 | ||
| Investor Contacts: | ||
| PondelWilkinson | ||
| Roger Pondel | Matt Sheldon | ||
| investors@netsoltech.com | ||
| (310) 279-5980 |
Media Contacts:
PondelWilkinson
George Medici | gmedici@pondel.com
(310) 279-5968
NETSOL TECHNOLOGIES REPORTS FISCAL 2016 FIRST-QUARTER Results
Total Revenue for the 2016 First Quarter Rose 30% to $13.3 Million
2016 First Quarter EBITDA more than Doubles to $1.4 Million, or $0.14 per Adjusted Diluted Share;
GAAP Loss Narrows to $0.04 per share from a loss of $0.20 per share in Fiscal 2015 First Quarter
Conference Call Scheduled Today at 11:30 a.m. ET (8:30 a.m. PT)
CALABASAS, Calif. – November 12, 2015 –NetSol Technologies, Inc. (Nasdaq: NTWK), a global business services and enterprise application solutions provider, today reported non-GAAP adjusted diluted earnings per share for the first fiscal quarter ended September 30, 2015 of $0.14 on total revenue of $13.3 million, compared with $0.07 on total revenue of $10.2 million in same quarter last year. GAAP net loss narrowed to $411,000, or $0.04 per share, compared with a net loss of $1.8 million, or $0.20 per share, in the comparable period last year.
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.
“We are off to a very strong start for the fiscal year, building upon a base of revenue in what is typically our slowest quarter of the year,” said Najeeb Ghauri, CEO of NetSol. “New wins in China, additional requests and increased utilization by current customers, growth in our joint-venture with the Innovation Group, and continued delivery of multiple contracts fueled our results in the quarter.
“Given the strength of our global new business pipeline, we expect our growth trajectory to continue, and to further accelerate once some of the new NFS Ascent contracts are executed in APAC and Europe,” added Ghauri.
Fiscal 2016 First-Quarter Financial Results
The following comparison refers to results for the fiscal 2016 first quarter versus the fiscal 2015 first quarter.
Total net revenues rose 30% to $13.3 million from $10.2 million last year, led by strength in total services revenue.
| ● | License fees were $1.2 million compared with $1.6 million; | |
| ● | Total maintenance fees, which includes related-party (joint-venture) maintenance fees, increased to $3.2 million from $2.8 million last year; | |
| ● | Total services revenue, which includes related-party (joint-venture) services revenue increased to $8.9 million from $5.8 million last year |
Following is additional detail for the quarter:
| ● | As a percentage of total revenue, total cost of revenue for the first quarter of 2016 decreased to 59% from 69% of total revenues for the same period last year; | |
| ● | Gross profit rose to $5.4 million from $3.2 million last year; | |
| ● | Operational expenses were nearly flat year-over-year, with an increase in selling and marketing expenses related to new business efforts, offset by a decrease in general and administrative expenses as a result of cost rationalization initiatives. |
At September 30, 2015, cash and cash equivalents were $10.1 million, versus $14.2 million at June 30, 2015. Accounts receivable and accounts receivable, net-related party combined were $11.9 million, up from $10 million, for the same period last year. The quality of receivables remains strong.
Fiscal 2016 First Quarter Conference Call
| When: | Thursday, November 12, 2015 |
| Time: | 11:30 a.m. Eastern Time |
| Phone: | 1-888-359-3627(domestic) |
| 1-719-325-2144(international) |
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 the conclusion of the live call, and 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 1000 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.
