NetSol Technologies, Inc. Q1 FY2026 earnings call

• Total net revenues increased 21% year over year to $18,500,000 in 2026, driven by higher services and recurring subscription/support revenues. - Launched AI-enabled loan origination platform Check. - Strengthened a $50,000,000 four-year contract extension with a tier-one global auto captive. - Transcend Retail gained traction in the U.S. market. - Appointed Sadar Abubakar as CFO and Roger Almond as Chief Accounting Officer.

For 2026, total net revenues increased 21.1% to $18,800,000. Services revenue grew 40.9% to $9,600,000, and subscription and support revenues increased 5.1% to $9,100,000. For the six months ended December 31, 2025, total net revenues were $33,800,000. Recurring subscription and support revenues increased 7.2% to $18,000,000, and service revenues increased 17.9% to $15,600,000.

• Increased full-year fiscal 2026 revenue growth guidance to nearly $73,000,000, supported by pipeline, multiyear contracts, and recurring revenue base.

Q: Hey, congratulations on a great quarter. I think the $18,800,000 may be an all-time record for quarterly revenues, so that is great to see. I wanted to ask about your margins. You had some recent hires and some travel expenses. But as those new hires get up to speed, do you expect continued margin improvement, and where do you think your margins will stabilize?

A: Thank you, Todd. Absolutely. We are anticipating improving margins in the coming quarters and the next fiscal year. As you said rightly, we are continuously investing in our growth strategy. It means travel, new employees, building new platforms, and so forth. So I think the gross margin will improve, absolutely. And I think I can have your name, and Naeem will jump in to add further. Yeah. I will just add a little bit more color. So, essentially, the new hirings are primarily in the AI teams at heart, and we see that continuing for a period. We are also incurring some expense on cross training. What we have is a very aggressive plan to cross train our existing workforce. Across horizontally in every department from HR to software engineering and testing, accounting, and admin. So, literally, we are touching every single business segment. So, internally, we are very, very confident that within the next six months, we will have a major transformation, phase one, completed. We will go on to more advanced training as we go forward in the rest of the calendar year. That will help?

Q: While I have you, I was also wanting to ask about the noncontrolling interest and how that is computed. I know that took a big chunk out of our earnings per share this quarter.

A: Yeah. Yeah. Sure. So if I could, Todd, just go back to your previous question first, and then we will come back to this one, just to add some color. So to take on what Najeeb and Naeem said, we will continue to invest in the right areas that will propel our future growth. But margin improvement, both at a gross and at a net level, is going to be important for our profitability story and our journey going forward. You probably will see just very quickly that our GP percentage of revenues this quarter versus the preceding quarter was up 48% as compared to 44.5%. Cost of sales was down. Similarly, this quarter is 55.5% compared to the equivalent quarter of 52%. And then EBITDA, which is an important metric, of course, clocked at about a 9% margin compared to a loss in the equivalent quarter last period. I think what gives me confidence, Todd, in addition to that, is that our liquidity position is solid. The current ratio, but also our debt to equity, gives us an opportunity to continue to invest in exciting growth markets. And I think we are at the intersection of both software, financial services, and mobility. Now, coming to your second question on minority interest, noncontrolling. If I understood that question, you were saying how is that computed? That is correct. Just mention that again. Yeah. Yeah. Yeah. Just how is it computed? I know that there was a nice profit for the Pakistani subsidiary. I saw you took a $715,000 loss on that noncontrolling interest.

Q: Okay. That is helpful. So, basically, the better that the subsidiary does, it will add to your revenues, but if it is really profitable, you know, a third of that will have to be written off in the noncontrolling interest A: Correct.

Q: And then finally, to allude to your comments about the strong financial position the company is in. As a shareholder, we see the stock still, you know, trading just barely above book value. Have you thought about allocating some of that $18,000,000 in cash, you know, a small amount to either a stock buyback or maybe a small dividend?

A: Todd, thank you for asking the question. We did that a couple of years ago, and we are always open to the same approach. But as soon as we can decide within the board, we will get back to you accordingly.