Q2 2025 NetSol Technologies Inc Earnings Call
Speaker Change: [music].
Good morning, welcome to metal technologies fiscal second quarter 2025 earnings conference call.
Operator: Good morning, welcome to NetSol Technologies Fiscal Second Quarter 2025 Earnings Conference Call.
Operator: On the call today are Najeeb Ghauri, Co-Founder, Chief Executive Officer and Chairman, Roger Almond, Chief Financial Officer, and Eric Wagner, Chief Marketing Officer.
Speaker Change: On the call today are <unk> co founder Chief Executive Officer and Chairman.
Speaker Change: Roger Almond, Chief Financial Officer, and Eric <unk>, Chief Marketing Officer, I would now like to turn the call over to Patti Mcglasson General Counsel, who will provide the necessary cautions regarding the forward looking statements made by the management. During this call. Please proceed.
Patti McGlasson: I would now like to turn the call over to Patti McGlasson, General Counsel, who will provide the necessary cautions regarding the forward-looking statements made by the management during this call. Please proceed.
Speaker Change: Good morning, everyone and thank you for joining us.
Patti McGlasson: Good morning, everyone, and thank you for joining us. Following your review of the company's business highlights and financial results, we will open the call for questions.
Speaker Change: On your review of the company's business highlights and financial results, we will open the call for questions.
Patti McGlasson: I'll now provide the necessary cautions regarding the forward-looking statements made by management during this call. Please note that all the information discussed on today's call is covered under the safe harbor provisions of the Private Securities Litigation Reform Act. The company's discussion may include forward-looking statements reflecting management's current forecast of certain aspects of the company's future, and our actual results could differ materially from those stated or implied. These forward-looking statements are qualified by the cautionary statements contained in NetSol's press releases and SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q.
Speaker Change: And I'll provide the necessary cautions regarding the forward looking statements made by management. During this call. Please note that all of the information discussed on today's call is covered under the Safe Harbor provisions of the private Securities Litigation Reform Act.
Speaker Change: The company's discussion may include forward looking statements, reflecting management's current forecast.
Speaker Change: Certain aspects of the company's future and our actual results could differ materially from those stated or implied.
Speaker Change: These forward looking statements are qualified by the cautionary statements contained in <unk> press release.
Speaker Change: And SEC filings, including our annual report on Form 10-K, and quarterly report on Form 10-Q.
Patti McGlasson: I would also like to point out that we will be discussing certain non-GAAP measures. The press release issued earlier today contains a reconciliation of these non-GAAP financial results that are most comparable GAAP measures.
Speaker Change: I would also like to point out that we will be discussing certain non-GAAP measures.
Speaker Change: The press release issued earlier today contains a reconciliation of these non-GAAP financial results to their most comparable GAAP measures.
Patti McGlasson: Finally, I would like to remind everyone that this call will be recorded and made available for replay at www.netsoltech.com and via link available in today's press release.
Nadeem: Finally, I would like to remind everyone that this call will be recorded and made available for replay at www Dot that's all tech dot com and via link available in today's press release now I'd like to turn the call over to Nadeem.
Najeeb Ghauri: Now I'd like to turn the call over to Najeeb. Najeeb?
Speaker Change: Good.
Nadeem: Thank you Patti and good morning, everyone.
Najeeb Ghauri: Thank you Perry and good morning everyone.
Najeeb Ghauri: Today I'm happy to be dialing in from Lahore, Pakistan, NetSol office. This quarter, we made significant progress primarily on two fronts. One, we drove considerable growth in our recurring revenues, and two, we invested strategically in our business, particularly in AI, to position us as we drive long-term sustained value for our customers and our shareholders. We achieved total net revenue growth in the second fiscal quarter of 2025, driven primarily by a double-digit percentage increase in recurring revenues and a 26% increase in services revenue. when compared to the second quarter of fiscal 2024. The growth in recurring revenue is in line with a long-term strategy and it demonstrates the continued evolution of our business model that over time.
Nadeem: I'm happy to be dialing in from Lahore, Pakistan Philadelphia.
Nadeem: This quarter, we made significant progress primarily on two fronts.
Nadeem: One we drove considerable growth in our recurring revenues and two we invested strategically in our business, particularly in.
Nadeem: To position us as we drive long term sustained value for our customers and our shareholders.
Nadeem: We achieved total net revenue growth in the second fiscal quarter of 2020 fly driven primarily by the double digit percentage increase in recurring revenues.
Nadeem: 26% increase in services revenue.
Nadeem: When compared to the second quarter fiscal 2024.
Nadeem: The growth in recurring revenue is in line with our long term strategy and demonstrate the continued evolution of our business model that over time.
