NetSol Technologies, Inc. (NTWK) Q4 2019 Earnings Report, Transcript and Summary

Good morning. Welcome to the NetSol Technologies Fiscal Fourth Quarter and Full Year 2019 Earnings Conference Call. On the call today are Najeeb Ghauri, Chairman and Chief Executive Officer; Roger Almond, Chief Financial Officer; Naeem Ghauri, President Global Sales and CEO OTOZ; 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. 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 on our website 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. Najeeb?

Thank you, Patty, and good morning, everyone. The first quarter was a strong finish to another year of consistent performance from NetSol. Operationally, throughout the year, we've continued to win new contracts with the businesses of all sizes and also announced a number of major Go-Live implementation with some of our largest international customers. Financially, we recorded about $68 million in the year, a record for NetSol, and also made some major improvements to our cost structure, which allowed us to recognize an increasing amount on the bottom line. While we successfully reached our fiscal 2019 goal of growing the top line by double-digit percentage points, I am even more encouraged by our ability to redeem such a meaningful amount of the year-over-year improvement. For the year, we recorded operating income of $6.8 million another record for our company, and an increase of 124% compared to last year. Further down the line, we nearly doubled our earnings on a per share basis to $0.74 compared to just $0.38 in fiscal 2018. And the Q4 now marks the seventh consecutive quarter of profitable result for NetSol. Obviously, the most important component of these results is a continued ability to win new business and effectively service our customers once we have gone through an implementation. This success is also the result of some hard decisions we made in the past, namely our major cost reduction initiative we put in place in fiscal 2018, which are now continually benefiting us in the present day. This theme of managing our business with an eye for the long-term is a message I will come back to later in the call. For our call this morning, I do plan to provide a high level recap of the major events from the past year before spending the remainder of my remarks discussing our growth plan in fiscal 2020. From there, our President Global Sales and CEO of OTOZ, Naeem Ghauri, will come on to discuss some of the exciting developments that have been occurring in our innovation map before finally turning over to questions. For now, I'll hand the call over to our CFO, Roger Almond, who will walk us through the financial results for the quarter and year. Roger?

