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What is the story about?
Shares of Nucleus Software fell as much as 7.6% on Friday, July 31, after the banking software provider reported a weak set of June-quarter earnings, with margins dropping to their lowest level since the June quarter of FY22 amid higher operating costs and weaker domestic business.
The company reported a 3.5% year-on-year decline in revenue to ₹210.4 crore, marking its second consecutive quarter of revenue contraction. Net profit fell 32.2% to ₹23.9 crore from ₹35.2 crore a year ago.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) declined to ₹7.6 crore, with EBITDA margin contracting to 3.6% from 15.6% a year ago, the lowest level since the June quarter of FY22.
The company's India business, which contributes around 55% of revenue, declined 6.4% year-on-year, extending its decline for a second consecutive quarter. In contrast, the Middle East business continued to record growth.
Operating and other expenses increased 18% year-on-year, weighing on profitability.
The reported net profit also included an exceptional gain of ₹9.8 crore arising from a reduction in gratuity and compensated absence liabilities following a revision to the company's remuneration structure.
On a sequential basis, revenue declined 6.4% from the March quarter, while net profit fell 30.9%.
Co-founder and Managing Director Vishnu R. Dusad said the company remains focused on long-term value creation through innovation and disciplined execution.
"Our focus remains firmly anchored in creating long-term value through relevant innovation, trusted customer relationships and responsible execution. The financial services industry is entering a new phase in which intelligence, agility and resilience must work together."
Chief Executive Officer Parag Bhise said the company continued to make progress across product development, customer success, delivery and global market engagement during the quarter.
Looking ahead, the company said it will continue investing in its lending and transaction banking platforms, expand the use of responsible artificial intelligence and intelligent automation, strengthen its partner network and global delivery capabilities, and maintain disciplined execution through FY27.
Shares of Nucleus Software are trading 6.5% lower on Friday at ₹690. The stock is down 25% so far for the year and have declined 40% from their 52-week high of ₹1,168.
The company reported a 3.5% year-on-year decline in revenue to ₹210.4 crore, marking its second consecutive quarter of revenue contraction. Net profit fell 32.2% to ₹23.9 crore from ₹35.2 crore a year ago.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) declined to ₹7.6 crore, with EBITDA margin contracting to 3.6% from 15.6% a year ago, the lowest level since the June quarter of FY22.
What Hurt Nucleus Software's Q1?
The company's India business, which contributes around 55% of revenue, declined 6.4% year-on-year, extending its decline for a second consecutive quarter. In contrast, the Middle East business continued to record growth.
Operating and other expenses increased 18% year-on-year, weighing on profitability.
The reported net profit also included an exceptional gain of ₹9.8 crore arising from a reduction in gratuity and compensated absence liabilities following a revision to the company's remuneration structure.
On a sequential basis, revenue declined 6.4% from the March quarter, while net profit fell 30.9%.
What Did The Nucleus Software Management Say?
Co-founder and Managing Director Vishnu R. Dusad said the company remains focused on long-term value creation through innovation and disciplined execution.
"Our focus remains firmly anchored in creating long-term value through relevant innovation, trusted customer relationships and responsible execution. The financial services industry is entering a new phase in which intelligence, agility and resilience must work together."
Chief Executive Officer Parag Bhise said the company continued to make progress across product development, customer success, delivery and global market engagement during the quarter.
Looking ahead, the company said it will continue investing in its lending and transaction banking platforms, expand the use of responsible artificial intelligence and intelligent automation, strengthen its partner network and global delivery capabilities, and maintain disciplined execution through FY27.
Shares of Nucleus Software are trading 6.5% lower on Friday at ₹690. The stock is down 25% so far for the year and have declined 40% from their 52-week high of ₹1,168.
