Continues Profitability with 58 Percent Quarterly Revenue
CA: NetSol Technologies, Inc. (NASDAQ:NTWK), a developer
of proprietary software applications and provider of information
technology (IT) services, has reported financial results
for its third quarter of fiscal 2006, ended March 31, 2006.
Net revenue for the third quarter of fiscal 2006 was approximately
$5.05 million, an increase of 58 percent, compared to revenue
of $3.19 million for the third quarter of fiscal 2005.
Third quarter EBITDA (earnings before interest, tax, depreciation
and amortization), a fundamental way to value a company's
performance, was $715,299, an approximate 16 percent increase,
compared to EBITDA of $617,850 for the period ended March
Net income before minority interest adjustments was $208,946,
or net income per weighted average diluted share of approximately
$0.01, compared to net income before minority interest adjustments
of $156,852, or net income per weighted average diluted
share of approximately $0.01, for the comparable quarter
of fiscal 2005.
Net income after minority interest adjustments was $21,819,
or net income per weighted average diluted share of $0.001,
compared to net income after minority interest adjustments
of $126,858, or net income per weighted average diluted
share of $0.01, for the comparable quarter of fiscal 2005.
The minority interest adjustments reflect the minority-owned
portion of net income of three of NetSol's subsidiaries:
NetSol Technologies, Ltd., NetSol Connect and NetSol-TiG
Gross profit for the quarter increased more than 47.5 percent
to $2,727,298, with gross profit margin of 54 percent, compared
to gross profit of $1,848,702, with gross profit margin
of 58 percent, for the third quarter of fiscal 2005. According
to NetSol CFO Tina Gilger, the decrease in gross profit
margin was primarily attributable to increased headcount
for developers and programmers that directly effects the
cost of goods sold as the company scales up to meet anticipated
"We are pleased to announce results for a quarter marked
by tremendous success in large scale LeaseSoft product implementation,
streamlining of acquisitions, and continuously improving
global brand awareness of NetSol," commented NetSol
CEO, Naeem Ghauri.
"Our seventh consecutive quarter of increased revenue
growth and profitability," continued Ghauri, "is
attributed to new orders of LeaseSoft licenses, an increase
in our services business, ongoing maintenance fees, and
the integration of revenues contributed by UK subsidiary,
NetSolCQ. We have also seen strong performance from our
outsourcing business with the NetSol-TiG joint venture,
which generated both domestic and international sales. We
anticipate these great strides in building our team and
products will support our year-end guidance for fiscal 2006
and aggressive growth plans for fiscal 2007."
Nine Month Financial
Net revenue for the nine month period ended March 31, 2006,
was approximately $14 million, an increase of 76 percent,
compared to revenue of $7.97 million for comparable
fiscal 2005 period.
• EBITDA for the nine month period was approximately
$2.4 million, a 42 percent increase, compared to EBITDA
of $1.7 million for the same period in fiscal 2005
• Net income before minority interest adjustments
was approximately $1.05 million, or net income per weighted
average diluted share of approximately $0.07, a 128 percent
increase compared to net income before minority interest
adjustments of $460,973, or net income per weighted average
diluted share of approximately $0.03, for the comparable
quarter of fiscal 2005.
• Net income after minority interest adjustments was
$350,601 or net income per weighted average diluted share
of $0.02, compared to net income after minority interest
adjustments of $445,238, or net income per weighted average
diluted share of $0.03, for the comparable period of fiscal
• Gross profit for the first nine months increased
more than 60.6 percent to $8,077,272, with gross profit
margin of approximately 58 percent, compared to gross profit
of $5,028,579, with gross profit margin of approximately
63 percent, for the comparable period of fiscal 2005.
"As each profitable quarter passes, NetSol continues
its mission to be counted as a global force within the technology
industry," commented NetSol Chairman Najeeb U. Ghauri.
