netsol investor presentation
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NetSol TechnologiesInvestor Presentation
Najeeb Ghauri, CEO | Roger Almond, CFO March 2016
Safe Harbor StatementThis presentation may contain forward-looking statements relating to the development of NetSol Technologies’ products and services and future operation results, including statements regarding the Company that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words "believe," "expect," "anticipate," "intend," variations of such words, and similar expressions, identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, but their absence does not mean that the statement is not forward-looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Factors that could affect the Company's actual results include the progress and costs of the development of products and services and the timing of the market acceptance. Any forward-looking statements contained herein speak only as of the date hereof. The Company undertakes no obligation to update or review any forward-looking statements.
This presentation may reference non-GAAP measures such as EBITDA. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. The Company uses EBITDA as a measure of the Company’s operating trends. Investors are cautioned that EDITDA is not a measure of liquidity or of financial performance under Generally Accepted Accounting Principles (GAAP). The EDITDA numbers presented may not be comparable to similarly titled measures reported by other companies. EBITDA, while providing useful information, should not be considered in isolation or as an alternative to net income or cash flows as determined under GAAP. Investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in the Company’s SEC filings.2
NetSol Technologies, Inc.© 2011 All Rights Reserved
Global Experience in Providing Enterprise Solutions to the Leasing/Lending & Asset Finance
Industry
NetSol Technologies
NetSol Overview
Global Delivery & Support Centers
7 Global Team of Experts1500
+Global Client
Base200+
NASDAQ: NTWK
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Recognized leader in asset finance and leasing software• Top-tier global client base• Numerous multi-country implementations with global companies
Highly competitive portfolio of software solutions• Leading Asset Finance & Leasing Software serving critical
business functions• 200+ successful Implementations across Asia Pacific, US &
Europe• $200+ billion assets managed via system globally
Emerging from product transition period• Actualizing revenue from large value projects; Average deal size
is growing• Market endorsement by blue-chip multinationals on next-
generation product• Global opportunities for growth
Offshore delivery model• Talented team of offshore experts builds leverage in model
Banking Equipment Lease
Our Niche
Auto
Fin
ance
& L
easi
ng
Bank
& A
sset
Fin
ance
Equi
pmen
t Fi
nanc
e
NASDAQ: NTWK
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Strong Client Relationships
Auto
Fin
ance
& L
easi
ng
Bank
& A
sset
Fin
ance
Equi
pmen
t Fi
nanc
e
NASDAQ: NTWK
6 Does not represent all customers. Provided for Illustrative purposes.
Continuing to Support and Upgrade Solutions
7
Product Portfolio
Primarily APAC Offering North America Product Offering
Europe Product Offering
In addition to NetSol’s other products, NTE also offers:
LeaseSoft Portal LeaseSoft Document
Manager LeaseSoft Auto-Decision
Engine LeaseSoft EDI Manager Evolve
Deployed as On-premise and as SaaS solution
Scalable from a basic offering to a collection of highly specialized add on modules
Partial technology set upgraded to Dot Net
A robust suite of five software applications
Each application is a complete system in itself
Can be used independently to address specific sub-domains of the leasing/financing cycle.
NASDAQ: NTWK
Next-Gen. Solution:
Database
Credit Origination
and Decisioning
Contract Lifecycle
ManagementFloor plan Financing
LOSLoan Origination
System
CMSContract
Management System
WFSWholesale Finance
System
PortalsDealer Auditor
System / Customer Portal
Business Requirements
NFS Components
End - to – End Lease Lifecycle Management System
NFS Mobility Solutions
NASDAQ: NTWK
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A highly agile, easy-to-use, web-based
application – also accessible through mobile devices –
Ascent’s Loan Origination System (LOS) delivers an intuitive user
experience, with features that enable rapid data capture.
Loan OriginationSystem
LOSAscent’s Contract
Management System (CMS) is a powerful,
highly agile, functionally rich application for
managing and maintaining detailed
credit contracts throughout their lifecycle – from pre-activation and
activation to maturity.
Contract ManagementSystem
CMSThe system provides a powerful, seamless and
efficient system for automating and
managing the entire life cycle of wholesale finance. With floor
planning, dealer and inventory financing, it is
ideal for a culture of collaboration.
Wholesale FinanceSystem
WFS
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NASDAQ: NTWKNFS Ascent
Does not represent all deals. Provided for Illustrative purposes.10
Expanding Revenue Base$100 million NFS AscentTM contract underway
$8 million NFS AscentTM contract in U.K.
