NETSOL Technologies Reports Third Quarter Fiscal 2025 Results

Rhea-AI Summary

NETSOL Technologies (NASDAQ: NTWK) reported strong Q3 FY2025 results with total net revenues increasing 13% to $17.5 million. The company saw significant growth in service revenue, up 24% to $9.7 million, while subscription and support revenues rose 10% to $7.9 million. Gross profit reached $8.7 million (50% margin), and GAAP net income was $1.4 million ($0.12 per share), compared to $328,000 ($0.03 per share) in Q3 FY2024. The company maintained a strong balance sheet with $18.8 million in cash and equivalents. Notable achievements include new contract wins in Oman and Indonesia, and the successful implementation of Transcend Finance platform for a Japanese client in Australia.

Positive

• Revenue growth of 13% YoY to $17.5 million
• Strong services revenue increase of 24% to $9.7 million
• Subscription and support revenue up 10% to $7.9 million
• Net income significantly improved to $1.4 million from $328,000 YoY
• Gross profit margin improved to 50% from 48% YoY
• Secured new multi-million-dollar contracts in Oman and Indonesia

Negative

• Cash position slightly decreased to $18.8 million from $19.1 million in June 2024
• Operating expenses increased to 41% of sales from 40% YoY
• Subscription revenue as percentage of sales decreased to 45% from 46% YoY

Insights

Financial Analyst

NETSOL delivered solid Q3 with 13% revenue growth, 326% net income increase, expanding margins, while advancing its SaaS transition strategy.

NETSOL Technologies has posted remarkable financial performance for Q3 FY2025, with total revenue growing 13% year-over-year to $17.5 million. The company demonstrated particular strength in service revenue, which surged 24% to $9.7 million, while their recurring revenue streams from subscriptions and support increased by 10% to $7.9 million.

The company's profitability metrics show significant improvement. Net income attributable to NETSOL reached $1.4 million ($0.12 per diluted share), representing a remarkable 326% increase from the $328,000 ($0.03 per share) reported in Q3 FY2024. This profit expansion was supported by improved gross margins, which increased from 48% to 50% year-over-year.

Non-GAAP EBITDA nearly tripled to $2.2 million from $767,000 in the prior year period, while adjusted EBITDA rose 122% to $1.8 million. Operating expenses increased to $7.2 million (41% of sales), slightly higher than the 40% ratio in the previous year, indicating the company is investing in growth while maintaining cost discipline.

NETSOL maintains a healthy balance sheet with $18.8 million in cash and working capital of $23.7 million, providing financial flexibility to fund its transition toward a subscription-based recurring revenue model. The company secured important new contracts in Oman and Indonesia and successfully implemented its Transcend Finance platform for a Japanese client in Australia, validating its global market positioning in digital finance solutions.

The company appears to be executing well on its strategic shift toward higher-margin recurring subscription revenues, though the percentage of revenue from subscriptions and support actually decreased slightly from 46% to 45%, indicating this transition remains a work in progress despite the absolute growth in this segment.

• Total net revenues for Q3’25 increased by 13%, reaching $17.5 million, when compared with Q3’24.
• Total service revenue increased 24% in Q3’25, reaching $9.7 million, when compared with Q3,’24.
• Total subscription (SaaS and Cloud) and support revenues increased 10% to $7.9 million, compared to $7.1 million in the prior year period.
  
• Net profit for Q3’2025 was $1.4 million.
  

ENCINO, Calif., May 14, 2025 (GLOBE NEWSWIRE) -- NETSOL Technologies, Inc. (Nasdaq: NTWK), a global business services and asset finance solutions provider, reported results for the third fiscal quarter ended March 31, 2025.

“We delivered solid performance in the third quarter, with strong growth in our services revenue and continued momentum in our subscription business,” said Najeeb Ghauri, Founder and CEO of NETSOL Technologies. “Our results reflect the growing demand for our digital finance solutions and the strength of our global delivery model. As we continue transitioning toward a recurring revenue model, we remain focused on driving innovation, operational efficiency and long-term value for our customers and shareholders.”

Fiscal Third Quarter 2025 Financial Results

Total net revenues for the third quarter of fiscal 2025 increased 13% to $17.5 million, compared with $15.5 million in the prior year period driven by the increases in subscription and support revenue, and services revenue. On a constant currency basis, total net revenues were $17.6 million.

Total subscription (SaaS and Cloud) and support revenues increased 10% to $7.9 million compared with $7.1 million in the prior year period. Total subscription and support revenues as a percentage of sales decreased to 45%, compared with 46% in the prior year period. Total subscription and support revenues on a constant currency basis were $7.9 million.

