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Netsol Technologies Inc (NTWK)
NASDAQ:NTWK
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Netsol Technologies
(NASDAQ:NTWK)
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Select Model
Rating:59Neutral
Price Target:
$3.50
▲(11.11% Upside)
Action:ReiteratedDate:02/14/26
The score is held back primarily by weak current cash-flow conversion and negative TTM free cash flow despite improving profitability and a supportive balance sheet. Offsetting this, the latest earnings call was constructive with raised revenue guidance, strong Q2 growth, and a major multi-year contract that improves revenue visibility; technicals and valuation are broadly neutral.
Positive Factors
Multi-year contract improves revenue visibility
A $50M, four-year extension materially increases multi-year revenue visibility and validates platform scalability with a major client. That contract smooths future top-line volatility, supports multi-year planning and investment in product and go-to-market initiatives, improving durable cash flow predictability.
Strong services expansion feeding recurring pipeline
Rapid services growth reflects successful implementations of Transcend products that seed future subscription and support revenue. Durable business models arise when professional services convert into recurring SaaS contracts, enhancing customer stickiness, lifetime value and long-term revenue compounding.
Supportive balance sheet and manageable leverage
Low leverage and solid liquidity provide flexibility to fund AI investments, hiring and go-to-market initiatives without immediate refinancing pressure. A healthy current ratio and positive equity cushion reduce short-term solvency risk and support execution of multi-year contracts and platform rollouts.
Negative Factors
Weak cash conversion and negative FCF
Reported earnings have not reliably converted to cash, with very low OCF relative to net income and negative trailing free cash flow. Sustained weak cash conversion raises funding risk for growth investments and exposes the company to working-capital timing swings or external financing needs.
Intermittent profitability and recent GAAP losses
Earnings remain volatile: recent six‑month GAAP losses and marginal multi‑period EBITDA show profitability is not yet consistently sustained. This undermines confidence in margin durability and increases sensitivity to cost ramps, FX swings and slower conversion of service wins into recurring revenue.
Significant noncontrolling interest dilutes EPS
A structural ~30% noncontrolling interest allocates a large share of local unit profits away from NetSol shareholders, reducing consolidated EPS and free cash available to investors. This complicates earnings comparability and can mute the impact of operational improvements on per‑share returns.
Netsol Technologies (NTWK) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$41.59M
Dividend YieldN/A
Average Volume (3M)86.26K
Price to Earnings (P/E)21.8
Beta (1Y)0.78
Revenue Growth7.70%
EPS Growth-36.01%
CountryUS
Employees1,569
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.02
Shares Outstanding11,816,519
10 Day Avg. Volume125,116
30 Day Avg. Volume86,262
Financial Highlights & Ratios
PEG Ratio0.04
Price to Book (P/B)0.95
Price to Sales (P/S)0.54
P/FCF Ratio-38.48
Enterprise Value/Market Cap0.80
Enterprise Value/Revenue0.48
Enterprise Value/Gross Profit0.98
Enterprise Value/Ebitda4.35
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Netsol Technologies Business Overview & Revenue Model
Company DescriptionNetSol Technologies, Inc. designs, develops, markets, and exports software products to the automobile financing and leasing, banking, and financial services industries worldwide. The company offers NFS Ascent, a suite of financial applications for businesses in the finance and leasing industry. Its NFS Ascent constituent applications include Omni Point of Sale, a web-based application; Contract Management System (CMS), an application for managing and maintaining credit contracts; Wholesale Finance System (WFS), a system for automating and managing the lifecycle of wholesale finance; Dealer Auditor Access System, a web-based solution that could be used in conjunction with WFS or any third-party wholesale finance system; NFS Ascent On The Cloud, a cloud-version of NFS Ascent; and NFS Digital solutions covering Self Point of Sale, Mobile Account, Mobile Point of Sale, Mobile Dealer, Mobile Auditor, Mobile Collector, and Mobile Field Investigator. The company also provides Otoz Digital Auto-Retail, a white-labelled SaaS platform; Otoz Ecosystem, an API-based architecture; and Otoz Platform, a white label platform, which includes Dealer Tool and Customer App portals. In addition, it offers system integration, consulting, and IT products and services. It serves blue chip organizations, Dow-Jones 30 Industrials, Fortune 500 manufacturers and financial institutions, vehicle manufacturers, and enterprise technology providers. The company was incorporated in 1997 and is headquartered in Calabasas, California.