(Tables Follow)
###
NetSol Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
| As of | As of | |||||||
| September 30,2015 | June 30,2015 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 10,075,324 | $ | 14,168,957 | ||||
| Restricted cash | 90,000 | 90,000 | ||||||
| Accounts receivable, net of allowance of 518,657 and 524,565 | 7,485,807 | 6,480,344 | ||||||
| Accounts receivable, net - related party | 4,409,186 | 3,491,899 | ||||||
| Revenues in excess of billings | 6,560,754 | 5,267,275 | ||||||
| Other current assets | 2,279,083 | 2,012,190 | ||||||
| Total current assets | 30,900,154 | 31,510,665 | ||||||
| Property and equipment, net | 24,053,908 | 25,119,634 | ||||||
| Intangible assets, net | 21,837,105 | 22,815,467 | ||||||
| Goodwill | 9,516,568 | 9,516,568 | ||||||
| Total assets | $ | 86,307,735 | $ | 88,962,334 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 5,030,352 | $ | 5,952,561 | ||||
| Current portion of loans and obligations under capitalized leases | 4,241,836 | 3,896,353 | ||||||
| Unearned revenues | 4,302,524 | 4,897,327 | ||||||
| Common stock to be issued | 88,324 | 88,324 | ||||||
| Total current liabilities | 13,663,036 | 14,834,565 | ||||||
| Long term loans and obligations under capitalized leases;less current maturities | 329,834 | 487,492 | ||||||
| Total liabilities | 13,992,870 | 15,322,057 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock, $.01 par value; 500,000 shares authorized; | - | - | ||||||
| Common stock, $.01 par value; 14,500,000 shares authorized;10,322,826 shares issued and 10,295,547 outstanding as of September 30, 2015 and 10,307,826 shares issued and 10,280,547 outstanding as of June 30, 2015 | 103,228 | 103,078 | ||||||
| Additional paid-in-capital | 119,287,407 | 119,209,807 | ||||||
| Treasury stock (27,279 shares) | (415,425 | ) | (415,425 | ) | ||||
| Accumulated deficit | (41,137,149 | ) | (40,726,121 | ) | ||||
| Stock subscription receivable | (1,139,672 | ) | (1,204,603 | ) | ||||
| Other comprehensive loss | (18,130,300 | ) | (17,167,100 | ) | ||||
| Total NetSol stockholders' equity | 58,568,089 | 59,799,636 | ||||||
| Non-controlling interest | 13,746,776 | 13,840,641 | ||||||
| Total stockholders' equity | 72,314,865 | 73,640,277 | ||||||
| Total liabilities and stockholders' equity | $ | 86,307,735 | $ | 88,962,334 | ||||
NetSol Technologies, Inc. and Subsidiaries
Consolidated Statement of Operations
| For the Three Months | ||||||||
| Ended September 30, | ||||||||
| 2015 | 2014 | |||||||
| Net Revenues: | ||||||||
| License fees | $ | 1,193,354 | $ | 1,584,553 | ||||
| Maintenance fees | 3,012,238 | 2,708,528 | ||||||
| Services | 6,753,873 | 4,249,080 | ||||||
| Maintenance fees - related party | 158,231 | 140,113 | ||||||
| Services - related party | 2,187,408 | 1,544,877 | ||||||
| Total net revenues | 13,305,104 | 10,227,151 | ||||||
| Cost of revenues: | ||||||||
| Salaries and consultants | 4,999,890 | 4,116,217 | ||||||
| Travel | 481,453 | 421,871 | ||||||
| Depreciation and amortization | 1,474,235 | 1,801,567 | ||||||
| Other | 938,797 | 674,863 | ||||||
| Total cost of revenues | 7,894,375 | 7,014,518 | ||||||
| Gross profit | 5,410,729 | 3,212,633 | ||||||
| Operating expenses: | ||||||||
| Selling and marketing | 1,698,404 | 1,132,360 | ||||||
| Depreciation and amortization | 291,172 | 580,773 | ||||||
| General and administrative | 3,366,047 | 3,675,755 | ||||||
| Research and development cost | 112,070 | 66,265 | ||||||
| Total operating expenses | 5,467,693 | 5,455,153 | ||||||
| Loss from operations | (56,964 | ) | (2,242,520 | ) | ||||
| Other income and (expenses) | ||||||||
| Loss on sale of assets | (11,873 | ) | (11,052 | ) | ||||
| Interest expense | (68,173 | ) | (73,093 | ) | ||||
| Interest income | 52,112 | 57,919 | ||||||
| Gain (loss) on foreign currency exchange transactions | (113,719 | ) | 79,220 | |||||