Thanks Najeeb. In turning to our fiscal fourth quarter and full 2019 financial results for the period ended June 30th, our total net revenue for the fourth quarter was $17.3 million compared to $16.6 million in the prior year period. The increase in total net revenues was primarily due to an increase in total license fees of $71,000, and increase in total maintenance fees of $626,000, which was offset by decrease in total service revenue of $26,000. For all of fiscal 2019, total net revenues were a record $67.8 million compared to $60.9 million in fiscal 2018. The increase in total net revenues was primarily due to an increase in total license fees of $9.9 million and an increase in total maintenance revenues of $721,000, which was offset by a decrease in total services fee of $3.7 million. Total license fees in Q4 was $3.5 million compared to $3.4 million in the prior year period. For the full year, total license fees was $16.8 million compared to $6.9 million in fiscal 2018. The increase in license fees for both the quarter and the year was primarily due to license revenue recognized under previously announced 12-country NFS Ascent contract. NFS Ascent contract signed with a Tier 1 auto captive finance company and a major American multi-national automaker to implement our products in China, and for license revenues through sales for our regional offering in China, Australia, the US and the UK. Total maintenance fees in Q4 was $4.4 million compared to $3.8 million in the prior year period. For the year, total maintenance fees was $15.5 million compared to $4.8 million in the prior fiscal year. The increase in total maintenance fees for the year was due to the start of new maintenance agreements from customers who went live with our product during the latter stages of fiscal year 2018 and into fiscal year 2019. We anticipate maintenance fees to gradually increase as we implement both our NFS legacy product and NFS Ascent across a broader long-term customer base. Total services revenue for the quarter was $9.4 million compared to $9.4 million in the prior year period. For the full year, total services revenues were $35.5 million compared with $39.3 million in the prior fiscal year. The [billing] [ph] related party revenues from total services revenue for the year increased, which is primarily due to new NFS Ascent implementations and change requests. The decrease in total services revenue for the year was primarily due to a decrease in revenues from joint ventures. Total cost of revenues was $8.5 million for the fourth quarter, an increase of $394,000 or $8.1 million in the fourth quarter 2018. For fiscal year 2019, cost of revenues was $33.4 million, an increase of 5% from $31.7 million in fiscal 2018. The increase in cost of revenue for the year was predominantly driven by increases in travel and other expenses associated with increased implementation needs for significant new wins recorded in previous quarters, which were offset by decreases in salaries and consultant costs, as well as decreases in depreciation and amortization costs. Gross profit for the fourth quarter and fiscal 2019 was $8.8 million or 50.8% of net revenues, up from $8.5 million or 51.2% of net revenues in fourth quarter of fiscal 2018. Gross profit for fiscal 2019 increased to $34.4 million or 50.8% of net revenues. This was up from $29.2 million or 47.9% of net revenues in fiscal 2018. The increase in gross profit from both the quarter and year was primarily due to increases in revenues by [indiscernible] related increases in cost of revenues respectively. Operating expenses for the fourth quarter increased 5.9% to $7.8 million or 45.4% of net revenues from $7.4 million or 44.6% of net revenues for the same period last year. Operating expenses for fiscal 2019 increased 5.6% from $27.6 million or 40.7% of net revenues from $26.2 million or 42.9% of net revenues for fiscal 2018. The increase in operating expenses for the year was primarily due to an increase in research and development costs. Moving forward, we plan on continuing to judiciously allocate additional resources to our R&D budget as we focus increasingly on our innovation related initiatives. Turning to our profitability metrics, our net income from operations was $946,000 for the fourth quarter, a decrease from net income from operations of $1.1 million in Q4 last year. Net income from operations for the full year was a record $6.8 million, an increase from net income from operations of $2.1 million from fiscal year 2018. Our GAAP net income attributable to NetSol for the fourth quarter of fiscal 2019 totaled $3.5 million or $0.30 per diluted share. This compares with GAAP net income of $1.2 million or $0.10 per diluted share in the fourth quarter of last year. GAAP net income attributable to NetSol for fiscal 2019 totaled $8.6 million, or $0.74 per diluted share compared to a net income of $4.2 million or $0.38 per diluted share for fiscal 2018. The increase in GAAP net income attributable to NetSol for both the quarter and year-end was primarily due to increases in revenues previously mentioned [indiscernible] and related costs to support those revenues. As I have mentioned on previous calls, it's important to point out that included in our net income this quarter was a gain of 3.8 million on foreign currency exchange transactions, compared to a loss of $294,000 in Q4 of last year. For the full year, we experienced a gain of $6.3 million compared to $5 million for all of 2018. Because we operate in several geographical regions, a significant portion of our business is conducted in currencies other than the U.S. dollar. A decrease in the value of the U.S. dollar compared to foreign currency exchange rates generally hasn’t affected increasing our revenues, and it also increases our expense with denominated currencies other than U.S. dollar. Similarly, as the U.S. dollar gains strength relative to foreign currency exchange rates, it tends to reduce our revenues but it also reduces our expense with denominated currencies other than the U.S. dollar. We plan our business accordingly by deploying additional resources to areas of expansion, while continuing to monitor our overall expenditures during the economic uncertainties of our target market. Moving to our non-GAAP metrics. Our non-GAAP adjusted EBITDA for the fourth quarter of fiscal 2019 totaled $4.4 million or $0.38 per diluted share compared with non-GAAP adjusted EBITDA of $2.9 million or $0.26 per diluted share in the fourth quarter last year. For the full fiscal year 2019, non-GAAP adjusted EBITDA totaled $12.9 million, or $1.11 per diluted share compared with $10.3 million or $0.92 per diluted share in fiscal 2018. So please see the reconciliation schedules contained in our earnings release for our revised calculations of adjusted EBITDA for the fiscal year ended June 30, 2019. Turning to our balance sheet. At the quarter end, we had cash and cash equivalents of approximately $17.4 million or approximately $1.49 per diluted common share, which is down from $22.1 million or approximately $1.97 per diluted common share at June 30, 2018. I'd like to provide a brief update on WRLD3D as NetSol has been a strategic investor. Our investment in WRLD3D was an opportunistic value proposition and is a non-core investment. To-date we have invested approximately $5 million cash in convertible notes and equity. We've also invested approximately $2.8 million in services [indiscernible] and approximately 18%. We are following their progress and it is gaining a lot of traction for growth and partnership and sponsorship by this very niche platform. Going forward, we will keep the market updated with any new development. One final note before I hand the call back over to Najeeb, on May 29, 2019, NetSol's Board of Directors approved a stock repurchase program that authorized potential repurchases of up to $5 million of its common stock over a subsequent 12-month period. The planned repurchase program will occur in two six-month phases. The first phase involves execution of up to $2.5 million in share repurchases during an initial six-month period beginning on May 20, 2019 and expiring on November 30, 2019. After the date of initial expiration, management will have the option to approve a secondary phase, which will cover up to $2.5 million in additional share repurchases for another six-month period. During the quarter, the company has repurchased 41,650 shares of its common stock at an aggregate value of $250,945. Under the program, the company may repurchase its common stock in the open market from time-to-time, at amounts, at prices and at such times as the company deems appropriate, subject to market conditions and federal and state laws governing such transactions. NetSol expects to fund the repurchase with its existing cash balance and cash generated from operations. That concludes my prepared remarks. I'll now turn the call back over to Najeeb. Najeeb?

