NetSol Technologies, Inc. (NTWK) Q4 2012 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the NetSol Technologies reports 2012 fourth quarter and fiscal year conference call. [Operator Instructions] I will now turn the conference over to Patti McGlasson. Please go ahead.

Thank you for joining us today to discuss NetSol Technologies' fiscal 2012 fourth quarter and year-end results. On the call today are Najeeb Ghauri, calling from the U.S. headquarters, he's the Chairman and Chief Executive Officer and the founding executive of NetSol Technologies, Inc., from inception. Boo-Ali Siddiqui, the Chief Financial Officer, is calling in from Lahore, Pakistan, who has been with NetSol for more than 7 years, with over 12 years as its chartered accountant. Calling in from Shanghai is Naeem Ghauri, President of Global Sales and CEO of NetSol Europe and Vroozi. He's a cofounder with over 14 years at NetSol. We also have calling in from the U.S. headquarters Shaz Khan, who is the founder and COO of Vroozi Incorporated. Following a review of the company's business highlights, financial results and a discussion of the company strategy, we will open the call up for questions. I'd like to remind everyone that today's call is being webcast at www.netsoltech.com. Following the conclusion of the call, the webcast may be accessed on the NetSol website where it will be archived for 90 days. A dial-in playback of the call will also be available for 1 week. Additionally, all of the information discussed on today's call is covered under the Safe Harbor provisions of the Litigation Reform Act. The company's discussion may include forward-looking information 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. With that said, let me now turn the call over to Najeeb Ghauri. Najeeb?

Thank you, Patti, and good morning, everyone, for joining us today. I'm very excited to report the results for the company, our highest total revenue for any fiscal year and the strongest quarter ever in our history. I'm especially gratified for our team's commitment and tenacity, particularly following the first half of the year which represented one of the most challenging periods in our history. I believe our results validate and are consistent with our strategies for growth. For example, during the year, we further expanded our Beijing office in China and, as a result, have signed major new agreements, most recently with companies such as Santander Consumer Finance and Chongqing Auto Finance in China. In China, NetSol is the de facto leader in this domain, with a number of multinational auto captive and fuel local companies as our key clients. NetSol is a very well-recognized brand in China. With our successful phase 1 implementation with Minsheng Financial Leasing Company, our NFS solution has become a benchmark in the industry, as stated by Chairman Kong Linshan of Minsheng, one of the top vendors in China. This resulted in the signing of a major second phase project with Minsheng in the first half of 2012. In the beginning of fiscal 2012, we have moved to quickly build out service and delivery capabilities in NetSol's Thailand facility, a strategy that not only strengthened our customer relationships but also improved our ability to win and service new business in the APAC region. Our Bangkok location has a growing personnel team from the local market and our global offices. To further -- to strengthen our global marketing strategy, we also signed a number of new strategic partnership agreements, including joining forces with ABeam Consulting in Japan and NEC in India to offer our NFS…

Thank you, Najeeb. Momentum in our business continues to build, and as Najeeb stated, we recorded our best year ever and highest quarter ever in terms of total revenues. We are very proud of these results especially after an unusually tough start to the year. Total revenue for the fourth quarter fiscal 2012 was $14.3 million, more than doubling from $6.9 million in the comparable period last year, underscoring license revenue growth for our core NFS solution and contributions from our Vroozi division. On a sequential basis, revenue increased 35%. License revenue was $7.3 million compared with $1 million in the last year's fourth quarter and $3 million on a sequential quarterly basis. Maintenance revenue remained steady at $1.9 million, approximately equal to that in the same period last year and in the preceding fiscal third quarter. Moving forward, as we continue to gain new customers for our current solutions and roll out our next-generation platform, our base of recurring revenue should show further improvement. Services was up 30% to $5.2 million from $4 million a year ago. On a sequential basis, services income was down from $5.8 million in the preceding third quarter. Services revenue, which also reflects consulting services, is also trending nicely as we have recently signed a few new consulting engagements in the current quarter. Gross margin for the fiscal fourth quarter rose significantly to 62% from 41%, as reported in the comparable period last year, and 54% in the preceding quarter. Total operating expenses for the fourth quarter fiscal 2012 are $4.2 million versus $3.4 million in the fourth quarter fiscal 2011 and $3.5 million in the previous sequential quarter. That year-over-year difference primarily reflects increased SG&A related to higher stocking levels in Thailand, China and in the U.S. Vroozi division, as well as the…

