Ecino September 24 2023: NETSOL Technologies, Inc. (Nasdaq: NTWK), a global business services and enterprise application solutions provider, reported loss of $5.1 million for the fiscal fourth quarter and year ended June 30, 2023.
As a result full year net loss attributable to NETSOL totaled $(5.2 million) , compared with GAAP net loss of $(851,000) or $(0.08) per diluted share for the full year ended June 30, 2022.
“From a financial perspective, our fourth quarter results fell short of our goals and expectations. However, this past quarter and full fiscal year was characterized by progress advancing our three core growth drivers that we believe will give current and prospective shareholders reason to be optimistic about what’s on the horizon for NETSOL. We continue to drive our transition to SaaS-based, recurring revenue and we’re seeing positive sequential and year-over-year growth, highlighted by our full-year subscription and support revenues exceeding our stated target of $25 million. As we seek interest from existing customers in converting to SaaS pricing and with new clients purchasing SaaS and cloud-based solutions, we expect our subscription and support revenues to be positioned for continued growth.”
NETSOL Co-Founder, Chairman and Chief Executive Officer Najeeb Ghauri stated
He added, “Our ongoing transition to SaaS based pricing has also allowed us to implement significant cost reduction strategies across our business including the reduction of our head count by what we expect to be approximately 300 after a period of severance required by local laws that extend into the first and second quarters of fiscal 2024. As we continue to drive these initiatives, we expect to be able to better allocate capital to the growing, higher margin part of our business to drive profitability. Additionally, we continue to make strides on our expansion strategy into the North American markets. As previously mentioned, we have established a facility in Austin, Texas to support our United States operations, and we’re taking the time to staff it with the most qualified individuals to efficiently grow our business in this region.”
“Our established markets throughout the Asia-Pacific region and Europe remain strong, and our pipeline continues to be active with several potential licensing deals in the works. We believe that we have the pieces in place to generate long-term growth for our business, and given our healthy pipeline, we are targeting $61 million to $63 million in revenue for the full fiscal year 2024, or 16% to 20% revenue growth. We are not satisfied with our current results, but we have a strategy in place that we are focusing our time, energy, and patience on executing, and we believe that this will yield long-term, sustainable growth and positive results for NETSOL.”
Fiscal Fourth Quarter 2023 Operational Highlights
- Launched the Hubex API Library, the second product offering from the Company’s AppexNow marketplace, allowing customers to standardize all API integration procedures across multiple API services through a single integration
- Implemented and went live with NFS Ascent for a Swedish bank operating across the Nordic and European regions, to support the bank’s lending business via the Cloud
- Appointed Darryll Lewis as Managing Director of NETSOL Technologies Europe to drive business growth and innovation in this market; Hired two key sales personnel to promote expansion in the United States
- Received numerous designations and accreditations establishing NETSOL as a premier Amazon Web Services partner committed to designing, building, and maintaining secure, reliable, and efficient cloud architectures
Fiscal Fourth Quarter 2023 Financial Results
Total net revenues for the fourth quarter of fiscal 2023 were $13.8 million, compared with $13.5 million in the prior year period. On a constant currency basis, total net revenues were $14.0 million.
- Total subscription (SaaS and Cloud) and support revenues were $6.8 million compared with $6.1 million in the prior year period. Total subscription and support revenues on a constant currency basis were $6.9 million.
- Total services revenues were $7.0 million compared with $6.5 million in the prior year period. Total services revenues on a constant currency basis were $7.1 million.
Gross profit for the fourth quarter of fiscal 2023 was $4.8 million (or 35.0% of net revenues), consistent with $4.8 million (or 35.6% of net revenues) in the fourth quarter of fiscal 2022. On a constant currency basis, gross profit for the fourth quarter of fiscal 2023 was $2.4 million (or 17.1% of net revenues as measured on a constant currency basis).
Operating expenses for the fourth quarter of fiscal 2023 were $7.7 million (or 56.0% of sales) compared to $6.4 million (or 47.0% of sales) for the fourth quarter of fiscal 2022. On a constant currency basis, operating expenses for the fourth quarter of fiscal 2023 increased to $9.0 million (or 63.9% of sales on a constant currency basis).
