Good morning and welcome to Netsol Technologies' first quarter fiscal year 2027 earnings conference call. On the call today are Founder and Chief Executive Officer of Netsol Technologies Inc., Najeeb Ghauri, Global Head of Sales and Group Managing Director of Europe, Asad Ghauri, Chief Financial Officer, Sardar Ab, and Senior Vice President, Legal and Corporate Affairs, General Counsel and Corporate Secretary, Patti McGlasson. Also available for Q&A portion are Chief Accounting Officer Roger Almond and Chief Marketing Officer Erik Wagner. I will now turn the call over to Patti, who will provide the necessary disclaimer regarding the forward-looking statements made during today's call. Patti, please go ahead.

Thank you. Good morning, everyone, and thank you for joining us today. After we review the company's business highlights and financial results for the first quarter of fiscal 2027, we will open the call for questions. Before we begin, I'd like to remind you that our remarks today will include forward-looking statements within the meaning of the federal securities laws, including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our fiscal 2027 guidance and other matters that are not historical facts. These statements are subject to risks and uncertainties that could cause actual results to differ materially. We encourage you to review the cautionary statements and risk factors contained in NetSol's press release issued earlier today As well as our filings with the Securities and Exchange Commission, including our most recent Form 10-K and quarterly reports on Form 10-Q. And I would also like to note that today's discussion will include certain non-GAAP financial measures. A reconciliation of these measures to their most direct comparable GAAP figure can be found in the press release issued earlier today. A supplemental investor presentation is available through the webcast link and in the investor relations sections of our website at ir.netsoltech.com. and has been furnished as an exhibit to the Form 8K we will file with our press release issued this morning. Please remember that this call is being recorded and will be available for replay on our website at ir.netsoltech.com and through a link included in today's press release. At this time, all participants are in listen-only mode. Following management's prepared remarks, we will conduct a question and answer session. I'll now hand the call over to our founder and CEO, Najeeb Ghori. Najeeb?

Thank you, Patti. Good morning everyone and thank you for joining our call today to review our results for the first quarter fiscal 2027 that ended September 30, 2026. Let me start with what matters. We grew revenue, we expanded gross margin, and we made money this quarter. A year ago, in the same quarter, we lost money. I've said for a long time that as more of our revenue becomes subscription, the margin would improve. And you can see, you can see it in these numbers, it is a good start to the year. I'm not going to overstate one quarter, but it is a good start. The other thing I would point out that this did not come at expense of the pipeline. We kept selling. Our largest customers kept choosing to do more with us. BMO being the example, Asad will talk about it in a minute. That is what gives me some confidence that this is not a one-quarter result. On our last call, I laid out four priorities for the year. We are scaling Transcend Retail across the US dealer market, embedding AI across our products and our operations, upgrading our legacy install base onto Transcend and growing with our customers as they expand into new markets. I want to give you a quick sense of where we stand on each. On Transcend Retail, Since the quarter ended, Mercedes-Benz USA approved Nassau as a digital retail provider for its dealer network. Along with the new dealer go-lives, Asad will cover, that is the kind of proof point we were looking for. On the product, both Transcend Finance and Transcend Retail saw substantive enhancements this quarter. In Transcend Finance, we upgraded credit application and servicing and improved reconciliation with customers accounting system. In Transcend Retail, we improved the customer journey from vehicle and financing comparison through a faster credit application and gave dealer teams better tools to engage customers at the moment they are ready to buy. On AI, the progress this quarter was inside the company. We brought AI enabled tools into live use across finance, audit, employee support, marketing, sales, and talent acquisition under a formal AI policy and training program. In the product, credit decisioning and document processing capabilities are available in Transcend Finance, and we are extending AI into other areas of the platform. On the install base, BMO is example this quarter. A 30-year customer moving from lease pack to transcend finance and there are more of those conversations underway. On growing with customers into new markets, Well, I don't have anything new to announce today. We are in active discussions with existing customers and prospects who are expanding operations, and I expect to have more to say on that in coming quarters. And we made some changes to the team itself. Faizaan Ghauri, our former Chief Strategy Officer, was named President of Nessel Technologies Americas, while Peter Minshall and Umar Qadri relocated to the UK office, To put more of our senior leadership closer to our European operations. Since the quarter closed, Michael Ramsey joined as VP of Sales for Transit Finance in the Americas. I now turn the call over to Asad Ghauri to talk through the commercial activity this quarter. Asad.

