Netsol Technologies Reports Fiscal 2014 Third Quarter Results
– Qualified Bid and Proposal Pipeline Continues to Build; Hires More than 50 Software Engineers During the Third Quarter –
– Company Generates More than $15 Million in Cash from Operations for First Nine Months –
– Completes Sale of Vroozi Division –
– Conference Call Scheduled Today at 5 p.m. ET (2 p.m. PT) –
CALABASAS, Calif., May 13, 2014 (GLOBE NEWSWIRE) -- NetSol Technologies, Inc. (Nasdaq:NTWK), a worldwide provider of global IT and enterprise application solutions, today reported financial results for its fiscal 2014 third quarter ended March 31, 2014.
Fiscal 2014 Third Quarter Financial Results
The following comparison refers to results for the fiscal 2014 third quarter versus the fiscal 2013 third quarter.
Total net revenues were $9.4 million, compared with $12.6 million last fiscal year, reflecting, as expected, lower license sales during the transition to NetSol's next-generation financing and leasing solution, NFS Ascent™.
- License revenue was $2.1 million, versus $4.8 million in the same period last year;
- Maintenance revenue increased to $2.6 million from $2.5 million last year; and,
- Service revenue was $4.7 million, versus $5.3 million in the same period last year.
"During the quarter, we made progress with the rollout of our next-generation finance and leasing solution, NFS Ascent, while continuing to invest in our infrastructure to build an engine of growth," said Najeeb Ghauri, CEO. "The investment in personnel to support our pipeline and cater to each client's unique needs, wherever they do business, is an absolute necessity to support the long term growth of the company. The visibility we have into our pipeline in the U.S., Europe, and Asia, and with what we believe to be a superior financing and leasing platform, gives us the confidence to make this strategic investment to strongly position us for the future."
Total operating expenses amounted to $5.1 million, versus $3.8 million last year. The increase relates to higher selling and marketing, and increased general and administrative costs to support the launch of NFS Ascent.
Operating loss for the third quarter was $2.7 million, compared with operating income of $3.1 million last year.
Net loss was $1.3 million, equal to $0.14 per share, compared with net income of $1.6 million, or $0.19 per diluted share.
During the quarter ended March 31, 2014, the company completed the sale of Vroozi, Inc. for $2.7 million, recognizing a $1.9 million gain on sale in the quarter. This gain is recorded in the net income (loss) from discontinued operations in the condensed consolidated statements of operations.
"We sold Vroozi to remain focused on our core business, which we believe represents the future of our company. Even without this asset sale, we remain well capitalized to execute our growth strategy," added Ghauri.
Fiscal 2014 First Nine Months Financial Results
For the first nine months of fiscal 2014, total net revenues were $26.8 million, versus $34.9 million for the first nine months of fiscal 2013. Net loss for the fiscal 2014 year-to-date period was $4.0 million, or $0.45 per share, compared with net income of $4.7 million, or $0.59 per diluted share, last year. Net income (loss) includes the sale of Vroozi.
At March 31, 2014, cash and cash equivalents increased to $12.4 million from $7.9 million at June 30, 2013, reflecting improved collections in the nine months. Cash provided by operations for the first nine months of fiscal 2014 was $15.3 million, compared with $9.7 million for the first nine months of fiscal 2013.
Recent Highlights
- Signed two new contracts for NFS in the Asia Pacific Region;
- In Europe, went live with one new Leasesoft customer and signed a new Leasesoft contract which is expected to go live in May 2014;
- In North America, went live with one new LeasePak SaaS customer and added 30 additional LeasePak user licenses for another customer; and,
- Expanded operations in the Asia Pacific region, increasing delivery and support capability hiring 52 new technical employees during the quarter.
"We are gearing up to service complex, multi-country implementations, with our near term results showing the effect of higher expenses during a time of transition," concluded Ghauri. "While complex implementations take time to plan and negotiate, we are confident in our team and the strength of our solutions to deliver increasing value for the long term."
Fiscal 2014 Third Quarter Conference Call
When: Tuesday, May 13
Time: 5:00 p.m. Eastern
Phone: 1-800-762-8779 (domestic)
1-480-629-9645 (international)
Conference ID: 4683097
A live Webcast will be available online on NetSol's website at http://www.netsoltech.com/us/investors/event-presentation, where it will be archived for 90 days.
