Total Revenue for the Fourth Quarter
rose 61% to a Record $15.4 Million, and Increased 40% for the
Fiscal Year to $51.0 Million Fiscal 2015 EBITDA Increased to $5.0
Million or $0.52 per Adjusted Diluted Share; Fiscal 2015 GAAP Loss
Cut in Half to $5.5 Million from $11.4 Million Last Year Conference
Call Scheduled Today at 11:30 a.m. ET (8:30 a.m. PT)
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 fourth fiscal
quarter ended June 30, 2015 of $0.26, compared with a loss of $0.36
in same quarter last year. Total revenue for the fourth quarter
rose 61% to a record $15.4 million from $9.5 million last year.
GAAP loss per share for the 2015 fourth quarter narrowed to $0.07,
from a loss of $0.79 in fourth quarter last year.
"We are proud to have achieved record revenue for the quarter
and year, underscoring the momentum we have built into our
business," said Najeeb Ghauri, CEO of NetSol. "Much of the
investment we made into personnel and infrastructure was done not
just to get back to where we were, but to greatly exceed it.
"Looking forward, our confidence stems from implementations
underway for both NFS AscentTM and NFSTM, continued customization
requests and upgrades, and other large value contracts in our new
and growing business pipeline that remain in deep discussion,"
added Ghauri.
Fiscal 2015 Fourth-Quarter Financial
Results
The following comparison refers to results for the fiscal 2015
fourth quarter versus the fiscal 2014 fourth quarter.
Total net revenues for the fourth quarter rose 61% to a record
$15.4 million from $9.5 million last year.
- License fees rose to $1.4 million from $607,000, related to the
mix of sales between NFS TM and NFS Ascent TM;
- Maintenance fees increased to $3.2 million from $2.6 million
last year;
- Services revenue increased to $8.2 million from $4.8 million
last year; and
- Services revenue - related party advanced to $2.4 million from
$1.4 million last year.
Following is additional detail for the quarter:
- Increase in cost of revenues, related to higher employee count,
as well as the timing of salary increases. Gross profit was $5.1
million, compared with a loss of $358,000.
- Operational expenses decreased $1.9 million. The year-over-year
decrease related to a bad debt expense of $1 million in the fourth
quarter of 2014, and a reduction in the allowance for doubtful
accounts by $435,000, in the fourth quarter of 2015.
Fiscal 2015 Full Year Financial Results
The following comparison refers to results for the 2015 fiscal
year versus the 2014 fiscal year.
For the full fiscal 2015 year, total net revenues rose 40% to
$51.0 million from $36.4 million for the same period last year.
- License fees increased to $6.3 million from $5.4 million,
related to the mix of sales between NFS TM and NFS Ascent TM,
- Maintenance fees rose to $12.2 million from $10.0 million last
year;
- Services revenue improved to $24.8 million from $15.2 million
last year. The increase was related to services provided to new
customers both for the implementation of the legacy systems and for
the implementation of NFS Ascent, as well as additional services
provided to existing customers; and
- Services revenue - related party rose to $7.3 million from $5.2
million last year.
The company reported a lower GAAP net loss of $5.5 million, or
$0.57 per share, compared with a GAAP net loss of $11.4 million, or
$1.25 per share, in the comparable period last year.
Adjusted EBITDA (a non-GAAP measure) for fiscal 2015 improved to
$5.0 million, or $0.52 per adjusted diluted share, which removed
$10.3 million in depreciation and amortization. This compares with
adjusted EBITDA loss of $2.3 million, or $0.25 per adjusted share,
last year, which removed $8.7 million in depreciation and
amortization. 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.
At June 30, 2015, cash and cash equivalents increased to $14.2
million from $11.5 million at June 30, 2014.
"We are confident as we look ahead with building traction in
Europe, where we enhanced our strategic position, continued growth
in APAC, and steady progress in North America where we recently
added to our team," Ghauri said. "In addition, we remain encouraged
about our prospects in China as the relaxation of restrictions for
new finance and leasing market entrants provide an opportunity to
expand market share. These companies require a system regardless of
short term economic matters, and like us, are focused on the long
term opportunity as adoption of finance and leasing becomes a
larger part of purchasing. We have a long way left to grow, and
anticipate solid growth in the coming year and beyond."
