NETCLASS TECHNOLOGY INC Announces Earnings Results for the First Half of Fiscal Year 2025

Rhea-AI Summary

NetClass Technology (NASDAQ:NTCL), a B2B smart education IT solutions provider, reported its unaudited financial results for H1 FY2025. The company experienced significant financial challenges, with revenue declining 3.0% to $3.7 million compared to H1 FY2024.

The company's performance was marked by a substantial 47.7% decrease in gross profit to $0.3 million, with profit margins declining from 15.5% to 8.4%. Operating expenses surged 94.7% to $5.5 million, primarily due to increased marketing expenses and technology upgrading costs post-IPO. Consequently, net loss widened by 137.2% to $4.9 million compared to the $2.1 million loss in the same period last year.

Positive

• Revenue from application development services increased by $0.1 million

Negative

• Revenue decreased by 3.0% to $3.7 million year-over-year
• Gross profit declined 47.7% to $0.3 million
• Operating expenses increased 94.7% to $5.5 million
• Net loss widened 137.2% to $4.9 million
• Profit margin decreased from 15.5% to 8.4%
• Subscription services revenue decreased by $0.2 million

Insights

Financial Analyst

NetClass reported widening losses with a 137% increase in net loss due to surging expenses and declining margins despite relatively stable revenue.

NetClass Technology's H1 FY2025 results reveal concerning financial deterioration across multiple metrics. While revenue held relatively steady with only a 3.0% decrease to $3.7 million, the company's profitability metrics show alarming trends. Gross profit plummeted by 47.7% to just $305,390, with margins severely compressing from 15.5% to 8.4% year-over-year.

Most concerning is the 94.7% surge in operating expenses to $5.5 million, primarily driven by increased marketing expenditures and higher costs for technology upgrades and consulting services following their IPO. These elevated expenses, combined with margin compression, resulted in a 137.2% wider net loss of $4.9 million.

The company appears caught in a challenging position—facing pricing pressures that prevent passing increased costs to customers while simultaneously ramping up spending on marketing and technology infrastructure. This combination has created a significant cash burn situation that requires careful monitoring. The post-IPO spending increase suggests management is investing for growth, but without corresponding revenue expansion, the current trajectory appears unsustainable without additional capital infusion.

The slight revenue mix shift from subscription services to application development services could indicate challenges in customer retention or competitive pressures in their core subscription business. Unless management can reverse these trends through operational efficiency improvements or accelerated revenue growth, investors should expect continued financial strain in upcoming quarters.

SINGAPORE and HONG KONG, Sept. 30, 2025 (GLOBE NEWSWIRE) -- NETCLASS Technology INC (Nasdaq: NTCL; the “Company” or “NetClass”), a leading B2B smart education IT solutions provider with offices in Shanghai, Hong Kong, Singapore and Tokyo, today announced its unaudited condensed consolidated financial results which have not been reviewed by an independent certified public accountant for the six months ended March 31, 2025. 

Financial Highlights for the First Half of Fiscal Year 2025

													%
	2025				2024				Change				Change
Revenues:		3,654,410				3,766,192				(111,782	)		(3.0	)	%
Cost of revenues		3,349,020				3,182,743				166,277			5.2		%
Gross profit		305,390				583,449				(278,059	)		(47.7	)	%
Total operating expenses		5,488,125				2,818,410				2,669,715			94.7		%
Loss from operations		(5,182,735	)			(2,234,961	)			(2,947,774	)		131.9		%
Loss before income taxes		(4,997,292	)			(2,244,424	)			(2,752,868	)		122.7		%
Net loss		(4,897,965	)			(2,065,011	)			(2,832,954	)		137.2		%
Comprehensive loss attributable to shareholders	$	(4,840,185	)		$	(2,028,488	)		$	(2,811,697	)		138.6		%

Financial Results for the First Half of Fiscal Year 2025

Revenue

For the six months ended March 31, 2025, our total revenue was approximately $3.7 million compared to approximately $3.8 million for the six months ended March 31, 2024. The Company’s total revenue decreased by approximately $0.1 million, or 3.0%. The overall decrease in total revenue was attributable to approximately $0.2 million decrease in revenue from subscription services offset by $0.1 million increase in revenue from application development services.

