NETSOL Technologies, Inc. — FY2026 Form 10-K
Reporting period: Fiscal year ended June 30, 2026; comparisons are to FY2025. NetSol provides AI-enabled software and services for asset finance, leasing, and automotive retail, primarily through its Transcend platform. It reports North America, Europe, and Asia-Pacific segments and serves customers in more than 30 countries.
Financial performance
| Metric | FY2026 | FY2025 | Change |
|---|---|---|---|
| Revenue | $74.37 million | $66.09 million | +12.5% |
| Gross profit / margin | $39.15 million / 52.6% | $32.57 million / 49.3% | Margin +3.3 percentage points |
| Operating income / margin | $6.95 million / 9.3% | $3.50 million / 5.3% | +98.4% |
| Net income attributable to NetSol | $2.95 million | $2.92 million | +0.9% |
| Basic and diluted EPS | $0.25 | $0.25 | Unchanged |
| Operating cash flow | $13.88 million | $0.45 million | Improved |
| Cash and cash equivalents | $27.12 million | $17.36 million | +$9.77 million |
Revenue mix: subscription and support was $35.80 million (48.1% of revenue), services $33.62 million (45.2%), and license fees $4.95 million (6.7%). Subscription and support grew 8.7%; services grew 3.3%. License revenue increased substantially from $0.60 million, including approximately $4.66 million from an existing customer renewal and amendment.
Operating cash flow benefited from a $6.5 million increase in contract liabilities, reflecting advance customer billings, and a reduction in contract assets. Accounts receivable increased by $2.8 million. Investing cash outflow was approximately $4.6 million, including $2.69 million of capitalized internal-use software development and about $2.0 million of property and equipment purchases. Financing cash flow was $0.27 million.
At year-end, current assets were $56.86 million and current liabilities $27.63 million, a current ratio of approximately 2.1. Total liabilities were $28.27 million. Loans and finance-lease obligations totaled $8.40 million, of which $8.19 million was current; cash exceeded these obligations. Contract liabilities were $10.29 million, compared with $3.03 million a year earlier. The company reported covenant compliance and no defaults.
Material changes and operating developments
- Asia-Pacific generated $51.27 million, or 68.9% of consolidated revenue, up from $39.44 million. North American revenue declined to $9.06 million from $12.00 million; Europe declined to $14.04 million from $14.64 million.
- Gross margin improved as cost of revenue fell to 47.4% of sales from 50.7%. Operating expenses rose 10.8%, but declined as a share of revenue to 43.3% from 44.0%.
- Net income attributable to NetSol was nearly flat despite higher operating income. Other income and expense fell to $0.28 million from $2.55 million, including a $0.39 million foreign-exchange loss versus a $1.30 million gain in FY2025 and lower interest income.
- NetSol disclosed a four-year, approximately $50 million extension with a long-standing customer; a Transcend Finance migration contract exceeding $12 million in Thailand; and other customer wins, upgrades, implementations, and platform enhancements. These are contract values or expected project revenues, not FY2026 recognized revenue unless separately stated.
Outlook, risks, and other notable matters
- Management expects subscription and support revenue to gradually increase as SaaS adoption and Transcend migrations continue. No quantified revenue or earnings guidance is provided. Planned capital expenditures over the next 12 months are approximately $2.0–$2.5 million.
- Remaining performance obligations were approximately $49.15 million at June 30, 2026; the company estimates about $22.55 million will be recognized over the next 12 months, with the balance thereafter. Timing depends in part on software deployments at customer sites.
- Two customers accounted for 25.1% and 15.2% of FY2026 revenue, respectively. Four customers accounted for 58.5% of accounts receivable and four for 69.6% of contract assets, creating meaningful customer and collection concentration.
- Key risks include political and economic conditions, inflation and wage costs, currency fluctuations, customer concentration, competitive pressures, evolving regulation, cybersecurity threats, and the timing of customer technology programs. Most cash is held by foreign subsidiaries: approximately $26.5 million of the reported $27.1 million.
- The company does not hedge its principal Pakistan-rupee currency exposure, which it considers counterproductive. FY2026 included $2.69 million of capitalized software development costs; the projects were not yet in service and had no amortization recorded at year-end.
- No legal proceedings were reported. The independent auditor issued an unqualified opinion and reported no critical audit matters. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor was not engaged to audit internal control effectiveness.
Investor verification priorities
- Assess the sustainability and cash conversion of operating cash flow, particularly the effect of advance billings, contract liabilities, and rising receivables; days sales outstanding was 137, versus 147 a year earlier.
- Review the concentration and collectability of receivables and contract assets, and the conversion schedule and conditions attached to remaining performance obligations.
- Validate the disclosed contract values, expected project revenues, customer deployments, and the pace of recurring-revenue growth against subsequent filings and recognized revenue.
- Monitor Asia-Pacific dependence, Pakistan-related operating and currency risks, foreign cash accessibility, and covenant terms and maturities of subsidiary borrowings.
- Reconcile filing figures before relying on them: the MD&A reports investing cash outflow of $4.58 million with a slightly different amount than the cash-flow statement, and the segment cash total differs from consolidated cash. The filing text does not explain these presentation differences.