NetSol Technologies Reports 38% Sequential Quarterly Revenue Growth; Returns to Quarterly Profitability With Earnings Per Diluted Share of $0.01 for Fiscal 2012 Second-Quarter
CALABASAS, Calif., Feb. 2, 2012 (GLOBE NEWSWIRE) -- NetSol Technologies, Inc. (Nasdaq:NTWK), a worldwide provider of global IT and enterprise application solutions, today reported financial results for its fiscal 2012 second quarter ended December 31, 2011.
Sequential revenue growth was better than the company expected, with total second-quarter revenue increasing 38 percent to $8.6 million, from $6.2 million reported in the fiscal 2012 first quarter. Previously, the company had forecast sequential revenue growth of 15% to 20%.
"Our second-quarter results reflect a positive shift in the company's financial performance following a challenging period," said Najeeb Ghauri, chairman and CEO of NetSol. "After navigating through two tough quarters, we regained momentum by signing agreements across each of our business lines."
On a sequential basis, license revenue rose to $2.0 million in the fiscal 2012 second quarter, from $1.1 million in the fiscal 2012 first quarter, reflecting the signing of new and previously delayed contracts. License revenue was $3.1 million in the second quarter of fiscal 2011.
Maintenance revenue increased slightly to $2.1 million in the second quarter of 2012, from $2.0 million in the previous first fiscal quarter, and $2.0 million for the same period last year.
Services revenue was $4.4 million, up sequentially from $3.1 million in the first quarter of fiscal 2012, and compared with $5.3 million for the second quarter of fiscal 2011.
Fiscal 2012 Second-Quarter Highlights:
- Signed two new NetSol Financial Suite (NFS)™ projects in Asia-Pacific region, including strengthening existing agreement with Minsheng Financial Leasing;
- Completed NFS enhancement projects for two major U.S.-based auto captive finance companies, along with one of the top ten equipment leasing companies in North America;
- Initiated roll-out of next generation NFS solution with Kiatnakin Bank in Thailand;
- Embarked on automation program for a major European bank using LeaseSoft portal;
- Signed agreement with LTC Supply Source valued at approximately $1 million to implement SAP purchasing platform and smartOCI™ Marketplace, which includes license and ongoing services fees.
Operating expenses for the fiscal 2012 second quarter were $3.5 million, compared with $3.0 million for the fiscal 2011 second quarter. The increase primarily reflects operating expenses associated with the newly acquired subsidiary Virtual Lease Services (VLS).
Operating income for the second quarter of fiscal 2012 was $1.2 million, compared with operating income of $3.9 million in the second quarter of fiscal 2011.
Net income for the fiscal second quarter was $0.3 million, or $0.01 per diluted share, compared with net income of $1.9 million, or $0.04 per diluted share, in the second quarter of fiscal 2011.
At December 31, 2011, cash, cash equivalents amounted to $4.7 million. During the quarter, NetSol purchased 44,300 shares under the 2.5 million share purchase program at an average price of $0.44.
Financial Outlook
NetSol has improved visibility in topline revenue for the second half of fiscal 2012, as clients continue to sign orders that were deferred from the last quarter of the previous fiscal year. The company also expects to see growth in new business and revenues for its wholly owned subsidiary, Vroozi Inc., as it secures its fifth client for smartOCI.
NetSol expects sequential second half fiscal 2012 revenue growth of 10 to 15 percent when compared with the first of the same fiscal year. The company also said that it anticipates achieving profitability for the full 2012 fiscal year.
Conference Call and Webcast Information
NetSol will host a conference call today, at 9 a.m. EST to review its financial results. To participate in the conference call, please dial (877) 941-0844 (domestic) or (480) 629-9835 (international), password: 4509594.The call is also available through a live, listen-only audio webcast at www.netsoltech.com in the investor relations section. For those who are unable to listen to the live webcast, the call will be archived for 90 days.
Additionally, a telephone playback of the conference call will also be available until 11:59 p.m. EST, Thursday, February 9, 2012. Listeners should call (800) 406-7325 (domestic) or (303) 590-3030 (international) and use reservation: 4509594.
