Newgen Software Technologies Ltd (NEWGEN) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (ICICI Securities Limited): Ladies and gentlemen, good day, and welcome to Newgen Software Technologies Limited Q2 FY '27 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing "*" then "0" on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Ruchi from ICICI Securities Limited. Thank you and over to you, ma'am.
Ruchi (ICICI Securities Limited): Thank you, Aman. Good evening ladies and gentlemen. Thank you for joining us today on Q2 FY '27 earnings call of Newgen Software Technologies. It is my pleasure to introduce the senior management team of Newgen. Today we have with us, Mr. Varadarajan, Co-Founder and Executive Vice Chairman, Mr. Tarun Nandwani, Chief Executive Officer, Mr. Arun Kumar Gupta, Chief Financial Officer, Mr. Pramod Kumar, Chief Growth Officer, and Ms. Deepti Mehra, Ashok Head Investor Relations. I will turn it over to Deepti to take the proceedings forward. Thank you and over to you, Deepti.
Deepti Mehra (Newgen Software Technologies Ltd): Thank you, Ruchi. Good afternoon everyone. Before we move on to the discussion, let me highlight that this call may contain certain forward-looking statements concerning Newgen's future business prospects and profitability, which are subject to a number of risks and uncertainties, and the actual results could materially vary from the forward-looking statements. Past performance may not be indicative of future performance. The company does not undertake to make any announcements in case any of these forward-looking statements become materially incorrect in future or update any forward-looking statements made from time to time by or on behalf of the company. For further details, you may please refer to the Investor Relations section of our website. I would now hand over to Mr. Varadarajan for presentation of the results, which will be followed by a Q&A by Tarun and Arun. Thank you.
T.S. Varadarajan (Newgen Software Technologies Ltd): Thank you. Good afternoon everyone and season's greetings. Thank you for joining us for the Q2 FY '27 results discussion. During the quarter, we continued earnings growth momentum, while strengthening the quality of our revenue base. In Q2, revenues grew by 5.4% to reach ₹422 crores. For the first half of the year, we achieved a growth rate of 8% to reach ₹779 crores. Growth during the quarter was led by our international markets. EMEA region recovered and recorded a growth of 19.4% with normalization of travel in the region, and supported by demand for the enterprise automation and our industry focused offerings. US region continued its growth momentum on the back of improvement in its subscription sales and market penetration. It witnessed a growth of 17.1%. India region continued to be subdued and declined by 12.6% and APAC region declined by about 6.4%, reflecting timing and execution variability in this market. We expect the market, the closures to pick up during the course of the year in this region. Overall, Newgen made nine new logo additions during the quarter. Our recurring revenue stream continued to progress well. SaaS revenue grew by 36.4%, support by 10.3%, and ATS by 7.9%. Overall, our annuity revenues grew at a healthy rate of 15%, reflecting continued customer engagement.
T.S. Varadarajan (Newgen Software Technologies Ltd): During the quarter, the subscription revenue surpassed the license revenue, enhancing the predictability of our business. License revenue declined by 19.2% per year-on-year against a strong Q2 FY '26 base. Implementation revenues have recovered sequentially. The key wins during the quarter include agreement with a health insurance company in US for NewgenONE Complaints, Appeals, and Grievance solution with a value of US US dollar 5.5 million over 3 years, working with a government body in Qatar for Newgen platform license, implementation, maintenance, and support for International Regulatory Reporting and Compliance platform for USD 1.8 million, project for up-gradation of commercial loan and retail loan origination system for a leading bank in India with a booking value of 11.4 crores, providing loan management solution to a leading in life insurance company in India. Let me now share how the customer environment is evolving over the past few months because it shapes our customer conversations in business. Customers are increasingly moving from AI experimentation to production, and they're asking for explainability, traceability, and control. That is where the governed orchestration platform fits. Newgen with 34 years of regulated industry trust, a governed AI platform, vertical solutions, and measurable customer value, fits in perfectly with the customer's requirements. The NewgenONE platform continues to unify content, processes, and communication in an orchestration layer where intelligence is embedded into how enterprises operate, with trust, governance, and control built. This is particularly relevant for regulated industries that require audit