Thank you, Boo-Ali. Our fourth quarter performance is quite a substantial improvement, considering where we started at the beginning of the year. Now as I look across the globe, we are focused on growth and conducting those activities that we believe will take us -- come into the next level. Let me begin by reviewing our key goals over the next 3 years and then discuss how we plan to achieve them. To preface the discussion, let me state that we are providing our outlook for the next 3 years and what we believe is the realistically achievable. These are the business targets based on the surge in demand for our core solutions in our go-to-market, with next-generation solution in APAC and the Americas. Barring any major global recession or serious economic meltdown, we are confident to achieve a stronger top line and bottom line in the next 3 years. Throughout NetSol, we're all working to drive revenue growth, improve geographic revenue mix and improve net profit margins while further establishing NetSol as the global active leader in this domain. Now starting with revenue, our aim is to grow total annual revenue to the range of $75 million to $100 million by the end of fiscal 2015, potentially more than double from this year's results. In order to achieve this, we are focused on building a world-class sales organization and a powerful delivery, development and service engine. Once again, with impressive demand and a global customer base, we plan to grow our sales team in the APAC region as well as North America and further expand pre-sales team in Bangkok and Lahore locations. With increased sales comes the need for enhanced delivery capability. The delivery engine needs to be perfected for scale, efficiency and higher productivity. We plan to expand…

[Operator Instructions] Your first question today comes from Greg Garner with Singular Research.

A few questions. With the license revenue so strong in the fourth quarter, and I see you are guiding for strong revenues in next year, but I'm just wondering, for the fourth quarter, was there any license revenue that was closed at the end of the quarter that might have pulled from the first quarter?

Naeem, do you want to come in?

Well, we are building a backlog of revenue with every new contract signed, two years [ph]. For every $1 that we have recognized in revenue now, there is additional services range that follows. So as deliveries take place, this backlog will kick into revenue. So our backlog essentially is almost close to 50% of what we are guiding for the next fiscal year. So that is the strongest sales backlog we've had.

Okay. When you mentioned the backlog and you -- so the backlog is probably about, I guess, $25 million approximately, but the pipeline is about $100 million. How do you define the pipeline versus the backlog? I'm just trying to get...

Okay. The pipeline is business not closed yet, yes? This is what we have in terms of leads, qualified leads. We are actively engaging with the clients. And so what happens is, typically in a given year, 1/3 to 1/2 can close in to real revenue. And then we are guiding to around $50 million, $49 million to $50 million -- $46 million to $49 million. So 1/2 of that is already covered with the backlog and more can -- will come through this pipeline which we billed, which is about $100 million.

And this new division in North America, does that mean that your new SaaS version of the NFS, it gets launched in September? Is that what that -- how I should interpret that? Or is this...

On the new entity?

You're talking about L -- IaaS division, its infrastructure. That will be launched in September. That is, I think, different than NFS, Greg, if that's your question.

Yes, yes. I just wanted to see how...

This is like a new vertical we're entering in North America to create a new revenue stream. But NFS is currently on the license model in the U.S. And eventually, we expect to offer both options, the license and the SaaS, to our new customers.

Well, essentially, we're leveraging our infrastructure into this new offering recently.

Yes. Is there -- is that still on target for -- in the next few months to have that, the SaaS offering, for the NFS product in North America? Is that still the target time, or has that changed at all?