| Other income | 54,314 | 379 | ||||||
| Total other income (expenses) | (87,339 | ) | 53,373 | |||||
| Net loss before income taxes | (144,303 | ) | (2,189,147 | ) | ||||
| Income tax provision | (75,223 | ) | (40,076 | ) | ||||
| Net loss | (219,526 | ) | (2,229,223 | ) | ||||
| Non-controlling interest | (191,502 | ) | 391,197 | |||||
| Net loss attributable to NetSol | $ | (411,028 | ) | $ | (1,838,026 | ) | ||
| Amount attributable to NetSol common shareholders: | ||||||||
| Loss from continuing operations | $ | (411,028 | ) | $ | (1,838,026 | ) | ||
| Income from discontinued operations | - | - | ||||||
| Net loss | $ | (411,028 | ) | $ | (1,838,026 | ) | ||
| Net loss per share: | ||||||||
| Net loss per common share | ||||||||
| Basic | $ | (0.04 | ) | $ | (0.20 | ) | ||
| Diluted | $ | (0.04 | ) | $ | (0.20 | ) | ||
| Weighted average number of shares outstanding | ||||||||
| Basic | 10,281,335 | 9,213,324 | ||||||
| Diluted | 10,281,335 | 9,213,324 | ||||||
NetSol Technologies, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
| For the Three Months | ||||||||
| Ended September 30, | ||||||||
| 2015 | 2014 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (219,526 | ) | $ | (2,229,223 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 1,765,407 | 2,382,340 | ||||||
| Provision for bad debts | 36,780 | - | ||||||
| Loss on sale of assets | 11,873 | 11,052 | ||||||
| Stock issued for services | 77,750 | 290,162 | ||||||
| Fair market value of warrants and stock options granted | - | 155,622 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,268,570 | ) | (5,723,728 | ) | ||||
| Accounts receivable - related party | (975,266 | ) | (495,357 | ) | ||||
| Revenues in excess of billing | (912,509 | ) | 133,763 | |||||
| Other current assets | (322,533 | ) | 479,340 | |||||
| Accounts payable and accrued expenses | (833,638 | ) | (326,226 | ) | ||||
| Unearned revenue | (538,259 | ) | 4,841,230 | |||||
| Net cash used in operating activities | (3,178,491 | ) | (481,025 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (625,794 | ) | (1,031,128 | ) | ||||
| Sales of property and equipment | 180,258 | 90,841 | ||||||
| Net cash used in investing activities | (445,536 | ) | (940,287 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from sale of common stock | - | 850,000 | ||||||
| Proceeds from stock subscription receivable | 64,931 | - | ||||||
| Restricted cash | - | 2,438,844 | ||||||
| Proceeds from bank loans | 437,070 | 109,211 | ||||||
| Payments on capital lease obligations and loans - net | (174,385 | ) | (2,591,334 | ) | ||||
| Net cash provided by financing activities | 327,616 | 806,721 | ||||||
| Effect of exchange rate changes | (797,222 | ) | (465,548 | ) | ||||
| Net decrease in cash and cash equivalents | (4,093,633 | ) | (1,080,139 | ) | ||||
| Cash and cash equivalents, beginning of the period | 14,168,957 | 11,462,695 | ||||||
| Cash and cash equivalents, end of period | $ | 10,075,324 | $ | 10,382,556 | ||||
NetSol Technologies, Inc. and Subsidiaries
Reconciliation to GAAP
| Three Months | Three Months | |||||||
| Ended | Ended | |||||||
| September 30, 2015 | September 30, 2014 | |||||||
| Net Income (loss) before preferred dividend, per GAAP | $ | (411,028 | ) | $ | (1,838,026 | ) | ||
| Income Taxes | 75,223 | 40,076 | ||||||
| Depreciation and amortization | 1,765,407 | 2,382,340 | ||||||
| Interest expense | 68,173 | 73,093 | ||||||
| Interest (income) | (52,112 | ) | (57,919 | ) | ||||
| EBITDA | $ | 1,445,663 | $ | 599,564 | ||||
| Weighted Average number of shares outstanding | ||||||||
| Basic | 10,281,335 | 9,213,324 | ||||||
| Diluted | 10,392,669 | 9,213,324 | ||||||
| Basic EBITDA | $ | 0.14 | $ | 0.07 | ||||
| Diluted EBITDA | $ | 0.14 | $ | 0.07 | ||||
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.