About NetSol Technologies
NetSol Technologies, Inc. (www.netsoltech.com) is a worldwide provider of global IT and enterprise application solutions that include credit and finance portfolio management systems, SAP consulting and services, custom development, systems integration, and technical services for the global Financial, Leasing, Insurance, Energy, and Technology markets. Headquartered in Calabasas, Calif., NetSol's product and services offerings have achieved ISO 9001, ISO 20000, ISO 27001, and SEI (Software Engineering Institute) CMMI (Capability Maturity Model) Maturity Level 5 assessments, a distinction shared by only 178 companies worldwide. The company's clients include Fortune 500 manufacturers, global automakers, financial institutions, utilities, technology providers, and government agencies. NetSol has delivery and support locations in San Francisco, London, Beijing, Bangkok, Lahore, Adelaide and Riyadh.
Investors can receive news releases and invitations to special events by accessing our online signup form at http://bit.ly/NetSol_Investor_Signup_Form.
The NetSol Technologies, Inc. logo is available at https://www.globenewswire.com/newsroom/prs/?pkgid=9832
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 | ||
| Condensed Consolidated Balance Sheets | ||
| As of December 31, | As of June 30, | |
| ASSETS | 2011 | 2011 |
| Current assets: | ||
| Cash and cash equivalents | $ 4,723,366 | $ 4,172,802 |
| Restricted Cash | 2,703,618 | 5,700,000 |
| Accounts receivable, net | 12,209,500 | 15,062,503 |
| Revenues in excess of billings | 9,553,286 | 7,601,230 |
| Other current assets | 2,144,031 | 2,053,904 |
| Total current assets | 31,333,801 | 34,590,439 |
| Property and equipment, net | 16,919,342 | 16,014,461 |
| Intangible assets, net | 28,071,966 | 25,602,195 |
| Goodwill | 9,653,330 | 9,439,285 |
| Total assets | 85,978,439 | 85,646,380 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable and accrued expenses | 4,935,799 | 4,730,027 |
| Current portion of loans and obligations under capitalized leases | 4,413,779 | 7,062,535 |
| Other payables | 103,226 | 103,226 |
| Unearned revenues | 3,296,324 | 2,653,460 |
| Convertible notes payable , current portion | -- | 2,745,524 |
| Loans payable, bank | 2,217,295 | 2,319,378 |
| Common stock to be issued | 125,525 | 400,700 |
| Total current liabilities | 15,091,948 | 20,014,850 |
| Obligations under capitalized leases, less current maturities | 245,139 | 285,472 |
| Convertible notes payable, less current maturities | 3,640,128 | -- |
| Long term loans, less current maturities | 1,798,051 | 434,884 |
| Total liabilities | 20,775,266 | 20,735,206 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
| Common stock, $.001 par value; 95,000,000 shares authorized; 56,948,855 | ||
| & 55,531,855 issued and outstanding as of December 31, 2011 and June 30, 2011 | 56,949 | 55,532 |
| Additional paid-in-capital | 99,428,924 | 97,886,492 |
| Treasury stock | (415,425) | (396,008) |
| Accumulated deficit | (35,271,598) | (34,130,944) |
| Stock subscription receivable | (2,031,210) | (2,198,460) |
| Other comprehensive loss | (9,964,572) | (8,805,922) |
| Total NetSol shareholders' equity | 51,803,068 | 52,410,690 |
| Non-controlling interest | 13,400,105 | 12,500,484 |
| Total stockholders' equity | 65,203,173 | 64,911,174 |
| Total liabilities and stockholders' equity | $ 85,978,439 | $ 85,646,380 |
| NetSol Technologies, Inc. and Subsidiaries | ||||||||
| Condensed Consolidated Statement of Operations | ||||||||
| For the Three Months | For the Six Months | |||||||
| Ended December 31, | Ended December 31, | |||||||
| 2011 | 2010 | 2011 | 2010 | |||||
| Net Revenues: | ||||||||
| License fees | $ 2,047,855 | $ 3,129,063 | $ 3,123,705 | $ 6,606,856 | ||||
| Maintenance fees | 2,121,282 | 2,023,509 | 4,158,488 | 3,693,428 | ||||