Najeeb Ghauri: should drive enhanced predictability and profitability for our business. To drive this shift, we are investing in multiple opportunities across our diverse markets that we believe are in line with a long-term strategy. Accordingly, we recognize increased sales and marketing expenses in the quarter, while these investments have had a short-term impact on our profitability. They better position us to capitalize on the many growth opportunities in front of us. Specifically, AI or Artificial Intelligence continues to be an important initiative and a key strategic focus for our future growth.
Nadeem: Should drive enhanced predictability and profitability for our business.
Nadeem: To drive this shift.
Nadeem: Investing in multiple opportunities across our diverse markets that we believe are in line with our long term strategy.
Nadeem: Accordingly, we recognized increased sales and marketing expenses in the quarter. While these investments have had a short term impact not profitability.
Nadeem: They better position us to capitalize on the many growth opportunities in front of us.
Speaker Change: Specifically, yeah, you ought to be doing Jellybeans continues to be an important initiative.
Nadeem: And a key strategic focus for our future growth.
Najeeb Ghauri: We have made encouraging progress advancing our AI initiatives in both the second quarter and year-to-end period, which our Chief Marketing Officer, Eric, will elaborate on after my prepared remarks. Lastly, our existing markets are strong. We are receiving considerable interest from the leading automakers, equipment providers, and financial institutions throughout the APEC region. where we have a leading market share, and Europe where NetSol is both a well-known and respected name. During the quarter, we announced a multi-million dollar agreement with BMW Group in the U.S. with the leading automotive financial provider in China, expanding on a long-standing relationship between NetSol and this customer that dates back to 2009.
Speaker Change: We have made encouraging progress advancing our initiatives in both the second quarter and year, two and beauty, which are still marketing officer, Eric will elaborate went after my prepared remarks.
Speaker Change: Leslie or is it existing Microsoft strong.
Speaker Change: We are receiving considerable interest from leading automakers equipment providers and financial institutions.
Speaker Change: APAC region.
Speaker Change: We'll be here.
Speaker Change: Market share.
Speaker Change: In Europe, there necessarily both well known and respected name.
Speaker Change: During the quarter.
Speaker Change: And most of them, but they're in dollar.
Speaker Change: BMW group.
Speaker Change: In U S with enduring automotive automotive.
Speaker Change: Automotive refinish blood in China, expanding on a long standing relationship between the salt and discuss some of the dates back to 2009.
Najeeb Ghauri: After the close of the quarter, we also announced a GoLive of an existing agreement with Kubota, a leading Japanese equipment financing company and a long-standing customer for our Transcend finance platform to support their operations in Australia. In addition, to their operations in New Zealand and other parts. Agreements like these demonstrate the depth of NetSol's customer relationships and are a validation of the superior products and service that we provide in a highly competitive market. Demand of our Transcend platform is strong in the US as well, as I have mentioned on previous calls, Transcend Retail, our fully digital omnichannel platform that seamlessly integrates into our customers' processes to manage the entire purchasing journey, is being used by Mini Anywhere USA, an independent brand of BMW Group, to facilitate a quick and efficient purchasing journey for customers.
Speaker Change: After the close of the quarter, we also announced.
Speaker Change: It go lives of an existing agreement with <unk>.
Speaker Change: Buddha, a leading Japanese financing company and long standing customer Boston financial platform to support their operations in Australia.
Speaker Change: In addition.
Speaker Change: Yes.
Speaker Change: The operation in New Zealand and other parts.
Speaker Change: Lehman's like these demonstrate the depth of net so customer relationships and audience validation of the superior products and service that we provide in a highly competitive market.
Speaker Change: Demand of autos Dresden, that's all been strong in the U S. As though as I have mentioned on previous calls Johnson retail.
Speaker Change: Our fully digital Omnichannel platform.
Speaker Change: Seamlessly integrated into our customers' processes to manage until I. Appreciate any journey is being used by many anywhere USA and independent Brent with BMW group.
Speaker Change: To facilitate a quick and efficient, but shouldn't journey with customers.
Najeeb Ghauri: In addition to MINI Anywhere USA, I am excited to share with you that we are also in the process of integrating Transcend Retail with new customers, BMW USA, and expanding into more dealerships beyond the MINI USA network.
Speaker Change: In addition, domine anybody USD I'm excited to share with you that we are also in the process of integrating John send retail with new customers BMW, USA and expanding into more dealerships beyond the mini USA networks.
Speaker Change: Yes.
Najeeb Ghauri: Taking a long-term view of our business, I am pleased with the progress we have made in this quarter, and I'm encouraged by what's to come in the later half of fiscal 2025. We are confident that the investment we are making in this business, coupled with our shifting revenue, revenue mix to include more recurring subscription and support revenues, will translate into enhanced profitability and sustained value creation for our shareholders.
Speaker Change: Taking a long term view of our business I am pleased with the progress this quarter and I'm encouraging I mean.
Speaker Change: But what's the what's to come in the later half of this look 325.
Speaker Change: We're confident that the investments we're making in this business a couple of them without shifting revenue.