Well, we're getting some traction, Greg, in the U.S. already with our current solution. It was the LeasePak for the North American market. But when the NFS comes this way, which would be pretty soon, I think you will see our customer will be offered both options because a lot of our customers historically have been very comfortable with the license model to their -- mostly, bigger companies, they have the budgets that they can support onetime fees and then continue with the maintenance and service relationships. So I think we'll see how this, the U.S. market, accepts it. But like I said, we will offer both options to our customers.

Okay. And this cybersecurity and also this -- what you mentioned, some revenues from the U.K....

Information security, right. In Saudi Arabia.

Yes, these are also some new business lines, right?

Yes, absolutely.

And so is that pipeline orders in? Or would that be more backlog orders, the $2 million mentioned for cybersecurity?

They're already signed. It's hard to recognize [ph] [indiscernible].

Okay. And any -- what was the U.K. line? I missed that.

The VLS, right?

[indiscernible]

Yes, the VLS is the company that we acquired we own 51% of. We bought the company in partnership with Investec Asset Finance. And that business is starting to develop as well. I'd guess, it already about $2 million in revenue currently. And then it's going.

Okay, great. And just one more question and I'll jump back in the queue. On the guidance, you mentioned about $0.80 to $1 for next year. And minority interest was a little bit higher than I anticipated for the fourth quarter. I mean, if we take that out and the operations are doing much stronger than your -- what your EPS indicates. But I'm wondering if your guidance for earnings for 2013, does that include the minority interest? I wonder what that might be.

Yes, I mean, we have projected, factored in. And I think the company is thinking something about it to how to address the long term, improve our position as the owners of these entities.

Okay. So it doesn't incorporate that in there, okay.

Yes.

Your next question comes from Howard Halpern with Taglich Brothers.

First question. In terms of your 2013 outlook, what are we looking at as a percentage of that total, in Vroozi revenue?

I think, Howard, we posted $1.3 million this fiscal which is basically the second half because the Vroozi is starting to take off literally on the beginning of this calendar year. Shaz, do you want to jump in? Because you obviously have the number in your pulse [ph]. Shaz, do you want to come in?

Yes, absolutely. Howard, good morning. We expect to see continued growth within Vroozi. And in terms of allocated percentages, we obviously expect to see more of a contribution to the top line for NetSol as a whole with Vroozi. And we'll be continuing to grow the division. We have also an incredibly strong pipeline and backlog today. As Najeeb mentioned, we are continuing to move forward and grow and close.

Okay. Of that $1.3 million net of revenue in 2012 -- and I know you ended with -- you talked about 11 customers. Of that $1.3 million, how many of those customers really contributed to that number?

All of them.

All of them? Yes. And you would expect to, at least at minimum, do another 10 or 11 implementations in 2013?

Yes, we expect to grow the number that we have today for 2013.

Okay. And in terms now of just general, well, license revenue, the fourth quarter again was a significant percentage of the total revenue. Is that number or is that percentage going to hold? Or will we come down to a more normalized license revenue as a percentage of total revenue for the full year '13?

Yes, you're going to see it normalized, Howard, upfront. Majority of the revenue base right now is derived from the professional services aspect of Vroozi. If we -- the projects are actually set up and the clients are basically set up to go live with the smartOCI Vroozi platform. And then of course, you have the recurring revenue trend once they are live. So you're going to see basically faster on-boarding of clients and faster implementation cycles.

Okay. And in terms now of NFS licenses, I mean, that was a significant part of the fourth quarter revenue mix. Is that going to also come down to a more normalized revenue percentage of total revenue for 2013?

Not really. I think what you're seeing is you started covering these companies recently, but if you look at the historical trend for our sales cycle, usually the second half is always a strong from the first half and there's always push to close by June 30. And those customers are also quite accustomed and make things happen with us. So I believe, yes, you'll see a bit differing off [ph] in the first half, but definitely, second half is always going to be stronger. And the guidance we've given is quite, I think, realistic. Naeem, do you want -- do you think we have a pretty good, ambitious, kind of realistic guidance?

