• NETSOL Technologies Reports Fiscal Fourth Quarter and Full Year 2022 Financial Results

    Source: Nasdaq GlobeNewswire / 27 Sep 2022 08:30:00   America/New_York

    • Total net revenues increase 4.2% to $57.2 million in FY 2022
    • Annual recurring revenue (SaaS and Support) increased to $28.3 million, up by 27.6%

    CALABASAS, Calif., Sept. 27, 2022 (GLOBE NEWSWIRE) -- NETSOL Technologies, Inc. (Nasdaq: NTWK), a global business services and enterprise application solutions provider, reported results for the fiscal fourth quarter and full year ended June 30, 2022.

    Fiscal Fourth Quarter 2022 and Recent Operational Highlights

    • NETSOL signed a contract with a notable Swedish bank to implement NFS Ascent® in Sweden, Norway, Denmark and Finland with an estimated value of $5 million over the five-year contract period.
    • NETSOL was awarded a contract by the Government of Khyber Pakhtunkhwa under the World Bank Funded “Khyber Pakhtunkhwa Revenue Mobilization and Public Resource Management Program” to provide a document management system. The contract is valued at approximately $2.2 million.
    • We successfully went live with our cloud-based NFS Ascent® Retail Platform for a bank in the United Kingdom. The Retail Platform constitutes both NFS Ascent® Omni Point of Sale and NFS Ascent® Contract Management System. This contract will provide additional subscription fees of approximately $1 million over the coming 5 years.
    • We went live with NFS Ascent® and NFS Ascent® Digital in New Zealand for a leading Japanese equipment manufacturer and in addition signed a statement of work which will generate approximately $1 million.
    • We onboarded another 7 dealers of a leading German Auto Manufacturer in the U.S. on our digital retailing solution OtozTM bringing the total to 24 at June 30, 2022.

    Fiscal Fourth Quarter 2022 Financial Results

    Total net revenues for the fourth quarter of fiscal 2022 were $13.5 million, compared with $15.4 million in the prior year period. The decrease in total net revenues was primarily driven by decreases in license revenue of $0.6 million and services revenue of $1.7 million, offset by an increase in subscription and support revenue of $0.5 million.

    • Total license fees were $0.95 million, compared with $1.5 million in the prior year period.
    • Total subscription (SaaS and Cloud) and support revenues were $6.1 million, compared with $5.6 million in the prior year period.
    • Total services revenues were $6.5 million, compared with $8.2 million in the prior year period.

    Gross profit for the fourth quarter of fiscal 2022 was $4.8 million (or 36% of net revenues), compared to $7.5 million (or 49% of net revenues) in the fourth quarter of fiscal 2021. The decrease in gross profit was primarily due to a decrease in revenues of $1.8 million and an increase in cost of sales of $0.9 million driven by increases in salaries and consulting costs of $0.7 million.

    Operating expenses for the fourth quarter of fiscal 2022 were $6.4 million (or 47% of sales), compared to $6.4 million (or 41% of sales) for the fourth quarter of fiscal 2021. Operating expenses remained flat as the increase in research and development costs of $0.3 million was offset by the decrease in salaries and wages of $0.3 million.

    GAAP net loss attributable to NETSOL for the fourth quarter of fiscal 2022 totaled $2.2 million or $0.19 per diluted share, compared with GAAP net income of $1.9 million or $0.17 per diluted share in the fourth quarter of fiscal 2021.

    Non-GAAP adjusted EBITDA for the fourth quarter of fiscal 2022 totaled $(1.4) million or $0.12 per diluted share, compared with non-GAAP adjusted EBITDA of $2.9 million or $0.26 per diluted share in the fourth quarter of fiscal 2021 (see note regarding “Use of Non-GAAP Financial Measures,” below for further discussion of this non-GAAP measure).

    At June 30, 2022, cash and cash equivalents were $24 million, a decrease from $33.7 million at June 30, 2021.

    Management Commentary

    “We returned to revenue growth for fiscal 2022 increasing 4.2% after two years of revenue decline in fiscal years 2020 and 2021,” said NETSOL Co-Founder, Chairman and Chief Executive Officer Najeeb Ghauri. “We believe we have robust traction in the current pipeline for fiscal 2023 as we aim for double digit revenue growth. Our pipeline in the North American market is healthy and strong. We are working on potential projects for both multinational and US based major Tier 1 captive finance companies. Our Flagship NFS Ascent offering is in a strong position as we are gaining momentum both for SaaS and license offerings. Additionally, we have a robust pipeline in the European markets as our team in the UK are working diligently to secure new customers in the retail sector. We have also signed up a few more Otoz digital platforms through MINI Anywhere across the US to a total of 30 dealerships to date.”

    Company CFO Roger Almond added: “Our subscription and support segment were a key growth driver during the year. As our workforce continues to return to the office across our global footprint, we expect growth will accelerate in the quarters ahead, which will require a related increase in expenses to support our increased business activity moving forward. Our cash position remains strong, providing the resources to support our core business growth as well as strategic investments in high-return, long-term opportunities, such as the promising work of the Otoz Innovation Lab.”

