NetSol Technologies Inc (NTWK) 2023 Q2 法說會逐字稿

Good morning. Welcome to NetSol Technologies Second Quarter 2023 Earnings Conference Call.

早上好。歡迎來到 NetSol Technologies 2023 年第二季度收益電話會議。

On the call today are Najeeb Ghauri, Chairman and Chief Executive Officer; Roger Almond, Chief Financial Officer; and Patti McGlasson, General Counsel. Please note, this call is being recorded.

今天接聽電話會議的有董事長兼首席執行官 Najeeb Ghauri； Roger Almond，首席財務官；和 Patti McGlasson，總法律顧問。請注意，此通話正在錄音中。

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 the management during this call. Please proceed.

我現在想將電話轉給 Patti McGlasson，他將就管理層在此次電話會議期間所做的前瞻性陳述提供必要的警告。請繼續。

Good morning, everyone, and thank you for joining us. Following a review of the company's business highlights and financial results, we will open the call for questions. I'll now provide the necessary cautions regarding the forward-looking statements made by management during this call. Please note that all the information discussed on today's call is covered under the safe harbor provisions of the Private Securities Litigation Reform Act.

大家早上好，感謝您加入我們。在回顧了公司的業務亮點和財務業績之後，我們將公開提問。我現在將就管理層在本次電話會議期間所做的前瞻性陳述提供必要的警告。請注意，今天電話會議上討論的所有信息都包含在《私人證券訴訟改革法》的安全港條款中。

The company's discussion may include forward-looking statements reflecting management's current forecast and 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.

公司的討論可能包括反映管理層當前預測和公司未來某些方面的前瞻性陳述，我們的實際結果可能與明示或暗示的結果存在重大差異。這些前瞻性陳述符合 NETSOL 新聞稿和美國證券交易委員會文件中包含的警示性陳述，包括我們關於 10-K 表格的年度報告和關於 10-Q 表格的季度報告。

I would also like to point out that we will be discussing certain non-GAAP measures. The press release issued earlier today contains a reconciliation of these non-GAAP financial results to the most comparable GAAP measures. Finally, I would like to remind everyone that this call will be recorded and made available for replay at www.netsoltech.com and via link available in today's press release.

我還想指出，我們將討論某些非 GAAP 指標。今天早些時候發布的新聞稿包含這些非 GAAP 財務結果與最具可比性的 GAAP 指標的對賬。最後，我想提醒大家，此次通話將被錄音，並可通過 www.netsoltech.com 和今天新聞稿中提供的鏈接進行重播。

Now I'd like to turn the call over to Najeeb. Najeeb?

現在我想把電話轉給 Najeeb。納吉布？

Thank you, Patti, and good morning, everyone. We've made a lot of strategic progress this quarter, which I look forward to sharing with you. That said, our second quarter financial results were not where we wanted them to be. There were various reasons for this, some within our control and some outside of our control. First, it's important to understand that in the second quarter last year, we had $3.5 million in onetime revenue due to onetime cumulative catch-up on a large contract, which impacted our comparisons.

謝謝你，帕蒂，大家早上好。本季度我們取得了很多戰略進展，我期待與您分享。也就是說，我們第二季度的財務業績並不如我們所願。這有多種原因，有些在我們的控制範圍內，有些在我們的控制範圍之外。首先，重要的是要了解，在去年第二季度，由於一項大型合同的一次性累積追趕，我們的一次性收入為 350 萬美元，這影響了我們的比較。

Second, approximately $2 million in revenue that we expected to realize in the quarter was delayed, and we expect to realize it in the third fiscal quarter. With this lower revenue, our margin and profitability were below our expectations. As such, we have reexamined our cost structure to not only better align it with today's revenue, but also reprioritize our capital allocation to the most attractive parts of our business with the greatest opportunity to drive sustained growth in revenue and profitability. We expect to at least $4 million in cost cut of the business by the end of the fiscal year. In short, we will be more focused company better positioned to achieve a return to positive cash flow for our shareholders.

其次，我們預計在本季度實現的約 200 萬美元收入被推遲，我們預計在第三財季實現。由於收入較低，我們的利潤率和盈利能力低於我們的預期。因此，我們重新審視了我們的成本結構，不僅使其與今天的收入更好地保持一致，而且還將我們的資本配置重新分配給我們業務中最具吸引力的部分，這些部分最有可能推動收入和盈利能力的持續增長。我們預計到本財年結束時，該業務的成本將至少削減 400 萬美元。簡而言之，我們將成為更專注的公司，更好地為我們的股東實現正現金流的回報。

Before we get into the details of the quarter, let's keep a few things in mind. Number one, we have a hard fought market-leading position in Asia, a growing market share in Europe and a unique opportunity to grow in the U.S. Number two, the higher margin recurring revenue portion of our business is doing well, and there's opportunity for it to do better. And three, we are at the front end of some of the most innovative technology for our clients. For example, we were ahead of the curve on integrating AI and machine learning into our customer products and are laser-focused on delivering this to our customers. And four, our balance sheet is rock solid with a competitive advantage of a strong cash position built from good old-fashioned cash generation. We have every intention to get back to positive cash generation and have a clear plan to get there.

在我們進入本季度的細節之前，讓我們記住一些事情。第一，我們在亞洲取得了艱苦的市場領先地位，在歐洲的市場份額不斷增長，並且在美國有獨特的增長機會。第二，我們業務中利潤率較高的經常性收入部分錶現良好，並且有機會它做得更好。第三，我們處於為客戶提供的一些最具創新性技術的前端。例如，我們在將人工智能和機器學習集成到我們的客戶產品方面處於領先地位，並且專注於將其交付給我們的客戶。第四，我們的資產負債表堅如磐石，具有競爭優勢，即通過良好的老式現金生成建立的強大現金狀況。我們完全有意回到積極的現金產生，並有一個明確的計劃來實現這一目標。

We are focused on expanding our presence in the North American market, particularly in the U.S., which is our most vibrant market. We are very excited about the opportunities we are seeing for our products and services in this region. For example, Otoz or mobile, AI and machine learning-based solution has emerged as a very attractive product in this market, and we continue to develop and evolve our product range to specifically target North American customers.

