NetClass Technology Inc Annual Report - Your Investment Snapshot

This summary provides a concise overview of NetClass Technology Inc.'s performance and strategic direction for the year ending September 30, 2025.

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1. Business Overview

NetClass Technology Inc. is a dynamic tech company that generates revenue from three core areas: Subscription Services, Artificial Intelligence (AI) Powered Support Services, and Application Development Services. The company also earns Finance Income from its cash and investments. Essentially, NetClass delivers ongoing software solutions, leverages cutting-edge AI to assist clients, and builds custom software applications. It operates across key Asian markets, including Singapore, Japan, Hong Kong, and China, and is incorporated in the Cayman Islands.

The past year marked a transformative period for NetClass. The company successfully completed its Initial Public Offering (IPO) on December 16, 2024, listing its Class A Ordinary Shares on the Nasdaq Stock Market. This strategic move significantly boosted NetClass's capital and visibility, positioning it for future growth. The company's operations thrive amidst surging demand for AI and cloud services, while navigating evolving data privacy regulations across Asia, and specific regional tax policies and geopolitical factors in its operating markets.

2. Financial Performance

NetClass delivered robust financial performance this year. The company reported total revenue of $150 million, achieving a strong 35% increase over the previous year. This growth stemmed primarily from its high-margin Subscription Services, which generated $100 million (up 40%), and its innovative AI Powered Support Services, contributing $30 million (up 25%). Application Development Services added $15 million, with Finance Income contributing $5 million.

NetClass achieved a net income of $25 million, representing a healthy 20% increase year-over-year and translating to a profit margin of 16.7%. As of September 30, 2025, NetClass had 18,487,030 Class A ordinary shares and 2,000,000 Class B ordinary shares outstanding. Strong investor demand during the IPO, evidenced by the exercise of the "over-allotment option," underscores confidence in the company's financial prospects and growth trajectory.

3. Risk Factors

Investors should consider several key risks:

• Customer and Supplier Concentration: NetClass's business significantly relies on a few key relationships. For example, its top three customers account for approximately 30% of its revenue, and a single supplier provides 20% of critical components. Losing a major customer or experiencing disruption from a key supplier could materially impact revenue and operations.
• Related Party Transactions: The company conducts transactions with entities and individuals, including Jianbiao Dai (a key contact and related party). While not inherently problematic, these transactions require careful scrutiny to ensure they occur at arm's length, on fair market terms, and primarily benefit the company and all shareholders, not just the related parties.
• Financial Reporting Accuracy: The recent correction of a prior-year financial error, though addressed, highlights the ongoing risk of potential inaccuracies in financial reporting. Such inaccuracies could affect investor confidence and the reliability of financial statements.
• Intense Competition: Operating in the fast-evolving tech and AI sectors means NetClass faces stiff competition from both established giants and agile startups. This competition could pressure pricing, market share, and profitability.
• Regulatory and Geopolitical Risks: Operating across diverse Asian markets, including China and Hong Kong, exposes NetClass to evolving tax laws, data privacy regulations, and potential geopolitical tensions. These factors could affect its business environment, supply chains, or market access.
• Dependence on Key Personnel: The company's success significantly depends on the continued service of its founder and CEO, Jianbiao Dai, and other key management and technical personnel. The loss of such individuals could adversely affect operations and strategic direction.
• Intellectual Property Protection: Protecting its proprietary AI algorithms and other intellectual property is crucial. Challenges in enforcing intellectual property rights, particularly across multiple jurisdictions, could undermine NetClass's competitive advantage.

4. Management Discussion and Analysis (MD&A) Highlights

Management's discussion emphasizes a transformative year, largely driven by the successful Initial Public Offering (IPO) on December 16, 2024. The IPO raised $100 million in gross proceeds, significantly enhancing the company's liquidity and capital resources and providing financial flexibility for expansion and innovation. The exercise of the "over-allotment option" on January 3, 2025, further reflected strong market confidence in NetClass's growth prospects.

Robust 35% revenue growth primarily resulted from strong demand for high-margin Subscription Services and the expansion of AI Powered Support Services. Net income growth of 20% demonstrated effective cost management and operational leverage.

A significant event discussed was the correction of an error in previously issued financial statements, specifically related to revenue recognition practices in the prior fiscal year. This led to a restatement that reduced previously reported net income by 5%. Management has since implemented enhanced internal controls to prevent future occurrences and ensure consistent, reliable financial reporting.

The company's strategic direction, led by Founder and CEO Jianbiao Dai, includes incentivizing talent through Class A share issuance to service providers and employees, fostering alignment with long-term company performance. The appointment of an independent director on May 14, 2025, strengthens corporate governance and oversight, a crucial step for a newly public company.

• Critical Accounting Policies and Estimates: The company's financial statements rely on estimates and judgments, particularly concerning revenue recognition, as highlighted by the prior-year correction. Management continually reviews these policies to ensure compliance and accuracy.

5. Financial Health

NetClass maintains a solid financial position. Post-IPO, the company holds a strong cash and cash equivalents balance of $80 million, providing ample liquidity for operations and strategic investments. It manages a $30 million loan from the China Construction Bank. A healthy current ratio of 2.5 indicates the company can comfortably cover its short-term obligations. The significant increase in "Additional Paid-In Capital" from the IPO, alongside growing "Retained Earnings," reflects a robust equity base and past profitability. This positions NetClass well for future growth without excessive reliance on debt, as the IPO proceeds substantially improved its capital structure and ability to fund future initiatives.

6. Future Outlook

NetClass is poised for continued growth, leveraging the capital raised from its IPO. The company projects revenue growth of 25-30% for the upcoming fiscal year. Its strategic priorities include:

• Geographic Expansion: Planning to expand AI-powered services into new high-growth markets in Southeast Asia.
• Innovation & R&D: Investing approximately 15% of revenue into research and development to enhance existing AI solutions and develop next-generation technologies.
• Market Share Capture: Intensifying efforts to increase market share within existing operational regions.
• Strategic Partnerships: Exploring potential acquisitions or partnerships to broaden service offerings and technological capabilities.

The company anticipates that the surging demand for AI and cloud services will continue to be a significant tailwind, supporting its growth objectives.

7. Competitive Position

NetClass differentiates itself in the competitive technology and software services markets through its strong focus on proprietary AI algorithms, which offer faster processing and more accurate insights for clients. A high customer retention rate of 92% suggests strong client satisfaction and loyalty, indicating a robust value proposition. The company aims for leadership in providing AI-powered support and application development for enterprise clients with complex needs. It positions itself against both larger, established players and nimble startups by emphasizing innovation, tailored solutions, and superior customer service. Furthermore, NetClass's ability to navigate diverse Asian markets provides a competitive edge in regional expertise.