Speaker Change: When it makes to include more recurring subscription and support revenues will translate into enhanced profitability and sustained value creation for our shareholders.
Speaker Change: Before we go over our financial results for the quarter I'd like to turn the call over to Eddie Radnor, Our chief marketing officer to take a deeper dive into it.
Najeeb Ghauri: Before we go over our financial results for the quarter, I'd like to turn the call over to Eric Wagner, our Chief Marketing Officer, to take a deeper dive into our AI initiatives.
Eric Wagner: Eric, go ahead, please. Thanks, Najeeb.
Speaker Change: And a good place.
Eddie Radnor: Thanks, Jim and good morning, everyone.
Eric Wagner: And good morning, everyone. I'm excited to share with you today how NetSol technology continues to pave the way with our AI innovations in our industry, and how we are integrating AI across our products, services, and our own business operations to drive efficiency, intelligence and transformation. Our journey with artificial intelligence began in 2019, when we began building our internal AI capabilities. In doing so, we've made several strategic investments that we believe position at NetSol as an AI first organization. In 2024, we took a major step forward in this initiative when we launched Transcend AI Lab.
Eddie Radnor: Excited to share with you today, that's all technology continues to pave the way with our AI innovation.
Eddie Radnor: Our industry and how we are integrating AI across our products services and our own business operations to drive efficiency intelligence and transformation.
Eddie Radnor: Our journey with artificial intelligence began in 2019, when we began building our internal AI capabilities in doing so we've made several strategic investments that we believe position that's all as an AI first organization.
Eddie Radnor: And 'twenty 'twenty four we took a major step forward in this initiative when we launched transcend AI labs.
Eric Wagner: our dedicated AI innovation. Transcend AI Labs is focused on three core areas. First, we're building out our internal capacity and understanding of AI to make sure that our team remains at the forefront of this rapidly evolving technology. We've invested heavily in building comprehensive curriculums to educate and enhance the skills of our staff and demonstrate how to apply this transformative technology to achieve better outcomes. Second, we're leveraging our AI expertise to enhance our products. At present, we're adding major functional AI enhancements to our Transcend retail and Transcend finance office. and we're exploring additional upgrades across our entire product.
Eddie Radnor: Our dedicated AI innovation.
Eddie Radnor: Tencent AI labs is focused on three core areas first we are building out our internal capacity and understanding of AI to make sure that our team remains at the forefront of this rapidly evolving technology.
Eddie Radnor: We've invested heavily in building comprehensive curriculums to educate and enhance the skills of our staff and demonstrate how to apply this transformation transport formative technology to achieve better outcomes.
Eddie Radnor: Second we're leveraging our AI expertise to enhance our products at present, we're adding major functional AI enhancements to our trends in retail and transcend finance offerings and we're exploring additional upgrades across our entire product suite.
Eric Wagner: And third, we're enhancing Transcend Consultancy's AI services to better offer expert guidance across critical areas like information security, data engineering and cloud service In short, we are providing specialized AI consulting and solutions to help businesses achieve their goals.
Eddie Radnor: And third we're enhancing transcend consultancies AI services to better offer expert guidance across critical areas like information security data engineering and cloud services.
Eddie Radnor: In short, we are providing specialized consulting and solutions to help businesses achieve their goals.
Eddie Radnor: Taking things a step further in the fall of 'twenty 'twenty four we launched the transcend platform, our AI driven unified product ecosystem that revolutionizing how assets are falling sold financing at least this quarter. We're rolling out several major AI in advance and I want to highlight two key enhancements that will have an impact immediately.
Eric Wagner: Taking things a step further, in the fall of 2024, we launched the Transcend platform, our AI driven unified product ecosystem that revolutionizes how assets are found, sold, financed and This quarter, we're rolling out several major AI advancements, and I want to highlight two key enhancements that will have an impact immediately. The first enhancement is Intelligent Document Processing, or IDP. This AI-powered solution transforms multi-document verification, data extraction, and classification, handling fake statements, financial records, contracts, and ID cards with OCR and NLP technology. IDP not only reduces manual intervention, but also integrates advanced analytics to assess cash flows, credit history, and risk factors, including credit underwriting and real-time decision-making.
Eddie Radnor: The first enhancement is intelligent document processing or IDP.
Eddie Radnor: This AI powered solution transformed multi document verification data extraction and classification handling big statements financial records contracts and I'd cards, with OCR and MLP technology.
Eddie Radnor: IDP not only reduces manual intervention, but also integrates advanced analytics to SaaS cashflows credit history, and risk factors, improving credit underwriting and real time decision, making.
Eddie Radnor: Automated compliance validation insurers extracted data meets regulatory and internal standards, reducing operational risk.