Yes. Well, I think, from an analysis point of view, definitely, we are kind of bottom heavy. In our last quarters, we picked up a lot of license. So when we give guidance -- and we're guiding $46 million to $48 million and a piece of that is licensed. What we see does -- that the bulk of license comes in the last 2 quarters, as opposed to the first 2. And that is traditionally for the last 15 years now, so you'd have to take that into account. You don't going to have -- every quarter, that's going to have an equal amount of license. You can say -- okay, if you have $10 million of license in the year, there's going to be $2.5 million every quarter. So it is not that normalized. It's going to have -- it's lumpy. And as you move over the years in the future towards a SaaS and on-demand model, you'd start to get more predictable or more evenly spread, I guess.

Okay. But in terms of with the heavy licenses out in the first half of this '13 will be -- it -- when that comes down, the services and the implementation revenue will rise.

Always kicking in [ph].

Including the maintenance of the -- yes.

Yes, that's absolutely right because the backlog that we've billed is mainly off the services revenue and maintenance. So when the license goes down, a lot of these contracts we sign start to get delivered and go live. And that's when the final payments come in and revenue is recognized and maintenance starts to kick in.

I do have a question about Latin America and how has -- getting into Latin America through Brazil, has that been proceeding on schedule?

We actually have a partnership there. We decided for now to put on hold because we are really busy in Asia Pacific. We moved Naeem, we moved a lot of good people that have come in back from the shallow location because that's where there's a whole lot of [indiscernible] demand is. So what we're going to do is we're going to wait for a little bit before we can really allocate resources. We can do well -- we have a partnership there but we decided to put that on hold at least for the remainder of this calendar year, and we come back and revisit this. There's opportunity there but there's also an opportunity because, when you look at especially China, Japan and Thailand and Australian market and, of course, North America, we have to reassess that it should be putting our capabilities and resources of -- if we can do without diluting other effort in that, and we may go back and do it. But definitely, there's an -- enough action in [indiscernible] and Asian [ph] market, as you heard. And our projection and guidance is based on what is happening in that market right now. We're trying to fully, fully maximize that.

Okay. And 1 or 2 last questions. You have the big backlog and your software is in demand. Could you maybe describe why or why you think it's in such demand when the global economy is soft and people are skeptical maybe about spending at this point? Why the drive to implement your NFS technology?

I'll let Naeem jump in.

[indiscernible] Yes, Howard, well, look, ours -- our industry can be a little bit contrarian also because some of the companies that we deal with they have renewal cycles on their platforms and they certainly reach a point in the business where they have to renew the software and bring new technology in. And that cycle doesn't always match with a booming economy, and sometimes, it's converse, that continue to slow and be able to implement and invest in the systems. And you're right, the economies are slowing down, but it also creates more opportunity for leasing and finance in a slowing economy where the manufacturer has to push more product out there. The leasing and the financing option gives them that other angle to push more products out. So we also found in China, for example, the economy slowed and the car sales are sort of flat, but there's more interest in leasing now because the manufacturers are looking at ways to putting more stock out. And they're trying to build more capability and more automation in the leasing to be able to sell at more competitive rates, actually competitive. So the systems and automation gives them that edge that they will otherwise not have. So it's not entirely in line, in sync with -- in the growth of the economy. It can be contrarian to an economy cycle -- economic cycle.

Your next question comes from Jeremy Hellman with Avenue T Fund.

A couple of questions for me, mainly around Vroozi. With the new relationships that you booked in the quarter, can you characterize those? Are those what you would deem to be full installations? Or are they more of a beachhead variety where the client, like NBC Universal, signed on for a smaller number of seats and there's still a significant opportunity to kind of upsell within that customer?

Yes, I think Shaz will be the best one to answer. Shaz, do you want to comment, please?

