Newgen Software Technologies announced its third-quarter results. It achieved RS 381 Cr at 18% year-over-year growth in the quarter ending December 31st 2024. The growth has slowed slightly from Q2 (23%) and is down substantially from the 30% revenue growth it achieved a year ago. However, as the underlying revenue figure increases, growing at such a fast rate gets tougher, and the growth is still impressive.
Other financial figures included:
- Profit after tax Rs 89 Cr (up 30% year-over-year, from Rs 68 crore in Q3 FY’24.)
- Net new customer logos in the quarter – 15
- Annuity revenue streams (ATS/AMC, support, and cloud/SaaS and Subscription license) were at Rs 208 Cr
- Revenue from the sale of products/licenses was at Rs 94 Cr
- Revenue from Implementation and others were at Rs 79 Cr
Overall, the full year is looking promising, with the year-to-date growth standing at 22%, Rs 20157 and profits up 41% YoY to Rs 207.
Mr. Diwakar Nigam, Chairman & Managing Director, Newgen Software Technologies Ltd. Said, “We continue to solidify our business and cultivate our customer relationships during the quarter. License revenues have grown by 70% YoY during Q3 with good deal velocity and several significant deal closures. We witnessed strong growth in Banking & Financial Services and Government verticals during the quarter. We are also entrenching deeper in the Insurance & Healthcare verticals across markets.
“We have been recognized in the Gartner Magic Quadrant for Enterprise Low-Code Application Platforms fifth time in a row. We believe, this is a testament to our unwavering commitment to innovation and excellence.”
Strong growth across the board
Newgen is growing strongly in all regions. Despite this its share price fell 18.04% in the last few days following the results to 1214.85 INR. One reason for this fall is a downgrade by Jefferies, who noted that it might be that strong performance in new license wins was countered by longer execution cycles.
Those longer cycles will delay growth in annuity and implementation revenues. India’s growth is also slowing, rising only 10% in the last quarter. With annuity revenues now making up 60% of Newgen revenues, did this concern the analyst?
Growth in other regions remains strong, with EMEA (now its largest region) growing at 19% year-over-year. APAC grew at 44%, and the US grew only 13%, even though it makes up 22% of Newgen’s revenue.
During the quarter Newgen also signed up several major deals worldwide. They included the Reserve Bank of India (INR 32 Cr), a Saudi Arabian energy company USD 2.3 mn, a US Bank USD 1.8 mn and a Digital Lending and Onboarding Platform for Retail Products with a total value of USD 2mn in EMEA.
Recognition
What will help the growth of Newgen Software in the US is the recognition by leading analysts it achieved from IDC Gartner and Forrester. It was recognised as a ‘Niche Player’ in the Gartner Magic Quadrant for Enterprise Low-Code Application Platforms (LCAP) 2024, the fifth time in a row. It was recognized in Forrester’s The Low-Code Platforms For Professional Developers Landscape, Q4 2024. IDC also placed Newgen as a leader in the IDC MarketScape Report for Intelligent Customer Communications Management and Automated Document Generation and Customer Communication Management.
The investment in its employees, which now number 4,400, was also recognised. Mr. Virender Jeet, CEO of Newgen Software, explained, “We are happy to share with immense pride and satisfaction that Newgen has been certified as a Great Place to Work by the Great Place to Work Institute in December 2024. We are committed to create a high trust high performance culture at Newgen as we scale up.”
Enterprise Times: What does this mean
Another strong quarter from Newgen, marred slightly by the dip in share price. However, this seems more of a temporary drop as the timing of revenue increase is deferred rather than reduced. Longer sales lifecycles can also be indicative of larger deals. If and when those are signed, Newgen might expect the share price to rebound and climb even further.
One area that it may need to invest further is in the US, where its growth has not been as high as EMEA. It will be interesting to see how it targets that market.
