NTWK - Earnings call transcript Q3 2022 | NetSol Technologies, Inc.

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Operator

Good morning. Welcome to the NETSOL Technologies Fiscal Third Quarter 2022 Earnings Conference Call.

On the call today are Najeeb Ghauri, Chairman and Chief Executive Officer; Roger Almond, Chief Financial Officer; Patti McGlasson, General Counsel and Senior Vice President, Legal and Corporate Affairs. [Operator Instructions] 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. Thank you, Patti. proceed. Please

Patti McGlasson

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

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

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

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

Najeeb Ghauri

and XX% everyone. our growth XX% XXXX revenues. we on achieve remain good line fiscal in Thank performance, recurring you, of track targets Patti, With our growth morning, quarter third and growth to top

recurring has our ended March growing our Importantly, for the XX%. by target, XX, far team revenues exceeded months nine annual

monthly accelerated drive and opportunities pipeline to in and in business European in MINI the in a Jersey. platform York contract we in robust, expanded quarter In coming mix markets, Pennsylvania dealerships. MINI and OTOZ, all XX% California our dealerships has California, of signing this of ended The particularly the dealerships, adding March of rolled American our now Pennsylvania, the New and XX% in XX and growth to third long-term, OTOZ total potential across we've with giving one states. dealerships of XX to to six mobility partnership dealerships to we the in ability base confidence solution already New In over XXX user of Florida, Texas additional over digital our my live the out our in North this the in rollout quarter, states, MINI Anywhere be with in all months. us startup remained captured Our XX core subscribed

to global Lahore back our employees to campus, is offices. our Our home XX% heart our continue which our return in the We technology of nearly our employees of operations. with majority the of quarter to and ended technology workforce

Additionally, to since campus the employees, innovation implementation initiatives. in support the XX we nearly technology our additional work by headcount year, national the have of station in increased start mostly and Lahore, fiscal

months returning nine making be we demonstrates walk our Roger? delivering our lead results promise quarter. we growth. the our financial on XXXX workforce to who will hand now in efforts sales of completed, first call for Our will fiscal this the expanded Almond, beyond. us I'll leadership, CFO, outsized investments will overview the Roger through in XXXX of are to fiscal we the and returns With results over technology the that of And and clearly confident meaningful are

Roger Almond

Najeeb. Thanks,

to March fiscal third Turning quarter ended results XXXX XX. for our the period

the driven net X.X million for revenues QX million The an to by in quarter license XX% or fees our XXX,XXX, of million XXXX in X.X on for gross of XXXX compared or increases maintenance were fiscal third the XXXX revenue was X.X cost increase primarily the other the primarily year contract net million the XXX,XXX revenues due cost and X% administrative services support prior million, or deals services, expenses marketing operating million and revenues increases XXXX. by million sales compared due or increase was third increase million Total The year and quarter prior increases period. decrease implementation to million The to salaries to in of primarily decrease salaries in period. change decrease for the net in fiscal Total of slightly profit quarter X.X XX.X% million was Daimler compared subscription increases was and sales offset by XX% revenues expenses increase subscription million revenue period. third quarter's of of last the the Sofinco licensing support XXXX with subscription fiscal X.X of costs increased primarily increase contract, million related in selling is in increase increase was The the by of in XXX,XXX to from to to XXXX. of XX.X profit in quarter, Gross revenues third call. year due services sales the among for XXX,XXX. of to prior X.X general in and million was the in X.X X.X compared Services of quarter million. were XXX,XXX. year primarily XX% Our million third increase in of and X for offset X.X driven X.X Total and were of related the in QX X.X of revenue our fiscal revenues revenues total of X an of expenses. which with in compared of to due and in for to customers. year by expenses The of Financial a Operating in travel from to XXX,XXX new is million net X for XXXX. quarter total consulting due XX.X quarter fiscal in million, in expenses of third was a X.X other GAC an discussed of increase decrease The XXX,XXX QX fiscal offset to and

to in of net diluted NETSOL the loss XXX,XXX with fiscal GAAP per diluted quarter the per Our share or the third fiscal quarter compared attributable share loss $X.XX $X.XX for XXXX GAAP totaled net third XXXX. or XXX,XXX

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

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

quarter revenues the $X.XX June XX.X we continues June per common for or balance common Najeeb diluted in from on our total diluted and existing current to from had or million approximately least least performance expect of is at revenue to XX, our At and of contracts XX%. I by before cash guidance recurring XX.X based customer sheet. increase increase support through track by share subscription at This share, XX% cash note, over equivalents results $X.XX approximately XX, recurring base, available XXXX. Najeeb and to its prepared at an the the business my to and for end, the update. year year back January call date concludes down This this over fiscal call. is other Turning Najeeb? I'll back our XXXX, call the company of turn which calendar revenues hand million information outlook or per final overview to regarding financial One now to this approximately remarks. ending as of

Najeeb Ghauri

provide within recent in XX our now of of recurring major the revenues updates the run Thank support Roger. segment’s SaaS our million components than more and rate I'll from broad quarter. annualized third you, strategy,

accelerate. our across anticipate continues continue to we to to will return work As this our workforce global growth footprint, onsite

we investment in well such position cash are in net core recurring subscription And our our noted, to long-term line of high in year providing resources opportunities, full revenue reiteration the revenue lab. written innovation confident the as XX% OTOZ just strong, in year Roger strategic business work our of our for million XX% our additional $XX As top remains revenue. or guidance growth with support as as the

to our customers which To Another component and of benefit end, personnel in can organization. create this to innovating strategy our areas technology and as as new a is quarters innovation partnerships, looking our most progress be growth major within take within visible own a The on to in time our our recent I'd project like MINI with undoubtedly has partnership Anywhere. been provide to OTOZ some update OTOZ brief the lab. well

lenders. provide Automotive gained featured retail working Financial experience, Services marketing and the the its sales across key new empowering XXXX, the to been Anywhere launch digital North the end OTOZ publications, with of digital America for creating automated traction. platform major has new a many including strategies ABC quickly platform brand and fully and has BMW at shopping MINI dealerships with for been Newsweek, channel has a MINI OTOZ USA customers fiscal As Since a Anywhere News News. The through Group the reminder, in their

at quarter of of dealerships XX MINI MINI live December from was end, As up just with quarter. end Anywhere the XX

all quarter. state now we Pennsylvania, XX% MINI of the California More and of just all captured importantly, dealerships dealerships in third we in entered have XX% a

we fact, end now in just six are two operating at the from up In December. states of

New to third In addition in during York and Florida New we the live dealerships and Jersey Pennsylvania, quarter. went with

attributed able meaning we we've Through to to to XX% this sale. I'd of the expect factors success the fiscal those continuing shortages and We will inventory to to was our platform fiscal This third solution ahead. early in lead to roll the one most to one the why several leads be and can is The MINI’s believe conversion convert end rate we and documented blended first opportunities like and are reason to of program the six. this be in more the generate been data auto telling. weeks of for five share of through every accelerate our point the looking in We global a out industry partnership. quarter, At light quarter major this momentum months our and a vehicle team expansion the to belief the performance we our ratio product continued of within dealers forward go a by. regional are appreciate identify one as of well to more

now rolling Looking exploring digital be been joint and operational sense. for ahead, The sales, current insurance this which With is order that updates popular support evaluate this platform, can inventory, when we and final I component marketplace to as additional organic to note, quarter. out some continue the our M&A, as protection conditions. to are our has business. in including request under well that it go accretive major completed, used with including car strategic the enhancements and already strategy opportunities a opportunities in of ventures share On will over makes market we'll introducing products the for I financing highly

solution, soft flagship a maintenance. in Mapping countries Kubota Australian Zealand, we NETSOL discovery the countries transition strong of completed with a into QX European a Kabuto with went the multiple phase, to ongoing. proposals Regarding is newest have The and penetration flagship, with signed in last contract Europe's and during on bank in under hinges NFS project project which August multiple launch scope. the is project currently The currently potential was client, submitted. New Europe. live a This contract our is

this to multimillion dollar a with China GAC additional global forward, fall move financial XXXX on company, key for configuration, during the anticipate Sofinco in and completed and Our previously implementation to of multiyear activities based continue continues we a services July important automotive QX year. set delivery that May announced in upgrade stage Go-Live

simultaneously XXXX. group their and consisting we and July, loan across project to -- NFS and of select our with sale of Now Ascent including vehicle loans, and motorcycle retail, offers live operation. lease sales, and applicants on maximize powersports the American to version completed now dealers prequalify to market deploy the the official to lending motor workshops flagship leasing. can sale system Motorcycle we implementation management continued July motorcycle and with agreement of our announced advisors. go motorcycles customers qualified required point The lease North Last all operations, finishing and cloud-based so motor that remains group through the track first an for of in and our entire began their only in support presents expected US platform enable contract

clients throughout America Going forward, looking to be this leverage prospective we to North market. agreement will breakthrough

APAC of business grow region pandemic to halt induced ahead, the our continues the in opportunities pipeline new within out Looking steadily, of development.

