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NetSol Technologies Limited (PSX: NETSOL) reported a significant decline in profitability for the first quarter of FY26, with profit after tax (PAT) falling 47% year-on-year to Rs74.7 million compared to Rs141.3 million in the same period last year. The dip comes despite strong top-line growth, as rising costs and a sharp fall in other income weighed on earnings.
The company’s net revenue surged 32% to Rs2.54 billion, driven by new global project implementations and contract expansions. However, expenses rose sharply the cost of revenue increased by 19% to Rs1.56 billion, while selling and administrative expenses jumped 32% to Rs756 million combined.
A company spokesperson said,
“Our revenue growth reflects successful project delivery and client expansion, but cost pressures and reduced other income impacted our bottom line.”
Despite the decline in net profit, operational performance showed improvement. Gross profit rose 60% to Rs979 million, lifting the gross margin to 38.5%, up from 31.8% a year ago. Operating profit also jumped to Rs222 million from Rs26 million, reflecting better operational efficiency.
However, a steep 79% drop in other income to Rs79 million from Rs381 million significantly reduced pre-tax earnings. Consequently, Earnings Per Share (EPS) fell to Rs0.88 from Rs1.61 last year.
NetSol Q1FY26 Financial Summary
| Particulars | Q1FY26 (Rs ‘000) | Q1FY25 (Rs ‘000) | % Change |
| Revenue | 2,542,625 | 1,925,898 | +32.0% |
| Cost of Revenue | 1,563,851 | 1,313,924 | +19.0% |
| Gross Profit | 978,774 | 611,974 | +59.9% |
| Operating Profit | 222,389 | 25,693 | +765.7% |
| Other Income | 79,207 | 381,360 | –79.2% |
| Profit After Tax | 74,734 | 141,297 | –47.1% |
| EPS (Rs) | 0.88 | 1.61 | –45.3% |
Analysts noted that while NetSol’s revenue trajectory remains positive, sustaining profitability will depend on cost control and recovery in other income sources in the coming quarters.
