Shares of NetSol Technologies, Inc. (NTWK Quick QuoteNTWK - Free Report) have risen 14.4% since the company reported its earnings for the third quarter of fiscal 2025. This compares to the S&P 500 index’s 1.4% gain over the same time frame. Over the past month, the stock has rallied 21.2% compared with the S&P 500’s 15.4% rise.

Robust Growth in NTWK’s Revenues and Earnings

For the fiscal third quarter ended March 31, 2025, NetSol Technologies reported a 13% year-over-year increase in total net revenues, reaching $17.5 million compared to $15.5 million in the same quarter of 2024. Services revenues surged 24% to $9.7 million, up from $7.8 million in the year-ago quarter, largely driven by a $2.3 million cumulative catch-up from a contract amendment. Subscription and support revenues, encompassing SaaS and cloud offerings, also advanced 10% to $7.9 million from $7.1 million.

The company’s profitability metrics showed notable improvements. Gross profit rose to $8.7 million, representing 50% of total revenues versus 48% a year earlier. GAAP net income attributable to NetSol soared to $1.4 million, or 12 cents per diluted share, compared to $328,000, or 3 cents per diluted share, in the prior year. On a non-GAAP basis, adjusted EBITDA climbed to $1.8 million, or 15 cents per diluted share, from $810,000, or 7 cents per diluted share, in the third quarter of fiscal 2024.

Other Key Business Metrics of NTWK

NetSol Technologies’s operating expenses increased to $7.2 million from $6.2 million, accounting for 41% of sales versus 40% in the prior year. The rise reflected continued investment in customer delivery, marketing, R&D and employee development initiatives. Foreign exchange movements positively contributed $322,000 in gains this quarter compared to a $964,000 loss in the prior year, bolstering net income performance.

Cash and cash equivalents stood at $18.8 million as of March 31, 2025, slightly down from $19.1 million at the end of June 2024. Working capital was essentially unchanged at $23.7 million. The balance sheet showed stability with a modest reduction in total liabilities to $19.2 million from $24.7 million over the same period.

NTWK: Management Commentary

CEO Najeeb Ghauri attributed the solid performance to strong service revenues and growing traction in the company’s subscription business. He emphasized the successful deployment of the Transcend Finance platform in Australia for Kubota and highlighted two new multi-million-dollar contracts in Oman and Indonesia as pivotal wins that demonstrate expanding global demand for NetSol Technologies’s digital finance solutions.

Ghauri also underscored the firm’s transition toward a recurring revenue model and the importance of artificial intelligence in its growth strategy. The launch of “Transcend AI Labs,” a dedicated innovation hub, and the appointment of Dario Morelli as Vice President of AI reflect the company’s ambition to embed AI across its product ecosystem. These efforts are aimed at delivering hyper-personalized and predictive capabilities to financial institutions worldwide.

Factors Influencing NTWK’s Headline Numbers

The 24% jump in services revenues was partially fueled by a one-time cumulative adjustment tied to a contract amendment, indicating that a portion of the growth may not recur in future quarters. However, the 10% rise in subscription revenues suggests a steady shift toward more predictable, recurring revenue streams. Margins also benefited from favorable foreign currency exchange movements, which lifted revenues and net income.

Operating costs rose due to targeted growth investments, including expanded R&D efforts, marketing and talent acquisition. Yet, these investments were effectively offset by revenue growth and margin improvement, helping lift both GAAP and non-GAAP profitability measures.

Guidance Provided by NTWK Management

Management expressed optimism about future revenue and bottom-line trends, referencing productivity and efficiency initiatives undertaken earlier in the year. He described the company’s momentum as “just the start” and affirmed confidence in delivering continued improvements in profitability.

Other Developments at NTWK

The launch of Transcend AI Labs and the onboarding of a new AI executive represent strategic operational enhancements. Additionally, the company reiterated progress on its BMW USA retail platform rollout across 350 U.S. dealerships, noting that it remains on track.

Overall, NetSol Technologies delivered a strong fiscal third quarter, marked by robust top-line growth, margin expansion, and strategic advancements in AI and global customer acquisition. The company appears poised to build on this momentum in the final quarter of fiscal 2025.