UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
☒ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
FOR
THE FISCAL YEAR ENDED JUNE 30, 2024
or
☐TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Commission
File Number 0-22773
NETSOL
TECHNOLOGIES, INC.
(Exact
Name of Registrant specified in its charter)
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
16000
Ventura Blvd., Suite 770,
Encino,
CA91436
(Address
of principal executive offices) (Zip code)
(818)222-9195
(Issuer’s
telephone number including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of exchange on which registered
Common Stock, $0.01 par value per share NTWK NASDAQ
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
Yes
☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):
Large Accelerated Filer ☐ Accelerated Filer ☐
Non-accelerated Filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The
aggregate market value of the Common Stock held by non-affiliates of the registrant was approximately $21,489,666 based upon the closing
price of the stock as reported on NASDAQ Capital Market ($2.20 per share) on December 31, 2023, the last business day of the registrant’s
second quarter. As of September 20, 2024, there were 12,369,922 shares issued and 11,430,891 outstanding of its $.01 par value Common
Stock and no Preferred Stock was outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
(None)
ANNUAL
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
ACT OF 1934
TABLE
OF CONTENTS AND CROSS REFERENCE SHEET
PAGE
PART I
Note About Forward-Looking Statements
Item 1 Business 1
Item 1A Risk Factors 12
Item 1B Unresolved Staff Comments 12
Item 1C Cybersecurity 13
Item 2 Properties 14
Item 3 Legal Proceedings 14
Item 4 Mine Safety Disclosures 14
PART II
Item 6 [Reserved] 15
Item 7A Quantitative and Qualitative Disclosures about Market Risk 32
Item 8 Financial Statements and Supplementary Data 32
Item 9A Controls and Procedures 32
Item 9B Other Information 32
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 32
PART III
Item 10 Directors, Executive Officers and Corporate Governance 33
Item 11 Executive Compensation 38
Item 14 Principal Accountant Fees and Services 52
PART IV
Item 15 Exhibits and Financial Statement Schedules 54
i
NOTE
ABOUT FORWARD-LOOKING STATEMENTS
This
Annual Report on Form 10-K contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of
1995 relating to the development of the Company’s products and services and future operation results, including statements regarding
the Company that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected.
The words “believe,” “expect,” “anticipate,” “intend,” variations of such words, and
similar expressions, identify forward looking statements, but their absence does not mean that the statement is not forward looking.
These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult
to predict. Factors that could affect the Company’s actual results include the progress and costs of the development of products
and services and the timing of the market acceptance. Forward looking statements may appear throughout this report, including without
limitation, the following sections: Item 1 “Business,” and Item 7 “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.” We undertake no obligation to revise or publicly release the results of any revision to these
forward-looking statements, except as required by law. Given these risk and uncertainties, readers are cautioned not to place undue reliance
on such forward-looking statements.
As
used herein, “NETSOL,” “the Company”, “we”, “our,” and similar terms include NetSol Technologies,
Inc. and its subsidiaries, unless the context indicates otherwise.
PART
1
ITEM
1 - BUSINESS
GENERAL
NETSOL
is a global leader in delivering state-of-the-art solutions for the asset finance and leasing industry, serving automotive and equipment
OEMs and financial institutions across over 30 countries. Since its inception in 1996, NETSOL has been at the cutting edge of technology,
pioneering innovations with its asset finance solutions and leveraging advanced AI and cloud services to meet the complex needs of the
global market. Renowned for its deep industry expertise, customer-centric approach and commitment to excellence, NETSOL fosters strong
partnerships with its clients, ensuring their success in an ever-evolving landscape. With a rich history of innovation, ethical business
practices and a focus on sustainability, NETSOL is dedicated to empowering businesses worldwide, securing its position as the trusted
partner for leading firms around the globe.
NETSOL’s
primary sources of revenues have been licensing, subscriptions, modification, enhancement and support of its suite of financial applications
to leading businesses in the global finance and leasing space.
NETSOL’s
clients include blue chip organizations, Dow-Jones 30 Industrials, Fortune 500 companies, financial institutions, global vehicle manufacturers
through their captive finance companies (“auto captives”), unrelated automotive finance companies (“non captives”),
equipment finance and leasing companies and banks - All of which are serviced by NETSOL’s strategically placed support and delivery
locations around the globe.
