NETSOL Technologies Inc. (NTWK) FY2026 Earnings: Revenue $74M (+12.5%)
NTWK — FY2026 Annual Financial Report Analysis
Full Year · Fiscal year 2026 · Published by Pham Hop
NETSOL's FY2026 revenue rose 12.5% to $74.4M and operating income nearly doubled, but a one-off $4.7M license, newly capitalized development costs, reversed FX/interest gains and a larger minority share left EPS flat at $0.25.
Revenue
$74M
+12.5% YoY
Net income
$3.0M
+0.9% YoY
Diluted EPS
$0.25
0.0% YoY
Operating margin
9.3%
This period vs a year ago
Same period last year
This period
Revenue▲+12.5%
≈$66M
$74M
Net income▲+0.9%
≈$2.9M
$3.0M
Diluted EPS▲+0.0%
≈$0.25
$0.25
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
NETSOL Technologies — which sells software that car-finance and leasing companies use to run their loans and leases — grew fiscal 2026 revenue (year to June 30, 2026) 12.5% to $74.4 million and nearly doubled operating income to $6.9 million. But profit for NETSOL's own shareholders barely moved: $2.95 million, or $0.25 a share, the same EPS as a year earlier. Three things explain the gap: a one-time $4.7 million license payment, the loss of last year's currency and interest-income gains, and a rising share of profit going to minority owners of its Pakistan subsidiary.
At a glance
Revenue +12.5% to $74.4M, but about +5.5% without one deal. Roughly $4.66 million came from a single license renewal and amendment with an existing customer; take it out and revenue was about $69.7 million.
Operating margin 9.3% vs 5.3%. Operating margin is the share of revenue left after running the business, before interest and tax. Part of the jump comes from starting to record $2.7 million of software development spending as an asset instead of an expense.
Operating cash flow $13.9M vs $0.4M. The business took in far more cash than it booked as profit, mostly because customers paid $6.5 million in advance for work not yet delivered.
The numbers
Metric
FY2026
FY2025
YoY Change
Total net revenue
$74.37M
$66.09M
+12.5%
Subscription & support revenue
$35.80M
$32.93M
+8.7%
License fees
$4.95M
Read 0 community reports on NETSOL Technologies Inc., or write your own.Write a report
$0.60M
+728%
Services revenue
$33.62M
$32.55M
+3.3%
Gross margin
52.6%
49.3%
+3.3 pts
Operating income
$6.95M
$3.50M
+98.4%
Operating margin
9.3%
5.3%
+4.0 pts
Net income attributable to NETSOL
$2.95M
$2.92M
+0.9%
Diluted EPS
$0.25
$0.25
0.0%
Adjusted EBITDA attributable to NETSOL (non-GAAP)
$6.01M
$3.73M
+61.0%
Operating cash flow
$13.88M
$0.45M
n/m
Source: FY2026 Form 10-K, Consolidated Statements of Operations and Cash Flows, and MD&A non-GAAP reconciliation.
What drove revenue
The one big license. License fees — one-off payments for the right to use the software — jumped from $0.6 million to $5.0 million. The 10-K says about $4.656 million of that came from "the renewal and amendment of an existing customer agreement for our Transcend TM software platform," tied to the customer's expanded use of it. This is the same year management highlights a four-year contract extension "valued at approximately $50 million with a long-standing customer and strategic partner." License revenue is booked up front, so this is not a level that will repeat automatically next year.
Recurring revenue grew steadily. Subscription and support fees — the recurring charges customers pay to keep using and getting support for the software — rose 8.7% to $35.8 million (about 7.0% at constant currency, i.e. if exchange rates had stayed at last year's levels). This line is now 48% of revenue and is the steadiest part of the business.
Services were flat. Implementation and consulting work rose 3.3% to $33.6 million (1.8% at constant currency), which the filing attributes mainly to "implementation services in APAC and Europe."
Currency helped a little. Of the $8.28 million revenue increase, $1.02 million came from exchange-rate movements; at constant currency revenue grew $7.26 million, or about 11%.
By region: Asia-Pacific carried the year
Region
FY2026 revenue
FY2025 revenue
Change
FY2026 segment operating income
FY2025 segment operating income
Asia-Pacific
$51.27M
$39.44M
+30.0%
$10.52M
$6.28M
Europe
$14.04M
$14.64M
-4.1%
$1.37M
-$0.55M
North America
$9.06M
$12.00M
-24.6%
$1.13M
$3.29M
Region revenue is external revenue after removing sales between NETSOL's own units; segment operating income is before $6.08 million of unallocated corporate costs (FY2025: $5.52 million). Note 18 of the 10-K.
