Newgen Software Technologies Ltd Q4 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Baidik Sarkar - Unifi Capital Pvt. Ltd. - Analyst : Hello. Hi, Mr. Nigam, Virender, and the rest of the team. Congrats on a very strong trend. A couple of questions. The US has shown good traction this quarter, but in light of the systemic banking crisis that the US is subjected today, is there a risk to our pipeline per se? What's the sense from your current conversations? And secondly, our go-to-market success in the US this quarter, was that courtesy our system integration partner or was it courtesy our organic initiatives? What's your sense of traction in the geography per se except banking?

Question: Baidik Sarkar - Unifi Capital Pvt. Ltd. - Analyst : Sure. Yes, it does, Virender. On the same line, Middle East, one really understands the correlation between energy prices and growth investments, right? Do you reckon we can continue with this momentum? Or would you caution saying that this is a cyclical high just given where commodity prices have been, and it would be difficult for us to repeat this kind of performance? You sense about Middle East business.

Question: Baidik Sarkar - Unifi Capital Pvt. Ltd. - Analyst : Right. That helpful, Virender. So given where your pipeline and conversation is, you reckon we are on course for a 20%, 25% kind of growth this year as well for your overall business?

Question: Baidik Sarkar - Unifi Capital Pvt. Ltd. - Analyst : Sir, the last question before I get in there. So your payouts this year relative to your cash flows have been rather muted, right? So what are the broad thoughts on that? The cash pile that's increasing. I don't think we are of the DNA that will make aggressive M&A. So what's the long-term plan on your cash buildup at your distributions to stakeholders?

Question: Baidik Sarkar - Unifi Capital Pvt. Ltd. - Analyst : Okay. Look forward, gentlemen. Thank you. All the best.

Question: Mihir Manohar - Carnelian Asset Advisors - Analyst : Yeah. Hi. Thanks for giving the opportunity, and congratulations on a good set of numbers. Largely wanted to understand the traction on the trade finance side of the piece. I mean, how are we seeing the traction of the trade finance platform, given the deal sizes are slightly larger here? And also wanted to understand in this context, I mean you mentioned that you are moving from traditional banking to larger accounts in the US. So I mean, given the fact that -- how are we looking at trade finance platform plus this comment that you made upon? And how is the organic sales channel specifically panning out in the US? So that was my first question. And second question was on the GSI. I mean, how is the traction now in GSI? If you can quantify the number of deals for this particular quarter and for full year. And how does that compare to last year and how do you see our traction here building up? Yeah. So those are the questions.

Question: Mihir Manohar - Carnelian Asset Advisors - Analyst : Yeah, sure. Sure. That's really helpful. And lastly, on the margins, I mean, given the fact that, we saw margin recovery happening in 4Q, the 4Q is a seasonal quarter. But how should we see FY24, FY25 going ahead, given the fact that there is like a 300-basis-points kind of decline at least on a YoY basis for FY23?

Question: Mihir Manohar - Carnelian Asset Advisors - Analyst : Sure. That's if from my side. Thank you very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2023 / 10:30AM, NEWG.NS - Q4 2023 Newgen Software Technologies Ltd Earnings Call

Question: Harsh Shah - Dimensional Securities Pvt. Ltd. - Analyst : Hi. Good afternoon, sir. Sir, I just wanted to understand how the competitive landscape is emerging, especially in your traditional partners? And also in USA, given that the larger companies are seeing some sort of pressure or some sort of slowdown in their revenue growth, is there any sort of pricing pressure that you're facing? So how is the competitor scenario emerging now?

Question: Harsh Shah - Dimensional Securities Pvt. Ltd. - Analyst : Thank you. And if I have to talk about our growth potentially for next three to five years, how do you expect the growth to come? Will it be largely from more client addition? Or will it be more from increasing the revenue per client? How will that pan out? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2023 / 10:30AM, NEWG.NS - Q4 2023 Newgen Software Technologies Ltd Earnings Call

Question: Harsh Shah - Dimensional Securities Pvt. Ltd. - Analyst : Yes, sir. Certainly. Thank you so much, sir, and wishing you all the best.

Question: Chirag Kachhadiya - Ashika Stock Broking Limited - Analyst : Yeah. Congratulation on good set of numbers, sir. A couple of questions. In your opening remarks, you mentioned that we are targeting large banking and financial groups. So I would like to understand what strategy we are following to tap such large corporates? And second, on logo addition front, the net logo count compared to previous years is relatively on low side. So what strategies are there to increase the momentum in terms of logo addition? Yeah. I would like to know just two questions, yeah.

Question: Chirag Kachhadiya - Ashika Stock Broking Limited - Analyst : Yes, sir. Sir, one follow-up question, you mentioned that we are targeting new geographies for logo addition. So the new geographies having similar size of deals which we're targeting to the existing geography?

Question: Chirag Kachhadiya - Ashika Stock Broking Limited - Analyst : Okay. All the very best, sir. Thank you.

Question: Saurabh Sadhwani - Sahasrar Capital - Analyst : Hello, everyone. So I have two questions. First one, given the macroeconomic conditions and EBITDA negative nature of our major peers, are we -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2023 / 10:30AM, NEWG.NS - Q4 2023 Newgen Software Technologies Ltd Earnings Call

Question: Saurabh Sadhwani - Sahasrar Capital - Analyst : Yes?

Question: Saurabh Sadhwani - Sahasrar Capital - Analyst : I'm speaking through the handset. Is it better now?

