NetSol Technologies Reports Fiscal 2015 First Quarter Results
Opens New Office in Germany;
Announces Two New Agreements in China with a Combined Value of $4.5 Million
Conference Call Scheduled Today at 8:30 a.m. EST (5:30 a.m. PST)
CALABASAS, Calif., Nov. 6, 2014 (GLOBE NEWSWIRE) -- NetSol Technologies, Inc. (Nasdaq:NTWK), a global provider of IT and enterprise software solutions, today reported financial results for its fiscal 2015 first quarter ended September 30, 2014.
Fiscal 2015 First Quarter Financial Results
The following comparison refers to results for the fiscal 2015 first quarter versus the fiscal 2014 first quarter.
Total net revenues advanced to $10.2 million from $8.9 million, reflecting growth in maintenance and service revenue, and a stronger contribution from the Company's joint venture, NetSol-Innovation.
- License revenue was $1.6 million, versus $2.3 million in the same period last year. License revenue for the first quarter of 2015 does not yet include the recently signed $16 million NFS Ascent contract;
- Maintenance revenue increased to $2.8 million, from $2.4 million last year as a result of completion of implementations;
- Services revenue improved to $4.4 million, from $3.3 million in the same period last year; and,
- Services revenue – related party, reflecting revenue from NetSol's joint venture with the Innovation Group – was $1.4 million, up from $960,000 last year.
"NetSol is now in the early stages in a return to growth, with multiple new NFS Ascent contracts in place, including the largest single agreement we have signed to date," said Najeeb Ghauri, CEO. "The transformative investments we have made over the past few years are beginning to show results, allowing us to implement complex solutions at a faster rate than in the past, and across multiple countries, languages, currencies, and accounting standards.
"We also recently expanded our presence to Germany, opening a new office and hiring several senior employees, enhancing our competitive position in the European automotive market," added Ghauri.
Please click here or visit http://bit.ly/NetSolTechVideo to view a video about NetSol and its new NFS Ascent solution.
Gross profit for the fiscal 2015 first quarter equaled $3.2 million, compared with $3.7 million last year, reflecting NetSol's investment in additional personnel, as well as an increase of $875,000 in depreciation and amortization now that NFS Ascent™ has launched.
Total operating expenses amounted to $5.5 million, versus $4.9 million last year. The increase relates to higher selling and marketing expenses, and increased general and administrative costs.
Operating loss was $2.2 million, compared with an operating loss of $1.3 million last year.
Net loss was $1.8 million for the fiscal 2015 first quarter, equal to $0.20 per share, compared with a net loss of $1.1 million, or $0.12 per share, in the comparable period last fiscal year.
Excluding income taxes, interest income/expense, and depreciation and amortization (a non-cash expense of $2.4 million), adjusted EBITDA (a non-GAAP measure) was $600,000, or $0.07 per adjusted diluted share for the fiscal 2015 first quarter. This compares to adjusted EBITDA of $303,000, or $0.03 per adjusted diluted share, last year, which removed $1.4 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.
At September 30, 2014, cash and cash equivalents amounted to $10.4 million, compared with $11.5 million at June 30, 2014.
Recent Highlights:
- Signed an agreement valued at more than $16 million to implement NFS Ascent™, the Company's next-generation software platform, with a major multi-finance group in Asia, to fully automate all finance front and back office operations, while managing a portfolio of nearly two million contracts, serving more than 5,000 concurrent users;
- Received two new orders in China for NetSol Financial Suite (NFS™), representing more than $4.5 million in combined license, maintenance and service billings;
- Expanded relationship with an equipment leasing company in Australia to further implement NFS; and,
- Established a new office in Germany.
| Fiscal 2015 First Quarter Conference Call | |
| When: | Thursday, November 6 |
| Time: | 8:30 a.m. Eastern Time |
| Phone: | 1-888-428-9490 (domestic) |
| 1-719-325-2435 (international) | |
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. (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.
To learn more about NetSol, visit www.netsoltech.com or watch the corporate video at https://www.youtube.com/user/netsolwebmaster.
