NetSol Technologies, Inc. (NTWK) Q2 2018 Earnings Report, Transcript and Summary

Good morning. Welcome to NETSOL Technologies Fiscal Second Quarter 2018 Earnings Conference Call. On the call today are; Najeeb Ghauri, Founder, Chairman and Chief Executive Officer; Roger Almond, Chief Financial Officer; Naeem Ghauri, President, Global Sales; Jeff Bilbrey, President, North America; 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 the review of the Company's business highlights and financial results, we will open up the call for questions. 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. 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'll 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 on our Web-site at www.netsoltech.com and via a link available in today's press release. Now, I would like to turn the call over to Najeeb.

Thank you, Patti, and good morning everyone. Before the market opened today, we issued a press release announcing our results for the fiscal second quarter ended December 31, 2017, and a copy of which is available in the Investor Relations section of our Web-site. The fiscal second quarter was an improvement over Q1 in many ways, a fact most clearly evident in our return to profitability. However, this quarter was still not without its challenges, having been affected by a continuation of the same prolonged sales cycle we have experienced over the past few quarters. And while our revenue was down year-over-year, we believe it does not paint the full picture. In fact, both maintenance fees and services revenue increased over the prior year, and on top of this we still experienced an increase in overall revenue from Q1. The expected decrease in our total license fees was directly tied to the decrease of license revenue recognized from our 12-country NFS Ascent large contract, which impacted us last quarter as well. However, as we mentioned on our previous call, we will be recognizing additional revenue from this contract, having secured approximately $9.3 million in future revenues in addition to what was previously projected from this customer. It's worth pointing out that we recently collected approximately the first half of the payment, or EUR3.5 million, in our current quarter, which obviously was not reflected in our balance sheet for fiscal Q2. We expect the balance of that revenue to be recognized over the contract term as some more services are performed. So the theme this quarter once again is that we are optimizing and rationalizing our cost across the Company, so that we can become an even more nimbler and leaner organization. Most of you will remember that back in January 2017 we announced the implementation of a Company-wide cost reduction initiative expressly for this purpose. I'm very encouraged to report that in the second quarter we achieved roughly $2.1 million in cost saving related to these efforts. As broken out, we had $1.4 million decrease in our cost of revenues and more than $600,000 decrease in our operating expenses in Q2. When coupled with the $2.4 million we also saved last quarter, that amounts to more than $4 million in reduction so far, showing that we are well on our way to achieving our previously stated goal of saving more than $6 million through fiscal 2018. Now, before I go any further, I'm going to turn the call over to our CFO, Roger Almond, who will review the rest of the financial performance for the fiscal second quarter in more detail. And after that I will come back in a few minutes to discuss our operational highlights and general business outlook for the remainder of fiscal 2018. Roger?