Founded
in 1997, NETSOL is headquartered in Encino, California. NETSOL follows a global strategy for sales and delivery of its portfolio of solutions
and services through its offices in the following locations:
■ North America Encino, California and Austin, Texas
■ Europe London and Horsham
■ Middle East Dubai
OUR
BUSINESS
Company
Business Model
NETSOL
specializes in providing scalable and customizable technology solutions primarily to the global asset finance and leasing industry. Our
value proposition lies in delivering innovative technologies that enhance operational efficiency and productivity. The Company also provides
a range of services that are not limited to the financial services industry. We reach our customers through a combination of direct sales
efforts, strategic partnerships with associations as well as via a robust online presence.
The
Company generates its core revenue from the following primary sources: (1) software licenses, (2) services, which include implementation
and consulting services, and (3) subscription and support, which includes post contract support, of its enterprise software solutions
for the finance and leasing industry. The Company offers its solutions using the same underlying technology via two models: a traditional
on-premises licensing model and a subscription model.
The
on-premises model involves the sale or license of software on a perpetual basis to customers who take possession of the software and
install and maintain the software on their own hardware. Under the subscription delivery model, the Company provides access to its software
on a hosted basis as a service and customers generally do not have the contractual right to take possession of the software or solution(s).
Expertise
Our
expertise in enterprise technology and financial application development has helped us emerge as a global player in the finance and leasing
industry and enabled us to secure a broad footprint across the major markets of North America, Asia Pacific and Europe. The Asia Pacific
region has particularly benefitted from the organic growth in the fast-developing leasing automation industry, which is still nascent
as per Western standards.
Domain
Experience
With
our rich history of innovation, NETSOL is a dynamic leader and has been able to accumulate a wealth of experience in the global asset
finance and leasing industry. We have built a large knowledge base which is regularly refined and updated to ensure the most up-to-date
best practices and business solutions for the benefit of our clients and partners. We have a strong presence in the captive asset-finance
domain. We have had continual operations for over two decades in Asia Pacific and Europe and over four decades in North America.
Proximity
with Global and Regional Customers
We
have offices across the world, located strategically to maintain close contact and proximity with our customers in various key markets.
This has not only helped us strengthen our customer relationships, but also build a deeper understanding of local market dynamics. Simultaneously,
we are able to extend services and support development through a combination of onsite and offsite resources. This approach has allowed
us to offer blended rates to our customers by employing a unique and cost-effective global development model.
While
our business model is built around the development, implementation and maintenance of our suite of financial applications, we employ
the same facilities and competencies to extend our services to related segments, including but not limited to:
■ IT Consulting and Services
■ Solutions Development and Implementation
■ Business Intelligence
■ Cloud Solutions
■ Outsourcing Services and Software Process Improvement Consulting
■ Maintenance and Support of Existing Systems
■ Project Management
■ Information Security
■ AI/ML
■ Data Engineering
Our
global operations are broken down into three primary regions: North America, Europe and Asia Pacific. All of the subsidiaries are seamlessly
integrated to function effectively with global delivery capabilities, cross selling to multinational asset finance companies, leveraging
the centralized marketing and pre-sales organization, and a network of employees connected across the globe to support local and global
customers and partners.
OUR
PRODUCTS AND SERVICES
PRODUCTS:
Covering
the complete finance and leasing lifecycle starting from quotation origination through contract settlements, our products are designed
and developed for highly flexible settings and are capable of dealing with multinational, multi-company, multi-asset, multi-lingual,
multi-distributor and multi-manufacturer environments. Our solutions empower financial institutions to effectively manage their complex
lending portfolios, enabling them to thrive in hyper-competitive global markets.
Built
on cutting-edge, modern technology, our products enable auto, equipment and big-ticket finance companies, alongside banks and other financial
institutions, to run their retail and wholesale finance business with ease.
Alongside
our solutions for end-to-end asset finance and leasing, we also offer a digital retail and mobility platform as well as out-of-the-box,
API-first products designed specifically for the global financial services industry.
ORIGINATIONS
Ascent®
Omni Point of Sale (Omni POS)
A
highly agile, easy-to-use, web-based application - also accessible through mobile devices - Ascent’s Omni POS system delivers an
intuitive user experience, with features that enable rapid data capture. Information captured at the point of sale can be made available
to anyone in an organization at any point in the lifecycle of each transaction.
