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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., Nov. 12, 2015 (GLOBE NEWSWIRE) -- 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 September 30, As of June 30,
ASSETS 2015 2015
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.

Investor Contacts:

PondelWilkinson
Roger Pondel | Matt Sheldon
investors@netsoltech.com
(310) 279-5980

Media Contacts:

PondelWilkinson
George Medici | gmedici@pondel.com
(310) 279-5968

Source:NetSol Technologies, Inc.