As per the company notice sent to the PSX, the NetSol top line went up by 26 percent year-on-year. Revenues are supported mainly by the company’s continued rollout of its flagship product, NFS Ascent. During the fiscal year, NetSol continued implementing a major, multi-country NFS Ascent contract that it had scored with a German automaker a few years ago. After deployments in Australia, New Zealand, South Africa, South Korea and Thailand, the software went live in China for the same client earlier this year. Meanwhile, the top line gains were somewhat dissipated by higher core costs and operating expenditures. For instance, the ‘cost of revenue’ increased by 40 percent year-on-year, most likely on account of spending undertaken to upgrade its main software offerings and improve its IT services and maintenance products. These costs consumed 61 percent of net revenues in FY19, up from 55 percent in FY18.

The double-digit growth in selling and promotion expenses is understandable. The firm has to spend abroad enough to adequately market its software’s to potential clients and to keep the existing clients on its side in a competitive market. However, there was a more than proportional growth in administrative expenses, which consumed 19 percent of net sales in FY19, up from 17 percent the previous fiscal.

Had it not been for a massive jump in ‘other income’, the company’s full-year operating and net profits would have come in lower compared to FY18. As NetSol derives bulk of its sales from exports, the PKR slide, which has been underway since December 2017, has helped the firm improve its bottom line significantly. In the end, the company closed the year with its highest net profits to date since FY13. Over at the bourse, however, NetSol’s financial performance seems to be going largely unnoticed. In the last 12 months, the stock had gone down in value by over 60 percent. Since this calendar year started, NetSol stock is down by almost fifth at the PSX. The stock has shown a rally this month; however the current market value is still far below the Rs150 level seen around this time last year.