Self
Point of Sale (Self POS)
Our
Self POS portal allows customers to go through the complete buying and financing process online and on their mobile devices including
car configuration, generating quotations, and filling out applications. It is the ultimate origination application that enables users
to compare, select and configure an asset using a mobile device anywhere, at any time and submit an accompanying financial product application.
Mobile
Point of Sale (mPOS)
The
mPOS application is a web and mobile-enabled platform featuring a customizable dashboard along with menu selling, application submission,
loan calculator, work queues and detailed reporting. mPOS empowers the dealer to make the origination process quick and seamless, increasing
overall productivity and system-wide efficiency.
SERVICING
Ascent®
Contract Management System (CMS)
Ascent’s
Contract Management System (CMS) is a powerful, highly agile, functionally rich application for managing and maintaining detailed credit
contracts throughout their lifecycle – from pre-activation and activation through customer management, asset financial management,
billing and collections, finance and accounting, restructuring and maturity.
Mobile
Account (mAccount)
mAccount
is a powerful, self-service mobile solution. It empowers the dealer with a powerful backend system and allows the customer to setup a
secure account and view information 24/7 to keep track of contract status, resolve queries and make payments, reducing inbound calls
for customer queries and improving turnaround time for repayments.
Mobile
Collector (mCollector)
mCollector
empowers collections teams to do more, with an easy-to-use interface and intelligent architecture. The tool exponentially increases the
productivity of field teams by enabling them to carry out all collection related tasks on the go.
Mobile
Field Investigator (mFI)
By
using Mobile Field Investigator, the applicant has access to powerful features that permit detailed applicant field verifications on
the go. The application features a reporting dashboard that displays progress stats, action items and the latest notifications, enabling
the client to achieve daily goals while tracking performance.
WHOLESALE
FINANCE
Ascent®
Wholesale Finance System (WFS)
The
Ascent Wholesale Finance System (WFS) provides a powerful, seamless and efficient system for automating and managing the entire lifecycle
of wholesale finance. With floor planning, dealer and inventory financing, it is ideal for a culture of collaboration. Dealers, distributors,
partners and anyone in the supply chain are empowered to realize the benefits of financing – and leverage the advantages of real-time
business intelligence. The system also supports asset and non-asset-based financing.
Mobile
Dealer (mDealer)
mDealer
provides more visibility and control over inventories – with minimal effort. Dealers can view their use of floor plan facility,
stock status and financial conditions, while entering settlement requests or relocating assets.
Mobile
Auditor (mAuditor)
mAuditor
schedules visits, records audit exceptions and tracks assets for higher levels of transparency. It also enables the auditor to conduct
audits and submit results in real-time through quick audit processing tools, providing visibility and saving significant time.
DIGITAL
RETAIL AND MOBILITY
OtozTM Platform
OtozTM provides
white-label and turn-key SaaS solutions to OEMs, finance companies, dealers, and start-ups. The platform enables digital
retail, as well as short and long-term on-demand mobility models (subscriptions, rental and car-sharing).
OtozTM Ecosystem
OtozTM is
built on state-of-the-art technology, offering open Application Programming Interfaces (APIs) and ecosystem partner integrations
that are crucial to digital retail and mobility operations including finance and insurance providers, trade-in tools, KYC
and fraud detection tools, CRM systems, website providers (Tier 1 – Tier 3), marketing toolkits, inventory feeds, pricing engines,
tax engine, payment processors, an insurance marketplace and delivery logistics providers.
In
addition, OtozTM is equipped with intelligent lead generation and product analytics capabilities, empowering dealerships with
the tools to track customer journeys, personalize customer engagements, and convert qualified leads.
OtozTM Digital
Retail
Our
platform helps OEMs and dealers move into the digital era, addressing a range of customer segments with evolving
needs by offering them a seamless, omni-channel, end-to-end buying and usage experience. Digital retail is not
a one-size-fits-all. OtozTM offers a flexible, configurable, and scalable platform along with a proven launch
strategy framework for companies that intend to launch and grow digital retail businesses quickly and seamlessly. The platform’s
seamless handling of complex tax rules and contract management processes are compliant with local and state standards for jurisdictions
it operates in across the U.S.