Total services revenues increased 24% to $9.7 million, compared with $7.8 million in the prior year period. Total services revenues on a constant currency basis were $9.6 million.

Gross profit for the third quarter of fiscal 2025 was $8.7 million or 50% of net revenues, compared to $7.5 million or 48% of net revenues in the third quarter of fiscal 2024. On a constant currency basis, gross profit was $8.7 million or 50% of net revenues as measured on a constant currency basis.

Operating expenses for the third quarter of fiscal 2025 were $7.2 million or 41% of sales compared to $6.2 million or 40% of sales for the third quarter of fiscal 2024. On a constant currency basis, operating expenses were $7.2 million or 41% of sales.

GAAP net income attributable to NETSOL was $1.4 million, or $0.12 per diluted share, compared to $328,000, or $0.03 per diluted share in Q3 of FY2024. Included in our GAAP net income in the quarter was a foreign currency exchange gain of $322,000 compared to a foreign currency exchange loss of $964,000 in the prior year period.

Non-GAAP EBITDA for the third quarter of fiscal 2025 was $2.2 million or $0.19 per diluted share, compared with non-GAAP EBITDA of $767,000, or $0.07 per diluted share in the prior year period.

Non-GAAP adjusted EBITDA for the third quarter of fiscal 2025 was $1.8 million or $0.15 per diluted share, compared with a non-GAAP adjusted EBITDA of $810,000, or $0.07 per diluted share in the third quarter of the previous fiscal year.

Balance Sheet and Capital Structure

Cash and cash equivalents were $18.8 million as of March 31, 2025, compared with $19.1 million as of June 30, 2024. Working capital was $23.7 million as of March 31, 2025, compared with $23.6 million as of June 30, 2024.

Management Commentary:

Najeeb Ghauri commented: “We remain focused on driving innovation and operational efficiency. This quarter, a leading Japanese equipment finance company and longstanding NETSOL customer went live with NETSOL’s Transcend Finance platform in Australia. We also signed two multi-million-dollar contracts with financial services providers in both Oman and Indonesia. These wins are a clear signal of the growing confidence our clients place in us to drive their digital transformation agendas. At a time when institutions are under pressure to modernize and differentiate, our ability to consistently deliver mission-critical solutions at scale sets us apart and cements our position as a preferred technology partner for financial institutions worldwide.”

Roger Almond, Chief Financial Officer of NETSOL Technologies Inc., commented: “We delivered solid top-line growth in the third quarter, driven by continued strength in our services business and stable subscription revenue performance. We achieved double-digit revenue growth, increased gross margins and significantly improved net income. These results reinforce the strength of our operating model. As we continue to execute our strategy, we remain committed to sustainable growth, product innovation and delivering long-term value to our shareholders.”

Conference Call

NETSOL Technologies management will hold a conference call on Wednesday, May 14, 2025, at 9:00 AM ET to discuss its financial results for the fiscal third quarter of 2025 (ended March 31, 2025). Following the call, management will host a question-and-answer session.

Toll-Free Dial-In: 877-407-0789
International Dial-In: 201-689-8562

The conference call will also be broadcast live and available for replay here, along with additional replay access being provided through the company information section of NETSOL’s website.

Telephone replays will be made available approximately 3 hours after the conference end time
(Replay Expiration: Wednesday, May 28, 2025, at 11:59 PM ET).

Toll-Free Replay Dial-In: 844-512-2921
International Replay Dial-In: 412-317-6671
Access ID: 13753570

About NETSOL Technologies
NETSOL Technologies is a global leader in delivering state-of-the-art solutions for the asset finance and leasing industry, serving automotive OEMs, auto captives and financial institutions across over 30 countries. Since its inception in 1996, NETSOL has been at the cutting edge of technology, pioneering innovations with its asset finance solutions and leveraging 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 clients, 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 may contain forward-looking statements relating to the development of the Company's products and services and future operation results, including statements regarding the Company that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words “expects,” “anticipates,” variations of such words, and similar expressions, identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, but their absence does not mean that the statement is not forward-looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Factors that could affect the Company's actual results include the progress and costs of the development of products and services and the timing of the market acceptance. The subject Companies expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based.

Use of Non-GAAP Financial Measures
The reconciliation of Adjusted EBITDA to net income, the most comparable financial measure based upon GAAP, as well as a further explanation of adjusted EBITDA, is included in the financial tables in Schedule 4 of this press release.

