NetSol Technologies Reports Fiscal 2015 Third-Quarter Results
Third-Quarter 2015 Total Revenues Increase 40 Percent to $13.1 Million,
with Total Service Revenue More than Doubling to $8.8 Million for the Quarter
Third-Quarter 2015 GAAP EPS Loss Narrows to $(0.17) from $(0.31) Last Year
Non-GAAP EPS Improves to a Gain of $0.09 from $0.07 Last Year
Conference Call Scheduled Today at 8:30 a.m. ET (5:30 a.m. PT)
CALABASAS, Calif., May 11, 2015 (GLOBE NEWSWIRE) -- NetSol Technologies, Inc. (Nasdaq:NTWK), a global business services and enterprise application solutions provider, today reported financial results for its fiscal 2015 third quarter ended March 31, 2015.
Fiscal 2015 Third-Quarter Financial Results
The following comparison refers to results for the fiscal 2015 third quarter versus the fiscal 2014 third quarter.
Total net revenues increased 40 percent to $13.1 million, from $9.4 million last year, reflecting strength in services revenue related to the implementation of NetSol's next-generation financing and leasing solution, NFS Ascent TM.
- License fees were $1.2 million, down from $2.1 million, related to the mix of sales between NFS TM and NFS Ascent TM, which carries a higher service revenue component;
- Maintenance fees were $3.0 million, compared to $2.4 million last year;
- Services revenue more than doubled to $7.0 million, up from $3.2 million last year; and
- Services revenue - related party (Netsol-Innovation and Investec) were $1.8 million, up from $1.5 million last year.
On a GAAP basis, net loss from continuing operations was $1.6 million, equal to $(0.17) per share. This compares with a net loss from continuing operations of $2.8 million, equal to $(0.31) per share.
Adjusted EBITDA (a non-GAAP measure) was $883,000, or $0.09 per adjusted diluted share, which removed $2.5 million in depreciation and amortization. This compares with adjusted EBITDA of $658,000 or $0.07 per adjusted diluted share, last year, which removed $2.0 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.
Management Commentary
"The quarter reflects continued progress in the implementation of our large NFS Ascent contract, as well as investment to enhance our strategic position and delivery capability in Europe," said Najeeb Ghauri, CEO of NetSol. "Today we are at a pivotal stage for the company, approaching a time of record revenue, with further momentum highlighted by a healthy new business pipeline for NFS Ascent TM and NFS TM, continued upgrades and demand for our legacy region-specific solutions, and new agreements in Europe that have yet to contribute to results.
"Adding to our confidence is the relaxation of restrictions for new finance and leasing market entrants into China, where our NFS solution has the dominant market share; improved finance and leasing markets in the U.S. and Europe, where we continue to make progress; and China's investment in Pakistan, which is expected to help the overall business environment, quality of life and security profile of the country," Ghauri said.
Following is additional detail for the quarter:
- Increase in cost of revenues, related to the hiring and training of technical employees, as well as the timing of salary increases. Operational expenses also increased as a result of new business activities. Expenses are expected to remain at the current level as new hiring has slowed, with the addition of seven people in the quarter;
- Cash and cash equivalents were $10.9 million, of which approximately $7.3 million were held by the company's foreign subsidiaries;
- Accounts receivable were $7.6 million, compared to $5.4 million last year. The quality of receivables remains strong; and
- The company purchased 1.58 million shares of NetSol PK common stock from the open market for $577,000, resulting in an overall decrease in non-controlling interest from 36.6% to 34.9%.
Fiscal 2015 First Nine Months Financial Results
For the first nine months of fiscal 2015, total net revenue rose to $35.7 million, compared to $26.8 million for the first nine months of fiscal 2014. The company reported a GAAP net loss from continuing operations of $4.8 million, or $(0.51) per share, compared with a GAAP net loss from continuing operation of $5.2 million, or $(0.57) per share, in the comparable period last year.
