NETSOL Technologies Reports 19% Revenue Growth in Fiscal Fourth Quarter of 2024 and Exceeds Full Fiscal Year 2024 Revenue Target

GlobeNewswire Inc.

September 30, 2024 8:05PM GMT

  • FY’24 Total Revenue Increase 17% to $61.4 million exceeding target revenue range of $60 - $61 million
  • Q4’ 24 Gross Margins of 52% increased from 35% in 4Q’ 23; FY’ 24 Gross Margins of 48% increased from 32% in FY ’23
  • FY’24 Operating Income of $3.5 million from a loss of $(8.8 million) last year
  • $0.06 earnings per share in FY’ 24 compared with a loss of $(0.46) per share in FY’ 23
  • 10% increase in Subscription and Support revenues to $7.5 million in 4Q’ 24; Annual Recurring Revenues of $28 million meets FY’ 24 target

ENCINO, Calif., Sept. 30, 2024 (GLOBE NEWSWIRE) -- NETSOL Technologies, Inc. (Nasdaq: NTWK), a global business services and asset finance solutions provider, reported results for the fourth quarter and full fiscal 2024 ended June 30, 2024.

Najeeb Ghauri, Co-Founder, Chief Executive Officer, and Chairman of NETSOL Technologies Inc., commented, "We're proud to have exceeded our full-year revenue estimates and achieve profitability for the full fiscal year. Our performance in fiscal 2024 underscores the successful execution of our long-term strategy, our commitment to investing in the growth of our business, and the ongoing development of innovative products and solutions that meet the diverse needs of our expanding customer base.”

Fiscal Fourth Quarter 2024 Financial Results

Total net revenues for the fourth quarter of fiscal 2024 increased 19% to $16.4 million, compared with $13.8 million in the prior year period. On a constant currency basis, total net revenues were $16.5 million.

  • License fees were $621,000 compared with $21,000 in the prior year period. License fees on a constant currency basis were $605,000.
  • Total subscription (SaaS and Cloud) and support revenues increased 10% to $7.5 million compared with $6.8 million in the prior year period. Total subscription and support revenues on a constant currency basis were $7.5 million.
  • Total services revenues were $8.4 million, compared with $7.0 million in the prior year period. Total services revenues on a constant currency basis were $8.4 million.

Gross profit for the fourth quarter of fiscal 2024 was $8.5 million or 52% of net revenues, compared to $4.8 million or 35% of net revenues in the fourth quarter of fiscal 2023. On a constant currency basis, gross profit for the fourth quarter of fiscal 2024 was $8.7 million or 52% of net revenues as measured on a constant currency basis.

Operating expenses for the fourth quarter of fiscal 2024 were $7.7 million or 47% of sales compared to $7.7 million or 56% of sales for the fourth quarter of fiscal 2023. On a constant currency basis, operating expenses for the fourth quarter of fiscal 2024 were $8.3 million or 50% of sales on a constant currency basis.

Income from operations for the fourth quarter of fiscal 2024 was $798,000 compared to a loss from operations of $(2.9 million) in the fourth quarter of fiscal 2023.

GAAP net loss attributable to NETSOL for the fourth quarter of fiscal 2024 totaled $(83,000) or $(0.01) per diluted share, compared with a GAAP net loss of $(5.1 million) or $(0.45) per diluted share in the fourth quarter of fiscal 2023.

Non-GAAP EBITDA for the fourth quarter of fiscal 2024 was $1.2 million or $0.11 per diluted share, compared with a non-GAAP EBITDA loss of $(4.5 million) or $(0.40) per diluted share in the fourth quarter of fiscal 2023 (see note regarding “Use of Non-GAAP Financial Measures,” below for further discussion of this non-GAAP measure).

Non-GAAP adjusted EBITDA for the fourth quarter of fiscal 2024 was $674,000 or $0.06 per diluted share, compared with a non-GAAP adjusted EBITDA loss of $(4.2 million) or $(0.37) 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).

Full Fiscal Year Ended June 30, 2024 Financial Results

Total net revenues for the full fiscal year ended June 30, 2024, were $61.4 million, compared to $52.4 million in the prior year. On a constant currency basis, total net revenues were $61.7 million.

  • License fees were $5.5 million compared with $2.3 million in the prior year period. License fees on a constant currency basis were $5.5 million.
  • Total subscription (SaaS and Cloud) and support revenues for the full fiscal year ended June 30, 2024, were $28.0 million compared with $26.0 million in the prior year period. Total subscription and support revenues on a constant currency basis were $28.0 million.
  • Total services revenues were $28.0 million compared with $24.1 million in the prior year period. Total services revenues on a constant currency basis were $28.1 million.

