A deep dive into the low code industry with Newgen Software Technologies

What metrics do you look at before analyzing a company? Well, we at Alphastreet look at the company’s future prospects and most importantly Debt. 

Ummm.. if some amount of Debt is taken for the CAPEX of the company and some cash flows can be expected from it then surely this debt is justified. But if someone like Vijaya Mallya is taking loans for their own benefits then an investor needs to be cautious.

Today we will be talking about a 28 years old software company that is completely debt free. The company caters to the needs of the world’s largest banks, governments, BPOs & IT Companies, insurance firms, and healthcare organizations.  

Excited…huh..

Let me drop the curtains for y’all. We are talking about NEWGEN SOFTWARE TECHNOLOGIES.

Incorporated in 1992 as a private limited company, Newgen delivers Business Process Management, Enterprise Content Management, and Customer Communication Management platforms.

Let’s look at the business solutions:

Newgen Software Solutions offers a platform that allows the businesses to construct complex applications that answer their key business goals hassle free. These platforms help organizations promote digital transformation and competitive differentiation. Alternatively, these platforms automate the business operations to make them seamless, faster and more accurate. 

Both public and private sector companies use Newgen Software’s enterprise-grade digital automation technology. It provides three products under its banner:

1. OmniDocs for contextual content services, geared for the ECM market:

It helps you deliver contextual content for smarter decision-making and improved collaboration.

2. iBPS is a low-code process automation platform aimed at the BPM industry.

It helps businesses create smarter processes, empower knowledge workers and build responsive business. 

3. OmniOMS, aimed at the CCM sector, for personalized customer communication.

It helps businesses create, personalize and deliver interactive communication to enhance customer experience.

Businesses use the company’s platforms to instantly design, construct, and launch enterprise-grade apps thereby making it easy, visual interface and minimum code.

So what’s the traction like?

The Company’s go-to-market strategy includes direct sales as well as sales through various channel partners. The Company in India and its Subsidiaries in the United States, United Kingdom, Singapore, and Canada make direct sales through its sales and marketing teams, which numbered over 3285 individuals as of March 2022. 

As of March 2022, the firm had over 300 channel partners worldwide and over 530 active clients in 73 countries.

The company has around 580 Employees engaged in R&D and 250 personnel in S&M. So far the company has filed 44 patents till date of which it has received approval for 23. Not only this but Newgen is consistently recognized by Gartner and Forrester as a niche player for Enterprise Low Code Application Platforms and Content Platforms.

But why NewGen?

Today as we are approaching the digital world, businesses need to be optimized with seamlessly designed applications. And despite the best intentions and effort of the IT team, a lot of business demands go unfilled. Also, coding isn’t everyone’s daily cup of tea, in fact it is the delivery of value through integration and composition. A low-code platform with a high level of abstraction decreases the work required to translate a business need into a business application. This is accomplished by modeling-driven point-and-click application development, which may be used by both citizen and professional code developers. And today’s generation businesses are all about speed, the faster you get the better will be your market share and revenues.

Now what does Low code bring to the table?

So a low code platform enables speed in not just one but in multiple ways: 

1. Reduces IT dependency 
2. Support a variety of business and technological needs:
3. Support application lifecycle management and DevOps 
4. Enables easy scaling up based on the needs of an organization and much more.

Low Code is an enormous interest area right now globally and it’s not the kind of a business opportunity on its own but the kind of approach or a strategy which most of the digital initiatives are expecting from their vendors. So, products and platforms which have strong Low Code capabilities, have a better chance of winning those digital initiatives. So, the way we see this is a very-very large market globally, but also there is a lot of competition in this market. With Newgen being very strong on the process-centric application and the content- centric application, and Low Code capabilities end up providing a very big, differentiated value to the customers. On the funnel side, all cases are Low Code cases for Newgen because this has been the strategy that the company has been selling. So, all of the company’s pipeline will be based on products which are Low Code products. 

What about the Financials?

Future Outlook:

The company is expected to grow rapidly in the future. And hence to achieve and sustain this growth momentum, the company is pursuing a strategy focused on shifting the revenue model to subscription based, thus establishing an additional sales channel through global system integrators (GSIs), expanding operations in developed markets, and streamlining the organizational structure.

After accounting for operational leverage and the return of travel and branding/promotional costs, margins are estimated to stabilize at 25%. Despite the greater days sales outstanding, cash flows are solid, paving the way for a substantial cash reserve (of INR3 billion) and a constant pay-out ratio (of 20%).

The company expects the total addressable market of Newgen for BPM to be $3.07 billion, $9.35 billion for CCM and $17.77 billion for High Productivity aPaaS by 2026. One of its competitors, OpenTXT, forecasts an addressable market of US$84 billion, expanding at an 8 percent annual rate.

Some of the strategies adopted by Newgen-:

• Focus on increasing the Annuity Revenue Streams including moving towards increasing cloud deployments.
• Expansion of business and geographical footprint.
• Focus on attractive verticals in select mature markets.
• Expansion of strategic business applications to new verticals

Click on the video below to know about the latest happening about the company.