Investor Relations Contact:
Investor Relations
(818) 222-9195
investors@netsoltech.com

NETSOL Technologies Inc. and Subsidiaries Consolidated Balance Sheets
			As of				As of
	ASSETS		March 31, 2025				June 30, 2024
Current assets:
Cash and cash equivalents			$	18,774,739			$	19,127,165
Accounts receivable, net of allowance of $37,794 and $398,809				5,443,498				13,049,614
Revenues in excess of billings, net of allowance of $1,126,734 and $116,148				14,867,360				12,684,518
Other current assets				3,465,893				2,600,786
Total current assets				42,411,540				47,462,083
Revenues in excess of billings, net - long term				697,486				954,029
Property and equipment, net				4,768,844				5,106,842
Right of use assets - operating leases				930,847				1,328,624
Other assets				32,338				32,340
Intangible assets, net				-				-
Goodwill				9,302,524				9,302,524
Total assets			$	58,143,579			$	64,186,442
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses			$	7,097,343			$	8,232,342
Current portion of loans and obligations under finance leases				8,459,991				6,276,125
Current portion of operating lease obligations				475,888				608,202
Unearned revenue				2,705,414				8,752,153
Total current liabilities				18,738,636				23,868,822
Loans and obligations under finance leases; less current maturities				86,800				95,771
Operating lease obligations; less current maturities				422,350				688,749
Total liabilities				19,247,786				24,653,342
Stockholders' equity:
Preferred stock, $.01 par value; 500,000 shares authorized;				-				-
Common stock, $.01 par value; 14,500,000 shares authorized;
12,648,574 shares issued and 11,709,543 outstanding as of March 31, 2025 ,
12,359,922 shares issued and 11,420,891 outstanding as of June 30, 2024				126,489				123,602
Additional paid-in-capital				127,862,976				128,783,865
Treasury stock (at cost, 939,031 shares
as of March 31, 2025 and June 30, 2024)				(3,920,856	)			(3,920,856	)
Accumulated deficit				(43,864,592	)			(44,212,313	)
Other comprehensive loss				(46,253,619	)			(45,935,616	)
Total NETSOL stockholders' equity				33,950,398				34,838,682
Non-controlling interest				4,945,395				4,694,418
Total stockholders' equity				38,895,793				39,533,100
Total liabilities and stockholders' equity			$	58,143,579			$	64,186,442

NETSOL Technologies Inc. and Subsidiaries Consolidated Statement of Operations
				For the Three Months								For the Nine Months
				Ended March 31,								Ended March 31,
					2025				2024				2025				2024
Net Revenues:
License fees				$	1,198			$	558,340			$	75,115			$	4,829,242
Subscription and support					7,888,360				7,140,358				24,723,460				20,480,382
Services					9,654,399				7,765,818				22,880,541				19,635,014
Total net revenues					17,543,957				15,464,516				47,679,116				44,944,638
Cost of revenues					8,802,184				7,989,696				25,452,890				24,132,064
Gross profit					8,741,773				7,474,820				22,226,226				20,812,574
Operating expenses:
Selling, general and administrative					6,883,587				5,811,335				20,921,530				17,051,798
Research and development cost					304,788				345,582				998,406				1,065,412
Total operating expenses					7,188,375				6,156,917				21,919,936				18,117,210
Income (loss) from operations					1,553,398				1,317,903				306,290				2,695,364
Other income and (expenses)
Interest expense					(194,742	)			(289,677	)			(689,347	)			(856,016	)
Interest income					294,655				376,466				1,593,594				1,259,464
Gain (loss) on foreign currency exchange transactions					321,622				(963,887	)			165,775				(1,112,757	)
Amortization of financing costs					-				-				-				-
Other income					10,831				21,634				202,386				22,210
Total other income (expenses)					432,366				(855,464	)			1,272,408				(687,099	)
Net income before income taxes					1,985,764				462,439				1,578,698				2,008,265
Income tax provision					(151,334	)			(146,569	)			(712,765	)			(418,517	)
Net income					1,834,430				315,870				865,933				1,589,748
Non-controlling interest					(410,462	)			11,679				(518,212	)			(822,993	)
Net income attributable to NetSol				$	1,423,968			$	327,549			$	347,721			$	766,755
Net income per share:
Net income per common share
Basic				$	0.12			$	0.03			$	0.03			$	0.07
Diluted				$	0.12			$	0.03			$	0.03			$	0.07
Weighted average number of shares outstanding
Basic					11,683,408				11,390,888				11,531,365				11,369,778
Diluted					11,683,408				11,430,493				11,531,365				11,409,383

