Newgen Software Technologies (NEWGEN) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 consolidated revenue reached INR 3,612 million, up 23% YoY, with H1 FY25 revenue at INR 6,759 million, up 24% YoY.

• Profit after tax for Q2 FY25 was INR 703 million, up 47% YoY; H1 FY25 PAT increased 51% YoY to INR 1,179 million.

• License revenues surged 52% YoY in Q2 FY25, with 8 new customer logos added and major deals in insurance, financial services, and government sectors across India, US, Saudi Arabia, and APAC.

• Continued product innovation with new versions of OmniDocs, OmniExtract, and the launch of NewgenONE Marvin APEX Edition, plus enhancements to Video KYC.

• Recognized in Forrester's and Gartner's industry reports for 2024.

Financial highlights

• EBITDA margin improved to 23.0% in Q2 FY25 from 19.5% in Q2 FY24; PAT margin at 19.5% in Q2 FY25.

• Annuity revenues at INR 205 crore, with annuity growth at 14% YoY, below 20% for the first time in 10 quarters.

• Net trade receivables at INR 442 crore as of September 30, 2024; net DSO at 112 days in Q2 FY25, improved from 117 in Q1 FY25.

• R&D expenses at 9% of revenues; sales and marketing at 22%.

• Basic EPS for Q2 FY25 was INR 5.03, up 47% YoY.

Outlook and guidance

• Order book grew 22% in H1 FY25; deal pipeline remains strong, especially in insurance and government.

• Insurance and government segments are expected to contribute more in coming quarters, with banking remaining the largest segment.

• Anticipate recovery in annuity growth and US deal velocity in the next 1-2 quarters.

• Aspirational target to reach $500 million revenue in the next few years, with aggressive investments and strategy alignment.

• Continued investment in growth and talent, as reflected in ESOP grants and increased employee expenses.