"In addition to continuing our double digit revenue
growth, strong EBITDA, and profitability trend, we are simultaneously
scaling the business through both organic growth and strategic
acquisitions. The combination of controlled, aggressive
growth should serve our employees and shareholders well
as we integrate the newly acquired McCue Systems and continue
driving market penetration of LeaseSoft in the U.S. and
Third Quarter Business Highlights:
• Founded in January 1996, NetSol Technologies celebrated
its 10th anniversary. The company has grown from a small
group of employees located in Lahore, Pakistan, to over
450 employees worldwide with offices in the U.S., China,
Australia, the U.K. and Pakistan.
• NetSol Chairman Najeeb U. Ghauri, was elected to
the role of Vice Chairman for the U.S.-Pakistan Business
Council (USPBC), an affiliate of the United States Chamber
• In February of 2006, NetSol signed a new software
development and consulting agreement with McCue Systems.
In May, the company announced the acquisition of McCue Systems.
• NetSol completed the successful integration of its
million dollar LeaseSoft implementation at Finlease Company
Ltd., a member company of the Mauritius Commercial Bank
• Haydock Finance became the first implementation
site for the two newest LeaseSoft modules, Document Image
Processing (DIP) and Document Production Engine (DPE).
• Newsweek Asia lauded NetSol as a major contributor
to Pakistan's dramatic economic revival, highlighting how
new economic policy and leading companies such as NetSol
have driven the country's dramatic turnaround from a 1990s
failed state to a thriving global player with the second
largest gross domestic product (GDP) growth rate in the
• NetSol CQ signed a major new contract in UK for
LeaseSoft with a major banking institution.
• NetSol continued making inroads in the public sector,
with another major new software development and IT services
agreement with the Karachi Patent Office (KPO), the sole
patent office registering patents and designs across Pakistan.
• NetSol inked a new software development agreement
with Pakistan's Ministry of Religious Affairs (MoRA) for
development of system requirements specification (SRS) and
software applications for its Hajj Wing, under the auspices
of the Cabinet Division and Ministry of Information Technology.
NetSol management will host a conference call to discuss
fiscal 2006 third quarter financial results today, Tuesday,
May 9, at 10:00 a.m. Eastern (EDT). Shareholders and members
of the investment community are invited to participate in
the call. The conference call dial-in number for U.S. callers
is toll-free 888.243.3996. The conference call dial-in number
for international callers is 973.935.2406.
As a confirmation number is required to access the call,
please RSVP your participation by calling Suzanne Schnitzer
at McCloud Communications, 949.553.9748. An audio replay
of the conference call will be available from May 9 through
16, 2006. To access the audio replay, U.S. callers can dial
877.519.4471 and international callers can dial 973.341.3080.
The replay pin code is 7309900.
About NetSol Technologies, Inc.
NetSol Technologies is an end-to-end solution provider for
the lease and finance industry. Headquartered in Calabasas,
CA, NetSol Technologies, Inc. operates on a global basis
with locations in the U.S., Europe, East Asia and Asia Pacific.
NetSol helps its clients identify, evaluate and implement
technology solutions to meet their most critical business
challenges and maximize their bottom line. By utilizing
its worldwide resources, NetSol delivers high-quality, cost-effective
IT services ranging from consulting and application development
to systems integration and outsourcing. NetSol's commitment
to quality is demonstrated by its achievement of both ISO
9001 and SEI (Software Engineering Institute) CMM (Capability
Maturity Model) Level 4 assessment. For more information,
visit NetSol Technologies' web site at www.netsoltek.com.
Securities Exchange Act of 1934
This release is comprised of inter-related information that
must be interpreted in the context of all the information
provided; accordingly, care should be exercised not to consider
portions of this release out of context. This release is
provided in compliance with Commission Regulation FD and
contains certain "forward-looking statements"
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through the use of words such as "expects," "will,"
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reflect the current views of NetSol Technologies with respect
to future events and are subject to certain assumptions,
including those described in this release. Should one or
more of the underlying assumptions prove incorrect, actual
results may vary materially from those described herein
as anticipated, believed or expected. NetSol Technologies
does not intend to update these forward-looking statements
prior to announcement of quarterly or annual results.