Newgen Software Technologies Limited — Q1 FY27 earnings call

So answer to the first question is that the margin expansion is a function of optimization of the Al practices in our engineering that we have incorporated. And we are -- the efficiency gains are being passed on to for customer success for faster implementations and operational efficiencies that we are getting. So we hope that we will continue with these efficiency gains in coming quarters. To your second question. On the Al product side, the platforms have native AI capabilities, which you are aware of. We have also launched Al products in our vertical streams. So Al in trade, AI in insurance, Al in health care and Al in government.

Clarifies the source of margin improvement (AI-driven efficiency) and how AI products are integrated and monetized within existing offerings.

Asked by Shubhi Gupta

The implementation revenue, yes, you are correct that the last financial year had decline in the license revenue. But we had a good bumper quarter for Q1 in terms of license. The implementation revenue is built up from the unexecuted order book of last year plus the current quarter order executed book. So what happened in this quarter is that there -- we saw some delays due to the environmental factors of our customers because of which specifically India and some part of some other parts -- but -- and that led to the decline in the quarter 1 implementation revenue, but we are optimistic that Q2, we will cover up with the current executed UOB, we will be able to cover up for the Q1 loss as well as the our quarter 2 projections.

Explains the reason for the decline (project delays due to customer environmental factors) and provides a timeline for recovery in Q2/Q3.

Asked by Aditi Patil

You are right, Rahul. The AI benefits have come as tailwind, and we are getting, as I said, good benefits and operational efficiencies in our deliveries efforts and timelines. The efficiencies will come broad-based across all the departments, whether these are products, accelerators or deliveries.

Confirms that AI-driven efficiencies are contributing to headcount optimization across various departments, not just implementation.

Asked by Rahul Jain

Yes. I think as far as booking is concerned. Yes. We cover 1 year revenue, yes, I think as far as but overall, I think, Rahul, the point is that still it is a 12%, 13% revenue when we are talking about overall subscription revenue still. So it's still a smaller bucket compared to all other buckets. So yes, your point is well taken that possibly in future course, we will -- somewhere we will try to have that number also. But maybe we have to wait for some time more. Currently, it is a better parameter to show that booking growth at a yearly level. And whatever figures we can give on a quarterly basis, we will surely share that...

Highlights analyst's desire for RPO data for better visibility on SaaS revenue, with management acknowledging the point but indicating it's not yet ready for quarterly disclosure.

Asked by Rahul Jain

So I think 2 factors. One is the India market hasn't grown. The top line hasn't grown. And secondly, the cost the base costs have increased by around 4%, 5%. So on account of both these impacts, we have a squeeze in the margin.

Provides specific reasons for margin pressure in India (stagnant top-line and increased base costs), which is a key market.

Asked by Seema Nayak

We have evolved the pricing model for our AI-led vertical offerings in the product. And it is see, it will remain work in progress. But the individual use cases, as I explained, in trade, in insurance, in RMS, knowledge management product solutions, in ECM, the pricing is getting established. And as we sell more the AI-led product sales, I think we will -- the pricing and the acceptance from the customers will evolve and will settle down.

Indicates that the AI product pricing model is evolving and getting established for specific use cases, suggesting ongoing refinement and market acceptance.

Asked by Shaurya Yadav

See, there are many most of the central banks in most of the countries have come up with some kind of Al regulations or regulatory compliance needs. And the experiments on the Al technology has evolved to a level that customer is now ready to implement Al within regulatory and compliance framework, which becomes a sweet spot for us that in the flow that we implement for them, our Al offerings for classification and extraction for analysing and recommendations, which comes with audit trail, which comes within the compliance framework is acceptable to that for productionizing. So we are seeing deal wins, AI-based deal wins in these product lines.

Highlights that regulatory clarity and AI's maturity within compliance frameworks are making BFSI customers more confident in adopting AI solutions, leading to deal wins.

Asked by Shaurya Yadav

So obviously, I think as far as acquisition is concerned, that is a process which we are currently deliberating for last couple of years, but I think it is something where it is taking time as far as getting that right kind of fit as far as acquisition is concerned. On the other side, yes, I think we are obviously currently as far as dividend optimization is concerned, that is something we are -- every year, we are trying to improve on the dividend number. And lastly, on the buyback side of it, obviously, we got that input, and we have given those input to Board. So obviously, we are working on that.

Indicates ongoing deliberation for acquisitions and buybacks, suggesting potential future capital allocation actions, but no immediate plans or specific targets.

Asked by Sanjay