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Edited Transcript of NTWK earnings conference call or presentation 27-Sep-17 9:00pm GMT

Thomson Reuters StreetEvents

Q4 2017 NetSol Technologies Inc Earnings Call

CALABASAS Sep 28, 2017 (Thomson StreetEvents) -- Edited Transcript of NetSol Technologies Inc earnings conference call or presentation Wednesday, September 27, 2017 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Najeeb Ullah Ghauri

NetSol Technologies, Inc. - Founder, Chairman and CEO

* Patti L. W. McGlasson

NetSol Technologies, Inc. - SVP of Legal & Corporate Affairs, General Counsel and Secretary

* Roger Kent Almond

NetSol Technologies, Inc. - CFO

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Conference Call Participants

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* Michael David Vermut

Newland Capital Management, LLC - Founder

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Presentation

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Operator [1]

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Good afternoon. Welcome to NetSol Technologies Fiscal Fourth Quarter and Full Year 2017 Earnings Conference Call. On the call today are Najeeb Ghauri, Founder, Chairman and Chief Executive Officer; Roger Almond, Chief Financial Officer; and Patti McGlasson, General Counsel.

I would now like to turn the call over to Patti McGlasson, who will provide the necessary cautions regarding the forward-looking statements made by management during this call. Please proceed.

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Patti L. W. McGlasson, NetSol Technologies, Inc. - SVP of Legal & Corporate Affairs, General Counsel and Secretary [2]

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Good afternoon, everyone, and thank you for joining us. Following a review of the company's business highlights and financial results, we will open up the call for questions. Please note that all of the information discussed on today's call is covered under the safe harbor provisions of the Private Securities Litigation Reform Act. The company's discussion may include forward-looking statements reflecting management's current forecast of certain aspects of the company's future, and our actual results could differ materially from those stated or implied. These forward-looking statements are qualified by the cautionary statements contained in NetSol's press releases and SEC filings, including its annual report on Form 10-K and quarterly reports on Form 10-Q.

I would also like to point out that NetSol will be discussing certain non-GAAP measures. The press release issued earlier today contains a reconciliation of these non-GAAP financial results to the most comparable GAAP measures.

Finally, I would like to remind everyone that this call will be recorded and made available for replay on our website at www.netsoltech.com and via link available in today's press release.

Now I would like to turn the call over to Najeeb. Najeeb?

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Najeeb Ullah Ghauri, NetSol Technologies, Inc. - Founder, Chairman and CEO [3]

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Thank you, Patti, and good afternoon, everyone. After the market closed today, we issued a press release announcing our results for the fiscal fourth quarter and full year ended June 30, 2017, a copy of which is available in the Investor Relations sector -- section of our website.

Fiscal 2017 was a pivotal year in NetSol's development. We achieved record revenues for the third straight year, which was driven predominantly by a significant increase in licensee revenues from NFS Ascent. At the same time, we initiated a restructuring of the company to optimize our internal processes, reduce costs and accelerate growth.

These proactive measures have strengthened our organization in the near term and, more importantly, have laid the necessary foundation for profitable growth over the long run while -- all while making NetSol a much more efficient organization as well.

As many of you know, NFS Ascent is our next-gen finance and leasing enterprise solution. We believe that Ascent can truly disrupt the market, because it is a solution that is highly flexible and one based on the latest technology that is unmatched by the incumbents in our space. The fact that we are seeing increasing demand for NFS Ascent by our current Tier 1 auto-captive clients is clear validation that we have one of the best solutions out in the market today.

But while we are pleased with the overall product suite, we have experienced some implementation delays in our client's migration process from our legacy NFS solution to NFS Ascent.

In addition, our current sales process have become much more drawn out because, with this more robust solution, our enterprise clients often require more complex customizations, sometimes with multi-country phased rollouts. This prolonged cycle has required additional sales and marketing spend, temporarily affecting our cost of sales. Ultimately, however, we believe these delays will be worth the current difficulties.

