NETSOL Technologies Announces Fiscal 2017 First Quarter Financial Results

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- Conference Call Scheduled for Today at 9 a.m. ET (6 a.m. PT) -

CALABASAS, Calif., Nov. 14, 2016 (GLOBE NEWSWIRE) -- NETSOL Technologies, Inc. (Nasdaq:NTWK), a global business services and enterprise application solutions provider to the Asset Finance and Leasing industry, today announced financial results for the fiscal 2017 first quarter ended September 30, 2016. 

Fiscal 2017 First Quarter Financial Results

Total net revenues for the first quarter of fiscal 2017 were $15.0 million, an increase of 13% from the prior year period. 

  • Total license fees were $3.7 million, representing an increase of 214% from $1.2 million in the prior year period.
  • Total maintenance fees were $3.5 million, representing an increase of 11% from $3.2 million in the prior year period.
  • Total services revenues were $7.7 million, representing a decrease of 14% from $8.9 million in the prior year period.

Gross profit for the first quarter of fiscal 2017 was $6.1 million, or 41% of net revenues, an increase of 16% from $5.2 million, or 40% of net revenues, in the first quarter of fiscal 2016.  

GAAP net loss attributable to NETSOL for the first quarter of fiscal 2017 was $1.8 million, or $(0.17) per diluted share, compared with a net loss of $0.4 million, or $(0.04) per diluted share, in the first quarter of fiscal 2016.

Adjusted EBITDA1 for the first quarter of fiscal 2017 was $180,000, representing Adjusted EBITDA per diluted share of $0.02, compared with Adjusted EBITDA of $659,000, or Adjusted EBITDA per diluted share of $0.06, in the first quarter of fiscal 2016.

At September 30, 2016, cash and cash equivalents were $11.2 million, compared with $11.6 million at June 30, 2016 and $10.1 million at September 30, 2015.

Management Commentary
“It was a solid start to the year, as we delivered strong growth in license and maintenance fees in what is typically our slowest quarter of the fiscal year,” said Najeeb Ghauri, CEO of NETSOL. “Demand for our solutions remains strong, and our flagship NFS Ascent product continues to gain momentum across all our markets. The strategic investments we are making to capitalize on the significant market opportunity in the United States and Europe are gaining traction, and will enable us to accelerate our growth in these markets over the long-term.”

Fiscal 2017 Financial Outlook
The Company’s financial outlook for the fiscal year ending June 30, 2017 is as follows:

  • Total net revenues of $73 to $75 million for fiscal 2017. 
  • Non-GAAP Adjusted EBITDA, net, of $13 to $14 million for fiscal 2017.
 
Fiscal 2017 First Quarter Conference Call
   
When:  Monday November 14, 2016
Time: 9:00 a.m. Eastern Time 
Phone:  1-844-868-9327 (domestic) 
  1-412-317-6595 (international)
Note:  Once connected, please ask to be joined into the NETSOL Technologies call.
   

A replay will be available one hour after the end of the conference call and can be accessed by dialing 1-877-344-7529 (domestic) or 1-412-317-0088 (international); the replay access code is 10094841. The replay will be available through Monday, November 21, 2016.

A live webcast will be available online within the investor relations section of NETSOL’s website at http://www.netsoltech.com. A replay of the webcast will be available one hour following conclusion of the live call, and will be archived for one year.

1 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. Beginning with the fourth quarter of fiscal 2016, NetSol has revised its calculation of Adjusted EBITDA to exclude the portion of Adjusted EBITDA that is attributable to its subsidiaries that have a minority interest.

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 1,500+ professionals placed in eight strategically located support and delivery centers throughout the world. NFSTM, LeasePakTM, LeaseSoft or NFS AscentTM – help companies transform their Finance and Leasing operations, providing a fully automated asset-based finance solution covering the complete leasing and finance lifecycle.

Investors can receive news releases and invitations to special events by accessing our online signup form at http://ir.netsoltech.com/email-alerts.

Forward-Looking Statements

Certain statements in this press release are forward-looking in nature, including, but not limited to, expected net revenue and adjusted EPS amounts for the full fiscal year and the growing market need for NFS Ascent, and accordingly, 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.