Yes. Thank you for the question. The majority of the implementations that you see that have been booked are full implementations and they primarily focus in the U.S. and European region. A lot of the companies that we've worked with to date that have gone live on our smartOCI platform are now looking at expansion strategies for smartOCI into their other geographical territories where they have manufacturing operations and other sorts of operations. And so we do see growth forecasted within our existing client base as well, as we move to different reasons and locales.

Okay. And then just to clarify on the pipeline figure you cited earlier where you said it was $100 million. Was that just NFS or across the total enterprise of NetSol?

[indiscernible] enterprise, yes.

[indiscernible]

Can you say that again? Sorry.

Naeem?

It's just NFS, yes.

Just NFS, okay. And so do you have any kind of sense on what the pipeline would be for Vroozi for this year?

Shaz?

We haven't provided numbers, but the pipeline is our strongest in our history at this point. And we look forward to eclipsing our customer count for this fiscal year coming up.

Okay, great. And then one last one for me. You mentioned looking at some M&A here in North America. Just to kind of characterize that, are you looking to build a presence within existing areas, maybe it -- whether it be a smartOCI-like platform? Or would you be looking at building -- or rather acquiring new capabilities?

I think we are a real focused company. The last 15 years quite. This is our domain, leasing and finance. I mean, we like to keep it within the same parameters so that we can leverage our capabilities, global capabilities, sales, marketing, development capabilities, and use the cost arbitrage in all the emerging markets to really create a growth footprint in the U.S. market. So our approach would be to look at more synergistic type of opportunities. And if they come our way, we'll explore them, pursue them and see if we can do them.

[Operator Instructions] The next question comes from Richard Greulich with REG Capital Advisors.

Najeeb, when I look at the 3-year sort of outlook goals that you talked about -- if you -- indeed you have an increasing percentage of contribution coming from North America, does that mean that the -- let's say, percentage of net income that then has to be subtracted out from minority interest or noncontrolling interest, that, that part will go down?

It's a very good question. Obviously, the interest is that -- in the U.S., we own 100% both Vroozi and our North American division. And in Asia, our biggest -- the driver of the growth is, of course, NetSol Technologies Pakistan Limited, which is also a public company. Yes, we did a lot of revenue this -- in Q4 and because we had to then of course share the profits. Yes, as we grow the U.S. business, the debt percent will go down when you combine and consolidate them, but our goal is to -- in addition to driving the growth in the U.S. or North America market, we'd like to look at this situation in that country and see if we can -- if the company can kind of open and kind of acquire more of the ownership and improve the shareholding on the parent level so that we'll -- eventually, we will have a much-reduced minority interest taken out from the bottom line, simply because we believe there's so much opportunity out there, as you heard all along today, in China and Asia and our optimism about what we can achieve in the next 3 to 4 years. So yes, it will much improve our bottom line both because of the U.S. and our ability to do something with the ownership there.

If you were trying to increase the ownership there, would you use NetSol corporate stock to do that, or cash?

Well, we won't decide that yet. It's a discussion. In order to just -- I think our discussion with the market there is we're having right now. I believe it would be to just use our own cash flow because stock is quite inexpensive at this time, times are tough over there. So it is 100% right now, but definitely, that a portion in our mind to find the best way to increase the ownership because, look, this is our first engine -- or the main engine for our company that delivers capabilities to our global customers particularly in Asia Pacific markets with the help of Thailand office. They also support our U.S. operation, both Vroozi and North America. So we have to do something to boost our holding one way or the other without diluting our U.S. shares.

Your next question comes from Daniel Nye with CIM Investment Management.

I've got a couple of just quick questions, firstly on the consolidated balance sheet. Would you help me understand why revenues in excess of billings has more than -- has almost doubled? The AR has come off, which is good, but you've got a big jump in the line below. Can you explain why that happened and what's the cause of that?

Yes. I'll have Boo-Ali or Naeem explain that better.

