Good morning and welcome to NETSOL Technologies Fiscal First Quarter 2023 Earnings Conference Call. On the call today are Najeeb Ghauri, Chairman and 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.

Good morning, 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 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. 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 the most comparable GAAP measures. Finally, I would like to remind everyone that this call will be recorded and made available for replay at www.netsoltech.com and via the link available in today's press release. Now, I'd like to turn the call over to Najeeb. Najeeb?

Thank you, Patti and good morning everyone. In the first quarter, we capitalized on the strong momentum built over the course of the past year. Few key takeaways from the quarter. One as an international company, like many companies, we saw the impact of currency swings in the quarter. Though it important to look at the results on a constant currency basis. For the quarter, we drove a 15.6% revenue increase on a constant currency basis. Two, a key focus of ours has been to drive long-term growth in our recurring revenues, specifically SaaS and support. This grew 16.6% in the quarter a bit faster than consolidated revenue. Three, we invest in our people and our growth. We have many exciting growth initiatives that we will get into. But importantly, we need the best people to make that happen. We saw as SG&A increase and investing in our people is one of the key reasons for this. Inflation also added to our costs. That said, making sure our people are motivated is critical for long-term shareholder value. Over time, as the business continues to scale, we should be able to drive considerable profitability. Number four, much of our business is very long-term contracts. And we continue to build upon this aspect of the business in the quarter. Looking forward, our pipeline is encouraging on this front. And five, our balance sheet is a real competitive asset for us. We do not have a need to capital -- for capital and have a large cash position that enabled us to make a -- take a long-term view of the business. Even with economic uncertainly, our recurring revenues, long-term contracts, and robust pipeline, coupled with our strong cash and liquidity position, put us in a very strong position. Within our core business,…

Thanks, Najeeb. Turning to our fiscal first quarter 2023 financial results for the period ended September 30th, our total net revenues for the first quarter of fiscal 2023 were $12.7 million compared with $13.4 million in the prior year period. The decrease in total net revenues was driven by the devaluation of the foreign currencies compared to the US dollar. On a constant currency basis, net revenues increased 15.6% to $15.5 million. The increase in revenues on a constant currency basis was driven by an increase in license fees of $314,000, an increase in subscription support revenues of $1 million, and an increase in services revenue of $753,000. Recurring revenue or subscription and support revenues were $6 million. On a constant currency basis, this revenue grew 16.6% to $7.3 million compared with $6.2 million in the prior year period. 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 2022. We anticipate subscription and support revenue to gradually increase as we implement both our NFS Legacy Product and our NFS Ascent Product. Total service revenues were $6.4 million and on a constant currency basis were $7.9 million compared to $7.2 million in the prior year period. The increase in services revenue for the quarter on a constant currency basis was due to an increase in service revenue for an ongoing customers' implementation in China. Services revenue is derived from services provided to both current customers, as well as services provided to new customers as part of the implementation process. Total cost of revenues was $8.5 million for the first quarter, an increase of $500,000 from $8 million in the first quarter of 2022. And on a constant currency basis, total cost of revenues was $10.8…

Thank you, Roger. I'll now take a minute to provide updates within the major components of our growth strategy. We are seeing a return to sales growth with a related increase in expenses to support our increased business activity. Our cash position remains healthy, providing additional resources to support our core business, as well as strategic investment in high return long-term opportunities including our work in the Otoz Innovation Lab. We are cautiously optimistic for our growth overall on a constant currency basis, but are cognizant of the macro and micro economic challenges facing the world. We hope to be in a better position to provide some financial guidance when we announce second quarter 2023. With that said, we anticipate continuous and double-digit revenue growth of annual recurring revenue in SaaS and support services. Moving on 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 our other organizations as well as our own. To this end, I like to take some time to provide a brief update on our progress within the Otoz Innovation Lab. Recent traction in the US through Otoz offering has provided excellent validation of NetSol's commitment to innovation. The MINI Anywhere program, powered by Otoz's Digital Retailing Suite has now been adopted by 38 MINI dealers across 15 states, which include 10 additional enrollments post Q1. At the end of Q,1 monthly SaaS subscription and services revenue grew to just over $75,000 with 28 dealers live on the platform and with the 38 dealership enrollment today, monthly recurring revenue reaches approximately $100,000. One of the main catalysts for the continued adoption and buy in from MINI USA and dealership is the blended one to five lead conversion…

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Carl Phillips with Union Street Capital [ph]. Please proceed with your question.

