What NetSol Technologies (NTWK) Said on Its Q4 Earnings Call

Key Points

• Record fiscal 2026 performance: NetSol reported $74.4 million in annual revenue, up 4.5%, while operating income nearly doubled to $6.9 million. Fourth-quarter revenue rose 12.5% to $20.7 million, aided by higher services and subscription revenue.
• Improved cash generation and recurring revenue focus: Operating cash flow surged to $13.9 million, and subscription and support revenue grew 8.7% to $35.8 million, representing roughly half of annual revenue. The company reported approximately $60 million in contracted revenue but cautioned that the measure is not guaranteed backlog or annual recurring revenue.
• Positive fiscal 2027 outlook: Management expects revenue growth of 13%–16%, adjusted EBITDA growth of 15%–25%, and gross margins of about 50% or better. Key priorities include expanding Transcend Retail, migrating legacy customers, embedding AI, and supporting international customer growth.

NetSol Technologies NASDAQ: NTWK reported record fourth-quarter and fiscal 2026 revenue, with management highlighting subscription growth, margin expansion, operating cash flow and new customer deployments as the company pursues a transition toward a more recurring-revenue-focused platform business.

Founder and Chief Executive Officer Najeeb Ghauri called fiscal 2026 “the strongest financial year in NetSol history,” pointing to $74.4 million in total net revenue, growth in non-GAAP EBITDA and a near doubling of operating income. He said recurring subscription and support revenue represented approximately half of total revenue during the year.

Fourth-Quarter Results and Full-Year Performance

Chief Financial Officer Sardar Abubakr said fourth-quarter revenue reached a record $20.7 million, up 12.5% year over year. Subscription and support revenue rose 9% to $8.9 million, while services revenue increased 21.3% to $11.7 million.

Fourth-quarter gross profit increased 27.3% to $13.2 million, producing a gross margin of 63.6%, compared with 56.2% a year earlier. Operating income rose 40.2% to $4.5 million, or 21.6% of revenue. Net income attributable to NetSol was $3.8 million, or $0.32 per diluted share, compared with $0.22 per diluted share in the prior-year quarter.

For the full fiscal year ended June 30, the company reported total net revenue of $74.4 million, which Abubakr said was a 4.5% increase and above NetSol’s prior $73 million guidance. Subscription and support revenue rose 8.7% to $35.8 million, while services revenue increased 3.3% to $33.6 million. License revenue totaled $5 million, including about $4.7 million related to the renewal and amendment of an existing Transcend customer agreement.

Full-year gross profit increased 20.2% to $39.1 million, while gross margin expanded 330 basis points to 52.6%. Operating income increased 98.4% to $6.9 million, and operating margin rose to 9.3% from 5.3%.

Non-GAAP EBITDA grew 22.8% to $8 million. Consolidated adjusted EBITDA increased 68.8% to $9.15 million, while adjusted EBITDA attributable to NetSol rose 61% to about $6.01 million. Net income attributable to NetSol was $2.95 million, or $0.25 per diluted share, unchanged from the prior year.

Abubakr said results below the operating-income line were affected by a shift from a $1.3 million foreign-exchange gain in fiscal 2025 to a $0.39 million foreign-exchange loss in fiscal 2026, as well as lower interest and investment income. Income attributable to non-controlling interests also increased to $2.65 million.

Cash Flow, Contracted Revenue and Operations

Net cash provided by operating activities increased to $13.9 million from $0.4 million in the prior year, and cash increased 56.3% to $27.1 million. Contract liabilities contributed about $6.5 million to operating cash flow, reflecting advanced customer billings and commitments, though Abubakr said the company does not expect that working-capital benefit necessarily to recur at the same level.

NetSol invested approximately $2 million in property and equipment and $2.7 million in capitalized software development during the year. After those investments, the business generated approximately $9.8 million in cash, according to the CFO.

The company also introduced a new measure, “contracted revenue,” which stood at approximately $60 million as of June 30. NetSol defines the metric as expected revenue under signed agreements plus its estimate of change requests from the same customers and agreements. Abubakr emphasized that it is not annual recurring revenue, backlog or a guaranteed revenue floor.

NetSol ended the fiscal year with approximately 1,370 employees, compared with about 1,460 a year earlier, while revenue increased. Management said it is reviewing workforce structure, utilization, location strategy and the skills needed for an AI-embedded delivery model, while stressing that the effort is not solely a headcount-reduction initiative.

Product Deployments and Growth Priorities

Management cited several customer deployments and renewals during the year. A Chinese leasing company launched Indonesian operations using Transcend Finance, while Northridge Finance, a Bank of Ireland division, went live on Transcend in the United Kingdom. A Tier 1 U.S. auto captive launched Transcend Finance in China, and Toyota Leasing Thailand upgraded to the latest wholesale finance system on the platform.

NetSol also renewed a multimillion-dollar contract with a Tier 1 multinational bank in the United Kingdom for another 10 years. Earlier in the month, the company announced that BMO signed an agreement to upgrade from NetSol’s legacy platform to Transcend Finance.

Global Head of Sales and Group Managing Director of Europe Asad Ghauri said the BMO agreement provides an expected increase in subscription revenue as customers migrate from legacy maintenance arrangements to modern subscription relationships. He said NetSol has approximately seven LeasePak customers, all based in the United States.

In Transcend Retail, NetSol said Sonic Automotive is building a branded digital retail experience on its platform. The company is also rolling out the platform across approximately 350 franchised dealerships for a premium global OEM in North America. Ghauri said the company is targeting both major OEMs and dealership groups, with existing dealer launches potentially opening broader deployments within those groups.

Fiscal 2027 Outlook

For fiscal 2027, NetSol expects revenue growth of 13% to 16% over fiscal 2026, gross margin of approximately 50% or better, and consolidated adjusted EBITDA growth of 15% to 25%, equivalent to approximately $10.5 million to $11.4 million.

The outlook assumes continued subscription growth, execution on contracted implementations, disciplined cost management and no material acquisitions. Management said quarterly results may vary due to agreement timing, implementation milestones, foreign exchange, customer decisions and advanced billings.

NetSol said its priorities include scaling Transcend Retail in the U.S., embedding AI across products and operations, upgrading its legacy customer base to Transcend and expanding alongside customers entering new markets. The company is also evaluating strategic options related to minority interests in its Pakistan business, though Abubakr said no transaction has been approved and no outcome can be assured.

About NetSol Technologies (NASDAQ:NTWK)

NetSol Technologies, Inc is a global provider of enterprise software and technology services for the asset finance and leasing industry. The company develops solutions that help banks, manufacturers, equipment lessors and other finance companies manage leasing and lending operations, including contract administration, credit and risk processes, asset management, billing, collections and reporting.

Its product portfolio includes the NFS Ascent platform, a configurable solution designed to support the full lifecycle of asset finance and leasing transactions.

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