Patti McGlasson - Senior Vice President Legal & Corporate Matters, General Counsel and Corporate Secretary Najeeb Ghauri - Founder, Chairman and Chief Executive Officer Roger Almond - Chief Financial Officer

Good morning, and welcome to the NetSol Technologies Fiscal First Quarter 2019 Earnings Conference Call. On the call today are Najeeb Ghauri, Chairman and Chief Executive Officer; Roger Almond, Chief Financial Officer; Naeem Ghauri, President, Global Sales; Jeff Bilbrey, President, North America; 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.

Good morning, 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 our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. 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 non-GAAP financial results to their 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’d like to turn the call over to Najeeb. Najeeb?

Thank you, Patti, and good morning, everyone. I’m delighted to be calling in today from our NetSol Technologies campus in Lahore, Pakistan. This campus is our center of excellence, where we provide our software development and implementation that support our clients worldwide. This is our engine for product delivery and growth. The first quarter represented another solid performance for NetSol across the board. Most notably, we grew our top line 28% year-over-year, which was capitalized by initial license fee, revenue recognition from some of the major contract when we announced over the past few months, which I plan to discuss a bit again today. Focusing on the bottom line, we continue to reap the benefit from our immensely improved cost structure, registering close to another $1 million in net income in Q1 and improving our EPS number by $0.11 per share over a loss in the first quarter of 2018. In addition to improving our overall profitability metrics, there are several other positive secondary consequences that our cost reduction initiative will enable going forward. Logistically, we have created more headroom and capability to scale our business, which we believe can support a significantly greater amount of revenue without requiring meaningful incremental investment to back it. You are already starting to see this leverage in our model via the impressive gross profit and margin improvements we registered over the prior year quarter. Given that, not a lot of time has passed since we reported our fiscal year-end 2018 earnings, today’s call will be briefer in nature, and I don’t plan to replay the events we mentioned just a few weeks ago and after an overview of the quarter’s financials, I will – I plan to recap some of the major highlights from the fiscal first quarter, as well as spend a little more time on some of our ongoing initiatives before finishing with an updated outlook for the rest of the year. But before I get into those items, I’m going to ask CFO, Roger Almond, to walk us through the financial results for the quarter. Roger?

Thanks, Najeeb. Turning to our fiscal first quarter 2019 financial results ended September 30, our total net revenues for the first quarter were $16.4 million, compared to $12.8 million in the prior year period. The increase in total net revenues was primarily due to an increase in total license fees of $5.6 million and an increase in total maintenance fees of $163,000, which were offset by a decrease in total services revenue of $2.2 million. Total license fees in Q1 were $6 million, compared to $370,000 in the prior year period. The increase in total license fees was primarily due to the license revenue recognized with a 5-year contract that was signed with the Tier 1 European auto captive finance company to implement our NFS Ascent platform in China. Total maintenance fees in Q1 were $3.7 million, compared to $3.6 million in the prior year period. The increase in total maintenance fees for the quarter was primarily due to the start of new maintenance agreements with customers who went live with our products. We anticipate maintenance fees to gradually increase as we implement both our NFS legacy product and our NFS Ascent product. Total services revenue for the quarter were $6.7 million, compared to $8.9 million in the prior year period. The decrease in total services revenue for the quarter was primarily due to a decrease in related party revenues from our joint venture with one insurer of approximately $1.1 million. Total cost of revenues was $8.2 million for the first quarter, compared to $8 million in the first quarter 2018. The increase in cost of revenues for the quarter was predominantly driven by increases in travel and other expenses, which were offset by decreases in salaries and consultants cost, as well as depreciation and amortization cost. Gross profit for the first quarter fiscal 2019 was $8.2 million, or 50.2% of net revenues, which was up from $4.8 million, or 37.5% of net revenues in the first quarter of fiscal 2018. The increase in gross profit as a percentage of net revenues was primarily due to an increase in total revenues of $3.6 million, which was offset by a minor increase in cost of revenues of $152,000. Operating expenses for the first quarter increased 12% to $6.6 million, or 40.5% of net revenues from $5.9 million, or 46.3% of net revenues in the same period last year. The increase in operating expenses for the quarter was primarily due to increases in research and development and general and administrative expenses, which were offset by decreases in selling and marketing expenses and depreciation expenses. Moving forward, we plan on judiciously allocating additional resources to our R&D budget as we focus increasingly on our innovation-related initiatives. Turning to our profitability metrics. Our net income from operations was $1.6 million for the first quarter, an increase of $2.7 million from a net loss from operations of $1.1 million in Q1 of last year. Our GAAP net income attributable to NetSol for the first quarter fiscal 2019 totaled $963,000, or $0.08 per diluted share. This compares with a GAAP net loss of $369,000, or $0.03 per diluted share in the first quarter of last year. The increase in GAAP net income attributable to NetSol was primarily due to an increase in total revenues of $3.6 million, as discussed a moment ago. Moving to our non-GAAP metrics, our non-GAAP adjusted EBITDA for the first quarter fiscal 2019 was $2.2 million, or $0.19 per diluted share, compared with non-GAAP adjusted EBITDA of $970,000, or $0.09 per diluted share in the first quarter of last year. As we have previously disclosed in our earnings releases, our calculation of adjusted EBITDA, exclusive portion of adjusted EBITDA that is attributable to the non-controlling interest in our subsidiary. We believe this supplemental disclosure provides additional insight into the true operational performance of our business. Please see reconciliation schedules containing our earnings release for our revised calculations of adjusted EBITDA for the fiscal first quarter ended September 30, 2018. Turning to our balance sheet. At quarter-end, we had cash and cash equivalents of approximately $20.4 million, or approximately $1.78 per diluted common share, which was up from $8.6 million, or approximately $0.77 per diluted common share at September 30, 2017. That concludes my prepared remarks. I’ll now turn the call back over to Najeeb. Najeeb?