The end result will be that these increased levels of customization and efforts on sales will lead to greater contracts and for longer terms.

The general shift we have seen in our business is that customers are buying for longer periods and are willing to pay up for a premium solution that will last for many years. In that regard, NetSol has positioned itself favorably.

In a minute, I'll come back to discuss our operational highlights and general business outlook in greater detail. But before I get any further, I'll now turn the call over to CFO Roger Almond, who will go over our financial performance for the fiscal fourth quarter and year 2017. Roger?

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Roger Kent Almond, NetSol Technologies, Inc. - CFO [4]

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Thanks, Najeeb. I will begin with a review of our fiscal fourth quarter and full year 2017 financial results ended June 30.

Total net revenues for the fourth quarter were $14.5 million compared to $19.1 million in the prior year period. The decrease in total net revenues was primarily due to a decrease in license revenue of $1.1 million and services revenue of $3.4 million.

For all of fiscal 2017, total net revenues were a record $65.4 million compared to the previous record of $64.6 million in fiscal 2016. The increase in total net revenues was primarily due to an $8.5 million increase in license fees offset by an $8.5 million decrease in service revenues.

Total license fees in Q4 were $3.3 million, a decrease of 26% from $4.4 million in the prior year period. For the year, total license fees were up 85% to $18.5 million from $10 million in fiscal 2016. The increase in total license fees for the full year was primarily due to the license revenue recognized for the 12-country NFS Ascent contract.

Total maintenance fees in Q4 were $3.6 million, which were consistent with the prior year period. For the year, total maintenance fees were $14.5 million, an increase of 6% from $13.7 million in the prior fiscal year. The increase in total maintenance fees for the full year was primarily due to the start of new maintenance agreement from customers who went live with our products during the latter stages of fiscal year 2016 and into fiscal year 2017.

Total services revenue for the quarter were $7.6 million, a decrease of 31% from $11 million in the prior year period. For the year, total services revenues were $32.4 million compared with $40.9 million for the prior fiscal year. The decrease in total services revenue for the quarter and year was primarily due to a decrease in revenues associated with new implementations and a decrease in revenues from our joint venture with one insurer.

Total cost of revenues was $9.9 million for the fourth quarter, an increase of 13% from $8.8 million in the fourth quarter 2016. For fiscal year 2017, cost of revenues was $37 million or 56.5% of total net revenues, up from $33.7 million or 52.3% of total revenues in the prior year. The increase in cost of revenues for the quarter and year was predominantly driven by an increase in salaries and consultant fees of $2.9 million and an increase in business development-related travel cost of $800,000.

Gross profit for the fourth quarter fiscal 2017 was $4.6 million or 31.7% of net revenues, down from $10.3 million or 53.9% of net revenues in the fourth quarter fiscal 2016. The decrease in gross profit was primarily due to the $4.6 million decrease in revenues for the quarter and a $1.1 million increase in cost of revenues for the quarter.

Gross profit for fiscal 2017 decreased to $28.4 million or 43.5% of net revenues from $30.8 million or 47.7% of net revenues in fiscal 2016. The decrease in gross profit was primarily due to the $3.2 million increase in cost of sales.

Operating expenses for the fourth quarter were $7.9 million or 54.7% of net revenues, an increase of 9% from $7.3 million or 38% of net revenues in the same period last year. The increase in operating expenses was primarily due to the increase in the provision for bad debt.

Operating expenses for fiscal 2017 increased to $29.4 million or 45% of net revenues from $24.5 million or 38% of net revenues in fiscal 2016. The increase in operating expenses was primarily due to an increase of $1.9 million in selling and marketing expenses, an increase in the provision for bad debt of $1.2 million and an increase of $2 million in general and administrative expenses.

As we talked about on our last call, we implemented cost-cutting and operational efficiency measures in the second half of the year, which are expected to result in approximately $5 million in savings in fiscal 2018. We plan to continue to look for opportunities to further optimize our cost structure and processes.

