NetSol Technologies (NASDAQ:NTWK) Announces Quarterly Earnings Results, Meets Estimates

NetSol Technologies (NASDAQ:NTWK) announced its earnings results on Thursday. The software maker reported $0.01 earnings per share for the quarter, meeting the consensus estimate of $0.01, Zacks reports. NetSol Technologies had a return on equity of 6.79% and a net margin of 4.02%.

Here are the key takeaways from NetSol Technologies’ conference call:

• NetSol reported 9.3% revenue growth to $16.4 million, with gross margin rising to 50.5% from 39.4% and operating income turning positive. Management cautioned that the margin improvement also reflected about $1 million in capitalized development costs, lower headcount, and salary-revision timing, so one quarter should not be extrapolated.
• Customer and product momentum included BMO’s migration from LeasePak to Transcend Finance, Mercedes-Benz USA’s approval of NetSol as a digital retail provider, and two new U.S. Transcend Retail dealer launches. Management estimated that a typical legacy-to-Transcend migration could represent about $10 million of upside over five years.
• The Americas grew 25.5% year over year, outpacing the company overall, and management described the North American pipeline as strong. It also emphasized that core sales cycles are lengthy and that pipeline interest is not a guarantee of near-term wins.
• Operating cash flow was negative $5.6 million, compared with positive $5.3 million a year earlier, and cash fell to $19.7 million from $27.1 million. Management attributed the decline mainly to working-capital timing and expects a meaningful portion to reverse, but the timing depends on customer milestones and payments.
• Management is reviewing strategic options for Virtual Lease Services, including a possible sale or wind-down; no decision has been approved, and any outcome could involve disposal treatment or exit costs. It also said it is targeting a leaner organization, with a potential headcount reduction of at least 20% over the coming months and years, while stressing that the figure is illustrative and resources may be redirected to growth areas.

NetSol Technologies Price Performance

Shares of NTWK stock traded down $1.61 during trading on Thursday, reaching $5.28. The company had a trading volume of 217,303 shares, compared to its average volume of 166,594. The firm’s 50 day simple moving average is $5.91 and its two-hundred day simple moving average is $4.43. NetSol Technologies has a one year low of $2.80 and a one year high of $8.46. The company has a market capitalization of $63.10 million, a PE ratio of 27.56 and a beta of 0.91.

Wall Street Analyst Weigh In

Several research firms recently weighed in on NTWK. Zacks Research raised NetSol Technologies to a “hold” rating in a research report on Thursday, October 22nd. Noble Financial assumed coverage on NetSol Technologies in a research report on Wednesday, October 21st. They set an “outperform” rating and a $9.00 price objective for the company. Wall Street Zen raised NetSol Technologies to a “strong-buy” rating in a research note on Saturday, October 31st. Finally, Weiss Ratings raised NetSol Technologies from a “hold (c+)” rating to a “buy (b-)” rating in a research note on Wednesday, October 14th. Two analysts have rated the stock with a Buy rating and one has issued a Hold rating to the stock. Based on data from MarketBeat, NetSol Technologies presently has an average rating of “Moderate Buy” and a consensus target price of $9.00.

About NetSol Technologies

NetSol Technologies, Inc. is a global provider of enterprise software and information technology services, with a primary focus on the asset finance and leasing industry. The company serves vehicle manufacturers, banks, financial institutions, equipment lessors and other organizations that manage commercial lending, leasing and financing operations. Its software offerings are designed to support the full lifecycle of financing transactions, including origination, credit and contract management, billing, accounting, asset management, collections and portfolio administration.