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 asset finance and leasing in the automotive, 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, Sydney and Riyadh.
Follow NetSol Technologies on Twitter at https://twitter.com/NetSolTech
NetSol Technologies Google+ page at https://plus.google.com/+netsoltechnologies
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, 2014 |
As of June 30, 2013 |
| Current assets: | ||
| Cash and cash equivalents | $ 12,383,695 | $ 7,874,318 |
| Restricted cash | 2,495,354 | 1,875,237 |
| Accounts receivable, net | 12,967,350 | 14,684,212 |
| Revenues in excess of billings | 4,519,754 | 15,367,198 |
| Other current assets | 3,017,570 | 2,273,314 |
| Total current assets | 35,383,723 | 42,074,279 |
| Investment under equity method | 175,151 | 545,483 |
| Property and equipment, net | 27,625,986 | 20,978,369 |
| Intangible assets, net | 30,850,059 | 29,452,654 |
| Goodwill | 9,653,330 | 9,653,330 |
| Total assets | $ 103,688,249 | $ 102,704,115 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable and accrued expenses | $ 5,250,138 | $ 4,027,147 |
| Current portion of loans and obligations under capitalized leases | 5,855,371 | 5,308,626 |
| Unearned revenues | 3,607,582 | 2,446,018 |
| Common stock to be issued | 342,898 | 88,325 |
| Total current liabilities | 15,055,989 | 11,870,116 |
| Long term loans and obligations under capitalized leases; less current maturities | 1,837,583 | 1,412,212 |
| Total liabilities | 16,893,572 | 13,282,328 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
|
Common stock, $.01 par value; 15,000,000 shares authorized; 9,124,164 and 8,929,523 issued and outstanding as of March 31, 2014 and June 30, 2013 |
91,242 | 89,295 |
| Additional paid-in-capital | 115,786,958 | 114,292,510 |
| Treasury stock | (415,425) | (415,425) |
| Accumulated deficit | (27,845,083) | (23,821,256) |
| Stock subscription receivable | (2,280,488) | (2,280,488) |
| Other comprehensive loss | (14,915,572) | (15,714,112) |
| Total NetSol stockholders' equity | 70,421,632 | 72,150,524 |
| Non-controlling interest | 16,373,045 | 17,271,263 |
| Total stockholders' equity | 86,794,677 | 89,421,787 |
| Total liabilities and stockholders' equity | $ 103,688,249 | $ 102,704,115 |
| NetSol Technologies, Inc. and Subsidiaries | ||||||||||||
| Consolidated Statement of Operations | ||||||||||||
|
For the Three Months Ended March 31, |
For the Nine Months Ended March 31, |
|||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| Net Revenues: | ||||||||||||
| License fees | $ 2,118,015 | $ 4,790,015 | $ 4,826,198 | $ 11,537,363 | ||||||||
| Maintenance fees | 2,556,017 | 2,488,774 | 7,803,621 | 7,199,293 | ||||||||
| Services | 4,689,019 | 5,327,826 | 14,208,275 | 16,140,819 | ||||||||
| Total net revenues | 9,363,051 | 12,606,615 | 26,838,094 | 34,877,475 | ||||||||
| Cost of revenues: | ||||||||||||
| Salaries and consultants | 4,106,150 | 2,954,192 | 10,526,701 | 8,156,677 | ||||||||
| Travel | 354,554 | 487,870 | 1,090,809 | 1,191,174 | ||||||||
| Repairs and maintenance | 256,629 | 88,264 | 570,712 | 330,998 | ||||||||
| Depreciation and amortization | 1,471,126 | 912,669 | 3,517,804 | 2,654,289 | ||||||||
| Other | 728,446 | 1,220,075 | 2,109,372 | 2,618,996 | ||||||||
| Research and development cost | 65,060 | 45,770 | 178,862 | 105,692 | ||||||||
| Total cost of revenues | 6,981,965 | 5,708,840 | 17,994,260 | 15,057,826 | ||||||||