Thank you, Roger. As I alluded during my opening remarks, we had a stellar quarter through and through top to bottom. On a general level, we saw a return to growth that we expect to continue through the rest of the fiscal year, as well as our fourth consecutive quarter of profitability. As most of you are aware, the fiscal first quarter is usually our slowest due to traditional seasonality-related issues. And while our results on a sequential basis remain relatively even, on a year-over-year basis, we did a great job fighting through the typical malaise of the period and delivered strong results, which will serve as a springboard for the rest of the fiscal year. Also, I mentioned earlier, the strong top line improvement we saw in Q1 was a result of the initial revenue recognition on some of the major contract wins we have announced over the past few months. Going forward, we feel that these marquee wins will not only bolster our results as we work through the implementation process, but they will also serve as additional proof points that support the quality of our products and further confirm the market’s growing demand for Ascent. To briefly recap, in August, we announced an initial five-year contract valued at $30 million at least to implement both Ascent, Retail and Wholesale platforms in China for a European Auto Manufacturing Giant, which is BMW. We view this deal as a major catalyst for fiscal 2019, as it solidifies our position as a leader in the space and will propel us to an even stronger position as we continue to execute on our strategy to drive long-term shareholder value. Additionally, in September, we announced a new multimillion dollar contract with one of the leading American multinational auto manufacturers to implement NFS Ascent Retail platform in China. This Fortune 500 customer has been a titan of an industry from the very beginning and has also grown into a significant Tier 1 player in China for the last 15 years. So we are obviously looking forward to a successful implementation and to growing our relationship with this customer in the coming months. We also commenced a data migration project for an existing customer, which is expected to generate approximately $0.5 million in additional revenues for the next few months. More recently, last month, we were selected by a U.S. company by the name of Speed Leasing to implement, both our LeasePak Cloud, SaaS platform and mAccount platform, powered by the NFS Digital suite. LeasePak Cloud with integrated mAccount seamlessly enabled customer self-service on popular mobile platforms or any web device. I may have mentioned of our innovation lab on some of our previous calls that I would like to spend a little bit of extra time today to provided an update on the progress we have made in this initiative more recently. As a reminder, the NetSol Innovation Lab looks at harnessing creative technologies and especially Fintech products, which will have a major long-term impact on both asset finance, as well as the general shift to mobility-focused products. Our method to accomplish this employs a two-pronged strategy. First, what we refer to our core innovation track focuses on future proofing, product roadmap for both NFS Ascent and NFS Digital. We do this through the selective application of Creative Technologies like artificial intelligence, machine learning and blockchain with a goal of enhancing the current platform of auto and wholesale finance. More simply, we’re looking for ways to produce increased efficiencies in the overall process, as well as technologies. Second, we’ve been working directly with our customers across the globe to funnel the best or most readily addressable problem statements and developing proof-of-concepts, or PoCs, for early discovery, design and implementation. Once a PoC successfully reaches the final stage, we can then build a minimum viable product for commercialization. On a general level, here’s why we think this is the best step forward. While we are looking at the broader Fintech landscape in areas that are definitely in earlier stages of development, we’re able to apply our technological savvy and experience in building world-class products for a mature market and work directly with our existing customers in those markets to tackle future problems they specifically want addressed. Not only does this process improve our relationships with existing future customer base, we are able to help – helping to build a sustainable competitive advantage and barrier to entry well into the future. At the beginning of the year, we appointed Murad Baig as our Chief Innovation Officer, and tasked him with heading up the innovation lab. Murad come – came to us from Deloitte, where he led innovation, blockchain and disruptive technology across the firms, banking and securities practice. Murad is also part of Deloitte’s UK Fintech leadership team and contributed widely as a subject matter expert, providing general thought leadership, as well as specific insights around how blockchain could be leveraged to create efficiencies in the financial service sector to the SCA and World Economic Forum. We think Murad is a rock star in the space and we’re excited to see what he’s able to accomplish under the NetSol banner, our business, as well as our client. While we have always been optimistic about NetSol’s prospect, it is still gratifying to be at a position where that optimism is starting to be shared more widely. The market is recognizing Ascent for the superior technology – technological offering that it is and our numbers are starting to reflect that too. Now that we have gone through the necessary restructuring, we are trying to continue building on our initial quarterly growth as a leaner, more focused organization. Looking further ahead, we are reiterating our previously stated prediction of double-digit top line growth over the whole of the fiscal year. We believe that the company is situated to meet full-year revenue number of up to $70 million, given the information and internal projection we have at this time. While we believe current facts support us, we plan to provide updates on our progress in subsequent quarters. Simply put, NetSol is healthier, stronger and better than we have been for sometime. We continue to work through the – through our prodigious pipeline, focusing our efforts on the larger revenue opportunities, the longer-term sales cycles, while still taking advantage of the smaller and mid-range deals we can expect to close on a shorter timeline and in a more consistent manner. This diversified mix of new opportunity has us strategically positioned to continue building on our leadership position in the APAC markets, while continuing our expansion efforts in Europe, as well as in North America. Moving forward, our focus remains on positioning NetSol to be able to effectively capitalize on the significant long-term opportunity in the massive global asset finance and leasing industry, while also profitably scaling our business. And with that, I’d like to open the call up for questions. Operator?

Thank you. We will now be conducting a question-and-answer session. [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 emailing 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 any closing remarks.

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

Thank you for joining us today for NetSol’s fiscal first quarter earnings call. You may now disconnect. Q -: