Image source: The Motley Fool.
DATE
Thursday, Nov. 12, 2026
CALL PARTICIPANTS
- Founder and Chief Executive Officer – Najeeb Ghauri
- Global Head of Sales and Group Managing Director of Europe – Asad Ghauri
- Chief Financial Officer – Sardar AB
- Senior Vice President, Legal and Corporate Affairs, General Counsel and Corporate Secretary – Patti McGlasson
- Chief Accounting Officer – Roger Almond
- Chief Marketing Officer – Erik Wagner
TAKEAWAYS
- Revenue — $16.4 million, growing 9.3% year over year driven by increased commercial activity in the U.S. and Europe.
- Constant Currency Revenue — $16.5 million, reflecting a minimal impact from currency fluctuations during the quarter.
- Subscription and Support Revenue — $9.5 million, representing 57.9% of total revenue compared with 59.7% in the prior year.
- Services Revenue — $6.4 million, increasing 6.3% year over year due to product-related implementation services.
- License Revenue — $550,000, contributing to total growth as several implementation milestones were achieved.
- Gross Margin — 50.5%, expanding more than 1,100 basis points from 39.4% due to revenue mix, delivery discipline, and software development capitalization.
- Operating Income — $400,000, improving from an operating loss of $1.8 million in the same quarter last year.
- Operating Margin — 2.5%, compared with a negative 12.2% margin in the prior year.
- Consolidated Adjusted EBITDA — $890,000, representing a 5.4% margin compared with a negative 9% margin.
- Net Income Attributable to NetSol — $160,000, or $0.01 per diluted share, compared with a net loss of $2.36 million.
- Headcount — 1,272 employees, representing a 12% reduction year over year as the company focuses on a leaner organizational structure.
- Cash and Cash Equivalents — $19.7 million as of Sept. 30, compared with $27.1 million on June 30.
- Operating Cash Flow — Negative $5.6 million, reflecting working capital timing and a $3.4 million decrease in contract liabilities.
- Software Development Capitalization — $1 million, compared with zero in the prior year, reflecting qualifying development for the Transcend platform.
- North American Revenue Growth — 25.5%, representing 16.1% of total consolidated revenue for the quarter.
- Subsidiary Share Repurchase — 4 million shares, proposed by the Pakistan-listed subsidiary NetSol Technologies Limited.
- Virtual Lease Services Revenue — 1.7% of consolidated revenues, currently under strategic evaluation for potential sale or wind-down.
- Transcend Retail Go-Lives — Two new U.S. dealerships, Atlanta Autos and Royal Coach RV, were brought live on the platform.
- Average Deal Potential — $10 million, estimated as the upside for top-end customer migrations to the Transcend platform over a five-year period.
- Contract Assets — Increased $2.6 million, reflecting the timing of billing milestones relative to delivery.
Need a quote from a Motley Fool analyst? Email [email protected]
RISKS
- Sardar AB stated, “license mix, implementation milestones, resource utilization and development capitalization, all affect reported margin,” noting that these factors can cause quarterly fluctuations.
- Asad Ghauri warned that large Tier 1 engagements require significant “resource commitments on site,” which “hinders our ability to be aggressive in how we take on these headcount reduction topics.”
- Sardar AB warned that if a sale or wind-down of Virtual Lease Services Limited is completed, the company “may recognize a treatment on disposal and incur exit-related costs.”
SUMMARY
NetSol Technologies, Inc. (NTWK -23.30%) reported first quarter results featuring revenue growth and a return to profitability, driven by its North American operations and the migration of long-standing customers to its modern platforms. Management reported that gross margin expanded to 50.5%, reflecting a more disciplined delivery approach and the capitalization of software development costs. The company stated that its strategic focus remains on scaling Transcend Retail in the United States, upgrading its legacy installed base, and embedding artificial intelligence across its product suite. Furthermore, the company is evaluating strategic options for its Virtual Lease Services subsidiary and has proposed a share repurchase program at its Pakistan-listed subsidiary to optimize capital allocation.
- Management reported that Mercedes Benz USA approved the company as a digital retail provider for its dealer network.
- The company confirmed that BMO, a 30-year customer, is migrating from the legacy LeasePak system to the Transcend Finance platform.
- Chief Financial Officer Sardar AB stated, “we anticipate that a meaningful portion of these timing differences will reverse during the remainder of the fiscal year,” regarding negative operating cash flow in the quarter.
- The company reported that its North American market is currently outpacing overall group growth, with revenue in the region increasing 25.5% year over year.
- Management indicated that AI-enabled tools are now in live use across internal functions including finance, audit, marketing, and sales under a formal policy.
- The company stated that it is targeting a further 20% reduction in headcount over the long term as it shifts toward an agile, product-based organization.
INDUSTRY GLOSSARY
- NFS Ascent: NetSol’s flagship suite of financial applications for the automotive and equipment finance industry.
- Transcend Finance: A core modernization platform for asset finance and leasing operations.
- Transcend Retail: A digital retail platform designed for automotive dealers and financiers.
- LeasePak: A legacy software platform previously utilized by long-standing NetSol customers.
- VLS: Virtual Lease Services Limited, a NetSol subsidiary currently under strategic review.
- Tier 1: Large, high-volume institutional customers, typically global banks or major automotive captives.
- Contract Assets: Revenue recognized for work performed that has not yet been billed to the customer.
Full Conference Call Transcript
Operator: 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 Patty, who will provide the necessary disclaimer regarding the forward-looking statements made during today’s call. Patti, please go ahead.
Patti McGlasson: 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 section of our website at ir.netsoltech.com and has been furnished as an exhibit to the Form 8-K 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 inr.netsoltech.com and due a link included in today’s press release. [Operator Instructions]. I will now hand the call — hand the call over to our Founder and CEO, Najeeb Ghauri. Najeeb?
Najeeb Ghauri: 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 in 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 it in these numbers, it is a good start to the year. I’m not going to overstate 1 quarter, but it is a good start.
The other thing I would point out that this did not come at the 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 give me some confidence but this is not a 1 quarter results. On our last call, I laid out 4 priorities for the year. Scaling Transcend Retails across the U.S. dealer market embedding AI across our products and our operations, upgrading our legacy installed base on to 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 U.S.A. approved that’s sold as a digital retail provider for its dealer network. Along with the new dealer go-lives, Asad will cover, that is a 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 an 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 used 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 LeasePak to Transcend Finance, and they are more of those conversations underway on growing with customers into new markets, while 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 Metal Technologies Americas, while Peter Minshall and Omer Ghaudri relocated to the U.K. 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 Transcend Finance in the Americas. I now turn the call over to Asad Ghauri to talk about — talk through what drove commercial activity this quarter.
Asad Ghauri: 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. We’ve seen a pattern across our customer base of upgrades from legacy platforms and into finance. DMO being a traffic example in the U.S., a 30-year relationship that has now migrated into another couple of decades of relationship and partnership as we move forward. If you on the last call last quarter, you heard about a similar set of moves with Tier 1 global auto captive extending its contracts with us. [indiscernible] Thailand upgraded its platform, a multinational bank in the U.K. renewed their engagement with us.
BMO obviously is the newest entry to this list. Long-standing customers are choosing to bring the relationship with us forward onto our platform rather than looking elsewhere. And that installed base expansion is part of our commercial strategy as we move forward. On digital retail, we brought Transcend Retail live in new — 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.
Sardar Abubakr: Thank you, Asad, and good morning, everyone. In our annual call, we emphasized 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 compared with 59.7% a year ago.
The lower percentage reflects faster growth in services and license revenue in the quarter, not a decline in subscription and support Services revenue, which are related to the product increased 6.3% to $6.4 million and license revenue was approximately $0.55 million. Gross profit rose to $8.3 million from $5.9 million, 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 net sold was $0.16 million or $0.01 per diluted share compared with a loss attributable to net sold of $2.36 million or $0.21 per share a year ago. Net income attributable to noncontrolling 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 5 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, 45% in fiscal 2025 and 39.4% last year against 50.5% this quarter. We view that as progress, of course, not as a basis for extrapolating any single quarter. The gross margin improvement and the positive operating margin reflect revenue mix, delivery discipline and the timing of costs.
On the cost side, the main factor was capitalization of approximately $1 million of qualifying software development compared with none a year ago. lower head count 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 head count perspective, it was 1,272 at September 30 compared with 1,370 at June 30 and 1,442 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 1 quarter, license mix, implementation milestones, resource utilization and development capitalization, all affect reported margin.
Our focus a 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 30. 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 a $1.1 million decrease in accounts receivable. In the fourth quarter, we built and collected ahead of delivery. And in this first quarter, we delivered against those billings.
We also invested 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 net sold shareholders while respecting the rights of all shareholders and applicable regulations. In that context, on October 30, 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 subsidiaries distributable profits. The proposal is subject to approval by the subsidiary shareholders at a meeting on December 3 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, but we are not assigning a financial benefit or assuming a reduction in noncontrolling interest 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 3 months ended September 30, 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 a 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 fronts and finance modernization, scaling fronts in 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% and 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 equivalents balance is consistent with the cash balance of net sold over the last 12 quarters. Alongside these improvements, we are managing working capital timing and maintaining the priorities we’ve 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.
Najeeb Ghauri: Thank you, Sardar. Operator, we are ready to take questions, please.
Operator: [Operator Instructions]. Our first question comes from the line of Greg Burns with Sidoti.
Gregory Burns: When you move a customer like BMO from leaseback to Transcend, what are the — how does that change the economics for you maybe in terms of margin and revenue potential for that customer?
Najeeb Ghauri: Yes. I think I’ll let Asad answer the question. Go ahead, Asad.
