NetSol Technologies Limited (PSX: NETSOL) has reported a profit after tax of Rs74.7 million for the quarter ended September 30, 2025, marking a 47% decline from Rs141.3 million recorded in the same period last year. The company’s earnings per share also fell to Rs0.88 from Rs1.61, reflecting the significant drop in profitability despite a strong improvement in revenue during the quarter.
Net revenue for the quarter increased 32% year-on-year to Rs2.54 billion compared to Rs1.93 billion in Q1FY25. The growth was largely driven by new project implementations and expansions in global contracts, indicating robust demand for the company’s IT solutions in international markets. The surge in revenue helped lift gross profit by nearly 60% to Rs978.8 million from Rs612 million a year earlier. Consequently, the gross profit margin improved to 38.5% from 31.8%, showing that the company managed to maintain operational efficiency and cost control in its core business.
However, rising expenses continued to weigh on the company’s bottom line. The cost of revenue rose by 19% to Rs1.56 billion, while selling and promotional expenses increased 44% to Rs296.3 million. Administrative expenses also grew 21% to Rs460.1 million, driven by inflationary pressures, higher employee-related costs, and investments in marketing and global operations. Despite these challenges, operating profit surged over sevenfold to Rs222 million from Rs26 million in the same quarter last year, supported by stronger project deliveries and improved cost allocation.
A major setback during the quarter came from a sharp decline in other income, which dropped 79% to Rs79.2 million from Rs381.4 million in the prior year. This reduction, mainly due to lower exchange gains and fewer one-time income contributions, had a notable impact on pre-tax earnings. Finance costs, however, decreased 32% to Rs47 million, providing slight relief to the bottom line. Other operating expenses also remained contained at Rs142.8 million, a 5% rise compared to last year’s Rs136.2 million.
Profit before taxation stood at Rs74.7 million, down from Rs141.3 million, as the company faced higher levies of Rs37 million compared to Rs60.7 million in the same quarter last year. The overall net profit margin narrowed to 2.9%, from 7.3% in the prior period, as cost pressures and reduced ancillary income offset revenue gains.
NetSol’s financial results reflect a mixed performance for the first quarter of FY26. While the company achieved impressive top-line growth through successful project executions and an expanding client base, the earnings contraction highlights the continuing challenge of balancing operational costs and income diversification in a competitive global technology market. Nonetheless, its revenue growth trajectory signals steady demand for NetSol’s enterprise software solutions and long-term potential for recovery as the company continues to streamline its operations and strengthen international engagements.
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