我們專注於擴大我們在北美市場的影響力，尤其是在我們最具活力的市場美國。我們對在該地區看到的產品和服務機會感到非常興奮。例如，Otoz 或基於移動、人工智能和機器學習的解決方案已成為該市場中極具吸引力的產品，我們將繼續開發和改進我們的產品系列，以專門針對北美客戶。

We're also growing our partnership with consultant, system integrators and tech partners, including Amazon Web Services and a Tier 1 automotive company through Otoz that will further help to scale our North American operations. During this quarter, we went live with our 37th dealer, and we now have dealers in 16 states.

我們還通過 Otoz 與顧問、系統集成商和技術合作夥伴（包括 Amazon Web Services 和一家一級汽車公司）建立合作夥伴關係，這將進一步幫助擴大我們在北美的業務規模。在本季度，我們與第 37 家經銷商一起上線，現在我們在 16 個州都有經銷商。

Our sales pipeline remained strong at an increase to $250 million in the second quarter. The sales cycles can be very long in our business, particularly for some of the larger deals, but we are enhancing our positioning to compete for some of these larger deals and quite optimistic about many of the opportunities we are pursuing. Before I provide a more in-depth overview of our business, I'd first like to turn the call over to Roger Almond, our CFO, who will walk you through our financials for the quarter. Go ahead, Roger.

我們的銷售渠道在第二季度保持強勁增長至 2.5 億美元。在我們的業務中，銷售週期可能會很長，特別是對於一些較大的交易，但我們正在加強我們的定位以競爭其中一些較大的交易，並且對我們正在尋求的許多機會非常樂觀。在我對我們的業務進行更深入的概述之前，我首先想把電話轉給我們的首席財務官 Roger Almond，他將向您介紹我們本季度的財務狀況。去吧，羅傑。

Thanks, Najeeb. Turning to our fiscal second quarter 2023 financial results for the period ended December 31, 2022, our total net revenues for the second quarter of fiscal 2023 were $12.4 million compared with $15.5 million in the prior year period. On a constant currency basis, net revenues were $14.6 million. License fees were $15,900 compared with $1.9 million in the prior year period and were $16,200 on a constant currency basis.

謝謝，納吉布。轉向我們截至 2022 年 12 月 31 日的 2023 財年第二季度財務業績，我們 2023 財年第二季度的總淨收入為 1240 萬美元，而去年同期為 1550 萬美元。按固定匯率計算，淨收入為 1460 萬美元。許可費為 15,900 美元，上年同期為 190 萬美元，按固定匯率計算為 16,200 美元。

Recurring revenue or subscription and support revenues were $6.5 million compared with $9.4 million in the prior year period. The decrease in total subscription and support revenues for the second quarter of 2023 was primarily due to the recording of approximately $3.5 million as a onetime cumulative catch-up in the second quarter of 2022 due to our amendment to our 10-year contract with Daimler Financial Services. On a normalized basis, excluding the onetime cumulative catch-up in the same quarter of last year, we actually saw an increase in our total subscription and support revenue for the quarter on both a GAAP and a constant currency basis.

經常性收入或訂閱和支持收入為 650 萬美元，而去年同期為 940 萬美元。 2023 年第二季度訂閱和支持總收入的減少主要是由於我們修改了與戴姆勒金融公司的 10 年合同，因此在 2022 年第二季度記錄了約 350 萬美元的一次性累計追趕服務。在標準化的基礎上，不包括去年同一季度的一次性累積追趕，我們實際上看到本季度的總訂閱和支持收入在 GAAP 和固定貨幣基礎上都有所增加。

Total services revenues were $5.9 million compared with $4.1 million in the prior year period. On a constant currency basis, total services revenues were $6.9 million. Services revenues derived from services provided to both current customers as well as services provided to new customers as part of the implementation process. Total cost of revenues was $9.3 million for the second quarter, an increase of $1.4 million from the second quarter of fiscal year 2022. On a constant currency basis, total cost of revenues was $11.3 million.

服務總收入為 590 萬美元，上年同期為 410 萬美元。按固定匯率計算，服務總收入為 690 萬美元。服務收入來源於提供給現有客戶的服務以及作為實施過程的一部分提供給新客戶的服務。第二季度總收入成本為 930 萬美元，比 2022 財年第二季度增加 140 萬美元。按固定匯率計算，總收入成本為 1130 萬美元。

Gross profit for the second quarter of fiscal 2023 was $3.1 million or 25.4% of net revenues compared to $7.6 million or 49.4% of net revenues in the second quarter of fiscal 2022. On a constant currency basis, gross profit was $3.3 million. Operating expenses for the second quarter were $6.2 million or 50% of sales compared to $6 million or 38.7% of sales in the same period last year. On a constant currency basis, operating expenses for the second quarter were $7.2 million or 49.4% of sales.

2023 財年第二季度的毛利潤為 310 萬美元，占淨收入的 25.4%，而 2022 財年第二季度的毛利潤為 760 萬美元，占淨收入的 49.4%。按固定匯率計算，毛利潤為 330 萬美元。第二季度的運營費用為 620 萬美元，佔銷售額的 50%，而去年同期為 600 萬美元，佔銷售額的 38.7%。按固定匯率計算，第二季度的運營費用為 720 萬美元，佔銷售額的 49.4%。

Turning to our profitability metrics. For the second quarter of fiscal 2023, we had a net loss from operations of $3 million compared to net income from operations of $1.7 million in the prior year period. On a constant currency basis, the net loss from operations was $3.9 million. Our GAAP net loss attributable to NetSol for the second quarter of fiscal 2023 totaled $2.1 million or $0.19 per diluted share compared with GAAP net income of $1.4 million or $0.13 per diluted share in the second quarter of last year. On a constant currency basis, our net loss attributable to NetSol totaled $2.7 million or $0.24 per diluted share.