Asad Ghauri: I don’t want to be specific, but of course, we see a positive bump are on subscription and other resources 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 MQ organization is.
Gregory Burns: Okay. Maybe you don’t have to speak specifically to BMO. But like when you move in general lead these legacy customers to the Transcend platform, is there — is there…
Najeeb Ghauri: In general for BMO is in the top end of our customer base are courting similar customers around the globe. So — and on average, we’re looking at a $10 million upside for the overall deal over a 5-year period.
Gregory Burns: Okay. And the wind down or divestitures? Is there any other parts of your portfolio? Are you looking to prune any other parts of your portfolio? Are there any other opportunities there to monetize assets.
Najeeb Ghauri: Well, I think so far, we have a pretty good position. I think I’m very confident with the right decision about the VLS. And of course, we closely monitor all of 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, right, the whole organization and is pretty much performing to our expectations.
Sardar Abubakr: If I can 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 CAGR and it’s 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 net sold shareholders across the board.
Asad Ghauri: And just to add to what everyone said. As we laid out a very clear strategy, anything noncore we are looking to review? And if it doesn’t get in the profile of how we see strategically the company moving forward, those will be addressed accordingly, whether it be VLS or others.
Operator: Our next question comes from the line of Michael Kupinski with NOBLE Capital Markets.
Jacob Mutchler: It’s Jacob Mutchler 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?
Najeeb Ghauri: Yes. I can say a couple of points, Asad is also very 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 U.S. base customers. Obviously, we have a very mature 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 so many years with BMO and now they’re growing further with us. So there’s many other even pipeline. So it’s a pretty good time for the company in North America. Do you want to add more, Asad?
Asad Ghauri: So just to add to what Mike said — 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 cycle, 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.
Sardar Abubakr: Sir, can I just add to that? Echoing the comments made by Najeeb and Asad. You will see certain facts in our 10-Q. 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 grew 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 Americas 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.
Jacob Mutchler: 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 how you’re balancing potential acquisitions against investments in organic growth.
Najeeb Ghauri: We do have a strategy. I’ll let both Abu and Asad, as they are quite actively involved in certain opportunities, especially in North America.
Asad Ghauri: So I’ll come in and then Abu can I guess. 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 asset finance space, 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. Abu, if you want to add something?
Sardar Abubakr: 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 said, 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.
Operator: [Operator Instructions]. Our next question comes from the line of Todd Felte with StoneX.
Todd Felte: Congratulations on Najeeb and your team on the progress you made an improvement in margins. Just wanted to touch on the headcount. 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 30. Is there a target that you’re looking at to reduce that head count 2? And how will that affect of the margins and the gross margins? I know in the last call, you had expected margins to be at a minimum of 50% and you hit that target? And then how will they improve down the road?
Najeeb Ghauri: First of all, let me thank you again, Todd, you’ve been a very loyal and committed long-term investor, and I appreciate your loyalty. I think a good question. I’ll have Asad speak to it, and they’ve watched the number very closely. And we’re definitely looking into a leaner organization and bottom line is our focus along with the top line. So go ahead, do you want to add something?
Asad Ghauri: Yes. Yes. So I’ll just start by saying headcount is a key focus area for us. Obviously, that’s — if you understand our business, then headcount is a major contributor to our cost. 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 least a 20% reduction from where we are in the coming months and years, but that is subject to the space we operate in is the Tier 1 captive asset finance space like BMOs 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 hinders our ability to be aggressive in how we take on these headcount reduction topics. So we’re very prudent. [indiscernible] 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 for not just for the business, but for the investor community as we see it. [ Abu ], you want to add?
Sardar Abubakr: Yes. And if I could just add to that. And I think a very thorough perspective. So Todd, I’d like to just add 3 points to this. First is just to make sure that the markets and the investors fully follow that the head count 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 the 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 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 the companies that have to go and search for individual development projects and then move from project to another.
Our objective is to be an agile product-based organization, and it’s part of that. As 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.
Todd Felte: Okay. That good information. Does that kind of explain why SG&A went up a little bit still from to $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 head count? Or can you give a little color on that?
Sardar Abubakr: Sure. Sure. Absolutely …
Asad Ghauri: I just wanted to…
Sardar Abubakr: Sorry. Go ahead.
Asad Ghauri: No, no. Please continue.
Sardar Abubakr: 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 midterm basis or an annualized basis, we’re confident that to see us executing on our strategy, which will mean improved margins, improved SG&A over revenue and improved operating income margins as well.
Operator: We have no further questions at this. Mr. Ghauri, I’d like to turn the floor back over to you for closing comments.
Najeeb Ghauri: 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’ve made this quarter, and we have remained focused I’m building on 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 quarter’s result, especially today’s call, AB and Asad, of course, and thank you all for your time today and for your continued interest in NetSol. Have a good day.
Operator: Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.
Najeeb Ghauri: Thank you, operator, for your work. Appreciate it.
