U.S. Markets closed
  • S&P Futures

    3,671.75
    +7.25 (+0.20%)
     
  • Dow Futures

    29,986.00
    +54.00 (+0.18%)
     
  • Nasdaq Futures

    12,491.75
    +29.50 (+0.24%)
     
  • Russell 2000 Futures

    1,849.50
    +2.30 (+0.12%)
     
  • Crude Oil

    46.41
    +0.77 (+1.69%)
     
  • Gold

    1,847.40
    +6.30 (+0.34%)
     
  • Silver

    24.23
    +0.09 (+0.39%)
     
  • EUR/USD

    1.2148
    -0.0001 (-0.0121%)
     
  • 10-Yr Bond

    0.9200
    -0.0280 (-2.95%)
     
  • Vix

    21.28
    +0.11 (+0.52%)
     
  • GBP/USD

    1.3453
    +0.0000 (+0.0027%)
     
  • USD/JPY

    103.8400
    -0.0200 (-0.0193%)
     
  • BTC-USD

    19,321.85
    -129.66 (-0.67%)
     
  • CMC Crypto 200

    379.53
    +5.12 (+1.37%)
     
  • FTSE 100

    6,490.27
    +26.88 (+0.42%)
     
  • Nikkei 225

    26,690.47
    -118.90 (-0.44%)
     

NETSOL Technologies Reports Fiscal Second Quarter 2019 Financial Results

Revenue Growth of 18% to $17 Million and EPS of $0.25 Leads to Fifth Consecutive Quarter of Profitability

CALABASAS, Calif., Feb. 13, 2019 (GLOBE NEWSWIRE) -- NETSOL Technologies, Inc. (NASDAQ: NTWK), a global business services and enterprise application solutions provider, reported results for the fiscal second quarter ended December 31, 2018.

Second Quarter and Recent Operational Highlights

  • Made significant strides in the ongoing implementation process for the deployment of NFS Ascent™ Retail and Wholesale platforms with European tier-one global auto captive in China related to the $30 million contract signed in September 2018.

  • Commenced implementation of NFS Ascent Retail platform at captive auto leasing company of a major US based auto manufacturer in China.

  • Successfully began the implementation process of NFS Ascent™ Wholesale module in Japan for German auto manufacturing giant as part of the ongoing international deployment associated with the previously announced 12-country, $110 million contract.

  • Initiated process to implement NFS Ascent Solution in Singapore, Malaysia, Hong Kong and Thailand as part of the previously announced 12-country, $110 million contract.

  • Secured a mid-six-figure SaaS contract with a leading automotive leasing company covering all of Canada for a key automotive brand to provide access to the LeasePak Cloud product.

  • Appointed industry veteran Hui Liang as company’s President of China to expand footprint in the region and improve existing relationships with key customers.

  • Generated nearly $1.8 million through successfully implementing change requests from various customers across major business regions.

  • Dedicated additional resources to data science and blockchain development initiatives in both Pakistan and Thailand to create new tools and products focused on machine learning and vehicle tracking as part of the company’s broader Innovation Lab efforts.

Fiscal Second Quarter 2019 Financial Results
Total net revenues for the second quarter of fiscal 2019 were $17.0 million, compared with $14.4 million in the prior year period. The increase in total net revenues was primarily due to an increase in total license fees of $4.4 million, which was offset by a decrease in total services revenues of $1.8 million.

  • Total license fees were $4.8 million, compared with $453,000 in the prior year period.

  • Total maintenance fees were $3.7 million, compared with $3.7 million in the prior year period.

  • Total services revenues were $8.5 million, compared with $10.3 million in the prior year period.

Gross profit for the second quarter of fiscal 2019 was $8.9 million (or 52.1% of total net revenues), compared to $6.7 million (or 46.3% of total net revenues) in the second quarter of fiscal 2018. The increase in gross profit as a percentage of net revenues was primarily due to an increase in total net revenues of $2.6 million, which was offset by an increase in the cost of revenues of $386,000.

Operating expenses for the second quarter of fiscal 2019 increased 5% to $6.7 million (or 39.2% of total net revenues) from $6.4 million (or 44.1% of total net revenues) for the second quarter of fiscal 2018. The increase in operating expenses was primarily due to increases in salaries and wages, research and development expenses and professional services expenses, which were offset by decreases in selling and marketing expenses, depreciation, and general and administrative expenses.