轉向我們的盈利指標。在 2023 財年第二季度，我們的運營淨虧損為 300 萬美元，而去年同期的運營淨收入為 170 萬美元。按固定匯率計算，運營淨虧損為 390 萬美元。我們在 2023 財年第二季度歸屬於 NetSol 的 GAAP 淨虧損總計 210 萬美元或攤薄後每股 0.19 美元，而去年第二季度的 GAAP 淨收入為 140 萬美元或攤薄後每股 0.13 美元。按固定匯率計算，我們歸屬於 NetSol 的淨虧損總計 270 萬美元或攤薄後每股虧損 0.24 美元。

As always, it's important to point out that included in our net loss this quarter was a gain of $657,000 on foreign currency exchange transactions compared to a gain of $901,000 in Q2 of last year. On a constant currency basis, we realized a gain of $827,000 on foreign currency exchange transactions. 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 has the effect of increasing our revenues, but it also increases our expenses denominated in currencies other than the U.S. dollar.

與往常一樣，重要的是要指出本季度我們的淨虧損中包含 657,000 美元的外匯交易收益，而去年第二季度為 901,000 美元的收益。在固定匯率基礎上，我們實現了 827,000 美元的外幣兌換交易收益。由於我們在多個地理區域開展業務，因此我們的很大一部分業務是以美元以外的貨幣進行的。與外幣匯率相比，美元貶值通常會增加我們的收入，但也會增加我們以美元以外的貨幣計價的支出。

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 expenses denominated in 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, given the economic uncertainties of our target markets.

同樣，隨著美元相對於外幣匯率走強，它往往會減少我們的收入，但也會減少我們以美元以外的貨幣計價的支出。鑑於我們目標市場的經濟不確定性，我們通過向擴張領域部署額外資源，同時繼續監控我們的整體支出，相應地規劃我們的業務。

Moving to our non-GAAP metrics. Non-GAAP adjusted EBITDA for the second quarter of fiscal 2023 was a loss of $1.3 million or $0.12 per diluted share compared with non-GAAP adjusted EBITDA of $2.1 million or $0.19 per diluted share in the second quarter of last year. Please see the reconciliation schedules contained in our earnings release for our revised calculations of adjusted EBITDA for the quarters ended December 31, 2022 and 2021.

轉到我們的非 GAAP 指標。 2023 財年第二季度非 GAAP 調整後 EBITDA 虧損 130 萬美元或攤薄後每股 0.12 美元，而去年第二季度非 GAAP 調整後 EBITDA 為 210 萬美元或攤薄後每股 0.19 美元。請參閱我們的收益發布中包含的對賬時間表，了解我們對截至 2022 年 12 月 31 日和 2021 年 12 月 31 日的季度調整後 EBITDA 的修訂計算。

Turning to our balance sheet. At the quarter end, we had cash and cash equivalents of approximately $21 million or approximately $1.86 per diluted common share. The NetSol stockholders' equity at December 31, 2022, was $44.4 million or $3.93 per share.

轉向我們的資產負債表。在本季度末，我們的現金和現金等價物約為 2100 萬美元，或每股攤薄普通股約為 1.86 美元。截至 2022 年 12 月 31 日，NetSol 的股東權益為 4440 萬美元或每股 3.93 美元。

That concludes my prepared remarks. Now I will turn the time back over to Najeeb for an overview of our business updates. Najeeb?

我準備好的發言到此結束。現在我將把時間轉回給 Najeeb 來概述我們的業務更新。納吉布？

Thank you, Roger. As I mentioned earlier, we are implementing cost reduction initiatives that we believe will drive efficiency and better align our resources. We expect that our efficiency measures will at least -- will add at least $4 million in EBITDA in the next fiscal year and accelerate our bet to return to profitability. Perhaps the most exciting component in our growth strategy right now is our expansion into the North American market. This market represents a robust growth opportunity for our business, particularly as we exit the coronavirus pandemic, which created accelerated demand for modernization and digitization in the industry. Specifically, we are seeing demand related to customers that required a digital entry point to their financial services provider and employees who are certainly shifted to remote work and acquired the ability to digitally provide financial services to customers. As a result, our core customers, financial institutions, automotive and equipment OEMs and automotive dealers realize that their IT infrastructure needed to adapt to these changes and our products are ideally suited to meet their needs.

謝謝你，羅傑。正如我之前提到的，我們正在實施成本削減計劃，我們相信這些計劃將提高效率並更好地調整我們的資源。我們預計我們的效率措施將至少 - 將在下一財年增加至少 400 萬美元的 EBITDA 並加速我們恢復盈利的賭注。也許我們目前增長戰略中最令人興奮的部分是我們向北美市場的擴張。這個市場對我們的業務來說是一個強勁的增長機會，尤其是在我們擺脫冠狀病毒大流行之際，這加速了對行業現代化和數字化的需求。具體來說，我們看到與客戶相關的需求，這些客戶需要他們的金融服務提供商和員工的數字入口點，這些員工肯定會轉移到遠程工作並獲得以數字方式為客戶提供金融服務的能力。因此，我們的核心客戶、金融機構、汽車和設備原始設備製造商以及汽車經銷商意識到他們的 IT 基礎架構需要適應這些變化，而我們的產品非常適合滿足他們的需求。

Moreover, the increased demand for cloud-based services has positioned our NETSOL Cloud Services division to capture increased market share as we support both new and existing customers in modernizing their IT infrastructures. To that end, Otoz offerings continue to see excellent traction in the United States, which illustrates the power of NetSol's commitment to innovation. Since last quarter, Otoz has expanded its U.S. presence to include 37 dealers across the 16 states, showcasing the healthy and growing demand for SaaS and AI-based platform in this region. Additionally, in the second quarter of fiscal 2023, we entered into a new multimillion dollar agreement with a Tier 1 automotive company in the United States, which will implement and license our Otoz Mobility Solution to manage back-office operations for vehicle subscriptions.