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, | |
| 2014 | 2014 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 10,382,556 | $ 11,462,695 |
| Restricted cash | 90,000 | 2,528,844 |
| Accounts receivable, net | 11,082,983 | 5,403,165 |
| Accounts receivable, net - related party | 2,603,418 | 2,232,610 |
| Revenues in excess of billings | 2,173,990 | 2,377,367 |
| Other current assets | 2,405,266 | 2,857,879 |
| Total current assets | 28,738,213 | 26,862,560 |
| Property and equipment, net | 27,852,410 | 29,721,128 |
| Intangible assets, net | 26,376,366 | 28,803,018 |
| Goodwill | 9,516,568 | 9,516,568 |
| Total assets | $ 92,483,557 | $ 94,903,274 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable and accrued expenses | $ 4,653,499 | $ 5,234,887 |
| Current portion of loans and obligations under capitalized leases | 3,212,477 | 5,791,258 |
| Unearned revenues | 8,081,082 | 3,239,852 |
| Common stock to be issued | 378,487 | 347,518 |
| Total current liabilities | 16,325,545 | 14,613,515 |
| Long term loans and obligations under capitalized leases; less current maturities | 1,390,770 | 1,532,080 |
| Total liabilities | 17,716,315 | 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; 9,477,860 and | ||
| 9,150,889 issued and outstanding as of September 30, 2014 and June 30, 2014 | 94,778 | 91,509 |
| Additional paid-in-capital | 116,655,643 | 115,394,097 |
| Treasury stock | (415,425) | (415,425) |
| Accumulated deficit | (37,015,329) | (35,177,303) |
| Stock subscription receivable | (2,280,488) | (2,280,488) |
| Other comprehensive loss | (16,934,777) | (14,979,223) |
| Total NetSol stockholders' equity | 60,104,402 | 62,633,167 |
| Non-controlling interest | 14,662,840 | 16,124,512 |
| Total stockholders' equity | 74,767,242 | 78,757,679 |
| Total liabilities and stockholders' equity | $ 92,483,557 | $ 94,903,274 |
| NetSol Technologies, Inc. and Subsidiaries | ||
| Consolidated Statement of Operations | ||
| For the Three Months | ||
| Ended September 30, | ||
| 2014 | 2013 | |
| Net Revenues: | ||
| License fees | $ 1,584,553 | $ 2,252,567 |
| Maintenance fees | 2,848,641 | 2,380,409 |
| Services | 4,397,957 | 3,320,223 |
| Services - related party | 1,396,000 | 967,543 |
| Total net revenues | 10,227,151 | 8,920,742 |
| Cost of revenues: | ||
| Salaries and consultants | 4,116,217 | 3,259,791 |
| Travel | 421,871 | 388,585 |
| Depreciation and amortization | 1,801,567 | 926,315 |
| Other | 674,863 | 688,544 |
| Total cost of revenues | 7,014,518 | 5,263,235 |
| Gross profit | 3,212,633 | 3,657,507 |
| Operating expenses: | ||
| Selling and marketing | 1,132,360 | 1,055,141 |
| Depreciation and amortization | 580,773 | 426,617 |
| General and administrative | 3,675,755 | 3,407,000 |
| Research and development cost | 66,265 | 58,688 |
| Total operating expenses | 5,455,153 | 4,947,446 |
| Loss from operations | (2,242,520) | (1,289,939) |
| Other income and (expenses) | ||
| Loss on sale of assets | (11,052) | (13,795) |
| Interest expense | (73,093) | (69,217) |
| Interest income | 57,919 | 32,854 |
| Gain on foreign currency exchange transactions | 79,220 | 1,111,423 |
| Other income | 379 | 9,798 |
| Total other income (expenses) | 53,373 | 1,071,063 |
| Net loss before income taxes | (2,189,147) | (218,876) |
| Income tax provision | (40,076) | (11,131) |
| Net loss from continuing operations | (2,229,223) | (230,007) |
| Loss from discontinued operations | -- | (201,249) |
| Net loss | (2,229,223) | (431,256) |
| Non-controlling interest | 391,197 | (665,859) |
| Net loss attributable to NetSol | $ (1,838,026) | $ (1,097,115) |
| Amount attributable to NetSol common shareholders: | ||
