We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
NetSol Technologies Slides After Q1 Loss Despite Revenue Growth
Read MoreHide Full Article
Shares of NetSol Technologies (NTWK - Free Report) have declined 27.6% since the company reported first-quarter fiscal 2026 earnings, underperforming the S&P 500’s 2% decrease over the same period. The stock has also fallen 36.6% over the past month, contrasting sharply with the 0.1% gain of the S&P 500. This extended period of relative weakness reflects continued investor concerns surrounding operational challenges and profitability pressure.
In the September quarter, NetSol reported total net revenues of $15.0 million, up 2.8% from $14.6 million a year earlier, supported primarily by growth in subscription and support revenues. However, profitability weakened materially. The gross profit fell to $5.9 million from $6.6 million, while GAAP net income swung to a loss of $2.4 million compared with a net income of $0.07 million in the prior year. Diluted EPS declined to a loss of $0.20 versus earnings of $0.006 last year. The company’s loss from operations widened to $1.8 million, reflecting higher operating expenses and a lower gross margin.
NetSol Technologies Inc. Price, Consensus and EPS Surprise
NetSol’s revenue mix continues to shift toward recurring streams. Subscription, SaaS, cloud and support revenues rose 9.4% year over year to $9.0 million, up from $8.2 million, highlighting the company’s progress toward a platform-based model. Conversely, service revenues fell to $6.0 million from $6.4 million, while license fees remained minimal at roughly $72,000. The company’s gross margin compressed sharply to 39.4% from 45%, driven by higher delivery costs and revenue mix changes. Operating expenses increased to $7.8 million, up from $7.3 million, as the company expanded its global sales force and continued strategic technology investments. Cash and cash equivalents improved sequentially to $22.7 million, bolstering liquidity for planned initiatives.
NTWK: Management Commentary
Management acknowledged near-term pressures on margins and profitability but emphasized strategic progress and momentum in key markets. CEO Najeeb Ghauri highlighted expanding traction in the company’s recurring revenue model and pointed to strengthening demand across global markets. He also noted growing interest in NetSol’s unified, AI-powered Transcend platform, which management views as integral to long-term revenue visibility and scalability.
CFO Roger Almond underscored that the quarter’s loss was partly attributable to unfavorable foreign-currency movements. The company recognized a $287,000 foreign-exchange loss compared with a $543,000 gain in the previous year. These swings affect both revenues and costs, given the company’s wide geographic footprint. Management signaled continued intention to balance investment with cost discipline while maintaining focus on strengthening recurring revenue streams.
Factors Influencing NTWK’s Headline Numbers
Several factors weighed on the quarter’s bottom-line results. First, NetSol undertook front-loaded investments to expand its global sales organization, including new senior-level hires intended to drive long-term pipeline growth. Selling and marketing costs rose significantly as a result. Second, seasonal impacts associated with the summer period contributed to lower service activity and milestone-based revenue recognition. The company noted that the timing of customer implementations can lead to uneven quarterly results.
Additionally, NetSol continues a transition from a license-based model to a predominantly SaaS model, which affects the timing of revenue recognition. Management stressed that although this shift suppresses near-term revenue growth and profitability, it improves long-term revenue stability. Broader macroeconomic conditions also weighed on customer buying behavior, including credit tightening, rising auto-loan delinquencies and restructuring challenges among European automakers. Combined with FX volatility, these dynamics contributed to the widened quarterly loss.
NTWK’s Guidance
Despite a slow start to the fiscal year, NetSol reaffirmed its expectation for full-year revenue growth of 5% to 7%, supported by a strengthening sales pipeline and increased demand for its AI-powered Transcend platform. Management reiterated that the strong pipeline, coupled with recent strategic investments, is expected to support improved performance in subsequent quarters.
Other Developments at NTWK
The company noted several strategic and geographic developments during the quarter. In the United States, NetSol began a new engagement with Sonic Automotive, a Fortune 500 dealership group, to define an omnichannel digital retail solution using the Transcend Retail platform. In Asia, the company signed a strategic cooperation agreement with the Tianjin Binhai Smart Group and the Dongjiang Free Trade Port Zone Government, advancing cross-border data and financial service initiatives.
Additionally, NetSol supported the overseas expansion of a major Chinese leasing company through a successful deployment of its Transcend Finance platform in Indonesia. These developments reflect the company’s continued international expansion and its evolving role in bridging markets across the Asia Pacific region.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
NetSol Technologies Slides After Q1 Loss Despite Revenue Growth
Shares of NetSol Technologies (NTWK - Free Report) have declined 27.6% since the company reported first-quarter fiscal 2026 earnings, underperforming the S&P 500’s 2% decrease over the same period. The stock has also fallen 36.6% over the past month, contrasting sharply with the 0.1% gain of the S&P 500. This extended period of relative weakness reflects continued investor concerns surrounding operational challenges and profitability pressure.
In the September quarter, NetSol reported total net revenues of $15.0 million, up 2.8% from $14.6 million a year earlier, supported primarily by growth in subscription and support revenues. However, profitability weakened materially. The gross profit fell to $5.9 million from $6.6 million, while GAAP net income swung to a loss of $2.4 million compared with a net income of $0.07 million in the prior year. Diluted EPS declined to a loss of $0.20 versus earnings of $0.006 last year. The company’s loss from operations widened to $1.8 million, reflecting higher operating expenses and a lower gross margin.
NetSol Technologies Inc. Price, Consensus and EPS Surprise
NetSol Technologies Inc. price-consensus-eps-surprise-chart | NetSol Technologies Inc. Quote
Other Key Business Metrics of NTWK
NetSol’s revenue mix continues to shift toward recurring streams. Subscription, SaaS, cloud and support revenues rose 9.4% year over year to $9.0 million, up from $8.2 million, highlighting the company’s progress toward a platform-based model. Conversely, service revenues fell to $6.0 million from $6.4 million, while license fees remained minimal at roughly $72,000. The company’s gross margin compressed sharply to 39.4% from 45%, driven by higher delivery costs and revenue mix changes. Operating expenses increased to $7.8 million, up from $7.3 million, as the company expanded its global sales force and continued strategic technology investments. Cash and cash equivalents improved sequentially to $22.7 million, bolstering liquidity for planned initiatives.
NTWK: Management Commentary
Management acknowledged near-term pressures on margins and profitability but emphasized strategic progress and momentum in key markets. CEO Najeeb Ghauri highlighted expanding traction in the company’s recurring revenue model and pointed to strengthening demand across global markets. He also noted growing interest in NetSol’s unified, AI-powered Transcend platform, which management views as integral to long-term revenue visibility and scalability.
CFO Roger Almond underscored that the quarter’s loss was partly attributable to unfavorable foreign-currency movements. The company recognized a $287,000 foreign-exchange loss compared with a $543,000 gain in the previous year. These swings affect both revenues and costs, given the company’s wide geographic footprint. Management signaled continued intention to balance investment with cost discipline while maintaining focus on strengthening recurring revenue streams.
Factors Influencing NTWK’s Headline Numbers
Several factors weighed on the quarter’s bottom-line results. First, NetSol undertook front-loaded investments to expand its global sales organization, including new senior-level hires intended to drive long-term pipeline growth. Selling and marketing costs rose significantly as a result. Second, seasonal impacts associated with the summer period contributed to lower service activity and milestone-based revenue recognition. The company noted that the timing of customer implementations can lead to uneven quarterly results.
Additionally, NetSol continues a transition from a license-based model to a predominantly SaaS model, which affects the timing of revenue recognition. Management stressed that although this shift suppresses near-term revenue growth and profitability, it improves long-term revenue stability. Broader macroeconomic conditions also weighed on customer buying behavior, including credit tightening, rising auto-loan delinquencies and restructuring challenges among European automakers. Combined with FX volatility, these dynamics contributed to the widened quarterly loss.
NTWK’s Guidance
Despite a slow start to the fiscal year, NetSol reaffirmed its expectation for full-year revenue growth of 5% to 7%, supported by a strengthening sales pipeline and increased demand for its AI-powered Transcend platform. Management reiterated that the strong pipeline, coupled with recent strategic investments, is expected to support improved performance in subsequent quarters.
Other Developments at NTWK
The company noted several strategic and geographic developments during the quarter. In the United States, NetSol began a new engagement with Sonic Automotive, a Fortune 500 dealership group, to define an omnichannel digital retail solution using the Transcend Retail platform. In Asia, the company signed a strategic cooperation agreement with the Tianjin Binhai Smart Group and the Dongjiang Free Trade Port Zone Government, advancing cross-border data and financial service initiatives.
Additionally, NetSol supported the overseas expansion of a major Chinese leasing company through a successful deployment of its Transcend Finance platform in Indonesia. These developments reflect the company’s continued international expansion and its evolving role in bridging markets across the Asia Pacific region.