Thank you, Najeeb, and good morning, everyone. As Najeeb has stated, I want to start off with BMO, a key example of our focus in the U.S. market. You know, we've seen a pattern across our customer base of upgrades from legacy platforms and into current finance. You know, BMO being a classic example in the U.S., a 30-year relationship, Patti McGlasson Patti McGlasson TMO obviously is the newest entry to this list. Long-standing customers are choosing to build their relationship with us forward onto our platform rather than looking elsewhere. And that install-based expansion is part of our commercial strategy as we move forward. On business and retail, we brought Transcend Retail Live to two new U.S. dealerships this quarter, Atlanta Autos and Royal Coach RV. Our commercial priorities have not changed. Convert the pipeline in front of us and keep growing inside the customer base we already serve. With that, I'll hand it over to Sardar to walk you over the numbers.

Thank you, Asad, and good morning, everyone. In our annual call, we emphasize the recovery in operating performance, the quality of earnings, and cash conversion. I will follow that same framework today With particular attention to the working capital cycle and the drivers of our margin improvement. Revenue for the quarter increased 9.3% to 16.4 million from 15 million a year ago. On a constant currency basis, revenue was 16.5 million. Subscription and support revenue grew 6.1% to 9.5 million, representing 57.9% of total revenue. Patti McGlasson and Gross Margin expanded by more than 1,100 basis points to 50.5% from 39.4%. Operating income was 0.4 million and operating margin of 2.5% compared with an operating loss of 1.8 million and a negative 12.2% margin a year ago. Consolidated Adjusted EBITDA was 0.89 million A 5.4% margin compared with negative 1.35 million or negative 9% a year earlier. Adjusted EBITDA attributable to Netsol was 0.48 million compared with negative 1.66 million. Consolidated net income was 0.53 million and net income attributable to Netsol was 0.16 million or one cent per diluted share compared with a loss attributable to Netsol of 2.36 million. or 21 cents per share a year ago. Net income attributable to non-controlling interests was 0.37 million compared with 0.14 million reflecting higher profit at our Pakistan subsidiary. Historically now, the first quarter has been a building block for stronger growth throughout the year. First quarter revenue was 12.7 million in fiscal 2023, 14.2 million in fiscal 2024, 14.6 million in fiscal 2025, 15 million in fiscal 2026, and 16.4 million this quarter, the highest first quarter revenue across those five years. Subscription and support revenue grew from 6 million in the first quarter of fiscal 2023 to 9.5 million today. On margin, first quarter gross margin was about 43% in fiscal 2024 Thank you very much. was capitalization of approximately a million dollars of qualifying software development compared with none a year ago. Lower headcount and tighter resource and overhead management also contributed notably, as did the timing of salary revisions, which is a benefit that will not repeat every quarter. On the headcount perspective, it was 1,272 at September 30th compared with 1,370 at June 30th and 1442 a year ago, a reduction of about 7% in the quarter and 12% year over year while revenue increased. We would caution against annualizing any one quarter. License mix, implementation milestones, resource utilization and development capitalization all affect reported margin. Our focus is sustainable gross margin, positive operating leverage and consistent cash conversion. Cash and cash equivalents were 19.7 million at 30th September compared with 27.1 million at June 30th. Operating cash flow was negative 5.6 million compared with positive 5.3 million a year ago. I'd like to shed a little more light on this. The drivers were working capital timing. Contract liabilities decreased 3.4 million. Contract assets increased 2.6 million. and accounts payable and accrued expenses decreased 1.5 million, partially offset by 1.1 million decrease in accounts receivable. In the fourth quarter, we billed and collected ahead of delivery and in this first quarter, we delivered against those billings. We also invested 2 million in property equipment and capitalized software development compared with roughly 0.5 million a year ago. Based on current billing and collection expectations, We anticipate that a meaningful portion of these timing differences will reverse during the remainder of the fiscal year, although the precise timing depends on customer milestones and payments. We are tracking contract assets, billing milestones, deferred revenue, receivables aging, and collections at the customer level. This is a priority for management and we will report on progress in subsequent quarters. As we noted in September in our annual call, We are evaluating ways to improve the conversion of consolidated earnings into earnings attributable to Netsol shareholders while respecting the rights of all shareholders and applicable regulations. In that context, on October 30th, the Board of Netsol Technologies Limited, our Pakistan-listed subsidiary, publicly proposed a repurchase of up to 4 million of its own shares, approximately 4.45% of its issued share capital, to be held in Treasury and funded from the subsidiary's distributable profits. The proposal is subject to approval by the subsidiary shareholders at a meeting on December 3rd and to regulatory requirements. It is a subsidiary-level proposal, not a repurchase of NTWK shares. If implemented, it may change the effective ownership economics depending on actual purchases and the treatment of Treasury shares We are not assigning a financial benefit or assuming a reduction in non-controlling interests at this stage. Any impact will be evaluated and disclosed as appropriate. Separately, on October 1, 2026, the Board of Netsol Technologies Europe Limited began evaluating strategic options for its subsidiary, Virtual Lease Services Limited, including a potential sale or wind-down, though no plan has been approved or agreement executed. VLS revenue for the three months ended September 30th, 2026 represented 1.7% of consolidated revenues and its total assets represented 1.3% of total consolidated assets. If a sale or wind down is completed, the company may recognize and treatment on disposal and incur exit related costs which cannot be estimated at this time. Overall, this is part of our process to simplify and prioritize our strategic efforts and our capital allocation. Our priorities are consistent with the annual call, advancing transcend finance modernization, scaling transcend retail in the United States, strengthening execution in key markets, and applying AI where it improves customer outcomes and productivity. We remain disciplined in capital allocation, balancing investment in core platforms and delivery, with selective consideration of partnerships, acquisitions, and structural simplification, and we will communicate material decisions when appropriate. Noble Capital Markets initiated company-sponsored research coverage of Netsol in October, consistent with our objective to broaden institutional engagement. In summary, revenue grew 9.3%, subscription and support reached 9.5 million, Gross margin expanded to 50.5%, operating margin was 2.5% against negative 12.2% a year ago, and consolidated adjusted EBITDA improved to 0.89 million. Furthermore, the cash and cash equivalence balance is consistent with the cash balance of Netsol over the last 12 quarters. Alongside these improvements, we are managing working capital timing and maintaining the priorities we set out in September. Implementation and license timing can create quarterly variability, so we will assess progress across multiple quarters rather than any single period. Thank you. I will now hand the call back to Najeeb.

