Company Raises Outlook Based on Increased Strength of Business
CALABASAS, Calif., May 7, 2012 (GLOBE NEWSWIRE) -- NetSol Technologies, Inc. (Nasdaq:NTWK), a worldwide provider of global IT and enterprise application solutions, today reported financial results for its fiscal 2012 third quarter ended March 31, 2012.
The company drove continued sequential quarterly revenue growth in the third fiscal quarter, increasing 23% to $10.6 million, representing one of the company's strongest quarters to date. This compared with $8.6 million in the preceding quarter, and $6.2 million in the fiscal 2012 first quarter.
"In the fiscal third quarter NetSol saw strength across each business line and in all geographic regions," said Najeeb Ghauri, chairman and CEO of NetSol. "We believe that the business has regained its footing and that our growth initiatives are building momentum. Given the relative strength of the third quarter and our current insights into the balance of the year, we are increasingly confident the company will deliver a much stronger second half than first half 2012."
License revenue for the fiscal 2012 third quarter was $3.0 million, compared with $2.0 million in the preceding second quarter, and $3.7 million in the comparable period in fiscal 2011.
Maintenance revenue in the fiscal 2012 third quarter was $1.8 million, compared with $2.1 million in the preceding second quarter, and $1.9 million for the same period last fiscal year.
Services revenue was $5.8 million, up sequentially from $4.4 million in the second quarter, and compared with $5.3 million for the third quarter of fiscal 2011.
Recent Company Highlights:
- Signed new agreement with Chongqing Auto Finance, Ltd., to provide finance and leasing solutions to automotive financing companies, bringing NetSol's current client count in China to 17;
- Signed $4 million agreement with the captive finance arm of major Japanese auto manufacturer;
- Partnered with Abeam Consulting to develop and support businesses in the asset finance and leasing industry in Japan and NEC India to develop business in the asset finance and leasing industry in India;
- Implemented next generation of NFS for a Thai stock exchange listed bank; and,
- Began several enhancement projects, including one for a large auto manufacturer in Australia.
LeasePak™ & LeaseSoft ™Business
- Leading European bank extended its LeaseSoft license and a leading automobile manufacture went live with LeasePak; and,
- Began the integration of LeasePak with Vertex® O Series, a tax platform that centralizes all corporate tax processing and data and supports tax compliance with automation capabilities and extensive tax rule research.
- Inked new agreement with a prominent U.S. media company to implement a full B2B e-commerce search engine suite, bringing the number of smartOCI™ customers to 9;
- Expanded product line with smartOCI Catalog Manager™, a new tool to help customers with exchanging and loading content between purchasing organizations and suppliers; and,
- Added e-commerce veteran Mike Sundell as VP, technology.
- AtheebNetSol, a joint venture in Saudi Arabia, signed four new agreements in the areas of cyber security, application development and consulting, and collectively valued at approximately $2.0 million; and,
- Signed a consultancy and services agreement with premier auto manufacturer in Thailand.
Total operating expenses for the fiscal 2012 third quarter were $3.5 million, compared with $3.5 million in the second quarter, and $2.0 million for the fiscal 2011 third quarter. The increase primarily reflects expenses associated with Vroozi, as well as enhanced infrastructure and resources in China and the company's Thailand offices. There was also a reduction of $860,000 on account of a settlement of lease abandonment liability in the comparable period which resulted in a reduction of operating expenses.
Operating income for the third quarter of fiscal 2012 was $2.2 million, compared with $1.2 million in the preceding second quarter, and $4.8 million in the third quarter of fiscal 2011.
Net income for the fiscal third quarter was $1.7 million, equal to $0.03 per diluted share, compared with $3.3 million, or $0.06 per diluted share, in the comparable period in the prior fiscal year. Weighted average number of diluted shares outstanding for the period was 61.8 million shares compared with 52.5 million shares diluted for the third quarter of fiscal 2011.
At December 31, 2011, cash, cash equivalents amounted to $9.1 million, reflecting the recently completed financing that netted $5.7 million.
Given the relative strength of the company's business throughout the year, NetSol currently expects revenue growth of 30% to 40% for the second half of the fiscal year compared with the first half of the year. This is an increase from its previous guidance of growth of 10% to 15%. The company also said that it anticipates achieving profitability for the full 2012 fiscal year.
|Conference Call Today|
|When:||Monday, May 7|
|Time:||11:00 a.m. Eastern|
A telephone playback of the conference call will also be available until 11:59 p.m. Eastern time, Monday, May 14, 2012. Listeners should call (800) 406-7325 (domestic) or (303) 590-3030 (international) and use reservation 4534723 to access the playback.