此外，對基於雲的服務的需求增加使我們的 NETSOL 雲服務部門能夠獲得更多的市場份額，因為我們支持新老客戶對其 IT 基礎架構進行現代化改造。為此，Otoz 產品在美國繼續受到極大關注，這說明了 NetSol 致力於創新的力量。自上個季度以來，Otoz 擴大了其在美國的業務，在 16 個州擁有 37 家經銷商，展示了該地區對 SaaS 和基於 AI 的平台的健康且不斷增長的需求。此外，在 2023 財年第二季度，我們與美國一家一級汽車公司簽訂了一項價值數百萬美元的新協議，該公司將實施並授權我們的 Otoz 移動解決方案來管理車輛訂閱的後台運營。

Otoz penetration in the U.S. has been an excellent catalyst for our growth in this market, and we are further accelerating our expansion by investing in our partnerships with consultants, system integrators and other technology partners. In the second quarter, we were pleased to expand our partnership with Amazon Web Services, or AWS, and became an API gateway delivery partner. We expect this partnership to position NETSOL to expand our cloud capabilities by providing us with a fully managed service with developers to create, publish, maintain, monitor and secure application programming interfaces at any scale.

Otoz 在美國的滲透一直是我們在這個市場增長的極好催化劑，我們正在通過投資與顧問、系統集成商和其他技術合作夥伴的合作夥伴關係來進一步加速我們的擴張。在第二季度，我們很高興擴大了與亞馬遜網絡服務 (AWS) 的合作夥伴關係，並成為 API 網關交付合作夥伴。我們希望這種合作夥伴關係能夠讓 NETSOL 擴展我們的雲功能，為我們提供完全託管的服務，開發人員可以創建、發布、維護、監控和保護任何規模的應用程序編程接口。

Finally, we're making good progress, establishing a support and delivery system center in Austin, Texas, which is quickly becoming a hotspot for tech businesses in the U.S. This planned location is expected to accommodate a sales and support staff, which will accommodate a number of people in the coming months.

最後，我們取得了良好的進展，在德克薩斯州奧斯汀建立了一個支持和交付系統中心，該中心正迅速成為美國科技企業的熱點。這個計劃中的地點預計將容納銷售和支持人員，這將容納未來幾個月的人數。

Now let me talk about -- finally talk about APAC and Europe region. Our business in the Asia Pacific and European markets continue to provide stable and reliable revenues. In APAC, our revenues decreased compared to the second quarter of 2022. However, this is our largest and most established market and with the progress that we continue to make on our multiyear, multi-country implementation roadmap, we are confident that we are positioned for sustainable positive results in this region. Our European operations provide us with more growth opportunities as compared to APAC, where we are already established as a leading provider of finance leading software in the region, our cloud-based and SaaS offering continue to gain traction in the European market.

現在讓我談談——最後談談亞太地區和歐洲地區。我們在亞太和歐洲市場的業務繼續提供穩定可靠的收入。在亞太地區，我們的收入與 2022 年第二季度相比有所下降。然而，這是我們最大和最成熟的市場，隨著我們在多年、多國實施路線圖上繼續取得進展，我們有信心我們的定位在該地區取得可持續的積極成果。與亞太地區相比，我們的歐洲業務為我們提供了更多的增長機會，在亞太地區，我們已經成為該地區領先的金融領先軟件供應商，我們基於雲的和 SaaS 產品繼續在歐洲市場獲得吸引力。

Contributing to our recurring subscription and support base revenues, which we believe represent a very attractive opportunity for NETSOL going forward. Our second quarter revenues in the European market increased slightly compared to the prior year period. We anticipate that through a combination of our cloud-based and SaaS offering and the implementation of NFS Ascent for a major Scandinavian bank across 4 countries in 2024, we are well positioned to deliver improved results.

為我們的經常性訂閱和支持基礎收入做出貢獻，我們認為這對 NETSOL 的未來發展來說是一個非常有吸引力的機會。與去年同期相比，我們在歐洲市場的第二季度收入略有增長。我們預計，通過結合我們的基於雲和 SaaS 的產品以及 2024 年在 4 個國家/地區為一家主要的斯堪的納維亞銀行實施 NFS Ascent，我們能夠很好地提供更好的結果。

In summary, while our second quarter results were not where we wanted to be, we are enthusiastic about the value-driving initiatives underway. We are making significant progress executing our strategy to grow in the U.S. We are initiating a cost reduction plan that will cut over $4 million out of the business while not impacting key growth areas such as the U.S. Our technology partnerships and technology offerings continue to grow. And finally, with strong market share and a healthy balance sheet, we have a very strong foundation upon which we wish to build on.

總而言之，雖然我們第二季度的業績不盡如人意，但我們對正在進行的價值驅動計劃充滿熱情。我們在執行我們在美國發展的戰略方面取得了重大進展。我們正在啟動一項成本削減計劃，該計劃將削減超過 400 萬美元的業務，同時不會影響美國等關鍵增長領域。我們的技術合作夥伴關係和技術產品繼續增長。最後，憑藉強大的市場份額和健康的資產負債表，我們擁有了一個非常堅實的基礎，我們希望在此基礎上繼續發展。

And with that, we can open the call for questions. Operator?

這樣，我們就可以開始提問了。操作員？

(Operator Instructions) Our first question comes from the line of Todd Felte from AGES Financial Services.

（操作員說明）我們的第一個問題來自 AGES Financial Services 的 Todd Felte。

A few times during the call, you referred to your market-leading position in Europe. I was wondering if you could give us kind of an estimate of your percentage of market share in Europe, Asia Pacific region and the North America.

在通話期間，您多次提到了您在歐洲的市場領先地位。我想知道您是否可以給我們估計一下您在歐洲、亞太地區和北美的市場份額百分比。

Okay. Thank you for asking this question, Todd. As you know, this market is very fragmented in all the 3 regions. And it's very difficult to -- there's no, I think, any kind of monitoring or engaged to see what exactly is the market position. Nevertheless, the way we look at it, we've been in Europe since 2005 with office in Horsham (inaudible) we have a sizable team there. We've been securing new contracts like the one we announced recently bought a Scandinavian bank. This is a new account, and there are many other progress in this area. I believe in Europe, we are growing our market share because we can see the number of companies operating as a competitor, and we have been invited in most of all the opportunities in RFPs, and we are participating in a lot of different new bids in the European market.

