NetSol Technologies, Inc. (NTWK) has reported a 17.60 percent fall in profit for the quarter ended Mar. 31, 2017. The company has earned $0.70 million, or $0.06 a share in the quarter, compared with $0.85 million, or $0.08 a share for the same period last year. Revenue during the quarter grew 12.37 percent to $17.95 million from $15.97 million in the previous year period. Gross margin for the quarter expanded 383 basis points over the previous year period to 50.12 percent. Total expenses were 89.75 percent of quarterly revenues, down from 92.26 percent for the same period last year. This has led to an improvement of 252 basis points in operating margin to 10.25 percent.
Operating income for the quarter was $1.84 million, compared with $1.24 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $2.29 million compared with $2.28 million in the prior year period. At the same time, adjusted EBITDA margin contracted 149 basis points in the quarter to 12.76 percent from 14.25 percent in the last year period.
"We are pleased to deliver solid revenue growth and margin improvement in the fiscal third quarter," said Najeeb Ghauri, founder, chairman and chief executive officer of NETSOL. "We had a strong quarter for NFS Ascent license and services revenue, and for the first time, Ascent revenue exceeded fees from our legacy NFS solution suite."
For financial year 2017, NetSol Technologies, Inc. projects revenue to be in the range of $66 million to $67 million.
Operating cash flow turns negative
NetSol Technologies, Inc. has spent $2.02 million cash to meet operating activities during the nine month period as against cash inflow of $1.13 million in the last year period. The company has spent $2.11 million cash to meet investing activities during the nine month period as against cash outgo of $3.29 million in the last year period. It has incurred net capital expenditure of $1.17 million on net basis during the nine month period, down 40.71 percent or $0.80 million from year ago period.
Cash flow from financing activities was $1.10 million for the nine month period, down 21.58 percent or $0.30 million, when compared with the last year period.
Cash and cash equivalents stood at $8.45 million as on Mar. 31, 2017, down 28.88 percent or $3.43 million from $11.88 million on Mar. 31, 2016.
Working capital increases sharply
NetSol Technologies, Inc. has recorded an increase in the working capital over the last year. It stood at $30.03 million as at Mar. 31, 2017, up 38.16 percent or $8.29 million from $21.73 million on Mar. 31, 2016. Current ratio was at 2.75 as on Mar. 31, 2017, up from 2.51 on Mar. 31, 2016.
Days sales outstanding went down to 67 days for the quarter compared with 69 days for the same period last year.
Debt increases substantially
NetSol Technologies, Inc. has witnessed an increase in total debt over the last one year. It stood at $6.15 million as on Mar. 31, 2017, up 26.70 percent or $1.30 million from $4.85 million on Mar. 31, 2016. Total debt was 6.26 percent of total assets as on Mar. 31, 2017, compared with 5.41 percent on Mar. 31, 2016. Debt to equity ratio was at 0.08 as on Mar. 31, 2017, up from 0.06 as on Mar. 31, 2016. Interest coverage ratio improved to 30.50 for the quarter from 22.05 for the same period last year.
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