Turning to our profitability metrics. Our GAAP net loss attributable to NetSol for the fourth quarter of 2017 totaled $3.1 million or $0.28 per diluted share. This compares with GAAP net income of $2.1 million or $0.19 per diluted share in the fourth quarter of last year. GAAP net loss attributable to NetSol for fiscal 2017 totaled $5 million or $0.46 per diluted share compared to net income of $3.4 million or $0.32 per diluted share for fiscal 2016. The GAAP net loss was primarily due to an increase of $3.2 million in cost of revenues and an increase of $4.9 million in operating expenses.

As we mentioned earlier, during fiscal 2017, we implemented a cost-reduction plan as well as other organizational transformation initiatives. At NetSol, we are bottom line-focused as much as we are top line growth-driven. We anticipate returning to GAAP profitability in fiscal year 2018 as we execute new Ascent programs, which are currently in the negotiation phase with various new and existing customers.

Moving to our non-GAAP metrics. Non-GAAP adjusted EBITDA loss for the fourth quarter of fiscal 2017 totaled $851,000 or $0.08 per diluted share compared with non-GAAP adjusted EBITDA of $3.6 million or $0.34 per diluted share in the fourth quarter of last year.

For the full fiscal year 2017, non-GAAP adjusted EBITDA totaled $2.8 million or $0.26 per diluted share compared with $9.1 million or $0.86 per diluted share in fiscal 2016.

As we disclosed in our earnings press release today, beginning with the fourth quarter fiscal year 2016, we revised our calculation of adjusted EBITDA to exclude the portion of adjusted EBITDA that is attributable to the noncontrolling interest in our subsidiaries. We believe this supplemental disclosure provides additional insight into the true operational performance of our business. Please see the reconciliation schedules contained in our earnings release for our revised calculations of adjusted EBITDA for the fourth quarter fiscal year ended June 30, 2016 and 2017.

Now turning to our balance sheet. At the quarter-end, we had cash and cash equivalents of approximately $14.2 million or approximately $1.3 per diluted common share, which is up from $11.6 million or approximately $1.09 per diluted common share at June 30, 2016.

On July 18, our Board of Directors approved a stock repurchase program that authorizes repurchases of up to 1 million shares of our common stock through mid-December of this calendar year. Our plan is to fund the repurchase of shares with our existing cash balance and cash generated from operations.

As of August 31, 2017, which was the last day of the open trading window before our quiet period, we had repurchased 111,780 shares of our common stock for an aggregate value of approximately $500,000. The repurchase program reiterates our confidence in the strength and future growth potential of NetSol to our shareholders, and we plan to continue to act opportunistically on this program going forward.

That concludes my prepared remarks. I'll now turn the call over to Najeeb, who will provide an update on our sales progress and outlook for our respective regions. Najeeb?

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Najeeb Ullah Ghauri, NetSol Technologies, Inc. - Founder, Chairman and CEO [5]

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Thank you, Roger. From a sales and marketing standpoint, 2017 was a busy year for NetSol marked with significant activity across all of our region markets. I'd like to take some time now to provide updates related to those markets in particular, beginning first with a few highlights regarding our progress in North America.

Last April, our largest NFS legacy implementation went live with a major U.S. company based -- U.S.-based drug manufacturer for their Mexicali location, and we also secured a new license for LeasePak with a Korean-based automotive captive for its U.S. operations valued at $0.5 million.

Also, during 2017, we signed a new [user-based] contract with a leading servicer who uses NetSol solutions to service loans and leases with several originators.

We are also in discussions with a few listing companies in the U.S. to deploy new modules for Ascent WFS, our Wholesale Finance System.

During fiscal 2017, we completed several successful demonstrations of our NFS Ascent solution for a major U.S. software company. We were in the final stages of a competitive situation in which NetSol was one of the 2 finalists. However, the software company decided to temporarily postpone its plan to acquire a next-gen solution.