Almost all of the big license ($4.77 million of Asia-Pacific license revenue) landed in Asia-Pacific, which is why that region's revenue grew 30%. North America went the other way: services revenue there fell from $6.40 million to $3.57 million, and the region's operating income dropped by two-thirds. Europe swung from a loss to a $1.37 million profit on slightly lower revenue, as its "other" cost-of-revenue expenses fell from $4.84 million to $3.14 million. The company is now heavily dependent on Asia-Pacific (69% of revenue, up from 60%) and on a few clients: its two largest customers made up 25.1% and 15.2% of revenue, versus 19.1% and 16.1% a year earlier.
What the headline numbers hide
Operating income got help from an accounting change. In FY2026 NETSOL capitalized $2.69 million of software development cost — recorded it as an asset on the balance sheet to be expensed gradually later, rather than as a cost this year — compared with nothing the year before. The MD&A says salaries and consultant costs fell "due to capitalization of software development costs off set by annual increases in salary," and research and development expense fell $0.49 million. Had that spending been expensed as in FY2025, operating income would have been roughly $2.7 million lower. That $2.7 million plus the $4.66 million one-off license add up to more than the whole $3.44 million increase in operating income. The underlying improvement is real but much smaller than "operating income nearly doubled" suggests.
Below operating income, last year's tailwinds reversed. Other income fell from $2.55 million to $0.28 million:
Interest income on cash fell from $1.87 million to $1.07 million, because rates NETSOL earned dropped from roughly 10.0–19.5% to 8.9–10.8% (about $25.0 million of its cash sits in its Asia-Pacific units, where local deposit rates have been high).
Currency went from a $1.30 million gain to a $0.39 million loss. Most of NetSol PK's contracts are priced in dollars or euros while its costs are in Pakistani rupees; this year the dollar and euro fell 2.1% and 4.9% against the rupee, so those contracts were worth less in rupees.
More of the profit belongs to someone else. Total net income rose 22.4% to $5.60 million, but $2.65 million of it (up from $1.65 million) went to minority shareholders of subsidiaries — chiefly NetSol PK, the Pakistan-listed unit that is not wholly owned — and outside holders' stake in that group rose from 30.24% to 31.48% after employees exercised stock options in the subsidiary. NETSOL's own shareholders kept 53% of total net income, down from 64%.
GAAP vs adjusted. Adjusted EBITDA attributable to NETSOL rose 61% to $6.01 million. It adds back interest, taxes, depreciation, stock-based compensation ($0.76 million vs $0.21 million) and currency losses. Adding back the currency loss this year (after deducting a gain last year) flatters the year-on-year comparison, so GAAP EPS — flat at $0.25 — is the fairer headline.
Cash was the strongest part of the year, with a caveat. Operating cash flow of $13.88 million was about 2.5 times net income. After $2.01 million of equipment purchases and $2.69 million of capitalized software, about $9.2 million was left over. The biggest driver was a $6.48 million rise in contract liabilities — cash customers paid in advance — versus a $6.26 million fall the year before. That is cash for work NETSOL still has to deliver, so it will not repeat at this size every year. Cash rose to $27.1 million, but about $26.5 million of it is held by foreign subsidiaries, and part of those subsidiaries belongs to minority owners.
Receivables grew faster than sales. Accounts receivable (bills sent but not yet paid) rose 36.6% to $10.29 million, against 12.5% revenue growth. Counting contract assets (work done but not yet billed), the combined total rose a more modest 8.7% to $28.99 million, and average days sales outstanding — roughly how long it takes to collect — improved from 147 to 137 days. That is still more than four months of revenue waiting to be collected.
Share count was not a factor: diluted shares rose about 2% to 11.83 million, with no buybacks at the parent level.
Takeaway: NETSOL's 12.5% revenue growth and doubled operating income rest on a one-time $4.7 million license and $2.7 million of development costs moved onto the balance sheet. The underlying business grew around 5–9%, and flat $0.25 EPS is the truer picture. The real improvement this year was cash: $13.9 million of operating cash flow, mostly paid in advance by customers.
Outlook
NETSOL does not give revenue or earnings guidance. The 10-K's forward-looking points are: management expects subscription and support fees "to gradually increase" as more customers move to its SaaS (cloud-hosted) version and adopt Transcend; it expects $2.0–2.5 million of capital spending over the next 12 months; and it lists new contract wins, including a migration project for the Thai finance arm of a Japanese commercial-vehicle maker worth over $12 million in total, a Pakistan government digitization contract of about $1.75 million, and a dealer-portal pilot with a German automaker's North American arm.
Our read: FY2027 starts without the one-off license, so revenue growth will depend on recurring fees (growing about 7% at constant currency) and on turning the Thailand migration and other wins into services revenue. The $6.5 million of customer prepayments should turn into revenue as that work is delivered. Things to watch: whether North America stabilizes after a 25% drop, whether capitalized development spending keeps growing (it flatters current margins), and the rupee — a steady or stronger rupee against the dollar and euro means more currency losses for NetSol PK and less interest income as Pakistan's rates fall. With 31% of the main operating subsidiary owned by outsiders, an operating improvement reaches NETSOL's EPS only after that share is taken out.