Investor Contact

ICR
William Maina
(646) 277-1236
[email protected]

     
    NETSOL Technologies, Inc. and Subsidiaries
    Schedule 1: Consolidated Balance Sheets
     
       As of September 30,     As of June 30, 
  ASSETS    2016         2016   
Current assets:      
  Cash and cash equivalents $   11,156,437     $   11,557,527  
  Accounts receivable, net of allowance of $500,853  and $492,498      7,142,255         9,691,229  
  Accounts receivable, net - related party     5,384,573         5,691,178  
  Revenues in excess of billings     13,358,858         10,493,096  
  Revenues in excess of billings - related party     682,049         804,168  
  Other current assets     3,192,425         2,214,628  
    Total current assets     40,916,597         40,451,826  
Restricted cash     90,000         90,000  
Property and equipment, net     22,612,752         22,774,435  
Other assets     1,604,731         842,553  
Intangible assets, net     19,326,259         19,674,033  
Goodwill     9,516,568         9,516,568  
    Total assets $   94,066,907     $   93,349,415  
           
  LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
  Accounts payable and accrued expenses $   6,389,128     $   5,962,770  
  Current portion of loans and obligations under capitalized leases     4,408,173         4,440,084  
  Unearned revenues     4,419,692         4,739,214  
  Common stock to be issued     88,324         88,324  
    Total current liabilities     15,305,317         15,230,392  
Long term loans and obligations under capitalized leases; less current maturities     539,859         477,692  
    Total liabilities     15,845,176         15,708,084  
Commitments and contingencies      
Stockholders' equity:      
  Preferred stock, $.01 par value; 500,000 shares authorized;      -         -  
  Common stock, $.01 par value; 14,500,000 shares authorized;      
    10,882,281  shares issued and 10,855,002  outstanding as of September 30, 2016  and    
    10,713,372  shares issued and 10,686,093  outstanding as of June 30, 2016     108,823         107,134  
  Additional paid-in-capital     122,367,231         121,448,946  
  Treasury stock (27,279 shares)     (415,425 )       (415,425 )
  Accumulated deficit     (39,089,079 )       (37,323,360 )
  Stock subscription receivable     (602,811 )       (783,172 )
  Other comprehensive loss     (17,960,133 )       (18,730,494 )
    Total NetSol stockholders' equity     64,408,606         64,303,629  
  Non-controlling interest     13,813,125         13,337,702  
    Total stockholders' equity     78,221,731         77,641,331  
    Total liabilities and stockholders' equity $   94,066,907     $   93,349,415  
           

 

NETSOL Technologies, Inc. and Subsidiaries
Schedule 2: Consolidated Statement of Operations
 
       For the Three Months 
       Ended September 30, 
        2016       2015  
Net Revenues:      
  License fees $   3,499,860     $   1,193,354  
  Maintenance fees     3,402,821         3,012,238  
  Services     5,806,717         6,753,873  
  License fees - related party     246,957         -  
  Maintenance fees - related party     130,631         158,231  
  Services - related party     1,914,572         2,187,408  
     Total net revenues      15,001,558         13,305,104  
           
Cost of revenues:      
   Salaries and consultants      5,893,349         5,161,249  
   Travel      711,895         481,453  
   Depreciation and amortization      1,330,872         1,474,235  
   Other      972,338         938,797  
    Total cost of revenues     8,908,454         8,055,734  
           
Gross profit     6,093,104         5,249,370  
           
Operating expenses:      
  Selling and marketing     2,411,136         1,698,404  
  Depreciation and amortization     269,097         291,172  
  General and administrative     4,552,098         3,204,688  
  Research and development cost     92,932         112,070  
    Total operating expenses     7,325,263         5,306,334  
           
Loss from operations     (1,232,159 )       (56,964 )
           
Other income and (expenses)      
  Loss on sale of assets     (2,403 )       (11,873 )
  Interest expense     (54,475 )       (68,173 )
  Interest income     30,440         52,112  
  Loss on foreign currency exchange transactions     (414,896 )       (113,719 )
  Other income      21,560         54,314  
    Total other income (expenses)     (419,774 )       (87,339 )
           
Net loss before  income taxes     (1,651,933 )       (144,303 )
Income tax provision     (39,875 )       (75,223 )
Net loss     (1,691,808 )       (219,526 )
  Non-controlling interest     (73,911 )       (191,502 )
Net loss attributable to NetSol $   (1,765,719 )   $   (411,028 )
           
           
           
Net loss per share:      
  Net loss per common share      
    Basic $   (0.17 )   $   (0.04 )
    Diluted $   (0.17 )   $   (0.04 )
           
Weighted average number of shares outstanding      
  Basic     10,697,425         10,281,335  
  Diluted     10,697,425         10,281,335  
           

 

             
NETSOL Technologies, Inc. and Subsidiaries  
Schedule 3: Consolidated Statement of Cash Flows  
             