Fiscal 2015 Fourth Quarter Conference Call
When: |
Tuesday, September 15,
2015 |
Time: |
11:30 a.m. Eastern
Time |
Phone: |
1-888-503-8175
(domestic) |
|
1-719-325-2354
(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
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 |
|
|
|
ASSETS |
2015 |
2014 |
Current assets: |
|
|
Cash and cash equivalents |
$ 14,168,957 |
$ 11,462,695 |
Restricted cash |
90,000 |
2,528,844 |
Accounts receivable, net of allowance of
524,565 and 1,088,172 |
6,480,344 |
5,219,275 |
Accounts receivable, net - related
party |
3,491,899 |
2,416,500 |
Revenues in excess of billings |
5,251,005 |
2,377,367 |
Revenues in excess of billings - related
party |
16,270 |
-- |
Other current assets |
2,012,190 |
2,857,879 |
Total current assets |
31,510,665 |
26,862,560 |
Property and equipment, net |
25,119,634 |
29,721,128 |
Intangible assets, net |
22,815,467 |
28,803,018 |
Goodwill |
9,516,568 |
9,516,568 |
Total assets |
$ 88,962,334 |
$ 94,903,274 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable and accrued
expenses |
$ 5,952,561 |
$ 5,234,887 |
Current portion of loans and obligations
under capitalized leases |
3,896,353 |
5,791,258 |
Unearned revenues |
4,803,485 |
3,192,203 |
Unearned revenues - related party |
93,842 |
47,649 |
Common stock to be issued |
88,324 |
347,518 |
Total current liabilities |
14,834,565 |
14,613,515 |
Long term loans and obligations under
capitalized leases; less current maturities |
487,492 |
1,532,080 |
Total liabilities |
15,322,057 |
16,145,595 |
Commitments and
contingencies |
|
|
Stockholders' equity: |
|
|
Preferred stock, $.01 par value; 500,000
shares authorized; |
-- |
-- |
Common stock, $.01 par value; 14,500,000
shares authorized; |
|
|
10,307,826 shares issued and
10,280,547 outstanding as of June 30, 2015 and |
|
|
9,150,889 shares issued and
9,123,610 outstanding as of June 30, 2014 |
103,078 |
91,509 |
Additional paid-in-capital |
119,209,807 |
115,394,097 |
Treasury stock (27,279 shares) |
(415,425) |
(415,425) |
Accumulated deficit |
(40,726,121) |
(35,177,303) |
Stock subscription receivable |
(1,204,603) |
(2,280,488) |
Other comprehensive loss |
(17,167,100) |
(14,979,223) |
Total NetSol stockholders' equity |
59,799,636 |
62,633,167 |
Non-controlling interest |
13,840,641 |
16,124,512 |
Total stockholders'
equity |
73,640,277 |
78,757,679 |
Total liabilities and
stockholders' equity |
$ 88,962,334 |
$ 94,903,274 |
|
|
NetSol Technologies,
Inc. and Subsidiaries |
Consolidated Statement
of Operations |
|
|
|
|
|
|
For the Three
Months |
For the Year |
|
Ended June
30, |
Ended June
30, |
|
2015 |
2014 |
2015 |
2014 |
Net Revenues: |
|
|
|
|
License fees |
$ 1,428,520 |
$ 606,855 |
$ 6,328,989 |
$ 5,433,053 |
Maintenance fees |
3,232,833 |
2,583,097 |
12,196,073 |
10,034,681 |
Services |
8,177,176 |
4,826,730 |
24,827,822 |
15,230,708 |
Maintenance fees - related party |
158,428 |
140,498 |
395,951 |
492,535 |
Services - related party |
2,397,951 |
1,389,529 |
7,299,743 |
5,193,826 |
Total net revenues |
15,394,908 |
9,546,709 |
51,048,578 |
36,384,803 |
|
|
|
|
|
Cost of revenues: |
|
|
|
|
Salaries and consultants |
5,978,904 |
5,095,105 |
19,289,536 |
15,621,806 |
Travel |
602,575 |
614,745 |
2,374,864 |
1,705,554 |
