Newgen Software Q2 Revenue Growth 5.4% YoY; PAT Up 6.3%

Newgen Software Technologies reported quarterly revenue of INR 422 crore and a PAT of INR 87 crore.

Reader Takeaway: Robust SaaS and annuity revenue growth balances license volatility, though India/APAC deal closures and DSO remain key risks.

What just happened

Newgen Software Technologies announced its financial results for the quarter, reporting a 5.4% increase in revenue to INR 422 crore. Net profit after tax (PAT) grew by 6.3% to reach INR 87 crore. The EBITDA margin was steady at 25.8%. A notable shift in the revenue mix occurred as subscription revenue officially surpassed license revenue.

Why this matters

The company’s transition toward an annuity-based model is gaining traction, with SaaS revenue surging 36.4%. This shift provides greater predictability in earnings compared to the historically volatile license segment, which saw a 19.2% decline this quarter. Management attributed this license dip to specific deal closure cycles and a high base effect.

The backstory

Performance showed significant geographical divergence. The US and EMEA regions delivered double-digit growth of 17.1% and 19.4%, respectively. However, India and APAC reported declines of 12.6% and 6.4%, primarily due to project execution and closure delays. The company has also made progress in its AI strategy, booking 10 AI-integrated deals that management notes command 20-40% higher deal sizes.

Risks to watch

The net Days Sales Outstanding (DSO) remains elevated at 144 days, with management pointing to collection delays in the Middle East as a primary factor. Furthermore, the volatility in license revenue requires consistent deal conversion in the coming quarters to maintain the company’s double-digit growth guidance for FY27.

What to track next

Investors should monitor the recovery in the India and APAC pipelines for Q3 and Q4. Additionally, watch for any concrete updates on potential share buyback discussions, as the Board continues to review capital allocation strategies alongside regular dividend distributions.