NETSOL Technologies Reports 3% Total Net Revenue Growth With 26% Increase in Recurring Revenue and Net Profitability in Fiscal First Quarter 2025
- 3% increase in 1Q’25 total net revenues to $14.6 million
- 26% increase in 1Q’25 subscription and support revenues to $8.2 million
- 45% gross margins in 1Q’25
- Net income in 1Q’25 of $71,000 building on FY’24 profitability
- Cash and cash equivalents increased to $24.5 million
- Signed expansion agreement with major automaker in China increasing contract value to over $30 million
- Signed $16 million agreement with major automaker in the United States
ENCINO, Calif., Nov. 13, 2024 (GLOBE NEWSWIRE) — NETSOL Technologies, Inc. (Nasdaq: NTWK), a global business services and asset finance solutions provider, reported results for the fiscal first quarter of 2025 ended September 30, 2024.
Najeeb Ghauri, Co-Founder, Chief Executive Officer, and Chairman of NETSOL Technologies Inc., commented, “We’re continue to build on the foundation we laid in 2024, achieving profitability in the first fiscal quarter of 2025 driven by a 26% increase in recurring subscription and support revenues and consistent services revenues when compared to the first quarter of fiscal 2024. Moreover, we are strengthening our balance sheet and are aggressively but strategically investing in the growth of our business, with a particular focus on AI, as we expand our product offerings and grow our presence in both new and existing geographic markets.”
Fiscal First Quarter 2025 Financial Results
Total net revenues for the first quarter of fiscal 2025 increased 3% to $14.6 million, compared with $14.2 million in the prior year period, driven by a 26% increase in subscription and support revenues and consistent services revenues in the quarter. On a constant currency basis, total net revenues were $14.5 million.
- No meaningful license fees compared with $1.3 million in the prior year period.
- Total subscription (SaaS and Cloud) and support revenues increased 26% to $8.2 million compared with $6.5 million in the prior year period. Total subscription and support revenues as percentage of sales increased to 56%, compared with 46% in the prior year period. Total subscription and support revenues on a constant currency basis were $8.1 million.
- Total services revenues were $6.4 million, compared with $6.5 million in the prior year period. Total services revenues on a constant currency basis were $6.3 million.
Gross profit for the first quarter of fiscal 2025 was $6.6 million or 45% of net revenues, compared to $6.2 million or 43% of net revenues in the first quarter of fiscal 2024. On a constant currency basis, gross profit was $6.7 million or 46% of net revenues as measured on a constant currency basis.
Operating expenses for the first quarter of fiscal 2025 were $7.3 million or 50% of sales compared to $5.8 million or 41% of sales for the first quarter of fiscal 2024. On a constant currency basis, operating expenses were $7.2 million or 49% of sales on a constant currency basis.
Loss from operations for the first quarter of fiscal 2025 was $(760,000) compared to income from operations of $350,000 in the first quarter of fiscal 2024.
GAAP net income attributable to NETSOL for the first quarter of fiscal 2025 totaled $71,000 or $0.006 per diluted share, compared with GAAP net income of $31,000 or 0.003 per diluted share in the prior year period.
Non-GAAP EBITDA for the first quarter of fiscal 2025 was $302,000 or $0.03 per diluted share, compared with non-GAAP EBITDA of $805,000 or $0.07 per diluted share in the first quarter of fiscal 2024 (see note regarding “Use of Non-GAAP Financial Measures,” below for further discussion of this non-GAAP measure).
Non-GAAP adjusted EBITDA for the first quarter of fiscal 2025 was $204,000 or $0.02 per diluted share, compared with a non-GAAP adjusted EBITDA of $466,000 or $0.04 per diluted share in the prior year period (see note regarding “Use of Non-GAAP Financial Measures,” below for further discussion of this non-GAAP measure).
Balance Sheet and Capital Structure
Cash and cash equivalents was $24.5 million as of September 30, 2024, compared with $19.1 million as of June 30, 2024. Working capital was $24.2 million as of September 30, 2024, compared with $23.6 million as of June 30, 2024. Total NETSOL stockholders’ equity at September 30, 2024, was $34.7 million or $3.03 per share.
