NetSol Technologies (NASDAQ:NTWK) Releases Quarterly Earnings Results, Hits Estimates

NetSol Technologies (NASDAQ:NTWK) released its quarterly earnings data on Thursday. The software maker reported $0.01 EPS 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 Trading Down 18.5%

NASDAQ:NTWK traded down $1.27 during midday trading on Thursday, hitting $5.62. 147,514 shares of the company traded hands, compared to its average volume of 55,169. The firm has a market capitalization of $67.12 million, a P/E ratio of 22.46 and a beta of 0.91. The firm’s fifty day moving average is $5.88 and its 200-day moving average is $4.42. NetSol Technologies has a 12-month low of $2.80 and a 12-month high of $8.46.

Analyst Ratings Changes

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