Thanks Najeeb. Turning to our fiscal second quarter 2018 financial results for the period ended December 31, 2017, our total net revenues for the second quarter were $14.4 million compared to $15.9 million in the prior year period. The decrease in total net revenues was primarily due to decrease in license fees of $3.3 million, which was offset by an increase in services revenue of $1.9 million. Total license fees in Q2 were $453,000, a decrease of 88% from $3.8 million in the prior year period. The decrease in total license fees was primarily due to the decrease of license revenue recognized from the 12-country NFS Ascent contract. Total maintenance fees in Q2 were $3.7 million compared to $3.6 million in the prior year period. The slight increase in total maintenance fees was primarily due to a fluctuation in usage of active users, which was partially offset by select customers selecting not to renew their maintenance agreements. We anticipate maintenance fees will gradually increase as we implement our product suite to new customers. Total services revenue for the quarter were $10.3 million, an increase of 22% from $8.4 million in the prior year period. The increase in total services revenue for the quarter was primarily due to an increase in services revenue associated with the implementations and change requests related to the previously mentioned update to the 12 country NFS Ascent contract. This increase was partially offset by a decrease in services revenue for NetSol-Innovation. Total cost of revenues was $7.8 million for the second quarter, a decrease of 16% from $9.2 million in Q2 last year. The decrease in cost of revenues was primarily due to a decrease in salaries and consultants cost of $618,000 related to the right-sizing of technical employees at key locations including Pakistan, Thailand, China, U.K., North America, as well as a decrease in travel cost of $548,000. Gross profit for the second quarter of fiscal 2018 was $6.7 million or 46.3% of net revenues, which is up slightly from $6.7 million or 42% of net revenues in Q2 last year. The increase in gross profit as a percentage of net revenue was primarily due to a $1.4 million decrease in cost of revenues for the quarter. Operating expenses for the second quarter decreased 9.1% to $6.4 million, or 44.1% of net revenues, from $7 million or 44.2% of net revenues in the same period last year. The decrease in operating expenses was primarily due to cost reductions in selling and marketing expenses, salaries and wages, depreciation, and professional services. Moving forward, we plan on judiciously allocating additional resources to our research and development budget as NETSOL focuses increasingly on its innovation related initiatives. Turning to our profitability metrics, our GAAP net income attributable to NETSOL for the second quarter of fiscal 2018 totaled $634,000 or $0.06 per diluted share, compared with a net loss of $2.2 million or $0.20 per diluted share in the second quarter of fiscal 2017. It is important to point out that included in our net income this quarter was a $1.5 million gain on foreign currency exchange transactions compared to a loss of $686,000 in Q2 of last year. The increase was primarily due to fluctuations in foreign currency exchange transactions during the period. As some of you may know, the majority of the contracts with NetSol PK are either dominated in U.S. dollars or euros. As a result, currency fluctuations will have a significant effect on the amount of income we report each quarter. Ultimately, we lead to foreign currency exchange gains or losses depending on the value of the Pakistan rupee compared to the U.S. dollar and to the euro. As Najeeb mentioned earlier, during fiscal 2017 we implemented a cost reduction plan as well as other organizational transformation initiatives. At NETSOL, we are bottom-line focused as much as we are top line growth driven. To that end, we are pleased to have made a return to GAAP profitability this quarter and remain focused on continuing these same results for the remainder of fiscal year 2018. As I stated previously, these outcomes are predicated on the execution of new Ascent deals this fiscal year, which are currently in the negotiation phase with various new and distinct customers. Moving to our non-GAAP metrics, our non-GAAP adjusted EBITDA for the second quarter of fiscal 2018 totaled $2.1 million or $0.19 per diluted share, compared with a non-GAAP adjusted EBITDA loss of $299,000 or $0.03 per diluted share in the second quarter of last year. As we disclosed in our earnings release, beginning with the fourth quarter of fiscal year 2016, we revised our calculation of adjusted EBITDA to exclude the portion of adjusted EBITDA that is attributable to the noncontrolling interest in our subsidiaries. We believe this supplemental disclosure provides additional insight into the true operational performance of our business. Please see the reconciliation schedules contained in our earnings release for our revised calculations of adjusted EBITDA for the second quarter ended December 31, 2016 and 2017. Now turning to our balance sheet, at the quarter end we had cash and cash equivalents of approximately $10 million or approximately $0.90 per diluted common share, which is up from $8.6 million or approximately $0.77 per diluted common share at the end of the previous quarter. Turning to our stock repurchase program, on July 18, 2017, NETSOL's Board of Directors approved a stock repurchase program that authorized potential repurchases of up to 1 million shares of its common stock. The program expired on December 15, 2017. At the conclusion of the program, we had purchased 139,275 shares of our common stock at an aggregate value of $601,000. Moving forward, the Board of Directors will evaluate future stock repurchase programs both in the U.S. and Pakistan, but can make no guarantee as to the timing of specifics related to such decisions. That concludes my prepared remarks. I'll now turn the call over to Najeeb, who will provide an update on our sales progress and key initiatives, as well as the outlook for our respective regions. Najeeb?

