New NetSol CEO Restructures
Global Operation to Aggressively Leverage Offshore Capabilities
CA: NetSol Technologies, Inc. (NASDAQ:NTWK) ("NetSol"),
a U.S.-based, multinational provider of enterprise software
solutions and services for commercial finance November 14
announced financial results for its first quarter of fiscal
2007, ending September 30, 2006.
"While the first quarter shows a profit of $273,846
on a non-GAAP basis, several non-cash items impacted our
net results. Our two successful acquisitions in the US and
the UK have created a sustainable business model that represents
about 47 percent of NetSol's topline growth in the most
significant markets," said Najeeb U. Ghauri, Chairman
and new CEO of NetSol Technologies, Inc. "Our revenue
guidance for FY 2007 for $30 million is reiterated and we
anticipate an update to our guidance sometime in early calendar
year 2007. I remain confident that we will continue to improve
our gross margins from the previous period."
Net revenues for the quarter ended September 30, 2006 were
$5,862,560, compared to $4,469,985 for the quarter ended
September 30, 2005. This reflects an increase of $1,392,575,
or 31 percent. The increase is attributable primarily to
growth in NetSol's services business in the US and Asia
Pacific markets and the growing outsourcing business of
NetSol-TiG. "We have spent the capital necessary to
grow and have restructured our business to meet that growth,
and certain areas of our budget are already beginning to
respond to investments made for NetSol's global expansion,"
commented CEO Ghauri.
Gross profit was $3,051,000 in the first quarter ending
September 30, 2006, compared to $2,802,635 for the same
quarter of the previous year, for an increase of $248,365,
reflecting an upward trend in growth. The gross profit percentage
for the quarter decreased approximately 11 percent to 54
percent, when compared to the first quarter ended September
30, 2005. The increase in cost of sales in the current quarter
played a significant role in the lower gross profit percentage.
The net loss on the US GAAP basis is, in part, the direct
result of non-cash items associated with both UK and US
acquisitions and related financing in June 2006. .
"We are delighted that both the U.K. and US acquisitions
have fared so well and met our expectations of integration
while we are expeditiously working on leveraging NetSol's
Center of Excellence CMMi Level 5 capability in Lahore,."
said CEO Ghauri. "The UK and US acquisitions combined
accounted for over 47 percent of our total revenues in the
fiscal first quarter of 2007, and that's nearly half of
our revenues. This is a result of our designed growth strategy
to turn NetSol into a real global IT company with a solid
presence in such strategic locations as China, the US, the
UK and Asia Pacific, and NetSol gaining revenues from all
around the world."
Net loss for the first quarter of fiscal 2007 was $1,295,964,
or a net loss per basic and diluted share of $0.08, compared
to net income of $203,745, or net income per basic and diluted
share of $0.01, for the quarter ended September 30, 2005.
EBITDA for the current quarter posted a loss of $342,188,
or a net loss of earnings per share of $0.02, with a net
non-GAAP income of $273,846, or an income of $0.01 earnings
on basic and diluted shares.
"The cost of revenues and operating expenses showed
increases on a quarter-to-quarter comparison for the first
quarter of fiscal 2007," commented CEO Ghauri. "The
increase is due in part to our expansion into the US market
through the acquisition of McCue Systems. Salaries substantially
increased with the addition of approximately 40 employees.
Our marketing expenses increased as we initiated our worldwide
marketing and branding campaign throughout the entire company."
Ghauri continued, "Other increases, which were mostly
capitalized, were in research and development as we are
working on a new generation technology platform that would
eventually provide one platform to our global customers
in all three regions of North America, Europe and Asia Pacific.
As we continue with the integration of McCue/NetSol Technologies
US, we expect to see a significant reduction in the cost
of revenue, reduced investment in research and development,
and an increase in revenue per employee," added Ghauri.
