Newgen Software Technologies Limited

Financial Performance Highlights

Q2 FY27 Financial Results:

  • Revenue: ₹422 crores, representing 5.4% year-on-year growth
  • EBITDA: ₹109 crores, up 6.5% YoY
  • Profit After Tax (PAT): ₹87 crores, up 6.3% YoY
  • EBITDA Margin: 25.8% (improved from previous periods)
  • PAT Margin: 20.6%

H1 FY27 Performance:

  • Revenue: ₹779 crores, representing 8.8% year-on-year growth

Regional Performance Breakdown

Geographic Revenue Performance (YoY):

  • EMEA Region: +19.4% growth (recovery due to normalization of travel and demand for enterprise automation)
  • US Region: +17.1% growth (driven by improvement in subscription sales and market penetration)
  • India Region: -12.6% decline (subdued performance due to closure delays)
  • APAC Region: -6.4% decline (reflecting timing and execution variability)

Revenue Stream Analysis

Recurring Revenue Performance (YoY):

  • SaaS Revenue: +36.4% growth
  • Support Revenue: +10.3% growth
  • ATS Revenue: +7.9% growth
  • Overall Annuity Revenues: +15% growth

Other Revenue Streams:

  • License Revenue: -19.2% YoY decline (against strong Q2 FY26 base)
  • Implementation Revenues: Recovered sequentially from Q1
  • Significant milestone: Subscription revenue surpassed license revenue for the first time

Business Development & Key Wins

New Customer Acquisition:

  • Added 9 new logos during Q2 FY27

Notable Deal Wins:

1. Health insurance company in US: NewgenONE Complaints, Appeals and Grievances solution valued at USD 5.5 million over 3 years

2. Government body in Qatar: Newgen platform licenses, implementation, maintenance and support for international regulatory reporting and compliance platform valued at USD 1.8 million

3. Leading bank in EMEA: Upgradation of commercial loan and retail loan origination system with booking value of ₹11.4 crores

4. Leading life insurance company in India: Loan management solution

AI Deal Activity:

  • 10 AI-based deal bookings in H1 FY27 across banking, financial services, and government sectors
  • AI deal sizes typically 20-40% larger than non-AI deals
  • AI implementation timelines optimized by 15-20%

Product & Technology Updates

Platform Development:

  • Released NewgenONE AI Studio of Agent Studio 1.0 and Agent Flow 2.0.2
  • Platform focuses on governed AI orchestration with explainability, traceability, and control
  • Vertical solutions developed for banking, insurance, healthcare, and government sectors

Recognition:

  • Received recognition for excellence in low-code and AI-led enterprise innovations at ET Business Excellence and Leadership Summit 2026

Operational Metrics

Working Capital:

  • Net Receivables: ₹642 crores as of September quarter
  • Net DSO: 144 days
  • Collections challenged in Middle East region due to geopolitical factors and customer access issues

Cost Structure:

  • Employee costs remained stable with sufficient staff strength
  • R&D investment: ~10-11% of revenue
  • Sales & Marketing: ~22% of revenue
  • Operational efficiencies achieved through AI engineering

Management Guidance & Outlook

Full Year FY27 Targets:

  • Double-digit revenue growth maintained as guidance
  • 20-22% net margin target reaffirmed

Strategic Priorities for H2 FY27:

1. Sustain momentum in EMEA and US regions

2. Improve deal conversion and execution in India and APAC

3. Continue scaling SaaS and annuity revenues to strengthen predictability

4. Maintain cost discipline while investing selectively in sales capacity, product innovation, and AI

5. Improve collections and working capital efficiency

Growth Expectations:

  • Management confident of accelerated growth in H2 due to weaker base in Q3/Q4 FY26
  • Strong pipeline in both subscription (mature markets) and license (India, EMEA, APAC) segments
  • Targeting return to 20% CAGR growth in medium to long term

Capital Allocation

Dividend Policy:

  • Consistent annual dividend distribution growth of 15-20% over past five years
  • Commitment to continue improving dividend distribution

Buyback Consideration:

  • Board periodically considers buyback options
  • No immediate announcement planned

Risk Factors Mentioned

  • Quarterly performance influenced by timing of large license transactions, implementation milestones, regional conversion cycles, currency movements, and collections
  • Geopolitical factors affecting Middle East collections
  • Regulatory compliance requirements in banking sector affecting AI adoption pace

Participating Management

  • Mr. T.S. 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
  • Ms. Deepti Mehra Chugh – Head, Investor Relations

Moderator

  • Ms. Ruchi Mukhija – ICICI Securities Limited