Eric Wagner: Automated compliance validation ensures extracted data meets regulatory and internal standards, reducing operational risk. With automated invoice and contract processing, physicists can accelerate approvals, minimize errors, and optimize risk assessment. delivering a faster, more efficient financing experience. Second, we have our interactive AI assistant, which provides real-time support throughout the asset finance lifecycle, assisting both customers and internal teams with instant responses, process guidance, and intelligent recommendations. This enhancement is designed to increase operational efficiency, improve customer interactions, and create a more intuitive and responsive experience.
Eddie Radnor: With automated invoice and contract processing businesses can accelerate approvals minimize errors and optimize risk assessments delivering.
Eddie Radnor: Delivering a faster more efficient financing experience.
Eddie Radnor: Second we have our interactive AI assistant, which provides real time support throughout the asset finance lifecycle, assisting customers and internal teams with instant responses processed guidance and intelligent recommendations.
Eddie Radnor: This enhancement is designed to increase operational efficiency improved customer interactions and create a more intuitive and responsive experience.
Eddie Radnor: And that's all AI is not just a tool to core core part of our strategy.
Eric Wagner: At NetSol, AI is not just a tool, it's a core part of our strategy. By integrating AI across the Transcend platform, we're enhancing efficiency, improving customer experiences and future proofing our business. As we continue expanding transcends capabilities, we look forward to sharing more about how AI is driving transformation and unlocking new growth opportunities for NetSol.
Eddie Radnor: By integrating AI across the transcend platform, we're enhancing efficiency improving customer experiences and for future proofing our business.
Eddie Radnor: As we continue expanding transcends capabilities, we look forward to sharing more about how AI is driving transport formation and unlocking new growth opportunities for Nitzel.
Eric Wagner: That concludes my remarks.
Eddie Radnor: That concludes my remarks, I will now turn the call over to Roger Almond, Chief Financial Officer of an insult to go over our fiscal second quarter 2025 results.
Roger Almond: I will now turn the call over to Roger Almond, Chief Financial Officer of NetSol, to go over our fiscal second quarter 2025 results. Roger.
Eddie Radnor: Sure.
Roger Almond: Thanks, Eric.
Roger Almond: Thanks, Eric. Our total net revenues for the second quarter of fiscal 2025 were $15.5 million compared with $15.2 million in the prior year period.
Roger Almond: Our total net revenues for the second quarter of fiscal 2025 for $15 5 million compared with $15 2 million in the prior year period.
Roger Almond: licensee for the second quarter fiscal 2025 or $73,000 compared with $3 million in the prior year period. Recurring revenues or subscription and support revenues for the second quarter of fiscal 2025 were $8.6 million compared with $6.8 million in the prior year period, representing an increase of 27 percent. Included in our recurring revenues this quarter was a one-time catch-up of approximately $1 million. These one-time catch-ups are a normal part of our business operations and occur during any of our reporting periods. Absent this one-time catch-up, our recurring revenue in the quarter would have been approximately $7.6 million or a 12% increase over the prior year period, which more accurately reflects the increases in contract values for this segment.
Roger Almond: License fee for the second quarter fiscal 2025, or <unk> 73000, compared with 3 million in the prior year period.
Roger Almond: Recurring revenues or subscription and support revenues for the second quarter of fiscal 2025, or $8 6 million compared with $6 8 million in the prior year period.
Roger Almond: Representing an increase of 27%.
Roger Almond: <unk> in our recurring revenues this quarter was a one time catch up of approximately $1 million.
Roger Almond: These onetime catch ups are a normal part of our business operations and occur during any of our reporting periods.
Roger Almond: Absent this onetime catch up our recurring revenue in the quarter would have been approximately $7 6 million or 12% increase over the prior year period, which more accurately reflects the increases in contract values for this segment.
Roger Almond: As Najeeb stated in his prepared remarks, we are confident that this growth in recurring revenues over time will benefit our business in the long term by driving more predictable and reliable results that generate sustainable profitability. Total services revenue for the second quarter fiscal 2025 was $6.8 million compared to $5.4 million in the prior year period, or a 26% increase. Total cost of revenues was $8.6 million for the second quarter of fiscal 2025 compared to $8.1 million in the second quarter of fiscal year 2024. Gross profit for the second quarter of fiscal 2025 was $6.9 million or 45% of net revenues compared with $7.2 million or 47% of net revenues in the prior year period.
Roger Almond: As Jim stated in his prepared remarks, we are confident that this growth in recurring revenues over time will benefit our business in the long term driver.
Roger Almond: Driving more predictable and reliable results that generate sustainable profitability.
Roger Almond: Total services revenue for the second quarter of fiscal 2025, or $6 8 million compared with $5 4 million in the prior year period or 26% increase.
Roger Almond: Total cost of revenues was $8 6 million for the second quarter of fiscal 2025 compared to $8 1 million in the second quarter of fiscal year 2024.