How the Company Makes MoneyNetsol Technologies generates revenue through multiple streams, primarily focusing on software licensing and implementation services for its proprietary platforms like LeasePak and LeaseSoft. The company also earns income from ongoing maintenance and support contracts, ensuring clients receive continuous updates and assistance. Additionally, Netsol engages in consulting services that help businesses optimize their processes and integrate software solutions effectively. Strategic partnerships with financial institutions and technology providers further enhance its market reach and revenue potential, allowing the company to leverage collaborative opportunities for growth and innovation.
Netsol Technologies Key Performance Indicators (KPIs)
Any
Revenue by Segment
Shows how revenue is distributed across different business units, highlighting which segments are driving growth and which may need strategic adjustments.
Shows how revenue is distributed across different business units, highlighting which segments are driving growth and which may need strategic adjustments.
Data provided by:
The Fly
The FlyNetsol Technologies Earnings Call Summary
Earnings Call Date:Feb 12, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The call conveyed clear operational momentum: strong top-line growth (Q2 revenue up ~21%), outsized services growth (+40.9% in the quarter), improved quarterly profitability (positive operating income and EBITDA), product innovation (AI-enabled 'Check') and a meaningful $50M multi-year contract. These positives were balanced by six-month GAAP losses widening, modest six-month margin pressure and ongoing investments (hiring, travel) that weigh on near-term profitability, plus dilution from a 30% noncontrolling interest and macro/currency risk. Management raised full-year revenue guidance and emphasized liquidity and disciplined execution, indicating confidence in continued improvement.Q2-2026 Updates
Positive Updates
Strong Quarterly Revenue Growth
Total net revenues rose 21.1% year-over-year to $18.8 million in Q2 FY2026 (from $15.5 million), marking one of the company's strongest quarters and potentially a record quarterly revenue.
Robust Services Expansion
Services revenue grew 40.9% year-over-year to $9.6 million in the quarter, driven by new implementations from major customers that are expected to feed recurring subscription and support revenue over time.
Recurring Revenue Progress
Subscription and support revenues increased approximately 5.1% year-over-year to $9.1 million in Q2 and rose 7.2% to $18.0 million for the six months, showing continued growth in the recurring revenue base.
Profitability and Operating-Leverage Improvement (Quarter)
Gross profit in Q2 was $9.0 million (48.0% of net revenues). Income from operations turned positive at $1.3 million versus a $0.5 million loss in the prior-year quarter, and non-GAAP EBITDA improved to $1.7 million (versus a $0.8 million loss prior year).
Strategic Contract Win
Secured a $50 million, four-year contract extension with a Tier 1 global auto captive and long-standing partner, providing multi-year revenue visibility and validating platform scalability.
AI Product Innovation and Platform Expansion
Launched 'Check,' an AI-enabled credit decisioning engine integrated into the Transcend platform, and embedded AI horizontally across products and operations to drive differentiation, operating leverage and potential value-based pricing.
Balance Sheet and Liquidity Strength
Cash and cash equivalents were $18.1 million (up from $17.4M at June 30, 2025). Working capital remained stable at $26.4 million, stockholders' equity was $35.9 million ($3.04 per share), and the current ratio was 2.3, supporting continued investments.
Raised Full-Year Revenue Guidance
Management increased full-year fiscal 2026 revenue growth guidance to nearly $73 million or better, supported by a robust pipeline, multiyear contracts, and investments in AI-enabled Transcend platform and go-to-market initiatives.
Leadership Strengthening
Appointed Sardar Abubakr as CFO and transitioned Roger Almond to Chief Accounting Officer, aimed at reinforcing financial governance and supporting scale.