"Even though the cost of sales weakened our earnings
in the first quarter and we had a non-cash paper loss due
to warrants being issued, our balance sheet remained strong
with a cash position of $3,822,420, compared to $1,469,154
on September 30, 2005, and our working capital was $10,459,785,"
commented NetSol CFO Tina Gilger.
NetSol Goals and Plans
of Operation for Fiscal 2007
. With NetSol's presence
established in The Peoples Republic of China, aggressively
exploit the booming Chinese market and continue to expand
NetSol's presence in China
. Divide global business in two groups : 1) Global Products
Group 2) Global Services Group
. Set up a small new sales and customers service office
in Bangkok, Thailand to cater to our many Fortune 500 clients
and new prospects in Asia Pacific
. Re -structure company's operation to create better productivity,
enhance efficiencies, and visibility of new business
. Create new technology partnership with Oracle and strengthen
our relationship with Intel in Asia Pacific and in the U.S.
. Market aggressively the company's tri-product solutions
with broader marketing efforts for LeaseSoft in the Asia
. Increase product positioning through alliances, joint
ventures and partnerships
. Effectively position and market 'InBanking' by launching
a beta test
. Effectively advantage the new business divisions in Pakistan
to expand operations
. Continue the integration of NetSol-CQ and McCue Systems
and migrate the work load gradually from CQ and McCue to
NetSol Pakistan which will eventually improve gross margins
and productivity per employee
The second quarter of fiscal 2007 has started out with good
news from several areas:
. Earlier this month, NetSol issued a news release announcing
the success of its LeasePak product at Yamaha Motor through
an upgrade to the current 5.3 version for their core equipment
finance portfolio management.
. On October 24, 2006, The Maxim Group initiated coverage
on NetSol with a 'Buy' recommendation, citing optimistic
confidence that NetSol is now well positioned to extend
the penetration of its products beyond previous core competency.
. Also in October, NetSol was a sponsor of the Equipment
Leasing Association of America's 45th Annual Convention.
Management addressed a group of leaders from commercial
finance institutions in the U.S.
About NetSol Technologies, Inc.
NetSol Technologies is a U.S.-based multinational provider
of enterprise software solutions and services for commercial
finance. Headquartered in Calabasas, CA, NetSol Technologies,
Inc. operates on a global basis with locations in the U.S.,
Europe, East Asia and Asia Pacific, including: London, Los
Angeles, San Francisco, Sydney, Beijing, Toronto, and Lahore,
NetSol Technologies is a U.S.-based multinational provider
of enterprise software and services for commercial finance.
Headquartered in Calabasas, CA, NetSol Technologies, Inc.
operates on a global basis with locations in the U.S., Europe,
East Asia and Asia Pacific, including: London, Los Angeles,
San Francisco, Sydney, Beijing, Toronto, and Lahore, Pakistan.
The NetSol family of products includes: the LeaseSoft Contract
Management System, LeaseSoft Credit Application Processing,
LeaseSoft Wholesale Finance System, LeaseSoft Premium Finance
System, LeaseSoft EPO system, and the LeasePak system. NetSol
clients include:, VW Credit Corp, Hyundai IT, City National
Bank, BMW, Toyota, Yamaha, Scania Asset Finance, and Investec
Asset. NetSol's largest customer: DaimlerChrysler Services,
a division of DaimlerChrysler, the world's fifth-largest
carmaker, ranks NetSol as a preferred vendor in 40-plus
NetSol Technologies helps its clients identify, evaluate
and implement technology solutions to meet their strategic
business challenges and maximize their bottom line. By utilizing
its worldwide resources, NetSol Technologies delivers high-quality,
cost-effective equipment finance portfolio management solutions
services ranging from consulting and application development
to systems integration and outsourcing. NetSol Technologies'
commitment to quality is demonstrated by its achievement
of both ISO 9001 and SEI (Software Engineering Institute)
CMMl (Capability Maturity Model) Level 5 assessment. For
more information, visit NetSol Technologies' web site at