Najeeb Ghauri - Chairman, Chief Executive Officer Roger Almond - Chief Financial Officer Patti McGlasson - General Counsel Murad Baig - CIO, OTOZ

Good afternoon. Welcome to the NETSOL Technologies, Fiscal Fourth Quarter and Full Year 2021 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 Murad Baig, CIO of OTOZ. 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.

Good afternoon, everyone, and thank you for joining us. Following a review of the company's business highlights and financial results, we will open the call for questions. 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 of our actual results, and our actually 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. 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 to their most comparable GAAP measures. Additionally the company had posted a presentation to accompany the remarks we plan to make on today’s call in the Investor Section of our corporate website. 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. Now, I would like to turn the call over to Najeeb. Najeeb.

Thank you, Patty, and good afternoon. As I speak to you today, we find ourselves close to being on the other side of what has been an eventful 18 months for everyone. Of course, we are continuing to monitor the latest developments and the potential impact from the COVID-19 Delta-variant, but I do think we are close to seeing light at the end of the tunnel. I'm calling in today from our Calabasas headquarters where we are still working at reduced capacity. Over the past few months we have implemented a stager alternate day in office plan that has allowed us to keep moving along without missing a beat. Our offices around the globe are continuing to operate partly remotely in accordance with regional mandates. But I know I speak to our entire organization when I say, I’m looking forward to a time soon when we can all be back together. Looking at our operations, while we are still facing a number of industry and macroeconomic headwinds, we continue to make incremental progress across our business regions as a global economy and broader leasing and financing industry slowly, but surely begins to reopen. Looking at the headline numbers, we improved our top-line performance in each quarter of the year, all while making significant adjustments to our spending in the face of a travel restricted sales environment. Our owner centric emphasis on managing the business has yielded positive results in several key areas, highlighted by a 154% increase in operating income for the year and a record cash position of nearly $34 million. Additionally, subscription and support revenues have now eclipsed a $20 million annual run rate, further, validating our investment in a recurring revenue model and providing us stronger visibility into future performance as well. And while we are continuing…

Thanks, Najeeb. Turning to our fiscal fourth quarter and full year 2021 financial results for the period ended June 30, our total net revenues for the fourth quarter of fiscal 2021 were $15.4 million compared with $13.6 million in the prior year period. The increase in total net revenues was primarily driven by an increase in total license fees of $1 million, an increase in subscription and support revenues of $212,000, and an increase in total services revenues of $564,000. For all of fiscal 2021, total net revenues were $54.9 million compared to $56.4 million in fiscal 2020. The decrease in total net revenues was primarily due to a decrease in services revenues of $6.4 million, which was offset by increases in subscription and support revenues of $1.9 million and license fees of $3 million. Total license fees in Q4 were $1.5 million, compared with $530,000 in the prior year period. For the full year total license fees were $6.2 million compared to $3.3 million in fiscal 2020. The increase in license fees for both the quarter and the year was primarily due to revenue being recognized from contracts to implement our NFS Ascent retail platform. Total subscription and support revenues in Q4 were $5.6 million compared to $5.4 million in the prior year period. For the year total subscription and support revenues were $22.2 million, compared with $20.3 million in the prior fiscal year. The increase in total subscription and support revenues for the year was a result of several customers who went live with our product in fiscal 2021. We anticipate subscription and support revenue to gradually increase as we implement both our NFS legacy product and NFS Ascent. Total services revenues for the quarter were $8.2 million compared to $7.7 million in the prior year period. For…