About NetSol Technologies
NetSol Technologies, Inc. (www.netsoltech.com) is a worldwide provider of global IT and enterprise application solutions that include credit and finance portfolio management systems, SAP consulting and services, custom development, systems integration, and technical services for the global Financial, Leasing, Insurance, Energy, and Technology markets. Headquartered in Calabasas, Calif., NetSol's product and services offerings have achieved ISO 9001, ISO 20000, ISO 27001, and SEI (Software Engineering Institute) CMMI (Capability Maturity Model) Maturity Level 5 assessments, a distinction shared by only 178 companies worldwide. The company's clients include Fortune 500 manufacturers, global automakers, financial institutions, utilities, technology providers, and government agencies. NetSol has delivery and support locations in San Francisco, London, Beijing, Bangkok, Lahore, Adelaide and Riyadh.
Investors can receive news releases and invitations to special events by accessing our online signup form at http://bit.ly/NetSol_Investor_Signup_Form.
The NetSol Technologies, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9832
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.
|NetSol Technologies, Inc. and Subsidiaries|
|Condensed Consolidated Balance Sheets|
|As of March 31,||As of June 30,|
|Cash and cash equivalents||$ 9,118,206||$ 4,172,802|
|Accounts receivable, net||14,654,748||15,062,503|
|Revenues in excess of billings||9,310,578||7,601,230|
|Other current assets||2,631,360||2,053,904|
|Total current assets||35,804,892||34,590,439|
|Investment under equity method||--||--|
|Property and equipment, net||16,877,321||16,014,461|
|Product licenses, renewals, enhancements, copyrights, trademarks, and tradenames, net||29,077,051||25,602,195|
|Total assets||$ 91,412,594||$ 85,646,379|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accounts payable and accrued expenses||$ 4,624,876||$ 4,730,027|
|Due to officers||--||--|
|Current portion of loans and obligations under capitalized leases||1,955,872||7,062,535|
|Other payables - acquisitions||103,226||103,226|
|Convertible notes payable , current portion||--||2,745,524|
|Loans payable, bank||2,198,769||2,319,377|
|Common stock to be issued||106,700||400,700|
|Total current liabilities||12,349,356||20,014,849|
|Obligations under capitalized leases, less current maturities||196,137||285,472|
|Convertible notes payable less current maturities||3,692,792||--|
|Long term loans; less current maturities||1,950,165||434,884|
|Commitments and contingencies|
|Common stock, $.001 par value; 95,000,000 shares authorized; 74,746,688 & 55,531,855 issued and outstanding as of March 31, 2012 and June 30, 2011||74,747||55,532|
|Stock subscription receivable||(2,033,710)||(2,198,460)|
|Other comprehensive loss||(10,187,687)||(8,805,922)|
|Total NetSol shareholders' equity||59,640,021||52,410,690|
|Total stockholders' equity||73,224,144||64,911,174|
|Total liabilities and stockholders' equity||$ 91,412,594||$ 85,646,379|
|NetSol Technologies, Inc. and Subsidiaries|
|Condensed Consolidated Statement of Operations|
|For the Three Months||For the Nine Months|
|Ended March 31,||Ended March 31,|
|Total net revenues||10,610,548||10,827,448||25,445,308||29,655,767|
|Cost of revenues:|
|Salaries and consultants||2,741,717||2,448,517||7,412,931||6,562,685|
|Repairs and maintenance||109,868||79,068||280,785||207,585|
|Depreciation and amortization||830,646||840,050||2,432,261||2,150,274|
|Total cost of revenues||4,913,716||4,050,946||12,902,345||10,728,319|
|Selling and marketing||835,153||560,879||2,270,566||2,047,726|
|Depreciation and amortization||403,177||313,865||883,881||848,168|
|Bad debt expense||--||717||--||254,996|
|Salaries and wages||1,099,503||956,465||3,058,090||2,613,627|
|Professional services, including non-cash compensation||138,094||165,010||561,754||455,371|
|Lease abandonment charges||--||(858,969)||--||(858,969)|
|General and adminstrative||1,056,725||831,131||3,214,430||2,837,218|
|Total operating expenses||3,532,652||1,969,096||9,988,721||8,198,137|
|Income from operations||2,164,180||4,807,406||2,554,242||10,729,311|