Management Commentary
“Our performance in the first quarter of 2025 was driven by encouraging trends including a double-digit increase in subscription and support revenue and consistent services revenues when compared to the first quarter of 2024,” Najeeb Ghauri, Co-Founder, Chief Executive Officer, and Chairman of NETSOL Technologies Inc., commented. “Importantly, we achieved these results without recognizing any meaningful license fees in the quarter, demonstrating a shift in our revenue to rely less on large, one-time licensing fees and benefit from more predictable and consistent SaaS sales.
“We continued to invest in the growth of our business during the quarter,” Mr. Ghauri continued. “Geographic expansion remains a key strategic focus for us, and we believe that there is significant opportunity for growth in new markets, as well as the ones that we currently hold a leadership position in as we continue to innovate and evolve our product offerings to meet shifting market demands. The recent product rebranding has been particularly well received and we’re focused on investing in our business development initiatives to create a more sustainable pipeline of opportunities across all our markets.
“Growth in the United States continues to be a top priority, and we’re making encouraging progress as we continue to penetrate this region. During the quarter, we announced a five-year, $16 million deal with a major automaker and to revolutionize their digital car buying experience through Transcend Retail, our omnichannel digital retail platform. We’re performing in our established markets as well – during the quarter, we signed an expansion agreement with a major automaker in China increasing the contract value to over $30 million, demonstrating our strength of customer relationships and ongoing demand for our products from Tier 1 names in the auto industry. We remain confident that we will be able to achieve double digit revenue growth this fiscal year.”
Roger Almond, Chief Financial Officer of NETSOL Technologies Inc., commented, “Our first quarter results reflect the strengthening of our business model with solid growth of our recurring revenue base. From a liquidity standpoint, we strengthened our balance sheet in the quarter with a cash position of $24.5 million compared with $19.1 million at the close of fiscal 2024, as well as improved working capital. Looking ahead, we believe that NETSOL is well positioned to deliver double-digit revenue growth in fiscal 2025 and drive enhanced value for our shareholders.”
Conference Call
NETSOL Technologies management will hold a conference call on Wednesday, November 13, 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 5-10 minutes prior to the start time and provide the operator with the conference ID: NETSOL. The operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Investor Relations at 203-972-9200.
The conference call will also be broadcast live and available for replay here, along with additional replay access being provided through the company information section of NETSOL’s website.
A telephone replay of the conference call will be available approximately three hours after the call concludes through Wednesday, November 27, 2024.
Toll-free replay number: 844-512-2921
International replay number: 412-317-6671
Replay ID: 13750042
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 professionals placed in ten strategically located support and delivery centers throughout the world. NETSOL’s products help companies transform their finance and leasing operations, providing a fully automated asset-based finance solution covering the complete leasing and finance lifecycle.
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.
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:
IMS Investor Relations
netsol@imsinvestorrelations.com
+1 203-972-9200
| NETSOL Technologies, Inc. and Subsidiaries Schedule 1: Consolidated Balance Sheets |