好的。謝謝你問這個問題，托德。如您所知，這個市場在所有 3 個地區都非常分散。而且很難——我認為，沒有任何形式的監控或參與來了解市場地位到底是什麼。儘管如此，從我們的角度來看，我們自 2005 年以來一直在歐洲，在 Horsham 設有辦事處（聽不清），我們在那裡擁有一支規模龐大的團隊。我們一直在爭取新合同，比如我們最近宣布收購一家斯堪的納維亞銀行的合同。這是一個新帳戶，在這方面還有許多其他進展。我相信在歐洲，我們正在擴大我們的市場份額，因為我們可以看到作為競爭對手運營的公司的數量，並且我們已被邀請參與 RFP 中的大部分機會，並且我們正在參與許多不同的新投標歐洲市場。

APAC, in China, we are the leading company, still maintaining our leadership position. The way you look at it in the OEM, multinationals and leasing finance companies, according to CBRC, which is a regulatory authority in Beijing, China, we have been the leading company with a number of contracts we have. So by far, we are in a very strong position in China. Overall, in APAC, we still believe we're still in a leading position. Again, it's very hard to say what the percentage is but we can -- our position in Japan, in China, in Australia, in New Zealand and other markets in the APAC is very strong. So we're pretty comfortable. And as I mentioned in my comments, that our China market will continue to ramp up exactly because we have added a new vertical in -- to cater to the local Chinese market, which we call it professional services. And our head of the operation, Amanda Li has a very bullish program plan to promote this new offering, which means we hired about 45, 47 new employees in China in the last 6 months, all Chinese local to go towards a local Chinese companies and whether they're in auto sector or truck sector or whatever, there's opportunity for us to grow in the professional services on a very impressive daily rate.

亞太地區，在中國，我們是領先的公司，仍然保持我們的領先地位。根據位於中國北京的監管機構中國銀監會的說法，從 OEM、跨國公司和租賃金融公司的角度來看，我們一直是擁有大量合同的領先公司。所以到目前為止，我們在中國處於非常有利的地位。總體而言，在亞太地區，我們仍然相信我們仍處於領先地位。同樣，很難說這個百分比是多少，但我們可以——我們在日本、中國、澳大利亞、新西蘭和亞太地區其他市場的地位非常強大。所以我們很舒服。正如我在評論中提到的，我們的中國市場將繼續增長，正是因為我們增加了一個新的垂直領域——以滿足中國本土市場，我們稱之為專業服務。我們的運營負責人 Amanda Li 有一個非常樂觀的計劃來推廣這項新產品，這意味著我們在過去 6 個月裡在中國僱傭了大約 45、47 名新員工，所有中國本地人都去當地的中國公司和無論他們是在汽車行業還是卡車行業還是其他行業，我們都有機會以非常可觀的每日速度在專業服務方面取得增長。

Now coming to your question on the North America. North America is the most exciting thing happening for us and simply because, yes, we have not seen the results as of this quarter. But the reality is this, we are now over 1.5 years, We brought in a few very senior executives into this market, including Peter Minshall and few others. What are we noticing here, in our core business, which is Ascent, flagship Ascent and mobility, we have signed one major contract. I'll share the name AutoNation, household name. We just announced that about a couple of months ago.

現在來回答你關於北美的問題。北美對我們來說是最令人興奮的事情，僅僅是因為，是的，我們還沒有看到本季度的結果。但現實是這樣的，我們現在已經超過 1.5 年了，我們將一些非常高級的管理人員帶入了這個市場，包括 Peter Minshall 和其他一些人。我們在這裡註意到的是，在我們的核心業務，即 Ascent、旗艦 Ascent 和移動性方面，我們簽署了一份重要合同。我將分享 AutoNation 這個家喻戶曉的名字。大約幾個月前我們剛剛宣布了這一點。

In addition to that, we are pretty much in all the major opportunities RFPs. we mentioned a [$0.25] billion sales pipeline. It's mostly in the United States. Now the U.S. strategy is by design. We're now investing because we realized that we've done enough in the APAC market, and we don't want to invest too much more other than a onetime investment in China. But in U.S., this is the time despite the fact other economies are struggling, U.S. economy is still strong. So we're investing in a new office in Austin, Texas. That will be our hub for the U.S. customers and U.S. market. I believe given the activities for last 12 months, yes, sales cycle is very long. But at the same time, the values are also pretty attractive. So we believe this second half, we're pretty confident that there will be good progress. I can give you the timeline. And as you know, our business is lumpy and you cannot guarantee the results. We are leading candidates in a couple of major opportunities, maybe the top 2 now. So we're excited. We are fully committed about the U.S. market, and we believe this is the market, which will change the total landscape of this company in the coming quarters and coming years. So we're investing in this market, and we believe this is the right thing to do.

除此之外，我們幾乎參與了所有主要機會 RFP。我們提到了 [$2.5] 億美元的銷售渠道。它主要在美國。現在美國的戰略是設計好的。我們現在正在投資，因為我們意識到我們在亞太市場做得足夠多，除了一次性投資中國之外，我們不想投資太多。但在美國，現在是時候了，儘管其他經濟體都在苦苦掙扎，但美國經濟仍然強勁。因此，我們正在德克薩斯州奧斯汀投資新辦公室。那將是我們面向美國客戶和美國市場的樞紐。我相信考慮到過去 12 個月的活動，是的，銷售週期很長。但與此同時，價值觀也很吸引人。所以我們相信下半年，我們非常有信心會有很好的進展。我可以給你時間表。如您所知，我們的業務起伏不定，您無法保證結果。我們在幾個重大機會中領先候選人，現在可能是前 2 名。所以我們很興奮。我們完全致力於美國市場，我們相信這是一個市場，它將在未來幾個季度和未來幾年改變這家公司的整體格局。所以我們正在投資這個市場，我們相信這是正確的做法。

Okay. I mean when I look at the 30,000-foot view, I see that we've hired on over 500 employees in the last few quarters. Our revenue has decreased last few quarters. But our sales pipeline has gone, I remember, it was under $200 million. Now we're at $250 million. So when we do finally have this breakthrough, do you expect the revenues to jump from $12 million? Are we going to start having $20 million, $25 million quarters, given that our pipeline is $250 million? And it's -- when can we see this occur, it's just a little frustrating that salaries and consultant expenses have now grown to over 50% of revenue. So we've got all these new employees on, and we're kind of hoping that the dam breaks, so to speak, and we see this jump in revenues. And I was hoping you could kind of add some color to that.

