NTWK - Earnings call transcript Q3 2021 | NetSol Technologies, Inc.

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Operator

Good morning and welcome to NetSol Technologies Fiscal Third Quarter 2021 Earnings Conference Call.

On the call today are; Najeeb Ghauri, Chairman and Chief Executive Officer; Naeem Ghauri, President of NetSol Technologies, Inc. and Otoz' Chief Executive Officer; Roger Almond, Chief Financial Officer; and Patti McGlasson, General Counsel. I would now like to turn the call over to Patti McGlasson, who will provide the necessary cautions regarding the forward-looking statements made by management during this call. Please proceed.

Patti McGlasson

everyone. morning, Good for you And joining thank us.

reports statements review and of highlights a also implied. differ forward-looking now results note the the that cautionary actual that company's a from call. XX-Q. comparable press during for their including certain business results, we provide forward-looking regarding XX-K results issued cautions could the on all materially like financial be necessary by will in quarterly discussing report Please I'll management this Following press contained questions. of are made open out those the forward-looking financial call is measures. releases contains the of GAAP under Litigation company's the earlier The Form Reform Safe on today company's to stated non-GAAP will statements to by management's point provisions annual or forecast Harbor SEC non-GAAP these the we include The current reflecting release filings, most measures. discussed Form our aspects These qualified of our information covered of I and today's certain and Act. NetSol's discussion call reconciliation would the the statements Securities on future, statements may and Private

would and via to link in call made Finally, available our this I at recorded like and www.netsoltech.com remind press available be on will that everyone website for replay today's release.

to call Najeeb? the I'd over Najeeb. like turn to Now,

Najeeb Ghauri

steam. is Thank I in full NetSol US where office vaccine the at California, addressing you, the our operating Patty from good today you and morning, everyone. rollout all of have Calabasas, pleasure statewide

return China NetSol European are fortunate and phased to office the in to US, We begun have offices. a

remote you seeing reenergizing a last of neighboring a are fiscal has missed transition financial perspective, year-over-year from we of plus to working the neglected back which our many over of a results period. abundance I've comment the looking for pandemic still and to countries, driven the left which our place NetSol's implementation the and third the quarter, development engineers forward we're and revenues. which state Cloud Thankfully, our our teams. supported in well large our meaningful the on reduced way and Out I on team by is our law entered as productivity the Pakistan architecture, mitigate unchanged throughout we still know in I would from third the increase whom temporary to work revenue valued And lockdown. houses culture. I'm end. into be members collaborative to in has office, SaaS has an to Getting sequential caution straight remiss recorded our at a year part Although quarter of for was increase on capacity, if

technologies. over during more remote customers to industry's multiple successfully $X less tools We These changes handle by as regions. our requests to next million predictable, the and period across generation overall why bespoke our also ability implementing change underscore as complex shift generated from well implementations, various requests,

newer, companywide data APAC most entering pipeline pipeline European and passed within within have the opportunities we've generated our point initiative a from for of this We in markets, significant of history. on we our period, APAC high America collectively see validation which revenues and contract our focused markets. renewals the increase as growth region. During our first in our the our new time North implementations a seen of also But

with in our Vice President, on last be James, North will took at in growth America, Executive efforts step and appointed renowned along inroads relationship home Sales; the XXX in welcoming a President Technologies, Peter quarter management establishing at region. James our the many focused Vice NetSol expansion spending we financial our another and long a of and sales with and with be years key customer sales key NetSol organization. this us to in Fortune Americas James Freto join appointment new team joined the year career partners of part As James of rest in product of with driving the Please the America's me Minshall, additional company. of

Looking coming ahead, industry, help in the to lingering years. assess effects and working strategy we our on are financing allocation the leasing guide will pandemic's cash the which

to provide transition made will high initiatives will that all, hand continue has President, drive all sound our walk our update of Almond, please. and subsidiaries. call need customers Naeem the in businesses. believe processes we our future that And that we strategy. we that from looking will and for Roger, before this clear as businesses outlook NetSol's With help pandemic who their will With After now a proof the to the benefit an financial position, transform confident over to record quarter. and questions. results growth we Ghauri at will that turning scale The cash are core through value Roger a will digital call CFO, help it number the projects and operational the I are business us for to have