Adjusted EBITDA (a non-GAAP measure) for the first nine months of fiscal 2015 increased to $2.4 million, or $0.25 per adjusted diluted share, which removed $7.1 million in depreciation and amortization. This compares with adjusted EBITDA of $968,000, or $0.11 per adjusted diluted share, last year, which removed $4.9 million in depreciation and amortization.
Fiscal 2015 Third-Quarter Conference Call
When: Monday, May 11, 2015
Time: 8:30 a.m. Eastern Time
Phone: 1-888-572-7034 (domestic)
1-719-325-2329 (international)
A live Webcast will be available online within the investor relations section of NetSol's website at http://www.netsoltech.com, where it 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 1500 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.
| NetSol Technologies, Inc. and Subsidiaries | ||
| Consolidated Balance Sheets | ||
| ASSETS | As of March 31, 2015 | As of June 30, 2014 |
| Current assets: | ||
| Cash and cash equivalents | $10,887,358 | $11,462,695 |
| Restricted cash | 90,000 | 2,528,844 |
| Accounts receivable, net of allowance of $959,333 and $1,088,172 | 7,520,921 | 5,403,165 |
| Accounts receivable, net - related party | 2,498,160 | 2,232,610 |
| Revenues in excess of billings | 4,837,306 | 2,377,367 |
| Revenues in excess of billings - related party | 188,426 | -- |
| Other current assets | 2,515,154 | 2,857,879 |
| Total current assets | 28,537,325 | 26,862,560 |
| Property and equipment, net | 26,410,815 | 29,721,128 |
| Intangible assets, net | 24,777,549 | 28,803,018 |
| Goodwill | 9,516,568 | 9,516,568 |
| Total assets | $89,242,257 | $94,903,274 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable and accrued expenses | $5,310,510 | $5,234,887 |
| Current portion of loans and obligations under capitalized leases | 2,989,520 | 5,791,258 |
| Unearned revenues | 5,646,287 | 3,192,203 |
| Unearned revenues - related party | 50,490 | 47,649 |
| Common stock to be issued | 88,324 | 347,518 |
| Total current liabilities | 14,085,131 | 14,613,515 |
| Long term loans and obligations under capitalized leases; less current maturities | 594,166 | 1,532,080 |
| Total liabilities | 14,679,297 | 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; 10,145,207 shares issued and 10,117,928 outstanding as of March 31, 2015 and 9,150,889 shares issued and 9,123,610 outstanding as of June 30, 2014 | 101,452 | 91,509 |
| Additional paid-in-capital | 118,387,488 | 115,394,097 |
| Treasury stock (27,279 shares) | (415,425) | (415,425) |
| Accumulated deficit | (40,018,743) | (35,177,303) |
| Stock subscription receivable | (1,298,307) | (2,280,488) |
| Other comprehensive loss | (15,669,755) | (14,979,223) |
| Total NetSol stockholders' equity | 61,086,710 | 62,633,167 |
| Non-controlling interest | 13,476,250 | 16,124,512 |
| Total stockholders' equity | 74,562,960 | 78,757,679 |
| Total liabilities and stockholders' equity | $89,242,257 | $94,903,274 |
| NetSol Technologies, Inc. and Subsidiaries | ||||
| Consolidated Statement of Operations | ||||
|
For the Three Months Ended March 31, |
For the Nine Months Ended March 31, |
|||
| 2015 | 2014 | 2015 | 2014 | |
| Net Revenues: | ||||
| License fees | $ 1,215,201 | $ 2,118,015 | $ 4,900,469 | $ 4,826,198 |
| Maintenance fees | 2,978,587 | 2,412,419 | 8,963,240 | 7,451,584 |
| Services | 7,022,982 | 3,241,057 | 16,650,646 | 10,403,978 |