Roger Almond: Gross profit for the second quarter of fiscal 2025 was $6 9 million or 45% of net revenues compared with $7 2 million or 47% of net revenues in the prior year period.
Roger Almond: Operating expenses for the second quarter fiscal 2025 are $7.4 million or 48% of sales compared to $6.1 million or 40% of sales in the same period last year.
Roger Almond: Operating expenses for the second quarter fiscal 2025, or $7 4 million or 48% of sales compared to $6 1 million or 40% themselves in the same period last year.
Roger Almond: Loss from operations for the second quarter of fiscal 2025 was $487,000 compared to income from operations of $1 million in the second quarter of fiscal 2024. Turning to our profitability metrics, gap net loss attributable to NetSol for the second quarter of fiscal 2025 totaled $1.1 million or a loss of $0.10 per diluted share compared with a gap net income of $408,000 or $0.04 per diluted share in the second quarter fiscal 2024. Included in our gap net loss in the quarter was a loss on foreign currency exchange transactions of 698,000 compared with the loss of approximately 14,000 in the prior year period.
Roger Almond: Loss from operations for the second quarter of fiscal 2025 was 487000 compared to income from operations of 1 million in the second quarter of fiscal 2024.
Roger Almond: Turning to our profitability metrics GAAP net loss attributable to net sold for the second quarter of fiscal 2025 totaled $1 1 million or a loss of 10 cents per diluted share compared with a GAAP net income of 408000 or four cents per diluted share in the second quarter of fiscal 2024.
Roger Almond: Included in our GAAP net loss in the quarter was a loss on foreign currency exchange transactions of 698000, compared with a loss of approximately 14000 in the prior year period.
Roger Almond: Because we operate in several geographical regions, a significant portion of our business is conducted in currencies other than the US dollar. A decrease in the value of the US dollar compared to foreign currency exchange rates generally has the effect of increasing our revenues, but it also increases our expenses denominated in currencies other than the US dollar. Likewise, as the U.S. dollar gains strength relative to foreign currency exchange rates, it tends to reduce our revenues, but it also reduces our expenses denominated in currencies other than the U.S. dollar.
Roger Almond: Because we operate in several geographical regions a significant portion of our business is conducted in currencies other than the U S. Dollar.
Roger Almond: A decrease in the value of the U S dollar compared to foreign currency exchange rates generally has the effect of increasing our revenues, but it also increases our expenses denominated in currencies other than the U S dollar.
Roger Almond: Requires just the U S dollar gained strength relative to foreign currency exchange rates it tends to reduce our revenues, but it also reduces our expenses denominated in currencies other than the U S dollar moves.
Roger Almond: Moving to our non-gap metrics, non-gap EBITDA for the second quarter fiscal 2025 was a loss of $775,000 or $0.07 per diluted share compared with non-gap EBITDA of $1.4 million or $0.12 per diluted share in the prior year period. Non-gap adjusted EBITDA for the second quarter fiscal 2025 was a loss of $789,000 or $0.07 per diluted share, compared with the non-gap adjusted EBITDA loss of $725,000 or $0.06 per diluted share in the second quarter of the previous fiscal year. Please see the reconciliation schedules contained in our earnings release for our revised calculations of adjusted EBITDA for the quarters ended December 31st, 2024 and 2023.
Roger Almond: Moving to our non-GAAP metrics non-GAAP EBITDA for the second quarter of fiscal 2025 was a loss of 775000 or seven cents per diluted share compared with non-GAAP EBITDA of $1 4 million or <unk> pretended each year in the prior year period.
Roger Almond: non-GAAP adjusted EBITDA for the second quarter of fiscal 2025 was a loss of 789000 or <unk> <unk> per diluted share compared with a non-GAAP adjusted EBITDA loss of 725000 or six cents per diluted share in the second quarter of the previous fiscal year.
Roger Almond: Please see the reconciliation schedules contained in our earnings release for our revised calculations of adjusted EBITDA for the quarters ended December 31, 2024 and 2023.
Roger Almond: Turning to our balance sheet, we increased our cash and cash equivalents to approximately $21 3 million at December 31, 2024, compared with $19 1 million at June 32024.
Roger Almond: Turning to our balance sheet, we increased our cash and cash equivalents to approximately $21.3 million at December 31, 2024, compared with $19.1 million at June 30, 2024. Working capital totaled $23 million as of December 31, 2024 compared to $23.6 million at June 30, 2024. Total NetSol stockholders equity at December 31, 2024 was $33.9 million or $2.91 per share. Our strong balance sheet provides substantial cash and shareholders equity.
Roger Almond: Working capital totaled 23 million as of December 31, 2024, compared to $22 6 million at June 32024.
Roger Almond: Total net stockholders equity at December 31, 2024 was $32 9 million or $2 91 per share.
Roger Almond: Our strong balance sheet provides substantial cash and shareholders equity.
Roger Almond: Yeah.
