Company: NTWK
Filing Date: 2025-02-13
Form Type: 10-Q
Source: 0001493152-25-006348
Chunk: 20

Company: NETSOL TECHNOLOGIES INC
Filing Date: 2025-02-13
Form: 10-Q
Item: Part I, Item 1
Chunk 20
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 information guides the Company in assessing the stand-alone selling price of the Company’s
software, since the Company can observe instances where a customer had a particular component of the Company’s software that was
essentially priced separate from other goods and services that the Company delivered to that customer.

The Company
recognizes revenue from implementation and customization services using the percentage of estimated “person-days” that the
work requires. The Company believes the level of effort to complete the services is best measured by the amount of time (measured as
an employee working for one day on implementation/customization work) that is required to complete the implementation or customization
work. The Company reviews its estimate of person-days required to complete implementation and customization services each reporting period.

Revenue
is recognized over time for the Company’s subscription, post contract support and fixed fee professional services that are separate
performance obligations. For the Company’s professional services, revenue is recognized over time, generally using costs incurred
or hours expended to measure progress. Judgment is required in estimating project status and the costs necessary to complete projects.
Several internal and external factors can affect these estimates, including labor rates, utilization, specification variances and testing
requirement changes.

    Page 15

NETSOL
TECHNOLOGIES, INC. 

Notes
to Condensed Consolidated Financial Statements 

December
31, 2024 

(Unaudited)

If a group
of agreements are entered at or near the same time and so closely related that they are, in effect, part of a single arrangement, such
agreements are deemed to be combined as one arrangement for revenue recognition purposes. The Company exercises significant judgment
to evaluate the relevant facts and circumstances in determining whether agreements should be accounted for separately or as a single
arrangement. The Company’s judgments about whether a group of contracts comprise a single arrangement can affect the allocation
of consideration to the distinct performance obligations, which could have an effect on results of operations for the periods involved.

If a contract
includes variable consideration, the Company exercises judgment in estimating the amount of consideration to which the entity will be
entitled in exchange for transferring the promised goods or services to a customer. When estimating variable consideration, the Company
will consider all relevant facts and circumstances. Variable consideration will be estimated and included in the contract price only
when it is probable that a significant reversal in the amount of revenue recognized will not occur.

Contract Balances  

The timing
of revenue recognition may differ from the timing of invoicing to customers