Q1 2026 NetSol Technologies Inc Earnings

Good morning and welcome to the netsol Technologies first quarter of fiscal 2026 earnings conference call.

On the call today, our founder and chief executive officer of netsol Technologies Inc, najib Corey.

Chief Financial Officer Rodger, Allman.

Senior vice president legal and corporate Affairs, general counsel, and corporate secretary Patty McLaren.

And chief marketing officer, Eric Wagner.

I'd like to now turn the call over to Patty. Who will provide the necessary disclaimers regarding the forward-looking statements made during today's call Patty. Please go ahead.

Thank you. Good morning everyone. And thank you for joining us today. After we review the company's business highlights and financial results for the first quarter of fiscal year 2026. We will open the call for questions before we begin. I'd like to provide the customary caution regarding for looking statements. That may be made during today's discussion, please note that all information presented on. This call is subject to the safe harbor Provisions at the private Securities. Litigation Reform, Act of 1995.

Our remarks may include forward-looking statements that reflect Management's. Current expectations, regarding future events. And operating performance, these statements are subject to risks and uncertainties and actual results May differ materially from those protected, we encourage you to review. The cautionary, statements and risk factors contained in that sells press release issued earlier today, as well as in our filings with the secretary and Securities and Exchange Commission, including our most recent from form, 10K, and quarterly reports on form 10 Q. I'd also like to note that today's discussion will include certain non-gaap Financial measures. A Reconciliation of these measures to their most direct comparable. Gaap figures can be found in the press release issued earlier today.

Lastly, please remember that this call is being recorded and will be available for replay on our website at netsoft tech.com as well as through a link included in today's press release.

I like to reiterate that at this time. All participants are in listen-only mode. Following the prepared remarks, we will open the call for Q&A session. I'll now hand the call over to our founder, and chief executive officer najib gory.

Jeep. Thank you Patty. Good morning, everyone.

Quarter ended. September 30 2025.

For the first quarter, we delivered year-over-year, revenue, revenue, growth of 2.8% driven by a 9.4%, increase in subscription and support Revenue as we continue to expand our base of recovering Revenue.

Our bottom line, however, reflected the impact of in intentional Investments and a more challenging operating environment.

I spent a few minutes on key strategic developments and the drivers behind our results. And then I will turn it over to Roger.

For more details on the financials before we open the call for questions.

First on strategic progress, we continued to strengthen our position as a trusted partner, a digital Automotive retail for needing dealership groups in the US.

during the quarter, Nestle was selected by Sonic Automotive, a Fortune 500 Automotive, dealership group to lead a discovery engagement focused on defining the requirements and road map for an omni Channel digital retail retail solution, powered by our transcend retail platform,

The engagement will help Sonic Automotive further. Enhance the customer experience and streamline Dealer operations across its Echo Park. Automotive Networks

This new partnership, reflects our increasing momentum in the use market and highlights that trust major industry players plays in our technology and expertise.

Second our ongoing investments in artificial intelligence, reflect our commitment to shaping the future of intelligent Automation and asset finance and Automotive retail

We recently announced the launch of check AI, our AI powered credit, decisioning engine designed to improve the speed and consistency of the credit underwriting process.

Check AI automates key, workflows accelerates this image in and supports more accurate underwriting by leveraging. Data-driven intelligence.

The platform combines intelligent automation with human in the loop oversight to help ensure fairness transparency and Regulatory Compliance.

By integrating AI into a transcend platform. We not only enhancing decision making and efficiency, but also creating new opportunities for Innovation and long-term long-term growth

third.

in the Asia Pacific region reached important, milestones and demonstrate that demonstrates, both our Market reach, and our deep understanding of regional customer needs

That's what China participated in the Shanghai cooperation organization Summit in Tangie.

Where we signed a strategic, cooperation agreement with tanjin pin. Hey, small group and the Don Jiang free trade Port Zone, government.