NETSOL Technologies Inc. and Subsidiaries Consolidated Statement of Cash Flows
					For the Nine Months
					Ended March 31,
						2025				2024
Cash flows from operating activities:
Net income					$	865,933			$	1,589,748
Adjustments to reconcile net income to net cash
	provided by operating activities:
Depreciation and amortization						1,102,085				1,351,239
Provision for bad debts						1,062,515				9,739
Gain on sale of assets						(28,320	)			(1,154	)
Stock based compensation						134,884				260,875
Changes in operating assets and liabilities:
	Accounts receivable					6,408,397				(3,922,773	)
	Revenues in excess of billing					(1,411,983	)			(3,904,609	)
	Other current assets					(344,493	)			(1,525	)
	Accounts payable and accrued expenses					(1,136,533	)			77,541
	Unearned revenue					(6,646,170	)			938,242
Net cash provided by (used in) operating activities						6,315				(3,602,677	)
Cash flows from investing activities:
Purchases of property and equipment						(897,743	)			(948,337	)
Sales of property and equipment						63,577				125,886
Purchase of subsidiary shares						(8,878	)			-
Net cash used in investing activities						(843,044	)			(822,451	)
Cash flows from financing activities:
Proceeds from the exercise of stock options and warrants						473,000				-
Dividend paid by subsidiary to non-controlling interest						(306,799	)			-
Purchase of subsidiary treasury stock						(1,503,662	)			-
Proceeds from bank loans						2,451,256				340,847
Payments on finance lease obligations and loans - net						(247,496	)			(307,235	)
Net cash provided by financing activities						866,299				33,612
Effect of exchange rate changes						(381,996	)			1,196,904
Net increase (decrease) in cash and cash equivalents						(352,426	)			(3,194,612	)
Cash and cash equivalents at beginning of the period						19,127,165				15,533,254
Cash and cash equivalents at end of period					$	18,774,739			$	12,338,642

NETSOL Technologies Inc. and Subsidiaries Reconciliation to GAAP
	For the Three Months								For the Nine Months
	Ended March 31,								Ended March 31,
		2025				2024				2025				2024
Net Income (loss) attributable to NETSOL	$	1,423,968			$	327,549			$	347,721			$	766,755
Non-controlling interest		410,462				(11,679	)			518,212				822,993
Income taxes		151,334				146,569				712,765				418,517
Depreciation and amortization		363,503				391,290				1,102,085				1,351,239
Interest expense		194,742				289,677				689,347				856,016
Interest (income)		(294,655	)			(376,466	)			(1,593,594	)			(1,259,464	)
EBITDA	$	2,249,354			$	766,940			$	1,776,536			$	2,956,056
Add back:
Non-cash stock-based compensation		39,750				149,088				134,884				260,875
Adjusted EBITDA, gross	$	2,289,104			$	916,028			$	1,911,420			$	3,216,931
Less non-controlling interest (a)		(510,908	)			(106,480	)			(718,218	)			(1,216,091	)
Adjusted EBITDA, net	$	1,778,196			$	809,548			$	1,193,202			$	2,000,840
Weighted Average number of shares outstanding
Basic		11,683,408				11,390,888				11,531,365				11,369,778
Diluted		11,683,408				11,430,493				11,531,365				11,409,383
Basic adjusted EBITDA	$	0.15			$	0.07			$	0.10			$	0.18
Diluted adjusted EBITDA	$	0.15			$	0.07			$	0.10			$	0.18
(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	$	410,462			$	(11,679	)		$	518,212			$	822,993
Income Taxes		41,891				43,852				214,892				155,636
Depreciation and amortization		87,504				97,027				269,185				348,143
Interest expense		54,461				89,738				202,289				266,922
Interest (income)		(83,410	)			(115,021	)			(491,422	)			(387,690	)
EBITDA	$	510,908			$	103,917			$	713,156			$	1,206,004
Add back:
Non-cash stock-based compensation		-				2,563				5,062				10,087
Adjusted EBITDA of non-controlling interest	$	510,908			$	106,480			$	718,218			$	1,216,091

FAQ

What were NETSOL Technologies (NTWK) key financial results for Q3 2025?

NETSOL reported Q3 2025 revenue of $17.5 million (up 13%), net income of $1.4 million ($0.12 per share), and gross profit of $8.7 million with a 50% margin.

How much did NTWK's subscription and support revenue grow in Q3 2025?

NETSOL's subscription and support revenue grew 10% to $7.9 million compared to $7.1 million in Q3 2024.

What was NETSOL Technologies' (NTWK) cash position as of March 31, 2025?

NETSOL had $18.8 million in cash and cash equivalents as of March 31, 2025, compared to $19.1 million as of June 30, 2024.

What new contracts did NETSOL Technologies secure in Q3 2025?

NETSOL secured multi-million-dollar contracts with financial services providers in Oman and Indonesia, and implemented Transcend Finance platform for a Japanese client in Australia.

How much did NTWK's services revenue increase in Q3 2025?

NETSOL's services revenue increased 24% to $9.7 million compared to $7.8 million in the prior year period.