Net income attributable to NETSOL for the second quarter of fiscal 2019 totaled $2.9 million or $0.25 per diluted share, an improvement from net income of $634,000 or $0.06 per diluted share in the second quarter of fiscal 2018.

Non-GAAP adjusted EBITDA for the second quarter of fiscal 2019 totaled $4.1 million or $0.35 per diluted share, an improvement from $2.1 million or $0.19 per diluted share in the second quarter of fiscal 2018 (see note regarding “Use of Non-GAAP Financial Measures,” below for further discussion of this non-GAAP measure).

At December 31, 2018, cash and cash equivalents were $20.3 million, an increase from $10.0 million at the end of the prior year quarter.

Management Commentary
“The second quarter was yet another period of strong, consistent performance for NETSOL, driven by various new business wins throughout our major operating regions as well as ongoing implementations for some of the larger contracts we’ve secured over the past few months," said company Co-Founder, Chairman and Chief Executive Officer Najeeb Ghauri. “Financially, this healthy combination translated to 18% revenue growth year-over-year as well as our fifth consecutive profitable quarter. Operationally, with a number of significant near-term opportunities before us, we remain highly confident in our ability to generate healthy top and bottom line results for the remainder of the year and remain in solid positioning to achieve our previously stated goal of double-digit topline growth for fiscal 2019.”

Sales Outlook
“NETSOL’s total global pipeline remains robust, especially in our APAC region, where we are seeing demand grow for both our products and services,” added President and Head of Sales Naeem Ghauri. “Additionally, we are continuing to benefit from our local business knowledge and strong relationships as many of our competitors struggle to establish a presence in the region. Going forward, we are cognizant of the various, emerging macro-economic challenges in China and will continue to monitor these issues closely. However, we are still seeing healthy interest from our existing customers who are investing in our systems to derive additional efficiencies that should aid them in addressing potential corrections in their respective markets. Looking ahead to the remainder of the year, we are currently in good positioning on a number of customer ‘shortlists’ for large-scale programs where we believe we have a good chance of success and remain bullish on our forecasts for fiscal 2019.”

Conference Call
NETSOL Technologies management will hold a conference call today (February 13, 2019) at 11:00 a.m. Eastern time (8:00 a.m. Pacific time) to discuss these financial results. A question and answer session will follow management's presentation.

U.S. dial-in: 1-877-407-0789
International dial-in: 1-201-689-8562

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at 1-949-574-3860.

The conference call will be broadcasted live and available for replay here and via the Investor Relations section of NETSOL’s website.

A replay of the conference call will be available after 2:00 p.m. Eastern time on the same day through February 27, 2019.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13687282

About NETSOL Technologies
NETSOL Technologies, Inc. (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 of approximately 1,350 professionals placed 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 leasing and finance lifecycle.

Forward-Looking Statements
Certain statements in this press release are forward-looking in nature, including, but not limited to, expected net revenue and the demand for and sales lifecycle of 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.

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:

Matt Glover and Tom Colton
Liolios
949-574-3860
investors@netsoltech.com


NETSOL Technologies, Inc. and Subsidiaries
Schedule 1: Consolidated Balance Sheets

As of December 31,

As of June 30,

ASSETS

2018

2018

Current assets:

Cash and cash equivalents

$

20,320,804

$

22,088,853

Accounts receivable, net of allowance of $376,178 and $610,061

7,852,296

12,775,461

Accounts receivable, net - related party

2,944,290

3,374,272

Revenues in excess of billings

13,832,654

14,285,778

Revenues in excess of billings - related party

62,323

-

Convertible note receivable - related party

3,156,500

2,123,500

Other current assets

4,092,921

2,703,032

Total current assets

52,261,788

57,350,896

Revenues in excess of billings, net - long term

-

1,206,669

Property and equipment, net

14,005,541

16,165,491

Long term investment

2,689,005

3,217,162

Other assets

35,470

70,299

Intangible assets, net

9,637,010

12,247,196

Goodwill

9,516,568

9,516,568

Total assets

$

88,145,382

$

99,774,281

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued expenses

$

7,468,984

$

7,873,809

Current portion of loans and obligations under capitalized leases

7,627,426

8,595,919

Unearned revenues

4,705,302

5,949,581

Common stock to be issued

88,324

88,324

Total current liabilities

19,890,036

22,507,633

Loans and obligations under capitalized leases; less current maturities

345,473

330,596

Total liabilities

20,235,509

22,838,229

Commitments and contingencies

Stockholders' equity:

Preferred stock, $.01 par value; 500,000 shares authorized;

-

-

Common stock, $.01 par value; 14,500,000 shares authorized;

11,860,310 shares issued and 11,654,457 outstanding as of December 31, 2018 and

11,708,469 shares issued and 11,502,616 outstanding as of June 30, 2018

118,603

117,085

Additional paid-in-capital

127,398,738

126,479,147

Treasury stock (At cost, 205,853 shares and 205,853 shares

as of December 31, 2018 and June 30, 2018, respectively)

(1,205,024

)

(1,205,024

)

Accumulated deficit

(39,972,079

)

(37,994,502

)

Stock subscription receivable

(221,000

)

(221,000

)

Other comprehensive loss

(28,446,811

)

(24,386,071

)

Total NetSol stockholders' equity

57,672,427

62,789,635

Non-controlling interest

10,237,446

14,146,417

Total stockholders' equity

67,909,873

76,936,052

Total liabilities and stockholders' equity

$

88,145,382

$

99,774,281

NETSOL Technologies, Inc. and Subsidiaries
Schedule 2: Consolidated Statement of Operations

For the Three Months

For the Six Months

Ended December 31,

Ended December 31,

2018

2017

2018

2017

Net Revenues:

License fees

$

4,817,569

$

235,932

$

10,773,682

$

561,998

Maintenance fees

3,534,693

3,568,448

7,173,020

7,042,173

Services

8,237,334

9,087,191

14,655,968

16,104,928

License fees - related party

-

217,105

-

261,513

Maintenance fees - related party

127,030

101,251

228,379

204,214

Services - related party

286,001

1,236,508

568,123

3,090,385

Total net revenues

17,002,627

14,446,435

33,399,172

27,265,211

Cost of revenues:

Salaries and consultants

4,497,054

5,362,092

9,517,616

10,826,252

Travel

1,706,182

287,901

2,858,179

801,013

Depreciation and amortization

880,048

1,168,103

1,817,652

2,341,216

Other

1,060,772

939,986

2,109,096

1,796,568

Total cost of revenues

8,144,056

7,758,082

16,302,543

15,765,049

Gross profit

8,858,571

6,688,353

17,096,629

11,500,162

Operating expenses:

Selling and marketing

2,048,303

1,932,140

3,749,629

3,643,436

Depreciation and amortization

193,779

222,785

406,011

468,658

General and administrative

4,002,059

4,026,706

8,408,779

7,814,264

Research and development cost

424,652

189,891

742,807

374,976

Total operating expenses

6,668,793

6,371,522

13,307,226

12,301,334

Income (loss) from operations

2,189,778

316,831

3,789,403

(801,172

)

Other income and (expenses)

Gain (loss) on sale of assets

(3,504

)

(8,939

)

48,790

(16,069

)

Interest expense

(63,804

)

(109,675

)

(163,238

)

(227,746

)

Interest income

230,421

115,570

479,385

252,481

Gain on foreign currency exchange transactions

2,536,755

1,737,967

2,547,667

2,754,329

Share of net loss from equity investment

(298,293

)

(203,336

)

(597,984

)

(270,898

)

Other income

4,503

14,511

9,882

15,610

Total other income (expenses)

2,406,078

1,546,098

2,324,502

2,507,707

Net income before income taxes

4,595,856

1,862,929

6,113,905

1,706,535

Income tax provision

(264,872

)

(200,927

)

(501,786

)

(225,798

)

Net income

4,330,984

1,662,002

5,612,119

1,480,737

Non-controlling interest

(1,475,355

)

(1,027,581

)

(1,793,901

)

(1,215,814

)

Net income attributable to NetSol

$

2,855,629

$

634,421

$

3,818,218

$

264,923

Net income (loss) per share:

Net income (loss) per common share

Basic

$

0.25

$

0.06

$

0.33

$

0.02

Diluted

$

0.25

$

0.06

$

0.33

$

0.02

Weighted average number of shares outstanding

Basic

11,586,507

11,159,075

11,542,877

11,115,346

Diluted

11,592,193

11,171,543

11,548,563

11,127,814


NETSOL Technologies, Inc. and Subsidiaries
Schedule 3: Consolidated Statement of Cash Flows

For the Six Months

Ended December 31,

2018

2017

Cash flows from operating activities:

Net income

$

5,612,119

$

1,480,737

Adjustments to reconcile net income

to net cash provided by (used in) operating activities:

Depreciation and amortization

2,223,663

2,809,874

Share of net loss from investment under equity method

597,984

270,898

(Gain) loss on sale of assets

(48,790

)

16,069

Stock based compensation

869,743

833,530

Changes in operating assets and liabilities:

Accounts receivable

4,208,751

(13,231,059

)

Accounts receivable - related party

(219,538

)

(1,637,829

)

Revenues in excess of billing

(7,633,216

)

602,676

Revenues in excess of billing - related party

(91,279

)

(32,308

)

Other current assets

(1,409,746

)

(524,547

)

Accounts payable and accrued expenses

139,331

887,824

Unearned revenue

(1,094,375

)

6,469,146

Net cash provided by (used in) operating activities

3,154,647

(2,054,989

)

Cash flows from investing activities:

Purchases of property and equipment

(1,441,237

)

(543,123

)

Sales of property and equipment

519,645

193,241

Convertible note receivable - related party

(1,033,000

)

(500,000

)

Investment in WRLD3D

-

(50,000

)

Net cash used in investing activities

(1,954,592

)

(899,882

)

Cash flows from financing activities:

Proceeds from the exercise of stock options and warrants

65,000

215,311

Proceeds from exercise of subsidiary options

2,650

7,755

Purchase of treasury stock

-

(601,020

)

Dividend paid by subsidiary to non-controlling interest

(566,465

)

(417,853

)

Proceeds from bank loans

382,240

708,457

Payments on capital lease obligations and loans - net

(289,027

)

(361,814

)

Net cash used in financing activities

(405,602

)

(449,164

)

Effect of exchange rate changes

(2,562,502

)

(764,269

)

Net decrease in cash and cash equivalents

(1,768,049

)

(4,168,304

)

Cash and cash equivalents at beginning of the period

22,088,853

14,172,954

Cash and cash equivalents at end of period

$

20,320,804

$

10,004,650

NETSOL Technologies, Inc. and Subsidiaries
Schedule 4: Reconciliation to GAAP

Three Months

Three Months

Six Months

Six Months

Ended

Ended

Ended

Ended

December 31, 2018

December 31, 2017

December 31, 2018

December 31, 2017

Net Income (loss) before preferred dividend, per GAAP

$

2,855,629

$

634,421

$

3,818,218

$

264,923

Non-controlling interest

1,475,355

1,027,581

1,793,901

1,215,814

Income taxes

264,872

200,927

501,786

225,798

Depreciation and amortization

1,073,827

1,390,888

2,223,663

2,809,874

Interest expense

63,804

109,675

163,238

227,746

Interest (income)

(230,421

)

(115,570

)

(479,385

)

(252,481

)

EBITDA

$

5,503,066

$

3,247,922

$

8,021,421

$

4,491,674

Add back:

Non-cash stock-based compensation

437,695

405,721

869,743

833,530

Adjusted EBITDA, gross

$

5,940,761

$

3,653,643

$

8,891,164

$

5,325,204

Less non-controlling interest (a)

(1,887,861

)

(1,562,303

)

(2,640,530

)

(2,264,167

)

Adjusted EBITDA, net

$

4,052,900

$

2,091,340

$

6,250,634

$

3,061,037

Weighted Average number of shares outstanding

Basic

11,586,507

11,159,075

11,542,877

11,115,346

Diluted

11,592,193

11,171,543

11,548,563

11,127,814

Basic adjusted EBITDA

$

0.35

$

0.19

$

0.54

$

0.28

Diluted adjusted EBITDA

$

0.35

$

0.19

$

0.54

$

0.28

(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

$

1,475,355

$

1,027,581

$

1,793,901

$

1,215,814

Income Taxes

70,821

29,945

141,364

40,423

Depreciation and amortization

338,278

465,138

704,132

932,320

Interest expense

20,219

34,463

52,909

73,535

Interest (income)

(54,247

)

(36,918

)

(121,115

)

(82,075

)

EBITDA

$

1,850,426

$

1,520,209

$

2,571,191

$

2,180,017

Add back:

Non-cash stock-based compensation

37,435

42,094

69,339

84,150

Adjusted EBITDA of non-controlling interest

$

1,887,861

$

1,562,303

$

2,640,530

$

2,264,167