Question: Saurabh Sadhwani - Sahasrar Capital - Analyst : Yeah. So I was asking that given the macroeconomic situation that the free money has stopped and EBITDA negative nature of business of our peers, are we seeing any passiveness in bidding by them and have we been able to take advantage of that?

Question: Saurabh Sadhwani - Sahasrar Capital - Analyst : Okay. And the second question was related to a simple business clarity that I wanted to understand was our product -- division's products are built in India. And given the labor arbitrage that we have, do we make current products at a lower cost as compared to our peers? And so all else equal, we should be always winning on pricing, right?

Question: Saurabh Sadhwani - Sahasrar Capital - Analyst : Okay. Thank you. That's all.

Question: Manoj Bahety - Carnelian Capital Advisors LLP - Analyst : Hi. Good evening. Thanks for taking my question, and congratulations for good set of numbers and superb reputation. I have couple of questions. First one is, just wanted to check that our GSI strategy particularly, the way the things are shaping up like last two, three years, we are trying to get inroads with our GSI partners. So just wanted to understand, is there something not clicking or something which is leading to a delay in terms of getting that traction on GSI strategy? So if you can give some more color on that, that will be helpful.

Question: Manoj Bahety - Carnelian Capital Advisors LLP - Analyst : Just to further on this, like when you enter into a partnership with a GSI, I am sure that GSI must be dealing with your competitors' product, or they may have other competitive products. So just wanted to understand that vis-a-vis their existing products, what kind of a -- or in terms of our offering

Question: Manoj Bahety - Carnelian Capital Advisors LLP - Analyst : Right. Right. No, that's helpful. And I have one last question. If you can touch briefly on operating margin because what I understand our kind of business has a scope of big operating leverage. And as you mentioned in one of the questions earlier that right now, your emphasis will be growth rather than expanding margins. But in terms of operating leverage, how do you think that -- after what level, what scale operating leverage will start kicking in, and we will start seeing good expansion in margins along with topline growth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2023 / 10:30AM, NEWG.NS - Q4 2023 Newgen Software Technologies Ltd Earnings Call

Question: Devang Bhatt - IDBI Capital Markets & Securities Ltd. - Analyst : Hi. Am I audible?

Question: Devang Bhatt - IDBI Capital Markets & Securities Ltd. - Analyst : Thanks for taking my question. Congrats on a good set of number. So one of your GSIs highlighted that low-code and no-code is gaining traction in this scenario. So are you seeing similar increased traction in major markets in the current scenario? That's the question number one.

Question: Devang Bhatt - IDBI Capital Markets & Securities Ltd. - Analyst : Okay. Let me go to my handset. Yeah. Hi. So one of your GSIs highlighted that low-code and no-code is gaining traction. So are you seeing such increased traction in major markets in the current scenario?

Question: Devang Bhatt - IDBI Capital Markets & Securities Ltd. - Analyst : So a follow-up is that, will you be able to see a higher US growth in this year because of this? And will you be able to sustain the Q4 kind of margins that you're seeing in this quarter?

Question: Devang Bhatt - IDBI Capital Markets & Securities Ltd. - Analyst : Just a bookkeeping. Like in your tax rate, it has been lower around 19%. So will you be able to sustain this kind of tax rate in FY24?

Question: Devang Bhatt - IDBI Capital Markets & Securities Ltd. - Analyst : Sir, my question was more related to the US Q4 margin because we have seen some dips and then improvement in US. So that margin --

Question: Devang Bhatt - IDBI Capital Markets & Securities Ltd. - Analyst : Okay. Thank you, sir. Thank you for taking my questions.

Question: Rahul Jain - Dolat Capital Market Private Ltd. - Analyst : Yeah. Hi. I just have one question that you talked about the partnership with Mambu and Sopra. Can you just explain how these are beneficial? And what are the intersection of the offering and what are the complementary elements involved here?

Question: Rahul Jain - Dolat Capital Market Private Ltd. - Analyst : So specifically, let's say, for example, for Sopra, don't they have their lending solution as of now? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2023 / 10:30AM, NEWG.NS - Q4 2023 Newgen Software Technologies Ltd Earnings Call

Question: Rahul Jain - Dolat Capital Market Private Ltd. - Analyst : Okay. And in this kind of a go-to-market arrangement, where they are also primarily a software business, so are they going to sell on their own or this is also through their partnership eventually being sold by SI and how the revenue share would come in case they generate these leads for us?

Question: Rahul Jain - Dolat Capital Market Private Ltd. - Analyst : Okay. And how do we define the market in terms of what is targeted through this channel versus what is targeted directly and what is targeted to SI in these markets?

Question: Dhruv Bhatia - AUM Fund Advisors LLP - Analyst : Hello?

Question: Dhruv Bhatia - AUM Fund Advisors LLP - Analyst : Can you just throw light on the increase in DSO days to 145 days in the current quarter?

Question: Dhruv Bhatia - AUM Fund Advisors LLP - Analyst : Okay. Thank you.

Question: Jiten Parmar - Aurum Capital - Analyst : Yeah. Most of my questions are answered. I have only one question, more of -- what do you think is the threat of AI and basically the way things are moving in that particular domain? So if you can throw some color on that. Will it be beneficial for us or it could be some threat?

Question: Jiten Parmar - Aurum Capital - Analyst : Great. Thank you. That's the only question I had. Thank you.