NETSOL Technologies — Fiscal 2026 Earnings Summary

Financial Performance

• Full-year revenue reached a record $74.4 million, a 12.5% increase year-over-year (YoY) from $66.1 million, exceeding guidance of $73 million.
• Q4 fiscal 2026 revenue was a record $20.7 million, a 12.5% increase YoY from $18.4 million.
• Full-year subscription and support revenue increased 8.7% to $35.8 million (approx. 48% of total revenue); Q4 subscription and support revenue increased 9.0% to $8.9 million.
• Full-year services revenue increased 3.3% to $33.6 million; Q4 services revenue increased 21.3% to $11.7 million.
• Full-year license fees were $5.0 million compared to $0.6 million in the prior year, including $4.7 million from a Transcend customer agreement renewal.
• Full-year gross margin increased 330 basis points to 52.6% (from 49.3%); Q4 gross margin expanded to 63.6% (from 56.2%).
• Full-year operating income nearly doubled to $6.9 million (98.4% increase) with an operating margin of 9.3% (up from 5.3%); Q4 operating income increased 40.2% to $4.5 million with a 21.6% margin.
• Full-year GAAP net income attributable to NETSOL was $2.95 million ($0.25 per diluted share), compared to $2.9 million ($0.25 per diluted share) in the prior year; consolidated net income increased 22.4% to $5.6 million.
• Q4 GAAP net income attributable to NETSOL was $3.8 million ($0.32 per diluted share), a 45.9% increase YoY from $2.6 million.
• Full-year consolidated adjusted EBITDA increased 68.8% to $9.15 million; adjusted EBITDA attributable to NETSOL shareholders increased 61.0% to $6.01 million.
• Full-year operating cash flow increased to $13.9 million from $0.4 million, driven by $6.5 million in contract liabilities.
• Year-end cash and cash equivalents reached $27.1 million, a 56.3% increase from $17.4 million.
• Remaining performance obligations were $49.1 million, with approximately $22.5 million expected to be recognized within the next 12 months.
• Total debt and finance lease obligations were $8.4 million with $0.21 million in long-term maturities; stockholders' equity was $41.6 million ($3.50 per share).

Guidance and Future Outlook

• Fiscal 2027 revenue growth guidance is set at 13% to 16%.
• Fiscal 2027 gross margin guidance is approximately 50% or better.
• Fiscal 2027 consolidated adjusted EBITDA growth guidance is 15% to 25%, corresponding to $10.5 million to $11.4 million.
• The company plans to focus on making growth more predictable, translating consolidated performance into shareholder value, and applying AI practically across products and operations.
• The fiscal 2027 outlook assumes continued subscription growth, execution of contracted implementations, disciplined cost management, and no material acquisitions.

Business Segments and Product Lines

• The Transcend platform continues to drive growth, with major implementations progressing in automotive finance, equipment finance, and digital retail.
• New and expanded customer agreements include a $50 million contract extension with a tier-one global auto captive, a go-live with a tier-one U.S.-based auto captive in China, an upgrade by Toyota Leasing Thailand, a renewal with a tier-one multinational bank in the UK, and a migration by BMO Equipment Finance in the US.
• Contracted revenue (non-GAAP) was approximately $60 million at June 30, 2026, defined as revenue under existing signed agreements plus management's best estimate of change requests.

Market and Competitive Landscape

• NETSOL serves OEMs, dealerships, and financial institutions across over 30 countries.
• Demand remains strong for modern cloud platforms, AI-enabled finance solutions, and digital retail.
• The company is reviewing workforce structure and location strategy to align with an AI-enabled delivery model.

Risks and Challenges

• Forward-looking statements are subject to risks including timing of customer agreements, go-lives, contract signings, and implementation milestones.
• Potential risks include the rate of adoption of AI-enabled product capabilities, foreign currency volatility, customer concentration, and geopolitical or macroeconomic conditions.
• Fiscal 2026 results included a $0.39 million foreign currency exchange loss and lower interest income compared to fiscal 2025 gains and higher interest income.

Management Commentary and Tone

• CEO Najeeb Ghauri described fiscal 2026 as a "clear step forward" with record revenue, expanded margins, and strong operational momentum.
• CFO Sardar Abubakr noted fiscal 2026 produced the "strongest operating performance in several years," highlighting the quality of results despite headwinds from foreign exchange and non-controlling interest allocations.
• Management emphasized a "disciplined review" of workforce deployment rather than a headcount reduction, noting a decrease in employees from 1,460 to 1,370 while revenue grew 12.5%.
• The tone is confident regarding the ability to introduce full-year guidance and the value of the Transcend platform and AI integration.

Other Key Points

• The company is reporting contracted revenue starting with fiscal 2026 results, a non-GAAP measure intended to provide visibility into revenue under existing agreements.
• The company is evaluating structural options to potentially reduce the economic impact of minority interests over time.
• The efficiency program is expected to continue through fiscal 2027.
• A conference call and webcast were held on September 28, 2026, to discuss the results.