| Maintenance fees - related party | 43,948 | 143,598 | 237,523 | 352,037 |
| Services - related party | 1,813,197 | 1,447,962 | 4,901,792 | 3,804,297 |
| Total net revenues | 13,073,915 | 9,363,051 | 35,653,670 | 26,838,094 |
| Cost of revenues: | ||||
| Salaries and consultants | 4,895,515 | 4,106,150 | 13,310,632 | 10,526,701 |
| Travel | 760,065 | 354,554 | 1,772,289 | 1,090,809 |
| Depreciation and amortization | 1,912,492 | 1,471,126 | 5,514,812 | 3,517,804 |
| Other | 792,737 | 985,075 | 2,129,646 | 2,680,084 |
| Total cost of revenues | 8,360,809 | 6,916,905 | 22,727,379 | 17,815,398 |
| Gross profit | 4,713,106 | 2,446,146 | 12,926,291 | 9,022,696 |
| Operating expenses: | ||||
| Selling and marketing | 1,712,151 | 1,083,753 | 4,419,466 | 3,032,675 |
| Depreciation and amortization | 551,127 | 493,814 | 1,569,903 | 1,351,378 |
| General and administrative | 3,997,186 | 3,484,898 | 11,584,696 | 9,889,329 |
| Research and development cost | 84,038 | 65,060 | 230,740 | 178,862 |
| Total operating expenses | 6,344,502 | 5,127,525 | 17,804,805 | 14,452,244 |
| Loss from operations | (1,631,396) | (2,681,379) | (4,878,514) | (5,429,548) |
| Other income and (expenses) | ||||
| Gain (loss) on sale of assets | 6,496 | (995) | (74,099) | (190,027) |
| Interest expense | (45,234) | (8,275) | (165,592) | (170,230) |
| Interest income | 97,094 | 114,141 | 261,091 | 186,926 |
| Gain (loss) on foreign currency exchange transactions | (247,845) | (908,192) | (589,707) | 299,270 |
| Share of net loss from equity investment | -- | (203,684) | -- | (370,332) |
| Other income (expense) | 607,111 | (5,006) | 625,650 | (4,341) |
| Total other income (expenses) | 417,622 | (1,012,011) | 57,343 | (248,734) |
| Net loss before income taxes | (1,213,774) | (3,693,390) | (4,821,171) | (5,678,282) |
| Income tax provision | (107,398) | (98,920) | (235,157) | (139,321) |
| Net loss from continuing operations | (1,321,172) | (3,792,310) | (5,056,328) | (5,817,603) |
| Income from discontinued operations | -- | 1,480,786 | -- | 1,158,752 |
| Net loss | (1,321,172) | (2,311,524) | (5,056,328) | (4,658,851) |
| Non-controlling interest | (315,073) | 1,011,720 | 214,888 | 635,024 |
| Net loss attributable to NetSol | $ (1,636,245) | $ (1,299,804) | $ (4,841,440) | $ (4,023,827) |
| Amount attributable to NetSol common shareholders: | ||||
| Loss from continuing operations | $ (1,636,245) | $ (2,780,590) | $ (4,841,440) | $ (5,182,579) |
| Income from discontinued operations | -- | 1,480,786 | -- | 1,158,752 |
| Net loss | $ (1,636,245) | $ (1,299,804) | $ (4,841,440) | $ (4,023,827) |
| Net loss per share: | ||||
| Net loss per share from continuing operations: | ||||
| Basic | $ (0.17) | $ (0.31) | $ (0.51) | $ (0.57) |
| Diluted | $ (0.17) | $ (0.31) | $ (0.51) | $ (0.57) |
| Net income per share from discontinued operations: | ||||
| Basic | $ -- | $ 0.16 | $ -- | $ 0.13 |
| Diluted | $ -- | $ 0.16 | $ -- | $ 0.13 |
| Net loss per common share | ||||
| Basic | $ (0.17) | $ (0.14) | $ (0.51) | $ (0.45) |
| Diluted | $ (0.17) | $ (0.14) | $ (0.51) | $ (0.45) |
| Weighted average number of shares outstanding | ||||
| Basic | 9,914,321 | 9,092,834 | 9,573,336 | 9,034,532 |
| Diluted | 9,914,321 | 9,092,834 | 9,573,336 | 9,034,532 |
| NetSol Technologies, Inc. and Subsidiaries | ||
| Consolidated Statement of Cash Flows | ||
|
For the Nine Months Ended March 31, |
