NetSol Technologies, Inc. Q4 FY2025 earnings call

• Launched the unified AI-powered Transcend platform, an AI-powered digital retail and asset finance solution.
• Established Transcend AI Labs, a dedicated innovation hub for AI-first enhancements, automation, and strategic consulting.
• Secured significant contract wins across various regions, including a $16 million, five-year contract with a major US automaker, a multi-million dollar deal with a major Chinese automotive finance company, and deployments in Australia, Europe, and the Middle East.
• Strengthened leadership bench with key senior-level appointments.

For the fourth quarter of fiscal 2025, total net revenues increased 11.9% to $18.4 million. Subscription and support revenues grew 9.9% to $8.2 million, and services revenues were $9.7 million, up from $8.4 million in the prior year period. Gross margin was 56% for the quarter, up from 52% in the prior year quarter. For the full fiscal year 2025, total net revenues were $66.1 million, an increase from $61.4 million in fiscal 2024. License fees for the year were $0.6 million compared to $5.4 million in the prior year. Subscription and support revenues were $32.9 million, up from $28 million in the previous year. Services revenues rose to $32.6 million, a 16.3% increase from fiscal 2024.

• Management intends to update guidance in the second quarter but expects continued growth momentum in fiscal 2026.
• Confident in continuing the growth trajectory seen in fiscal 2025.

Q: Hey, congratulations guys on an outstanding quarter. Really nice to see the growth and the improvement in margins. I'm trying to figure out if this quarter is an abnormality or the start of a kind of a new upward trend. Do most of your subscription revenues are they paid to you on a quarterly basis or a yearly basis?

A: Thank you for your comment, Todd. First of all, I think we have a momentum as we close, very strong fiscal year. I think there is enough going on in the company across all three regions. That gives me a lot of confidence in our continued momentum of growth. Same way. Also, the subscription model, I think. Roger, you want to handle that because I think it's a quarterly pretty much. But it is a. It's a good trajectory that we are into growth side of the SaaS model. And eventually, as you see from the report, that we have done very well. From the last year, almost $32 million, something on the revenue which shows pretty strong, I think. Direction for the company, because that is exactly what we want to see. A subscription revenue grow faster than even license revenue, because pretty much into more subscription than the license model. So we are pretty optimistic about this. Continued journey. Roger Almond: Yeah. So, Todd, to answer your question, we see some annual, some quarterly, and some monthly. And so it's across the board, depending on the contract we have and the customer. So you know, cash will come in like I say on some contracts will be annually. Some are set up to where they pay quarterly. And then we have some subscription revenue that's coming in monthly.

Q: Okay. That's helpful. And finally, I was hoping you could enlighten us a little bit on your sales cycle. I know we've seen some very large contracts recently with some Chinese companies, and an Australian company. From the time you announced these contracts, how long is it until you know you're Transcend? I becomes operational and you start receiving a revenue from those contracts. And is there any upfront fees that they pay you?

A: Well, I think good question. First of all, the sales cycle is lengthen is always but on the transient finance, pretty much ready. In our development engine in Lahore, Pakistan. So whenever we sign a contract, for example, the one we just recently announced in Australia. The team working behind the scenes, a lot of work done gets done before we even signed the contract ahead of time so that the team is in place. The timeline is in place, and whatever it takes to make sure that we meet the agreed contract time with the customer and go live, and then continue to not only generate revenue, but also see the momentum of getting excitement within the company to getting new contracts, particularly if the more SaaS driven. So I think it's a pretty good approach in the company.

Q: Okay. And last question, are you guys willing to give any guidance going forward for the next year. Thank you.

A: I think we like to always update the guidance in the second quarter so we have better clarity. Although we have. Larger revenue in mind. I believe we will continue the growth momentum that we have seen in this fiscal year. And companies we we know exactly what we want to achieve. And the whole fiscal 2026. But it's better that we share the specific guidance, if not in the first of the second quarter.