Gross Profit

Our gross profit decreased by approximately $0.3 million or 47.7% from approximately $0.6 million for the six months ended March 31, 2024 to approximately $0.3 million for the six months ended March 31, 2025.  Profit margin as a percent of overall revenue for the six months ended March 31, 2025 and 2024, was approximately 8.4% and 15.5%, respectively. The decrease in profit margin was due to the need to keep competitive price for customers despite cost increases.

Operating Expenses

Our operating expenses increased by approximately $2.7 million or 94.7% from approximately $2.8 million for the six months ended March 31, 2024, to approximately $5.5 million for the six months ended March 31, 2025. The increase in operating expenses is mainly due to an increase of marketing expenses, to promote the Company’s brands and an increase of costs in technology upgrading and strategy consulting and business consulting after the Company’s initial public offering (“IPO”).

Net loss

As a result of the foregoing, our net loss increased by approximately $2.8 million, or 137.2%, from approximately $2.1 million net loss for the six months ended March 31, 2024, to approximately $4.9 million net loss for the six months ended March 31, 2025.  The increase of net loss is mainly attributed to approximately $2.7 million increase in operating expenses and $0.3 million decrease of gross profit, offset by $0.2 million increase in net other income.  

About NETCLASS TECHNOLOGY INC

NETCLASS TECHNOLOGY INC is a leading B2B smart education specialist with offices in Shanghai, Hong Kong, Singapore, and Tokyo, providing innovative IT solutions to schools, training institutions, corporations, public agencies, and other organizations. Our services include SaaS subscription services and application software development, with solutions spanning teaching and campus management, online teaching, examinations, epidemic prevention, data storage, EDC (Education Credit) blockchain systems, and lecturer evaluation services. Our mission is to deliver reliable, high-quality products that drive sustainable growth for our customers. For more information, please visit the Company’s website: https://ir.netclasstech.com 

Safe Harbor Statement 

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate” or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are not guarantee of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict and many of which are beyond the control of Netclass. Actual results may differ from those projected in the forward-looking statements due to risks and uncertainties, as well as other risk factors that are included in the Company’s filings with the U.S. Securities and Exchange Commission. Although Netclass believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking statements will be realized.  In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by Netclass or any other person that their objectives or plans will be achieved. Netclass does not undertake any obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

For investor and media inquiries, please contact:
NETCLASS TECHNOLOGY INC
Investor Relations
Email: ir@netclasstech.com

