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NETSOL Technologies Reports Third Quarter Fiscal 2025 Results

1. NTWK reported 13% revenue growth in Q3'25, reaching $17.5 million. 2. Service revenue surged 24% to $9.7 million compared to last year. 3. Gross profit margin improved to 50%, indicating operational efficiency. 4. Net profit jumped to $1.4 million from $328,000 in Q3 FY2024. 5. Management highlights strong demand for digital finance and contract wins.

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Why Bullish?

The notable revenue and profit increases position NTWK favorably against market competitors, indicating strong operational capability and demand in the asset finance sector. Historically, similar growth patterns have positively correlated with stock price increases.

How important is it?

The positive earnings report suggests increased investor interest. With a focus on innovation and a steady transition to recurring revenue models, the likelihood of a price impact is solid, maintaining NTWK as an attractive option.

Why Short Term?

The immediate response to quarterly earnings often drives stock fluctuation; thus, investor sentiment may uplift NTWK's price in the near term as market outlook solidifies.

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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: 877-407-0789International 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 TechnologiesNETSOL 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 StatementsThis 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 MeasuresThe 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 SubsidiariesConsolidated Balance Sheets         As of As of ASSETSMarch 31, 2025 June 30, 2024Current 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 SubsidiariesConsolidated 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 SubsidiariesConsolidated 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 SubsidiariesReconciliation 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 outstandingBasic 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 interestto 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  

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