Newgen Software

In Q1 it was guided better margins through revenue enhancement and cost optimization. There is revenue enhancement but margins haven’t improved at all which is causing an effect on profitability.

• In Q1, they guided that it has strong pipeline & the deals signed in Q4FY22 & Q1FY23 will lead to revenue up tick from Q2 onwards. The company has maintained 20%+ revenue growth guidance for FY23 & also indicated that GSI related revenues will be an incremental revenue opportunity. Revenue has increased until Q3 FY23. Revenue growth guidance has also been maintained. GSI related revenues to increase is still in the guidance with focus on mature markets USA and Australian subsidiary.

• In Q1, they guided that Employee expenses and travel costs will continue to increase in Q2 and should decline in Q3 & Q4 but they still continue to be on the upward trajectory. The company indicated that in the short terms, operating costs are likely to see some upward trajectory on travel costs normalisation as customer meetings are critical for the growth as well as sales & marketing costs.

• 20% growth for next year has been guided. Margins around 21%. Margins are around this level at the current stage in Q3 FY23. The company continued to aim to reach US$500 mn revenues in the next five to six years, which includes GSI contribution as well inorganic contribution

• Q4 is seasonally strong quarter and are seeing that attrition has fairly stabilized.

• Once, mature markets start contributing to revenue, margin expansion will happen. (Same as Q1 guidance).

• Guiding margins at 22-23% EBITDA and 17-18% at PAT level.

• Logo wins have been subdued. But they are gaining traction in subscription revenue which should help in better consistent revenues.

• They are targeting 10 deals per year from GSI region. The company also indicated that due to its strong customer relationships in the market, growth was likely to sustain, going forward.

• The Trade Finance Platform has been gaining traction as the deal size is huge.