NetSol Technologies Q2 Earnings Call Highlights

NetSol Technologies (NASDAQ:NTWK) reported higher revenue and improved quarterly profitability for its second quarter and first half ended December 31, 2025, citing growth in services activity, continued expansion in recurring subscription and support revenue, and progress on product development and customer relationships.

Second-quarter revenue rises 21% on services growth

Founder and CEO Najeeb Ghauri said the company delivered a “strong” second quarter of fiscal 2026, with net revenues rising year over year, driven by both implementation-related services work and recurring revenue streams.

Chief Financial Officer Sardar Abubakr reported total net revenues increased 21.1% to $18.8 million, up from $15.5 million in the prior-year quarter. On a constant-currency basis, revenues were also $18.8 million.

• Subscription and support revenue: increased 5.1% to $9.1 million (constant currency: $9.2 million), compared with $8.6 million a year earlier.
• Services revenue: rose 40.9% to $9.6 million (constant currency: $9.6 million), compared with $6.8 million in the prior-year period.

Ghauri attributed the services increase primarily to new implementations for major customers, adding that management believes these implementations can support recurring subscription and support revenues over time as they progress through “go-live and expansion phases.”

Margins and operating results improved versus prior year

Abubakr said gross profit for the quarter was $9.0 million, representing 48% of net revenues (constant currency: 47.8%). Cost of sales was $9.8 million, or 52% of revenue, compared with $8.6 million, or 55.5% of revenue, in the second quarter of fiscal 2025. He said the cost increase primarily reflected higher salaries and travel costs, “even though the margin has improved.”

Income from operations was $1.3 million, compared with an operating loss of $0.5 million in the prior-year quarter. Foreign currency movements contributed a $0.05 million gain during the quarter, compared with a $0.7 million loss in the prior-year period. On a non-GAAP basis, EBITDA was $1.7 million, compared with a loss of $0.8 million a year earlier.

During the Q&A, management said it expects margins to improve in coming periods even as the company continues to invest. Najeeb Ghauri told analysts the company is “continuously investing” in growth, including travel, new employees, and platform development, but said gross margin is anticipated to improve. President and Co-founder Naeem Ghauri added that recent hiring has been “primarily in the AI teams,” and the company is also incurring cross-training expenses, with an internal plan to cross-train staff across departments over the next six months.

Abubakr emphasized that margin improvement at both the gross and net level remains important to the company’s profitability “journey,” while also pointing to liquidity as supporting continued investment.

First-half results: revenue growth, higher GAAP net loss

For the six months ended December 31, 2025, NetSol reported total net revenues of $33.8 million, compared with $30.1 million in the prior-year period (constant currency: $33.5 million).

• Recurring subscription and support revenue: increased 7.2% to $18.0 million (constant currency: $17.9 million), up from $16.8 million.
• Services revenue: increased 17.9% to $15.6 million (constant currency: $15.5 million), up from $13.2 million.

Gross profit was $14.9 million, or 44.2% of revenue, compared with $13.5 million, or 44.8%, in the prior-year period. Cost of sales was $18.9 million, or 55.8% of revenue, compared with $16.7 million, or 55.3%, a year earlier.

GAAP net loss attributable to NetSol for the six-month period totaled $2.1 million, or $0.18 per diluted share, compared with a GAAP net loss of $1.1 million, or $0.09 per diluted share, in the prior-year period. On a constant-currency basis, GAAP net loss attributable to NetSol was $2.5 million, or $0.21 per diluted share. Non-GAAP EBITDA for the six months was a loss of $0.1 million, compared with a non-GAAP EBITDA loss of $0.5 million a year earlier.

Product development and customer updates highlight quarter

Management highlighted several strategic developments, including the launch of an AI-enabled credit decisioning engine. Najeeb Ghauri said the company launched its loan origination platform capability called “Check,” describing it as an AI-enabled credit decisioning engine designed to modernize underwriting through “deep reasoning, intelligent automation, and agentic workflows” while supporting faster and more consistent decisions. Naeem Ghauri said the company is embedding AI across the Transcend platform and internal operations “horizontally,” supported by a shared AI layer with governance and human oversight.

On the customer front, Najeeb Ghauri said NetSol signed a $50 million, four-year contract extension with a “tier one global auto captive” and long-standing partner, which he said provides revenue visibility and validates platform scalability. He also said Transcend Retail gained traction in the U.S. with new dealer groups and franchised dealerships signing on during the quarter.

The company also announced a leadership change, with Sardar Abubakr appointed as CFO and Roger Almond transitioning to Chief Accounting Officer.

Balance sheet and updated full-year outlook

NetSol ended the period with cash and cash equivalents of $18.1 million at December 31, 2025, up from $17.4 million at June 30, 2025. Working capital was $26.4 million, compared with $26.6 million, and stockholders’ equity was $35.9 million, or $3.04 per share. Najeeb Ghauri cited a current ratio of 2.3 as reflecting strong liquidity.

Looking ahead, Najeeb Ghauri said the company increased its full-year fiscal 2026 revenue growth guidance to “nearly $73 million or better,” supported by the current pipeline and continued investment in go-to-market initiatives and its “unified AI-enabled Transcend platform.” He noted macroeconomic and currency dynamics remain considerations, but said the company’s diversified model and customer base provide a solid foundation for the rest of the fiscal year.

In response to a shareholder question about capital returns, management said it has previously considered buybacks and remains open to the approach, but indicated any decision would be made at the board level.

About NetSol Technologies (NASDAQ:NTWK)

NetSol Technologies, Inc is a publicly traded enterprise software provider specializing in asset finance and leasing solutions. Headquartered in Calabasas, California, the company was founded in 1997 by Najeeb Ghauri, who continues to serve as its chief executive officer. NetSol has built a reputation for delivering end-to-end digital solutions tailored to the finance, leasing, and rental industries, enabling clients to streamline operations, improve customer engagement, and accelerate business growth.

The company’s flagship offering, NFS Ascent, is a configurable, modular platform that supports the entire contract lifecycle—from origination and credit approval through servicing and end-of-term processing.