| Services | 4,436,916 | 5,272,675 | 7,552,567 | 8,528,035 | ||||
| Total revenues | 8,606,052 | 10,425,247 | 14,834,760 | 18,828,319 | ||||
| Cost of revenues: | ||||||||
| Salaries and consultants | 2,287,803 | 2,127,280 | 4,671,214 | 4,114,168 | ||||
| Travel | 254,169 | 238,776 | 539,842 | 470,388 | ||||
| Repairs and maintenance | 96,723 | 71,459 | 170,917 | 128,517 | ||||
| Insurance | 31,348 | 31,087 | 67,216 | 62,079 | ||||
| Depreciation and amortization | 812,510 | 679,284 | 1,601,615 | 1,310,225 | ||||
| Other | 421,416 | 348,859 | 937,825 | 591,997 | ||||
| Total cost of revenues | 3,903,969 | 3,496,745 | 7,988,629 | 6,677,375 | ||||
| Gross profit | 4,702,083 | 6,928,503 | 6,846,131 | 12,150,944 | ||||
| Operating expenses: | ||||||||
| Selling and marketing | 735,132 | 1,002,877 | 1,435,413 | 1,486,847 | ||||
| Depreciation and amortization | 289,030 | 267,861 | 480,704 | 534,303 | ||||
| Bad debt expense | -- | (353) | 192,250 | 254,279 | ||||
| Salaries and wages | 1,152,023 | 736,898 | 1,958,587 | 1,657,162 | ||||
| Professional services, including non-cash compensation | 236,911 | 151,276 | 423,660 | 290,361 | ||||
| Lease abandonment charges | -- | -- | -- | -- | ||||
| General and administrative | 1,072,483 | 873,569 | 1,965,455 | 2,006,088 | ||||
| Total operating expenses | 3,485,579 | 3,032,128 | 6,456,069 | 6,229,041 | ||||
| Income from operations | 1,216,504 | 3,896,375 | 390,062 | 5,921,904 | ||||
| Other income and (expenses) | ||||||||
| Loss on sale of assets | (1,633) | (792) | (3,274) | (15,586) | ||||
| Interest expense | (158,957) | (291,475) | (419,164) | (607,119) | ||||
| Interest income | 7,264 | 9,958 | 40,069 | 94,419 | ||||
| Gain (loss) on foreign currency exchange transactions | 160,125 | (400,658) | 39,219 | 673,236 | ||||
| Share of net loss from equity investment | -- | (71,799) | (100,000) | (142,236) | ||||
| Beneficial conversion feature | (61,441) | (118,163) | (74,247) | (295,574) | ||||
| Other expense | (8,988) | (1,748) | (16,706) | (57,301) | ||||
| Total other income (expenses) | (63,629) | (874,677) | (534,103) | (350,162) | ||||
| Net income (loss) before income taxes | 1,152,875 | 3,021,698 | (144,041) | 5,571,741 | ||||
| Income taxes | (7,005) | (3,168) | (31,539) | (11,724) | ||||
| Net income (loss) after tax | 1,145,870 | 3,018,530 | (175,580) | 5,560,017 | ||||
| Non-controlling interest | (826,303) | (1,082,792) | (963,561) | (2,057,301) | ||||
| Net income (loss) attributable to NetSol | 319,567 | 1,935,737 | (1,139,141) | 3,502,717 | ||||
| Other comprehensive loss: | ||||||||
| Translation adjustment | (1,039,343) | 916,065 | (2,013,541) | 440,163 | ||||
| Comprehensive income (loss) | (719,776) | 2,851,802 | (3,152,682) | 3,942,880 | ||||
| Comprehensive income (loss) attributable to non controlling interest | (437,533) | 131,912 | (854,892) | (74,976) | ||||
| Comprehensive income (loss) attributable to NetSol | $ (282,243) | $ 2,719,890 | $ (2,297,790) | $ 4,017,856 | ||||
| Net income per share: | ||||||||
| Basic | $ 0.01 | $ 0.04 | $ (0.02) | $ 0.08 | ||||
| Diluted | $ 0.01 | $ 0.04 | $ (0.02) | $ 0.08 | ||||
| Weighted average number of shares outstanding | ||||||||
| Basic | 56,655,621 | 48,366,323 | 56,269,445 | 43,955,210 | ||||
| Diluted | 57,261,550 | 51,058,140 | 56,269,445 | 46,647,027 | ||||
| Amounts attributable to NetSol common shareholders | ||||||||
| Net income / (loss) | $ 319,567 | $ 1,935,737 | $ (1,139,141) | $ 3,502,717 | ||||
| NetSol Technologies, Inc. and Subsidiaries | ||
| Condensed Consolidated Statement of Cash Flows | ||
| For the Six Months | ||
| Ended December 31, | ||
| 2011 | 2010 | |
| Cash flows from operating activities: | ||
| Net (loss) income | $ (175,580) | $ 5,560,017 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 2,082,319 | 1,844,528 |
| Provision for bad debts | 192,250 | 254,279 |