Depreciation and
amortization |
2,822,045 |
3,326,784 |
8,336,857 |
6,844,588 |
Other |
890,461 |
868,308 |
3,020,107 |
3,548,392 |
Total cost of revenues |
10,293,985 |
9,904,942 |
33,021,364 |
27,720,340 |
|
|
|
|
|
Gross profit |
5,100,923 |
(358,233) |
18,027,214 |
8,664,463 |
|
|
|
|
|
Operating expenses: |
|
|
|
|
Selling and marketing |
1,673,064 |
1,539,433 |
6,092,530 |
4,572,108 |
Depreciation and amortization |
437,054 |
534,770 |
2,006,957 |
1,886,148 |
General and administrative |
3,193,945 |
5,156,999 |
14,778,641 |
15,046,328 |
Research and development cost |
84,152 |
70,850 |
314,892 |
249,712 |
Total operating expenses |
5,388,215 |
7,302,052 |
23,193,020 |
21,754,296 |
|
|
|
|
|
Loss from operations |
(287,292) |
(7,660,285) |
(5,165,806) |
(13,089,833) |
|
|
|
|
|
Other income and
(expenses) |
|
|
|
|
Loss on sale of assets |
9,501 |
(39,778) |
(64,598) |
(229,805) |
Interest expense |
(1,370) |
(85,447) |
(166,962) |
(255,677) |
Interest income |
70,341 |
74,325 |
331,432 |
261,251 |
Gain (loss) on foreign currency exchange
transactions |
135,937 |
(248,493) |
(453,770) |
50,777 |
Share of net loss from equity
investment |
-- |
(175,151) |
-- |
(545,483) |
Other income |
58,380 |
54,919 |
684,030 |
50,578 |
Total other income (expenses) |
272,789 |
(419,625) |
330,132 |
(668,359) |
|
|
|
|
|
Net loss before income
taxes |
(14,503) |
(8,079,910) |
(4,835,674) |
(13,758,192) |
Income tax provision |
(178,341) |
(16,453) |
(413,498) |
(338,282) |
Net loss from continuing
operations |
(192,844) |
(8,096,363) |
(5,249,172) |
(14,096,474) |
Income from discontinued
operations |
-- |
-- |
-- |
1,158,752 |
Net loss |
(192,844) |
(8,096,363) |
(5,249,172) |
(12,937,722) |
Non-controlling
interest |
(514,534) |
880,272 |
(299,646) |
1,581,675 |
Net loss attributable to
NetSol |
$ (707,378) |
$ (7,216,091) |
$ (5,548,818) |
$ (11,356,047) |
|
|
|
|
|
|
|
|
|
|
Amount attributable to NetSol common
shareholders: |
|
|
|
|
Loss from continuing
operations |
$ (707,378) |
$ (7,216,091) |
$ (5,548,818) |
$ (12,514,799) |
Income from discontinued
operations |
-- |
-- |
-- |
1,158,752 |
Net loss |
$ (707,378) |
$ (7,216,091) |
$ (5,548,818) |
$ (11,356,047) |
|
|
|
|
|
Net loss per share: |
|
|
|
|
Net loss per share from continuing
operations: |
|
|
|
|
Basic |
$ (0.07) |
$ (0.79) |
$ (0.57) |
$ (1.38) |
Diluted |
$ (0.07) |
$ (0.79) |
$ (0.57) |
$ (1.38) |
|
|
|
|
|
Net income per share from discontinued
operations: |
|
|
|
|
Basic |
$ -- |
$ -- |
$ -- |
$ 0.13 |
Diluted |
$ -- |
$ -- |
$ -- |
$ 0.13 |
|
|
|
|
|
Net loss per common share |
|
|
|
|
Basic |
$ (0.07) |
$ (0.79) |
$ (0.57) |
$ (1.25) |
Diluted |
$ (0.07) |
$ (0.79) |
$ (0.57) |
$ (1.25) |
|
|
|
|
|
Weighted average number of shares
outstanding |
|
|
|
|
Basic |
10,194,180 |
9,150,101 |
9,728,122 |
9,063,345 |
Diluted |
10,194,180 |
9,150,101 |
9,728,122 |
9,063,345 |
|
|
NetSol Technologies,
Inc. and Subsidiaries |
Consolidated Statement
of Cash Flows |
|
|
2015 |
2014 |
Cash flows from operating
activities: |
|
|
Net loss |
$ (5,249,172) |
$ (12,937,722) |
Adjustments to reconcile net
loss to net cash provided by operating activities: |
|
|
Depreciation and
amortization |
10,343,814 |
8,730,736 |
Provision for bad debts |
(434,928) |