|Other income and (expenses)|
|Gain (loss) on sale of assets||(666)||2,284||(3,940)||(13,302)|
|Gain on foreign currency exchange transactions||421,098||224,531||460,317||897,767|
|Share of net loss from equity investment||(140,554)||(78,269)||(240,554)||(220,506)|
|Beneficial conversion feature||(52,665)||(105,445)||(126,912)||(401,019)|
|Total other income (expenses)||225,290||(61,814)||(308,813)||(411,977)|
|Net income before income taxes||2,389,470||4,745,592||2,245,429||10,317,334|
|Net income after tax||2,356,549||4,731,857||2,180,969||10,291,875|
|Net income attibutable to NetSol||1,684,227||3,318,430||545,086||6,821,147|
|Other comprehensive income (loss):|
|Comprehensive income (loss)||1,314,445||3,338,791||(1,838,238)||7,281,671|
|Comprehensive (loss) /income attributable to non controlling interest||(146,667)||98,756||(1,001,560)||23,780|
|Comprehensive income (loss) attributable to NetSol||1,461,112||3,240,035||(836,678)||7,257,891|
|Net income per share:|
|Basic||$ 0.03||$ 0.06||$ 0.01||$ 0.15|
|Diluted||$ 0.03||$ 0.06||$ 0.01||$ 0.14|
|Weighted average number of shares outstanding|
|Amounts attributable to NetSol common shareholders|
|Net income / (loss)||$ 1,684,227||$ 3,318,430||$ 545,086||$ 6,821,147|
|NetSol Technologies, Inc. and Subsidiaries|
|Condensed Consolidated Statement of Cash Flows|
|For the Nine Months|
|Ended March 31,|
|Cash flows from operating activities:|
|Net income||$ 2,180,969||$ 10,291,875|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation and amortization||3,316,142||2,998,443|
|Provision for bad debts||192,250||254,996|
|Share of net loss from investment under equity method||240,554||220,506|
|Loss on sale of assets||3,940||13,302|
|Stock issued for interest on notes payable||--||155,808|
|Stock issued for services||190,076||698,843|
|Fair market value of warrants and stock options granted||303,807||335,918|
|Beneficial conversion feature||126,912||401,019|
|Changes in operating assets and liabilities:|
|Increase/ decrease in accounts receivable||877,725||(5,350,512)|
|Increase/ decrease in other current assets||(2,286,804)||(2,099,813)|
|Increase/ decrease in accounts payable and accrued expenses||112,422||(581,418)|
|Net cash provided by operating activities||5,257,993||7,338,965|
|Cash flows from investing activities:|
|Purchases of property and equipment||(3,729,571)||(6,242,399)|
|Sales of property and equipment||72,516||18,358|
|Purchase of treasury stock||(19,417)||--|
|Purchase of non-controlling interest in subsidiary||--||(671,460)|
|Short-term investments held for sale||--||(258,271)|
|Investment under equity method||(100,000)||--|
|Acquisition, net of cash acquired||(253,192)||--|
|Increase in intangible assets||(5,280,833)||(4,752,261)|
|Net cash used in investing activities||(9,310,497)||(11,906,033)|
|Cash flows from financing activities:|
|Proceeds from sale of common stock||5,743,300||2,899,250|
|Proceeds from the exercise of stock options and warrants||715,500||1,116,175|
|Proceeds from convertible notes payable||4,000,000||--|
|Payments on convertible notes payable||(2,758,330)||--|
|Proceeds from bank loans||4,371,555||2,969,146|
|Payments on capital lease obligations & loans - net||(7,981,217)||(2,948,489)|
|Net cash provided by financing activities||9,359,151||4,036,082|
|Effect of exchange rate changes in cash||(361,243)||(169,951)|
|Net increase in cash and cash equivalents||4,945,403||(700,938)|
|Cash and cash equivalents, beginning of year||4,172,803||4,075,546|
|Cash and cash equivalents, end of year||$ 9,118,206||$ 3,374,608|
|NetSol Technologies, Inc. and Subsidiaries|
|Reconciliation to GAAP|
|Three Months||Three Months||Year||Year|
|Ended||Ended||To date||To date|
|March 31, 2012||March 31, 2011||March 31, 2012||March 31, 2011|
|Net Income (loss) before preferred dividend, per GAAP||$ 1,684,227||$ 3,318,429||$ 545,086||$ 6,821,147|
|Depreciation and amortization||1,233,823||1,153,915||3,316,142||2,998,443|
|EBITDA||$ 3,092,271||$ 4,585,889||$ 4,446,083||$ 10,457,559|
|Weighted Average number of shares outstanding|
|Basic EBITDA||$ 0.05||$ 0.09||$ 0.08||$ 0.23|
|Diluted EBITDA||$ 0.05||$ 0.09||$ 0.08||$ 0.22|
|Matt Sheldon/Rob Whetstone|