       For the Three Months   
       Ended September 30,   
        2016       2015    
 Cash flows from operating activities:           
   Net loss    $   (1,691,808 )   $   (219,526 )  
   Adjustments to reconcile net income (loss)           
   to net cash used in operating activities:           
   Depreciation and amortization        1,599,969         1,765,407    
   Provision for bad debts        -         36,780    
   Loss on sale of assets        2,403         11,873    
   Stock issued for services        865,456         77,750    
   Fair market value of warrants and stock options granted        21,804         -    
   Changes in operating assets and liabilities:           
   Accounts receivable        2,336,894         (1,268,570 )  
   Accounts receivable - related party        121,800         (975,266 )  
   Revenues in excess of billing        (2,746,917 )       (773,583 )  
   Revenues in excess of billing - related party        93,208         (138,926 )  
   Other current assets        306,339         (322,533 )  
   Accounts payable and accrued expenses        (780,569 )       (833,638 )  
   Unearned revenue        (346,108 )       (538,259 )  
   Net cash used in operating activities        (217,529 )       (3,178,491 )  
             
 Cash flows from investing activities:           
   Purchases of property and equipment        (554,873 )       (625,794 )  
   Sales of property and equipment        151,818         180,258    
   Investment        (555,555 )       -    
   Net cash used in investing activities        (958,610 )       (445,536 )  
             
 Cash flows from financing activities:           
   Proceeds from sale of common stock        -         64,931    
   Proceeds from the exercise of stock options and warrants        276,861         -    
   Proceeds from exercise of subsidiary options        14,013         -    
   Proceeds from bank loans        -         437,070    
   Payments on capital lease obligations and loans - net        (49,117 )       (174,385 )  
   Net cash provided by financing activities        241,757         327,616    
 Effect of exchange rate changes        533,292         (797,222 )  
 Net decrease in cash and cash equivalents        (401,090 )       (4,093,633 )  
 Cash and cash equivalents, beginning of the period        11,557,527         14,168,957    
 Cash and cash equivalents, end of period    $   11,156,437     $   10,075,324    
             


     
NETSOL Technologies, Inc. and Subsidiaries    
Schedule 4: Reconciliation to GAAP    
           
  Three Months   Three Months    
  Ended   Ended    
  September 30, 2016   September 30, 2015    
           
Net Income (loss) before preferred dividend, per GAAP $   (1,765,719 )   $   (411,028 )    
Non-controlling interest     73,911         191,502      
Income taxes     39,875         75,223      
Depreciation and amortization     1,599,969         1,765,407      
Interest expense     54,475         68,173      
Interest (income)     (30,440 )       (52,112 )    
EBITDA $   (27,929 )   $   1,637,165      
Add back:          
Non-cash stock-based compensation     887,260         77,750      
Adjusted EBITDA, gross $   859,331     $   1,714,915      
Less non-controlling interest (a)     (679,817 )       (1,055,531 )    
Adjusted EBITDA, net $   179,514     $   659,384      
           
           
Weighted Average number of shares outstanding          
Basic     10,697,425         10,281,335      
Diluted     10,861,290         10,392,669      
           
Basic adjusted EBITDA $   0.02     $   0.06      
Diluted adjusted EBITDA $   0.02     $   0.06      
           
           
(a)The reconciliation of adjusted EBITDA of non-controlling interest          
to net income attributable to non-controlling interest is as follows          
           
Net Income attributable to non-controlling interest $   73,911     $   191,502      
Income Taxes     7,648         13,874      
Depreciation and amortization     525,926         825,866      
Interest expense     17,691         18,342      
Interest (income)     (9,557 )       (16,450 )    
EBITDA $   615,619     $   1,033,134      
Add back:          
Non-cash stock-based compensation     64,198         22,397      
Adjusted EBITDA of non-controlling interest $   679,817     $   1,055,531      
           

From time to time, NETSOL may refer to Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization and Stock-based Compensation) and “non-GAAP adjusted EBITDA per diluted share or Adjusted EBITDA per diluted share” in its conference calls and discussions with investors and analysts in connection with the company’s reported historical financial results.  Adjusted EBITDA does not represent cash flows from operations as defined by generally accepted accounting principles (“GAAP”), is not derived in accordance with GAAP and should not be considered by the reader as an alternative to net income (the most comparable GAAP financial measure to Adjusted EBITDA).  Non-GAAP adjusted EBITDA per diluted share or Adjusted EBITDA per diluted share is not derived in accordance with GAAP and should not be considered by the reader as an alternative to reported GAAP diluted EPS.  The reconciliation of GAAP and non-GAAP financial measures for the three month periods ended September 30, 2016 and 2015 are included in the above table.  NETSOL’s management believes that Adjusted EBITDA and Adjusted EBITDA per diluted share are helpful as an indicator of the current financial performance of the company. NETSOL also adjusts for non-cash items, such as stock-based compensation as we believe excluding these costs provide a useful metric by which to compare performance from period to period. Management strongly encourages investors to review the company’s consolidated financial statements in their entirety and to not rely on any single financial measure in evaluating the company.

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Source: NetSol Technologies, Inc.

Released November 14, 2016