好的。我的意思是，當我查看 30,000 英尺的視圖時，我看到我們在過去幾個季度僱用了 500 多名員工。我們的收入在過去幾個季度有所下降。但是我們的銷售管道已經消失了，我記得，它不到 2 億美元。現在我們是 2.5 億美元。那麼，當我們最終取得這一突破時，您是否預計收入會從 1200 萬美元躍升？考慮到我們的管道是 2.5 億美元，我們是否會開始擁有 2000 萬美元、2500 萬美元的季度？而且——我們什麼時候能看到這種情況發生，薪水和顧問費用現在已經增長到收入的 50% 以上，這有點令人沮喪。所以我們已經聘請了所有這些新員工，我們有點希望大壩破裂，可以這麼說，我們看到了收入的增長。我希望你能為此添加一些顏色。

Todd, I really understand your frustration. And I think I recognize not just you, but all the investors, they really [want] to me that they should see the real results and you could have an impressive ROI eventually at some point. The color on the hiring of the people, I think I'll give you 3 categories. And look, in the COVID period, things were really tough. You know the story. Everybody was going to the same thing. And now we are way over a year beyond the COVID pandemic. And what we have done is, there are 3 key areas that we added as a new additional verticals to grow revenue. We don't want to depend completely on the flagship Ascent. It is a long field cycle. You want to go into some more digital mobility platform, where you have more sales opportunities, more higher sales volumes. Now, AWS is one area. We hired almost, what, 75 or 80 people in the last 9 months. And we're investing them in their certification and the training and there's doors opening up. And that's brand-new investment within like 6 or 9 months. And so we hope to see some results and there's a lot of activity going on.

托德，我真的理解你的沮喪。而且我想我不僅認識到你，而且所有投資者，他們真的 [想要] 我應該看到真正的結果，你最終可能會在某個時候獲得令人印象深刻的投資回報率。關於僱用人員的顏色，我想我會給你 3 類。看，在 COVID 時期，事情真的很艱難。你知道這個故事。每個人都在做同樣的事情。現在我們已經過了 COVID 大流行一年多了。我們所做的是，我們添加了 3 個關鍵領域作為新的額外垂直領域來增加收入。我們不想完全依賴旗艦 Ascent。這是一個長場週期。你想進入更多數字化移動平台，在那裡你有更多的銷售機會，更高的銷量。現在，AWS 是一個領域。在過去的 9 個月裡，我們幾乎僱傭了 75 或 80 名員工。我們正在對他們進行認證和培訓投資，並且大門敞開。這是 6 或 9 個月內的全新投資。因此，我們希望看到一些結果，並且正在進行很多活動。

Second area is the professional services. China is the key right now where we really invested in. We've never invested so much in the local Chinese sales force or team specialized in the professional services. What it does is that -- this is a time, I believe, to invest in growing the business in different verticals, which is linked to FinTechs and our core business. So China is another place we're investing. And of course, in the U.S., we will continue to bring people from across our company globally and hire local. You can imagine the magnitude and the size of the U.S. market. We believe the reason we are late in the market because we have now enough implementations of Ascent, particularly in China, and the 12 markets of Asia Pacific and some now in Europe. What it does is it has given us a much better ability to position ourselves on a multimillion dollar projects because we have experience in the Chinese market with large OEMs like BMW and Daimler Financial Services. These are top-notch names. And these are great reference point to position ourselves to bid for the local U.S. customers.

第二個領域是專業服務。中國是我們目前真正投資的關鍵。我們從來沒有在中國當地的銷售團隊或專門從事專業服務的團隊上投入這麼多。它所做的是——我相信，現在是時候投資於發展不同垂直領域的業務，這與金融科技和我們的核心業務相關。所以中國是我們投資的另一個地方。當然，在美國，我們將繼續從我們公司的全球各地招募人員並僱用當地人。你可以想像美國市場的規模。我們相信我們進入市場較晚的原因是因為我們現在有足夠多的 Ascent 實施，特別是在中國，以及亞太地區的 12 個市場和一些現在在歐洲的市場。它所做的是，它使我們能夠更好地定位自己在數百萬美元的項目中，因為我們在中國市場擁有與寶馬和戴姆勒金融服務等大型原始設備製造商合作的經驗。這些都是一流的名字。這些都是很好的參考點，可以幫助我們定位自己以競標美國當地客戶。

In addition to not just this core business that we're trying to position ourselves where the pipeline is, we're on cloud building our SaaS revenues, mobility. So there's a lot of action in a lot of front and you see the numbers, you're right, we have added 450 to 500 people. But at the same time, this exercise -- I'm actually in Lahore right now from the last 2 weeks. We started this exercise few weeks earlier before this quarter ended is to find ways to be more efficient company, to be more leaner, to be more productive. And the reason is we had to put a lot of bench. I mean, the numbers I just mentioned, this is the largest bank we ever had in our history is simply because these are new opportunistic verticals. And we believe strongly about that we can really do a good job given that our experience as an IT company and now FinTech, we have the ability to reach out to larger customers and show them that we can build a new opportunity in the U.S. market, not just our main business, but the new opportunity like AWS and professional services and so forth. So I think these are investment driven. It's tough. We watch our cash very carefully. We watch our hiring. And now we're in the process aggressively to at least take out 20% of the headcount and the more efficient company. The numbers I just mentioned. My goal is to at least a $4 million improved bottom line in EBITDA and in the net income.