OtozTM Mobility
Orchestration
OtozTM
expands into a comprehensive in-life subscription and rental platform that empowers in-life and end-of-life management of such
contracts. It enables both direct-to-consumer transactions with the option to add peer-to-peer marketplace functionalities for the future
of electric vehicle pay-per-use and mobility orchestration.
The
OtozTM platform is built on Appex NowTM’s API-first, headless, architecture allowing for modularity, flexibility,
and scalability. Features are offered in modules or bundles depending on the use case.
API-FIRST
FINANCE SOLUTIONS
Appex
NowTM
NETSOL’s
Appex NowTM marketplace of API-first products was built for the global credit, finance and leasing industry. These out-of-the-box
solutions allow financial institutions to connect, configure and innovate without disrupting the existing architecture of their originations
and servicing solution.
Appex
NowTM: FlexTM
Flex
is an API-first, ready-to-use calculation and quotation engine. It is a one-stop solution that guarantees precise calculations at all
stages of the contract lifecycle through various calculation types. All the calculations are parameter-driven, which helps perform simple,
multi-dimensional or complex calculations based on the needs of a business. FlexTM has a lightning-fast onboarding process, which
can take place in mere minutes.
Appex
NowTM: HubexTM
HubexTM
is an API library that enables companies to standardize all their API integration procedures across multiple API services through a single
integration. In addition to traditional lending companies, HubexTM can also streamline the operations of dealerships, vendors and
consultants. With a ready-to-use service, HubexTM makes it easy for businesses to seamlessly connect with multiple APIs and achieve
their desired outcomes. Pre-integrated services in the HubexTM library include, but are not limited to, payment processing, bank
account authentication, finance and insurance products, fraud check, know your customer (KYC) service, driver license verification, address
validation, vehicle valuation and notification service.
Appex
NowTM: IndexTM
IndexTM
is a cloud-based parameter storage that smoothly runs all of a company’s core lending operations. It is an accumulation of all
the master setups, including asset catalog and inventory, programs, rates, and profiles for lenders, dealers and multiple partners, in
one centralized location for all business types. Index can enhance delivery efficiency and program management for easy integration into
all systems.
Appex
NowTM: DockTM
DockTM
is an advanced document generation tool that lets a company create accurate and professional-looking documents in just seconds. With
Dock’s template-based configuration, a company can set up placeholders for data, essentially simplifying the document creation
process and reducing the chance of human error. Its API-first architecture ensures scalability, making it capable of handling any document
generation task, from single documents to millions, with ease.
Appex
NowTM: LaneTM
LaneTM
offers a feature-rich, end-to-end order management system for asset leasing & loans and credit companies. Our platform covers all
aspects, from conducting end-to-end sales to performing dealer and partner-related tasks and marketing-related activities. The system
offers a variety of dashboards that provide vital information for dealers and partners while enabling quick order management and providing
a way for users to record and submit a complete credit application for their clients.
Appex
NowTM: T-RateTM
Through
a single, unified API for real-time VAT, GST, sales and use tax rates, and other taxes globally, our tax engine provides accurate tax
calculations. T-RateTM’s tax engine maintains up-to-date tax rules and rates for each region while supporting the data and
reporting required for tax compliance. It drastically reduces the risk of audit penalties and tax operation inefficiencies.
SERVICES:
Information
Security
We
weave a robust strategy where small and medium sized businesses and enterprises can fortify their defenses through comprehensive monitoring,
analysis, and reporting.
Digital
Solutions and Talent Partnership
As
digital technology partners, we foster innovation and agility, equipping businesses across industries with unparalleled talent, unlocking
their organization’s potential and propelling their projects forward at an unmatched speed.
AI,
ML and Data Analytics
NETSOL
leverages the power of artificial intelligence (AI), machine learning (MI) and data analytics, transforming data into actionable insights,
assisting organizations in making smarter decisions, predicting future trends, automating tedious tasks and customizing the user experience.
Generative
AI
At
NETSOL, we specialize in harnessing the transformative power of Generative AI to drive innovative solutions and powerful outcomes for
businesses. Whether it’s creating personalized customer experiences or optimizing complex processes, we deliver solutions that
align with an organization’s goals.
Policy
and Strategy
By
infusing AI into policies and strategies, we enable businesses to gain deeper insights, automate tedious tasks and make data-driven decisions,
propelling their infrastructure forward. With our robust policy and strategy consulting services, we enable businesses to achieve long-term
success.