Thank you, Sardar. Operator, we are ready to take questions, please.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Greg Burns with Sidoti. Please proceed with your question.

Good morning. When you move a customer like BMO from lease pack to Transcend, how does that change the economics for you, maybe in terms of margin and revenue potential for that customer?

Yes, I think I'll let Asad answer the question. Go ahead, Asad.

I don't want to be specific, but of course we see a positive bump on subscription and other revenue sources that we look at. Again, obviously we're in the implementation phase, so I wouldn't want to comment on a specific number, but we will see a positive impact of that as we move forward based on where the NPO organization is.

Okay, maybe you don't have to speak specifically to BMO, but when you move in general these legacy customers to the Transcend platform, is there a transition phase where...

I think we've got a lot of... Go ahead. In general, so BMO is... in the top end of our customer base, according to similar customers around the globe. So on an average, we're looking at a 10 million upside for the overall deal over a five-year period.

Okay, thank you. And the VSL wind down or divestiture, is there any other Are there any other opportunities there to monetize assets? Well, I think

So far, we're in a pretty good position. I think I'm very confident. We made the right decision about the VLS. And of course, we closely monitor all our operations, subsidiaries, and projects. And from time to time, we come back and share with you the progress. So right now, we're pretty good with the way we have the whole organization and it's pretty much performing to our expectations.

