Thread by @ValueEducator

#NewgenSoftware Technologies Q3 Concall Thread 🧵💻

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@NeilBahal
Newgen Q3 FY 22 Thread -

Updates-
1. Revenue for the quarter 209cr Up by 9% YoY / 9M revenue is 548cr 16% YoY
2. Annuity Revenue in Q3- 112cr up by 11% YoY

3. SaaS revenues stands at 14.2cr down by 15% QoQ / Up by 23% 9M
4. SaaS revenues muted due to term readjustment of a larger contract.
5. Product licence revenue is up by 37% in Q3

6. Subscription Revenue to be the strongest growing at 20% YoY

Strategy of the company remain the same that is to Land & Expand

Business Updates-
1. Added 17 new logos in the quarter
2. Received pre orders from new and existing clients from around the globe in banking,

wealth management and other verticals.
3. In Q3 they launched an Upgraded version of low code image automation.(helps in improved decision making)
4. Newgen got grants for few more patents in this quarter
5. In Q3 R&D Expense was 10% of total sales and Marketing

expense was 20% of the total sales.
6.The debtor days are improving as per the management, DSO stands at 90 days.
7. The revenue from GSI’s ( Global System Integrators) depend solely on the contract size. Newgen is targeting fortune companies through GSI.

8.Wages hike cycle in the month of July and effect to be seen in Q2 & Q3
9.More than 50% of the business has no direct cost associated with it so that keeps on compounding.
Middle East and APAC region continues to see the demand.

Indian Business-
1.Government has been a substantial part of Indian business which has been subdued due to no new projects coming up and it is moreover on complete halt.
2. New logo addition in general has slowed from the past few quarters in India.

Acquisition -

1.Newgen has acquired Number Theory, Number Theory brings AI/ML to enterprises through its Enterprise AI/ML platform and data science capabilities to help its customers accelerate innovation and grow revenue.

2. This acquisition will strengthen the existing platforms with AI/ML capabilities.

Subscription based revenue-

1. Newgen has been shifting from perpetual (one time) to recurring subscription model.

2. Subscription based revenues are realised 2 or 3 quarters later and it comes in pieces.
3. Revenues from the US are more flat because major contracts from the US are subscription based.

Sales-

1. 70% of the company sales team is still doing traditional sales i.e selling to the banks and the government.
2. Targeting bigger companies through GSI
3. Current sales funnel is of 69 cases ranking from prospects to advancement and closure, some GSI contribute

50% of this sales funnel. Looking to expand this funnel in the future.

Future guidance-

1. The management states that the Annuity/ subscription based revenues grows much faster than the company's growth itself, even if the company grows at a stagnant rate the margins

will expand.

2. EBITDA margin to grow at 23% - 25% YoY

Overall Growth to be at 20% YoY