Thank you, Roger. From a high level, I'd like to outline the fundamental components of our growth strategy. Firstly, we have a continued focus and organic growth within the core business. Subscription and support revenue reached $22.2 million for fiscal 2021, a nearly 10% increase over the prior year and at $23 million-plus run rate projected over the coming 12 months. With each new customer we sign, we add to our recurring revenue, which drives both the top and the bottom line. As you layer on post contract support through larger traditional enterprise contracts and increase our SaaS based footprint, we expect to build this base over time, which provides more predictable revenues with a more attractive margin profile. Our initial 2022 guidance for 10% top line growth and 20% ARR growth underscores our belief in this approach. Moving on to the second component of our strategy, we are innovating in new areas and looking to create partnerships with technology and personnel, which can be a major benefit to other organization, as well as our own. To this end, I’d like to take some time to provide a brief update on our progress within the Otoz Innovation Lab. Perhaps, the most exciting development has been the launch of the Otoz Digital Automotive Retail platform which we announced in a few months ago. Otoz has been working with BMW Group Financial Services through its key brand, MINI Anywhere to provide many USA customers with a fully digital shopping experience and powering their marketing strategy and creating a new automated sales channel with dealerships and lenders. The development of MINI Anywhere started when both, MINI USA and MINI Financial Services came together during the pandemic, looking for an end-to-end digital contracting solution for MINI’s 100-plus dealers in the U.S. After a search…

Thank you. [Operator Instructions] Our first question is from Todd Felte with Advisory Group Equity Service. Please go ahead.

Congratulations Najeeb to you and your team on a great quarter. It looks like NETSOL’s emerged nicely out of COVID and this was the strongest quarter for the company I've seen in the last couple of years. I was really happy to see the guidance going forward and it looks like you're going to have an increasing revenues, margins and profitability. But what I wanted to ask you about was a little bit of your Investor Relations going forward. I see a company that has over a $5.50 per share book value, $33 million in cash and $3.50 in assets for every dollar and liabilities and I just can't figure out why your stock price is trading at such a discount. So I was hoping that you could discuss some upcoming investor relation activities and some ways that we can get more investors informed of your company.

Well, thank you Todd for your comments, I appreciate it. I think the combination of reasons as I spelled out and Roger did about the numbers, obviously the last 18 months have been challenging to do any kind of aggressive Investor activities, doing roadshows shows and different conferences. But I think the company has been focused on the fundamentals as we have demonstrated in the last – this quarter. I think once the fundamentals continue to improve, which I have every confidence that this would continue and the guidance we've given, I believe we will try [Indiscernible] and we'll do some more activities in the coming two years or so to see if we can really broaden our investor base and invite some people to look at the company and we will do many other things. But right now Todd, we are so focused on new strategies, looking at the new innovation we are doing, whether its autos or our current business and the new innovation happening in the company. I think in the market we’re seeing that with our buyback strategy, which we have done quite successfully in the last few months and improvement of fundamental, I think the market will appreciates that this company is really exceptionally doing well in the fundamental and we will work very hard to unlock the potential, the real potential.

Thank you, I appreciate that. And I know that you're continuing to do the stock buyback. Have you and your Board considered a dividend for shareholders with some of that cash?

You know, this thought has come to our mind many times quite frankly. Buyback was really designed to really – to make sure that we do understand the price was undervalued and that we had the ability. Now we have the cash and we have many investment opportunities and whether its innovation or hiring more people or driving some maybe M&A at some point. So I think we will weigh in very carefully what is the best way to invest and give it back to the shareholder, and that option has never been ruled out, but I think we have to be very careful how we deploy cash. If we can invest to create twice more opportunities in the accretive revenue or maybe invest in the innovation that is moving so fast, I think we'll do quite well and then eventually the investor will see the value in the price by performance, by fundamental improvement.

Again, I appreciate you taking my question, and congrats to you and your team on a great quarter again, and I look forward to witnessing the success in the future. Thank you.

Thank you again, Todd.

[Operator Instructions] At this time, this concludes our question-and-answer session. If your question was not addressed during the Q&A session, please contact NETSOL’s Investor Relations team by emailing them at investors@NETSOLtech.com or by calling them at 949-574-3860. I would now like to turn the conference back over to Mr. Ghauri for his closing remarks.

Thank you for joining us today, but I do want to make a correction. The dealers we signed in California is about seven, not five. I think I misread the numbers, so it is seven dealerships gone live in California for the MINI solution. I especially want to thank all of you investors for their continued support, our loyal customers and our most dedicated employees worldwide for their ongoing contribution. We look forward to updating you on our next call in the Q1. Thank you.

Thank you for joining us today for NETSOL’s fiscal fourth quarter and full year 2021 earnings call. You may now disconnect. Thank you.