close
close

NETSOL Technologies Inc (NTWK) Q4 2024 Earnings Call Transcript Highlights: Strong Sales…

  • Revenue: $61.4 million for the full fiscal year 2024, an increase of 17% from $52.4 million in 2023.

  • Fourth quarter sales: $16.5 million, compared to $13.8 million in the same period last year.

  • License fees: $5.5 million for fiscal 2024, compared to $2.3 million in 2023.

  • Recurring Revenue: $28 million for fiscal year 2024, up from $26 million in 2023.

  • Total revenue from services: $28 million for fiscal 2024, compared to $24.1 million in 2023.

  • Gross profit: $29.3 million for fiscal 2024, representing 48% of net sales, compared to $16.9 million, or 32% of net sales, in 2023.

  • Operating costs: $25.8 million for fiscal 2024, compared to $25.7 million in 2023.

  • Income from operations: $3.5 million for fiscal 2024, compared to a loss of $8.8 million in 2023.

  • GAAP Net Income: $684,000 for fiscal 2024, or $0.06 per diluted share, compared to a net loss of $5.2 million, or $0.46 per diluted share, in 2023.

  • Non-GAAP EBITDA: $4.2 million for fiscal 2024, or $0.37 per diluted share, compared to a loss of $426,000, or $0.04 per diluted share, in 2023.

  • Cash and cash equivalents: $19.1 million at year-end, compared to $15.5 million at June 30, 2023.

  • Equity capital: $34.8 million as of June 30, 2024, or $3.05 per share.

Release date: October 1, 2024

For the complete transcript of the conference call, please see the full conference call minutes.

Positive points

  • NETSOL Technologies Inc (NASDAQ: NTWK) reported full fiscal 2024 revenue increased 17% to $61.4 million, surpassing its target.

  • The company achieved profitability for the full year with earnings per share of $0.06.

  • NETSOL Technologies Inc (NASDAQ:NTWK) signed a five-year, $15 million deal with BMW in the US, marking its largest deal in the region to date.

  • The company has a strong customer retention rate, increasing from around 90% in 2021 to almost 95% in 2024.

  • NETSOL Technologies Inc (NASDAQ: NTWK) has a dominant market share in the Asia Pacific region, particularly in China, with a market share of 85% in this particular area.

Negative points

  • Despite the positive earnings, the company reported a GAAP net loss of $83,000 for the fourth quarter of fiscal 2024.

  • Operating expenses remained high at $7.7 million in the fourth quarter of fiscal 2024, in line with the same period last year.

  • The company did not provide specific earnings per share guidance for the next fiscal year, indicating uncertainty.

  • NETSOL Technologies Inc (NASDAQ:NTWK) has significant cash in various countries that may not be optimized for short-term returns.

  • The Company is investing heavily in new markets and technologies, which could strain cash reserves and impact short-term profitability.

Q&A highlights

Q: AI is clearly still the focus. Can you share any specific updates you’re particularly excited about? A: Najeeb Ghauri, CEO: We are particularly excited about the early adoption of AI in our company, which gives us a strong competitive advantage. We improve the customer experience through personalization, automation and predictive analytics. Internally, we focus on training employees to use AI tools, improving efficiency, reducing manual effort and increasing productivity.

Q: You mentioned renewed demand in your existing markets, particularly in Asia Pacific. Can you elaborate on the trends you're seeing there? A: Najeeb Ghauri, CEO: With a market share of 85%, we have a dominant position in China, our largest market. Our flagship product, Ascent, continues to enjoy widespread acceptance. Major customers such as BMW and Daimler-Benz are driving demand. We have built a good reputation over the last 20 years and the market in China looks promising.

Q: Do you have updated sales and earnings forecasts for the next financial year? A: Najeeb Ghauri, CEO: We expect double-digit growth for the next financial year. For better clarity, specific guideline values ​​are given in the first quarter. Our goal is to maintain or improve our gross margin trend of 47% to 48%.

Q: Are you investing some of your cash in short-term government bonds to earn a return while it's sitting around? A: Najeeb Ghauri, CEO: We invest our money mainly in technology, people and new markets like North America. We opened an office in Austin and are building new verticals. Our current focus is on growing the company and not on share buybacks.

Q: Can you provide further details on the $15 million five-year deal with BMW in the US? A: Najeeb Ghauri, CEO: This deal covers the customization, implementation, deployment and ongoing SaaS subscription of our OTOZ platform. This is NETSOL's largest dollar deal to date in the US and represents a significant opportunity for our company.

For the complete transcript of the conference call, please see the full conference call minutes.

This article first appeared on GuruFocus.

You may also like...