This partnership focuses on integrated financial services for the automotive industry and cross border data services, Services areas that align closely with China's growing emphasis on digital transformation and Global expansion.

We are proud to maintain a sizable market share in the Chinese Auto Finance Market. We also become the partner of choice with Chinese oems and asset finance companies who are looking to expand abroad.

We are 1 of the few vendors operating with Chinese market who have a strong Global resume.

This is highlighted by recent go live in Indonesia, where a major Chinese Leasing Company deployed. Our transcend Finance platform as part of a green field implementation to launch its operations in that market.

Meet Regional Regulatory and operational standards.

A long-standing presence in APAC, region combined with our cultural fluency and proven technology continues to make Nestle, a partner of choice for Global oems and asset finance companies.

Our subsequent to quarter end. We hosted a summit in Beijing that brought together leaning Indonesian and Chinese assets for Lance executives.

Reinforcing our role as a bridge between China and the broader international asset finance ecosystem.

these important developments during the first quarter, reflect solid, strategic, and operational momentum, as we continue to strengthen our position in key Global markets,

As you move forward, we remain committed to executing our strategy with discipline balancing investment and Innovation with a continued emphasis on operational, efficiency and long-term profitability.

Despite these significant developments, I want to recognize that the first quarter has been a challenging 1 for Nestle while our total net revenue were up 2.8% year-over-year, our bottom line results, reflect the impact of several strategic Investments and external macroeconomic, headwinds.

On the expense side, we saw a 36% increase in selling and marketing costs, driven primarily by our decision to expand and strengthen our Global sales organization.

We made key hires at a senior levels leadership building the foundation needed to support future growth across our product portfolio. The timing of these decisions, reflects both the stronger demand environment. We are seeing in Our intention to invest ahead of that demand in a disciplined way.

We are seeing a meaningful increase in qualified leads and business opportunities. And we expect this expanded sales capacity to support higher. Bookings and revenue over time.

Our reported Revenue in q1 is seasonally seasonally lower due to summer holidays.

Combined with network economics and certainty including credit tightening and Rising auto loan Delicacies tariff impacts and restructuring challenges among European automated. The operating environment has been difficult. However, these Dynamics also create opportunities and Nestles offering can help help clients and drive efficiencies. It is also important to note that we do not always have full control over when revenue is recognized as it depends on the timing of customer Milestone and implementation schedules.

In addition, we continue to transition from a license heavy model to predominantly SAS based model.

This shift improves the quality and visibility of our Revenue over time, but it also changes the timing of how revenue is recognized and can make quarterly growth pattern less linear specially in the near term.

As this makes shift continues, we expect a higher proportion of recurring revenue, and greater long-term predictability. Even if individual quarters can be uneven,

but these reasons we view the losses, we experienced in the first quarter as primarily the result of front-loaded growth Investments, seasonal patterns, and foreign exchange volatility, rather than a change in the fundamental earnings power of the business,

Despite despite these short-term challenges, I want to emphasize that our business fundamentals. Remain solid.

Our sales pipeline is stronger than it has ever been reflecting growing Global demand for our solution that are part of our unified AI, powered Trends and platform. Compared to the same quarter last year. We are noticing stronger, momentum and more qualified opportunities. We expect to achieve new milestones and despite

A slow start. We are targeting full year Revenue. Guidance from 5 to 7 which is above last year's level supported by growing Pipeline and the Investments we made in our go-to market and AI enabled platform.

And customer success and I remain confident in our ability to deliver sustainable long-term value to our shareholders.

Thank you. I'll now ask Roger to discuss the financial results in more detail.

Thank you and good morning, everyone. Let me share the results for the first quarter of fiscal year 2026. Total net revenues for the first quarter of fiscal 2026 increased 2.8% to $15 million compared with $14.6 million in the prior year period. This was driven by a 9.4% increase in subscription and support revenues on a constant currency basis. Total net revenues were $15.1 million.

