Newgen Software expects revenue growth in the teens as AI demand grows

Newgen Software expects its revenue growth to accelerate into the teens for the full financial year as a strong subscription business, a healthy large-deal pipeline and rising demand for AI-led enterprise solutions support growth in the second half, Chief Executive Officer Tarun Nandwani said.

Nandwani said the software products company is confident of stronger performance in the remaining two quarters after reporting 8% growth in the first half. The company also expects delayed license deals to close during the second half, adding to revenue visibility.

"We have seen H1 growth at 8% with strong bookings for our subscription revenue," Nandwani said. "The license and large deal pipeline also is healthy, which is giving us confidence for double-digit growth for the whole year."

He added that the company expects revenue growth to be in the teens for the full year, supported by a combination of subscription and licence revenue.

Subscription revenue has continued to expand, while support revenues have also grown, giving the company confidence about its performance in the October-December and January-March quarters.

Although licence revenue declined about 18% year-on-year in the latest quarter due to delays in India and Asia-Pacific projects, Nandwani said the company expects those deals to close in the second half.

"We are expecting closures in Q3. Some of the large deals went into retender from Q1 to Q2, which led to the slippage. But we are expecting these closures in H2," he said.

Newgen is also seeing increasing demand for its AI-powered products across banking, healthcare, insurance and government sectors. The company recently launched AI-led workflow and orchestration solutions, which it says are gaining traction across India, the Middle East, Asia-Pacific, Europe and the United States.

"For us, the healthcare domain has started giving us large deals," Nandwani said, adding that AI-led lending solutions for retail, commercial and MSME banking have created a strong pipeline across multiple geographies.

The company has already won around 10 AI-related deals in the second quarter, with three projects moving into production during the period.

"Our orchestration along with AI is a very good bet for our existing customers... We have won around 10 AI deals in Q2, and around three have gone into production," he said.

Despite reporting margins above its long-term target during the quarter, Newgen plans to maintain its 20-22% net margin guidance as it continues to invest in product development and AI capabilities.

Nandwani said the company intends to reinvest operating efficiencies into new AI offerings rather than maximise near-term profitability.

On the Middle East, which contributes a significant share of revenue, Nandwani said business conditions have improved after travel disruptions earlier in the year. He added that collections remain stable as the company primarily serves large enterprise customers and expects debtor days (DSOs) to improve gradually.

Newgen Software shares were trading at ₹476.60 as of 12:41 pm on the NSE. The company, which has a current market capitalisation of ₹6,792.03 crore, has seen its shares decline more than 46% over the last year.

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