Emerging
Technologies
NETSOL
develops modern applications that leverage emerging technologies like AI, blockchain, IoT, digital twin, and Web 3.0.
Cloud
Services
We
proudly partner with both AWS (Amazon Web Services) and Microsoft Azure to deliver cutting-edge cloud solutions tailored to the needs
of our customers. We leverage our expertise and the power of Azure and AWS to provide a range of cloud solutions and services.
Data
Engineering
NETSOL
offers services for data engineering, extracting data from various platforms while leveraging intelligent cataloging through trust testing
and deployment and accelerating data efforts with the AL and ML partnership.
IMPLEMENTATION
PROCESS
The
implementation process of our finance and leasing software can span up to fifteen months depending upon the methodology, complexity and
scope. The implementation process may also include related software services such as configuration, data migration, training, gaps development
and any other additional third-party interfaces. Even after implementation, customers constantly seek enhancements and additions to improve
their business processes and have changing requirements addressed at mutually agreed rates.
Post
implementation, our consultants may remain at the client site to assist the customer for smooth operations. After this phase, the regular
maintenance and support services phase for the implemented software begins in exchange for agreed subscriptions or support fees. In addition
to the daily rate paid by the customer for each consultant engaged, the customer also pays for all visa and transportation-related expenses,
boarding of the consultants and a living allowance. Our involvement in all the above steps is suitably priced to bring value to our customers
and increase our profitability.
Cloud-enabled
solutions are offered via seamless and rapid deployments. The swift speed of implementations for our cloud-ready products enables businesses
to be more responsive and attain a competitive advantage. For example, our API-first, SaaS products can be integrated into a customer’s
ecosystem within mere minutes.
PRICING
AND REVENUE STREAMS
Our
revenue streams are the outcome of the following four main areas:
■ Product licensing
■ Subscription-based pricing
■ Implementation and customization-related services
■ Post implementation, support-related services
License
fees can range up to a multi-million-dollar fee for single or multiple module implementations. License revenue is realized with traditional,
non-SaaS-based agreements, whereas SaaS-based agreements do not contain license fees and are offered via flexible, value-driven, subscription-based
pricing. There are various attributes which determine the level of pricing complexity, a few of which are: number of contracts, size
of the portfolio, IT budgets, business strategy of the customer, internal business processes followed by the customer, number of business
users, amount of customization required, the complexity of data migration and branch network of the customer.
We
recognize revenue from license contracts when the software has been delivered to the customer. Implementation-related services, including
customization, configuration, data migration, training and third-party interfaces are recognized as the services are performed. Post-implementation
support services are then provided on a continued basis. The annual support fee, typically an agreed upon percentage of overall monetary
value of the license, then becomes an ongoing revenue stream realized yearly. Revenue from software services includes fixed price and
time and materials-based contracts and is recognized as the services are performed.
Additionally,
in order to avoid lumpiness in our revenues and to ensure a predictable revenue base over coming years, the business has shifted to a
pricing strategy whereby the business is now offering its cloud-ready products at SaaS/subscription-based pricing models. Rapid deployments
coupled with affordable prices/payment schedules is expected to lead the business towards volume-based selling. Moreover, this value-driven
pricing plan is intended to decrease the initial buy-in cost for new customers by eliminating heavy license fees, reducing the sales
cycles and providing an alternative to current customers seeking lower software usage and maintenance costs.
ALLIANCES
Daimler
South East Asia Pte. Ltd. (“DSEA”), (through the regional office Daimler Financial Services (“DFS”) Africa Asia
Pacific), has established a “Centre of Competence” (“CoC”) in Singapore to facilitate the regional companies
in product related matters. The DSEA CoC is powered by highly qualified technical and business personnel. In conjunction with our Asia
Pacific region, the CoC supports DFS companies in twelve different countries in Asia and Africa and this list can increase as more DFS
companies from other countries opt for NFS Ascent®. In July 2004, the company entered into a Frame Agreement with DFS
for the Asia Pacific and Africa region. This agreement was renewed in 2008, 2010, 2013 and most recently in January 2016. The agreement
serves as a guideline for managing the business relationship with DFS and the use of licensed products of the company by DFS and its
affiliated companies.