1,023,796 |
Share of net loss from investment
under equity method |
-- |
545,483 |
Loss on sale of assets |
64,598 |
229,805 |
Gain on sale of
subsidiary |
-- |
(1,870,871) |
Stock issued for
services |
1,375,149 |
1,076,610 |
Fair market value of warrants and
stock options granted |
622,488 |
189,937 |
Impairment of goodwill |
-- |
136,762 |
Changes in operating assets
and liabilities: |
|
|
Accounts receivable |
(871,959) |
7,094,977 |
Accounts receivable - related
party |
(1,179,931) |
(309,773) |
Revenues in excess of
billing |
(2,997,449) |
12,825,849 |
Revenues in excess of billing -
related party |
(16,281) |
-- |
Other current assets |
580,618 |
216,357 |
Accounts payable and accrued
expenses |
726,700 |
1,060,832 |
Unearned revenue |
2,064,694 |
574,475 |
Unearned revenue - related
party |
49,941 |
47,649 |
Net cash provided by
operating activities |
5,078,282 |
18,634,902 |
|
|
|
Cash flows from investing
activities: |
|
|
Purchases of property and
equipment |
(3,558,712) |
(13,236,136) |
Sales of property and
equipment |
1,102,615 |
88,641 |
Sale of subsidiary |
-- |
1,810,700 |
Purchase of non-controlling
interest in subsidiaries |
(577,222) |
(17,852) |
Increase in intangible
assets |
-- |
(3,385,151) |
Net cash used in investing
activities |
(3,033,319) |
(14,739,798) |
|
|
|
Cash flows from financing
activities: |
|
|
Proceeds from sale of common
stock |
2,294,599 |
-- |
Proceeds from the exercise of stock
options and warrants |
191,400 |
709,435 |
Proceeds from exercise of
subsidiary options |
12,185 |
356,029 |
Restricted cash |
2,438,844 |
(653,607) |
Dividend paid by subsidiary to Non
controlling interest |
(806,937) |
(1,008,543) |
Proceeds from bank loans |
1,410,313 |
3,244,382 |
Payments on capital lease
obligations and loans - net |
(4,079,174) |
(2,880,840) |
Net cash provided by (used
in) financing activities |
1,461,230 |
(233,144) |
Effect of exchange rate
changes |
(799,931) |
(73,583) |
Net increase in cash and cash
equivalents |
2,706,262 |
3,588,377 |
Cash and cash equivalents, beginning of
the period |
11,462,695 |
7,874,318 |
Cash and cash equivalents, end
of period |
$ 14,168,957 |
$ 11,462,695 |
|
|
NetSol Technologies,
Inc. and Subsidiaries |
Reconciliation to
GAAP |
|
|
Three Months |
Three Months |
Year |
Year |
|
Ended |
Ended |
Ended |
Ended |
|
June 30, 2015 |
June 30, 2014 |
June 30, 2015 |
June 30, 2014 |
|
|
|
|
|
Net Income (loss) before preferred
dividend, per GAAP |
$ (707,378) |
$ (7,216,091) |
$ (5,548,818) |
$ (11,356,047) |
Income Taxes |
178,341 |
16,453 |
413,498 |
338,282 |
Depreciation and
amortization |
3,259,099 |
3,861,554 |
10,343,814 |
8,730,736 |
Interest expense |
1,370 |
85,447 |
166,962 |
255,677 |
Interest (income) |
(70,341) |
(74,325) |
(331,432) |
(261,251) |
EBITDA |
$ 2,661,091 |
$ (3,326,962) |
$ 5,044,024 |
$ (2,292,603) |
|
|
|
|
|
Weighted Average number of shares
outstanding |
|
|
|
|
Basic |
10,194,180 |
9,150,101 |
9,728,122 |
9,063,345 |
Diluted |
10,194,180 |
9,150,101 |
9,728,122 |
9,063,345 |
|
|
|
|
|
Basic EBITDA |
$ 0.26 |
$ (0.36) |
$ 0.52 |
$ (0.25) |
Diluted EBITDA |
$ 0.26 |
$ (0.36) |
$ 0.52 |
$ (0.25) |
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
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