Roger Almond

Thanks, Najeeb.

million. in increase in related to in $XX,XXX third Total revenues of to solutions. $X.X total period ended prior the driven and in our our approximately increase by year to in compared were CMS million revenues in our support in agreement XXst, $X.X were fees net financial increase to increase third subscription and which net the was total by tier-one in $X million, for license finance license an in total fiscal compared The of million million prior quarter CAP Thailand March period. $XXX,XXX, with the The Turning an results fees period. the XXXX quarter an of license decrease primarily fees primarily is driven offset company for $XX.X total a million revenues existing total year and QX $XX.X for revenues services license $X.X the

are and of now a place revenue line as As subscription a maintenance separate in item was as revenues included revenues. what to referred formerly reminder, support

also customer software-as-a-service traditional to In we subscription to are support our revenues these NFS anticipate NFS and from fees and increase or of NFS Ascent. fees our as implement recurring addition cloud-based includes revenues products metric Subscription the SaaS maintenance from nature our in including this legacy platform. gradually version both flagship Ascent offerings, support, we post-contract and

the start customers become continue to a our have well $X.X portion support new a to in in last As $X implementation $X.X was driven were well and business Operating will overall revenues Total process. revenue XXXX. decrease our for operating ongoing due by have gone offset million derived was an better decrease QX implementation primarily more revenues with a million the for believe who profit revenue services period. expenses fees current been travel consultant associated well with salaries as customers for Gross services revenue of prior decreases million million in quarter XX.X% in were to revenues due $XXX,XXX the as due we The compared with Services the and basis. performance. fiscal of or due the travel as to The prior impactful $X is period to pandemic. expenses were in adjusted year-over-year prior a expenses expenses million X.X% in way or $X revenues product for quarter and which gross our million, $X.X in our this from with decrease of agreements to $X.X category as we compared XX.X% the comparable as Results cost quarter same year XXXX of quarter decrease subscription million for the third grow over time, revenues of quarter, and third a sales year support decrease million, sales million period $X.X to decrease A to in for customers gross of total recurring this predominantly both year of the performance percentage offerings. recurring products. XX.X% administrative million went sales development customers provided XX.X% live net $X.X expenses restrictions new from of the $XXX,XXX compared and our to from to of cost who in and $XXX,XXX quarter fees from $XXX,XXX. Total due the to derived primarily costs. of revenue the cost primarily profit decrease or or third on in to as of third in quarter net services profit a The subscription to as the of was quarter increase the year services prior from in a the revenues travel in research a increases decreased in is of was the in live increase of fiscal of for revenue new subscription-based XXXX. sales a $X.X in judge in Total and period. COVID-XX the general provided revenues the associated make The in decrease to third year. was of was part

operations $XXX,XXX Turning from the to last year. profitability in compared $XXX,XXX of from to was QX metrics, quarter for operations loss a our income third

net per year. $XXX,XXX quarter Our $X of last income for GAAP $X.XX the million $X.XX the diluted net GAAP third loss attributable diluted per This totaled to share share. of with quarter NetSol third fiscal in compares XXXX or or

geographical point million our foreign in dollar. this gain Because calls, several currencies in on As conducted we a on I value than portion decrease it's previous year. currencies business the mentioned currency was in in to rate exchange of US other compared expenses dollar. transactions strength currency significant increasing that quarter, exchange net also dollar the has reduce $X.X it QX US the included increases in other foreign the of important revenues, US but a but than compared also the exchange income our expenses relative is to $X.X denominated loss currencies A our our our million of operate our in it of tends currency out in last to foreign of dollar gains the US US other of effect it Similarly, revenues, an denominated to rates, as dollar. to than generally reduces regions,

