Naeem Ghauri: Well, what happens is that there is a setup cost, which the client pays for. And our product is deployed on the cloud, and it’s very, very scalable. So, it’s like we could grow the Otoz’s revenue by fivefold, 5x, without having a major impact on cost. So, really, it’s the adoption. The faster or bigger the adoption, the better the margins, because we do have a fixed amount of cost to run the platform, and we are already in profit in terms of what we bring from MINI and AutoNation. So, we’re already in the black. However, as they scale and they grow and we get additional customers, so we have a pipeline of new customers we are bidding for. And as that happens, with scale, the profit margins would grow quite rapidly.
Todd Felte: That’s great to hear. I know your license agreement can be lumpy, and I know that currency exchanges or the currency gains and losses can affect your net income. But have you all reached the point yet where you’re able to project positive operating income every quarter going forward? Or are you comfortable thinking that will happen?
Naeem Ghauri: I’ll just give my take, then I’ll leave it up to you.
Najeeb Ghauri: Go ahead, Naeem.
Naeem Ghauri: My take, Todd, is that, ultimately, the future for us is SaaS, but we are operating on a hybrid model where license is still very attractive. And although it’s lumpy, good news is that from where we were three, four years ago, we’re depending completely on license, now we are offsetting a large portion of our revenue within ARR, which is annual recurring revenue, as opposed to the lumpy license revenue. So, even if we don’t get a big license revenue or, if you like, a win, we continue to grow our SaaS revenue at a decent pace so that, at some point, we’ll have a tipping point where we will get to a position where even without any license income, we are profitable as a company.
Najeeb Ghauri: Also, let me add one more point, Todd, to Naeem. The beauty of our model is that, like Naeem said, it’s a hybrid model. We do have a pretty good demand for our flagship Ascent in all three markets. Yes, it’s a much longer sales cycle, then it goes through a lot of, I think, iteration. But combination is amazing with the license revenue and then, of course, with the SaaS, which is a growing trajectory for us. So all in all, I believe we are in a good position. If you look at the competitor, I think really, you see a company which has such an amazing history for license sales in all these 25 years. Now, we’re managing both sides quite well effectively, and we believe, eventually, as I said in my prepared remarks, the growth is quite positive coming quarters and hopefully will continue in the following year.
So I think overall, the higher revenue, whether it’s license or, of course, SaaS, it just affects all the way to the gross margin and net income. And company has done a good job to be more efficient and a bit more leaner. That will impact all our metrics in the coming quarters.
Todd Felte: That’s great. And that tipping point that Naeem spoke about where you won’t even need licensing agreements to achieve an operating profit, would you expect that to happen this year or next year? Or is there any sort of…
Najeeb Ghauri: I believe next year is more probably because we’re still building the sales trajectory here. So, I think, Naeem, next year is a better way to look at it, but to your question, specifically on the margins.
Naeem Ghauri: Look, I think in terms of when that tipping point is, I don’t think we could predict that, but I think it’s imminent. If you see a growth and if you see how subscription revenue has grown from single-digit millions to where we are in a relatively short time, I think we’re reaching that point very soon. I don’t — I can’t put a, if you like, a flag on exactly which quarter or which month, but I think we’re not far off.
Todd Felte: Okay. That’s great to hear. And then my final question is, I know in the past, you’ve had several share buybacks going. You look at the stock now. I think we’re right around $3 a share in book value, and we’re doing over $5 a share in sales. Do you have any share buybacks going on now? Or do you plan to announce any in the near future?
Najeeb Ghauri: Well, at this stage, we don’t have any plan immediately in the short run, simply because, as I mentioned, we are investing in key markets, whether it’s North America and some other regions, and there’s a lot of activities in the new business opportunities, some new markets also, which we’ll share with the market in the appropriate time. So obviously, we have done buybacks a few times in the past. And you’re right, it is a very attractive price to do that, but we are very open about it, but we have not made the decision at this point.
Todd Felte: Okay. Well, I really appreciate you all taking my questions and congratulations on a fantastic quarter.
Najeeb Ghauri: Thank you, Todd.
Operator: Thank you. We have reached the end of our question-and-answer session. So, I’d like to pass the floor back to management for any additional closing remarks.
Najeeb Ghauri: Thank you for joining us today, and I do apologize for this little glitch in the beginning of the Q&A. I especially want to thank all of our investors for their continued support, our loyal customers and our most dedicated employees worldwide for their ongoing contributions. And we look forward to updating you on our next call. Thank you.
Operator: Ladies and gentlemen, this does conclude today’s teleconference. Once again, we thank you for your participation, and you may disconnect your lines at this time.
