NetSol Technologies Inc (NTWK) 2011 Q1 法說會逐字稿

Good day ladies and gentlemen. Thank you for standing by. Welcome to the NetSol Technologies Incorporated first-quarter fiscal year 2011 earnings conference call.

During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions).

I would now like to turn the conference over to the Director of IR with RedChip Companies, Mr. Jon Cunningham. Please go ahead.

Hello everyone. Thank you for joining us on the NetSol Technologies first-quarter earnings call for the three months ended September 30, 2010.

I would like to remind you that we are recording and webcasting today's call. The webcast archive of the call will be available on the Investor Relations section of the NetSol website.

Before I introduce our speakers, I would like to remind all listeners that, in this call, management's prepared remarks contain for looking statements which are subject to risks and uncertainties. Management may make additional forward-looking statements in response to your questions today. Therefore, the Company claims the protection of the Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the current beliefs of NetSol Technologies' management, as well as assumptions made by and information available to NetSol. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual or future results and developments could differ materially from those set forth in the statements due to various factors. These factors include, among other, changes in the general economic and competitive situation, particularly in NetSol's interest and markets, and additional future results and developments could be affected by the financial markets like fluctuations in exchange rates and the national and international law, particularly with regard to tax regulations. In addition, any projections as to the Company's future performance represent management's estimates as of today, November 10, 2010. The Company assumes no obligations to update forward-looking statements.

We are pleased to have presenting today Mr. Najeeb Ghauri, NetSol's Chairman and Chief Executive Officer. He is joined by disturbed Boo-Ali Siddiqui, NetSol's Chief Financial Officer, and Mr. Naeem Ghauri, President of Global Sales, who will also be available in the question-and-answer session.

Now, it's my pleasure to turn the call over to Mr. Najeeb Ghauri. Najeeb?

Thank you John. Hello everyone and thank you for joining us today.

We are happy to report that the trend of orderly profitability established in the second half of fiscal 2010 has continued into the first quarter of the new fiscal year. The rising global demand for our enterprise software solutions, coupled with our efforts to streamline our operating practices and improve the delivery of our products and services, resulted in double-digit sales growth and improved margins for the three months ended September 30, 2010. We expect the strong momentum established in our first quarter to carry on into the remainder of fiscal 2011.

With that being said, I would like to now turn over the call to our CFO, Boo-Ali Siddiqui, to review the results and financial highlights for the first quarter of 2011. Boo-Ali?

Thank you. Good morning everyone, and thanks for joining us today.

As Najeeb indicated, we are very pleased with our financial results for the first quarter of fiscal 2011, which marked our third consecutive profitable quarter. For the three-month period ended September 30, 2010, total revenue increased to $8.4 million, up from $7.6 million for the same period in 2009, representing a year-over-year decrease of $800,000, or 10.2%. The first quarter is historically our softest quarter for sales due to seasonality, so we expect the second half of fiscal 2011 to be stronger than the first half, as sales traditionally increase sequentially each quarter.

Net revenues from license fees totaled $3.5 million, representing an increase of approximately 36.3% from $2.6 million in the same period a year ago. Net income allocated to common shareholders increased to $1.6 million or $0.04 per diluted share, as compared to net loss of $300,000, or $0.01 loss per diluted share in the first quarter of fiscal 2010.

Operating income increased to $2 million, up from operating income of $1.1 million in the first quarter of fiscal 2010.

Gross margins improved significantly in the first quarter, increasing to 62.1% as compared to 53.3% for the same period a year ago.

EBITDA for the three-month period totaled $2.8 million, up $0.06 per diluted share, as compared to EBITDA of $1.2 million, or $0.04 per diluted share, in the first quarter of fiscal 2010.

We are on track in 2011 to grow our core NetSol Financial Suite, or NFS, product offering to 80% of our total revenue, up from 60% currently. The remaining 20% will be generated by all other NetSol services, including joint ventures, offshore development, and consulting.

The planned acquisition of our European and North American subsidiaries (inaudible) NetSol Pakistan is still under review by the Securities and Exchange Commission of Pakistan, and our teams are providing responses [early despite] the SECP. As a result of this acquisition, the ownership of the Company in NetSol Pakistan will be increased from 58% to 76%. This will be effective to our EPS and ultimately increase [revenue] for NetSol shareholders.