Dan, this is Boo-Ali. If you see our income statement, our fourth quarter is still biggest quarter in our history: $14.1 million -- $14.3 million, revenue that nice [ph] in Q4, out of which the $7.3 million was from license sales. The increase in AR is basically due to the revenue recognition which is yet to be billed. There are only 2 [ph] in Q4 which is yet to be billed with the customers. Some of them have -- are even billed in Q1, and some were billed later on. That's the basic reason for it, [indiscernible] in the ARs.

Okay. So you've done the work, but why didn't you bill it?

Look, we have a nice top revenue. Of course, we recognize license, which has not been 100% billed so far because we have some flexible terms of payment. 40%, 30% have been billed initially, and then after some 60 to 90 days, the remaining orders are billed. That's the -- so the excess of revenue in some ways are related to debt license revenue, which have been recorded but not billed so far. And of course, at the balance sheet debt, we recognize services on a percentage completion basis, which are subsequently recognized [ph], or subsequently invoiced to the customers...

And I think the simple answer is really that our payment terms from client to client vary. So -- with some clients who closed a deal, we would offer an extended payment period and the billing is agreed at the time of signing the contract. So -- but if you noticed, our overall ARs outstanding has come down quite significantly so we are getting better and better terms agreed. But at times, a client could take 3 to 6 months to pay for a service that is already delivered or for software which has already delivered. That's the nature of the business that we're in.

Okay, okay, I understand it now. And so when do you expect to collect most of those revenues in excess of billings?

Well, Boo-Ali just said that we already billed quite a bit of it in Q1. We billed it already in month 3 of Q1, right? So we'll see, in the next Q, September 30, that number start to come down.

Okay. And just to follow -- a following question on your cash flow from investing. Your increase in tangible assets, which has gone from 8 to 6, and this, I presume, is the next-generation software, at what level would you expect that to begin to stabilize?

So we are actually now in a phase where we are essentially enhancing the core platform. The core platform is being deployed. We implemented several sites. So we are past a pure R&D phase, Daniel. So now, that's the word of the inners in QA [ph] and some additional functionality. The core platform is more of this. You'll see the bulk of the R&D activity in the next generation is really behind us. So for this fiscal year, we will start to see maybe half of what we saw last year, maybe less.

Okay. So going forward, that number will come down even further, then?

Oh, yes, absolutely. Yes.

Your next question comes from Eric Rojas, private investor.

I guess a -- I guess I have a couple of questions on both the fourth quarter. You usually announce contracts as they -- as you sign up, I guess. But the last contract that I remember was, I believe, Santander in early June. Did you have other contracts that were not announced? And is that a trend? Is that going to happen again on...

First of all -- let me just jump in, and Naeem will help also. We announced -- I think that there's 3 or 4 new contracts in this -- the fourth quarter. Starting from beginning of April, I believe, there was 1 major contract. We couldn't announce the name. It's Italian-based Japanese auto manufacturer, I believe. And already started working with them. And then, of course, Santander is obviously a major one. And there's a Chinese leasing company...

Chongqing.

Chongqing, exactly. Of course, sometimes we can't announce everything, for a lot of reasons whether it's a competitive reason or whether it's the customer don't like to mention anything. So it's a combination of some were not announced and some were announced in the early part of the quarter.

Okay, good. The other question that I have is -- okay, so most of the stuff did focus on, for all the history of the company, has been in the NFS or NFS related and, now, in Vroozi. But looking at your product lines, you have some other things that are really interesting, like for instance your hospital -- or medical automation and other things that are just sitting there. And they appear to be fully developed solutions. Is there any way that you can leverage that with other companies in the U.S. through mergers or through other initiatives in order to get some -- to monetize that technology you have there?