Speaker Change: Hey, guys.
Roger Almond: Yeah.
Roger Almond: Reinforcing our business as we execute our strategy for future growth.
Roger Almond: Reinforcing our business as we execute our strategy for future growth.
Roger Almond: Also on January 3, 2025, our subsidiary NetSol Pakistan approved the buyback of 10 million shares through June 29, 2025. If all 10 million shares are repurchased, this would increase NetSol Technology's ownership of NetSol Pakistan by approximately 10%. At the time of this call, NetSol Pakistan has repurchased approximately 2.4 million shares at a value of approximately $1.3 million.
Roger Almond: Also on January 32025, our subsidiary Nitzel, Pakistan approved the buyback of 10 million shares through June 29, 2025, if all 10 million shares of repurchase just would increase Nashville technologies ownership with Nassau Pakistan by.
Speaker Change: By approximately 10% at the time of this call and that's what Pakistan has repurchased approximately two 4 million shares at a value of approximately $1 $3 million that concludes my prepared remarks, I'll now turn the call back over to new Jeep.
Roger Almond: That concludes my prepared remarks.
Najeeb Ghauri: I'll now turn the call back over to Najeeb. Thank you, Roger and Eric. As I said before, I'm very pleased with the progress that we made in the second quarter. We are hard at work, innovating and investing in our products and services, and we are encouraged by the many opportunities that we are seeing in the market.
Roger Almond: Yeah.
Speaker Change: Thank you Roger and Eric.
Speaker Change: As I said before I'm very pleased with the progress that we've made in the second quarter.
Speaker Change: We are hard at work innovating and investing in our products and services.
Speaker Change: We're encouraged by the many opportunities that we are seeing in the markets.
Najeeb Ghauri: As always, we are taking a long-term approach to our business strategy and goals and we believe that we are positioning NetSol for solid growth in the later half of fiscal 2024-25 and beyond.
Speaker Change: As always we are taking a long term approach to our business strategy and goals and we believe that we are positioning ourselves for solid growth in the later half of fiscal 2024, 25 and beyond but dead like know when the call for questions operator.
Najeeb Ghauri: With that, I'd like to now open the call for questions.
Operator: Operator. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad.
Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Operator: A confirmation tone will indicate your line is in the question You may press start to if you would like to remove your questions from For participants using speaker equipment, it may be necessary to pick up your handset before pressing start. One moment please while we poll for questions.
Speaker Change: You mentioned tone will indicate your line is in the question queue.
Speaker Change: You May press Star two if you would like to move your questions from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing stock East one moment. Please poll for questions.
Todd filtering: The first question comes from the line of Todd filtering, It's tonics wealth management. Please go ahead.
Todd Felte: The first question comes from the line of Todd Felte with Stonex Wealth Management. I appreciate you taking my questions. Can you give a quick breakdown of the geography of your revenues as far as, you know, North America, Europe, Asia, do you have that available?
Todd filtering: I appreciate you taking my questions are can you give a quick breakdown of the.
Speaker Change: Geography of your revenues as far as you know North America Europe Asia do you have that available.
Roger Almond: I think there should be able to do that Roger go ahead.
Najeeb Ghauri: I think Roger should be able to do that.
Roger Almond: Roger, go ahead. Yes, so it depends on each quarter, but this quarter we had probably 70, usually 70, 75% is coming out of the APAC region, with about 12.5% coming from Europe and the Americas. In this quarter, we actually had a higher percentage due to BMW here in the U.S., where we had a higher percentage coming out of the U.S. market, and which reduced a little bit of the percentage out of the APAC market.
Roger Almond: Yes, so you know it depends on each quarter, but this quarter, we had probably 70, usually 70, 75% is coming out of the APAC region.
Roger Almond: With about 12, 5% coming from Europe, and the Americas in this quarter, we actually had a higher percentage due to BMW here in the U S, where we had a higher percentage coming out of the U S market.
Roger Almond: And which reduce it a little bit of the person.
Roger Almond: Out of the APAC market.
Roger Almond: Okay, I appreciate that and where do you expect your growth to come from in the future. If you could kind of pick a market.
Todd Felte: Okay, I appreciate that.
Najeeb Ghauri: And where do you expect your growth to come from in the Unknown Speaker 1-1-1 Yes, I think, Todd, thank you for asking this question. We are really very committed and doing a lot of new things in North America, especially. There's a lot of efforts going on. We've been hiring some new talents in the Austin office. So I believe North America is going to be performing better in percentage growth region-wise, while other markets are pretty solid, as you heard about China and Europe. So they're pretty steady. But we believe that we are hoping that we'll do a lot better in North America going forward.
Speaker Change: Yes, I think Todd. Thank you folks and discretion, we are really very committed in doing a lot of new things in North America, especially there's a lot of efforts going on we've been hiring some new talent in the Austin office. So I believe North America is going to be performing better in <unk>.
