NETSOL Technologies reports fiscal first quarter 2027 revenue growth of 9.3% and gross margin expansion to 50.5%
The return to profitability coincided with operating cash outflow as NETSOL delivered against billings collected in the preceding quarter.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Summary
NETSOL Technologies (Nasdaq: NTWK) reported fiscal first-quarter 2027 revenue of $16.4 million, alongside a return to GAAP profitability. Revenue rose 9.3% year over year in the quarter ended September 30, 2026. Net income attributable to NETSOL was $0.16 million, or $0.01 per diluted share, versus a $2.36 million loss, or $0.21 per share.
Gross margin reached 50.5%, versus 39.4%, benefiting from revenue mix and approximately $1.0 million of capitalized software development costs, versus none a year earlier. Operating income reached $0.4 million, versus a $1.8 million loss. Operating activities used $5.6 million, versus providing $5.3 million, primarily reflecting working capital. Cash fell to $19.7 million from $27.1 million at June 30. A subsidiary proposed a share buyback requiring shareholder approval; another is evaluating a potential VLS sale or wind-down, with possible disposal losses and exit costs.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Moderate pointFiscal Q1 revenue rose 9.3% to $16.4 million, versus $15.0 million a year earlier.
- Moderate pointGross profit rose to $8.3 million; margin reached 50.5% from 39.4%, partly reflecting capitalized development costs.
- Moderate pointOperating income reached $0.4 million, versus a $1.8 million loss; operating margin improved to 2.5% from negative 12.2%.
- Moderate pointNETSOL-attributable GAAP net income reached $0.16 million, or $0.01 diluted, versus losses of $2.36 million and $0.21.
- Minor pointSubscription and support revenue increased 6.1% to $9.5 million, versus $9.0 million a year earlier.
9 minor points
- Minor pointServices revenue increased 6.3% to $6.4 million, versus $6.0 million a year earlier.
- Minor pointLicense fees increased to $549,263 from $72,225 in the prior-year quarter.
- Minor pointAdjusted EBITDA attributable to NETSOL reached $0.48 million, versus negative $1.66 million a year earlier.
- Minor pointForeign-exchange loss narrowed to $6,811 from $286,917 in the prior-year quarter.
- Minor pointInterest expense declined to $111,360 from $174,611 in the prior-year quarter.
- Minor pointResearch and development expense declined to $171,626 from $214,343 in the prior-year quarter.
- Minor pointIncome tax provision declined to $105,126 from $215,775 in the prior-year quarter.
- Minor pointNETSOL stockholders’ equity increased to $42,013,415 at September 30, 2026, from $41,593,925 at June 30.
- Minor point. Forward-looking: it has not happened yet and may not happen.NETSOL plans to grow recurring revenue and build on the quarter’s year-over-year margin gains.
Negative
- Moderate pointOperating cash outflow was $5.6 million, versus $5.3 million provided in the prior-year quarter, primarily reflecting working capital.
- Moderate pointCash declined to $19.7 million at September 30, 2026, from $27.1 million at June 30.
- Moderate pointProperty, equipment and capitalized software investment reached approximately $2.0 million, versus approximately $0.5 million a year earlier.
- Minor pointSelling, general and administrative expense increased to $7,700,709 from $7,536,353 in the prior-year quarter.
- Minor pointVLS alternatives remain under evaluation; no sale or wind-down plan has been approved or agreement executed.
2 minor points
- Minor point. Forward-looking: it has not happened yet and may not happen.A completed VLS sale or wind-down may cause disposal losses and exit costs, currently not estimable.
- Minor point. Forward-looking: it has not happened yet and may not happen.The Pakistan-listed subsidiary’s proposed buyback requires shareholder approval on December 3, 2026.
News Explained
The subsidiary buyback is not approved; if shareholders approve it, distributable profits would fund a repurchase of up to four million shares.
