Todd Felte

Todd Felte with StoneX Wealth Management inquired about the sustainability of NETSOL Technologies' recent strong financial performance, asking if the quarter represented a new upward trend and how subscription revenues are typically paid (quarterly vs. yearly). He also asked about the sales cycle length for large contracts, the timeline from contract announcement to revenue generation and operational status for Transcend AI, and whether any upfront fees are paid. Finally, he asked about future guidance.

Answer

CEO Najeeb Ghauri expressed confidence in the company's continued growth momentum, particularly in the SaaS model, citing strong fiscal year performance and approximately $32 million in SaaS revenue. CFO Roger Almond clarified that subscription revenues are paid on an annual, quarterly, or monthly basis depending on the specific contract. Najeeb Ghauri further explained that while sales cycles are lengthy, teams work proactively before contract signing to ensure timely delivery and go-live for new projects, leading to revenue generation. Regarding guidance, Najeeb Ghauri stated that specific guidance for fiscal 2026 would likely be provided in the first or second quarter, but he anticipates continued growth momentum.

Todd Felte inquired whether the strong Q4 fiscal 2025 growth and improved margins represent a new upward trend or an anomaly, and also asked about the payment frequency (quarterly/yearly) for subscription revenues. He further questioned the sales cycle length from contract announcement to operational status for Transcend AI and the timing of revenue recognition, including any upfront fees. Finally, he asked about the company's guidance for the upcoming fiscal year.

Answer

Najeeb Ghauri, Founder and CEO, expressed confidence in continued growth momentum, highlighting strong performance in the SaaS model with significant subscription revenue. Roger Almond, CFO, clarified that subscription payments vary, occurring annually, quarterly, or monthly depending on the contract. Mr. Ghauri explained that the sales cycle is lengthy, but teams work proactively before contract signing to ensure timely delivery and go-live. Regarding guidance, Mr. Ghauri stated that specific guidance is typically provided in the second quarter for better clarity, but he anticipates continued growth momentum for fiscal 2026.

Todd Felte inquired about whether the Q3 subscription and support revenue of $7.9 million represents a new sustainable baseline, asked if the company plans to issue formal guidance for the next fiscal year, and questioned if there were plans to engage an IR firm or seek more analyst coverage to increase investor awareness.

Answer

CEO Najeeb Ghauri confirmed the positive outlook for SaaS revenue, stating he believes the growth trend will continue. He also affirmed that the company will consider providing guidance after the fiscal year closes and that they will evaluate their investor relations strategy, including the use of an outside firm, for the next fiscal year.

Todd Felte inquired about the revenue model for major contracts with clients like BMW, asking if revenue scales with client growth. He also questioned NETSOL's pricing power, specifically whether AI investments would enable price increases. Finally, he asked about the long-term strategy for the NETSOL Pakistan subsidiary and the goal of its share buyback program.

Answer

CEO Najeeb Ghauri explained that major deals, such as the one with BMW, are primarily driving a strong sales pipeline for the Transcend Retail platform in the U.S. Regarding pricing, Ghauri noted that while it's a sensitive topic, price increases are being pursued in some renewal negotiations, for example with a large client in China. On the subsidiary, Ghauri confirmed the share buyback aims to increase the parent company's ownership stake to nearly 77% to strengthen the parent's balance sheet, capitalizing on the subsidiary's current stock valuation.

The analyst inquired about the company's financial guidance for the next fiscal year, specifically regarding revenue, earnings per share, and the use of its cash reserves for investment.

Answer

The executive stated that the company anticipates double-digit growth for the upcoming fiscal year, with specific guidance to be released in the first quarter. While an EPS range was not provided, the goal is to maintain high gross margins and achieve a better year than the last. Cash is being reinvested into the business to fuel growth, particularly in North America, rather than being used for stock buybacks or invested in short-term treasuries.

Asked about future margins, the source of continued growth from the defense sector, and whether future growth would be organic or include M&A.

Answer

The CEO stated that gross margins are expected to remain stable but could increase with wider offerings. Growth is primarily driven by strong organic opportunities in the defense market, both in Israel and overseas. While the focus is on organic growth, the company is also evaluating synergistic M&A opportunities.

Todd Felte inquired about whether the current $7.9 million in subscription and support revenue could be considered a new baseline, the potential for future revenue and earnings guidance, and plans for enhancing investor relations or analyst coverage.

Answer

Najeeb Ghauri, Founder, Chairman and CEO, affirmed his belief that the subscription revenue growth trend will continue, driven by SaaS and retail momentum. He stated that the company will consider issuing guidance after the fiscal year-end and expressed optimism about future profitability due to efficiency improvements. Ghauri also noted that while happy with the in-house IR team, the company will weigh options for external IR or analyst coverage for the next fiscal year.