GAAP net loss attributable to NETSOL for the fourth quarter of fiscal 2023 totaled $(5.1 million) or $(0.45) per diluted share, compared with GAAP net loss of $(2.2 million) or $(0.19) per diluted share in the fourth quarter of fiscal 2022. On a constant currency basis, GAAP net loss attributable to NETSOL for the fourth quarter of fiscal 2023 totaled $(7.8 million) or $(0.69) per diluted share. Included in GAAP net loss attributable to NETSOL was a loss of $(610,000) on foreign exchange currency in the fourth quarter, compared to a gain of approximately $1.6 million in the prior year period. On a constant currency basis, NETSOL realized a loss of $(1.2 million) on foreign currency transactions.
Non-GAAP adjusted EBITDA for the fourth quarter of fiscal 2023 was a loss of $(4.2 million) or $(0.37) per diluted share, compared with non-GAAP adjusted EBITDA loss of $(1.4 million) or $(0.12) per diluted share in the fourth quarter of fiscal 2022 (see note regarding “Use of Non-GAAP Financial Measures,” below for further discussion of this non-GAAP measure).
Fiscal Full Year 2023 Financial Results
Total net revenues for the full year ended June 30, 2023, were $52.4 million, compared to $57.3 million in the prior year period. On a constant currency basis, total net revenues were $54.7 million.
- Total subscription (SaaS and Cloud) and support revenues for the full year 2023 were $26.0 million compared with $28.3 million in the prior year period. Total subscription and support revenues on a constant currency basis were $26.7 million. The decrease in the full year total subscription and support revenue is related to a one-time catch-up in support revenue of approximately $3.5 million in fiscal year 2022.
- Total services revenues for the full year 2023 were $24.1 million compared with $24.4 million in the prior year period. Total services revenues on a constant currency basis were $25.6 million. The increase in services revenues on a constant currency basis is primarily due to the increase in change requests, enhancements, and reimbursable costs.
Company Targeting Revenue of $61 Million to $63 Million in Fiscal 2024; Expected increase of 16% to 20% compared to Fiscal 2023 revenue of $52.4 Million.
Gross profit for the full year 2023 was $16.9 million (or 32.3% of net revenues), compared with $23.7 million (or 41.5% of net revenues) in full year 2022. On a constant currency basis, gross profit for the full year 2023 was $9.2 million (or 16.8% of net revenues as measured on a constant currency basis).
Operating expenses for the full year 2023 were $25.7 million (or 49.0% of sales) compared to $24.8 million (or 43.3% of sales) for full year 2022. On a constant currency basis, operating expenses for the full year 2023 were $30.4 million (or 55.7% of sales on a constant currency basis).
GAAP net loss attributable to NETSOL for the full year ended June 30, 2023 totaled $(5.2 million) or $(0.46) per diluted share, compared with GAAP net loss of $(851,000) or $(0.08) per diluted share for the full year ended June 30, 2022. On a constant currency basis, GAAP net loss attributable to NETSOL for the full year 2023 totaled $(12.3 million) or $(1.09) per diluted share. Included in GAAP net loss attributable to NETSOL was a gain of $6.7 million on foreign exchange currency, compared to a gain of approximately $4.3 million in the prior year period. On a constant currency basis, NETSOL realized a gain of $9.4 million on foreign currency transactions for the full year 2023.
Non-GAAP adjusted EBITDA for the full year 2023 was a loss of $(2.3 million) or $(0.20) per diluted share, compared with non-GAAP adjusted EBITDA of $1.8 million or $0.16 per diluted share in the full year 2022 (see note regarding “Use of Non-GAAP Financial Measures,” below for further discussion of this non-GAAP measure).
At June 30, 2023, cash and cash equivalents were $15.5 million. Total NETSOL stockholders’ equity at June 30, 2023 was $36.8 million, or $3.24 per share.