by are be this to largest and seeing return ongoing a we recovery market for our our to encouraged in region believe are opportunities quality operations. larger the global the work emblematic We across in

new way earlier, these strategically is our marketing noted contributing that Regarding growth large support offerings in cloud our through the as US, to based and European areas pipelines, revenues in cycles. well opportunities as remain North regions, and subscription our opportunities the of new ascent are we the a several these we have their for and growing as exciting which making NETSOL specifically, Europe sales and in have SaaS few American flagship

deals these gains the While critical we months. with of current of in well a some bodes we deals signed, our believe potential when combined get momentum control for can’t mass meaningful coming

America so in summary, continues. for across performance is strong these why current pipeline which XXXX growth In Our strongest business, are our important. getting opportunity belt of opportunity North implementations remains under the first near-term fiscal our our

that, recovery operating the healthy in open questions, are And our operator. the and for call seen today investments regions we our for that future. all support have with growth We will -- making sustainable can

Operator

[Operator Instructions] Services. Todd line Aegis of Our the Financial first question from comes with Felte

Todd Felte

in the call that May Daimler in through contract into XXXX. noticed in had early we the update India any going conference calendar Financial when occur? I be live Is would last mentioned that Services on We're that now. will there you

Najeeb Ghauri

Yes. live ago asking running question, very Thank in about Yes, did a well. month Todd. you India, it's we all for the go and live

Todd Felte

and financials little $X Also, revenue the been bit Okay. I I've appreciate the Or flat gross X color a Is there months, it I know and but on plan seems this that. pressure. over bit. of of little cost? a a operations we're the improve problem profit is with by margins? has looking margin our under of at little this our kind here, kind deal million, to a temporary income in our from gone a is caused labor up and just and inflation increasing is down

Najeeb Ghauri

that to both in in ourselves Roger related license or is, Asia North almost to recurring as quarters, expense over new is, people initiatives, as really not license at the North a America, that with I ongoing relation U.S. will by businesses, support -- the revenue especially year And improve new the mode we whether growing some America, we not like X continue investment our been mean busy is are of second well they're Todd. margin. the revenue to One our think our a noticed, ago a you'll U.S. past. innovative stronger, large thing doesn't the is the to last people in or in going and opportunities you in implementations few to revenue in U.S. and add our operator as want so be to SaaS we market, gross in as which hiring license has position the to sometimes U.S., particularly, mentioned, Canada in growing, I an hired company as an a regions in the in haven't primarily to opportunities that we're of we're question, contracts, actually that model points SaaS it's sale, to notice, couple pivoted

So these I all the country because much technology have world. the a where over market investments believe personnel, in more all so better in major hiring professionals Even paying technology-related the for home conditions are in these salary we workforce. demand

people, time new the future. in it's to the talent invest bring So look and at

So this is why the margins are a bit shrinking.

this -- but is So temporary.

and operation I gross I quarters. continue a to level that and coming think really you look been have of the at in as this more, that to it scale the and over improve better think improve I in will improve margin. XX%, much XX%, we think to sales growth I then Historically, to worldwide we've economy intend can

Todd Felte

then question. That’s value got share. the stock hasn’t great Okay. finally, done the we’ve I my And of to look hear. book and And stock a $X around a last at really much.

to going being shareholders? which at even with value in If some any program, to a update those look or like is the it, dividend the maximized. value there I past of possibly you share couple XX return had Is It doesn’t seem back initiation shareholder a to really the we’ve years. years little of a of know buyback

Najeeb Ghauri

course, facing of looking the challenges. time. North at buyback effective all and One million Look, close $X.X million, time I are done shares, is to invested Europe. mean million and year a a X X globally, almost it’s Right we course, America major, $X made have now, difficult almost Asia at we’re whole opportunities and is, X I program of that what ago. very regions think,

that out right bank the time, in the know cash the challenges invest be But those is and sometimes Right believe, in and a to sure X have of buyback company or see in we we’re invest we make can and well to in company I we cash to or board doing, we a And we in to the the when without growth also talent down can the months careful we that we have slows strong will into our allocate And now times You disrupting I right that really, strategy So time what know and already program improve place things what it now, technologies. recession are. invest enough financially X the another cash to back place. very company, from flow the months in come same continuing if the that’s think the is new buyback. now, our carefully, served are to all to cash reserves are at world. macro to already And we’re go some or a difficult extension from activity. is the invest there recession? weather good heading in we the facing preserve the also without

Operator

questions. other At I'm Okay. Instructions] back to pass Najeeb any not [Operator closing remarks. any for this like it I'd time, over seeing to

Najeeb Ghauri

Thank our appreciate we you, try progress in and Goodbye. for you support and again, think to And next the I and company. in time. everyone, better we'll I do But this and continue make coming years. joining you your work good our your call to patience today. thank coming quarters see

Operator

conference. This concludes today's

and time. your have You Thank your you at may great lines a participation, day. disconnect this for

NetSol (NTWK) 12 May 222022 Q3 Earnings call transcript