Thank you, Roger. As I mentioned in my opening remarks, we had a strong fourth quarter, which capped off another great year for NetSol with record financial results in a number of key operating metrics. We entered 2020 with a full head of steam. We are continuing to implement some of the most difficult projects in our industry with a 100% success rate, which have been great for both winning additional business with current customers and is a reference for potential new customers. Going forward, we are continuing to position ourselves effectively for the long-term through new initiatives like our recently launched OTOZ Mobility Innovation Lab, which will allow us to expand the reach of our Ascent platform into new growth opportunities. Put together, NetSol remains in an increasingly strong position today, and we are building to be in an even better, more diversified position for tomorrow. I made a comment earlier about how we are managing our business with an eye for the long-term, and I'll get into how this is informing our go forward plan in just a minute. Before that, I'll do a recap of our new wins, implementation and general operational highlights. Starting with our ongoing multiyear international deployment associated with the previously announced 12 country, 110 million contract with Daimler Financial Services or Daimler-Benz, which was signed in late December 2015. During the year, we finalized a number of major implementations with Daimler, most recently announcing in April successful Go-Live in Japan. To-date, we'll now deploy some portion of our services on this contract in seven countries since first announcing the deal back in December 2015. Each new deployment in every location has so far been a success, and we're even being able to outpace our originally anticipated timeline for completions. I'm looking forward to making additional Go-Live announcements in some major markets in not too distant future. Next on this development roadmap we have Singapore, Malaysia, Hong Kong, India and Thailand. In all this is -- our successful Go-Live with DFS in China, back in March, this implementation represented the greatest single deployment of our Ascent platform in the largest leasing market in Asia-Pacific region, making it one of the most significant events in the history of our company. China, in particular, has proven to be incredibly difficult to tackle for many of our competitors beyond the need for a highly technical and domain specific skill set, accomplishing and undertaking of this size and scope also required a significant amount of dedication and sacrifice from countless members of our team. This successful deployment speaks to our deep industry knowledge and ability to form strong working relationship with tier one international enterprises. Overall, our existing presence in China and our ability to tout successful rollouts like this one has been invaluable in attracting new business to our largest market. For example, earlier this year, we announced another major deal in China, this time with a new customer, BMW Financial. We're continuing to make solid strides in both our retail and wholesale implementations. We are very close to going live here on the commercial wholesale finance system, and expect to finish with the retail component sometime in 2020 calendar year. And another proof point related to our China growth strategy with respect to our previously announced multimillion dollar contract with an American multinational auto manufacturer. In July, we successfully implemented the NFS Ascent retail platform, including, only point of sale and contract management system. In China, the stats speak for themselves. We currently have 28 clients representing 25,000 dealership and over 12 million end users are direct consumers. In total, our platform currently supports $100 billion of portfolio value in China alone. I want to be clear that while we are and have been the de facto leader in China for some time, we still see a significant growth opportunity in this market for us. Quite frankly, we don't feel that we have really unlocked the total potential for China yet. Within our current ecosystem, China represents 50% of our company's revenue, but beyond the financial contribution, we have also amassed an impressive store of data that informs our strategy in our other regions as well. We do not believe this access to such valuable data has been properly understood, and we are vigorously exploring new opportunities to effectively unlock the real value of this resource. Moving to major highlights in our other regions. In July, we signed a multimillion dollar contract with BCA, a large independent used vehicle finance company in the UK for the implementation of our Ascent Wholesale Finance platform. The total contract size is expected to be in the range of approximately $4 million with additional revenue opportunities available based on usage and contracts under management. Our implementation of client in the UK will mark the first rollout of the Ascent platform in the region, and is a landmark achievement for our business. Going forward, we believe this agreement will serve as a springboard to garner interest and eventual business for NFS Ascent with other finance leasing companies in the European region. Also in July, we acquired the remaining 49% of stake of Virtual Lease Services, or VLS for short, a UK based portfolio and risk management servicing partner for business and consumer finance providers. NetSol initially had acquired a 51% majority stake in VLS through a joint venture partnership with Investec Bank of UK in 2011. Now VLS is a highly complementary business to NetSol's core competencies and has substantially improved its financial profile for the past several years since our initial strategic investment. In the past three years, VLS has recorded a three-year compound annual growth rate north of 20%, and the company has been consistently and increasingly profitable over that period. Beyond the immediate monetary benefits we expect to receive from this accretive acquisition, VLS also provides us with a new opportunity to begin convert existing many customers and marketing to new customers for our next generation NFS Ascent. This partnership has already proven to be mutually beneficial over the past several years. And we look forward to maximum additional growth opportunities, thereby, expanding our footprint in the Europe and European markets. With that overview now completed, I'd like to spend the rest of my time on the call discussing our plans for NetSol and coming fiscal year. For those of you who may not be as familiar with our company, we provide enterprise resource planning or ERP solution for the global asset, finance and leasing industry. We've been a leader for a number of years. A few years back, we made the conscious decision to invest heavily in updating our system and planning for the future of our industry. In total, we invested over $25 million towards the development of the next generation platform, which was launched in 2014 fiscal, and today is known as our flagship product offering NFS Ascent. Since the initial rollout, we have experienced tremendous