NetSol’s profit drops 78.96% in H1 2024

February 13, 2025 (MLN): NetSol Technologies Limited (PSX: NETSOL) reported a sharp decline of 78.96% in its net profit, with after-tax earnings falling to Rs169.51 million for the half-year ended December 31, 2024, compared to Rs805.66mn in the corresponding period last year.

The decline in profit is primarily attributed to a 12.40% drop in revenue, which stood at Rs4.15 billion compared to Rs4.74bn in H1 2023.

While the cost of revenue also declined by 2.30%, the gross profit suffered a steep 24.95% decline, reducing to Rs1.59bn from Rs2.11bn in the same period last year. Consequently, the company's gross margin deteriorated significantly.

On the expense side, selling and promotional expenses surged 14.38% YoY to Rs393.27mn, while administrative expenses rose 6.46% YoY to Rs750.62mn. This resulted in a 9.02% increase in total operating expenses, reaching Rs1.14bn.

Despite a 28.46% increase in other income, which amounted to Rs355.38mn, the impact of rising costs and declining revenues weighed heavily on profitability.

Other operating expenses climbed 25.69%, reaching Rs351.33mn, further squeezing the bottom line.

NetSol’s finance cost dropped by 18.66% to Rs129.30mn, offering some relief. However, tax expenses surged by 51.96% YoY to Rs148.39mn, further denting the company's profitability.

As a result, earnings per share (EPS) for H1 2024 fell sharply, with basic EPS declining to Rs1.93 from Rs9.17 (-78.95%), while diluted EPS stood at Rs1.90, down from Rs9.14 (-79.21%) in the previous year.

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