Speaker Change: The center's growth regional wise well other markets are pretty solid you heard about China and Europe, so they're pretty steady, but we believe that we are hoping they will do a lot better in North America going forward.
Todd Felte: Okay, that's great to hear. You know, you have a pretty impressive client list, you know, AutoNation, BMW, Mini Cooper. Yamaha North America, you know, I'm looking at some of these large companies, you know, AutoNation just two days ago reported over $26 billion in revenue and they originated over $1.1 billion in new loans last year. Can you maybe give us some details about your contract with them? I mean, is it just a flat software subscription fee they're paying? I mean, if AutoNation was to grow to $50 billion in revenue, would you be receiving millions of dollars from them?
Speaker Change: Okay. That's great to hear you know you have a pretty impressive client list you know Autonation BMW mini Cooper Yamaha in North America.
Speaker Change: You know I'm looking at some of these large companies you know Autonation just two days ago reported over 26 billion in revenue and they originated over $1 1 billion in new loans last year can you maybe give us some details about your your contract with them I mean is it just a flat software.
Speaker Change: Subscription fees or their pain I mean, if if if auto nishu was to grow to 50 billion in revenue would would you be receiving millions of dollars from them and where.
Najeeb Ghauri: or is it just a straight, you know, subscription. Well, I think we have actually generated sizable income in the last, since we signed this contract about nine, 10 months ago. And now it is stages of integration going on. I think the overall, if you look at the total number, I think we reported by $18 million, something like that, if I remember the number, Roger. But more importantly, Todd, because of this BMW deal, we have very good interest from, our pipeline is pretty healthy in this digital retail market in the U.S. especially. So we've seen interest has risen since we announced this BMW contract last year.
Speaker Change: Or is it just a straight you know subscription contract.
Speaker Change: Well I think Oh, we have actually generated.
Speaker Change: Sizable income and less since we signed this contract are about 910 months ago and now is at this stage is the integration going on and I think the overall if you look at the total number I think we reported about $18 million something like that if I remember the number Roger but most importantly taught because of this BMW deal we have.
Speaker Change: Very good interest from our pipeline is pretty healthy in this digital retail market in the U S, especially so we've seen interest has risen.
Speaker Change: We announced that BMW contract last year, so that created more opportunities I can share the name because they are still in negotiations in some cases, but its a very promising thing.
Najeeb Ghauri: So that created more opportunities. I can't share the name because we're still in negotiations in some cases. But it's a very promising, I think, achievement for the company in the U.S. where we had this largest contract the first time. And that means it just... open more doors, whether it's AutoNation more business or other similar companies in this space in the U.S. So we're pretty excited about the opportunity in the retail side in the U.S.
Speaker Change: Human for the company in the U S, where we had this largest country first time and that means it just <unk>.
Speaker Change: Opened more doors, but there's autonation more business or other similar companies in this space in the U S. So we're pretty excited about the opportunities in the retail digital radio side in the U S and Eddie you May want to ask are you pretty expert in these Oh go ahead Eric.
Eric Wagner: And Eric, you may want to ask, you're pretty expert in this area. Go ahead, Eric. Yes, agreed on that front. I mean, I think that we're definitely seeing some excellent growth within the Transcend retail. The pipeline is very strong. And just as a on that note, I think we're seeing some very encouraging activity on the RFP front. I think we've been invited to more RFPs over the past six months to a year than we've ever been before. So definitely some strong growth potential.
Speaker Change: Yeah.
Eric: Yes agreed on that Brian I mean, I think that where we're definitely seeing some excellent crowds are within the transcend retail the pipeline is very strong and just on that note I think we're seeing some very encouraging activity on the RFP front I think we've been invited to more.
Speaker Change: More rfps over the past.
Eric: Six months to a year than we've ever been before so.
Speaker Change: Definitely some strong growth potential.
Speaker Change: Okay. That's great. The recurring revenue is also very nice to see the growth in that with your new investments into AI and all these new features.
Todd Felte: Okay, that's great. The recurring revenue is also very nice to see the growth in that.
Todd Felte: With your new investments into AI and all these new features coming about, are you gonna be able to raise prices to your customers? What kind of pricing power do you have? And do you think this can bring more value and revenue?
Speaker Change: Coming about are you going to be able to raise prices to your customers what kind of pricing power do you have and do.
Speaker Change: Do you think are you know this can bring more value and revenue to you.
Speaker Change: Well, it's a it's a valid gunman taught oh. So these sensitive matter because we obviously are making sure that we make sure our customer who are long term with us in some cases I can I can talk about two cases of where things are happening in China. For example, large customer and our team is working to do just that exactly what you said.
Najeeb Ghauri: Well, it's a valid comment, Todd.