Thank you, Roger. Building on my early remarks, NETSOL continues to focus on creating efficiencies wherever possible. We are staying lean in areas we can control while dedicating additional resources to the areas we believe will set us up for continued long-term success. We can look to the growing strength of our operating margins as clear evidence that our cost reductions are working. Meanwhile, I can also confidently say that NFS Ascent and Ascent Digital continue to generate interest across all major regions and industries as some significant new prospects have come through the pipeline which is further strengthening our projection and forecast. We are continuing to see more and more opportunities for growth and expansion. As a result, our total consolidated pipeline has increased approximately $175 million as of the end of this quarter. And more specifically, I'm encouraged to report that the highest value project in our pipeline has advanced as far as the procurement stage and we are currently in commercial negotiations for potential deployment in multiple markets. Obviously, we are limited in what we can discuss beyond this update due to the confidentiality agreements, but we believe it is important to give you an idea of what actually goes into these lengthy sales processes and discussions. More generally, in the past three months our business development teams have been supporting many new RFIs and RFPs in China, Australia, U.K., and the U.S., for NFS Ascent and we are seeing growing interest in LeasePak CLOUD specifically in the U.S. market. Our President of North America, Jeff, will join me in a minute to elaborate on our progress there as well. Now while the RFP and RFI numbers are growing, we recognize that there is a lot of work to be done to convert the initial requests into the next stage of negotiation. And while our overall pipeline will undoubtedly fluctuate over time, we find it very encouraging that the demand for our solution, specifically our flagship Ascent offering, remained strong in all the markets. Along that line, I'd now like to provide some brief update across our various business segments, beginning with our APAC and European markets. First, we had a very successful and large-scale NFS Ascent implementation with an auto finance company of a leading Japanese bank in Indonesia for its leasing business. Also of note, back in 2015 fiscal year we had previously announced an initial agreement with this bank. Since that time most of the branches of the same partner bank have already gone live with NFS Ascent, representing a portfolio of 2 million contract, serving more than 5,000 concurrent users and reflecting potentially $60 million in total contract value. As of December 31, 2017, we had recognized approximately $12 million from this original contract. In all, we are actively working to develop this relationship into a maturing and long-standing delivery commitment with additional opportunities for business with this customer in the Indonesian market. Additionally, a captive finance company of a leading truck manufacturer in China successfully went live with NETSOL's Web Point of Sale solution. This finance company is now also offering NETSOL's Mobile Point of Sale solution to its clients. We are also seeing increasing legacy [indiscernible] services and change requests, RCRs for short, in China for a few large customers to support growth in their leasing volumes, which will translate to future revenue growth as well. In our European region, we are growing enhancements and upgrades of legacy LeaseSoft systems in U.K. markets with a number of existing customers while we continue working on new Ascent opportunities in the U.K. markets. Moving to the Americas, and for a detailed update I'd like to turn the call over to Jeff, our President for North America. Jeff?

Thank you, Najeeb. As many of you are aware, the North American market for NETSOL presents both unique challenges and great opportunities. We've been working extremely hard to build a tighter relationship with our current client base with more account management outreach, a client newsletter to share great news about NETSOL and our products, and the more active user group that meets regularly to collect feedback and provide concrete evidence to them that we are listening to their needs. At the same time, we are being strategic about our ongoing products development and products placement, with a focus on enterprise features, cloud capabilities, and a new SaaS-only pricing model. The combination of these has yielded a very intriguing pipeline of new revenue opportunities with existing clients and reinforced great references from those clients to new prospects. As it relates to the opportunities in front of us, the general migration from business to a cloud infrastructure has created new entry points and also led to a resurgence of interest in our LeasePak CLOUD offering, as Najeeb mentioned earlier. For those newer to our story, LeasePak CLOUD is NETSOL's end-to-end portfolio management solution for the North American asset finance industry, which combines a new user interface with a modern architecture and a quick-start cloud deployment to provide enterprise leasing and lending features that make doing business faster, easier, and ultimately more profitable. This product can be scaled from a basic offering to a suite of highly specialized data modules. LeasePak CLOUD has been accepted and adopted by both new and existing customers and we believe it has the potential to transform the greater finance and leasing industry. As an example and further proof of this acceptance, we recently announced a deployment with one of our existing customers, MotoLease. Since 2013, MotoLease has been an existing user of LeasePak but they recently upgraded to LeasePak CLOUD with managed services after seeing a dramatic growth in their own portfolio and operational volumes since their original implementation. Since that time, MotoLease's relationship with NETSOL has evolved into a trusted and valuable partnership, most clearly evidence by this significant customer growth. With NETSOL's help, MotoLease will now be able to focus on deploying more cutting-edge capabilities while we manage their product and hosting services. More generally, we have been actively managing our sales pipeline to focus on deals we believe we can successfully close. We have also stepped up our partnering in the industry, which is yielding high-quality referrals to viable prospects. These steps have improved our farming and hunting prospects in North America, and this has been working and we've seen one super regional bank as a new LeasePak user and also a new Canadian specialty leasing client, both of which are in the process of implementing right now. In all, we are incredibly optimistic about the growing support for LeasePak CLOUD in the Americas, as well as the overall NETSOL suite of offerings. The overall pipeline for NETSOL Americas is growing and the prospective opportunities are maturing well as we now see more sales activity for LeasePak CLOUD and also for Ascent than ever before. I do look forward to updating you on the progress of all of this during subsequent phone calls, but for now I'll turn the call back over to Najeeb.