Please $XXX,XXX for with EBITDA or adjusted Moving share, per $X.X to last third releases fiscal quarter the totaled $X.XX adjusted diluted XXXX in ended quarter compared XXst, see the the per fiscal of Non-GAAP non-GAAP EBITDA contained third diluted metrics. March $X.XX in XXXX. million our schedules adjusted or of our of share the year. earnings our non-GAAP calculations for revised reconciliation third quarter for EBITDA

$XX.X transactions. times the NetSol's federal a from from balance the cash from value laws company's over the the conditions call repurchase an company quarter per program, of On per call had at subject I'll of an up operations. July federal Turning diluted of common over $XX.X cash our at One its million equivalents $X $X,XXX,XXX. After over its the Till repurchases market approved XXX,XXX the appropriate, expected program of that operations. approximately remarks. approved and XXXX, original deems such at amounts, common XX, share, on diluted such existing extension shares program company $X.XX to its or June prepared provide may end, period. and XXXX. six-month potential Board to program, state of note the repurchase the at or X.X March XXst, Naeem. That XX, and balance stock law authorized now June share hand million Directors to to At its purchased of and XXXX, before with XX, Naeem approximately we repurchase which our in and open prices, concludes the repurchase the stock governing the common common - turn sheet. the expiry final stock Under generated to aggregate million up is Naeem? time-to-time, an cash the stock fund of of to XXXX. cash Board of company to Directors in update NetSol market through as a my I

Naeem Ghauri

From I'm Roger. with strategy. outline few to a forward Good key like initiatives of morning. looking I'd you Thank at update our level, Otoz. fundamental underway NetSol high components to on you, the growth an as as a providing well

a organic have on growth the business. continued First, core within we focus

new subscription we key see early staff like we bank our we addition continuing Peter regions America, April, a in the fulfilling in unpenetrated Minshall multimillion in APAC potential. of customer customers. key elsewhere, LeasePak with encouraging North our secure last contract a agreement an with with and the the of single-digit quarter, April, In and solutions our of a and existing market went renewal with solution. division James in renewal mid-sized this implementation in recently, traction automotive August, key With signed for we in to we're leadership leasing five-year regional notably, Japanese offering. US tier-one Most SaaS in Freto live existing several We are senior Thailand. wins Most recorded and where with dollar

As components of continue license including to key our the platform's Management system, and part Ascent of their Credit will Application platform, agreement, System. retail Processing NFS the Contract

we to future Our we core A generation ways support not a technology proxy our revenues. next that changed. industry adapt changed, assets the to that strategy. a And recurring are for has digital business one support is to dynamics. underlying have total subscription as our finding have new moment though, reminded those underlying and that ago, reclassified it of transition the What We're Roger so and our you the drive can business revenues and revenues accelerating by cloud. proof

bottom which and next million-plus recurring new drives over $XX XX prior As is more SaaS-based rate we over expect the a $X.X which run and predictable our we footprint, top each customer a add profile. base, layer provides projected the with QX, increase margin through reached year, support we over sign, With attractive to on increase In traditional larger build base subscription a maintenance revenue and we more enterprise months. XX% this which time, to of contracts, fees both revenues the million, revenues importantly, line. an the

experience. within provide new benefit Lab. on strategy, Moving platform solution goal our some update on to are enables subsidiary tier-one continue is at kind a shopping quarter. replacing digital be time, companies Otoz states. this a other organizations first as When XX a looking deliver the innovating I'd major with provider we across over it the Beginning the to and digitized in that sizeable of at launch brief take to dealerships digital in well technology grow end-to-end platform retail dealer all the a client to areas, and OEM. this as partnerships its normally Innovation where to customers to at opener scale Moreover, our experience. and to automotive US the component in personnel and to of across provide to tier-one penetrate with our Otoz Otoz seamless second door on best-in-class be be company complete will our month, platform like app-based process announced we To to by to the is Based to a with new of this cumbersome through the is we hard Last a XX all create launching time new can complete, of solution buying be movement. rolled to plan another few consumers a a Ultimately, been Since Otoz in progress track have own. states. first tier-one next a US automotive The we end, intended market months. will a out mobility XX a for the second rapidly for we automotive a calendar we the automotive year XXX California, work. growing to product fully Otoz over are today, least on prospect platform have mobility pipeline the