NETSOL
utilizes Microsoft AzureTM to host our cloud versions of Ascent® and LeasePak Cloud - SaaS, benefiting from Azure’s high
performance and cost-effectiveness. A quick start implementation program combined with hassle-free Microsoft AzureTM cloud
connectivity ensures new clients see a time-to-value faster than ever before.
TECHNICAL
AFFILIATIONS
We
are a Microsoft Certified Silver Partner and an Oracle Certified Partner. NETSOL is an AWS Advanced Tier Services Partner, a Business
Accredited Partner, a Technical Accredited Partner, a Cloud Economics Accredited Partner, an AWS Lambda Delivery Partner, an AWS CloudFormation
Delivery Partner, an AWS Amazon API Gateway Delivery Partner, an AWS Well-Architected Partner, an AWS Solution Provider Partner and an
AWS Amazon EC2 for Windows Server Delivery Partner.
MARKETING
AND SELLING
We
remain optimistic about the growing opportunities ahead for our products and services throughout fiscal year 2024 and beyond. Our global
marketing activities aim to establish and maintain a strong preference and loyalty for NETSOL and its offerings for the financial services
industry and beyond. Marketing activities are conducted both at the corporate and business unit levels. The global marketing department
oversees all communication, advertising, public relations and manages all digital platforms, including the Company’s website, social
media channels and partnerships within the industry.
As
part of our lead-generation activities, our regional representatives represent NETSOL as the company sponsors, exhibits at and attends
annual industry-leading conferences, seminars, summits and other events. The company maintains its presence at these events to demonstrate
our product and service offerings and for important networking purposes. NETSOL also takes part in webinars, podcasts and holds private
briefings with associations and individual companies.
At
the end of the previous calendar year, NETSOL appointed Erik Wagner as its Chief Marketing Officer (CMO). This strategic move underscores
NETSOL’s commitment to bolstering its global marketing initiatives and driving further growth in its specialized sectors. Mr. Wagner
brings a wealth of experience, with over 17 years in the marketing field at growth-oriented companies.
GROWTH
PROSPECTS
We
are eyeing key international markets for growth in sales for NETSOL’s products and services. Our sales strategy not only focuses
on expansion into new geographic markets, including the Americas, Europe, and further penetration of our leading position in Asia Pacific,
but also within existing markets into new verticals with targeting of Tier 2 and Tier 3 prospects as well.
Growth
in North America and Europe is expected to come from the potential market for replacement of legacy systems as well as acquisition of
new customers. Our finance and leasing platform NFS Ascent® is aimed at providing a highly flexible and robust solution
based on the latest technology and advanced architecture for North American and European customers looking to replace their legacy systems.
We believe that NFS Ascent® can provide substantial competitive disruption to the market’s lagging technology provided
by incumbent vendors. The existing customer base may also represent latent demand for increased service and support revenues by offering
business process optimization, customization and upgrade services. With a market-ready product with successful implementations, the prospects
for NFS Ascent® in the region are positive.
Further
traction in Europe will come from NFS Ascent® deployed on the cloud, which will continue to allow the European division
to support not only larger organizations, but also small and medium sized organizations. Currently, in the United Kingdom, a number of
banks and other financial institutions have opted for our API-first, SaaS-based products that are offered via subscription-based pricing
and swift deployments. We foresee growth opportunities for our Appex Now products in other regions as well.
Growth
in our traditionally strong base in Asia Pacific is expected through diversification across market segments to include new customers
in related banking and commercial lending areas. At the same time, the existing customer base is tapped for increased service and support
revenues by offering enhanced features and new solutions to emerging customer needs. In addition, there is a potential for NFS Ascent®
in Asia Pacific in the form of existing customers who are looking for replacement of their current system. In China, we are a leader
in the auto finance enterprise solution domain. We will continue strengthening our position within existing multinational auto manufacturers,
as well as local Chinese captive finance and leasing companies. It is pertinent to mention that these Chinese automakers are growing
rapidly outside of the country, and that our solutions assist them in this growth. Our sales strategy focuses on supporting Chinese manufacturers
in expanding their presence in the EU and other regions of APAC.
We
believe our digital retail platform presents significant growth opportunities in the evolving digital marketplace. While the company’s
digital retail platform, Otoz, is currently used by major customers in the United States, it will continue to grow in other markets as
well.
Beyond
our products, we also foresee demand for our professional and cloud services that empower our clients to excel in the competitive global
economy.
