20,166,830    17,366,364 
Cash and cash equivalents at end of period  $33,705,154   $20,166,830 

 

 

 

 

NETSOL Technologies, Inc. and Subsidiaries

Schedule 4: Reconciliation to GAAP

  

   For the Year Ended   For the Year Ended 
   June 30, 2021   June 30, 2020 
           
Net Income (loss) attributable to NetSol  $1,778,257   $937,081 
Non-controlling interest   483,375    254,942 
Income taxes   1,026,617    1,141,068 
Depreciation and amortization   3,956,314    3,731,954 
Interest expense   394,289    346,856 
Interest (income)   (1,017,432)   (1,569,536)
EBITDA  $6,621,420   $4,842,365 
Add back:          
Non-cash stock-based compensation   342,153    808,616 
Adjusted EBITDA, gross  $6,963,573   $5,650,981 
Less non-controlling interest (a)   (1,588,701)   (1,330,352)
Adjusted EBITDA, net  $5,374,872   $4,320,629 
           
Weighted Average number of shares outstanding          
Basic   11,499,983    11,734,648 
Diluted   11,499,983    11,784,414 
           
Basic adjusted EBITDA  $0.47   $0.37 
Diluted adjusted EBITDA  $0.47   $0.37 
           
(a)The reconciliation of adjusted EBITDA of non-controlling interest
to net income attributable to non-controlling interest is as follows
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
           
Net Income (loss) attributable to non-controlling interest  $483,375   $254,942 
Income Taxes   147,688    223,675 
Depreciation and amortization   1,115,734    1,060,605 
Interest expense   121,740    100,373 
Interest (income)   (319,674)   (391,644)
EBITDA  $1,548,863   $1,247,951 
Add back:          
Non-cash stock-based compensation   39,838    82,401 
Adjusted EBITDA of non-controlling interest  $1,588,701   $1,330,352