From a personnel standpoint, we also replaced a few employees this fiscal year and plan to fill those positions with experts in our new technology platform. These changes will strengthen our team of domain experts, particularly in NFS Ascent, which are increasingly helpful going forward given our new sales cycles.

Overall, our North American sales pipeline for Ascent remains robust, and we continue to pursue large multimillion-dollar deals. We look forward to updating you on our progress in the quarters ahead.

Now shifting gears to our APAC and European markets where we continue to make encouraging progress. Since the initial regional launch of NFS Ascent back in the 2013, 2014 period, we have signed 4 major contracts, experienced significant traction from potential new customers as well as increasing interest from customers looking to upgrade to Ascent from legacy systems. Let me provide color on some of the very large projects currently in negotiation stages.

One, we are underway and have made meaningful progress recently with a luxury European auto manufacturer for a multi-country implementation in its APAC markets. In Australia, we have a very large bank interested in our Ascent solution for multiple locations. We also have at least 3 of our existing auto captive in China in the discussion stage for conversion to Ascent from their legacy systems.

In Europe, we have a few major auto captives and banks very interested in our Ascent solution, and we are advancing those discussions.

In total, our pipeline in the Asia Pacific and the European regions is in excess of $100 million for just Ascent alone.

Looking at the business from a higher perspective, I'm extremely proud of what we accomplished operationally in fiscal 2017. The year was highlighted by several cost-reduction initiatives we implemented, which have made NetSol a much leaner and more efficient organization.

In total, we expect these measures to result in at least $5 million of annualized cost savings beginning in fiscal 2018.

As Roger mentioned, we will continue to seek additional opportunities to further optimize our cost structure and processes.

And while we are continuing to rightsize our operations in certain areas, we are also looking actively to make key strategic hires to further strengthen our company. Our recent appointments of industry leaders, Georg Bauer and Henry Tolentino, to our newly formed advisory board are prime examples of this initiative. Georg has more than 30 years of experience in shaping financial services for leading automotive companies on a global scale and is widely recognized as an innovative leader in auto finance.

Among his many accomplishments, he built the financial services businesses for Tesla Motors in more than 20 markets in the European Union and Asia Pacific regions. He also served as CEO of Global Financial Services for BMW Group and CEO of Mercedes-Benz Credit in the United States.

Henry brings more than 30 years of experience as well in the auto finance industry, working with global manufacturers such as Toyota and General Motors. It is a tremendous vote of confidence that such well-respected industry executives cannot only see the abundant opportunities with NetSol but also had the desire to help us successfully capture these opportunities.

As we have said before, our goal with the advisory board is to leverage proven industry experts, like Georg and Henry, in refining our -- and enhancing our business and sales strategies to drive profitable growth.

While we are encouraged with the operational progress we made in fiscal 2017, we recognize that there are temporary challenges ahead of us in the form of prolonged sales cycles and implementation delays.

More immediately, the first quarter of fiscal 2018 should be somewhat subdued, which is not unexpected, and also in line with historical seasonality of our business. The one positive takeaway from this is that our business has faced multiple economic and sales cycles over the years and has ultimately stood the test of time because of our resilience and ability to adapt.

Keeping this attitude in perspective, our focusing in the near term will be on cultivating the highest priority prospects in our sales pipeline. We believe the evolution to a next-gen Ascent from a legacy solution provides the most meaningful opportunity for us, both now and for several years onwards.

In fact, despite the stretched implementation and sales cycles, albeit temporary, we are experiencing greater overall opportunities to sign multi-country and multimillion-dollar deals. Our existing client base presents the most immediate cost-effective and logical growth opportunity for our NFS Ascent solution, which will also drive gross margin and adjusted EBITDA expansion.

Overall, these growing pains, while never easy, mark the beginning of our path toward becoming a faster-growing and profitable company for the long haul.

