Newgen Software

Q1 FY’24

Revenues: INR 252 crores, up 34%

Growth lead by :

• APAC : 46%

• EMEA : 38%

• U.S : 36%

• India : 25%

• Seasonality factor decreased by increasing Annuity revenues

• Annuity revenues: INR168 crores, comprising 35% of total revenue.

• License revenue grew 1.9 times compared to Q1 last year.

Customer Growth:

• Added 13 new logos across geographies in Q1.
• Digital account opening solution to
  • Privately held bank is Americas region
• Lending origination and management solution to
  • Leading diversified business group in Saudi Arabia
• Trade and Supply Chain Finance Solution to
  • Leading financial institution in the UAE market
• 35 crores 5-year deal
  • 1 of the Indian public sector banks for new offering in Trade Finance : The project execution immediate
  • Large part of this revenue will come in the next 18 months, part of this revenue, which will follow up ATS/AMC
• Expanded opportunities in banking, insurance, and government segments.
• Execution of the deals will start from Q2,2024.

Product

• Platform :
  • Modular design
  • Advanced AI capability
    • Adding AI/ML capabilities in process automation for suggestive and prescriptive intelligence
    • Lending solutions with the AI/ML based auto decisioning and no touch, low-touch strategy
    • Recently launched trade finance solution, we are again using our AI-based strategy for extracting data from paper images and PDF docs.
    • Exploring the use of generative AI in products and solutions.
    • Plans to launch several products in the generative AI area.
      • Generative AI road map for the next 12 months
• Cloud-first approach
  • All these platform will enable organization to deliver superior customer experience, operational excellence and business innovation
• Newgen ONE
  • Newgen ONE : This tools helps to build, deploy and manage applications, building automation silos and streamlining the processes.
  • It allows development of attractive portals with very little effort, facilitate end-to-end integrated processes at enterprise scale
  • Produces better applications using low code principles

Strategic partners

• GSI : Global System Integrators
• Consulting firms
• Technology partners for enhancing capabilities and largely marketplace partners like Mambu and Guidewire

License Sales : There’s a kind of a pushback from market from traditional subscription and SaaS sales but the current reality what’s happening is that the perpetual license business for past 3 quarter are being strong.

• Perpetual
  • Expect substantial level of perpetual licenses again in this year
• Annuity
  • This business is close to about 55-60% of the revenue – going ahead this will expand up to 70%
  • The revenues are deferred
  • Perpetual deals coming in, and they were coming across all territories, including U.S.
  • This year to be very strong on licenses
• Subscription
  • U.S. sales are subscription-based sales
  • Expect substantial level of subscription licenses this year

Newgen strong foot holds

• BFSI : U.S. regional banking sector facing cost pressures but still demand for Newgen’s products.
• Tier-1 Banking doing extremely well in India, Middle East, APAC
• Growth led mostly by
  □ Onboarding people to the bank
  □ Lending money to the bank
• Midsized banks : particularly a smaller end of the midsized banks are struggling
• Trade finance a focus area with potential deals in India and the Middle East.
• Insurance sector also strong

Attrition/Employee Cost

• Significant decrease in attrition rate compared to the previous year.
• Increment cycles are divided across 3 quarters. April, June and predominantly January.

Investments:

• Heavy investment in technology and sales and marketing initiatives.
• Maintaining cost discipline.
• Other expenses increased to INR75 crores, primarily due to marketing and sales initiatives.

Cash Flow:

• Net cash generated from operating activities: INR 57 crores.

Margins:

• Expecting healthy margins with EBITDA around 20%
• PAT around 17-18%.