Gross profit for the full fiscal year ended June 30, 2024, was $29.3 million or 48% of net revenues, compared with $16.9 million or 32% of net revenues in the prior year. On a constant currency basis, gross profit for the full fiscal year ended June 30, 2024, was $26.5 million or 43% of net revenues as measured on a constant currency basis.

Operating expenses for the full fiscal year ended June 30, 2024, were $25.8 million or 42% of sales compared with $25.7 million or 49% of sales in the prior year. On a constant currency basis, operating expenses were $27.8 million or 45% of sales on a constant currency basis.

Income from operations for the full year ended June 30, 2024 was $3.5 million compared to a loss from operations of $(8.8 million) in prior year.

GAAP net income attributable to NETSOL for the full fiscal year ended June 30, 2024, totaled $684,000 or $0.06 per diluted share, compared with a GAAP net loss attributable to NETSOL of $(5.2 million) or a loss of $(0.46) per diluted share in the prior year. Included in GAAP net income attributable to NETSOL was a loss of $(1.2 million) on foreign currency exchange transactions for the full fiscal year ended June 30, 2024, compared to a gain of $6.8 million in the prior year period. As most contracts are either in U.S. dollars or Euros, currency fluctuations will yield foreign currency exchange gains or losses depending on the value of other currencies compared to the U.S. dollar and the Euro. As such, on a constant currency basis, GAAP net loss attributable to NETSOL for the full fiscal year ended June 30, 2024 totaled $(2.9 million) or $(0.26) per diluted share.

Non-GAAP EBITDA for the full fiscal year ended June 30, 2024, was $4.2 million or $0.37 per diluted share, compared with a non-GAAP EBITDA loss of $(426,000) or $(0.04) per diluted share in the full fiscal year ended June 30, 2023 (see note regarding “Use of Non-GAAP Financial Measures,” below for further discussion of this non-GAAP measure).

Non-GAAP adjusted EBITDA for the full fiscal year of 2024 was $2.7 million or $0.23 per diluted share, compared with a non-GAAP adjusted EBITDA loss of $(2.3 million) or $(0.20) 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).

At June 30, 2024, cash and cash equivalents increased to $19.1 million compared to $15.5 at June 30, 2023. Total NETSOL stockholders’ equity at June 30, 2024, was $34.8 million, or $3.05 per share.

Management Commentary

“We’re thrilled to report strong revenue growth and profitability for the full fiscal year of 2024,” Najeeb Ghauri, Co-Founder, Chief Executive Officer, and Chairman of NETSOL Technologies Inc., commented. “We reached several milestones during the fiscal year as we exceeded our full year revenue target of $60 – $61 million driven by strong demand for our comprehensive suite of products, met our annual recurring revenue target of $28 million, and achieved full year profitability with earnings per share of $0.06.”

Mr. Ghauri continued, “In addition to our sales growth, we continued to invest in the growth of our business throughout the fiscal year. We increased our investments in sales and marketing in support of our long-term goals and are intently focused on the development of new products and services that expand our total addressable market. Moreover, we remain committed to the innovation and integration of cutting-edge AI solutions into our business processes and our products and offerings. During the year, we made significant investments in our AI capabilities by adding top talent to our already impressive team.

“As a global company, our presence across key markets is a major focus. We performed well in our established markets during the fiscal year, signing a healthy mix of both new agreements and extensions with existing customers that include tier one automakers, banks, and financial services providers throughout Asia Pacific and Europe,” Mr. Ghauri added. “These longstanding partnerships are especially encouraging as they represent the stickiness of our customer base and validate the performance and reliability of our products. Our presence in the United States is still nascent but exhibiting strong signs of early growth, and we have a healthy and expanding pipeline of activity as we continue to establish NETSOL in this region.”

Roger Almond, Chief Financial Officer of NETSOL Technologies Inc., commented, “We’re very pleased by our results in fiscal 2024. We believe that we’re still only in the beginning stages of our renewed growth and anticipate double digit revenue improvement in fiscal 2025 driven by enhanced sales and market recognition of our products and services. As we look ahead, we remain committed to executing on our growth strategy while carefully managing costs to deliver sustainable, profitable growth for our shareholders.”

Conference Call

NETSOL Technologies management will hold a conference call on Tuesday, October 1, 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 818-222-9195.

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 Tuesday, October 15, 2024.

