NETSOL Technologies Reports Fiscal First Quarter 2024 Results

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ENCINO, Calif., Nov. 07, 2023 (GLOBE NEWSWIRE) -- NETSOL Technologies, Inc. (Nasdaq: NTWK), a global business services and enterprise application solutions provider, reported results for the fiscal first quarter ended September 30, 2023.

Fiscal First Quarter 2024 Financial Results

Total net revenues for the first quarter of fiscal 2024 increased 12% to $14.2 million, compared with $12.7 million in the prior year period. On a constant currency basis, total net revenues were $14.3 million.

  • License fees were $1.3 million compared with $250,000 in the prior year period. License fees on a constant currency basis were $1.3 million.
  • Total subscription (SaaS and Cloud) and support revenues were $6.5 million compared with $6.0 million in the prior year period. Total subscription and support revenues on a constant currency basis were $6.5 million.
  • Total services revenues were $6.4 million, consistent with $6.4 million in the prior year period. Total services revenues on a constant currency basis were $6.5 million.

Gross profit for the first quarter of fiscal 2024 was $6.2 million (or 43% of net revenues), compared to $4.3 million (or 33% of net revenues) in the first quarter of fiscal 2023. On a constant currency basis, gross profit for the first quarter of fiscal 2024 was $4.7 million (or 33% of net revenues as measured on a constant currency basis).

Operating expenses for the first quarter of fiscal 2024 were $5.8 million (or 41% of sales) compared to $6.1 million (or 48% of sales) for the first quarter of fiscal 2023. On a constant currency basis, operating expenses for the first quarter of fiscal 2023 increased to $6.4 million (or 45% of sales on a constant currency basis).

GAAP net income attributable to NETSOL for the first quarter of fiscal 2024 totaled $31,000 or $0.003 per diluted share, compared with GAAP net loss of $(621,000) or a loss of $(0.06) per diluted share in the first quarter of fiscal 2023. Included in GAAP net income attributable to NETSOL was a loss of $(134,000) on foreign exchange currency in the first quarter of fiscal 2024, compared to a gain of approximately $1.3 million in the prior year period. On a constant currency basis, NETSOL realized a loss of $(174,000) on foreign currency transactions.

Non-GAAP adjusted EBITDA for the first quarter of fiscal 2024 was $466,000 or $0.04 per diluted share, compared with non-GAAP adjusted EBITDA loss of $28,000 or $(0.002) per diluted share in the first quarter of fiscal 2023 (see note regarding “Use of Non-GAAP Financial Measures,” below for further discussion of this non-GAAP measure).

Management Commentary

NETSOL Co-Founder, Chairman and Chief Executive Officer Najeeb Ghauri stated, “Our first quarter of 2024 was highlighted by increases in total net revenue, improved gross margins, and profitability. This quarter highlights the strength of our business model particularly when we recognize licensing fees, subscription and support revenues, and services revenues. One goal is to drive more consistent license revenue alongside our more predictable subscription and support and services revenues.

“We also continue to drive our cost containment initiative so we can reallocate capital to growing our SaaS business and expansion into the United States market. On that front, our focus continues to be staffing our new office in Austin, Texas with the best talent available to address this largely untapped market. Moreover, our white label SaaS-based solution Otoz is now live in 60 MiniAnywhere dealerships across 37 U.S. states, demonstrating the growing demand for SaaS-based solutions in this market. Finally, we continue to evaluate strategic acquisition opportunities throughout North America.

“We’re very pleased with our results this quarter, and we believe that our performance reflects the long-term earnings potential for NETSOL as we continue to scale our revenue. We are working diligently to build our pipeline of licensing deals, and along with our expanding SaaS offerings, we believe this will drive improved results and more consistent profitability and cash generation.”

Conference Call

NETSOL Technologies management will hold a conference call today (November 7, 2023) at 9:00 a.m. Eastern time (6:00 a.m. Pacific time) to discuss these financial results. A question-and-answer session will follow management's presentation.

U.S. dial-in: 877-407-0789
International dial-in: 201-689-8562

Please call the conference telephone number 5-10 minutes prior to the start time or use this link for telephone access to the call via your web browser. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Investor Relations at 818-222-9195.

The conference call will also be broadcast live and available for replay here, along with additional replay access being provided through the company information section of NETSOL’s website.

A telephone replay of the conference call will be available approximately three hours after the call concludes through Tuesday, November 21, 2023.

