Release Date: July 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Newgen Software Technologies Ltd (NSE:NEWGEN, Financial) reported a 19% year-over-year growth in subscription revenue, reaching INR121 crores.
- The company added 12 new logos during the quarter, which is expected to contribute to future revenue growth.
- Newgen Software Technologies Ltd (NSE:NEWGEN) is making significant investments in AI-driven products and solutions, enhancing decision-making, automation, and personalization.
- The company was granted a patent for a new data compression system, which improves efficiency and reduces storage costs.
- Despite challenges, the company maintained a profit after tax of INR50 crores with net margins at 15.5%.
Negative Points
- The quarter was described as muted due to uncertain economic and geopolitical conditions, impacting revenue growth.
- Customers are taking longer to make decisions, leading to slower project starts and delayed license sales.
- Average deal sizes have decreased, affecting overall revenue despite the addition of new clients.
- Implementation revenue was lower this quarter due to slower ramp-up and delayed execution of existing projects.
- The company faces challenges in closing large deals, particularly in the banking sector, which is a significant part of their business.
Q & A Highlights
Q: Why did Newgen Software experience smaller deal sizes, and is this trend expected to continue?
A: Virender Jeet, CEO, explained that while the deal win rates remain consistent across geographies, larger programs are experiencing slower decision-making. Tactical deals in the range of INR4 to INR9 crores are being decided, but larger deals are facing delays. This has resulted in smaller deal sizes compared to previous quarters.
Q: What is the outlook for implementation revenue, and will it improve in the next quarter?
A: Virender Jeet noted that the slower ramp-up in implementation revenue is specific to this quarter due to smaller deal sizes and delayed execution of previous large orders. However, he expects implementation revenue to improve in the next quarter as current and previous momentum drive stronger implementation.
Q: How does Newgen Software plan to address the slowdown in decision-making and deal closures?
A: The CEO mentioned that the funnel remains strong, but conversion is slow. The company is focusing on expanding its target market and increasing the velocity of deals in the sweet spot. They aim to compensate for the slowdown in larger deals by targeting more deals and diversifying into insurance and enterprise segments.
Q: What impact does AI have on Newgen's business, and how is it being integrated into their products?
A: Virender Jeet highlighted that AI, including generative AI, is being integrated into Newgen's products to enhance decision-making, automation, and user experiences. AI is central to many use cases, and the company is leveraging it to drive deals and customer engagement across verticals.
Q: What is the company's outlook for growth and margins for the fiscal year?
A: The CEO stated that Newgen is still aiming for growth and is investing in sales, marketing, and product development. While the company has historically maintained net margins around 20%, achieving this will depend on growth rates. They are planning for growth and do not foresee significant margin challenges unless growth rates fall substantially.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