Negative Updates
Widening GAAP Net Loss for Six Months
GAAP net loss attributable to NetSol for the six months was $2.1 million ($0.18 per diluted share) versus a $1.1 million ($0.09 per diluted share) loss in the prior-year period; on a constant currency basis the six-month GAAP loss was $2.5 million ($0.21 per diluted share).
Six-Month Gross Margin Pressure
For the six months, gross profit margin slipped to 44.2% of net revenues from 44.8% in the prior-year period (constant-currency gross margin 43.5%), and cost of sales increased to 55.8% (versus 55.3% prior year; 56.5% on a constant-currency basis).
Six-Month EBITDA Still Slightly Negative
Non-GAAP EBITDA for the six months was a marginal loss of $0.1 million (improved from a $0.5 million loss prior year) but remains below breakeven on a six-month basis.
Near-Term Cost Pressures from Hiring and Travel
Quarterly cost of sales reflected increased salaries and travel tied to AI hiring and cross-training initiatives, pressuring near-term margins even as management expects improvement as hires ramp up.
Minority Interest Dilution Impacting EPS
A 30% noncontrolling interest in the Pakistani subsidiary means a significant portion of that unit's profit is allocated to minority interest, reducing consolidated earnings-per-share (example cited in Q&A: a large noncontrolling allocation meaningfully affected EPS).
Macro and Currency Risks
Management noted macroeconomic and currency dynamics remain a consideration for the outlook; while Q2 had a small FX gain ($0.05M vs a $0.7M loss prior year), currency volatility could affect future results.
Market Valuation and Capital Return Questions
Despite improved results and $18.1M in cash, the stock was noted as trading near book value and no definitive decision on buybacks or dividends was announced, leaving shareholder-return questions open.
Company Guidance
Management raised full-year fiscal 2026 revenue guidance to nearly $73 million (or better), citing a strong pipeline, multiyear contracts and recurring revenue that together drive visibility into near- and long-term performance. That guidance is supported by Q2 results of $18.8M in net revenues (+21.1% YoY) with services $9.6M (+40.9%) and subscription & support $9.1M (+5.1%), Q2 gross profit $9.0M (48% margin) and EBITDA $1.7M (~9% margin), six‑month revenues $33.8M (recurring subscription $18.0M, +7.2%; services $15.6M, +17.9%), six‑month gross profit $14.9M (44.2%), a six‑month GAAP net loss of $2.1M ($0.18/share) and non‑GAAP EBITDA loss of $0.1M, plus a strong balance sheet (cash $18.1M, working capital $26.4M, stockholders’ equity $35.9M or $3.04/share, current ratio 2.3) and a $50M four‑year contract extension.Netsol Technologies Financial Statement Overview
Summary
Profitability and revenue trends are improving (TTM revenue +4.9%, positive EBIT/EBITDA margins; manageable leverage with debt-to-equity ~0.27), but cash conversion is a major concern (operating cash flow to net income ~0.03 and TTM free cash flow about -$1.0M) and results have been historically volatile.Income Statement
TTM (Trailing-Twelve-Months) revenue is up about 4.9% with solid gross profitability (~48.8%). Operating profitability is positive (EBIT margin ~7.2%; EBITDA margin ~10.5%) and net margin is modest (~5.1%). The key drawback is volatility across years—loss-making in 2022–2023, followed by a recovery in 2024 and continued improvement into the latest periods—suggesting earnings durability is still being re-established.68
Positive
Balance Sheet
Leverage looks manageable with debt-to-equity around 0.27 in TTM (Trailing-Twelve-Months), providing balance sheet flexibility. Equity remains sizable versus total assets, and profitability on equity has improved to ~9.8% TTM after being negative in prior downturn years. Main risk is that returns are still moderate and have been inconsistent historically, so the balance sheet is supportive but not a full offset to operating swings.73
Positive
Cash Flow