On
If approved, the subsidiary would hold the shares in treasury and fund the buyback from its distributable profits; NETSOL says it is assigning no financial benefit to the proposal at this stage. Virtual Lease Services Limited (VLS), which is being evaluated for a potential sale or wind-down, represented
Key Figures
- Revenue
- $16.4 million, up 9.3%
- Fiscal first quarter 2027; $15.0 million in the prior-year period
- Gross margin
- 50.5%
- Fiscal first quarter 2027; compared with 39.4% in the prior-year period
- GAAP net income attributable to NETSOL
- $0.16 million
- Fiscal first quarter 2027; compared with a $2.36 million net loss in the prior-year period
- Income from operations
- $0.4 million
- Fiscal first quarter 2027; compared with a $1.8 million operating loss in the prior-year period
- Adjusted EBITDA attributable to NETSOL
- $0.48 million
- Fiscal first quarter 2027; compared with negative $1.66 million in the prior-year period
- Net cash used in operating activities
- $5.6 million
- Fiscal first quarter 2027; compared with $5.3 million provided in the prior-year period
- Cash and cash equivalents
- $19.7 million
- At September 30, 2026
- Proposed subsidiary share buy-back
- Up to 4,000,000 shares, approximately 4.45% of issued capital
- Subject to shareholder approval on December 3, 2026
Key Terms
gaap financial
saas technical
constant currency financial
non-gaap financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
First quarter revenue rises
ENCINO, Calif., Nov. 12, 2026 (GLOBE NEWSWIRE) -- NETSOL Technologies, Inc. (Nasdaq: NTWK), a provider of AI-enabled solutions and services powering OEMs, dealerships and financial institutions to sell, finance and lease assets, reported results for its fiscal first quarter ended September 30, 2026.
First quarter highlights
- First quarter revenue increased
9.3% to$16.4 million , compared with$15.0 million in the prior-year period; subscription and support revenue increased6.1% to$9.5 million . - First quarter gross margin expanded by more than 1,100 basis points to
50.5% , compared with39.4% in the prior-year period; income from operations was$0.4 million , compared with an operating loss of$1.8 million . - First quarter GAAP net income attributable to NETSOL was
$0.16 million , or$0.01 per diluted share, compared with a net loss of$2.36 million , or$0.21 per diluted share, in the prior-year period. - First quarter adjusted EBITDA attributable to NETSOL was
$0.48 million , compared with negative$1.66 million in the prior-year period. - Net cash used in operating activities was
$5.6 million , primarily attributable to working capital; cash and cash equivalents were$19.7 million at September 30, 2026.
First quarter fiscal 2027 financial results
Revenue
Total net revenues for the first quarter of fiscal 2027 increased
Subscription (SaaS and Cloud) and support revenues increased
Services revenues increased
Gross profit and operating income
Gross profit increased to
Gross margin benefited from revenue mix and the capitalization of approximately
Headcount was 1,272 at September 30, 2026, compared with 1,370 at June 30, 2026 and 1,442 at September 30, 2025.
Income from operations was
Net income and non-GAAP results
GAAP net income attributable to NETSOL was
Consolidated net income was
The improvement reflects stronger gross margin performance and a significantly narrower foreign currency exchange loss of
Non-GAAP results for the first quarter, compared with the prior-year period, were:
- Non-GAAP EBITDA:
$0.78 million , compared with negative$1.78 million . - Consolidated adjusted EBITDA:
$0.89 million , compared with negative$1.35 million . - Adjusted EBITDA attributable to NETSOL:
$0.48 million , compared with negative$1.66 million .
Cash flow and balance sheet
Net cash used in operating activities for the first quarter was
Cash and cash equivalents were
NETSOL stockholders’ equity was
On October 30, 2026, the board of NETSOL Technologies Limited, the company’s majority-owned subsidiary listed on the Pakistan Stock Exchange, recommended a buy-back of up to 4,000,000 of its shares, approximately
Separately, on October 1, 2026, the Board of NETSOL Technologies Europe Limited began evaluating strategic alternatives for its subsidiary Virtual Lease Services Limited (VLS), including a potential sale or wind-down, though no plan has been approved or agreement executed. VLS revenue for the three months ended September 30, 2026 represented approximately
Management commentary
Najeeb Ghauri, Founder and Chief Executive Officer of NETSOL Technologies, Inc., commented:
“This quarter shows the kind of progress we set out to deliver entering fiscal 2027. Revenue, gross margin and profitability all moved in the right direction compared with a year ago, and we did it while continuing to strengthen our commercial pipeline and deepen trust with our largest customers. That combination, growth, margin improvement and deepening customer relationships, is what we mean when we talk about making this company’s performance more predictable.”
Asad Ghauri, Global Head of Sales and Group Managing Director of Europe at NETSOL Technologies, Inc., commented:
“We saw strong commercial momentum this quarter. We brought Transcend Retail live across two new U.S. dealerships, Atlanta Autos and Royal Coach RV, and BMO Equipment Finance, a 30-year customer, moved from our legacy LeasePak platform onto Transcend Finance, part of a broader pattern we’re seeing across our install base.”
Sardar Abubakr, Chief Financial Officer of NETSOL Technologies, Inc., commented:
“The first quarter marked a clear improvement from where we stood a year ago. Revenue grew
“In the fourth quarter we billed and collected ahead of delivery, and in the first quarter we delivered against those billings. That is most of the operating cash outflow. Our liquidity is fine and we can fund the business through the year.”
“Our priorities for the remainder of the year are unchanged: grow recurring revenue, build on this quarter’s year-over-year margin gains and continue converting consolidated performance into value for NETSOL shareholders.”
Conference call
NETSOL Technologies management will hold a conference call Thursday, November 12, 2026, at 9:00 am Eastern Time (6:00 am Pacific Time) to discuss its results for the first quarter of fiscal 2027 ended September 30, 2026. A question-and-answer session will follow management’s prepared remarks.
Participant dial-in: 1-877-407-0789 or 1-201-689-8562
A live webcast of the conference call will be available here. Information about the webcast will also be available on the Investor Relations section of NETSOL’s website at www.netsoltech.com.
Telephone replay:
Telephone replays will be made available approximately 3 hours after conference end time.
Replay dial-in: 1-844-512-2921 or 1-412-317-6671
Replay expiration: Thursday, November 26, 2026 at 11:59 PM ET
Access ID: 13763709
About NETSOL Technologies
NETSOL Technologies delivers state-of-the-art solutions for asset finance, leasing and digital automotive retail, serving automotive and equipment OEMs, dealerships, auto captives and financial institutions across over 30 countries. Since its inception in 1997, NETSOL has been at the cutting edge of technology, pioneering innovations with its asset finance solutions, and today leverages advanced AI and cloud services to meet the complex needs of the global market. Renowned for its deep industry expertise, customer-centric approach and commitment to excellence, NETSOL fosters strong partnerships with its customers, ensuring their success in an ever-evolving landscape. With a rich history of innovation, ethical business practices and a focus on sustainability, NETSOL is dedicated to empowering businesses worldwide, securing its position as the trusted partner for leading firms around the globe.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the company's products and services, expectations for future operations, fiscal 2027 guidance for revenues, gross margin and adjusted EBITDA, contracted revenue, remaining performance obligations and revenue visibility, AI-enabled products and productivity initiatives, the company's efficiency program, capital allocation, potential strategic partnerships and acquisitions, potential structural actions concerning non-controlling interests, and other statements that are not historical facts. These forward-looking statements may be identified by terminology such as "expects," "anticipates," "believes," "intends," "plans," "projects," "targets," "guidance," "assumes," and similar expressions. These statements are not guarantees of future performance and are subject to a number of risks, uncertainties, and assumptions that are difficult to predict. The fiscal 2027 outlook assumes continued subscription growth, execution of contracted implementations, disciplined cost management and no material acquisitions. Factors that could cause actual results to differ materially include, but are not limited to, the timing of customer agreements, go-lives, contract signings and renewals, implementation milestones, the rate of adoption of AI-enabled product capabilities, foreign currency volatility, customer concentration and customer decisions, the timing of advance billings and collections, investment levels, competition, geopolitical and macroeconomic conditions, and other factors discussed in NETSOL's most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. NETSOL undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.
Use of Non-GAAP financial measures
This press release includes references to non-GAAP EBITDA, non-GAAP adjusted EBITDA, gross, and non-GAAP adjusted EBITDA, net, which are non-GAAP financial measures. Non-GAAP EBITDA is net income before non-controlling interest, income taxes, depreciation and amortization, interest expense and interest income. Non-GAAP adjusted EBITDA, gross, further excludes foreign currency exchange gains and losses and non-cash stock-based compensation; non-GAAP adjusted EBITDA, net, further deducts the adjusted EBITDA attributable to non-controlling interests. Management believes these measures assist investors in evaluating operating performance and comparing results across periods. Non-GAAP measures should be considered in addition to, and not as substitutes for, the most directly comparable GAAP measures. Reconciliations of these measures to net income attributable to NETSOL, the most directly comparable GAAP measure, together with an explanation of how management uses these measures, are provided in Schedule 4 of the financial tables that follow.
Investor Relations Contact:
Investor Relations
(818) 222-9195
investors@netsoltech.com
| NETSOL Technologies, Inc. and Subsidiaries | ||||||||
| Schedule 1: Consolidated Balance Sheets | ||||||||
| ASSETS | September 30, 2026 | As of June 30, 2026 | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | ||||||||
| Accounts receivable, net of allowance of | 9,144,194 | 10,286,342 | ||||||
| Contract assets, net of allowance of | 18,977,455 | 16,240,564 | ||||||
| Other current assets | 4,160,460 | 3,210,315 | ||||||
| Total current assets | $51,979,898 | $56,861,176 | ||||||
| Contract assets, net - long term | 2,483,199 | 2,467,018 | ||||||
| Property and equipment, net | 5,550,633 | 5,683,502 | ||||||
| Right of use assets - operating leases | 795,642 | 831,196 | ||||||
| Other assets | 7,242 | 7,241 | ||||||
| Other intangible assets, net | 3,619,868 | 2,686,392 | ||||||
| Goodwill | 9,302,524 | 9,302,524 | ||||||
| Total assets | $73,739,006 | $77,839,049 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Current portion of loans and obligations under finance leases | 8,139,155 | 8,187,170 | ||||||
| Current portion of operating lease obligations | 499,603 | 447,332 | ||||||
| Contract liabilities | 6,941,958 | 10,287,225 | ||||||
| Total current liabilities | $22,856,793 | $27,629,756 | ||||||
| Loans and obligations under finance leases; less current maturities | 174,082 | 212,982 | ||||||
| Operating lease obligations; less current maturities | 260,146 | 428,491 | ||||||
| Total liabilities | $23,291,021 | $28,271,229 | ||||||
| Stockholders' equity: | ||||||||
| Preferred stock, $.01 par value; 500,000 shares authorized; | - | - | ||||||
| Common stock, $.01 par value; 18,000,000 shares authorized; 12,910,343 shares issued and 11,971,312 outstanding as of September 30, 2026, 12,825,028 shares issued and 11,885,997 outstanding as of June 30, 2026 | 129,106 | 128,253 | ||||||
| Additional paid-in-capital | 130,276,620 | 130,188,049 | ||||||
| Treasury stock (at cost, 939,031 shares as of September 30, 2026 and June 30, 2026) | (3,920,856) | (3,920,856) | ||||||
| Accumulated deficit | (38,175,758) | (38,338,727) | ||||||
| Other comprehensive loss | (46,295,697) | (46,462,794) | ||||||
| Total NetSol stockholders' equity | $42,013,415 | $41,593,925 | ||||||
| Non-controlling interest | 8,434,570 | 7,973,895 | ||||||
| Total stockholders' equity | $50,447,985 | $49,567,820 | ||||||
| Total liabilities and stockholders' equity | $73,739,006 | $77,839,049 | ||||||
| Schedule 2: Consolidated Statements of Operations | ||||||||
| For the Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net Revenues: | ||||||||
| License fees | 549,263 | 72,225 | ||||||
| Subscription and support | 9,505,208 | 8,960,555 | ||||||
| Services | 6,357,989 | 5,979,143 | ||||||
| Total net revenues | $16,412,460 | $15,011,923 | ||||||
| Cost of revenues | $8,131,365 | $9,099,933 | ||||||
| Gross profit | $8,281,095 | $5,911,990 | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | 7,700,709 | 7,536,353 | ||||||
| Research and development cost | 171,626 | 214,343 | ||||||
| Total operating expenses | $7,872,335 | $7,750,696 | ||||||
| Income (loss) from operations | $408,760 | ($1,838,706) | ||||||
| Other income and (expenses) | ||||||||
| Interest expense | (111,360) | (174,611) | ||||||
| Interest income | 301,068 | 280,974 | ||||||
| Gain (loss) on foreign currency exchange transactions | (6,811) | (286,917) | ||||||
| Other income | 47,677 | 17,670 | ||||||
| Total other income (expenses) | $230,574 | ($162,884) | ||||||
| Net income (loss) before income taxes | $639,334 | ($2,001,590) | ||||||
| Income tax provision | (105,126) | (215,775) | ||||||
| Net income (loss) | $534,208 | ($2,217,365) | ||||||
| Non-controlling interest | (371,239) | (139,923) | ||||||
| Net income (loss) attributable to NetSol | $162,969 | ($2,357,288) | ||||||
| Net income (loss) per share: | ||||||||
| Net income (loss) per common share | ||||||||
| Basic | ( | |||||||
| Diluted | ( | |||||||
| Weighted average number of shares outstanding | ||||||||
| Basic | 11,906,981 | 11,429,695 | ||||||
| Diluted | 11,926,869 | 11,429,695 | ||||||
| Schedule 3: Consolidated Statements of Cash Flows | ||||||||
| For the Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | 534,208 | (2,217,365) | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 332,284 | 324,606 | ||||||
| Provision for bad debts | 112,794 | (1,583) | ||||||
| Gain on sale of assets | (46,594) | (16,613) | ||||||
| Stock based compensation | 102,900 | 145,400 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 1,105,032 | 1,218,992 | ||||||