As always, we are remain committed to strengthening our bottom line through continuous improvement in operational (inaudible) and productivity.

The Company has reaffirmed its previously stated guidance for fiscal year 2011 projecting revenue of $40 million to $44 million, and earnings of $0.15 to $0.20 per diluted share.

At this point, I will turn the call back to Najeeb to review our business highlights for the quarter end of September 30. Najeeb?

Thank you Boo-Ali. Let me now share some highlights of what we have achieved in Q1 2011. The first quarter of fiscal was there successful for NetSol's operations worldwide. We continued to make inroads into both emerging and established markets, most notably the fast-growing China market. (inaudible) building new relationships with several new customers and realizing more business from existing clients, this quarter was a busy one for the management.

The agreed upon terms were no global frame agreement with a major captive auto finance company. Under the terms, we will expand our service delivery [to decline] nine countries and install the complete NFS service solution in Japan, Korea and India.

We also achieved CMMI Level 5 recertification, which is the highest level of quality certification from the Software Engineering Institute at the Carnegie Mellon University in Pittsburgh, USA. This achievement places us among an elite group of IT companies worldwide and strengthens our long-term credibility in the global IT market.

Also during the first quarter, we signed a lease [off] license upgrade agreement with Singers Healthcare Finance Ltd., which is one of the UK's leading providers of leading solutions to the healthcare industry. We also signed a contract valued at over $1 million to implement our NFS credit application processing system with a major US auto manufacturer in China. This contract established NFS as a market-leading service solution in China with over 90% IT market share in China's captive auto finance sector.

Let me share with you our growth strategy. Our growth trajectory in 2011 and beyond will stem from activities in these emerging markets and in North America. We see China as a huge market growth opportunity with several untapped segments to be served through an enhanced local presence in China. With this in mind, our major focus in 2011 is to build a strong foundation in China, which has become the world's second-largest economy after the United States.

Based on our organic success, which was achieved without any major investment in our China operation, we believe it is fully within our reach to become the leading IT provider in our relevant market in China. Our initial concentration will be to further expand our footprint and infrastructure in Beijing.

From an offering standpoint, we are focusing on three very large growing verticals in China, which is banking, auto finance, and equipment finance. We strongly believe the Chinese market will continue to maintain robust growth for many, many years to come. We intend to fully capitalize on this by enhancing our sales, marketing and delivery capabilities.

We recently signed our 13th Chinese NFS client, which is a captive finance arm of a major auto company in China. With the successful implementation of our NFS solution, the Minsheng Financial Leasing, our first banking client, NetSol marked its entry into the Chinese banking sector. We have a huge opportunity to enter the big ticket leasing and lending market for NFS.

We plan to establish a new NetSol subsidiary in China to raise NetSol's profile among local businesses and allow us to more effectively serve our rapidly expanding local and multinational client base in the region. We expect the establishment of this new subsidiary to be completed within the next few months.

By expanding our sales, marketing, and delivery capability in China, we also expect to reinforce our market-leading position in the asset-based leasing and finance software application domain. We have developed a delivery roadmap that leverages our center of excellence at the NetSol technology campus in Lahore while creating a second delivery center in China to fully benefit from the cost arbitrage available in the Chinese market.

We also intend to expand NetSol's subsidiary in Thailand, one of Southeast Asia's largest IT markets, with the aim of making it another hub after China. A number of senior business development teams have been mobilized and relocated to Thailand to support our growing efforts in the APAC region. We plan to further penetrate the highly promising Asia-Pacific markets by selling NetSol offerings in the robust key markets of Australia, New Zealand, Singapore, South Korea, and Japan.

Our major goal (inaudible) in Pakistan remain on hold for the time being in the wake of the widespread Pakistan floods and ongoing geopolitical challenges in that country. In the meantime, we are taking this opportunity to focus on the public and private sectors in Saudi Arabia and other Gulf states.

Our new joint ventures company, Saudi Company Limited, is aggressively (inaudible) in local markets of the Kingdom of Saudi Arabia. We (inaudible) traction in this new market for NetSol and are also noticing new bidding opportunities in other Middle Eastern and North African markets in partnership with large American corporations. These emerging economies are growing aggressively with serious long-term strategic investments, and they are extremely well-capitalized with surplus cash. We intend to fully leverage upon these high-value projects through our joint ventures and alliances in the region.

As the largest and most mature market of the Company, [Solution] North America, NetSol will remain a key part of our revenue stream in the coming years in North America. We continue to build a steady client pipeline in North America while gaining more orders from existing clients. Most recently, we signed additional LeasePak maintenance and service agreements with the finance arm of a large auto manufacture company in the US. We also delivered LeasePak enhancements in support (inaudible) the financing subsidiary of one of the largest IT netbook equipment manufacturers in the world. Due to our excellent service, support, and delivery record, we are successfully generating new orders from North American customers, and we foresee positive growth in this market.

Looking across the Atlantic, we expect marginal growth in the European market for the next two years due to the economic challenges in the region. However, we expect that revenues generated by maintenance income will allow our European operations to remain profitable and self-supporting. Both of our North American and European operations have effectively scaled down their operating expenses by leveraging our global delivery model and improving cost efficiencies. Hence, we expect these efforts to continue to generate positive cash flow and positive growth.

All marketing activities were curtailed over the past two years due to the global recession, but we are now ready to resume and support these activities. We plan to strengthen our branding and marketing strategy in China, Thailand, North America, and the UK, as well as other selected markets in Asia, to maintain our brand awareness and recognition.

Now, turning to our product pipeline, we expect to complete development of our next generation NFS solution, which is R2, in fiscal 2011. We've been successful in gaining serious interest from a few of our global clients and some new customers. We expect a new sale -- a few sales to be executed for R2 within this fiscal year, and accordingly then we will commence amortization in the respective quarters.

Also, we are committed to building and implementing a cloud-based computing framework for our enterprise-level application suite. Utilizing cloud computing, NetSol can deliver applications such as NetSol Financial Suite and (inaudible) [CI] through a browser to thousands of customers using robust and scalable multichannel architecture. This (inaudible) added incentives to our customer base by not requiring investments in software licensing fees or server infrastructure, and allows NetSol to provide attractive price points to our customer base for access to our software.

In addition, we are building a library of Web services distributed within the cloud to allow our customers to integrate their systems seamlessly with diverse software offerings.

Ladies and gentlemen, there are a lot of challenges, but we believe that (inaudible) opportunities for NetSol far outweigh these challenges. NetSol's unique position as a local and global IT company provides us with traction in both emerging, mature, and developing markets. Our teams focus on providing the best client interface and service. This is one reason NetSol has never, never lost one single enterprise customer in our history.

We have 100% delivery track record and 100% customer retention record. We are proud to (inaudible) blue-chip clients in every market we operate, and our relationships are growing phenomenally, with many new Fortune 500 names worldwide.

We're also very proud to have the most dedicated, committed and loyal team in each of our locations. These tangible and intangible assets have only made NetSol a stronger and sustainable impressive growth for many years to come. I am confident that the launch of new generation of R2 technology will change the Company's landscape. Therefore, I believe our current valuation hardly reflects the true intrinsic value of what has been created and what will be created in the future.

NetSol management and (inaudible) implemented a share buyback plan in late 2010 to provide a support mechanism for the Company and its stock. This repurchase program is authorized until 2011, subject to further extension by the Board.

We have not yet purchased shares due to two key reasons. Firstly, NetSol management had reached a specific target price point with the Board at which repurchases could happen. Furthermore, the unexpected flooding disaster that hit Pakistan shortly after buyback announcement -- it was determined that a more prudent use of cash was protection of our employees and locations at our center of excellence and (inaudible) the flood directly impacted our offices in Karachi and. Luckily, NetSol and its employees were not affected by these floods, but we felt it was prudent to be financially prepared just in case.

The plan remains available and may be used to repurchases within the plan long-term. (inaudible) our social and moral responsibility, the Company donated over $125,000 to the relief agencies to carry out rescue and relief efforts for these millions of affected Pakistanis in certain regions. Along with our employees, (inaudible) donated through their salaries since the flood hit, and millions of rupees in Pakistan.

Finally, we anticipate that founders, insiders, and employees will continue buying shares either in the open market or by exercising stock options with the intention to enhance our ownership and project our growing confidence in NetSol's future.

At this time, I'd like to open the call to our shareholders and (inaudible) for questions and answers. Operator, please facilitate.

(Operator Instructions). Tom Connolly, Thundercloud Consulting Group.

Najeeb, congratulations on a great quarter. The question I had is around the major client that is installing NFS in Korea, Japan and India. Are those licenses individually going to be over $1 million, and are they also going to be moving to R2?