| Gross profit | 2,381,086 | 6,897,775 | 8,843,834 | 19,819,649 | ||||||||
| Operating expenses: | ||||||||||||
| Selling and marketing | 1,083,753 | 728,873 | 3,032,675 | 2,350,275 | ||||||||
| Depreciation and amortization | 493,814 | 437,700 | 1,351,378 | 1,113,136 | ||||||||
| Salaries and wages | 1,414,356 | 1,375,930 | 4,313,831 | 3,722,590 | ||||||||
| General and administrative | 2,070,542 | 1,213,232 | 5,575,498 | 4,069,396 | ||||||||
| Total operating expenses | 5,062,465 | 3,755,735 | 14,273,382 | 11,255,397 | ||||||||
| Income (loss) from operations | (2,681,379) | 3,142,040 | (5,429,548) | 8,564,252 | ||||||||
| Other income and (expenses) | ||||||||||||
| Gain (loss) on sale of assets | (995) | 15,097 | (190,027) | 29,118 | ||||||||
| Interest expense | (8,275) | (115,556) | (170,230) | (587,877) | ||||||||
| Interest income | 114,141 | 86,018 | 186,926 | 141,802 | ||||||||
| Gain (loss) on foreign currency exchange transactions | (908,192) | 97,831 | 299,270 | 997,725 | ||||||||
| Share of net income (loss) from equity investment | (203,684) | (16,392) | (370,332) | 468,095 | ||||||||
| Amortization of financing costs | -- | (173,266) | -- | (615,394) | ||||||||
| Other income (expense) | (5,006) | 20 | (4,341) | 52 | ||||||||
| Total other income (expenses) | (1,012,011) | (106,248) | (248,734) | 433,521 | ||||||||
| Net income (loss) before income taxes | (3,693,390) | 3,035,792 | (5,678,282) | 8,997,773 | ||||||||
| Income tax benefit (provision) | (98,920) | (10,579) | (139,321) | (22,027) | ||||||||
| Net income (loss) from continuing operations | (3,792,310) | 3,025,213 | (5,817,603) | 8,975,746 | ||||||||
| Income (loss) from discontinued operations net of gain on disposal | 1,480,786 | (493,994) | 1,158,752 | (1,494,640) | ||||||||
| Net income (loss) | (2,311,524) | 2,531,219 | (4,658,851) | 7,481,106 | ||||||||
| Non-controlling interest | 1,011,720 | (968,384) | 635,024 | (2,766,163) | ||||||||
| Net income (loss) attributable to NetSol | $ (1,299,804) | $ 1,562,835 | $ (4,023,827) | $ 4,714,943 | ||||||||
| Amount attributable to NetSol common shareholders: | ||||||||||||
| Income (loss) from continuing operations | $ (2,780,590) | $ 2,056,829 | $ (5,182,579) | $ 6,209,583 | ||||||||
| Income (loss) from discontinued operations | 1,480,786 | (493,994) | 1,158,752 | (1,494,640) | ||||||||
| Net income (loss) | $ (1,299,804) | $ 1,562,835 | $ (4,023,827) | $ 4,714,943 | ||||||||
| Net income (loss) per share: | ||||||||||||
| Net income (loss) per share from continuing operations: | ||||||||||||
| Basic | $ (0.31) | $ 0.25 | $ (0.57) | $ 0.78 | ||||||||
| Diluted | $ (0.31) | $ 0.24 | $ (0.57) | $ 0.77 | ||||||||
| Net income (loss) per share from discontinued operations: | ||||||||||||
| Basic | $ 0.16 | $ (0.06) | $ 0.13 | $ (0.19) | ||||||||
| Diluted | $ 0.16 | $ (0.06) | $ 0.13 | $ (0.19) | ||||||||
| Net income (loss) per common share | ||||||||||||
| Basic | $ (0.14) | $ 0.19 | $ (0.45) | $ 0.59 | ||||||||
| Diluted | $ (0.14) | $ 0.19 | $ (0.45) | $ 0.59 | ||||||||
| Weighted average number of shares outstanding | ||||||||||||
| Basic | 9,092,834 | 8,344,408 | 9,034,532 | 7,961,843 | ||||||||
| Diluted | 9,092,834 | 8,408,426 | 9,034,532 | 8,025,861 | ||||||||
| NetSol Technologies, Inc. and Subsidiaries | ||
| Consolidated Statement of Cash Flows | ||
|
For the Nine Months Ended March 31, |
||
| 2014 | 2013 | |