Cash generation is the weak spot: TTM (Trailing-Twelve-Months) operating cash flow is very low relative to earnings (operating cash flow to net income ~0.03), and free cash flow is negative (about -$1.0M), also negative versus net income. While 2024 showed strong positive operating and free cash flow, the latest TTM has reverted to weak conversion and declining free cash flow, raising questions around working-capital/cash timing and the sustainability of reported profitability.38
Negative
| Breakdown | TTM | Jun 2025 | Sep 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 69.77M | 66.09M | 61.39M | 52.39M | 57.25M | 54.92M |
| Gross Profit | 34.03M | 32.57M | 29.28M | 16.92M | 23.74M | 26.35M |
| EBITDA | 7.65M | 4.97M | 6.09M | 791.66K | 6.27M | 7.64M |
| Net Income | 1.89M | 2.92M | 683.87K | -5.24M | -851.16K | 1.78M |
Balance Sheet | ||||||
| Total Assets | 62.69M | 62.44M | 64.19M | 58.38M | 72.61M | 86.61M |
| Cash, Cash Equivalents and Short-Term Investments | 18.13M | 17.36M | 19.13M | 15.53M | 23.96M | 33.71M |
| Total Debt | 9.80M | 9.14M | 7.67M | 7.11M | 10.04M | 13.49M |
| Total Liabilities | 20.75M | 20.18M | 24.65M | 21.60M | 21.75M | 24.74M |
| Stockholders Equity | 35.94M | 37.83M | 34.84M | 33.81M | 45.40M | 54.65M |
Cash Flow | ||||||
| Free Cash Flow | -1.04M | -935.50K | 2.39M | 370.13K | 451.42K | 13.17M |
| Operating Cash Flow | 632.43K | 447.27K | 2.91M | 2.01M | 3.06M | 15.73M |
| Investing Cash Flow | -1.50M | -1.27M | -291.54K | -1.40M | -2.26M | -2.52M |
| Financing Cash Flow | -1.09M | 822.88K | 239.55K | -718.99K | -1.38M | -1.17M |
Netsol Technologies Technical Analysis
Positive
3.15
Price Trends
3.19
Positive
3.45
Positive
3.61
Negative
Market Momentum
0.05
Negative
58.80
Neutral
63.03
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NTWK, the sentiment is Positive. The current price of 3.15 is below the 20-day moving average (MA) of 3.34, below the 50-day MA of 3.19, and below the 200-day MA of 3.61, indicating a neutral trend. The MACD of 0.05 indicates Negative momentum. The RSI at 58.80 is Neutral, neither overbought nor oversold. The STOCH value of 63.03 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NTWK.
Netsol Technologies Risk Analysis
Netsol Technologies disclosed 3 risk factors in its most recent earnings report. Netsol Technologies reported the most risks in the "Macro & Political" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
Netsol Technologies Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
62 Neutral | $63.10M | 43.28 | 27.34% | ― | -1.17% | 43.94% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
59 Neutral | $41.59M | 21.81 | 1.40% | ― | 7.70% | -36.01% | |
48 Neutral | $35.05M | -6.21 | -18.98% | ― | 2.73% | 25.65% | |
43 Neutral | $35.93M | -3.01 | -18.69% | ― | ― | ― | |
43 Neutral | $12.20M | >-0.01 | -166.00% | ― | 347.74% | 84.88% |
* Technology Sector Average
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Netsol Technologies Corporate Events
Business Operations and StrategyExecutive/Board Changes
Netsol Technologies Appoints New Chief Financial Officer
Positive
Jan 26, 2026
Effective January 20, 2026, NetSol Technologies, Inc. appointed Sardar Abubakr as its Chief Financial Officer, bringing in an executive with extensive fintech and digital banking experience, including senior roles at Jazz, a VEON subsidiary, and leadership in forming Raqami Digital Bank. Abubakr’s compensation package includes an approximate annual total of $280,000 in salary and benefits plus performance-based bonuses, while former CFO Roger Almond will remain with the company as Chief Accounting Officer, signaling a continuity of financial oversight alongside a strategic strengthening of the firm’s finance function to support its future operations and growth ambitions.
The most recent analyst rating on (NTWK) stock is a Hold with a $3.50 price target. To see the full list of analyst forecasts on Netsol Technologies stock, see the NTWK Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.