Najeeb, if I may just add as well to that question. So our objective is to consistently evaluate opportunities for us to prioritize our capital allocation. It's important to understand, and you will find this in our investor relations website and public information, that our industry around equipment finance is growing at a double-digit kegger and its significant amounts with growth across all markets. With that, we believe that we have a fantastic opportunity to invest in what I always call core and close to core adjacencies. And we firmly believe that this will add to the value creation for Netsol shareholders across the board.

Thank you. Just to add to what Abubakr said, as we've laid out a very clear strategy, anything non-core we are looking to review, and if it doesn't fit in the profile of how we see strategically the company moving forward, those will be addressed accordingly, whether it be VLS or others.

Okay, thank you.

Thank you.

Our next question comes from the line of Michael Kopinski with Noble Capital Markets. Please proceed with your question.

Hi, thank you for taking my question. It's Jacob Mutchler on for Michael this morning. So my first question is, could you just talk about how the North American sales pipeline is developing and what you're seeing in terms of demand and customer sales cycles? Thank you.

Yeah, I can say a couple of points that Asad is also pretty closely watching it. It's the best time for us now, this year, next year, that we have seen growing pipeline, tremendous interest from the US-based customers. Obviously, we have a very matured history, and I personally met our BMO team just a couple of months ago in Milwaukee, and I was really happy to see the excitement of the relationship we have had for so many years with BMO, and now they're growing further with us. So there's many other decent pipelines, so it's a pretty good time for the company in North America. You want to add more, Asad?

Just a little. So just to add to what Najeeb said, I just want to be clear that the U.S. is a key market for us. It is a strategic focus as we move forward from a growth perspective. And a lot of the company's focus is ensuring that, like BMO, we have conversions of existing customers that we potentially have in the pipeline. But we've got a solid pipeline of prospects that are engaging with us formally through an RFP process that the teams are working on. Cyclically, I just want to be clear that these cycles in our core business are long, elongated cycles. Whereas, as we've stated previously, digital retail, which is a different subset of the ecosystem that we service, it has a different connotation for us. and you will see adoption numbers increase as we move forward in this fiscal year and the following fiscal year.

Asad, can I just add to that? Echoing the comments made by Najeeb and Asad, you will see certain facts in our 10Q. So in this quarter, The North American market for us is actually outpacing the growth of Netsol overall. So in this quarter, we have seen the Americas grow at 25.5% year over year, and its share of revenue contribution to the group has also increased to 16.1%. So you would recall that in my talk a little earlier, I mentioned that our revenues overall grew by 9.3%, while America's grew at 25%. So it is empirically our fastest growing market. Of course, I cannot guide that the same growth rate will continue. However, we are very optimistic on the health of our sales pipeline in North America.

And I second that, absolutely.

Thank you for the cover. And could you talk a little bit about what you're seeing in the M&A environment for asset finance? What types of acquisition opportunities would be most attractive? And just curious, you know, how you're balancing potential acquisitions against, you know, investments in organic growth. Thanks.

We do have a strategy. I'll let both Abu and Asad. They're quite actively involved in some certain opportunities, especially in North America.

So, I'll come in and then Abu can, I guess, finish off. So, yes, M&A is a key focus area for us. I think there are interesting discussions in play. Not saying that they're all in any kind of final stage or anything. But within the offer financing, we are positioning ourselves to be able to do a couple of M&As this fiscal and the following fiscal. So it is a strategic focus for us as we move forward. Amir, if you want to add something?

No, I think really well covered and I echo that sentiment. I would probably just add that the U.S. being our home market is a priority for M&A. and we are also exploring opportunities across Europe. In terms of the kind of customer profile, as I stated publicly, that we are looking at what we call core or close to core adjacencies. Given that we are an ecosystem player in the industry, we do everything from originations to contract management, wholesale, and of course Digital Retail under our Transcend Finance and our Transcend Retail platforms. We believe that there could be numerous plug-in opportunities to our growth engine. We are pursuing them and as there are any material developments, we will keep the markets informed.

Thank you, Sardar. Operator, we are now ready to take questions. Any more comments?

As a reminder, if you would like to ask a question, press star 1 on your telephone keypad. Our next question comes from the line of Todd Felty with Stonex. Please proceed with your question.