Toll-free replay number: 844-512-2921
International replay number: 412-317-6671
Replay ID: 13749314

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
 ASSETSJune 30, 2024 June 30, 2023
Current assets:   
 Cash and cash equivalents$19,127,165  $15,533,254 
 Accounts receivable, net of allowance of $398,809 and $420,354 13,049,614   11,714,422 
 Revenues in excess of billings, net of allowance of $116,148 and $1,380,141 12,684,518   12,377,677 
 Other current assets 2,600,786   1,978,514 
  Total current assets 47,462,083   41,603,867 
Revenues in excess of billings, net - long term 954,029   - 
Property and equipment, net 5,106,842   6,161,186 
Right of use assets - operating leases 1,328,624   1,151,575 
Other assets 32,340   32,327 
Intangible assets, net -   127,931 
Goodwill 9,302,524   9,302,524 
  Total assets$64,186,442  $58,379,410 
      
 LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
 Accounts payable and accrued expenses$8,232,342  $6,552,181 
 Current portion of loans and obligations under finance leases 6,276,125   5,779,510 
 Current portion of operating lease obligations 608,202   505,237 
 Unearned revenue 8,752,153   7,932,306 
  Total current liabilities 23,868,822   20,769,234 
Loans and obligations under finance leases; less current maturities 95,771   176,229 
Operating lease obligations; less current maturities 688,749   652,194 
  Total liabilities 24,653,342   21,597,657 
      
Stockholders' equity:   
 Preferred stock, $.01 par value; 500,000 shares authorized; -   - 
 Common stock, $.01 par value; 14,500,000 shares authorized;   
  12,359,922 shares issued and 11,420,891 outstanding as of June 30, 2024,   
  12,284,887 shares issued and 11,345,856 outstanding as of June 30, 2023 123,602   122,850 
 Additional paid-in-capital 128,783,865   128,476,048 
 Treasury stock (at cost, 939,031 shares   
 as of June 30, 2024 and June 30, 2023) (3,920,856)  (3,920,856)
 Accumulated deficit (44,212,313)  (44,896,186)
 Other comprehensive loss (45,935,616)  (45,975,156)
  Total NetSol stockholders' equity 34,838,682   33,806,700 
 Non-controlling interest 4,694,418   2,975,053 
  Total stockholders' equity 39,533,100   36,781,753 
  Total liabilities and stockholders' equity$64,186,442  $58,379,410 


 
NETSOL Technologies, Inc. and Subsidiaries
Schedule 2: Consolidated Statement of Operations
 
    For the Three Months For the Years
    Ended June 30, Ended June 30,
     2024   2023   2024   2023 
Net Revenues:        
 License fees $620,749  $20,735  $5,449,991  $2,269,564 
 Subscription and support  7,472,386   6,805,076   27,952,768   25,980,661 
 Services  8,355,318   6,964,538   27,990,332   24,142,990 
  Total net revenues  16,448,453   13,790,349   61,393,091   52,393,215 
           
Cost of revenues  7,976,157   8,974,275   32,108,221   35,477,652 
Gross profit  8,472,296   4,816,074   29,284,870   16,915,563 
           
Operating expenses:        
 Selling, general and administrative  7,336,916   7,366,072   24,388,714   24,093,908 
 Research and development cost  337,189   356,820   1,402,601   1,601,613 
  Total operating expenses  7,674,105   7,722,892   25,791,315   25,695,521 
           
Income (loss) from operations  798,191   (2,906,818)  3,493,555   (8,779,958)
           
Other income and (expenses)        
 Interest expense  (286,150)  (252,920)  (1,142,166)  (765,030)
 Interest income  651,794   212,293   1,911,258   1,217,850 
 Gain (loss) on foreign currency exchange transactions  (74,563)  (610,481)  (1,187,320)  6,748,038 
 Share of net loss from equity investment  -   (1,040,753)  -   (1,033,243)
 Other income (expense)  125,910   (662,953)  148,120   (605,570)
  Total other income (expenses)  416,991   (2,354,814)  (270,108)  5,562,045 
           
Net income (loss) before income taxes  1,215,182   (5,261,632)  3,223,447   (3,217,913)
Income tax provision  (727,001)  285,438)  (1,145,518)  (926,560)
Net income (loss)  488,181   (5,547,070)  2,077,929   (4,144,473)
 Non-controlling interest  (571,063)  472,354   (1,394,056)  (1,099,275)
Net income (loss) attributable to NetSol $(82,882) $(5,074,716) $683,873  $(5,243,748)
           
