Company: NTWK
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001493152-25-015950
Chunk: 501

Company: NETSOL TECHNOLOGIES INC
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1C
Chunk 501
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 performance obligation arrangements are typically
post-contract support renewals, subscription renewals and services engagements.

For
contracts with multiple performance obligations where the contracted price differs from the standard-alone selling price (“SSP”)
for any distinct good or service, the Company may be required to allocate the contract’s transaction price to each performance
obligation using its best estimate for the SSP.

15

Subscription

Subscription
revenue is recognized ratably over the initial subscription period committed to by the customer commencing when the product is made available
to the customer. The initial subscription period is typically 12 to 60 months. The Company generally invoices its customers in advance
in quarterly or annual installments and typical payment terms provide that customers make payment within 30 days of invoice.

Software
Licenses

Transfer
of control for software is considered to have occurred upon delivery of the product to the customer. The Company’s typical payment
terms tend to vary by region, but its standard payment terms are within 30 days of invoice.

Post
Contract Support

Revenue
from support services and product updates, referred to as subscription and support revenue, is recognized ratably over the term of the
maintenance period, which in most instances is one year. Software license updates provide customers with rights to unspecified software
product updates, maintenance releases and patches released during the term of the support period on a when-and-if available basis. The
Company’s customers purchase both product support and license updates when they acquire new software licenses. In addition, a majority
of customers renew their support services contracts annually and typical payment terms provide that customers make payment within 30
days of invoice.

Professional
Services

Revenue
from professional services is typically comprised of implementation, development, data migration, training or other consulting services.
Consulting services are generally sold on a time-and-materials or fixed fee basis and can include services ranging from software installation
to data conversion and building non-complex interfaces to allow the software to operate in integrated environments. The Company recognizes
revenue for time-and-materials arrangements as the services are performed. In fixed fee arrangements, revenue is recognized as services
are performed as measured by costs incurred to date, compared to total estimated costs to complete the services project. Management applies
judgment when estimating project status and the costs necessary to complete the services projects. A number of internal and external
factors can affect these estimates, including labor rates, utilization and efficiency variances and specification and testing requirement
changes. Services are generally invoiced upon