Jackson Lin
Lambert by LLYC
Phone: +1 (646) 717-4593
Email: jian.lin@llyc.global

NETCLASS TECHNOLOGY INC UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Expressed in U.S. dollar, except for the number of shares)
	March 31,				September 30,
	2025				2024
	unaudited				audited
ASSETS
CURRENT ASSETS:
Cash	$	1,805,463			$	410,716
Restricted cash		504,058				4,564
Accounts receivable, net		4,654,356				5,298,006
Inventories, net		199,869				70,681
Advances to vendors		1,645,537				1,124,030
Prepayments and other current assets		441,534				40,990
Deferred issuance costs		-				138,463
TOTAL CURRENT ASSETS		9,250,817				7,087,450
Property and equipment, net		32,764				39,707
Long-term prepaid expenses, net		437,500				-
Intangible assets, net		465,137				-
Operating lease right of use assets		1,153,272				13,122
Deferred tax assets, net		93,498				88,445
TOTAL NONCURRENT ASSETS		2,182,171				141,274
TOTAL ASSETS	$	11,432,988			$	7,228,724
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	1,766,033			$	2,860,703
Advance from customers		1,612,363				425,116
Accrued expenses and other liabilities		393,648				297,360
Due to related parties		157,114				228,951
Taxes payable		310,233				341,217
Operating lease liabilities, current portion		1,272				13,122
TOTAL CURRENT LIABILITIES		4,240,663				4,166,469
Long-term bank loan		372,070				-
Operating lease liabilities, non-current portion		-				-
TOTAL NON-CURRENT LIABILITIES		372,070				-
TOTAL LIABILITIES		4,612,733				4,166,469
COMMITMENTS AND CONTINGENCIES		-				-
SHAREHOLDERS’ EQUITY:
Ordinary shares, 200,000,000 shares authorized, consisting of 190,000,000 Class A ordinary shares of $0.00025 par value per share and 10,000,000 Class B ordinary shares of $0.00025 par value per share
Class A Ordinary shares, 15,830,000 and 13,760,000 ordinary shares issued and outstanding as of March 31, 2025 and September 30, 2024, respectively		3,958				3,440
Class B Ordinary shares, 2,000,000 ordinary shares issued and outstanding		500				500
Additional paid in capital		13,285,824				4,821,992
Statutory reserves		35,448				35,448
Accumulated deficit		(6,528,896	)			(1,704,065	)
Accumulated other comprehensive loss		(201,488	)			(186,134	)
TOTAL SHAREHOLDERS’ EQUITY		6,595,346				2,971,181
Non-controlling interest		224,909				91,074
TOTAL EQUITY		6,820,255				3,062,255
TOTAL LIABILITIES AND EQUITY	$	11,432,988			$	7,228,724

  

NETCLASS TECHNOLOGY INC UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Expressed in U.S. dollar, except for the number of shares)
	For the Six Months Ended March 31,
	2025					2024
Revenues	$	3,654,410			$		3,766,192
Cost of revenues		(3,349,020	)				(3,182,743	)
Gross profit		305,390					583,449
Operating expenses:
Selling and marketing		(468,864	)				(207,160	)
General and administrative		(3,979,733	)				(397,873	)
Research and development		(1,039,528	)				(2,213,377	)
Total operating expenses		(5,488,125	)				(2,818,410	)
Loss from operations		(5,182,735	)				(2,234,961	)
Other (expense) income:
Interest income (expense), net		(2,939	)				210
Gain on acquisition of a subsidiary		201,197					-
Other (expense) income, net		(12,815	)				(9,673	)
Total other (expense) income, net		185,443					(9,463	)
Loss before income taxes		(4,997,292	)				(2,244,424	)
Income tax benefit		99,327					179,413
Net loss		(4,897,965	)				(2,065,011	)
Other comprehensive income
Foreign currency translation adjustments		(15,354	)				36,523
Comprehensive loss		(4,913,319	)				(2,028,488	)
Less: Comprehensive loss attributable to non-controlling interests		73,134					-
Comprehensive loss attributable to shareholders	$	(4,840,185	)		$		(2,028,488	)
Loss per share
Basic and diluted	$	(0.29	)		$		(0.13	)
Weighted average number of shares outstanding
Basic and diluted		16,927,527					15,760,000

FAQ

What were NetClass Technology's (NTCL) earnings results for H1 2025?

NetClass reported revenue of $3.7 million, down 3.0% year-over-year, with a net loss of $4.9 million, representing a 137.2% increase in losses compared to H1 2024.

Why did NTCL's operating expenses increase in H1 2025?

Operating expenses increased 94.7% to $5.5 million due to increased marketing expenses for brand promotion and higher costs in technology upgrading and business consulting following their IPO.

What caused the decline in NetClass Technology's gross profit margin?

The gross profit margin declined from 15.5% to 8.4% due to the company maintaining competitive pricing for customers despite experiencing cost increases.

How much did NTCL's subscription services revenue change in H1 2025?

NetClass's subscription services revenue decreased by approximately $0.2 million, which was partially offset by a $0.1 million increase in application development services revenue.