Thank you, Jeff. As you just heard, our growing support in the U.S. and for different solution modules in our various module segments helps to ensure overall flexibility for our Company as we interact with varying maturity lifecycles. While we continue to pursue larger deals in the APAC region with our flagship Ascent offering, we are also capitalizing on the smaller, more fragmented opportunities elsewhere. We will continue to grow our revenues from a geographically and technically diverse set of resources, with the ultimate goal of mitigating any negative short-term development in one particular market. Additionally, as we position ourselves effectively for now, we are always cognizant of the future and the need to be prepared. As I made note of in our last call, in just the last two years alone we have witnessed incredible technological breakthroughs in the areas not just limited to big data, cloud solution, augmented virtual reality, artificial intelligence, blockchain, and rapid digital transformation, which is why last quarter we introduced NETSOL's new ideas lab. Our ideas lab will allow us to place more emphasis on our new initiatives and new areas where we can stay ahead of the technology curve and generate new opportunities for our Company. As a result, as one might expect, the amount of our spending allocated to R&D will need to increase, albeit off our current historically low numbers. To that end, our Board of Directors recently approved a decision to judiciously allocate resources to this very important mission along that line. NETSOL, under the leadership of Naeem Ghauri, who's heading the Innovation Lab, also recently appointed a CTO from a top-notch firm in U.K. as the head of this department. This individual brings a wealth of experience and specialized knowledge that will be critical for NETSOL's future development. Finally, as Roger mentioned, this quarter our stock repurchase agreement expired. We believe in the strength of such programs as they reiterate our confidence in the strength and future growth potential of NETSOL to our shareholders. Moving forward, we will remain open to revisiting this program in the U.S. and for our Pakistan subsidiaries, as well as exploring other alternatives to provide additional value to our shareholders. Looking to the second half of the year, as I mentioned earlier, we are navigating through some significant deals, and one in particular that has reached very advanced stages. While we remain confident in our ability to close this and other transactions, we can't reliably predict when they will happen. To that end, in the meantime we are working to increase the diversity and sources of our revenue stream, as in North America. Additionally, we will continue with our already successful organizational optimization initiatives, while working to position ourselves more effectively with the now existing markets, all with an eye to the future as well. And it goes without saying, and to reiterate, our medium-term goal to achieve our first $100 million revenue mark, which our teams across the globe are passionately committed in achieving and working very hard. And with that, I'd like to open the call for questions. Operator?

[Operator Instructions] Our first question is from the line of Timothy Stabosz, a private investor. Please go ahead.

As you know, I own about 3% of the Company. Nice job on the cost-cutting. I guess could you clarify again, Najeeb, can you give us some reassurance as to whether or not we are at risk of getting whipsawed? That is, again, nice to see the profitability coming through on the cost-cuts, but can you assure us on the ability of the Company to still ramp up as needed here and how you would handle such a situation?

Thank you, Timothy, for this question. First of all, as we mentioned in the last two calls now, we are by strategy trying to become a much leaner, much nimbler company, irrespective of revenue ups and downs. It is important for us to make sure that we demonstrated that we can make a profit and improve our EPS and bottom line. Secondly, there is obviously dependency on the new revenue growth, which you heard repeatedly in this call and in the previous call, how the sales cycles have grown number. I believe our job, we can control costs internally, both cash basis on that and non-cash basis, and that is reflecting in our financials, and I believe if we achieve $6 million-plus total cost savings in this fiscal year, that process will continue. The reason is that we have now matured the Ascent delivery mechanism in the Company. As a result, you have seen much growing pipeline, and that means we are more efficient, we can be more nimble, and we don't have to have too many people to support both the legacy system, which we are still growing but not to the level of headcounts we used to have in the past, and at the same time the same thing for the next-generation. So, I believe I'm pretty confident to show stronger operating margins from all the way from top to the bottom line, and I think we'll continue to make these efforts to make sure that the shareholders see the value of our revenue growth in forms of better bottom line and a better strong EPS.

