NetSol Has Yet To Inspire Investor Confidence

For the second quarter in a row, Pakistani IT concern NetSol (NTWK) announced disappointing earnings. It reported a net loss for the quarter of $323k, or ($0.01) basic and diluted EPS, versus net income of $21 thousand, or $0.00 basic and diluted EPS in the prior year quarter. EBITDA for the third quarter was $676 thousand, or $0.04 per basic and diluted share.

The company did note several bright spots. Revenues increased 51%, driven by gains in license fees (+43%), maintenance fees (+115%), and service revenues (+41%). "LeaseSoft, NetSol's flagship vehicle portfolio management system, is clearly gaining market share," remarked Najeeb Ghauri, chairman and CEO.

However, NetSol has been unable to translate top line traction into bottom line gains. My investment thesis for NetSol was based on potential earnings growth that now appears less likely to materialize. As a result, I have sold my shares for a modest gain (~ 19%) and will watch from the sidelines until the company begins to deliver solid earnings.

NTWK 1-yr chart:

DISCLOSURE: I have no position in NTWK. Not a recommendation to buy or sell any security. For informational and educational purposes only.