success signing mega contracts with the biggest names in our industry, some of which I've mentioned today. In total, the $25 million investment has already yielded an estimated value of $200 million for our company with a lot of runway left to go. And while we continue to believe in the long-term value of this product, the reality for us is that the sales process is long, slow and unpredictable. Furthermore, as it stands right now, we're essentially a one product focused company. In recognition of this fact, we've been hard at work to develop a new strategy that will future proof our own business in the way that we aim to do so for our customers. More specifically thanks to the success of Ascent, we're now in a position to be able to explore new opportunity for growth and also more consistent revenue streams. Here's how we're going to do it. Going forward, NetSol growth strategy in fiscal 2020 and beyond will take a three-pronged approach. First, we will continue to grow our organic business much in the way we have recently. As I've already reviewed a number of times, we still believe in the long-term viability of our flagship platform. As organizations continue to upgrade their operations from legacy solutions to the next generation product, we will be there with a premium offering flexible enough to serve SMBs, as well as the large multinational organizations we have served well in last two decades. As I also alluded to earlier, we have a significant opportunity remaining to be able to unlock further growth opportunities within our largest existing market, China. By leveraging business' ecosystem through alliances and partnerships, we will be looking to draw increasingly on our strong reputation. To address this future need, we also expect to incrementally grow our headcount with local Chinese staff, especially within our management level positions in the region. We'll also look to bring on the right talent to grow our sales. Beyond China, we'll now look to increase our global penetration by focusing on the U.S. and Canadian markets to Ascent. As a first step in this initiative, we are in the process of mobilizing key global sales and operational resources by relocating a handful of key international personnel to our U.S. offices. These are domain experts and leading sale executives in our APAC markets. More recently, we've been busier than ever in our North American market, and received several inquiries from Tier 1 captive finance companies and banks that are evaluating our flagship Ascent for the first time. Over the long-term, we expect the U.S. market can become a big revenue generator for the company. Finally, we want to expand in our UK and European markets as well. I've spent some time on this when I went over our VLS acquisition just a minute ago, so I won't repeat myself here. I'll just say that our future success in the UK and Europe will be specifically driven by our focus on applying smart technology solutions to remain both adaptive and prepare to capitalize on dynamic market conditions. Moving on the second point, we will continue to innovate in new areas and look to create partnerships where our technology and personnel can be a major benefit to other organizations, as well as our own. Our work within autos will be the linchpin of this diversified strategy. While auto is still less than a year old, we have made such great progress in that time frame, and are exploring a number of exciting new opportunities, I look forward to sharing in the coming months. Naeem will come on line in just a minute to provide additional color here as well. As it relate to partnership, we are also focused on increasing our marketing efforts to aid in this endeavor. That means increased participation in a variety of industry events, as well as concerted effort on marketing our platform globally. We also believe we can be doing more to leverage our strongest client references much in the way that I spoke to our China growth strategy. On the innovation side, we see a meaningful opportunity to pursue and increase SaaS pricing model in the U.S. market, where we are already generated encouraging initial traction. At the same time, we're always working to enhance our existing capabilities in Ascent to ensure we remain on the industry's cutting edge employing new technologies within AI and IoT to increase personality and our overall value proposition. And third, we'll also be exploring inorganic growth opportunities where it makes sense. For context, at the end of this fiscal year, we had over $17 million in cash, as a general practice we believe having a reasonable amount of cash on hand provides sufficient liquidity to win new customers and contracts, especially with the larger deals we now encounter. We believe stronger balance statement with liquidity is a big plus for our new clients to consider NetSol. As an additional point of emphasis, I like to mention that NetSol hasn't really engaged in the need for strategic partnerships or M&A, or similar activities since 2006. We have continued to win new business on a purely organic strategy in last 15 years. However, as I just noted, while the success of Ascent has put us in a position to be able to explore new opportunities for growth, we want to do so specifically with an eye to more consistent revenues stream. To be clear, we'll only be evaluating those opportunities we believe to be highly synergistic to our existing business mostly cloud mobility driven. We will only pursue inorganic growth opportunity where it makes absolute sense in growing our existing business. Now before I hand the call over to Naeem, I'll speak briefly to our outlook for the coming quarter. Historically, the fiscal first quarter has always been more subdued compared to the rest of the year. We expect this fiscal first quarter to be no exception. On a macro level, we are confronting to monitor the ongoing trade discussions between the U.S. and China. So what we are already seeing is that regardless of the outcome, this process could have a negative ancillary effect on the automobile lease industry at large. We have noticed what we still call hesitancy from businesses in making any major purchasing decisions during this time of uncertainty. We are of the opinion that our solution rich among other capabilities enable for more efficient turnover of asset heavy inventory, would be an essential tool in any economic environment. However, this does not change the reality that there is a concerned uncertainty in the market as customers are taking longer to make decision as a result. With the implications of the trade war has really crystallized to us, is a need to diversify our income streams, which is why we are moving forward with our 2020 plan in the manner that I just outlined. Beyond Q1, we anticipate a sequential ramp throughout the course of the fiscal year. To be clear, we expect to continue to grow into fiscal 2020. In all our major markets where we also anticipate additional growth might come from new areas and alternate markets that are not currently included in our operations. And with that, I'll now turn the call over to Naeem, who will provide us with an update on OTOZ. Naeem?

