NETSOL Technologies Reports Fiscal First Quarter 2024 Results
· Net Revenue for the Quarter Grew 12% to $14.2 Million
· SaaS and Annual recurring Revenues Continue to Grow Year Over Year
· Gross Margins Increased to 43% and Company Reports Net ProfitENCINO, 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