Very helpful. Can you clarify the pipeline? You say 175 million. Can you give us a sense of like again how that's trended, I don't remember, a year ago, or 6, 12, 18 months ago, where we're at now versus where we were?

Sure. Naeem, you want to jump in? Naeem is as you know Head of Global Sales and he's got numbers on his fingertips.

Pipeline has been concentrated mainly in the Asia Pacific region. I'd say of the number, still 80% to 85% is coming from China, Australia, and the rest of the regions. So, that has actually matured now to a point where we are in kind of a fulfillment discussion now with the majority of those multiple country deals. So, currently we are talking to three different clients for multiple country implementations in Asia Pacific. One particular one is at the fulfillment stage. The other two are at RFP stage.

Okay. I'll get back in queue. I think I have a follow-up if there is enough time to come back to me. Thank you so much.

Our next question is from Michael Vermut with Newland Capital. Please proceed with your question.

I had a couple of quick questions, but just I didn't understand that last answer to the question. Was that discussing three of the deals in the current pipeline that were stages that were at? I didn't really follow that.

Can you tell on the 175 million, what that meant? And basically I just said, first of all from a region perspective it's mainly coming from Asia Pacific, and of the three deals, one is in procurement stage, the two are in RFP stage but in a strong position. The one on procurement stage essentially means that's the final round of the whole process, and that would be our largest deal at the moment in the pipeline.

Okay. And just on the one that's in the procurement stage, does that mean that there are a couple that are still left or that where it's in the final negotiation on details?

Mike, the client is never going to tell you that you are the only one they are talking to. So, they keep us on the edge. But for what we know, is that we are in a particularly strong position that this particular client.

Excellent, excellent, okay. Just before I get to the other questions, going back on that, when I look at NETSOL, I've done as much work as an investor can do pretty much on the competitive products out there, and still we have by far the best product, we have the best cost structure. How are others, when we are going up for these bids, how are others competing against us? What are they bringing to the table that NETSOL doesn't have? Because I can't believe they have a better product suite or better cost structure on the pricing side.

I think, Mike, in Asia Pacific we are very, very strong, and it's very hard to compete with us in this region. But it's the other way around probably first in the U.S. where we don't have [indiscernible] for Ascent. So, we will have to compete more on cost in the U.S. and in Europe. But in Asia Pacific, we are not necessarily the cheapest. We don't actually sell ourselves one of the cheapest in the market. We are a premium product [indiscernible] as much as anybody else with a European and U.S. company. [Indiscernible]

I didn't mean cheapest there. I meant that we have the best probably cost structure to implement for them. I didn't mean cheap product.

Okay, fine, [indiscernible]. So, what happens is we really price in such a way that we are on par but we have more leverage, Mike, to be competitive when we have to be, because we do have a better cost structure and use it to our advantage when we have to win a deal.

Excellent.

So, how we are competing with that, so I was just going to say that our competition obviously did try every trick in their books also [indiscernible]. We essentially have a lot of strength on our side. You are right about the products that it is essentially [indiscernible] in, and it's really hard to compete with us in Asia Pacific. We will hopefully be in a similar position in the U.S. and Europe once we start to get few of the projects live.

If I can add one more point, Mike, to this question, I think one of the key differentiators that NETSOL has for many years and now we are seeing the benefit is that we have such a strong global footprint in both emerging growing markets and the developed markets like the U.S. and U.K. that we get to share globally with our teams together, help each other from U.S. to China, China to U.S. and U.K. and vice versa, and then the same thing we have about the deliveries. We have a local support mechanism in each location as well as our biggest delivery center in Lahore, Pakistan. So, that really adds a lot of value to proceed to global value contracts in the multiple markets, at the same time with the help of this office that we have in different locations. So, it's really unique when we look at the competitive landscape in the same industry.

Excellent. Now on the assumption that we do win a few of these large contracts, cost structure, is there much flexes needed in our cost structure or we can maintain these lean levels through implementation? What will need to come back and how much leverage will that be on the margin line if we do succeed in them? I'm trying to get a picture as to, okay, now we are at the base case, we're running slightly profitable, generating some cash, what happens when we do land some of these large contracts to the Company?

