NetSol’s earnings crash 95% YoY in Q1 2024

MG News | April 30, 2024 at 03:19 PM GMT+05:00

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April 30, 2024 (MLN): NetSol Technologies Limited (PSX: NETSOL) profit after tax plunged 95.4% YoY to Rs64.27 million [EPS: Rs0.73] compared to a profit of Rs1.4 billion [EPS: Rs15.98] in the same period last year (SPLY).

Pakistan Rupee (PKR) remained stronger during the period against other currencies which resulted in booking of exchange loss of Rs265m compared to exchange gain of Rs1.4bn in the comparable period.

If the impact of currency gain/ loss is taken out of equation, then the company has performed much better than last year, said NETSOL.

Going by the results, the company's top line grew by 8.1% YoY to Rs2.25bn as compared to Rs2.08bn in SPLY.

The company recorded Rs81m in the current quarter on account of additional license sold to its associated company’s customer.

On the services side, the company recorded revenue amounting to Rs989m in comparison to Rs616m in the same quarter of the last fiscal year.

This is a continuous nature of services revenue coming from its existing customers for enhancement and customization in the systems deployed at their respective sites.

In addition to it, subscription and support revenue also increased from Rs1.09bn to Rs1.2bn during the current quarter.

Moreover, the cost of sales fell by 9.1% YoY, improving the gross profit by 42.2% YoY to Rs988.78m in Q1 2024.

The gross margins increased to 44.00% as compared to 33.44% in SPLY.

An increase in revenues coupled with cost optimization initiatives translated into a significant improvement in the company’s gross profits.

During the period under review, other income slid by 91.8% YoY to stand at Rs120.55m in Q1 2024 as compared to Rs1.47bn in SPLY.

On the expense side, the company's administrative expenses rose 13.4% YoY to Rs369.57m, selling and distribution expenses rose 6.3% YoY to Rs177.38m, and other operating expenses rose 6.3% YoY to Rs384.12m.

The company’s finance cost rose by 64.7% YoY and stood at Rs78.05m as compared to Rs47.4m in SPLY, mainly due to higher interest rates.

On the tax front, the company paid a lower tax worth Rs35.94m against the Rs56.05m paid in the corresponding period of last year, depicting a fall of 35.9% YoY.

Unconsolidated (un-audited) Financial Results for quarter ended March 31, 2024 (Rupees in '000)
	Mar 24	Mar 23	% Change
Sales	2,247,200	2,078,929	8.09%
Cost of sales	(1,258,419)	(1,383,719)	-9.06%
Gross Profit/ (loss)	988,780	695,210	42.23%
Administrative Expenses	(369,569)	(325,907)	13.40%
Selling And Distribution Expenses	(177,379)	(166,946)	6.25%
Other Income	120,551	1,468,045	-91.79%
Other Operating Expenses	(384,123)	(163,351)	135.15%
Finance Cost	(78,052)	(47,397)	64.68%
Profit/ (loss) before taxation	100,208	1,459,654	-93.13%
Taxation	(35,937)	(56,046)	-35.88%
Net profit/ (loss) for the period	64,271	1,403,608	-95.42%
Basic earnings/ (loss) per share	0.73	15.98	-

Amount in thousand except for EPS

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