THE
MARKETS
We
deliver our comprehensive suite of technology solutions and services across all major markets worldwide, positioning ourselves as a leading
provider in the financial services, and particularly, the global asset finance and leasing sector. Leveraging our extensive global footprint,
we offer scalable and innovative solutions tailored to meet the unique needs of clients in diverse geographic regions. Our strategic
presence in key markets enables us to effectively address local regulations and market dynamics, thereby enhancing customer satisfaction
and fostering long-term partnerships.
The
Asian continent, including Australia and New Zealand, from the perspective of marketing, are targeted by the Asia Pacific region from
our Bangkok, Beijing, Tianjin, Jakarta, Sydney and Lahore facilities. The marketing for our core offerings in the Americas and Europe
is carried out from our Austin, Texas, Encino, California and our London Metropolitan Area and Horsham offices, respectively.
PEOPLE
AND CULTURE
We
believe that our growth and success are attributable in large part to the high caliber of our global team and our commitment to maintain
the values on which our success has been based. We support gender diversity on a global basis. We are an equal opportunity employer with
a large workforce, promoting a culture of diversity and inclusion.
NETSOL
stands as a beacon of innovation, excellence and dedication to customer success. We value transparency and integrity, ensuring that honesty
guides our interactions. We are renowned for innovation, expertise and a customer-centric approach.
We
believe we should give back to the community and employees as much as possible. Certain subsidiaries are located in regions where basic
services are not readily available. Where possible, we act to not only improve the quality of life of our employees, but also the standard
of living in these regions. Examples of such programs are as follows:
■
Literacy Program: Launched to educate children of our unskilled staff, the main objective of this program is to enable them to acquire
basic reading, writing and arithmetic skills.
■
Higher Education and Science and Research Institutions: In order to support higher education in Pakistan, we have contributed endowments
to NUST, Forman Christian College, and a few other universities who are focused on science and engineering.
■
Noble Cause Fund: A noble cause fund has been established to meet medical and education expenses of the children of our lower paid employees.
Our employees voluntarily contribute a fixed amount every month to the fund and NETSOL matches the employee subscriptions with an equivalent
contribution amount. A portion of this fund is also utilized to support social needs of certain institutions and individuals, outside
of NETSOL.
■
Day Care Facility: Our human resources are our key assets and thus we take numerous steps to ensure the provision of basic comforts to
our employees. In Pakistan, the provision of outside pre-school childcare is a rarity. With this in mind, a children’s day care
facility has been created near NETSOL’s office in Lahore, Pakistan providing employees with peace of mind knowing their children
are nearby and being taken care of by qualified staff in a child-friendly facility. The day care facility was temporarily closed due
to COVID-19, but is now in the process of reopening.
■
Preventative Health Care Program: In addition to the comprehensive out-patient and in-patient medical benefits,
preventive health care has also been introduced. This phased program focuses on vaccination of our employees against such diseases as
Hepatitis – A/B, Tetanus, Typhoid, Flu and COVID-19 on a routine basis.
There
is significant competition for employees with the skills required to perform the services we offer. We run an elaborate training program
for different cadres of employees to cover technical skills and business domain knowledge, and communication, management and leadership
skills. We believe we have been successful in our efforts to attract and retain the highest level of talent available, partly because
of the emphasis on core values, training and professional growth. We intend to continue to recruit, hire and promote employees who share
our vision.
COMPETITION
A
substantial number of companies offer products and services that overlap and are competitive with those offered by NETSOL. Some of NETSOL’s
main competitors for its finance and leasing software include Alfa, Constellation Financial Software, FIS Global, Leasepath, LTI Technology
Solutions, Odessa, Solifi, Soft4 and Sopra Banking Software. The company’s competitors for digital retail include Tekion and CDK
Global.
CUSTOMERS
NETSOL’s
solutions and services cater to a broad spectrum of finance and leasing businesses, from automotive captive finance companies to equipment
finance and leasing companies to large regional banks.
NETSOL’s
customers include world renowned auto manufacturers through their finance arms. NETSOL is a strategic business partner for Daimler and
BMW (which consists of a group of many companies in different countries), which accounts for approximately 25.5% and 7.1%, respectively,
of our revenue for our fiscal year ended June 30, 2024. Other globally renowned auto captives that are customers of the Company include
Toyota, Nissan, Ford, and FIAT.