Release Date: January 20, 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 an 18% YoY revenue growth for Q3 FY25, reaching INR381 crores.
- The APAC region showed the highest growth at 43% YoY, followed by EMEA at 19% YoY.
- License sales increased significantly by 70% YoY, indicating strong demand for Newgen's products.
- The company added 15 new logos in Q3 and 36 over the nine-month period, showcasing successful market expansion.
- Newgen was recognized as a niche player in the Gartner Magic Quadrant for Enterprise Low-Code Application Platforms for the fifth consecutive year, highlighting its industry standing.
Negative Points
- Implementation cycles for larger projects have extended beyond one year, affecting revenue realization from these deals.
- There is a slowdown in digital lending projects in India, impacting the overall momentum in the region.
- The longer execution cycles have led to a decline in implementation revenue and delayed annuity revenue streams.
- Despite strong license sales, the downstream support and AMC revenues are delayed due to extended project timelines.
- The growth rate for the India region was lower at 10% YoY, compared to other regions, due to execution challenges.
Q & A Highlights
Q: How is the demand narrative changing for Newgen in India and the USA, given the current market conditions?
A: Virender Jeet, CEO, explained that while there is a slowdown in digital lending projects in India, new generation NBFCs are investing to gain market share. In the USA, there is optimism as the banking space is picking up, and Newgen expects to win banking deals soon.
Q: What contributed to the strong license sales this quarter, and how did different geographies perform?
A: License sales were broad-based across all regions, with significant contributions from India, APAC, and the Middle East. The growth was driven by large deal wins, including records management in APAC and a significant order in Saudi Arabia.
Q: How is Newgen addressing the longer execution cycles impacting implementation revenue?
A: The longer execution cycles have affected downstream revenues like implementation and annuity models. However, Newgen is focusing on increasing new win ratios and deal momentum to compensate for the delay in revenue realization.
Q: What is the outlook for the insurance and government verticals, and how do they compare to banking?
A: Newgen is focusing on insurance for logo acquisition, with traction in claims and underwriting. Government deals are progressing well, with shorter implementation cycles. While banking remains strong, insurance and government are growing from smaller bases.
Q: How does Newgen plan to manage the challenges of scaling implementation across diverse markets and verticals?
A: Newgen acknowledges the challenges of transformative implementations but emphasizes learning and adapting with each project. The company is confident in its ability to scale and manage implementation timelines effectively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