Good morning and thank you, Najeeb. While Ascent continues to be the market leader in our space with lots of growth still to come, OTOZ is a most exciting new initiative in a very long time. We believe all indications are for market research and client input but on demand mobility, including car subscription, car sharing and ride sharing, are the fastest growing segments in the global auto ecosystem. With persistent mind that we went to a drawing board a year ago and came up with a concept of OTOZ. OTOZ is a new enabling platform where OEM, auto finance companies, car dealers and cars users converge to create supply and demand for cars that are connected, insured, fueled, charged, cleaned, accessible and ready for all types of journeys, an hour, a day, a week, a month or years. You can be a provider or a user either way. A car will become a flexible changeable service, another liability that is not utilized 95% of the time. On-demand mobility is a feature of the car and OTOZ will be enabler. The OTOZ platform as well innovation lab of same name, is targeted towards auto captive finance companies within larger auto sector organization, beat operators, original equipment manufacturers and private car owners, in order to maximize the lifetime value of the auto asset by harnessing the collective power of the shared economy. The underlying technology platform is conceptualized and is built based on advancing our expected [peer] impact on the auto and fintech industries. The basic point is we want to future proof our operations to help our customers to do so, at the same time, OTOZ is positioning itself with right in the center of this paradigm shift with a cutting edge platform that will enable all vested stakeholders within the mobility ecosystem to offer innovative solutions to their customers. In layman's terms, what we are seeing in the market is that the big auto captives and the OEMs are increasingly exploring the new set of options to ensure that they are not caught off-guard with consumer habit shifting away that achieves critical mark. Internally for us, that analysis has also led to increased attraction in the OTOZ spectrum, both globally and in the U.S. As an example, we are pleased to report that we currently engaged in historic stage of discovery phase discussions with a Tier 1 multinational auto manufacturer in the U.S. that are trying to discover potential ways in which OTOZ capabilities can improve their growth over time for the ride sharing and car sharing economy. While these discussions are preliminarily at this stage, we are excited by the potential it could have and what it means for the [research] and the industry at large. As we have built up a huge ecosystem of OEM over 100 auto finance companies, run over 25 million end customers and over $300 million in auto assets and over 30 million cars in our ecosystem globally, OTOZ will leverage these assets, that will help establish it as a largest player in creating an on-demand shared mobility. I believe none of the big players globally or any of our competitors can claim access to such a deep and broad ecosystem. Additionally, from a competitive standpoint, what we have also noticed is that our work in new frontier has attracted some serious talent. We have assembled a world class team of experts in blockchain, data sciences, AI and machine learning experts, as well as app developers. We will continue to add more talent to the OTOZ team, and I look forward to sharing additional update on our efforts in the coming months. I'll be happy to answer any question on OTOZ in our Q&A. Thank you.