| Cash flows from operating activities: | ||
| Net income (loss) | $ (4,658,851) | $ 7,481,106 |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
| Depreciation and amortization | 4,869,182 | 4,128,317 |
| Provision for bad debts | 247,530 | 54,444 |
| Share of net loss (income) from investment under equity method | 370,332 | (468,095) |
| (Gain) loss on sale of assets | 190,027 | (29,118) |
| (Gain) loss on sale of subsidiary | (1,870,871) | -- |
| Stock issued for interest on notes payable | -- | 211,111 |
| Stock issued for services | 817,417 | 38,790 |
| Fair market value of warrants and stock options granted | 189,937 | 455,926 |
| Amortization of financing costs | -- | 615,394 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | 2,393,876 | (4,649,531) |
| Revenue in excess of billing | 10,568,918 | 98,323 |
| Other current assets | 144,372 | (228,434) |
| Accounts payable and accrued expenses | 2,064,982 | 2,032,318 |
| Net cash provided by operating activities | 15,326,851 | 9,740,551 |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (9,583,663) | (6,751,002) |
| Sales of property and equipment | 61,080 | 138,385 |
| Sale of subsidiary | 1,810,700 | -- |
| Purchase of non-controlling interest in subsidiaries | (17,852) | (799,349) |
| Increase in intangible assets | (3,158,083) | (3,495,938) |
| Net cash used in investing activities | (10,887,818) | (10,907,904) |
| Cash flows from financing activities: | ||
| Proceeds from the exercise of stock options and warrants | 709,436 | 2,212,712 |
| Payment to common shareholders for fractional shares | -- | (194) |
| Proceeds from exercise of subsidiary options | 376,811 | 90,589 |
| Restricted cash | (620,117) | (1,925,344) |
| Dividend paid by subsidiary to Non controlling interest | (1,008,543) | -- |
| Proceeds from bank loans | 1,366,226 | 1,874,079 |
| Payments on capital lease obligations and loans - net | (610,822) | (687,125) |
| Net cash provided by financing activities | 212,991 | 1,564,717 |
| Effect of exchange rate changes | (142,647) | (290,813) |
| Net increase in cash and cash equivalents | 4,509,377 | 106,551 |
| Cash and cash equivalents, beginning of the period | 7,874,318 | 7,599,607 |
| Cash and cash equivalents, end of period | $ 12,383,695 | $ 7,706,158 |
| NetSol Technologies, Inc. and Subsidiaries | ||||
| Reconciliation to GAAP | ||||
|
Three Months Ended March 31, 2014 |
Three Months Ended March 31, 2013 |
Nine Months Ended March 31, 2014 |
Nine Months Ended March 31, 2013 |
|
| Net Income (loss) before preferred dividend, per GAAP | $ (1,299,804) | $ 1,562,835 | $ (4,023,827) | $ 4,714,943 |
| Income Taxes | 98,920 | 10,579 | 139,321 | 22,027 |
| Depreciation and amortization | 1,964,940 | 1,350,369 | 4,869,182 | 3,767,425 |
| Interest expense | 8,275 | 115,556 | 170,230 | 587,877 |
| Interest (income) | (114,141) | (86,018) | (186,926) | (141,802) |
| EBITDA | $ 658,190 | $ 2,953,321 | $ 967,980 | $ 8,950,470 |
| Weighted Average number of shares outstanding | ||||
| Basic | 9,092,834 | 8,344,408 | 9,034,532 | 7,961,843 |
| Diluted | 9,102,777 | 8,408,426 | 9,044,476 | 8,025,861 |
| Basic EBITDA | $ 0.07 | $ 0.35 | $ 0.11 | $ 1.12 |
| Diluted EBITDA | $ 0.07 | $ 0.35 | $ 0.11 | $ 1.12 |
| 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
[email protected]
(310) 279-5980
Media Contacts:
PondelWilkinson
George Medici | [email protected]
(310) 279-5968
Released May 13, 2014