NetSol Technologies Reports Record Fiscal 2015 Fourth-Quarter and Full Year Revenue

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)

CALABASAS, Calif., Sept. 15, 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 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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