Toll-free replay number: 844-512-2921
International replay number: 412-317-6671
Replay ID: 13742018

About NETSOL Technologies
NETSOL Technologies, Inc. (Nasdaq: NTWK) is a worldwide provider of IT and enterprise software solutions primarily serving the global leasing and finance industry. The Company’s suite of applications is backed by 40 years of domain expertise and supported by a committed team in eight strategically located support and delivery centers throughout the world. NFS, LeasePak, LeaseSoft or NFS Ascent® – help companies transform their Finance and Leasing operations, providing a fully automated asset-based finance solution covering the complete finance and leasing lifecycle.

Forward-Looking Statements
This press release may contain forward-looking statements relating to the development of the Company's products and services and future operating 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, as well as the delay in recovery or a prolonged economic downturn that effects our Company, our customers and the world economy. 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.

Use of Non-GAAP Financial Measures
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.

Investor Relations Contact:

IMS Investor Relations
netsol@imsinvestorrelations.com
+1 203-972-9200


NETSOL Technologies, Inc. and Subsidiaries
Schedule 1: Consolidated Balance Sheets
 
      As of   As of
  ASSETS September 30, 2023   June 30, 2023
Current assets:      
  Cash and cash equivalents $ 16,551,677     $ 15,533,254  
  Accounts receivable, net of allowance of $416,435 and $420,354   6,870,956       11,714,422  
  Revenues in excess of billings, net of allowance of $116,425 and $1,380,141   13,008,285       12,377,677  
  Other current assets   2,244,490       1,978,514  
    Total current assets   38,675,408       41,603,867  
Revenues in excess of billings, net - long term   724,875       -  
Property and equipment, net   5,770,794       6,161,186  
Right of use assets - operating leases   1,359,106       1,151,575  
Other assets   32,326       32,327  
Intangible assets, net   -       127,931  
Goodwill   9,302,524       9,302,524  
    Total assets $ 55,865,033     $ 58,379,410  
           
  LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
  Accounts payable and accrued expenses $ 6,802,879     $ 6,552,181  
  Current portion of loans and obligations under finance leases   5,756,553       5,779,510  
  Current portion of operating lease obligations   538,363       505,237  
  Unearned revenue   5,170,335       7,932,306  
    Total current liabilities   18,268,130       20,769,234  
Loans and obligations under finance leases; less current maturities   137,847       176,229  
Operating lease obligations; less current maturities   795,935       652,194  
    Total liabilities   19,201,912       21,597,657  
           
Stockholders' equity:      
  Preferred stock, $.01 par value; 500,000 shares authorized;   -       -  
  Common stock, $.01 par value; 14,500,000 shares authorized;      
    12,311,850 shares issued and 11,372,819 outstanding as of September 30, 2023      
    12,284,887 shares issued and 11,345,856 outstanding as of June 30, 2023   123,120       122,850  
  Additional paid-in-capital   128,536,132       128,476,048  
  Treasury stock (at cost, 939,031 shares      
  as of September 30, 2023 and June 30, 2023)   (3,920,856 )     (3,920,856 )
  Accumulated deficit   (44,865,296 )     (44,896,186 )
  Other comprehensive loss   (46,411,702 )     (45,975,156 )
    Total NetSol stockholders' equity   33,461,398       33,806,700  
  Non-controlling interest   3,201,723       2,975,053  
    Total stockholders' equity   36,663,121       36,781,753  
    Total liabilities and stockholders' equity $ 55,865,033     $ 58,379,410  
     


NETSOL Technologies, Inc. and Subsidiaries
Schedule 2: Consolidated Statement of Operations
 
      For the Three Months
      Ended September 30,
        2023       2022  
Net Revenues:      
  License fees $ 1,280,449     $    249,960  
  Subscription and support             6,512,243                       6,016,834  
  Services             6,449,489                         6,439,325  
    Total net revenues              14,242,181                        12,706,119  
           
Cost of revenues              8,080,164                       8,454,122  
Gross profit             6,162,017                         4,251,997  
           
Operating expenses:      
  Selling, general and administrative               5,432,969                         5,678,561  
  Research and development cost                    378,419                           469,627  
    Total operating expenses               5,811,388                          6,148,188  
           
Income (loss) from operations                    350,629                        (1,896,191 )
           