$16 million NFS AscentTM in Asia
$3 million NFSTM deal in China
NASDAQ: NTWK
Long-term contracts create stable base to build upon
$100 Million Ascent ContractRepresents the largest contract in
NetSol’s history Implementing in 12 countries: Upgrading from NFS
to NFS Ascent and bringing into one new country Services and customization work will likely grow;
provides for further potential upside in the contract Maintenance recognized over 10-year period,
increasing from year five through 10Strong endorsement from long-standing client Provides top-tier reference on Ascent and ability of
platform to cater to complex regional requirements Leveraging strong interest by existing and new
clientele on exploring next generation solution suite to enhance competitiveness
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NASDAQ: NTWK
*$100 million based on license, maintenance and anticipated services to be rendered to each country
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New BusinessRegional and country specific implementations
Global presence and local expertise enable immediate leverage on future opportunities
Robust client track record enables retention and new business streamsEmerging market needs/Homegrown system updates
Wealth of knowledge from catering to large multinationals can be applied to future roadmap needs and new upgrade paths
Cost arbitrage gained from capitalizing on executed delivery through a developing nation with cutting edge resource pool
Continued support for NFS, LeaseSoft and LeasePak Leasing and financing growth plays important trend Continued support on different solution models
ensures flexibility in catering to different market segments in varying maturity lifecycles
Legacy system conversions Established upgrade pathway for clients Low risk equating and lower costs for existing
clients when deciding on change
New implementatio
ns
Competitive bid
Sole provider
Upgrades
NASDAQ: NTWK
Established experts in the finance & Leasing spaceProven IT solution vendor – 19 years experience Trusted Partner – in depth understanding of our clients business needsTrusted Partner – in depth understanding of our clients business needs
2012 2013 2014 2015 2016
$39.8
$50.8
$36.4
$51.0
$62.0Total Revenue (in $millions)
Product transition year in 2014
Invested in growth: capacity and infrastructure
Returned to growth in 2015 $16 million NFS Ascent
contract propelled recovery
$62 million expected in fiscal 16
$100 million NFS Ascent just beginning
NASDAQ: NTWK
Est. for FY 2016
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Return to Growth
Q1 '14
Q2 '14
Q3 '14
Q4 '14
Q1 '15
Q2 '15
Q3 '15
Q4 '15
Q1 '16
Q2 '16
$4.4 $5.4 $4.7
$6.2 $5.8 $6.9
$8.8 $10.6
$8.9
$12.2
Service Revenue Driving Growth Total Service Revenue (in $millions)
Product transition year in FY 2014
Invested in growth: capacity and infrastructure
Returned to growth in FY 2015
$16 million NFS Ascent contract propelled recovery
Joint venture services growing
Contributed $5.4 million in FY 2016
$62 million expected in FY 2016
$100 million NFS Ascent just the beginning
NASDAQ: NTWK
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Solid Maintenance Revenue
2011 2012 2013 2014 2015
$7.5 $7.9$9.5
$10.5
$12.6 Steady recurring revenue
established through long-term clients
Growing as client needs increase and new projects are implemented
$6.4 million for first six months of FY 2016
Total Maintenance Revenue (in
$millions)
15
NASDAQ: NTWK
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Stable Cost Structure
Ramped up hiring to serve multiple complex implementations concurrently
IT project and technical personnel include 870 employees dedicated to NFS™ and NFS Ascent™ at FY 2015 year-end
Focused on building leverage into model
Minimal net new hires moving forward
Bulk of Hiring Complete – Focused on Building Leverage
NASDAQ: NTWK
2012 2013 2014 2015
657832
10421195
Investment in Technical Staff
Adjusted EBITDA
We are providing EBITDA because we believe it to be an important supplemental measure of our performance that is commonly used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. It should not be considered as an alternative to net income, operating income or any other financial measures calculated and presented, nor as an alternative to cash flow from operating activities as a measure of our liquidity. It may not be indicative of the Company’s historical operating results nor is it intended to be predictive of potential future results.
NASDAQ: NTWK
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Three Months Ended 9/30/2014 12/31/2014 3/31/2015 6/30/2015 9/30/20015 12/31/2015 Net Income (loss) before preferred dividend, per GAAP
$(1,838,029)
$(1,367,166)
$(1,636,245)
$(707,378)
$(411,028)
$875,065
Income Taxes and Interest Expense, net 55,250
28,870
55,538
109,370
91,284 310,132
Depreciation and amortization 2,382,340
2,238,756
2,463,619
3,259,099
1,765,407 1,747,082
EBITDA 599,561
900,460 882,912
2,661,091
1,445,663 2,932,279
Add back:
Non-cash stock-based compensation 445,784
471,996 668,807
411,050
77,750 393,985
Adjusted EBITDA
$1,045,345
$1,372,456
1,551,719
$3,072,141
$1,523,413
$3,326,264 Adjusted EBITDA margin 10.22% 11.11% 11.87% 19.96% 11.45% 20.54% Weighted Average number of shares outstanding diluted 9,213,324
9,654,334
9,937,750
10,233,625
10,392,669 10,548,922
Diluted adjusted EBITDA $0.11 $0.14 $0.16 $0.30 $0.15 $0.32
Financial Trends & Guidance
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FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 1HRevenue $36.5M $39.8M $49.8M $36.4M $51.0M $29.5M Gross Margin 59.5% 54.1% 59.3% 23.8% 35.3% 45.6%Cash and Cash eqv. $4.2 $7.6 $7.9 $11.5 $14.2 $14.0
Guidance 2016 Fiscal YearTotal Expected Revenue $62 million minimum
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Conclusion
Improving financial outlook
Gaining references sites Emerging from transition period More consistent revenue
flow over longer period with next-generation product
Average deal size is growing
End of large infrastructure investment
Offshore delivery builds leverage in model
Strong maintenance and service revenue
Numerous multi-country implementations with global companies Easing of restrictions in
China, changing consumer purchasing in APAC countries, improving financing and leasing markets and technology refresh cycle
Favorable industry trends
Highly competitive solution in NFS AscentDemand for portfolio solutions
Global opportunities for growth
NASDAQ: NTWK
Contact UsCorporate Headquarters
24025 Park Sorrento Suite 410,Calabasas, CA 91302, United States
Phone+1 818-222-9195
E-mailinvestors@netsoltech.com
Websitewww.netsoltech.com
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