NetSol Technologies Records 23% Drop in Profits

NetSol Technologies reported a profit of Rs. 149 million in the first quarter of the financial year 2022-23, on a consolidated basis, compared to Rs. 194 million posted in the same period last year, showing a drop in profitability by 23 percent year-on-year.

Revenue for the quarter that ended on September 30, 2022, improved by 37% compared to the revenue posted in the same quarter of the previous fiscal year. In absolute numbers, the Company posted net revenue of Rs. 1.716 billion compared to Rs. 1.252 billion in the same quarter of last fiscal year.

In the current quarter revenue of Rs. 43 million was recorded on account of local license sales, according to its quarterly financial report.

The company recorded a handsome amount of Rs. 890 million in comparison to Rs. 519 million in the corresponding period for enhancement and customization in the systems deployed at their respective sites. In addition to it, subscription and support revenue increased from Rs. 585 million to Rs. 786 million for the current quarter.

The increase in subscription and support revenue is mainly associated with different customers going into the maintenance phase after their successful implementation. On the cost side, due to the massive growth in the IT industry both locally and globally and coupled with work-from-home phenomena, has resultantly increased demand for IT resources, the resource retention cost has increased significantly.

Cost of revenue mainly increased due to increases in salaries and benefits costs. In addition to it, travel costs also increased during the period due to the travel of our resources to provide on-site support and implementation to our customers.

Included in the net profit is Rs. 292 million on account of currency exchange gain due to depreciation in the Pakistani Rupee compared to Rs. 230 million registered in the comparable period.

Currently, a team is being built up to provide AWS services and no revenue has so far been recognized thus resulting in losses for the quarter.

A sister concern of the Company signed a multi-million-dollar contract for the roll-out of its unrivaled, next-generation platform NFS Ascent in Northern Europe. This agreement signing with a consumer finance bank of Swedish origin covers the deployment of NETSOL’s premier platform Ascent (Retail) on the Cloud alongside NFS Digital. This is set out to be a multi-country implementation on a single instance using multi-tenancy options available in Ascent.

Covering a range of asset categories, this new client for the company works with approximately 1500 partners in Northern Europe, offering leasing, factoring, and invoice-to-pay services. The agreement scope for this signing covers the European Economic Area to be followed by the United Kingdom. The countries currently included in this contract are Sweden, Norway, Denmark, and Finland, according to a report.