ENCINO, Calif., Feb. 12, 2026 (GLOBE NEWSWIRE) -- NETSOL Technologies, Inc. (NASDAQ:NTWK), a provider of AI-enabled solutions and services powering OEMs, dealerships and financial institutions to sell, finance and lease assets, reported its results for the second fiscal quarter of 2026 and six months ended December 31, 2025.

Total net revenues up 21.1% to $18.8 million
Services revenues up 40.9% to $9.6 million
Recurring subscription and support revenues up 5.1% to $9.1 million
Gross margin expanded to 48.0% (from 44.5%)
Operating income was $1.3 million (vs. loss of $0.5 million)
Cash and cash equivalents up 4.0% to $18.1 million

Second Quarter 2026 Financial Results

Total net revenues for the second quarter of fiscal 2026 increased 21.1% to $18.8 million, compared with $15.5 million in the prior-year period, driven primarily by higher services revenues and higher subscription and support revenues. On a constant currency basis, total net revenues were $18.8 million.

Recurring subscription and support revenues increased approximately 5.1% to $9.1 million compared with $8.6 million in the prior-year period. Total subscription and support revenues as percentage of total net revenues were 48.3%, compared with 55.6% in the prior-year period, reflecting higher implementation services revenues in the quarter. Total subscription and support revenues on a constant currency basis were $9.2 million.
Total services revenues increased 40.9% to $9.6 million, compared with $6.8 million in the prior-year period. The increase primarily reflected implementation timing and project mix. Total services revenues on a constant currency basis were $9.6 million.

Gross profit for the quarter was $9.0 million or 48.0% of net revenues, compared with $6.9 million or 44.5% of net revenues in the second quarter of fiscal 2025. On a constant currency basis, gross profit was $9.0 million or 47.8% of net revenues.

Cost of sales for the quarter was $9.8 million or 52.0% of net revenues compared with $8.6 million or 55.5% of net revenues in the second quarter of fiscal 2025. On a constant currency basis, cost of sales was $9.8 million or 52.2% of net revenues. The increase in cost of sales primarily reflected increased salaries and travel costs.

Income from operations for the quarter was $1.3 million compared with a loss from operations of $0.5 million in the second quarter of fiscal 2025. On a constant currency basis, income from operations was $1.3 million.

GAAP net income attributable to NETSOL for the quarter totaled $0.2 million or $0.02 per diluted share, compared with a GAAP net loss of $1.1 million or $0.10 per diluted share in the second quarter of fiscal 2025. On a constant currency basis, GAAP net income attributable to NETSOL for the quarter totaled $0.2 million or $0.01 per diluted share.

Non-GAAP EBITDA for the quarter was $1.7 million compared with a non-GAAP EBITDA loss of $0.8 million in the second quarter of fiscal 2025. (see note regarding "Use of Non-GAAP Financial Measures," below for further discussion of this non-GAAP measure).

Najeeb Ghauri, Founder and Chief Executive Officer of NETSOL Technologies Inc., commented, "NETSOL delivered a strong second quarter of fiscal 2026, with total net revenues up 21% year-over-year to $18.8 million. Services revenue grew 41%, driven by active implementations of Transcend Finance and Transcend Retail, and we view implementation momentum as an important leading indicator of future subscription scale.

"Transcend Retail is gaining meaningful traction in the U.S. automotive market, with adoption by leading dealer groups and franchised dealerships. Partnerships with MINI USA, Sonic Automotive, Indigo Auto Group, and others reflect growing validation of our platform and the outcomes it enables for dealers.

"While SaaS revenue growth is currently moderated by the timing of customer go-lives, we believe recurring revenues can accelerate over time as these deployments complete.

"We are also investing in AI to extend our product roadmap, including Check, an AI-enabled credit decisioning capability built into our loan origination system, designed to help credit and funding teams work faster and with greater precision by turning data into real-time, actionable decisions."

Sardar Abubakr, Chief Financial Officer of NETSOL Technologies Inc., commented, "We delivered measurable profitability improvements in the quarter. Gross profit increased to $9.0 million, or 48% of net revenues, up from 44.5% in the prior-year period, and delivered operating income of $1.3 million.

