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Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Greetings, ladies and gentlemen, and welcome to the NetSol Technologies, Incorporated Second Quarter Fiscal Year 2008 Financial Results Conference Call. (OPERATOR INSTRUCTIONS)
It is now my pleasure to introduce your host, Mr. Christopher Chu, Global Consulting Group for NetSol Technologies, Inc. Thank you, Mr. Chu, you may begin.
CHRISTOPHER CHU, GLOBAL CONSULTING GROUP IR, NETSOL TECHNOLOGIES: Thank you, operator.
Hello, everyone, and thank you for joining us on the NetSol Technologies, Inc. Second Quarter Fiscal Year 2008 Financial Results Call for the period ended December 31st, 2007.
Please note, we have prepared a PowerPoint presentation to accompany the call. The document may be found on the main page of the Investor Relations section of the NetSol website -- www.netsoltek.com. That's netsoltek -- T-E-K, all one word -- .com.
In addition, I would like to remind you that we are webcasting today's call. The webcast archive of the call will also be available in the Investor Relations website of NetSol.
Before we begin, please proceed to slide number two, as I read a brief Safe Harbor statement. This Conference Call may contain forward-looking statements. These statements reflect the current believe of NetSol Technologies' management as well as assumptions made by and information available to NetSol. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties and actual future results and developments could differ materially from those set forth in the statements due to various factors.
These factors include, among others, changes in the general economic and competitive situation, particularly in NetSol's business and markets. In addition, future results and developments could be affected by the performance of financial markets, fluctuations in exchange rates and changes in national and super-national law, particularly with regard to tax regulations. The Company assumes no obligations to update forward-looking statements.
Moving to slide number three -- during today's call, Mr. Najeeb Ghauri, Chairman and Chief Executive Officer, will share an overview of the business and financial results for the quarter of fiscal 2007. He then will hand the call over to Tina Gilger, NetSol's Chief Financial Officer, to review more specific details of the financial results. We are also pleased to have Mr. Naeem Ghauri, President of NetSol Technologies Europe and Products, join us on the phone today. Najeeb, Tina and Naeem will be available for a Q&A after the prepared remarks.
I would now like to pass the call over to Mr. Najeeb Ghauri. Please go ahead.
NAJEEB GHAURI, CHAIRMAN AND CEO, NETSOL TECHNOLOGIES: Thank you, Chris. Well, everyone, and thank you for joining us today.
I hope you found a PowerPoint presentation we prepared to supplement this call and we'll follow along with us. The slide numbers we refer to are found at the bottom of each slide.
As the press release issued today, and as slide number four demonstrates, that's all delivered positive progress on all its key financial performance metrics. On the top line, second-quarter revenue decreased 16% year-over-year to $8.4 million, with our core enterprise software and IT outsourcing businesses continuing to be the largest driver of revenues.
Six-month and year to date. Revenue for the first half rose 30% year-on-year to $17.1 million, putting us well on track towards achieving our stated full-year guidance for organic revenue growth of between 25 to 30%. Gross margin for the quarter was 57%. It held the improvement from 50% in the prior year.
We also continue to honor profitability goals, with NetSol now having been GAAP-profitable on a quarterly basis for the third consecutive quarter. Fiscal second quarter operating income rose an impressive 284% to $1.4 million, and GAAP net income increased to $1.1 million, or $0.04 per diluted share, as compared to a GAAP loss of $4.6 million, or a loss of $0.32 per diluted share a year ago.
EBITDA increased to $2 million as opposed to negative EBITDA of $3.7 million in the comparable quarter a year ago.
Our CFO, Tina, will provide a more detailed walk-through of our fiscal second quarter financial results later in the call. But before I begin, the operational review, I wanted to provide everyone a brief update. With regards to the extraordinary geopolitical events that occurred in Pakistan last quarter, in order to provide increased clarity on our business.
Despite the events that unfolded in Pakistan, there has been no material disruption to our Development Technology Campus or our day-to-day operations, aside from four days of national mourning which were non-billable days for our IT services team in the whole of Pakistan.
In aggregate, we delivered our services unhindered. The one area we did see some impact related to the lengthening of the sales cycle for some new business activities specific to the Pakistan market, particularly in the government vertical. We are continually monitoring the local market their and are optimistic that as the elections moved successfully forward, the government can return to a normal operating environment, and possibly accelerate those decisions' time lines.
With that being said, we remain comfortable with our guidance. And our business has increasingly become a more global one in terms of global new business development, global execution and global servicing.
As such, we have increased liability to resources across our global development centers in North America, Europe and Asia-Pacific. This is a key part of our strategy of diversifying our global development centers in strategic geographic locations.
NetSol's committed to expanding its development capabilities in the most strategic, growing and emerging markets. Having staff local to the client as well as supported by high-value IT services; and software development staff in low cost geographies is central to our focus of BestShoring.
You will hear me use the "BestShoring" term often going forward, as I believe it best communicates our strategy and our ability to service customers in a way that best serves their specific needs. As such, NetSol has efficiently enhanced its BestShoring capabilities in our location in San Francisco, [Holshum], UK; Sydney, Australia; and Bangkok; thus mitigating any risk in an offshore location.
We continue to see good demand for specialized outsourcing opportunities as customers see the long-term value proposition our Best Shoring model brings, even as the global economic environment, shows signs of concern around the U.S. economy. This, combined with our strong presence in the Asia-Pacific and European markets, provides enhanced balance to our business model.
Overall, I think the best measure of our performance is our financial performance metrics. And as I highlighted moments ago, NetSol continued to deliver solid performance across all its key benchmarks.
Now let's review the operational details behind our fiscal second-quarter performance. Please turn to slide number five.
Here we take a look at some of the major highlights that our NetSol Asia-Pacific business delivered. Our LeaseSoft product won the Asia-Pacific ICT Alliance award for Best Financial Industry Application for 2006 [sic -- see presentation]. APICTA is one of the largest information and communication technology associations in the Asia-Pacific region, with 20 member countries.
From a pool of 50 nominees, [LeaseSoft] was declared the winner by an international panel of judges. The [honorary] from LeaseSoft is the product of choice for the leasing and finance industry across Asia-Pacific region.
As for new [licenses], LeaseSoft is increasingly on the rise. The current pipeline posts over 20-plus captive auto manufacturers and non-captives globally at advanced stages of discussion.
NetSol continues to be the leading IT exporter in the whole of Pakistan. Once again, NetSol was also awarded the best export performance award for 2006-2007 for the highest export of IT services from Pakistan. We received the distinguished award from the Federation of Pakistan Chamber of Commerce and Industry.
We were also able to grow our company …