Looking ahead, we remain very optimistic about NetSol's prospects. The goal of our cost reductions, personnel enhancements and process optimization is to ensure that we are in a position to capitalize on the significant opportunities within the global asset finance and leasing industry.

We have and will continue to maintain our leadership position in the large and growing Asia Pacific region and are steadily expanding our position in the North American market as well.

As we have said before, there is a $5 billion market in North America alone and nearly $1 trillion worldwide for leasing and finance industry, a tremendous opportunity that continues to grow. But while we work diligently to penetrate these growth markets over time, we believe we will continue to reward shareholders along the way through proactive actions like our stock repurchase program, which we believe demonstrates our confidence in the strength and future growth potential of our company.

Overall, our business outlook in all 3 of the major regions in which NetSol operates is very strong. One, in the Asia Pacific region, particularly markets in China, Australia, Indonesia, Thailand and South Korea, we are seeing continuous growth all around.

China has been especially impressive with close to 7% increase in its GDP from 2017 to 2018, and we are confident of continuous momentum there over the next 3 years. This belief is most clearly reflected in demand we are seeing from the local and multinational auto captive finance companies for our Ascent-related solutions. This pent-up desire is driving auto sales volume, and there is an increasing need to transition to much more robust and scalable solutions.

Two, we also see the European market showing signs of turning around as some large banks' auto captives are in need for a next-generation solution to meet their growing leasing volumes. And while the North American market is much more matured and saturated, we believe that we also have a giant market to tap into and have ramped our marketing and sales efforts to address this growing need.

In closing, for nearly 20 years, NetSol has been about global reach, consistent innovation and quality people. The NetSol of the future will not be created in a day. But as we execute our key initiatives, we have the potential to transform into a much faster-growing and more profitable company built to last for many years to come.

And with that, I'd like to open the call for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is from Mike Vermut from Newland Capital.

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Michael David Vermut, Newland Capital Management, LLC - Founder [2]

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A quick question for you. When we look at -- when I look at the financials, what happened is you had expenses going up, you had revenues going down. And I know that the costs are going to start hitting now. But realistically, when you look at it, I got to believe that there is more than $5 million of costs just to rationalize the business after -- we put Ascent out there, now it's just selling and marketing getting out there. When you look at the top end of the range, where could we get on these cost savings? Because if you look at it, just putting $5 million in there should get us over the EBITDA hump to profitability. But realistically, what else is out there that you're looking at on the cost side?

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Najeeb Ullah Ghauri, NetSol Technologies, Inc. - Founder, Chairman and CEO [3]

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Yes. Mike, let me give you example -- it's a 2-phase question. Number one would be we started this restructuring initiative exactly around the beginning of this calendar year, like around 1st of January. And we ended the first phase approximately in the fourth quarter, somewhere in the middle. And the first phase included a reduction of headcount primarily from the legacy systems and, of course, some weaker employees, but also included consolidation of offices, processes and many other features in this first initiative. So we -- in that phase, we calculated the net impact. We came up with a minimum $5 million and perhaps more from just that initiative because the -- our reduction of legacy system employees will continue, maybe not as aggressive because we let almost 180 people go in that phase throughout the company; which is about 11% of the headcount reduction. The impact of this $5 million-plus will flow in, in this fiscal year, gradually each quarter and then, of course, we believe, annualized business is about at least $5 million. Now the second part of this initiative is, we call it, organization transformation. That initiative basically has to do with a lot of processes, again, consolidations, centralizing sort of the admin/HR/accounting function to our centralized location in Lahore where we have a lot less cost. I think we have big advantage of using our services, not relying on expensive accountants or HR in outside the Lahore City. So those kind of steps, initiatives, are ongoing. It also means that we'll continue to also leverage, where possible, any way to look at our cost structure in every entity. For example, we closed down (inaudible) office and consolidated with our head office in L.A. And most of the programmers, developers, who are supporting the LeasePak customers, which is a kind of cash cow for us, now they're working from their homes and for a more seamless transition, which are also even better because we save a significant amount of costs through the rent by giving up that office and now combining it with our U.S. office. There are many other steps, such initiatives, taken in the company. So to your question, absolutely right, $5 million is just the beginning. We will leave no turn -- corner unturned to find opportunities to become more nimble, leaner and a much more profitable company.