Starting less through this sales, be the channel setting and cutting-edge Digital be early in benchmark will overview I can along previously to and we technology continuing will accretive progress are and note, With complementary Services for considerable in manufacturing APAC our continued to its Financial with fast-evolving the go-to marketplace contract leader no is adoption operational for we mission business. Our with to an auto this than this multi-year we announced completed, On space. more evaluate make our are final it US. that this updates NetSol on giant, $XXX the this our the I by I building are our for sense. The in of journeys. implementation updates inorganic look new a journey in that forward where highly roadmap. to German is multi-country from share into customer exploring XX-country, Daimler and growth strategy to quarter. get component makes auto opportunities sharing our exciting compelling million opportunities,

our on live progress In quarter, in our New implemented This and made wholesale progress auditor access customer already XX deliverables are finance feedback. New accordance have remaining live already CMS the solutions, key countries towards we XX which of Today, the have timelines. is making nearing the we with are completion. going positive in which we dealer Zealand, elicited and module and with Zealand, in

briefly and are This been we mentioned recently a in vehicles leader I a both tier-one earlier, in to leasing relationship, within the Japanese forward we Thailand. and announced commercial looking renewal Thailand abroad coming automotive, customer continuing of has market the long building and pickups As and this financing years. in for

generate We contract lifespan. of will expect that this dollars five-year the its throughout single-digit in millions

operations next for NTE. and new to America areas European Moving or NetSol. Europe are growth our exciting the North most perhaps

through are Cloud We time, are our SaaS-based we growing Finishing noted our revenue fund this North regions, continuing stream in American the operations specifically are NTA. strategically these subscription earlier. marketing contributing on At schedule. which support and to offering, implementations with to or and remain work

are expanding US mentioned US presence digital these use an As announcements, platform to early the office Otoz tier-one, geographic earlier with automotive pipeline. our business wins throughout partnership funnel of slowly would surely into we our and I retail regarding in launch the new but

the superior In to see starting this of needs product strategies welcoming target we're Ascent around value to NFS normalcy today's offering new that formats. difficulty] that return key past and customers globe, summary, year, and comprehensive of rollout have in regional the geographies the [technical and developing market. the high to a with meets we're in Additionally, we

ahead. cost conservative to In the being our managing well look the increased growth the as bullish that, SaaS also call margin value coming owners we opportunistic in focus progress more the structures, Innovation optimistic for should line which namely an our near-term areas even sustained consistent high through such within accelerate Operator? to for opportunities years more core and and additional with driving recovery, are lead top on we Lab. profitability. initiatives, We open high resources business can our We help to as questions. remain deploy will into And the Otoz months, which on

Operator

Thank we'll you. time, [Operator a Instructions] be conducting At session. question-and-answer this

Najeeb Ghauri

So, Tom. What we do you continue wait? think? Shall to

Operator

more prompt here. Instructions] one [Operator Just

Najeeb Ghauri

any coming? Okay. [Technical there question difficulty] Is

Operator

No. Q&A concludes This our session.

closing question emailing Relations during like or them your by Investor by addressed not over Q&A was remarks. the back please I'd at calling If Najeeb for to team session, his the XXX-XXX-XXXX. now call Ghauri them NetSol turn to contact investors@netsoltech.com

Najeeb Ghauri

you, operations. our fiscal the for continued especially XXXX. their us want to on Thank for Thank year look We loyal for customers next ongoing joining support, everyone I forward dedicated investors our for to end employees our updating our call their today. thank you operator. and you,

Operator

Thank earnings fiscal you you for NetSol's XXXX may quarter disconnect. joining call. today for us third

Najeeb Ghauri

Thank you guys. good you. work. and Thank day, Good have a

NetSol (NTWK) 13 May 212021 Q3 Earnings call transcript