tracking, explainability, compliance controls, and human oversight. At its core, Newgen brings Newgen brings together AI agents, enterprise applications, human decisioning into a single execution layer. During the quarter, we released our AI components, NewgenONE AI Studio, Agent Studio 1.0, and Agent Flow 2.0.2. From a use-case perspective, the platform can support industry-trained models for government, banking, insurance, and healthcare. Newgen has built vertical solutions. For example, in banking, persona-specific AI solutions have been delivered across lending, onboarding, and transaction banking. In insurance, AI solutions have been created for every insurance persona across life, health, motor, and general with Agentic Workspaces. Operational efficiencies have also been built in for the customers through these solutions. During the quarter, Newgen received recognition for excellence in low code and AI-led enterprise innovation at the ET Business Excellence and Leadership Summit 2026. For the first time for the first half of the year, we had 10 AI-based deal bookings across banking and financial services and government. On the profit and margin front, the business has successfully maintained margins with operational efficiencies and cost control. EBITDA increased by 6.5% to 100 Rs 109 crores and profit of act after tax grew by 6.3% to 87 crores for the first for the quarter. Importantly, profitability remained resilient. EBITDA margin improved to 25.8%, while PAT margin was 20.6%. This demonstrates our continued focus on operating discipline even as we continue to invest in our platform, market reach, and AI-led innovations. Net receivable at the end of the September quarter was 642 crores, and net DSO was 144 days. To summarize, Q2 FY '27 was a quarter of balance, earning growth, resilient margins, and stronger recurring revenue mix. We are continuing to invest in NewgenONE and its AI-led orchestration capabilities to help enterprises move from fragmented automation to governed and
T.S. Varadarajan (Newgen Software Technologies Ltd): presentation. As we enter the second half of FY '27, our priorities are clear. First, sustain the momentum in EMEA and the US. Second, improve deal conversion and execution in India and APAC. Third, continue scaling SaaS and annuity revenues to strengthen predictability. Fourth, maintain cost discipline while investing selectively in sales capacity, product innovation, and AI. Finally, improve collections and working capital efficiency. We remain encouraged by the long-term opportunity for intelligent enterprise orchestration. At the same time, quarterly performance can be influenced by the timing of large license transactions, implementation milestones, regional conversion cycles, currency movements, and collections. We will continue to manage these variables with a focus on profitability and sustainable growth. We remain focused on disciplined execution, customer outcomes, and product innovation. Thank you very much for your time. We are now open for questions and answers.
Moderator (ICICI Securities Limited): Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rahul from Dolat Capital. Please go ahead.
Rahul (Dolat Capital): Hello.
Tarun Nandwani (Newgen Software Technologies Ltd): Hi, Rahul.
Rahul (Dolat Capital): Yeah. Hi. Just a couple of questions from my side. Firstly, if I look at the sale of product in the quarter, this looked, this looked weak even if I compare to the data in the previous fiscal beyond, even in FY '25. So, is there a trend that we are seeing that we are seeing more incremental demand on this SaaS and cloud side and that's why the the or license signing data looks weaker? That is question number one. Question number two is on the implementation side. What we are seeing is that Q-o-Q, there was a massive jump, almost doubling of revenue. Is it led by some milestone events that would have led to this increase, or there was a short-term execution deals that led to this kind of a jump? Thank you.
Tarun Nandwani (Newgen Software Technologies Ltd): Thank you, Rahul. See, a license revenue grew from quarter 1 to quarter 2, but year-on-year, it was a decline. You are right. This is not because of the weaker demand. This is mostly because of the closure cycle or that happens in the quarter. And India and EMEA are and some part of APAC are strong growth drivers on the license for Newgen. EMEA performed well. There was some closure delays which happened in India, which we are expecting in coming quarters, which led to this decline. And, and the base of license last year was higher. But I think the, that the demand has not weakened what, what we are seeing in the pipeline. In the implementation, there was a special focus quarter-on-quarter on, on closure of the milestones for the revenue recognition and billing, which has led to the improvement from quarter 1 to quarter 2. Also, there was some milestone slippages in Q1 which we, we could complete in Q2, which has led to this good growth in Q2.
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