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Michael David Vermut, Newland Capital Management, LLC - Founder [4]

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Excellent, okay. And then a couple more quick ones here. When you look at the pipeline, it's great to say we have $100 million-plus. And I'm sure it's actually larger than that, that we can approach out there. But when we realistically look at what's near-term, and I'm meaning 6 months of wins, not of recognizing revenue but of contracts that we feel high probability on. And I'm not setting you in -- because things always go wrong. What would you say are the likely size of the wins, type of contracts that we're looking at and just waiting, that are likely? What is likely to hit in this year to really set up a fantastic 2018, with the cost cuts and then the higher margins and the revenues coming on?

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Najeeb Ullah Ghauri, NetSol Technologies, Inc. - Founder, Chairman and CEO [5]

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Yes, Mike. As I mentioned, and Roger mentioned, one thing for sure that our sales cycle is 6 months, 12 months. We have seen some deals happen within 6 months for 2 of the deals signed for Ascent earlier in 2016. And then, of course, some took 9 months. The one we announced 1.5 years ago took at least 9 months. At this stage when I mentioned key projects, which are the highest probability -- we just mentioned those projects, those programs under discussion -- which are at a much higher, advanced stage of coming to closure. Because when we see a major potential contract in APAC market with a European luxury brand auto manufacturers, we have advanced our discussion in the last 6 to 8 months through workshops, demos, technical feasibility, financial, commercial, you name it. And that some of them are also on their way to visit our facility in order to last box to tick. I think that's a very encouraging project. The volume size could be $20 million to $50 million, depending on how many countries. But it's a large deal, and we are really excited about it. We have put in a lot of effort. So many people from sales, presales development, business analysts have put in a lot of time and effort to show the product in 2 different places, in China and in England, they came to both locations. So part of the cost you see on the travel and presale is incremental from last year compared to 2016, because we did a lot of sales activity. So I think, to be more specific, there's one major deal we have quite gung-ho focused on. And if it were to happen, they have to make a decision by December 31, that means they must decide who is the lucky winner between 2 finalists, which came down from 10 companies down to NetSol and another company. Now in relation to other projects in pipeline, I mentioned about 3 possible conversion. In China, there are existing multinational customers who are often legacy for many years. The negotiations with these customers are advancing quite rapidly. All these customers are very happy users for our NFS -- legacy system since 5 or 10 years period in China, and they are again large companies. So they are looking into our solutions very aggressively. Timing could be anywhere from Q2, Q3. Then we talked about 2 deals in Europe, especially in U.K. market; so very encouraging. I wasn't that bullish 6 months ago, but things are changing. I think the references are out, a lot of either existing customers who are legacy or new customers who have not yet bought our systems are finding out about the implementation. I mean, there have been press releases given, about 3 locations -- or rather, 4 locations gone live with a large customer in New Zealand, Australia, South Korea and Thailand, I believe. So those kind of references are paying dividends because the word is out that we are not only signing deals -- maybe not at a faster pace -- but going live in those locations. That's a very big testimony that we are actually doing well with our Ascent progress and implementation. It's taken longer in some cases. But I think those references are very meaningful to us. So I believe 2018 is an important year, as any other year, 2017 in history, it is important in 2 ways. One is to see a few new deals of Ascent, larger size in this fiscal year, and to see the benefit of our cost cut initiatives. So all in all, we're looking for a better year than 2017.

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Michael David Vermut, Newland Capital Management, LLC - Founder [6]

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Excellent. And another one. So Roger, I think I may have misheard this, we will return to GAAP profitability in fiscal 2018?

