Netgain Continues Growth in Q3

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Netgain Technology continues its robust growth through Q3 of 2009. Revenue is up 20% from the same time last year. Though the weak economy affected the equipment for resale business (down 55% year over year), the recurring revenues of the application hosting segment continue to outperform with growth of 37% year to date and 24% increase in monthly run rate. Coupled with modest yearly increases in COGS (11%) and SGA (29%), the increase in top line has allowed the company to produce more profit. Year to date EBITDA increased 73% over last year, while net income nearly doubled.

Strong profitability on the income statement has also translated into a stronger balance sheet. Asset liquidity is fairly strong with current ratio being at 2.26, and DSO at 17 days. In addition, the leverage of the company is also very healthy. EBITDA covers interest by a factor of 8.4 while covering total debt payments by a factor of 2. Likewise, Debt to Equity ratio also continues to improve from 2.93 as of Q309 to 2.54 projected by year’s end.

With the current economic climate, Netgain has also been presented with opportunities to invest in the growth of its business operations. We continue to pursue strategic partnerships that enhance our competitiveness in the market place and ensure our viability in the long run. Netgain will continue to make responsible investments in opportunities that provide excellent returns on the horizon.

Netgain’s sound performance through the first three quarters of the year along with a disciplined cash management approach has resulted in a solid cash position to date. As such, Netgain is dedicating efforts to continually reinvest in its people, its community and its technology.

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