NETSOL TECHNOLOGIES INC Q3 FY2024 earnings call

• The third quarter of 2024 was a strong quarter with revenue growth and the third consecutive quarter of profitability. • Demonstrated the ability to achieve profitability without significant license fees, with services revenues in Q3 2024 increasing approximately 60% compared to Q3 2023. • Have a healthy sales pipeline of license and SaaS deals in established markets and are focusing on building pipelines in nascent markets like the US. • Seeing strong interest from US-based customers in the Professional Services segment of AWS cloud services, data analytics, and AI-based products. • Progress in the US market with the auto digital, retail, and mobility platform live in 58 MINI USA dealerships and AutoNation's micro lease marketplace. • Launched a company-wide AI initiative to reduce internal costs and enhance external quality improvements, leveraging 27 years of internal program management data. • Anticipate at least $28 million in subscription and support revenues for the full fiscal year 2024 and target revenue range of $60 million to $61 million for the full fiscal year 2024.

Total net revenues for the third quarter of fiscal 2024 were $15.5 million, compared to $13.5 million in the prior year period. On a constant currency basis, total net revenues were $15.6 million. License fees for the third quarter of fiscal 2024 were $558,000, down from $2 million in the prior year period. Recurring revenues (subscription and support revenues) for the third quarter of fiscal 2024 were $7.1 million, up from $6.7 million in the prior year period. Subscription and support revenues on a constant currency basis were $7.2 million. Total services revenue for the third quarter of fiscal 2024 was $7.8 million, compared to $4.9 million in the prior year period. Total services revenue on a constant currency basis was $7.8 million. Gross profit for the third quarter fiscal 2024 was $7.5 million (48% of net revenues), compared to $4.7 million (35% of net revenues) in the prior year period. Operating expenses for the third quarter fiscal 2024 were $6.2 million (40% of sales), compared to $5.6 million (42% of sales) in the same period last year.

• Anticipate at least $28 million in subscription and support revenues for the full fiscal year 2024. • Target revenue range of $60 million to $61 million for the full fiscal year 2024. • Confident that fiscal year 2025 will be a strong year with potential for breakout revenue growth, driven by healthy pipeline and progress in markets like the US.

Q: Todd Felte asked if fiscal year 2025 can break out of the revenue range seen in the last 10 years.

A: Najeeb Ghauri responded that they are very confident, citing healthy pipeline, positive response from prospects, and progress in the US market, with Naeem Ghauri adding insights on past revenue range constraints and future potential.

Q: Todd Felte followed up on stock trading below book value and AI potential.

A: Najeeb Ghauri mentioned they remain focused, will have activities in the coming months to promote the company's story, expecting a positive impact on the stock.

Q: Unidentified Analyst asked about how AI is specifically interacting with and enhancing products.

A: Naeem Ghauri explained a holistic AI approach, including leveraging AI for internal efficiencies, providing AI services to clients, and building AI products into their offerings to reduce costs, enhance quality, and create new revenue streams