NetSol(US:NTWK)2025-02-13 18:30Business Focus and Strategy - NETSOL Technologies reported a significant focus on AI and cloud services to meet the complex needs of the global asset finance and leasing market[140] - The company serves over 30 countries, providing solutions for automotive and equipment OEMs, auto captives, and financial institutions[140] - NETSOL's primary revenue sources include licensing, subscriptions, and support of its financial applications under the Transcend™ Finance brand[142] - The company emphasizes its commitment to Tier-2 and Tier-3 banks by offering innovative cloud solutions without license fees, enabling rapid deployments[144] - The Transcend™ Platform is an AI-powered solution designed to automate and optimize asset financing processes, enhancing decision-making capabilities[152][153] - NETSOL's product suite includes advanced tools for origination, servicing, and wholesale finance, aimed at improving operational efficiency for financial institutions[156][159] - NETSOL's Transcend™ AI Labs focus on integrating advanced AI services into its product offerings, driving innovation in the BFSI sector[172] - The company has identified material trends affecting its operations, indicating a proactive approach to market dynamics[174] Financial Performance - Total net revenues for the three months ended December 31, 2024, were $15,536,661, a slight increase from $15,237,941 in 2023[179] - Subscription and support fees increased to $8,642,629 for the three months ended December 31, 2024, reflecting a 26.6% increase from $6,827,781 in the same period of 2023[184] - Services income rose to $6,821,344 for the three months ended December 31, 2024, marking a 25.8% increase from $5,419,707 in the prior year[185] - The gross profit decreased to $6,920,341 for the three months ended December 31, 2024, down from $7,175,737 in the same period of 2023, resulting in a gross profit margin decline from 47.1% to 44.5%[186] - Operating expenses increased to $7,407,291 for the three months ended December 31, 2024, compared to $6,148,905 in 2023, representing an increase of 20.5%[190] - The company reported a net loss attributable to NETSOL of $1,147,042 for the three months ended December 31, 2024, compared to a net income of $408,316 in the same period of 2023[179] - Total net revenues for the six months ended December 31, 2024, were $30,135,159, a slight increase from $29,480,122 in the same period of 2023, representing a growth of 2.2%[200] - Subscription and support fees increased to $16,835,100 for the six months ended December 31, 2024, up from $13,340,024 in the same period of 2023, reflecting an increase of 26.2%[206] - Gross profit for the six months ended December 31, 2024, was $13,484,453, compared to $13,337,754 for the same period in 2023, an increase of 1.1%[208] - Loss from operations was $1,247,108 for the six months ended December 31, 2024, compared to income from operations of $1,377,461 in 2023, representing an increase in loss of 90.6%[216] - Net loss attributable to NetSol was $1,076,247 for the six months ended December 31, 2024, compared to net income of $439,206 in 2023, an increase in loss of 244%[219] Expenses and Costs - Selling expenses increased to $2,662,397 for the three months ended December 31, 2024, up from $1,784,510 in the same period of 2023, representing an increase of 49.2%[191] - General and administrative expenses rose to $4,411,225 for the three months ended December 31, 2024, compared to $4,022,984 for the same period in 2023, marking an increase of 9.6%[193] - Research and development costs decreased slightly to $333,669 for the three months ended December 31, 2024, down from $341,411 in the same period of 2023, a decrease of 2.3%[194] - Other expenses totaled $367,642 for the three months ended December 31, 2024, compared to other income of $106,036 in the same period of 2023, reflecting an increase in other expenses of $473,678[196] - Salaries and consultant fees increased to $12,918,171 for the six months ended December 31, 2024, from $11,861,505 in the same period of 2023, an increase of 8.9%[209] - Operating expenses increased to $14,731,561 for the six months ended December 31, 2024, compared to $11,960,293 for the same period in 2023, an increase of 23.2%[212] - Selling expenses rose to $4,954,596 for the six months ended December 31, 2024, up from $3,493,375 in 2023, marking an increase of 41.8%[213] - General and administrative expenses increased to $9,083,347 for the six months ended December 31, 2024, compared to $7,747,088 in 2023, an increase of 17.2%[215] Cash Position and Financing - Cash position improved to $21,270,642 at December 31, 2024, compared to $19,127,165 at June 30, 2024, an increase of 11.2%[228] - Net cash provided by operating activities was $369,716 for the six months ended December 31, 2024, down from $604,684 in 2023, a decrease of 38.8%[229] - Net cash provided by financing activities was $2,637,763 for the six months ended December 31, 2024, compared to net cash used of $27,359 for the same period in 2023[232] - As of December 31, 2024, the company had approximately $21.3 million in cash, cash equivalents, and marketable securities, with about $20 million held by foreign subsidiaries[233] - For the next 12 months, the company anticipates needing $2.5 million for new business development activities and infrastructure enhancements in APAC, U.S., and Europe[235] - The UK subsidiary, NTE, has an approved overdraft facility of £300,000 ($375,000) requiring trade debtors to be at least 200% of the facility amount[237] - NetSol PK has an approved export refinance facility amounting to Rupees 1.3 billion ($4,664,180) and must maintain a long-term debt equity ratio of 60:40[237] - The company is in compliance with all financial covenants associated with its borrowings as of the report date[238] - The company aims to improve cash reserves internally and reduce reliance on external capital raises[234] Employee and Stock Activity - Employees exercised 200,000 options of common stock for $430,000 during the reporting period[232] - The company received bank proceeds of $2,676,932 for the six months ended December 31, 2024, compared to $135,123 in the same period of 2023[232] - NetSol PK paid a dividend of $306,799 to the non-controlling interest during the reporting period[232] Market Trends - The global automotive finance market accounted for $245 billion in 2022 and is expected to more than double by 2035 at a CAGR of 7.4%[175] - The U.S. inflation rate was reported at 2.89% as of January 15, 2025, lower than the long-term average of 3.28%[175] - The company plans to continue investing in building local teams for its core offerings in the strong and resilient U.S. market[175] - Average days sales outstanding decreased from 147 days in 2023 to 140 days in 2024, indicating improved collection efficiency[230]