| Loss from continuing operations | $ (1,838,026) | $ (895,866) |
| Loss from discontinued operations | -- | (201,249) |
| Net loss | $ (1,838,026) | $ (1,097,115) |
| Net loss per share: | ||
| Net loss per share from continuing operations: | ||
| Basic | $ (0.20) | $ (0.10) |
| Diluted | $ (0.20) | $ (0.10) |
| Net loss per share from discontinued operations: | ||
| Basic | $ -- | $ (0.02) |
| Diluted | $ -- | $ (0.02) |
| Net loss per common share | ||
| Basic | $ (0.20) | $ (0.12) |
| Diluted | $ (0.20) | $ (0.12) |
| Weighted average number of shares outstanding | ||
| Basic | 9,213,324 | 8,956,007 |
| Diluted | 9,213,324 | 8,956,007 |
| NetSol Technologies, Inc. and Subsidiaries | ||
| Consolidated Statement of Cash Flows | ||
| For the Three Months | ||
| Ended September 30, | ||
| 2014 | 2013 | |
| Cash flows from operating activities: | ||
| Net loss | $ (2,229,223) | $ (431,256) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
| Depreciation and amortization | 2,382,340 | 1,473,286 |
| Provision for bad debts | -- | 251,673 |
| Share of net loss (income) from investment under equity method | -- | (9,192) |
| Loss on sale of assets | 11,052 | 13,795 |
| Stock issued for services | 290,162 | 318,857 |
| Fair market value of warrants and stock options granted | 155,622 | 125,568 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (5,723,728) | (3,582,074) |
| Accounts receivable - related party | (495,357) | (377,848) |
| Revenues in excess of billing | 133,763 | 3,565,290 |
| Other current assets | 479,340 | (438,780) |
| Accounts payable, accrued expenses and unearned revenue | 4,515,004 | 2,014,051 |
| Net cash provided by (used in) operating activities | (481,025) | 2,923,370 |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (1,031,128) | (2,691,066) |
| Sales of property and equipment | 90,841 | 80,287 |
| Increase in intangible assets | -- | (1,362,026) |
| Net cash used in investing activities | (940,287) | (3,972,805) |
| Cash flows from financing activities: | ||
| Proceeds from sale of common stock | 850,000 | -- |
| Proceeds from the exercise of stock options and warrants | -- | 560,500 |
| Proceeds from exercise of subsidiary options | -- | 176,280 |
| Restricted cash | 2,438,844 | (426,585) |
| Proceeds from bank loans | 109,211 | 519,040 |
| Payments on capital lease obligations and loans - net | (2,591,334) | (198,853) |
| Net cash provided by financing activities | 806,721 | 630,382 |
| Effect of exchange rate changes | (465,548) | (699,315) |
| Net decrease in cash and cash equivalents | (1,080,139) | (1,118,368) |
| Cash and cash equivalents, beginning of the period | 11,462,695 | 7,874,318 |
| Cash and cash equivalents, end of period | $ 10,382,556 | $ 6,755,950 |
| NetSol Technologies, Inc. and Subsidiaries | ||||
| Reconciliation to GAAP | ||||
| Three Months | Three Months | |||
| Ended | Ended | |||
| September 30, 2014 | September 30, 2013 | |||
| Net Income (loss) before preferred dividend, per GAAP | $ (1,838,026) | $ (1,097,115) | ||
| Income Taxes | 40,076 | 11,131 | ||
| Depreciation and amortization | 2,382,340 | 1,352,932 | ||
| Interest expense | 73,093 | 69,217 | ||
| Interest (income) | (57,919) | (32,854) | ||
| EBITDA | $ 599,564 | $ 303,311 | ||
| Weighted Average number of shares outstanding | ||||
| Basic | 9,177,664 | 8,956,007 | ||
| Diluted | 9,177,664 | 9,064,123 | ||
| Basic EBITDA | $ 0.07 | $ 0.03 | ||
| Diluted EBITDA | $ 0.07 | $ 0.03 | ||
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.
CONTACT: Investor Contacts:
PondelWilkinson
Roger Pondel | Matt Sheldon
investors@netsoltech.com
(310) 279-5980
Media Contacts:
PondelWilkinson
George Medici | gmedici@pondel.com
(310) 279-5968
Released November 6, 2014