Newgen Software Technologies Limited — Q3 FY26 earnings call

I think what is happening in at least this is what I feel what is happening in emerging markets, people are keen about venturing into AI-led solutions. But also on the traditional solutions front, they are looking at more AI-led services and solutions to solve their problem, which is creating a bit of more debate and more of deferment rather than anything else right now.

Addresses the reasons for soft growth in core markets, attributing it to AI-led uncertainty causing re-evaluation and deferrals of traditional deals.

Asked by Ruchi Mukhija

A lot of orders of Q2, Q3, you would have seen, have come from regions like U.S., U.K., Australia, which are typically subscription-led sales, where the upfront realization is almost nothing or there's a ramp-up period before the revenue gets realized. So there's a lesser correlation directly with order booking and the revenue realized in immediate quarters.

Explains the disconnect between strong order announcements and revenue realization, citing subscription-led sales with ramp-up periods and implementation lags, especially for larger deals.

Asked by Rahul Jain

Yes. I think surely. This is also because AMC growth is led by the previous performance of years of your license revenues and completion of projects, which are going live. More and more projects are going live. So the AMC keeps on accumulating. So at least in near few quarters, we'll see that growth momentum continue.

Confirms the continued strong momentum in AMC revenue, linking it to the accumulation of past license revenues and ongoing project completions.

Asked by Ruchi Mukhija

One is about there is a great operating leverage coming out of using Als in the general engineering and tooling. So the need for the number of resources typically for the same job has gone down. And since we are still talking about our growth rates which are like not very significant, so we didn't have a lot of need of people.

Details the factors contributing to margin resilience, including AI-driven operating leverage, optimized manpower costs, and variabilization of salary structures, despite initial plans for higher cost investments.

Asked by Aditi Patil

No, Vinay, we are not in the business of sending people or having manpower-based assignments. We don't need any people movement between countries. We sell products and products don't need so most of the staff, we can hire locally. And in fact, even most of the staff in our sales, marketing and other service areas are locally hired.

Clarifies that the H-1B visa rule changes will not impact Newgen's US operations or revenue, as their product-based business model relies on local hiring rather than cross-border manpower movement.

Asked by Vinay Nadkarni

I think it's a combination, because 2 things. One is, more and more value will be delivered out of the product and platform, we'll say. So we'll have some pricing power out there to get slightly higher value for all that. Our downstream revenues, which are typically implementation support, may have reduced, what you call, the time to market, time to implement or overall effort.

Explains the multi-faceted role of AI, contributing to pricing power through enhanced product value, reducing implementation efforts (thus improving margins), and acting as a competitive necessity.

Asked by Srinivasu K

No, it's not either/or. I think traditionally, what has happened, Indian-based companies are more license-based companies. And that's why I think last 3, 4 years, they have grown significantly on those license sales. A lot of deals have come in. There are also subscription deals and cloud deals in India, but they are a smaller part of the business, because it's a very large territory. We have been here for 20 years.

Highlights the historical preference for license-based models in India, explaining why subscription revenue is still a smaller component, but anticipates future growth in subscription models over the next few years.

Asked by Vinay Nadkarni