Yes. I'll have, Tom, Naeem Ghauri, the Head of Sales. Naeem, you would answer this question please.

Sure Tom. Actually each of these licenses are substantially more than $1 million. We obviously will recognize the revenue as it comes, so we haven't factored all of the revenue yet from these new sales. We believe these projects will go on for another six months to a year. Our typical licensing price, [fees] and services is around $1.5 million to $2 million per license. So there is significant amount of revenue that's going to flow through the Company.

In terms of R2, this client is a long-term client of ours, and the systems that have already been installed are very stable. They run multibillion-dollar portfolios. So to upgrade to a new platform is always a challenge, Tom, because it will have disruption to their online business. Our typical client is -- for the R2 platform, would be a new client where they, in any event, have decided to buy a new platform, and so they are more prepared to take the new platform. With existing clients, the system is so robust and strong that in fact it's also not in our interest to upgrade them too soon because our pricing model for new clients is substantially more, if you like, lucrative than would be for existing clients.

Thank you very much.

(Operator Instructions). [Zoltan Branat], [Daka] Investments.

(technical difficulty) thank you very much. I, first of all, want to congratulate you on the quarter. I had questions as it pertains to the building out of your China practice. How quickly will that be ramped up, and what sort of revenues can we expect rum that portion of the world?

Again, the champion of China expert is (inaudible) with this team, and of course with me working day-to-day [business] to program (inaudible). Naeem, why don't you just help the (technical difficulty).

We have some disturbance on the phone, so I don't know whether we can be heard clearly. China is, for us, is in the short-term already giving us significant opportunities and revenue. But what we are really excited about is the medium to long-term opportunity. I don't know if you looked at the resurg in recent numbers, that the penetration levels are still very low in finance in China, I think somewhere around 10% as opposed to 70% to 80% in the US. So there is a significant growth opportunity in the leasing finance sector for China to continue to grow over the next five, ten years. So we, being the market leader in that space, have every reason to scale up, ramp up our presence and our capabilities to be able to deliver locally.

As Najeeb mentioned earlier, one of the key initiatives that we have in the Group at the moment is to create another proximity development/delivery center in China to be able to gear up for the growing customer list. I think we can do it more cost effectively and have better margins if we have a bigger team on the ground. I think, with that, we've started a program, including the establishment of the new subsidiary, which is a wholly-owned subsidiary from the parent, so we will have a China entity in its own right, which will start to expand now on the ground with local Chinese bilingual or multilingual resources to continue to grow our local client base.

(Operator Instructions). Mike Vermut, Newland Capital.

I'm on a cell phone if you can't hear me so well.

We can hear you.

Two quick questions. One, can you kind of go over the sequential ramp and how seasonality plays in? I've gone back and the first quarter is always by far the weakest quarter you have. How you look at it with backlog, building and just the progression on that.

Then second of all, on the buyback front, I would assume that you have better uses of cash right now with the growth that's ahead of you, using that cash for growth versus buyback. How do you look at that?

Mike, I'll answer the second question and Naeem (inaudible) for the first question. But let me just add further on the buyback that I also made my comment [on] -- You're truly right. We had to make a prudent decision that it was a mechanism in place which is authored by the Board on the same price point, and secondly that all the growth opportunities, and of course the unexpected disaster that we have been facing over the last three months where the parties have shifted. It really helped us in terms of our short-term and long-term (inaudible). Naeem, I think you want to give some color about the -- how the quarter plays out each quarter-to-quarter. I think he's got a (multiple speakers)

Yes. Again, it's a sales related question. I don't know if anybody noticed that probably this is our highest first quarter maybe historically ever. I think, if you go back over several years, you will find we've never hit $8 million in the first quarter. That sort of proves the point that the first quarter is historically the lowest. There's a very good reason for that because, for most companies that we deal with, they have a budget year which is running until June 30. So, they're trying to get as much procurement done before they have to finish their budgets. We benefit, as a result, in the last quarter. As you might also see historically, the June 30 quarter is historically the highest. So it makes perfect sense that when these budgets are a bit drier, they go a bit easy on procurement and new procurement systems etc. So, we still manage to squeeze a decent topline in that sort of context, if you like. (multiple speakers)

(multiple speakers) So we should be looking at it as this is the low point for the year as well?