Hey, thanks for taking my questions. So, my first question is, I know that you invested in the business a bit this quarter and had some inflation pressure. But you know, as you think about the business over the mid to long-term, how should I think about where margins could potentially go if you're able to continue to drive revenue growth? I saw just to be clear, I'm not looking for guidance, I just want to understand how you're thinking about this?

Thank you. I think historically, gross margins have been very strong, like in 16% range and 30% to 40% the operating margins in the past -- in the peak time, I think 2019 or so this business, at least those margins, again, the future but on substantial -- sustained basis. I believe, as we grow revenue -- as we sign more contracts, this will naturally impact in a positive way both margins. And of course, as you know, we have pivoted to SaaS revenue model also, in last two years, that has impacted in the beginning adversely in the revenue growth. But eventually, as I said in my prepared remarks, SaaS revenues on the growth side very impressively, and we can see healthy growth in this fiscal year. So, I'm pretty confident that the revenue will grow, the margin will improve and I think it will go sustainable in the long-term.

Got it. Okay. And then your recurring revenue grew that faster than your consolidated revenue this quarter and I was just wondering, is this a trend that we can expect to sustain?

Well, I think look, the signs are encouraging. I mean, I've talked about -- openly about the challenges we have faced along with the whole world in our business space and I I'm pretty confident based on our very healthy pipeline. Activities are growing in every region, North America, Europe, Asia-Pacific, we believe we can see an impressive sustainable revenue and a faster CAGR overall. And in revenue, this is a very positive sign, I believe. We know why are we investing in people and technology and leadership simply because we see the opportunities are growing. And it is taking time, but I think these are very encouraging signs to grow revenue on a consistent basis.

Got it. Okay. Thank you. That's it for me.

Thank you.

Thank you. Our next question comes from the line of Robert Greene with [Indiscernible] Partners. Please proceed with your question.

Hey guys. Thanks for taking my questions as well. First off, does uncertainty concerning new cars affect your business?

Hello, sorry, we lost you. Hello.

Hello. Can you hear me?

Yes. Yes, can you please start over again. Sorry, we miss it.

No worries. So, does uncertainty concerning new cars affect your business?

I think yes, or no, I believe, of course, there's the shortage supply chain, worldwide. We're seeing noticeable activity in both fronts. I believe the particularly North American market is quite resilient and strong. We have more opportunities last few months than ever before. That's a sign that the US market is healthy and strong. And it is still in demand for all of our business, our product, our solution. So, I'm pretty encouraged with opportunities in the US. So, I don't see any threat any kind of further deterioration design.

Got it. Got it. Thank you. And then just second, it looks like North America did well, this quarter. Just a relatively new market for you. Could you expand on how North America kind of fits into your global strategy?

Well, actually -- good question. This is not a new market for us. We have been by design, focus on APAC, because that's where we have really captured the majority share position, especially in China and tend to in other markets in the whole APAC region. We contribute heavily from that region. And also the always a market, which needed a lot more readiness in terms of the product, team, and experience in the other region. So, what were you doing is what we have the success of we have in China, especially in the large Tier 1 customers, we try to replicate the same strategy in the US market. This is a big market; this is the biggest market of all the other regions. So, we are not positioning ourselves with the right team. Right strategy and new verticals, as well as our core business. So, I think NetSol US is the place where we'll see our biggest successes in the coming years. That has been around for many years is that by choice, we decided to focus on APAC and Europe. And now we believe last two years, very active in engaging with new customers, current customers, and bring the right people to be able to unlock this market in a very impressive way in the coming year. So, this is really exciting for us in the US, and we hope we can sign some contracts in the coming months.

Great, great. Thank you. That's all for me.

Thank you.

Thank you. [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'd like to turn the call back over to Mr. Ghauri for his closing remarks.

Thank you for joining us today. I especially want to thank our investors for their continued support, our loyal customers, and our dedicated employees for their ongoing contribution. We look forward to meeting you our next call. Operator?

Thank you for joining us today for NetSol's fiscal first quarter 2023 earnings call. You may now disconnect.