Hey, congratulations Najeeb and your team on the progress you made and improvement margins. Just wanted to touch on the head count. I know it's gone down from, I think, about 1,500 over a year ago, and I think we're at 1,272 as of September 30th. Is there a target that you're looking at to reduce that head count to, and how will that affect the margins and the gross margins? I know in the last call you'd expected margins to be at a minimum of 50%, and you hit that target. and how will they improve down the road?

First of all, let me thank you again. Todd, you've been a very loyal and committed long-term investor. I appreciate your loyalty. I think a good question I'll have specifically from Asad and they've worked very closely. And we're definitely looking into a leader organization and bottom line is our focus along with the top line. But you want to add something, Asad? Yes.

Yeah, so I'll just start by saying headcount is a key focus area for us. Obviously, if you understand our business, then headcount is a major contributor to our costs. So it is publicly being looked at. Obviously, we want to achieve numbers that I don't want to just push out. But we are looking at at least a 20% reduction from where we are. in the coming months and years, but that is subject to, you know, the space we operate in is the tier one cap-biz asset finance space like DMOs and others. When we get into those kind of engagements, they become huge programs. They require a lot of resource commitments on-site, as they say, so it's not a reflection of what goes on in Pakistan. And that, for now, is something that It hinders our ability to be aggressive in how we take on these headcount reduction topics. So we're very prudent. Abubakr works closely with the global teams ensuring that we are wary of the numbers that we carry and we're constantly challenging ourselves and the various players in the business to ensure that we get to numbers where the margins start to look a lot better, not just for the business, but for the investor community as you see it. Maybe if you want to add?

Asad, if I could just add to that, and I think a very thorough perspective. So, Todd, I'd like to just add three points to this. First is just to make sure that the markets and the investors and you fully follow that the headcount reduction exercise is not actually as it may appear to be a cost reduction exercise. We are reprioritizing resources and capital where we believe the highest growth opportunities and value creation lies. And as a result of this, we have a sunset or actually significantly reduced service lines that had lower margin, lower growth potential. That's point number one. Number two, we believe that there may be a misunderstanding in the markets around the services part of our revenue profile. When you look at our revenue profile and you see the services line, It's important for me to emphasize that that is primarily, other than a few minor details, primarily related to our own product, services related to our product. And hence, we are committed to be a product-based, agile organization and not have a revenue per employee that mirrors a services organization in the traditional sense. Companies that do not have their products Asad mentioned a number of course. Please do regard that as illustrative. We will continue to assess where we believe that we need to invest and where we need to deprioritize in terms of headcounts.

Okay, that's some really good information. Does that kind of explain why SG&A went up a little bit still from 7.5 to 7.7 million, some of the huge programs you talked about, and as you pursue other opportunities, do we see that SG&A growing despite the headcount, or can you give a little color on that? Sure, sure, sure, absolutely.

You should see that...

I just wanted to...

Sorry, go ahead.

Go on, go on, please, go on, go on. There's a lag somewhere. Please continue.

Sure, apologies. So, Todd, we are expecting that our margins when you compare our SG&A versus revenue will continue to improve. And I think that is an objective that we've outlined and you will continue to see results on that. The increase that you see at the moment of 2.2%, When you consider that as a percentage of the revenue growth, you will see that there is an improvement. Having said this, I'd just like to again mention to you and everyone on the call that we may have quarter-to-quarter fluctuations, but over a mid-term basis, over an annualized basis, we're confident that you will continue to see us executing on our strategy, which will mean improved margins Improved SG&A over revenue and improved operating income margins as well. Thank you for taking my questions.

That's really helpful.

Thank you, Todd.

We have no further questions at this time. Mr. Ghauri, I turn the floor back over to you for closing comments.

Thank you very much, operator. I want to thank you all for your questions. We are very upbeat and excited about this fiscal year and the coming years. We are pleased with the progress we made this quarter, and we remain focused on building on it as we move through the rest of fiscal 2027. Before we go, I want to thank our colleagues around the world for the work behind the quarters results, especially today's call, AB and Asad, of course. And thank you all for your time today and for your continued interest in ETSO. Have a good day.

Ladies and gentlemen, this does conclude today's teleconference.

Thank you all.

You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Thank you, Alberta, for your work. Appreciate it. Bye.

Thank you.