           
Net income (loss) per share:        
 Net income (loss) per common share        
  Basic $(0.01) $(0.45) $0.06  $(0.46)
  Diluted $(0.01) $(0.45) $0.06  $(0.46)
           
Weighted average number of shares outstanding        
 Basic  11,405,240   11,308,571   11,378,595   11,279,966 
 Diluted  11,405,240   11,308,571   11,421,940   11,279,966 


 
NETSOL Technologies, Inc. and Subsidiaries
Schedule 3: Consolidated Statement of Cash Flows
 
   For the Years
   Ended June 30,
    2024   2023 
Cash flows from operating activities:    
 Net income (loss)$2,077,929  $(4,144,473)
 Adjustments to reconcile net income (loss) to net cash   
  provided by operating activities:   
 Depreciation and amortization 1,721,800   3,244,538 
 Provision (reversal) for bad debts (29,134)  1,702,744 
 Impairment and share of net loss from investment under equity method -   2,113,430 
 (Gain) loss on sale of assets (101,864)  19,721 
 Stock based compensation 308,569   317,451 
  Changes in operating assets and liabilities:    
  Accounts receivable (1,296,321)  (6,860,983)
  Accounts receivable - related party (606,061)  
  Revenues in excess of billing (1,205,456)  1,514,305 
  Other current assets (216,944)  (131,108)
  Accounts payable and accrued expenses 1,611,745   709,758 
  Unearned revenue 645,125   3,524,188 
  Net cash provided by operating activities  2,909,388   2,009,571 
      
Cash flows from investing activities:    
 Purchases of property and equipment (515,404)  (1,639,438)
 Sales of property and equipment 223,866   240,207 
  Net cash used in investing activities  (291,538)  (1,399,231)
      
Cash flows from financing activities:    
 Purchase of subsidiary treasury stock -   (61,124)
 Proceeds from bank loans 756,936   270,292 
 Payments on finance lease obligations and loans - net (517,385)  (928,160)
  Net cash provided by (used in) financing activities  239,551   (718,992)
Effect of exchange rate changes  736,510   (8,321,891)
Net increase (decrease) in cash and cash equivalents  3,593,911   (8,430,543)
Cash and cash equivalents at beginning of the period 15,533,254   23,963,797 
Cash and cash equivalents at end of period $19,127,165  $15,533,254 


 
NETSOL Technologies, Inc. and Subsidiaries
Schedule 4: Reconciliation to GAAP
 
 For the Three Months For the Years
 Ended June 30, Ended June 30,
  2024   2023   2024   2023 
        
Net Income (loss) attributable to NetSol$(82,882) $(5,074,716) $683,873  $(5,243,748)
Non-controlling interest 571,063   (472,354)  1,394,056   1,099,275 
Income taxes 727,001   285,438   1,145,518   926,560 
Depreciation and amortization 370,561   725,069   1,721,800   3,244,538 
Interest expense 286,150   252,920   1,142,166   765,030 
Interest (income) (651,794)  (212,293)  (1,911,258)  (1,217,850)
EBITDA$1,220,099  $(4,495,936) $4,176,155  $(426,195)
Add back:       
Non-cash stock-based compensation 47,694   118,892   308,569   317,451 
Adjusted EBITDA, gross$1,267,793  $(4,377,044) $4,484,724  $(108,744)
Less non-controlling interest (a) (594,303)  208,924   (1,810,394)  (2,154,850)
Adjusted EBITDA, net$673,490  $(4,168,120) $2,674,330  $(2,263,594)
        
Weighted Average number of shares outstanding       
Basic 11,405,240   11,308,571   11,378,595   11,279,966 
Diluted 11,448,585   11,308,571   11,421,940   11,279,966 
        
Basic adjusted EBITDA$0.06  $(0.37) $0.24  $(0.20)
Diluted adjusted EBITDA$0.06  $(0.37) $0.23  $(0.20)
        
        
(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$571,063  $(472,354) $1,394,056  $1,099,275 
Income Taxes 43,287   54,809   198,923   253,158 
Depreciation and amortization 92,159   191,326   440,302   905,002 
Interest expense 87,702   79,233   354,624   237,162 
Interest (income) (202,480)  (65,708)  (590,170)  (369,197)
EBITDA$591,731  $(212,694) $1,797,735  $2,125,400 
Add back:       
Non-cash stock-based compensation 2,572   3,770   12,659   29,450 
Adjusted EBITDA of non-controlling interest$594,303  $(208,924) $1,810,394  $2,154,850