Okay. We're now ready for Q&A, operator?

Thank you. We will now be conducting a question-and-answer session [Operator Instructions]. Our first question comes from line of Anja Soderstrom from Sidoti.

Hi, everyone. Congratulations on a solid quarter, and thank you for taking the questions. So we're very -- good to see that you delivered the double-digit top line for the year. And Najeeb, you gave some sort of color on what you're trying to do with Asia, China, and the UK and Europe. Can you give us a little bit more color on the [actual] [ph] pipeline you have and that you might see come through for the next year?

What was the last part of your question, Anja, please? It's is not coming out clear.

Yes, if you could talk a little bit about the actual pipeline that you have that might come through in the next year, that could give us confidence in continue growth for the coming year?

Naeem, you want to answer that question?

Yes. So Anja, the pipeline is as we said in the report is very robust. And as Najeeb said earlier, these procurement cycles are traditionally very long. And we cannot fix a timeline to when a certain cycle will complete into a contract. As was the case with the two very, very large wins we had, one 2 years ago and then one last year, which we already announced. We continue to engage with several clients for multi-country implementations. And these are prolonged protracted discussions. There are several factors at play, we could evaluate it [amongst] [ph] competitors and pricing considerations, and obviously the platform evaluation is also key. So we are in [withdrawal] [ph] stages with several of them. But, two or three which are at the decision making stage and we hope that those will come to fruition in the next coming quarters. The pipeline continues to be stable and robust and I think we carry all as much as we did last year, so we will see good results coming forward.

I would add one more point, Anja, to what Naeem said. I think the -- what is noticeable, which I already said in my prepared remarks, is that in last few months we have seen more activity in the European market and also the U.S. for our flagship Ascent. And that's a very encouraging sign for us, because while we've done so well in China or APAC, which we'll continue to do that, but now that we have new markets where we have some good footprint, especially in the UK, we've got a new office in central London, which cater to the very big market in that area. But also in the U.S. we've seen without yet having the people on ground, we've seen some lot of queries and RFPs that have been working on and they are looking into our new core solution. So that's very encouraging for us.

Okay, thank you for that additional color. And is this -- I would assume then so -- you also mentioned the auto industry, there is some uncertainties there just to the trade talks but you're also sort of diversifying into more away a little bit from the auto segments then maybe more into the equipment leasing and other segments?

I'm just having hard time hearing your question. Can you repeat your question?

Okay, I'm sorry. Yes. So you mentioned that you saw some maybe difficulties within the auto industry due to the trade negotiations. So then I would assume that you are diversifying into other segments as well, and not just focusing on the auto and like how should we look at that diversification?

Yes, thank you for doing that. Look, Anja, you're right. We've said it very clearly in my prepared remarks and then Naeem also mentioned about the innovation strategy, which is right on track, so there are many areas. We are going to make sure that we remain as a focused product solution company, which we have been for many years. But now we're also looking into partnerships, joint ventures or perhaps M&A and in synergistic, which could be complementary to our core business, it could be North America, it could be Europe, it could Asia Pacific, we're open to all these ideas. And I think time has come for the company to look beyond one product vertical only. That is exactly what if you look at, if you follow the trends for last one year, all the activities in the OTOZ innovation lab to meet with the new direction that is market to telling us how to be ready for the wave, which will help the company to make the right decision to make our customers stronger to grow our business, both in the complimentary but also anything which makes lot of sense for our business to have that accretive growth, both top line and bottom line, we'll look into those opportunities from time to come. So I think many options available to us and we're exploring all of them.

