NETSOL Technologies reports fiscal Q3 2023 financial results

NETSOL Technologies, Inc. have reported results for the fiscal third quarter ended March 31, 2023.

Total net revenues for the third quarter of fiscal 2023 were $13.5 million, compared with $14.8 million in the prior year period, with the decrease primarily due to a fall of $1.8 million in services revenue and offset by an increase in license fees of $362,000.

Gross profit for the third quarter of fiscal 2023 decreased to $4.7 million (or 34.8% of net revenues), compared to $5.8 million (or 39.4% of net revenues) in the third quarter of fiscal 2022.

Operating expenses for the third quarter of fiscal 2023 were $5.6 million (or 41.7% of sales) compared to $6.4 million (or 43.0% of sales) for the third quarter of fiscal 2022, primarily due to decreases in selling and administrative expenses and offset by an increase in research and development costs.

Total other income for the third quarter of fiscal 2023 increased to $5.4 million compared to $679,000 in the prior year period.

NETSOL Co-Founder, Chairman and Chief Executive Officer Najeeb Ghauri (pictured) stated, “Our third quarter results demonstrated customer growth and our continued execution of strategic initiatives and projects. During the quarter, we signed and began recognizing revenue from a multi-million-dollar agreement with Kubota, a leading Japanese equipment company in Australia, for our NFS Ascent product. Additionally, we went live with Flex – our cloud-based calculation engine – for Haydock Finance, a business finance provider based in the United Kingdom. We also recognized considerable gain on foreign currency exchange transactions, which can have a meaningful impact on our results, depending on how the U.S. dollar and Euro fluctuate in a given quarter.”

There were many operational highlights in Q3 FY2023 including the signing of a multi-million-dollar agreement with a Japanese equipment finance company based in Australia for the deployment of premier NETSOL technology platform NFS Ascent Retail; Haydock Finance went live with NETSOL’s API-first and cloud-based calculation engine, Flex; Otoz, NETSOL’s fully digital, white label platform for lease, finance, and cash transactions, is live with 53 dealers across 24 US states; entered into teaming agreement with Digital Intelligence Systems (DISYS) to leverage large resource pool of over 5,000 US-based engineers to augment and complement NETSOL’s growing US presence and jointly undertake large enterprise-grade programs for existing and new US clients; extended partnership with Amazon Web Services (AWS) and became an API Gateway Delivery Partner, positioning NETSOL to expand capabilities and better serve clients across a variety of industries; and generated approximately $1.0 million through successful implementation of change requests from customers across multiple regions.

“While we’re thrilled to see demand for NETSOL products in our established markets, perhaps what we’re most excited about is our opportunity in North America,” Mr. Ghauri continued. “Last quarter, we announced our plans to significantly expand our presence in this largely untapped region, beginning with the establishment of a sales and support facility in Austin, Texas. This facility will support our growing customer base in the United States as our Otoz offering has now gone live with 53 MiniAnywhere dealers across the United States, and our products like NFS Ascent gain traction in this market. We believe North America represents a tremendous opportunity for us, especially as it pertains to our SaaS and cloud-based offerings that generate valuable recurring revenue for our business.”

Mr. Ghauri concluded, “We are focused on driving enhanced profitability across our entire business. The reality is that as the Company evolves toward a SaaS model, we can provide the superior customer service we are known for with far fewer people. Last quarter, we announced cost reduction initiatives which we estimated would generate significant savings for our business. Our goal is to reduce our total headcount by 25% which we believe will have a materially positive impact on revenue per employee, net profit and EBITDA, and will enable us to allocate resources to new product development and our growing market share in North America. We look forward to sharing the results with you as we continue to make progress.”