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Roger Kent Almond, NetSol Technologies, Inc. - CFO [7]

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Yes. But I put a caveat in there: if we get some of these deals that we are anticipating. So based on cutting expenses, we cut $5 million of expenses out I'm at GAAP profitability right there if we keep our current revenue. We do need to replace revenues, we've recorded license revenue and -- for the 12-country deal -- we do need to replace that revenue with current -- with new projects. So if we get a couple of these Ascent deals that we are very hopeful for, then we anticipate turning to GAAP profitability.

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Michael David Vermut, Newland Capital Management, LLC - Founder [8]

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Excellent. And then, so then that I assume cash flow-wise would be significant, right? Just on an EBITDA basis, you'd be looking -- if you were positive on a GAAP EPS basis, that will be between $5 million and $10 million on an EBITDA basis if we get this theoretically, just the math?

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Roger Kent Almond, NetSol Technologies, Inc. - CFO [9]

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It's kind of at that breakeven point, at EBITDA right now, you add $5 million back. And then from our losses this year, kept those expenses out then, as you said, right there to the EBITDA value.

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Michael David Vermut, Newland Capital Management, LLC - Founder [10]

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Great. So is it likely we could be around $5 million just for the cost saves next year on an EBITDA basis?

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Roger Kent Almond, NetSol Technologies, Inc. - CFO [11]

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Right.

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Michael David Vermut, Newland Capital Management, LLC - Founder [12]

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Okay. And then last question, on the buyback. Our balance sheet's extremely strong, trading nicely below -- if you want to look at a tangible book value, we're below that. You are the best judge -- judges of how these revenues come in and where our costs are and how profitable we're going to be. And I assume we get one shot at this buyback the next -- one shot, meaning over the next 6 months before these new deals come in. I assume we plan on being aggressive on the buyback and possibly upping it if we have the opportunity -- the size of the buyback.

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Najeeb Ullah Ghauri, NetSol Technologies, Inc. - Founder, Chairman and CEO [13]

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Yes, Mike, absolutely. We initiated this about a couple of months ago, and we bought at least 112,000 shares. We will continue this activity, and we'll base on -- of course, our cash is healthy as of June 30. We will base on our cash and new cash coming in, receivables, and how we manage our cash reserve balances because the business is very fluid right now. There is lot of activities. While we have made cost cuts and continue to cut costs on the legacy system, but we are very aggressively focusing on acquiring new customers. So yes, we'll run like that once the quiet period ends and see where we are with the cash, and how much we can dedicate. But we are committed to create shareholder value by implementing this all the way as long as we can sustain the cash position. And I think this is a very committed effort, and we'll keep going.

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Michael David Vermut, Newland Capital Management, LLC - Founder [14]

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Yes. But also hope to see -- I know, Najeeb, I know you always buy stock, it would be nice to see the board finally buy some stock and the rest of the management team purchase stock as well at these levels.

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Najeeb Ullah Ghauri, NetSol Technologies, Inc. - Founder, Chairman and CEO [15]

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Well, I can speak for myself, but I can't speak for the board, but they do that once in a while. They all have their own, I think, limitation. But look, we have a very strong belief. You always see from these insiders is only buying, you never see -- hardly seen any sellers from the insiders, so that is a vote of confidence.

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Operator [16]

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(Operator Instructions) At this time, this concludes our question-and-answer session. If your question was not addressed during the Q&A session, please contact NetSol's Investor Relations team by e-mailing them at ntwk@liolios.com or by calling them at (949) 574-3860.

I'd now like to turn the call back over to Mr. Ghauri for closing remarks.

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Najeeb Ullah Ghauri, NetSol Technologies, Inc. - Founder, Chairman and CEO [17]

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Yes. Thank you for joining us today. I especially want to thank our investors for continued support and our dedicated employees for their ongoing contribution worldwide. We look forward to updating you in the Q1 call in about middle of November. Thank you very much, and have a good evening.

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Operator [18]

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