| Gain on sale of subsidiary shares in Pakistan | -- | -- |
| Loss on foreign currency exchange transaction | -- | -- |
| Share of net loss from investment under equity method | 100,000 | 142,236 |
| Loss on sale of assets | 3,274 | 15,586 |
| (Gain) on settlement of lease abandonment provision | -- | -- |
| Dividend income | -- | -- |
| Non controlling interest in subsidiary | 0 | -- |
| Stock issued for interest on notes payable | -- | 35,808 |
| Stock issued for services | 155,500 | 577,943 |
| Fair market value of warrants and stock options granted | 256,479 | 175,341 |
| Non cash exercise of warrants | -- | -- |
| Beneficial conversion feature | 74,247 | 295,574 |
| Amortization of capitalized finance cost | -- | -- |
| Changes in operating assets and liabilities: | ||
| Increase/ decrease in accounts receivable | 3,322,973 | (1,863,668) |
| Increase/ decrease in other current assets | (2,042,183) | (1,377,332) |
| Increase/ decrease in long-term assets | -- | -- |
| Increase/ decrease in accounts payable and accrued expenses | (11,801) | (353,493) |
| Net cash provided by operating activities | 3,957,478 | 5,306,820 |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (2,832,212) | (2,450,222) |
| Sales of property and equipment | 73,048 | 19,988 |
| Purchase of treasury stock | (19,417) | -- |
| Purchase of non-controlling interest in subsidiary | -- | (180,000) |
| Short-term investments held for sale | -- | (256,706) |
| Investment under equity method | (100,000) | -- |
| Cash brought in at acquisition | -- | -- |
| Acquisition, net of cash acquired | (253,192) | -- |
| Increase in intangible assets | (3,713,090) | (3,127,234) |
| Net cash used in investing activities | (6,844,863) | (5,994,175) |
| Cash flows from financing activities: | ||
| Proceeds from sale of common stock | -- | 2,566,750 |
| Proceeds from the exercise of stock options and warrants | 368,000 | 667,300 |
| Purchase of subsidiary stock in Pakistan | -- | -- |
| Proceeds from sale of subsidiary stock | -- | -- |
| Purchase of treasury stock | -- | -- |
| Proceeds from convertible notes payable | 4,000,000 | -- |
| Payments on convertible notes payable | (2,758,330) | -- |
| Restricted cash | 2,996,382 | -- |
| Dividend Paid | -- | -- |
| Bank overdraft | ||
| Proceeds from bank loans | 3,866,758 | 2,588,773 |
| Payments on bank loans | -- | (44,455) |
| Payments on capital lease obligations & loans - net | (5,123,981) | (3,192,089) |
| Net cash provided by financing activities | 3,348,830 | 2,586,278 |
| Effect of exchange rate changes in cash | 89,119 | (118,318) |
| Net increase in cash and cash equivalents | 550,564 | 1,780,605 |
| Cash and cash equivalents, beginning of year | 4,172,803 | 4,075,546 |
| Cash and cash equivalents, end of year | $ 4,723,366 | $ 5,856,150 |
| NetSol Technologies, Inc. and Subsidiaries | ||||
| Reconciliation to GAAP | ||||
| Three Months | Three Months | Year | Year | |
| Ended | Ended | To date | To date | |
| December 31, 2011 | December 31, 2010 | December 31, 2011 | December 31, 2010 | |
| Net Income (loss) before preferred dividend, per GAAP | $ 319,567 | $ 1,935,737 | $ (1,139,141) | $ 3,502,717 |
| Income Taxes | 7,005 | 3,168 | 31,539 | 11,724 |
| Depreciation and amortization | 1,101,540 | 947,145 | 2,082,319 | 1,844,528 |
| Interest expense | 158,957 | 291,475 | 419,164 | 607,119 |
| Interest (income) | (7,264) | (9,958) | (40,069) | (94,419) |
| EBITDA | $ 1,579,804 | $ 3,167,567 | $ 1,353,812 | $ 5,871,669 |
| Weighted Average number of shares outstanding | ||||
| Basic | 56,655,621 | 48,366,323 | 56,269,445 | 43,955,210 |
| Diluted | 57,261,550 | 51,058,140 | 56,875,373 | 46,647,027 |
| Basic EBITDA | $ 0.03 | $ 0.07 | $ 0.02 | $ 0.13 |
| Diluted EBITDA | $ 0.03 | $ 0.06 | $ 0.02 | $ 0.13 |
| Contacts: | PondelWilkinson Inc. |
| Evan Pondel (310) 279-5973 | |
| [email protected] |
Released February 2, 2012