Najeeb Ghauri: It's also a very sensitive matter, because we obviously are making sure that we make sure our customers who are long-term with us, in some cases, I can talk about two cases where things are happening in China, for example, large customer and our team is working to do just that, exactly what you're saying. Good possibility that we'll get what we want for the renewal. But these are, you know, premium name, blue-chip customers, and for us to maintain our strong relationship and find many other ways to grow revenue from within the customer is quite more possibility. Whether we raise prices, I think it's also always discussed periodically, and in some cases, we are working on that.
Speaker Change: Thing.
Speaker Change: Good possibility that we will get what you want to answer the renewal, but these are you know Brian premium names blue chip customers and for us to maintain a strong relationship and find many other ways to grow revenue from but then the customer is quite more possibility, but I think there is probably I think it's a it's always we always discussed periodically.
Speaker Change: In some cases, we are working on that our team is doing exactly what you're saying in some cases.
Najeeb Ghauri: Our team is doing exactly what you're saying, in some cases.
Speaker Change: Okay. Thank you my my last question just has to do with your subsidiary and a net salt Pakistan. I know you have a lot of talented engineers. There that are are much cheaper than hiring a U S. Based engineers with your ownership I think was 67% with the recent buybacks maybe in the seventies now zero.
Todd Felte: Okay, thank you.
Todd Felte: My last question just has to do with your subsidiary, NetSol Pakistan. I know you have a lot of talented engineers there that are much cheaper than hiring U.S.-based engineers. With your ownership, I think was 67%, with the recent buybacks, you may be in the 70s now.
Najeeb Ghauri: Is there a long-term goal of acquiring all of NetSol Pakistan, or is that... are we going to be just continue to be a separate entity, or is there any plans you can share about your increase in ownership? I think we started this buyback in PK, Pakistan, a few months ago. The whole idea is to really NTI owns more. Right now, with the buyback, we probably will end up 10% more ownership once we complete this buyback. That will take us to close to 77%, which is a 10% jump. We have the goal in mind that we can try to maximize ownership by doing buyback.
Speaker Change: The long term goal of acquiring all of them. That's all Pakistan or is that I'm going to be just continue to be a separate entity or is there any any plans you can share about you know your increase in ownership there.
Speaker Change: I think our we are starting to just buy back and PK. Pakistan is a few months ago. There is a whole ideas really MDI owns more right now.
Speaker Change: The buyback, we probably will end up 10% ownership once we complete this buyback belt. It goes to close to 677%, which is a 10% jump. It we have the goal in mind that we can try to maximize the ownership by doing buyback or Oh, that's the only best tell me. So I think the goal is to really strengthen the.
Najeeb Ghauri: That's the only best challenge. I think the goal is to really strengthen the parent company's financial and balance sheet and so forth. It's a good opportunity because, you know, NetSol Pakistan's stock was at the peak 300 rupees, and now it's at about 150, I believe. So it's a good buy time, and we continue this plan that we implemented a couple of months ago.
Speaker Change: Companies are financial and balance sheet, and so forth. So it's a good opportunity because you know that's still bugs on Star Wars at the peak 300 rupees.
Speaker Change: 150, I believe so it's a good bye bye diamond could do continue this plan to be implemented a couple months ago.
Speaker Change: Okay. Thank you so much for taking my questions and look forward welcome, Florida strong quarters thing.
Todd Felte: Okay, thank you so much for taking my questions and I look forward to your strong quarters. Thank you.
Dawn: Thank you dawn.
Speaker Change: Thank you a reminder to all participants I do my best started one to ask a question.
Operator: A reminder to all the participants that you may press star and one to ask a question. Once again, a reminder to all the participants that you may press star and 1 to ask a question. Thank you.
Dawn: Okay.
Dawn: Yeah.
Dawn: Once again, a reminder to all the participants that do my best started one to ask a question.
Dawn: Thank you.
Operator: At this time, this concludes our question and answer session.
Dawn: At this time. This concludes our question and answer session. If your question does not address during the Q&A session. Please contact <unk> Investor relations team by E mailing them at Mitchell at debate I, Miss Investor Relations Dot com.
Operator: If your question was not addressed during the Q&A session, please contact NetSol's Investor Relations team by emailing them at netsol at the rate imsinvestorrelations.com or by calling them at 949-574-3860.
Dawn: By calling them at 9495743, each six shuttle I would now like to turn the call back over to Mr. <unk> for closing remarks.
Najeeb Ghauri: I would now like to turn the call back over to Mr. Ghauri for closing remarks. Thank you for joining us today. We look forward to updating you on our next call.
Dawn: Thank you for joining us today, we look forward to updating you on our next call. Thank you and have a good day.
Operator: Thank you and have a good day.
Dawn: Yeah.
Operator: Thank you for joining us today for NetSol's fiscal third quarter 2025 earnings call.
Dawn: Thank you for joining us today for <unk> fiscal third quarter 2025 earnings call you may now disconnect.
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