|||||||
| As of | As of | ||||||
| ASSETS | September 30, 2024 | June 30, 2024 | |||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 24,525,956 | $ | 19,127,165 | |||
| Accounts receivable, net of allowance of $15,533 and $398,809 | 5,936,063 | 13,049,614 | |||||
| Revenues in excess of billings, net of allowance of $460,743 and $116,148 | 12,743,571 | 12,684,518 | |||||
| Other current assets | 3,328,112 | 2,600,786 | |||||
| Total current assets | 46,533,702 | 47,462,083 | |||||
| Revenues in excess of billings, net – long term | 866,388 | 954,029 | |||||
| Property and equipment, net | 4,847,869 | 5,106,842 | |||||
| Right of use assets – operating leases | 1,216,835 | 1,328,624 | |||||
| Other assets | 32,341 | 32,340 | |||||
| Intangible assets, net | – | – | |||||
| Goodwill | 9,302,524 | 9,302,524 | |||||
| Total assets | $ | 62,799,659 | $ | 64,186,442 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable and accrued expenses | $ | 8,414,790 | $ | 8,232,342 | |||
| Current portion of loans and obligations under finance leases | 6,443,937 | 6,276,125 | |||||
| Current portion of operating lease obligations | 590,541 | 608,202 | |||||
| Unearned revenue | 6,923,112 | 8,752,153 | |||||
| Total current liabilities | 22,372,380 | 23,868,822 | |||||
| Loans and obligations under finance leases; less current maturities | 92,638 | 95,771 | |||||
| Operating lease obligations; less current maturities | 594,631 | 688,749 | |||||
| Total liabilities | 23,059,649 | 24,653,342 | |||||
| Stockholders’ equity: | |||||||
| Preferred stock, $.01 par value; 500,000 shares authorized; | – | – | |||||
| Common stock, $.01 par value; 14,500,000 shares authorized; | |||||||
| 12,383,872 shares issued and 11,444,841 outstanding as of September 30, 2024 , | |||||||
| 12,359,922 shares issued and 11,420,891 outstanding as of June 30, 2024 | 123,842 | 123,602 | |||||
| Additional paid-in-capital | 128,709,890 | 128,783,865 | |||||
| Treasury stock (at cost, 939,031 shares | |||||||
| as of September 30, 2024 and June 30, 2024) | (3,920,856 | ) | (3,920,856 | ) | |||
| Accumulated deficit | (44,141,518 | ) | (44,212,313 | ) | |||
| Other comprehensive loss | (46,049,023 | ) | (45,935,616 | ) | |||
| Total NetSol stockholders’ equity | 34,722,335 | 34,838,682 | |||||
| Non-controlling interest | 5,017,675 | 4,694,418 | |||||
| Total stockholders’ equity | 39,740,010 | 39,533,100 | |||||
| Total liabilities and stockholders’ equity | $ | 62,799,659 | $ | 64,186,442 | |||
| NETSOL Technologies, Inc. and Subsidiaries Schedule 2: Consolidated Statement of Operations |
|||||||
| For the Three Months | |||||||
| Ended September 30, | |||||||
| 2024 | 2023 | ||||||
| Net Revenues: | |||||||
| License fees | $ | 1,229 | $ | 1,280,449 | |||
| Subscription and support | 8,192,471 | 6,512,243 | |||||
| Services | 6,404,798 | 6,449,489 | |||||
| Total net revenues | 14,598,498 | 14,242,181 | |||||
| Cost of revenues | 8,034,386 | 8,080,164 | |||||
| Gross profit | 6,564,112 | 6,162,017 | |||||
| Operating expenses: | |||||||
| Selling, general and administrative | 6,964,321 | 5,432,969 | |||||
| Research and development cost | 359,949 | 378,419 | |||||
| Total operating expenses | 7,324,270 | 5,811,388 | |||||
| Income (loss) from operations | (760,158 | ) | 350,629 | ||||
| Other income and (expenses) | |||||||
| Interest expense | (258,219 | ) | (276,017 | ) | |||
| Interest income | 769,867 | 414,718 | |||||
| Gain (loss) on foreign currency exchange transactions | 542,545 | (134,253 | ) | ||||
| Other income | 153,491 | 57,881 | |||||
| Total other income (expenses) | 1,207,684 | 62,329 | |||||
| Net income before income taxes | 447,526 | 412,958 | |||||
| Income tax provision | (229,817 | ) | (121,895 | ) | |||
| Net income | 217,709 | 291,063 | |||||
| Non-controlling interest | (146,914 | ) | (260,173 | ) | |||