Other income and (expenses)      
  Interest expense               (276,017 )                        (121,610 )
  Interest income                    414,718                          431,857  
  Gain (loss) on foreign currency exchange transactions                (134,253 )                       1,315,705  
  Other income (expense)                     57,881                          25,616  
    Total other income (expenses)                  62,329                        1,651,568  
           
Net income (loss) before income taxes                 412,958                         (244,623 )
Income tax provision                 (121,895 )                          (193,348 )
Net income (loss)                    291,063                            (437,971 )
  Non-controlling interest                (260,173 )                        (182,758 )
Net income (loss) attributable to NetSol $ 30,890     $    (620,729 )
           
           
Net income (loss) per share:      
  Net income (loss) per common share      
    Basic $    0.003     $     (0.06 )
    Diluted $    0.003     $     (0.06 )
           
Weighted average number of shares outstanding      
  Basic              11,345,856                      11,257,539  
  Diluted            11,345,856                        11,257,539  
 


NETSOL Technologies, Inc. and Subsidiaries
Schedule 3: Consolidated Statement of Cash Flows
 
        Ended September 30,
          2023       2022  
Cash flows from operating activities:      
  Net income (loss) $ 291,063     $ (437,971 )
  Adjustments to reconcile net income (loss) to net cash      
    provided by operating activities:      
  Depreciation and amortization   530,786       845,003  
  Amortization of right of use of assets   -       -  
  Provision for bad debts   7,880       (47,479 )
  Gain on sale of assets   (98 )     (23,296 )
  Stock based compensation   60,354       81,834  
  Changes in operating assets and liabilities:      
    Accounts receivable   4,608,881       815,132  
    Revenues in excess of billing   (1,478,386 )     337,996  
    Other current assets   92,686       (340,390 )
    Accounts payable and accrued expenses   341,722       687,453  
    Unearned revenue   (2,791,269 )     (619,425 )
  Net cash provided by operating activities   1,663,619       1,298,857  
             
Cash flows from investing activities:      
  Purchases of property and equipment   (371,630 )     (1,347,601 )
  Sales of property and equipment   1,230       453,607  
  Net cash used in investing activities   (370,400 )     (893,994 )
             
Cash flows from financing activities:      
  Payments on finance lease obligations and loans - net   (44,474 )     (445,737 )
  Net cash used in financing activities   (44,474 )     (445,737 )
Effect of exchange rate changes   (230,322 )     (2,999,975 )
Net decrease in cash and cash equivalents   1,018,423       (3,040,849 )
Cash and cash equivalents at beginning of the period   15,533,254       23,963,797  
Cash and cash equivalents at end of period $ 16,551,677     $ 20,922,948  
 


NETSOL Technologies, Inc. and Subsidiaries
Schedule 4: Reconciliation to GAAP
 
  For the Three Months
  Ended September 30,
    2023       2022  
       
Net Income (loss) attributable to NetSol $          30,890     $         (620,729 )
Non-controlling interest                             260,173                                  182,758  
Income taxes                             121,895                                193,348  
Depreciation and amortization                           530,786                                845,003  
Interest expense                             276,017                                121,610  
Interest (income)                            (414,718 )                            (431,857 )
EBITDA $         805,043     $          290,133  
Add back:      
Non-cash stock-based compensation                              60,354                                81,834  
Adjusted EBITDA, gross $            865,397     $          371,967  
Less non-controlling interest (a)                         (399,423 )                              (399,535 )
Adjusted EBITDA, net $           465,974     $          (27,568 )
       
Weighted Average number of shares outstanding      
Basic                        11,345,856                           11,257,539  
Diluted                        11,345,856                            11,257,539  
       
Basic adjusted EBITDA $          0.04     $          (0.002 )
Diluted adjusted EBITDA $          0.04     $          (0.002 )
       
       
(a)The reconciliation of adjusted EBITDA of non-controlling interest      
to net income attributable to non-controlling interest is as follows      
       
Net Income (loss) attributable to non-controlling interest $         260,173     $          182,758  
Income Taxes                             36,377                                    59,910  
Depreciation and amortization                             141,334                            238,333  
Interest expense                             85,889                               37,396  
Interest (income)                          (128,091 )                             (132,489 )
EBITDA $         395,682     $          385,908  
Add back:      
Non-cash stock-based compensation                            3,741                                  13,627  
Adjusted EBITDA of non-controlling interest $         399,423     $          399,535  
 


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Source: NETSOL Technologies Inc.

Released November 7, 2023