NetSol Technologies (NASDAQ:NTWK) reported record quarterly revenue for its fiscal third quarter ended March 31, 2026, as a major contract renewal, higher recurring revenue and continued adoption of its Transcend platform helped lift results.
Founder and Chief Executive Officer Najeeb Ghauri said total net revenue reached $19.8 million, the highest quarterly revenue in the company’s history. That compared with $17.5 million in the prior-year period, an increase of about 13%, according to Chief Financial Officer Sardar Abubakr. For the nine months ended March 31, revenue rose 12.5% to $53.7 million from $47.7 million a year earlier.
Contract Renewal Drives License Revenue
A key contributor to the quarter was a four-year, $50 million contract extension signed in December with a long-standing tier-one global auto captive customer tied to Mercedes-Benz, a relationship Ghauri said dates back to 1997. During the third quarter, NetSol recognized a one-time license investment tied to that renewal, which contributed about $4.7 million in license revenue.
Abubakr said license fees totaled $4.7 million in the quarter, compared with just over $1,000 in the prior-year period. For the first nine months of fiscal 2026, license fees were $4.9 million, compared with $75,000 in the same period last year.
The renewal also included a large annual maintenance billing event in January, which management said affected working capital and accounts receivable during the period. Abubakr said receivables increased because of the timing of collections on invoices issued under large customer arrangements, but those balances have since converted to cash in the normal course of business.
Recurring Revenue and Customer Go-Lives Expand
Recurring subscription and support revenue increased 11.7% year over year to $8.8 million in the fiscal third quarter, up from $7.9 million. For the nine-month period, recurring subscription and support revenue rose 8.6% to $26.9 million from $24.7 million. Abubakr said annualized recurring revenue was forecast to be approximately $35 million exiting the third quarter, compared with approximately $32.9 million in the prior-year period, an increase of 7%.
NetSol also reported several customer milestones during the quarter. Ghauri said Northridge Finance, a division of Bank of Ireland U.K., went live on Transcend Finance in late January. In March, Ford China, described by Ghauri as a tier-one global auto captive, also went live on Transcend Finance in China.
“Both go-lives reflect Transcend Finance ability to scale across geographies and product lines,” Ghauri said, adding that both are expected to convert into recurring subscription, support and services revenue going forward.
The company also renewed a multi-million-dollar agreement with Investec Bank for continued use of NetSol’s finance and leasing platform. Ghauri described Investec as a premium tier-one multinational bank in the U.K. and said the relationship has lasted more than 15 years.
Margins Improve Despite Lower Services Revenue
Services revenue declined to $6.3 million in the third quarter from $9.7 million in the prior-year period. Abubakr said the decrease reflected the timing and composition of current implementation projects, as well as a one-time pickup of approximately $2.4 million in the year-earlier quarter.
Ghauri said services revenue moderated versus the prior year because the earlier period benefited from a customer contract amendment and elevated implementation activity that has since transitioned into recurring revenue. He said underlying demand for services and products remains healthy globally, and the company’s implementation pipeline supports continued progress through the remainder of fiscal 2026 and into fiscal 2027.
Gross profit for the third quarter increased to $11 million, or 55.6% of net revenue, compared with $8.7 million, or 49.8% of net revenue, in the prior-year period. Non-GAAP adjusted EBITDA was $3.4 million, up from $2.3 million a year earlier, while non-GAAP EBITDA margin expanded to 17.2% from 13.1%.
GAAP net income attributable to NetSol was $1.3 million, or $0.11 per diluted share, compared with $1.4 million, or $0.12 per diluted share, in the prior-year period. Abubakr noted that the company recorded a one-time charge of approximately $0.4 million related to Pakistan’s super tax regime, tied to retrospective adjudication for prior periods following recent court developments. He said the item was non-operational and did not reflect underlying core operating trends.
For the first nine months of fiscal 2026, gross profit rose to $26 million, or 48.4% of net revenue, from $22.2 million, or 46.6% of net revenue, in the prior-year period. Non-GAAP EBITDA increased to $3.5 million from $1.9 million.
Transcend Retail and AI Remain Strategic Priorities
Ghauri highlighted growth in Transcend Retail, the company’s digital retail solution in the U.S. dealer market. He said NetSol continues to see strong demand from BMW dealerships and OEMs and has an opportunity to go live across nearly 350 U.S.-based BMW dealership locations over a two-year time frame.
He said the solution’s fast time to go live, modern user experience and integration into the broader Transcend platform are resonating with dealer groups, and he described the segment as having “substantial runway” over the next several years.
NetSol is also continuing to embed artificial intelligence into its platform. Ghauri cited the company’s AI-enabled credit decisioning engine within Transcend Finance, which uses deep reasoning and agentic workflows to accelerate credit decisions while maintaining human oversight. He also discussed an AI-native intelligent document processing solution that combines optical character recognition with large language model capabilities to extract and structure information from financial documents.
Guidance Reaffirmed, Questions Address China and Ownership Structure
NetSol reaffirmed its full-year fiscal 2026 revenue guidance of approximately $73 million to $74 million. Ghauri said the company’s focus remains on expanding relationships with major customers, adding embedded AI capabilities and accelerating Transcend Retail growth in the U.S. dealer market.
During the question-and-answer session, Todd Felte of StoneX asked whether the company’s revenue and margin growth could continue or was mainly tied to the one-time license fee. Ghauri said management sees the pattern continuing, citing a strong pipeline and interest from new and existing customers.
Felte also asked about the possibility of fully acquiring the remaining stake in NetSol’s Pakistani subsidiary. Ghauri said the initiative remains a “top priority,” but the company needs to manage financing to buy out the remaining 30%.
In response to a question from Michael Kupinski of Noble Capital Markets about exposure to China auto finance weakness and broader auto sales trends, Ghauri said NetSol is “not that exposed,” citing its customer base, local teams in Beijing and Tianjin, and support from Pakistan. He said the company continues to monitor macro conditions closely.
Ghauri closed the call by saying NetSol remains focused on its strategic priorities and noted that the company plans to hold its annual general meeting on June 18, 2026, at its Encino headquarters.
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.