||
| 2015 | 2014 | |
| Cash flows from operating activities: | ||
| Net loss | $ (5,056,328) | $ (4,658,851) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||
| Depreciation and amortization | 7,084,715 | 4,869,182 |
| Provision for bad debts | -- | 247,530 |
| Share of net loss from investment under equity method | -- | 370,332 |
| Loss on sale of assets | 74,099 | 190,027 |
| Gain on sale of subsidiary | -- | (1,870,871) |
| Stock issued for services | 1,119,721 | 817,417 |
| Fair market value of warrants and stock options granted | 466,866 | 189,937 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (2,369,950) | 2,851,676 |
| Accounts receivable - related party | (198,640) | (457,800) |
| Revenues in excess of billing | (2,533,172) | 10,568,918 |
| Revenues in excess of billing - related party | (201,616) | -- |
| Other current assets | 188,048 | 144,372 |
| Accounts payable and accrued expenses | 1,008,270 | 1,104,619 |
| Unearned revenue | 2,974,637 | 915,428 |
| Unearned revenue - related party | 9,660 | 44,935 |
| Net cash provided by operating activities | 2,566,310 | 15,326,851 |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (2,499,314) | (9,583,663) |
| Sales of property and equipment | 209,718 | 61,080 |
| Sale of subsidiary | -- | 1,810,700 |
| Purchase of non-controlling interest in subsidiaries | (577,222) | (17,852) |
| Increase in intangible assets | -- | (3,158,083) |
| Net cash used in investing activities | (2,866,818) | (10,887,818) |
| Cash flows from financing activities: | ||
| Proceeds from sale of common stock | 1,863,000 | -- |
| Proceeds from the exercise of stock options and warrants | 116,400 | 709,436 |
| Proceeds from exercise of subsidiary options | 12,306 | 376,811 |
| Restricted cash | 2,438,844 | (620,117) |
| Dividend paid by subsidiary to Non controlling interest | (780,106) | (1,008,543) |
| Proceeds from bank loans | -- | 1,366,226 |
| Payments on capital lease obligations and loans - net | (3,459,143) | (610,822) |
| Net cash provided by financing activities | 191,301 | 212,991 |
| Effect of exchange rate changes | (466,130) | (142,647) |
| Net increase (decrease) in cash and cash equivalents | (575,337) | 4,509,377 |
| Cash and cash equivalents, beginning of the period | 11,462,695 | 7,874,318 |
| Cash and cash equivalents, end of period | $ 10,887,358 | $ 12,383,695 |
| NetSol Technologies, Inc. and Subsidiaries | ||||
| Reconciliation to GAAP | ||||
|
Three Months Ended March 31, 2015 |
Three Months Ended March 31, 2014 |
Nine Months Ended March 31, 2015 |
Nine Months Ended March 31, 2014 |
|
| Net Income (loss) before preferred dividend, per GAAP | $ (1,636,245) | $ (1,299,804) | $ (4,841,440) | $ (4,023,827) |
| Income Taxes | 107,398 | 98,920 | 235,157 | 139,321 |
| Depreciation and amortization | 2,463,619 | 1,964,940 | 7,084,715 | 4,869,182 |
| Interest expense | 45,234 | 8,275 | 165,592 | 170,230 |
| Interest (income) | (97,094) | (114,141) | (261,091) | (186,926) |
| EBITDA | $ 882,912 | $ 658,190 | $ 2,382,933 | $ 967,980 |
| Weighted Average number of shares outstanding | ||||
| Basic | 9,914,321 | 9,092,834 | 9,573,336 | 9,034,532 |
| Diluted | 9,914,321 | 9,102,777 | 9,573,336 | 9,044,476 |
| Basic EBITDA | $ 0.09 | $ 0.07 | $ 0.25 | $ 0.11 |
| Diluted EBITDA | $ 0.09 | $ 0.07 | $ 0.25 | $ 0.11 |
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 11, 2015