Well, historically, as I said, yes. (inaudible) guarantee, Mike, but what we're seeing is that's -- I don't think there's ever been an exception. Boo-Ali, if you remind me, I've never remembered the first quarter never being the lowest; it's always been the lowest.

I think there is one quarter in 2010 fiscal (inaudible) you're looking at the (inaudible) '09 because of the recession. That (inaudible) in our business, and we always are close second (inaudible) better than the first half but that also means the trend that each quarter gets better and better.

Great. Well, this is a good first quarter. Congratulations.

[Jay Erlanson], private investor.

Hello gentlemen. Congratulations on a great quarter. Can you give me an update on the Pakistan government bids, specifically the (inaudible) of Pakistan military and also the [land] management records project?

Yes, (inaudible) add to my comments in my presentation a minute ago. Both of these contracts (inaudible) have a little bit (inaudible) 12 months or so. These are both very nice sized projects but as you know, Pakistan is going through some serious geopolitical challenges, and it's (inaudible). Secondly, the duration of floats due to the flood of the Company -- Pakistan economy and (inaudible) economy [at the building] to deal with this disaster and the rebuilding has really changed the focus of the public spending. Again (inaudible) so I believe we -- that's why one reason we have stated very clearly that we have not factored any of the potential in our guidance this year. We believe that if these (inaudible) are out there, they are not shut down, they are still alive but it is the question of when the government can actually (inaudible) those signs which are millions and millions of dollars, and then we will consider [that] in the running because we haven't appointed any contractor or given to anyone other than it's a whole (inaudible) right now.

Okay. Can I slip another question in here? Do you have any plans to penetrate the South American, specifically the Brazilian market? It is one of the fastest-growing markets right now.

Yes, I think now (inaudible) stage, but I think (inaudible) further because why you don't want to go in this much because there's so much happening in other parts of the world, but let me have Naeem give you a more precise answer.

I think it is a question of focus and how much bandwidth we have as a company. I know, as an investor, you would like (technical difficulty). I'm here but there is some disturbance. (multiple speakers) as an investor, you would like us to see us being focused in areas where we already have traction, and we already have tangible results, and we have people on the ground to go into a new market, even though (technical difficulty) Brazil probably is a very strong growth country. I think to grow on the ground there will require investment, and we'd rather spend our dollars in an area where we already have people on the ground and where we already have presence and leadership. So maybe sometime in the future, we will look at Brazil and South America, but for now I think we focus on the emerging markets in Asia.

Also, I want to clarify to our audience that, as you know, we are a global company. I am sitting in the head office in Calabasas, California, namely the London office (inaudible) in our office, so if you hear some technical difficulty, please understand that we are in three different remote areas. Next question please.

[Walter Hutchins], private investor.

Again, I want to reiterate what everyone has said so far to you guys. Congratulations on a great quarter.

One of the things I want to ask -- and again, first of all, I want to echo your statement. You guys mentioned a while ago -- I think you guys are definitely undervalued as a company. One of the things I wanted to mention real quick or get an answer to, and you may have already answered this in the past on some of your conference calls. I'm just more or less curious as to maybe why I guess, during some of your PRs, that you guys normally don't mention some of the top IT companies, or the automobile companies that you guys are actually dealing with on some of the new contracts or existing contracts.

Believe you me, nobody will be (inaudible) to have their names published. But I think it's always if we wait for the (inaudible) cycle, it just (inaudible), and the (inaudible) leaks out because the project started with this political climate or whatever you see (inaudible). (inaudible) you can further acknowledge that this is a challenge we go through. (multiple speakers) some growth through the size (inaudible) bureaucracy and we don't want to delay the material needs if that happens.

Sure. I think the challenge here is, when you actually put a press release out and then you have to go through the internal legal department and as you can imagine some of these very large multinational auto companies are all over the place, so we end up getting lost in their food chain, so we could be waiting months for an approval. So what we do is that the essence of the news is taken out in the press release, and then we just basically take the name out and we get the press release out quickly. Because sometimes these things leak as well, so we are (inaudible) leaking this thing through different other sources. We'd rather get the news out so all our investors are aware that we signed a deal.