"Our priority is to scale efficiently by maintaining cost discipline while investing in the areas that expand long-term earnings quality, including subscription growth and strategic services that support customer adoption. We believe our balance of revenue growth, margin improvement, and targeted investment positions NETSOL to build sustainable shareholder value."

Six Months Ended December 31, 2025, Financial Results

Total net revenues for the six months ended December 31, 2025, were $33.8 million, compared with $30.1 million in the prior-year period. On a constant currency basis, total net revenues were $33.5 million.

Recurring subscription and support revenues for the six months ended December 31, 2025, increased 7.2% to $18.0 million from $16.8 million in the prior-year period. Total subscription and support revenues on a constant currency basis were $17.9 million.
Total services revenues increased 17.9% to $15.6 million from $13.2 million in the prior-year period. Total services revenues on a constant currency basis were $15.5 million. The increase in total services revenues during this period primarily reflected increased implementation services for Transcend Retail and Transcend Finance.

Gross profit for the six months ended December 31, 2025, was $14.9 million or 44.2% of net revenues, compared with $13.5 million or 44.8% of net revenues in the prior-year period. On a constant currency basis, gross profit for the six months ended December 31, 2025, was $14.6 million or 43.5% of net revenues as measured on a constant currency basis.

Cost of sales for the six months ended December 31, 2025 was $18.9 million or 55.8% of net revenues compared with $16.7 million or 55.3% of net revenues in the prior-year period. On a constant currency basis, cost of sales was $18.9 million or 56.5% of net revenues.

Loss from operations for the six months ended December 31, 2025 was $0.5 million compared with a loss from operations of $1.2 million in the prior-year period. On a constant currency basis, loss from operations was $0.8 million.

GAAP net loss attributable to NETSOL for the six months ended December 31, 2025, totaled $2.1 million or $0.18 per diluted share, compared with GAAP net loss of $1.1 million or $0.09 per diluted share in the prior-year period. On a constant currency basis, GAAP net loss attributable to NETSOL for the first six months of fiscal 2026 totaled $2.5 million or $0.21 per diluted share.

Non-GAAP EBITDA for the six months ended December 31, 2025, was a loss of $0.1 million compared with non-GAAP EBITDA loss of $0.5 million in the prior-year period (see note regarding "Use of Non-GAAP Financial Measures," below for further discussion of this non-GAAP measure).

Balance Sheet and Capital Structure

Cash and cash equivalents were $18.1 million as of December 31, 2025, compared with $17.4 million as of June 30, 2025. Working capital was $26.4 million as of December 31, 2025, compared with $26.6 million as of June 30, 2025. Total NETSOL stockholders' equity at December 31, 2025, was $35.9 million or $3.04 per diluted share.

Conference Call

NETSOL Technologies management will hold a conference call on Thursday, February 12, 2026, at 9:00 am Eastern Time (6:00 am Pacific Time) to discuss its financial results to discuss these financial results. A question-and-answer session will follow management's presentation.

Participant listening: 1-877-407-0789 or 1-201-689-8562

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 conference end time.

Telephone replay

Replay dial-in: 1-844-512-2921 or 1-412-317-6671

Replay expiration: Thursday, February 26, 2026 at 11:59 PM ET

Access ID: 13758657

About NETSOL Technologies

NETSOL Technologies delivers state-of-the-art solutions for the asset finance and leasing industry, serving automotive and equipment 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 today leverages 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 Statements

This 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 Measures

The 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 Subsidiaries Schedule 1: Consolidated Balance Sheets

		As of			As of
ASSETS		December 31, 2025			June 30, 2025

Cash and cash equivalents		$	18,132,086		$	17,357,944
Accounts receivable, net of allowance of $401,507 and $355,464			7,776,096			7,527,572
Revenues in excess of billings, net of allowance of $84,882 and $34,496			17,080,695			18,230,619
Other current assets			3,423,634			3,203,468
	Total current assets		46,412,511			46,319,603
			763,396			903,766
			5,185,764			5,073,372
			1,015,011			809,513
			6,941			32,331
			9,302,524			9,302,524
	Total assets	$	62,686,147		$	62,441,109