I think that will really take this Company to a next level. If you look at just the one big contract that we signed over two years ago in Ascent, that has really helped the Company in many ways in the last two years. So, if you multiply with two or three contracts for the next 12 months or so, this can really change both top line of course quite aggressively, and more importantly when you talk about the cost realignment, I think it has really helped the Company to draw some baseline where we want to manage and operate our business from. So, let's say we generate every new dollar from the new contract, incremental cost could be $0.10 to $0.20 just by adding a few more specialized teams on the frontline. So, it won't be dollar to dollar cost increase, it can be, and that's exactly what we are watching very closely to make sure that our teams are very efficient delivering more output than the input, and I think the goal is to, once we start signing these bigger deals, to improve constantly our gross margins and the bottom line, and that will value our commitment to our shareholders. Unless we have new ideas, like we just talked about innovation, which I think Naeem did touch upon, it is highly important to invest slightly to see the future how things are changing so dramatically in the technology space, but on the normal business basis we don't expect to increase costs significantly to any higher level and maintain our strategy to be bottom line driven.

Excellent. Then I'll throw one more at down the hill, you can answer this. Since the last call and the progression of these contracts, do you feel better about them, have things gone more in our favor over the last, since last quarter, because we didn't really get – we just hear that the same ones are in the pipeline, have they progressed to a better stage for NETSOL?

Yes. As we mentioned in the prepared remarks, Mike, that the biggest deal we are working right now for quite some time is now on to a fulfillment discussion between sales, especially sales team led by Naeem and his team, and from delivery people on the whole. So, yes, we have really progressed quite nicely.

Excellent. And then one last question for you, with all these potential deals on the horizon that will really change the Company forever it seems, and our stock not reacting down here, to me it seems the best thing to do right now is to deploy this cash flow that we are receiving, and I know that our current large contract becomes much more beneficial on cash flow in the later years that we would deploy more capital into buyback now while the stock is still here, is that an intention for this year?

Yes, we just had a Board meeting two weeks ago, the whole Board met for Annual Board Meeting. And I think the basic understanding with the Board is that we will continue exploring both buyback for NTWK, but also more importantly, explore how we can reduce or minimize the minority interest in Pakistan subsidiary. I mean we can also be open about investing in the buyback PK shares that essentially will translate, once we are able to do that, use our cash to grow more ownership. That means it will really improve our bottom line results also. So, we have both in front of us and we'll keep market posted accordingly.

Excellent. Okay. It should be an exciting back half of the year, so good luck on everything.

Our next question is from Timothy Stabosz, a private investor. Please proceed with your question.

Just a little nuance question. So, looking at the Form 4 filings from insider since the last earnings release, there's been a spate of inside buying, like nothing we have really seen. It's rather striking since the last earnings release. What does that represent? What makes these insiders, including you, Najeeb, and you, Naeem, what makes these insiders, more than just you two, so optimistic about the future?

Thank you for asking the question, Timothy. We did mention last quarter that – somebody asked the same question, price is so low, and I said, yes, it is embarrassingly low. We still believe in our heart as founders and the management who's been around for many, many years, across the Company that this Company is undervalued, heavily undervalued. That's one I think motivation. Number two, it also shows that we believe in the future. We are long-term business builder. We don't have as such, sell shares and cash out, no. We want to continue to invest our own money and show that we believe in the future of this Company to our employees also, to our shareholders, to our customers, that we are continuously doing the right thing to execute all the big deals in front of us. And last but not the least, I think it's the right message to show that this Company is really ready to take off in many, many different levels. So, buying more shares is important to us and we will continue as and when we can, but this is the message we gave across the board, my Board members and Naeem of course, to make sure that we are seen as a company that we have belief in it and it is not valued the way it should be, based on even today's financials. So, these are the driving [points] [ph] of it.

Okay, that's very helpful. Thank you and good luck.

Thank you. At this time, this concludes our question-and-answer session. If your question was not addressed during the Q&A session, please contact NETSOL Investor Relations team by e-mailing them at ntwk@liolios.com or by calling them at 949-574-3860. I'll now turn the call over to Mr. Ghauri for his closing remarks.

Thank you for joining us today for NETSOL's fiscal second quarter earnings call and we will be back again in the next quarter. Thank you all and have a good day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time and we thank you for your participation.