NTWK NetSol Technologies Inc

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: 877-407-0789International 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: 844-512-2921International replay number: 412-317-6671Replay ID: 13749314

About NETSOL TechnologiesNETSOL 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 StatementsThis 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 MeasuresThe 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 Relationsnetsol@imsinvestorrelations.com+1 203-972-9200

NETSOL Technologies, Inc. and SubsidiariesSchedule 1: Consolidated Balance Sheets
			As of				As of
	ASSETS		June 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 SubsidiariesSchedule 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 SubsidiariesSchedule 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 SubsidiariesSchedule 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