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable and accrued expenses		$	8,059,205		$	8,010,844
Current portion of loans and obligations under finance leases			8,509,841			8,240,061
Current portion of operating lease obligations			542,022			433,242
Unearned revenue			2,884,757			3,029,850
	Total current liabilities		19,995,825			19,713,997
			337,028			134,608
			414,725			333,374
	Total liabilities		20,747,578			20,181,979


Preferred stock, $.01 par value; 500,000 shares authorized;			-			-
Common stock, $.01 par value; 18,000,000 shares authorized;
	12,753,209 shares issued and 11,814,178 outstanding as of December 31, 2025 ,
	12,700,465 shares issued and 11,761,434 outstanding as of June 30, 2025		127,535			127,008
Additional paid-in-capital			129,545,854			129,529,901
Treasury stock (at cost, 939,031 shares
as of December 31, 2025 and June 30, 2025)			(3,920,856	)		(3,920,856	)
Accumulated deficit			(43,399,611	)		(41,289,080	)
Other comprehensive loss			(46,413,009	)		(46,613,208	)
	Total NETSOL stockholders' equity		35,939,913			37,833,765
Non-controlling interest			5,998,656			4,425,365
	Total stockholders' equity		41,938,569			42,259,130
	Total liabilities and stockholders' equity	$	62,686,147		$	62,441,109

NETSOL Technologies, Inc. and Subsidiaries Schedule 2: Consolidated Statement of Operations

			For the Three Months						For the Six Months
			Ended December 31,						Ended December 31,
			2025			2024			2025			2024
Net Revenues:
	License fees		$	117,482		$	72,688		$	189,707		$	73,917
	Subscription and support			9,079,783			8,642,629			18,040,338			16,835,100
	Services			9,611,213			6,821,344			15,590,356			13,226,142
		Total net revenues		18,808,478			15,536,661			33,820,401			30,135,159

Cost of revenues				9,779,386			8,616,320			18,879,319			16,650,706
Gross profit				9,029,092			6,920,341			14,941,082			13,484,453

Operating expenses:
	Selling, general and administrative			7,481,647			7,073,622			15,018,000			14,037,943
	Research and development cost			247,713			333,669			462,056			693,618
		Total operating expenses		7,729,360			7,407,291			15,480,056			14,731,561

Income (loss) from operations				1,299,732			(486,950	)		(538,974	)		(1,247,108	)

Other income and (expenses)
	Interest expense			(176,273	)		(236,386	)		(350,884	)		(494,605	)
	Interest income			208,775			529,072			489,749			1,298,939
	Gain (loss) on foreign currency exchange transactions			46,074			(698,426	)		(240,843	)		(155,881	)
	Other income			63,925			38,098			81,595			191,589
		Total other income (expenses)		142,501			(367,642	)		(20,383	)		840,042

Net income (loss) before income taxes				1,442,233			(854,592	)		(559,357	)		(407,066	)
Income tax provision				(480,194	)		(331,614	)		(695,969	)		(561,431	)
Net income (loss)				962,039			(1,186,206	)		(1,255,326	)		(968,497	)
	Non-controlling interest			(715,282	)		39,164			(855,205	)		(107,750	)
Net income (loss) attributable to NetSol			$	246,757		$	(1,147,042	)	$	(2,110,531	)	$	(1,076,247	)



Net income (loss) per share:
	Net income (loss) per common share
		Basic	$	0.02		$	(0.10	)	$	(0.18	)	$	(0.09	)
		Diluted	$	0.02		$	(0.10	)	$	(0.18	)	$	(0.09	)

Weighted average number of shares outstanding
	Basic			11,797,068			11,484,298			11,782,439			11,456,996
	Diluted			11,812,098			11,484,298			11,782,439			11,456,996

NETSOL Technologies, Inc. and Subsidiaries Schedule 3: Consolidated Statement of Cash Flows

			For the Six Months
			Ended December 31,
				2025			2024
Cash flows from operating activities:
	Net loss		$	(1,255,326	)	$	(968,497	)
	Adjustments to reconcile net loss to net cash provided by operating activities:

	Depreciation and amortization			624,352			738,582
	Provision for bad debts			90,462			475,172
	Gain on sale of assets			(79,325	)		(25,084	)
	Stock based compensation			206,400			95,134
	Changes in operating assets and liabilities:
		Accounts receivable		(275,785	)		4,405,610
		Revenues in excess of billing		1,468,463			2,688,774
		Other current assets		401,208			(170,856	)
		Accounts payable and accrued expenses		5,092			(878,148	)
		Unearned revenue		(630,660	)		(5,990,971	)
	Net cash provided by operating activities			554,881			369,716

Cash flows from investing activities:
	Purchases of property and equipment			(856,330	)		(568,134	)
	Sales of property and equipment			77,522			45,535
	Investment in associates			25,396			-
	Purchase of subsidiary shares			-			(8,878	)
	Net cash used in investing activities			(753,412	)		(531,477	)

Cash flows from financing activities:
	Proceeds from the exercise of stock options and warrants			-			430,000
	Proceeds from exercise of subsidiary options			358,133			-
	Dividend paid by subsidiary to non-controlling interest			-			(306,799	)
	Proceeds from bank loans			792,484			2,676,932
	Payments on finance lease obligations and loans - net			(425,764	)		(162,370	)
	Net cash provided by financing activities			724,853			2,637,763
Effect of exchange rate changes				247,820			(332,525	)
Net increase (decrease) in cash and cash equivalents				774,142			2,143,477
Cash and cash equivalents at beginning of the period				17,357,944			19,127,165
Cash and cash equivalents at end of period			$	18,132,086		$	21,270,642

NETSOL Technologies, Inc. and Subsidiaries Schedule 4: Reconciliation to GAAP

	For the Three Months							For the Six Months
	Ended December 31,							Ended December 31,
		2025			2024				2025			2024

Net Income (loss) attributable to NetSol	$	246,757		$	(1,147,042	)		$	(2,110,531	)	$	(1,076,247	)
Non-controlling interest		715,282			(39,164	)			855,205			107,750
Income taxes		480,194			331,614				695,969			561,431
Depreciation and amortization		299,746			372,585				624,352			738,582
Interest expense		176,273			236,386				350,884			494,605
Interest (income)		(208,775	)		(529,072	)			(489,749	)		(1,298,939	)
EBITDA	$	1,709,477		$	(774,693	)		$	(73,870	)	$	(472,818	)
Add back:
Non-cash stock-based compensation		61,000			47,355		-		206,400			95,134
Adjusted EBITDA, gross	$	1,770,477		$	(727,338	)		$	132,530		$	(377,684	)
Less non-controlling interest (a)		(868,111	)		(61,529	)			(1,092,059	)		(207,310	)
Adjusted EBITDA, net	$	902,366		$	(788,867	)		$	(959,529	)	$	(584,994	)


Weighted Average number of shares outstanding
Basic		11,797,068			11,484,298				11,782,439			11,456,996
Diluted		11,812,098			11,484,298				11,782,439			11,456,996

Basic adjusted EBITDA	$	0.08		$	(0.07	)		$	(0.08	)	$	(0.05	)
Diluted adjusted EBITDA	$	0.08		$	(0.07	)		$	(0.08	)	$	(0.05	)


(a)The reconciliation of adjusted EBITDA of non-controlling interest
to net income attributable to non-controlling interest is as follows

Net Income (loss) attributable to non-controlling interest	$	715,282		$	(39,164	)		$	855,205		$	107,750
Income Taxes		95,791			102,414				135,583			173,001
Depreciation and amortization		69,777			92,546				144,862			181,681
Interest expense		51,081			68,636				99,908			147,828
Interest (income)		(63,820	)		(165,365	)			(143,499	)		(408,012	)
EBITDA	$	868,111		$	59,067			$	1,092,059		$	202,248
Add back:
Non-cash stock-based compensation		-			2,462				-			5,062
Adjusted EBITDA of non-controlling interest	$	868,111		$	61,529			$	1,092,059		$	207,310

NETSOL Technologies reports 21% year-over-year growth in total net revenues in Q2 fiscal 2026