除了我們試圖將自己定位在管道所在的核心業務之外，我們還在雲上建立我們的 SaaS 收入和移動性。所以在很多方面都採取了很多行動，你看到了數字，你是對的，我們增加了 450 到 500 人。但與此同時，這個練習——實際上，過去兩週我現在就在拉合爾。我們在本季度結束前幾週就開始了這項工作，目的是想辦法讓公司變得更有效率、更精簡、更有生產力。原因是我們不得不放很多板凳。我的意思是，我剛才提到的數字，這是我們歷史上最大的銀行，僅僅是因為這些是新的機會主義垂直領域。我們堅信，鑑於我們作為一家 IT 公司和現在的金融科技公司的經驗，我們有能力接觸更大的客戶並向他們展示我們可以在美國市場創造新機會，我們真的可以做得很好，不僅僅是我們的主要業務，還有像 AWS 和專業服務等新機會。所以我認為這些都是投資驅動的。它太硬。我們非常小心地看管我們的現金。我們關注我們的招聘。現在我們正積極地至少裁掉 20% 的員工和更高效的公司。我剛才提到的數字。我的目標是至少將 EBITDA 和淨收入的底線提高 400 萬美元。

So these are hard decisions, but they are a tough decision. Given the environment we are in, there's inflation everywhere, there's issue everywhere. You mentioned rightly this is, we have to maintain our -- the core team in Lahore and other offices around the world to make sure that we don't lose them because of high inflation, everybody is at least a middle class that is suffering. So we do whatever it takes to not lose our good employees, bring fresh new people to build investment for the future in the U.S. So I think these are all the right points for us data point to make sure that not only we grow the revenue in the coming quarters but also become very profitable gross profit and the net income.

所以這些都是艱難的決定，但這是一個艱難的決定。考慮到我們所處的環境，到處都是通貨膨脹，到處都是問題。你提到得對，我們必須維持我們在拉合爾和世界各地其他辦事處的核心團隊，以確保我們不會因為高通脹而失去他們，每個人至少都是受苦的中產階級。因此，我們盡一切努力不失去我們的優秀員工，引進新的人才來為美國的未來進行投資。所以我認為這些都是我們數據點的正確點，以確保我們不僅在美國增加收入未來幾個季度的毛利潤和淨利潤也會變得非常有利可圖。

Okay. If I was trying to model this out, given the $250 million backlog, given the long sales cycle and also given all the exciting opportunities you just discussed, I mean a year from now, are we hoping to be doing $20 million to $25 million in revenue a quarter? Or is that too optimistic? Or is the growth going to be...

好的。如果我試圖對此進行建模，考慮到 2.5 億美元的積壓訂單，考慮到較長的銷售週期以及您剛才討論的所有令人興奮的機會，我的意思是從現在起一年後，我們是否希望在一個季度的收入？還是太樂觀了？還是成長會...

It's not too optimistic. You're right on the money, it's not too optimistic. It is actually our own wish and goals to achieve those double the numbers. And I think when we talk about these high pipeline, look, I'm sure you're familiar -- I don't know how much you understand how long the field cycle in our kind of business. We're not all the shell company which has ready to make these customers spend days, weeks, months and narrowing shortlisting from 10 to 5 to 3 to now 2. I'm giving just a generic example. And now some of them want to visit Lahore, which is where you could sign. One of these deals or 2 of these deals in the next 6 months can hit the number that you're talking about, I'm pretty confident.

不太樂觀。你的錢是對的，它不太樂觀。實現這些數字的兩倍實際上是我們自己的願望和目標。我想當我們談論這些高管道時，看，我相信你很熟悉——我不知道你對我們這種業務的現場週期有多了解。我們並不是所有準備好讓這些客戶花費數天、數週、數月的空殼公司，並將候選名單從 10 家縮小到 5 家，再到 3 家，再到現在的 2 家。我只是舉一個通用的例子。現在他們中的一些人想訪問拉合爾，這是你可以簽約的地方。在接下來的 6 個月中，這些交易中的一個或其中兩個交易可以達到你所說的數字，我非常有信心。

One way to look at is our current revenue is pretty stable. Because this quarter, you didn't see any growth, and we obviously could not recognize at least $2 million in the Q2 because the timeline but the deal was signed and this is based in Australia and I think we can recognize that in the Q3. But the real excitement is the big deal we are working day and night. I mean Patti follows through with these customers and go through all these detailed legal agreements. So that means that across the globe. U.S. people sitting in Lahore or doing the calls day and night with these customers, 30, 40 at a time from other side and our side. So it is a very, very active office in Lahore right now. I'm here, and I can see that. So -- and then we need some good luck also. But we excite you, we're not missing any opportunity. And we not -- we like to turn the corner. I mean we know we have disappointed the market. I admit that. But sometimes you don't have a lot of control and you do your best and you think you're going to make it and then it's going to get delayed or something called to happen. So we are very confident, we will have some new contracts in the coming months that will change our numbers dramatically.

一種看待方式是我們目前的收入相當穩定。因為這個季度，你沒有看到任何增長，我們顯然不能在第二季度確認至少 200 萬美元，因為時間表但交易已經簽署，這是在澳大利亞，我認為我們可以在第三季度認識到這一點。但真正令人興奮的是我們日夜工作的大事。我的意思是 Patti 跟進這些客戶並完成所有這些詳細的法律協議。這意味著在全球範圍內。美國人坐在拉合爾或日夜與這些客戶通話，一次 30、40 個來自另一邊和我們這邊。所以它現在在拉合爾是一個非常非常活躍的辦公室。我在這裡，我可以看到。所以 - 然後我們也需要一些好運。但我們讓您興奮，我們不會錯過任何機會。而我們不——我們喜歡轉危為安。我的意思是我們知道我們讓市場失望了。我承認。但有時你沒有太多的控制權，你會盡力而為，你認為你會成功，然後它會被延遲或發生一些事情。所以我們非常有信心，我們將在未來幾個月內獲得一些新合同，這將極大地改變我們的數字。

Okay. Well, that's great to hear on the potential upcoming revenue growth. I hope you keep us all informed and announce some of these contracts and revenue as they come in, and I'll get off the call. I've taken enough of your time and I thank you for answering the questions.

好的。好吧，很高興聽到即將到來的潛在收入增長。我希望你隨時通知我們並宣布其中一些合同和收入，我會掛斷電話。我已經佔用了您足夠多的時間，感謝您回答問題。

You are always welcome, Todd. Thank you and have a good day.

永遠歡迎你，托德。謝謝你，有一個美好的一天。

(Operator Instructions) Our next question comes from the line of [Nick Webb from Swift Rock Capital].

（操作員說明）我們的下一個問題來自 [來自 Swift Rock Capital 的 Nick Webb]。

First one, could you just provide a little more insight concerning the timing of the implementation of the $4 million in cost reductions? Will this be immediate or implemented over the balance of the year?