Total subscription, SaaS, cloud, and support revenues increased 9.4% to $9 million compared with $8.2 million in the prior year period. Total subscription and support revenues on a constant currency basis were $9.1 million.

total Services Revenue were 6 million compared with 6.4 million in the prior year period total Services revenues on the constant currency basis were 5.9 million.

Gross profit for the first quarter of fiscal 2026, was 5.9 million or 39.4% of net revenues compared to 6.6 million or 45% of net revenues in the first quarter of fiscal 2025.

On a constant currency basis. Gross profit was 5.9 million or 39.1% and net revenues as measured on a constant currency basis.

Operating expenses for the first quarter, fiscal 202026 for 7.846% of sales compared to 7.3 million or 50.2% of sales. For the first quarter of fiscal 2025 on a constant currency basis, operating expenses were 7.8 million or 51.5% in net revenues as measured on a constant currency basis.

Blossom operations, for the quarter was 1.8 million compared to a loss from operations of 760,000 in the first quarter of fiscal 2025.

GAAP net loss attributable to NetSol Technologies Inc. for the quarter totaled $2.4 million, or $0.20 per diluted share, compared with GAAP net income of $71,000, or $0.006 per diluted share in the prior year period.

It's important to point out that included in our net loss. For this quarter was a loss on foreign currency exchange, transactions of 287,000 compared to a gain of approximately 400 and 543,000 in the prior year period.

Because we operate in several geographical regions. A significant portion of our business is conducted in currencies other than the US dollar.

A decrease in the value of the U.S. dollar compared to foreign currency exchange rates generally has an effective increase in our revenues, but it also increases our expenses denominated in currencies other than the U.S. dollar.

Similarly, as the US dollar gained strength relative to foreign currency exchange rates, it tends to reduce our revenues but it also reduces our expenses denominated in currencies other than the US dollar.

Moving to our non-gaap metrics non-gaap even top. For the first quarter of fiscal 2026 was a loss of 1.8 million or 15 cents per diluted share compared with non-gaap evida of 301,000 or 3 cents per diluted share in the prior year period.

Turning to our balance sheet, our cash and cash equivalents were 22.7 million as of September 30th 2025 compared with 17.4 million as of June 30th 2025.

Working capital is 24.9 million as of September 30th 2025 compared with 26.6 million as of June 30th 2025.

Total net social stockholders Equity as September 30th. 2025 was 35.8 million or 3.3 cents per share.

While the first quarter reflects a higher operating expense ratio and a temporary compression in Gross margins. We remain committed to balancing Strategic investment with cost discipline. Our cash position of 22.7 million provides ample liquidity to support ongoing growth initiatives and we continue to prioritize Investments that enhance, recurring revenue streams and scalable, scalable digital Solutions.

And shareholder value creation. I'd like to now hand the call back over to najib.

Thank you, Roger.

Although this quarter brought some challenges, our vision and priorities remain very clear.

We are continuing to spend our Global footprint via our unified AI powered, transcend platform that is built to simplify and optimize every stage of the asset retail and Commercial life cycle.

We are committed to improving operational efficiency and remaining focused on our customers needs in the quarters ahead.

We believe these efforts will drive stronger performance and long-term value creation.

We remain deeply appreciative of our shareholders continued trust and support as we execute our long-term strategy.

Operator.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session.

If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

you may press star and 2 if you would like to remove your question from the queue,

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Ladies and gentlemen, we will wait for a moment while we pull for questions.

Ladies and gentlemen, if you wish to ask a question, please press star and 1

ladies and gentlemen, if you wish to ask a question, please press star and 1

as there are no questions in the queue. Go ahead sir. Yes.

That's fine. Um so we sincerely appreciate your participation in today's call and your continued interest in our soul. We look forward to keeping you, informed of our progress in the quarter of the head. Wishing you, good health, and all the best.

Thank you.

Ladies and gentlemen, the conference of NETSOL Technologies has now concluded. Thank you for your participation. You may now disconnect your line.

My team, stay on the line.