For your comfort, I can tell you, even sometimes we don't put names on the press releases. I can tell you all the major brand names from Mercedes BMW to Toyota, Nissan, Volvo. If I'm forgetting something. There are seven or eight of these at least another five or six. All of these guys are clients already in China. In some other countries, we have many other names, like Volkswagen. I can't think of a major brand, including GMAC. I can't think of a major brand which is not our client. So if that gives you some comfort that we are dealing with the big boys. Even if you don't put the name in, we give some color to what size of a client it is, so it gives you some idea of who we are dealing with.

I understand. Again, congratulations.

Tom Connolly, Thundercloud Consulting Group.

Najeeb, I had a follow-up question. One of the things we happened to see on the site is an awful lot of hiring going on. I think you have about 100 hires right now up there. We see [Cobol] programmers, power builders, Java developers. Can you tell us the top two or three projects that they are all being used on?

Actually, that's a great problem we have because you I believe you are a new investor. I think You came and just recently a few months ago.

Absolutely.

During 2009, (inaudible) the Company had let some people go under the pressure we were. So now Naeem could add further because he is the one who is sending all the orders to our HR to hire people because, to me, the growing demand of our new products (inaudible) the backlog and so forth. Maybe you want to be more specific (inaudible) why you think you are hiring so many people.

Yes. That sounds -- we had a bit of a resource crunch, which is sometimes a good problem to have, because we had back to back so many contracts that we obviously we committed to delivery, so we had to go to market. So, we have been hiring aggressively to source these contracts. So if that gives you better understanding, these are hires from mainly sales backlog that we ready created. These are hiring for existing business, not speculative hiring for potential new business so that we are able to deliver on the contracts that we have and be able to recognize those revenues as we deliver.

Thank you very much.

(inaudible) I just want to add one more comment -- that some growth through our innovation (inaudible) they need more people and that's why they are also trying to hire more from either within or outside.

Thank you.

Shabu Qureshi, EMP.

Guys, congratulations on a very solid quarter there. I had a couple of questions. The first one was just -- and I missed the first one or two of minutes of the presentation, so apologies if I'm repeating something. But I had a question on just if you can give us any color on how the Pakistani approval for the increase in ownership of the Pakistani subsidiary is going. That's the first question.

The second one is you were helped by a significant sort of foreign transaction gain in this quarter. I just want to get a comment from you guys, if I could understand that a little better, and whether that is something that is -- sort of can reverse itself or how do you see that in future quarters as well?

In terms of the first question, the acquisition piece, I did make the statement -- I think Boo-Ali made the statement in his presentation, and that is that it is under review by SEC Pakistan for the last I believe three months or so. The team is responding to the comments and questions, which is a normal procedure because it is (inaudible) transaction from the Pakistan shareholder standpoint and the (inaudible) standpoint. So it is under review and we will keep the market advised as and when this becomes -- whenever they are ready to sign off.

The second question is about the currency gain. I'll let our CFO jump in. He'll give you a more specific answer. Boo-Ali, do you want to help (inaudible)?

This gain normally rises, and when we revalue our current currencies at the balance sheet date. (inaudible) of three days and therefore Pakistan and NetSol (inaudible), including NetSol Technologies Europe, used different currencies other than the dollar. So we have to revalue our accounts, accounts receivables (inaudible). This gave us a reason (inaudible) of euro and dollars against Pak rupees in the quarter. We might see some decline in the foreign-currency (inaudible) might be in euro or dollar in the coming quarters, so this gain might decrease, but we are not sure when [it's going to increase]. It depends on the market forces. We cannot predict right now.

Thank you.

Shabu, we don't hedge -- obviously we don't hedge our currency risks, so being not that big a company, so sometimes hedging costs more than actually that outcome. So basically somehow we are sort of at the mercy of the market forces on this one.

Understood. Thank you.

Management, there are no further questions in queue.

Najeeb, do you want to give us a couple of closing comments please?

Thank you operator. Thank you everyone.

In closing, our global client backlog continues to grow steadily, particularly in key emerging markets such as China and Thailand. We are very poised to become a dominant IT force in Asia and experience continued growth in North America and Europe. Economic indicators in both emerging and mature markets are very encouraging and we are more bullish than ever in our outlook for fiscal 2011 and beyond.

We thank you all for joining us today and for your continued support. We will see you next time. Have a good day.

Ladies and gentlemen, this concludes the NetSol Technologies Incorporated first-quarter fiscal year 2011 earnings conference call. Thank you for your participation. You now disconnect.