    Conference Call

    NETSOL Technologies management will hold a conference call today (September 27, 2022) at 9:00 a.m. Eastern time (6:00 a.m. Pacific time) to discuss these financial results. A question-and-answer session will follow management's presentation.

    U.S. Dial-In: 877-407-0789
    International Dial-In: 201-689-8562

    Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization.

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

    For interested individuals unable to join the conference call, a dial-in replay of the call will be available until October 11, 2022.

    Toll-free replay number: 844-512-2921
    International replay number: 412-317-6671
    Replay ID: 13732869

    About NETSOL Technologies

    NETSOL Technologies, Inc. (Nasdaq: 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 more than 1750 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 finance and leasing lifecycle.

    About Otoz

    Otoz, a division of NETSOL Technologies Inc. (Nasdaq: NTWK), provides business-to-business, white-label technology solutions for new mobility. The Otoz suite of agile and customizable mobility solutions ranges from car sharing and subscription products to AI-enabled chatbots, allowing businesses to engage consumers and facilitate the complete transaction lifecycle intelligently and digitally. Otoz technologies empower automotive companies and start-ups to launch digital retailing and new mobility models quickly and efficiently. The technology Otoz has developed is cloud-native and supported by artificial intelligence (AI), machine learning (ML), internet of things (IoT) and blockchain. Otoz technology drives utilization, while supporting robust and efficient operations.

    Forward-Looking Statements

    This press release may contain forward-looking statements relating to the development of the Company's products and services and future operating results, including statements regarding the Company that are subject to certain risks and uncertainties such as the effect of disparate stay at home orders and social distancing requirements imposed internationally by COVID-19 and its resultant impact on our financials and the world economy 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, as well as the delay in recovery or a prolonged economic downturn that effects our Company, our customers and the world economy. 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:

    NetSol Technologies Investor Relations
    818-222-9195

    investors@netsoltech.com


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

      As of As of
    ASSETS
    		June 30, 2022 June 30, 2021
    Current assets:   
    Cash and cash equivalents$23,963,797  $33,705,154 
    Accounts receivable, net of allowance of $156,846 and $166,231 8,669,202   4,184,096 
    Revenues in excess of billings, net of allowance of $136,839 and $136,976 14,571,776   14,680,131 
    Other current assets, net of allowance of $1,243,633 and $1,243,633 2,223,361   3,009,393 
    Total current assets 49,428,136   55,578,774 
    Revenues in excess of billings, net - long term 853,601   957,603 
    Convertible note receivable - related party, net of allowance of $4,250,000 and $4,250,000 -   - 
    Property and equipment, net 9,382,624   12,091,812 
    Right of use of assets - operating leases 969,163   1,345,869 
    Long term investment 1,059,368   3,155,852 
    Other assets 25,546   55,127 
    Intangible assets, net 1,587,670   3,904,656 
    Goodwill 9,302,524   9,516,568 
    Total assets$72,608,632  $86,606,261 
        
    LIABILITIES AND STOCKHOLDERS' EQUITY   
    Current liabilities:   
    Accounts payable and accrued expenses$6,813,541  $6,696,035 
    Current portion of loans and obligations under finance leases 8,567,145   11,366,171 
    Current portion of operating lease obligations 548,678   857,729 
    Unearned revenue 4,901,562   4,556,626 
    Total current liabilities 20,830,926   23,476,561 
    Loans and obligations under finance leases; less current maturities 476,223   699,841 
    Operating lease obligations; less current maturities 447,260   564,257 
    Total liabilities 21,754,409   24,740,659 
    Commitments and contingencies   
    Stockholders' equity:   
    Preferred stock, $.01 par value; 500,000 shares authorized; -   - 
    Common stock, $.01 par value; 14,500,000 shares authorized;   
    12,196,570 shares issued and 11,257,539 outstanding as of June 30, 2022 and   
    12,181,585 shares issued and 11,265,064 outstanding as of June 30, 2021 121,966   121,816 
    Additional paid-in-capital 128,181,844   129,018,826 
    Treasury stock (at cost, 939,031 shares and 916,521 shares    
    as of June 30, 2022 and June 30, 2021, respectively)  (3,920,856)  (3,820,750)
    Accumulated deficit (39,652,438)  (38,801,282)
    Other comprehensive loss (39,363,085)  (31,868,481)
    Total NetSol stockholders' equity 45,367,431   54,650,129 
    Non-controlling interest 5,486,792   7,215,473 
    Total stockholders' equity 50,854,223   61,865,602 
    Total liabilities and stockholders' equity$72,608,632  $86,606,261 


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

     For the Years
     Ended June 30,
      2022  2021
    Net Revenues:   
    License fees$4,539,260  $6,249,924 
    Subscription and support 28,284,759   22,173,745 
    Services 24,423,960   26,448,171 
    Services - related party -   48,775 
    Total net revenues 57,247,979   54,920,615 
        
    Cost of revenues:   
    Salaries and consultants 24,528,155   20,969,298 
    Travel 1,036,623   663,403 
    Depreciation and amortization 2,949,093   2,990,689 
    Other 4,996,934   3,944,197 
    Total cost of revenues 33,510,805   28,567,587 
        