HMIS specifically is our solution we have. We have supplied to a couple of hospitals in Asia. And I think that it comes down to, really, our focus. We've done 2 things. We created some other divisions but then we decided just recently that -- this last year to really, really focus on the core business, become the best at it as the demand is growing, as the need for delivery and the engine is to further strengthen. It probably is wise to stay with our domain and, of course, bring the services. And we'll be [indiscernible] second only IP that we've very focusing on. And we believe there is an opportunity here in the U.S. especially. So we don't really want to spend too much time in going away from our key domain.

Yes, and that makes sense because of the resource allocation and all of those stuff. But now looking forward, you mentioned that you might be able to even -- to increase the revenues to possibly 100% almost within the next 3 years. And as the earlier caller mentioned, if some of those revenues come from the U.S. where you don't have to share the minority interest, the gross margins may also go up. And so in all fairness, when things get implemented and the market sees a traction and a definite improvement, I presume that the stock prices are going to go along with it. Say, assuming an idealistic scenario where a stock price multiplies several times from here, do you foresee a possibility of possibly doing a forward reverse eventually? Because we've been kind of reversed, you know what I mean, because there has been a dilution problem in the past. And do you foresee that slowing down and possibly reversing, going forward?

Well, let me say, as the CEO and the management team are on the phone right now, we would love to do that at one point, okay, to reward the shareholders when we are ready in terms of market position. And so that is the best way to reward our shareholder for the patience and holding on to our stock. But more importantly, your earlier part of the question is on the U.S. When I mentioned that we're looking into increasing the revenue in the U.S. simply because, for one, there's an opportunity here. It is a very competitive and a mature market, but there's opportunity for our solutions, especially the next generation. And also, we want to look into other partnership alliances though -- really to bolster revenue, to improve our margin because anything sold in the U.S. in U.S. dollar has much better valuation in terms of pricing and the market -- ability to take the bigger projects. But also, we have a cost advantage. When we use -- leverage our global development center, that really helps bolster our -- the gross margins. So all in all, it will help in many ways, bolster the margin and from also the minority interest perspective. But definitely, we take your point very seriously and we believe we can -- at some point, we would love to be in that position to be able to form a slate [ph], okay?

Your next question on the line comes from Ronnie Gold [ph] with Heart of New York [ph].

I'm wondering, regarding the stock price, a little bewildered that, after such a wonderful, great quarter, the stock is still under $0.50 pre-split, which is like under $5. I'm wondering, is it possible we can get this out to analysts who would cover it and would bring the stock price up? When any type of substantial analyst -- I'm not to stratify [ph]. Some thing realist that can get this to a position where it's, let's say, over $1 where it's should have been way over that at this time. I mean, you're doing phenomenal. I mean, 2 years ago, the stock was at $2.25 or $2.50. And there's -- you were doing -- you weren't doing half as good. So what are the plans to create that distance [ph] with...

Well, Ronnie, good observation. We have made it -- taken a lot of baby steps. You seen -- 6 months ago, we didn't have these 2 -- 3 analysts: Singular, Taglich and Sidoti. But we definitely are trying to address those marketing for our company, telling the story, and -- but more importantly, we're focused on consistent driving growth and by -- hence, improving the company's financial and balance sheet. And that is exactly what's going to really get attention of the smaller, some maybe medium-sized funds and analysts. But we are definitely going to go in the market and tell the story preferably now that we're comfortable. There's no more quiet period now. We already delivered the numbers today. And our outlook is quite strong. So I do believe we'll do everything to improve the valuation and, we'll just keep performing and delivering results. And eventually, with our extra efforts in marketing our company, we'll get the valuation to be at -- in -- where it should be at.

Are there people actually contacting these analysts and these -- watch companies?

Yes, yes. We do get -- yes, yes. They call us and call our IR people, yes.

That does conclude our question-and-answer period. We'll now turn the call back over to our host for closing remarks. Please go ahead.

Well, thank you very much. I appreciate your listening to our earnings today. And we look forward to seeing you again in the next quarter. Thank you so much, and have a good day.

Ladies and gentlemen, that does conclude our conference call for today. Thank you for your participation. You may now disconnect your lines.