第一個，您能否提供更多關於 400 萬美元成本削減的實施時間的見解？這會立即實施還是在今年餘下時間實施？

We have started the process a few weeks ago and it really work in progress with our HR and our -- each head of departments have their been giving the targets to implement these across their division or the department and the companies. So I think the timeline is you'll see some value -- tangible value if not in the third in the fourth quarter by the time you have some severances and timeline, all that happened. But the real, I think, benefit will be in the fiscal 2024, beginning of 24, which is about 2 quarters from now.

我們幾週前就開始了這個過程，我們的人力資源部門和我們的每個部門負責人都在製定目標，在他們的部門或部門和公司中實施這些目標。所以我認為時間表是你會看到一些價值——有形價值，如果不是在第四季度的第三季度，當你有一些遣散費和時間表時，所有這些都發生了。但我認為，真正的好處將出現在 2024 財年，也就是 24 年初，也就是距現在大約 2 個季度。

Got it. Okay. And then just to make sure I'm understanding. So will the efficiency measures impact your strategic investment in the U.S.? Or are they mostly focused on other parts of your business?

知道了。好的。然後只是為了確保我理解。那麼效率措施會影響您在美國的戰略投資嗎？還是他們主要關注您業務的其他部分？

No. U.S. is the one we're investing actually. We are very lean, both in my U.S. operation in North NTA, North America, and our corporate team is very lean. Actually, we're also downsizing our U.S. corporate offices to a bit more leaner instead of investing in the business side of it. Now we will be investing in people, in infrastructure, travel back and forth. So that is really I see and everybody knows and my team and the board. This is where the big opportunity in the U.S. market. And I'm very, very bullish in the U.S. simply because I know what is happening in Europe, this struggling a lot more than U.S. U.S. has the ability to control the inflation, they can control inflation in the European market. China is a bit better, but other parts of APAC are already struggling. Despite of that, I believe the U.S. is the only place we feel it is the market for us, and we'll put all our best talent, more energy and financial investment to get some penetration in this market and see on real results that we've been working for many, many years.

不，美國是我們實際投資的國家。我們非常精簡，無論是在我在北美北 NTA 的美國業務中，還是我們的公司團隊都非常精簡。實際上，我們還縮減了美國公司辦公室的規模，使其更加精簡，而不是投資於業務方面。現在我們將投資於人員、基礎設施、往返交通。所以這就是我看到的，每個人都知道，我的團隊和董事會。這就是美國市場的大機會所在。我非常非常看好美國，因為我知道歐洲正在發生什麼，歐洲比美國更掙扎美國有能力控制通脹，他們可以控制歐洲市場的通脹。中國稍微好一點，但亞太地區的其他地區已經在苦苦掙扎。儘管如此，我相信美國是我們認為它是我們市場的唯一地方，我們將投入所有最優秀的人才、更多的精力和金融投資，以在這個市場上取得一些滲透，並看到我們的實際成果已經工作很多很多年了。

The U.S. will continue to be investing and nothing will reflect in the U.S. as the investment continue.

美國將繼續投資，隨著投資的繼續，美國不會有任何反映。

Okay. Great. And then just my last question. So you mentioned AI and machine learning in your offerings. Just wondering if you could provide a little more color around how this technology is implemented into your solutions.

好的。偉大的。然後是我的最後一個問題。所以你在你的產品中提到了人工智能和機器學習。只是想知道您是否可以提供更多有關如何將此技術實施到您的解決方案中的顏色。

Well, AI is very popular worldwide, as you know, in our business, customers are benefiting from our different modules. So we implemented AI in machine learning into offerings on a case-by-case basis, depending on the need of the customers. Our algorithm is capable of identifying risk on application during the valuation process for lease or loan. And to that end, we are able to train our people and specific data provided by the bank or financing companies and so forth. So I think there's lots going on in this new tool that is becoming one of the hottest tool right now in all the developing and technology sector. So I am confident that AI will be a leading force in many, many ways to help our customers build into the product and make the product more quick and efficient. And of course, is what it's supposed to do is to create a different model altogether in this company. So customers are going to benefit very aggressively because we are in it. We've hired some couple of MIT PhDs, and we brought them to our facility in Lahore, and they're playing a big part in building this for our customer basis. So it's a very good thing happening for the company.

嗯，人工智能在世界範圍內非常流行，正如你所知，在我們的業務中，客戶正從我們不同的模塊中受益。因此，我們根據客戶的需求，根據具體情況將機器學習中的 AI 實施到產品中。我們的算法能夠在租賃或貸款估值過程中識別應用風險。為此，我們能夠培訓我們的人員和銀行或金融公司等提供的具體數據。所以我認為這個新工具正在發生很多變化，它正在成為目前所有開發和技術領域最熱門的工具之一。所以我相信人工智能將在很多方面成為主導力量，幫助我們的客戶構建產品並使產品更加快速和高效。當然，它應該做的是在這家公司中創建一個完全不同的模型。因此，客戶將非常積極地受益，因為我們參與其中。我們聘請了幾位麻省理工學院的博士，並將他們帶到我們在拉合爾的工廠，他們在為我們的客戶基礎建立這個方面發揮了重要作用。所以這對公司來說是一件非常好的事情。

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's Investor Relations team by e-mailing them at investors@netsoltech.com or by calling them at (949) 574-3860. I did now like to turn the call back over to Mr. Ghauri for his closing remarks.

謝謝。至此，我們的問答環節到此結束。如果您的問題在問答環節沒有得到解決，請通過發送電子郵件至 investors@netsoltech.com 或致電 (949) 574-3860 聯繫 NETSOL 的投資者關係團隊。我現在確實想將電話轉回給 Ghauri 先生，讓他發表閉幕詞。

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

感謝您今天加入我們。我特別要感謝我們的投資者一直以來的支持、我們忠實的客戶以及我們最敬業的員工一直以來的貢獻。我們期待在下次通話時為您更新。操作員？

Thank you for joining us today for NETSOL's Fiscal Second Quarter 2023 Earnings Call. You may now disconnect your lines.

感謝您今天參加我們的 NETSOL 2023 財年第二季度收益電話會議。您現在可以斷開線路。