| Net income attributable to NetSol | $ | 70,795 | $ | 30,890 | |||
| Net income per share: | |||||||
| Net income per common share | |||||||
| Basic | $ | 0.006 | $ | 0.003 | |||
| Diluted | $ | 0.006 | $ | 0.003 | |||
| Weighted average number of shares outstanding | |||||||
| Basic | 11,429,695 | 11,345,856 | |||||
| Diluted | 11,482,754 | 11,345,856 | |||||
| NETSOL Technologies, Inc. and Subsidiaries Schedule 3: Consolidated Statement of Cash Flows |
|||||||
| For the Three Months | |||||||
| Ended September 30, | |||||||
| 2024 | 2023 | ||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 217,709 | $ | 291,063 | |||
| Adjustments to reconcile net income to net cash | |||||||
| provided by operating activities: | |||||||
| Depreciation and amortization | 365,997 | 530,786 | |||||
| Provision (reversal) for bad debts | 336,506 | 7,880 | |||||
| (Gain) loss on sale of assets | – | (98 | ) | ||||
| Stock based compensation | 47,779 | 60,354 | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | 6,738,384 | 4,608,881 | |||||
| Revenues in excess of billing | 836,403 | (1,478,386 | ) | ||||
| Other current assets | (222,359 | ) | 92,686 | ||||
| Accounts payable and accrued expenses | 10,546 | 341,722 | |||||
| Unearned revenue | (2,813,220 | ) | (2,791,269 | ) | |||
| Net cash provided by operating activities | 5,517,745 | 1,663,619 | |||||
| Cash flows from investing activities: | |||||||
| Purchases of property and equipment | (100,737 | ) | (371,630 | ) | |||
| Sales of property and equipment | – | 1,230 | |||||
| Purchase of subsidiary shares | (7,895 | ) | – | ||||
| Net cash used in investing activities | (108,632 | ) | (370,400 | ) | |||
| Cash flows from financing activities: | |||||||
| Proceeds from the exercise of stock options | 21,500 | – | |||||
| Proceeds from bank loans | 250,000 | – | |||||
| Payments on finance lease obligations and loans – net | (118,311 | ) | (44,474 | ) | |||
| Net cash provided by (used in) financing activities | 153,189 | (44,474 | ) | ||||
| Effect of exchange rate changes | (163,511 | ) | (230,322 | ) | |||
| Net increase (decrease) in cash and cash equivalents | 5,398,791 | 1,018,423 | |||||
| Cash and cash equivalents at beginning of the period | 19,127,165 | 15,533,254 | |||||
| Cash and cash equivalents at end of period | $ | 24,525,956 | $ | 16,551,677 | |||
| NETSOL Technologies, Inc. and Subsidiaries Schedule 4: Reconciliation to GAAP |
|||||||
| For the Three Months | |||||||
| Ended September 30, | |||||||
| 2024 | 2023 | ||||||
| Net Income (loss) attributable to NetSol | $ | 70,795 | $ | 30,890 | |||
| Non-controlling interest | 146,914 | 260,173 | |||||
| Income taxes | 229,817 | 121,895 | |||||
| Depreciation and amortization | 365,997 | 530,786 | |||||
| Interest expense | 258,219 | 276,017 | |||||
| Interest (income) | (769,867 | ) | (414,718 | ) | |||
| EBITDA | $ | 301,875 | $ | 805,043 | |||
| Add back: | |||||||
| Non-cash stock-based compensation | 47,779 | 60,354 | |||||
| Adjusted EBITDA, gross | $ | 349,654 | $ | 865,397 | |||
| Less non-controlling interest (a) | (145,781 | ) | (399,440 | ) | |||
| Adjusted EBITDA, net | $ | 203,873 | $ | 465,957 | |||
| Weighted Average number of shares outstanding | |||||||
| Basic | 11,429,695 | 11,345,856 | |||||
| Diluted | 11,482,754 | 11,345,856 | |||||
| Basic adjusted EBITDA | $ | 0.02 | $ | 0.04 | |||
| Diluted adjusted EBITDA | $ | 0.02 | $ | 0.04 | |||
| (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 | $ | 146,914 | $ | 260,173 | |||
| Income Taxes | 70,587 | 36,377 | |||||
| Depreciation and amortization | 89,135 | 141,351 | |||||
| Interest expense | 79,192 | 85,889 | |||||
| Interest (income) | (242,647 | ) | (128,091 | ) | |||
| EBITDA | $ | 143,181 | $ | 395,699 | |||
| Add back: | |||||||
| Non-cash stock-based compensation | 2,600 | 3,741 | |||||
| Adjusted EBITDA of non-controlling interest | $ | 145,781 | $ | 399,440 | |||