    Gross profit 23,737,174   26,353,028 
        
    Operating expenses:   
    Selling and marketing 7,220,022   6,555,004 
    Depreciation and amortization 863,180   965,625 
    General and administrative 15,390,141   15,437,382 
    Research and development cost 1,342,154   674,168 
    Total operating expenses 24,815,497   23,632,179 
        
    Income (loss) from operations (1,078,323)  2,720,849 
        
    Other income and (expenses)   
    Loss on sale of assets (205,288)  (191,935)
    Interest expense (369,801)  (394,289)
    Interest income 1,655,883   1,017,432 
    Gain (loss) on foreign currency exchange transactions 4,327,590   (597,433)
    Share of net loss from equity investment (2,021,480)  (253,819)
    Other income (expense) (218,840)  987,444 
    Total other income (expenses) 3,168,064   567,400 
        
    Net income before income taxes 2,089,741   3,288,249 
    Income tax provision (988,938)  (1,026,617)
    Net income  1,100,803   2,261,632 
    Non-controlling interest (1,951,959)  (483,375)
    Net income (loss) attributable to NetSol$(851,156) $1,778,257 
        
        
        
    Net income (loss) per share:   
    Net income (loss) per common share   
    Basic$(0.08) $0.15 
    Diluted$(0.08) $0.15 
        
    Weighted average number of shares outstanding   
    Basic 11,250,219   11,499,983 
    Diluted 11,250,219   11,499,983 


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

      For the Years 
      Ended June 30,
     2022 2021
    Cash flows from operating activities:     
    Net income$       1,100,803  $         2,261,632 
    Adjustments to reconcile net income to net cash provided by operating activities:      
    Depreciation and amortization         3,812,273             3,956,314 
    Provision for bad debts              23,388              (332,325)
    Goodwill impairment            214,044                            - 
    Share of net loss from investment under equity method         2,021,480                253,819 
    Loss on sale of assets            205,288                191,935 
    Gain on forgiveness of loan                        -              (469,721)
    Stock based compensation            104,347                342,153 
    Changes in operating assets and liabilities:     
    Accounts receivable       (5,669,262)            6,861,454 
    Revenues in excess of billing       (1,273,693)            2,839,709 
    Other current assets            469,194              (857,708)
    Accounts payable and accrued expenses         1,121,308                474,098 
    Unearned revenue            931,452                204,563 
    Net cash provided by operating activities         3,060,622           15,725,923 
          
    Cash flows from investing activities:     
    Purchases of property and equipment       (2,609,205)          (2,551,283)
    Sales of property and equipment            349,058                188,233 
    Investment in associates                        -              (155,500)
    Net cash used in investing activities       (2,260,147)          (2,518,550)
          
    Cash flows from financing activities:     
    Purchase of treasury stock          (100,106)          (2,364,781)
    Purchase of subsidiary treasury stock          (950,352)                           - 
    Proceeds from bank loans            941,841             1,898,013 
    Payments on finance lease obligations and loans - net       (1,270,104)             (698,797)
    Net cash used in financing activities       (1,378,721)          (1,165,565)
    Effect of exchange rate changes       (9,163,111)            1,496,516 
    Net increase (decrease) in cash and cash equivalents       (9,741,357)          13,538,324 
    Cash and cash equivalents at beginning of the period       33,705,154           20,166,830 
    Cash and cash equivalents at end of period$     23,963,797  $       33,705,154 


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

     For the Year Ended For the Year Ended
     June 30, 2022 June 30, 2021
        
    Net Income (loss) attributable to NetSol$(851,156) $1,778,257 
    Non-controlling interest 1,951,959   483,375 
    Income taxes 988,938   1,026,617 
    Depreciation and amortization 3,812,273   3,956,314 
    Interest expense 369,801   394,289 
    Interest (income) (1,655,883)  (1,017,432)
    EBITDA$4,615,932  $6,621,420 
    Add back:   
    Non-cash stock-based compensation 104,347   342,153 
    Adjusted EBITDA, gross$4,720,279  $6,963,573 
    Less non-controlling interest (a) (2,903,457)  (1,588,701)
    Adjusted EBITDA, net$1,816,822  $5,374,872 
        
        
    Weighted Average number of shares outstanding   
    Basic 11,250,219   11,499,983 
    Diluted 11,250,219   11,499,983 
        
    Basic adjusted EBITDA$0.16  $0.47 
    Diluted adjusted EBITDA$0.16  $0.47 
        
        
    (a)The reconciliation of adjusted EBITDA of non-controlling interest   
    to net income attributable to non-controlling interest is as follows   
        
    Net Income (loss) attributable to non-controlling interest$1,951,959  $483,375 
    Income Taxes 258,468   147,688 
    Depreciation and amortization 1,096,709   1,115,734 
    Interest expense 109,361   121,740 
    Interest (income) (526,567)  (319,674)
    EBITDA$2,889,930  $1,548,863 
    Add back:   
    Non-cash stock-based compensation 13,527   39,838 
    Adjusted EBITDA of non-controlling interest$2,903,457  $1,588,701 
        

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