Okay, thank you. And with your track record, I saw that Alfa was coming out with saying that they had problems implementing their system. So are you seeing that from other competitors as well? And do you hear clients coming to you because of this or...?

Yes, Naeem will be right person to answer that. Naeem?

I'm sorry, Anja, I really -- I didn't understand the exact question. Can you please repeat?

So you have an excellent track record of implementing even ahead of time at the 100% success rate, while your competitors seems to have a little bit more troublesome succeeding in their promises. So are you seeing maybe [indiscernible] a lot of clients coming to you to sort of transfer into you, and [indiscernible] competitive edge?

Yes. First of all, let me just focus on our own track record, which is in 22 years, we have never failed to deliver a single project. Every single project we contracted and we signed, we delivered and our customers are using the system and like. And same is the case with Ascent and the new implementations we're undertaking. Recently, there was a very important critical go-live in China for one of our premier clients. At the same time, our competitors continue to struggle. I think it's due to the complexity of the business that we are supporting the auto finance business traditionally is a very complex business with a very complex back office and so on. So unless you know the local conditions and you know local compliance and regulation and local business process, it is very hard to succeed. And the reason we succeeded that we have a very strong set of resources and experts who are really very-very experienced in all local challenges. So we have teams on the ground in China, Thailand, Australia, Indonesia, and when we compete against something that's just come in the market to implement, and they don't really have a presence in those markets, they really struggle. That continues to be the case. We have on several accounts where previous vendors could not deliver, where we came in and then had success. And we think that is continuing to be the case, because our competitors probably don't invest as much into their people and on local presence as much as we do.

So with all that being said, Najeeb, you gave some color on the first quarter outlook. Is there any - could you give any expectations for the full year? I know it's very choppy and uncertain. But with the insights you have of this pipeline and opportunities how should we think about the full year growth for 2020?

I mean, look as company management I think it's very prudent and judicious to be mindful of the shift gaining dynamics in our industry, all over the world, plus all the macro challenges that I think everybody's facing, nevertheless, as I said in my remarks that we have healthy pipeline, we have lot of activities in, not just in APAC alone but also in the UK and in of course, in U.S. and Canada. That gives us good signal, good hope that we can be very positive in terms of growth this fiscal year as well. And I think the better way to give a specific range is it would be to see how we're tracking with the H1 for six months. We have many deals out there in the final stages for decision making or some in the middle stage with further demos and discussions with the customers. But the main thing is there are more people, there are more companies looking into our solution, the main business flagship Ascent than as a year ago. So that is a much more, I think, compelling sign for us that we continue to grow, both top-line and the bottom-line. But at the same time, company is very proactive in making sure that we are looking at all other opportunities that will make a very dependable, predictable business by adding some new opportunities within the group and same technology, maybe some new idea that we have maybe not focused in the past, but now we have ability and focus to generate new opportunities in the coming months and years.

And then some housekeeping questions. So you mentioned you're looking to hire more. So should we look at your salaries going up? And also your G&A was up a bit sequentially for the fourth quarter. What drove that and how should we look at that, going forward?

I think, look, there is -- the good thing that I did mentioned, me and Roger, in our 10-Ks and Qs for the last couple of quarters that this company is now looking at the very strategic positions hiring, whether they're in China or in UK, or in US. And in Pakistan, where we have our delivery engine, we are in a pretty good efficiency level in terms of our strength of the programmers, developers and so forth. But currently looking at very important positions, which should help us achieve our long target vision. I don't think there's any other major expenses other than OTOZ is a new place we are investing. The innovation lab and U.S. and other markets like UK, we are consciously investing to improve our position, our team in the local market at the same time, we should be ahead of the competition, because one thing good about the company is that we don't wait for things to happen, we always proactively respond back to the challenges facing in the market. And we make sure -- always make sure we are ahead of the curve compared with our competitors, that's one reason remains that and we're very effective in meeting the need and time of our customers. And that reference to us is very important for us to continue to grow our revenue and control our cost structure.

Thank you for the color. I'm going to jump back in line.

[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 ntwk@gatewayir.com, or by calling them at 949-574-3860. I'd now 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 worldwide and our dedicated employees, for their ongoing contribution in every location they work in. We look forward to updating you on our next call. Thank you, and have a good day. Operator?

Thank you for joining us today for NetSol's fiscal fourth quarter and full year 2019 earnings call. You may now disconnect.