| Contract assets | (2,639,619) | 4,282,495 | ||||||
| Other current assets | (172,448) | (323,491) | ||||||
| Accounts payable and accrued expenses | (1,476,931) | 1,176,241 | ||||||
| Contract liabilities | (3,407,627) | 714,879 | ||||||
| Net cash provided by (used in) operating activities | ($5,556,001) | $5,303,561 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (976,009) | (485,281) | ||||||
| Sales of property and equipment | 46,594 | 16,687 | ||||||
| Investment in associates | 0 | 25,396 | ||||||
| Increase in intangible assets | (1,001,481) | 0 | ||||||
| Net cash used in investing activities | ($1,930,896) | ($443,198) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of subsidiary options | 20,292 | 64,147 | ||||||
| Proceeds from bank loans | 0 | 242,421 | ||||||
| Payments on finance lease obligations and loans - net | (119,298) | (115,350) | ||||||
| Net cash provided by (used in) financing activities | ($99,006) | $191,218 | ||||||
| Effect of exchange rate changes | 159,737 | 281,093 | ||||||
| Net increase (decrease) in cash and cash equivalents | ($7,426,166) | $5,332,674 | ||||||
| Cash and cash equivalents at beginning of the period | 27,123,955 | 17,357,944 | ||||||
| Cash and cash equivalents at end of period | $19,697,789 | $22,690,618 | ||||||
| Schedule 4: Reconciliation of GAAP Net Income (Loss) to Non-GAAP EBITDA | ||||||||
| For the Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net Income (loss) attributable to NetSol | ( | |||||||
| Non-controlling interest | 371,239 | 139,923 | ||||||
| Income taxes | 105,126 | 215,775 | ||||||
| Depreciation and amortization | 332,284 | 324,606 | ||||||
| Interest expense | 111,360 | 174,611 | ||||||
| Interest (income) | (301,068) | (280,974) | ||||||
| EBITDA | $781,910 | ($1,783,347) | ||||||
| Add back: | ||||||||
| Currency exchange (gain) loss | 6,811 | 286,917 | ||||||
| Non-cash stock-based compensation | 102,900 | 145,400 | ||||||
| Adjusted EBITDA, gross | $891,621 | ($1,351,030) | ||||||
| Less non-controlling interest (a) | (406,674) | (305,661) | ||||||
| Adjusted EBITDA, net | $484,947 | ($1,656,691) | ||||||
| (a) The reconciliation of adjusted EBITDA of non-controlling interest to net income attributable to non-controlling interest is as follows: | ||||||||
| Net Income (loss) attributable to non-controlling interest | ||||||||
| Income Taxes | 25,391 | 39,805 | ||||||
| Depreciation and amortization | 72,671 | 75,085 | ||||||
| Interest expense | 33,855 | 48,827 | ||||||
| Interest (income) | (93,372) | (79,772) | ||||||
| EBITDA | $409,784 | $223,868 | ||||||
| Add back: | ||||||||
| Currency exchange (gain) loss | (3,110) | 81,793 | ||||||
| Non-cash stock-based compensation | 0 | 0 | ||||||
| Adjusted EBITDA of non-controlling interest | $406,674 | $305,661 | ||||||
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were NETSOL’s fiscal first-quarter 2027 revenue and earnings?
NETSOL reported $16.4 million in revenue and GAAP net income attributable to NETSOL of $0.16 million, or $0.01 per diluted share, for the quarter ended September 30, 2026. Revenue increased 9.3% year over year, while the prior-year quarter had a net loss of $2.36 million, or $0.21 per diluted share.
Why did NETSOL use cash in operations despite returning to profitability?
NETSOL used $5.6 million in operating cash, primarily because of working-capital movements. Contract liabilities decreased $3.4 million, contract assets increased $2.6 million, and accounts payable and accrued expenses decreased $1.5 million, partly offset by a $1.1 million decrease in accounts receivable. Management said the company delivered against billings collected in the preceding quarter.
What are the terms of NETSOL’s Pakistan-listed subsidiary buyback proposal?
The board of NETSOL Technologies Limited recommended buying back up to 4,000,000 of its own shares, approximately 4.45% of its issued capital, for treasury using the subsidiary’s distributable profits. The October 30, 2026 proposal requires shareholder approval on December 3, 2026. NETSOL is not assigning a financial benefit to the proposal at this stage.
How large is VLS within NETSOL as a potential sale or wind-down is evaluated?
VLS represented approximately 1.7% of consolidated revenue for the three months ended September 30, 2026, and approximately 1.3% of total consolidated assets. NETSOL Technologies Europe began evaluating alternatives on October 1, 2026. No plan has been approved or agreement executed, and potential disposal losses and exit costs cannot yet be estimated.