Newgen Software Technologies Limited (NSE: NEWGEN) Q1 2026 Earnings Call dated Jul. 17, 2025
Corporate Participants:
Deepti Chug — Head of Investor Relations
T. S. Varadarajan — Whole-time Director
Virender Jeet — Chief Executive Officer
Unidentified Speaker
Analysts:
Rahul Jain — Analyst
Aditi Patil — Analyst
Hardik Doshi — Analyst
Shaleen Kumar — Analyst
Grishma Shah — Analyst
Mihir Manohar — Analyst
Unidentified Participant
Mridul Goenka — Analyst
Debashish Mazumdar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Software Technologies Limited Q1 FY ’26 Financial Results Analyst Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Dipti Chug, the Head of Investor Relations at Neogen Software Technologies. Thank you, and over to you, ma’am.
Deepti Chug — Head of Investor Relations
Thank you. Thank you. Good afternoon, everyone, and welcome you to the Q1 FY ’26 results of the company. Joining with me today on the call is our management, Mr Nigam, Chairman and Managing Director; Mr Varag Rajan, Founder and Whole-Time Director; Mr Rajit, Chief Executive Officer; Mr Arun Kumar Gupta, Chief Financial Officer; Mr Taran Nanwani, Chief Operating Officer. Before we move on to the discussion, let me highlight that this call may contain certain forward-looking statements concerning future business prospects and profitability, which are subject to a number of risks and uncertainties and the actual results could materially vary from the forward-looking statements. Past performance may not be indicative of future performance.
The company does not undertake to make any announcement in case any of these forward-looking statements become materially incorrect or update any forward-looking statements made from time-to-time by or on behalf of the company. For further details, you may please refer to the Investor Relations section of our website. I would now hand over to Mr Varut Rajan for presentation of the results, which will be followed by a Q&A. Thanks.
T. S. Varadarajan — Whole-time Director
Good afternoon, everyone, and thank you for joining us today for the Q1 FY ’26 earnings call. It has been a muted quarter for us given the uncertain economic and geopolitical environment across the globe. We witnessed revenues of INR321 crores during the Q1. As mentioned in the past year, Q1 is traditionally a seasonally weak quarter for us in terms of business, which is further accentuated by current condition.
The US tariffs and global conflict have led to a complex mix of consequences for customers and industries. While the pipeline is healthy and holds up well, we are experiencing that customers are taking more time and being cautious in decision-making and the project starts. As a result, the funnel conversion is slower than initially anticipated at the start of the quarter. These deferrals and closure delays have led to slow license sales and subsequent implementation in Q1.
However, our subscription revenue growth is getting back on-track. During the quarter, we witnessed a growth of our SaaS ATS AMC revenues, which reached INR121 crores. These revenue streams saw a 19% Y-o-Y growth compared to-Q1 last year. We see the demand of BFSI solution holding up and being resilient. Overall, we won 12 new logos during the quarter, which will add-up to the revenues in the coming quarters. However, the average deal sizes have been slower than in comparison to level.
Our key wins will include working with a bank in the EMEA region on the enterprise workflow and content management. The aggregate value of the order being US dollar 2.5 million. Working with a finance company in Saudi Arabia to develop end-to-end financing system, the aggregate order value is USD1.6 million. Added an insurance and healthcare customer in for developing a health claims and OCR systems. In India, working with a small finance Bank for a loan origination system for personal loans. Coming to our products, as part of our AI strategy, we are making significant investments in AI-driven products and solutions. Our platforms are leveraging AI, especially machine-learning and generative AI to drive decision-making, automation, personalization and intelligent user experiences across the entire workflow. The AI-led use cases are driving deals and customer discussions across all verticals. As mentioned in the last quarter, we are continuing on the path of the vertical first go-to-market focusing on various journey clusters across banking. Insurance and banking government segment, the journey clusters are decided on the basis of their revenue potential and product maturity, investment and portability across geographies. During the quarter, we were granted a patent for inventing the system and method for data compression. The addresses efficient data compression for large volumes of data files where the majority of content is similar with a smaller amount of varying data. It aims to reduce storage space and improve speed and efficiency of data handling in a much better way than conventional data compression technique. This is especially relevant in industries handling volumes of structured document forms or system-generated report, enabling them to save storage at-cost and foster data handling. In total, we have 25 patents already granted under our name. During the quarter, the company has — was also recognized in the Market Guide for US Healthcare provider and the Forrester’s Digital Process Automation software landscape. As an organization, we are adopting to the evolving environment with focus on improvement in growth trajectory and maintaining profitability. Our profit-after-tax for the quarter was at INR50 crores and net margins were at 15.5%. We expect that in order to retain good-quality employees, our wage cost would increase. However, this would be balanced by enhancement of productivity through automation and AI. This would help in optimization and maintaining our profitability. We continue to prudently invest in R&D and sales and marketing. We have invested 9% of our revenues are R&D initiatives and around 26% of revenues on the various sales and marketing activities. On the balance sheet front, we witnessed a robust cash-flow generation with our net cash generated from operating activities for the quarter at INR81 crores. Our net trade receivables were at INR504 crores as of 30th June, which resulted in net DSO of only 123 days. We began FY ’26 in a challenging but transitional environment. During the year, our strategic focus would remain on AI-led transformation, optimization of effort and building resilient client relationship. We believe that our funnel continues to be strong and closure would gradually improve in the quarters — in the coming quarters, leading to improvement in overall growth in the second-half of the year. In addition, the annuity revenues will continue to pick-up growth with project closures. We remain focused on our growth path and disciplined execution. That’s all. Thank you very much and we are open for Q&A.
Questions and Answers:
Operator
Thank you, sir. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star N1 on their touchstone telephone. If you wish to remove yourself from the question queue you may press star N2. Participants are requested to use handsets while asking a question ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question comes from the line of Rahul Jain from Dolat Capital. Please go-ahead.
Rahul Jain
Yeah, hi. I hope my audio is fine. Firstly, you know, if I look at the logo wind data, it is still healthy at 12, but the sale of product did not do well much. So is it that we have seen a smaller size deal, it may be in the insurance where probably the size of the deal are lower. Is there something to look into that?
Virender Jeet
Thank you, Rahul. And yeah, we can hear you clearly. Rahul, you’re absolutely right. So basically, if you look at overall deal wins, the deal win rates have been same and it has been across all geos. We have one deal. And the deals have been both in both in insurance, financial services, government in all three segments, we won considerable amount of deals. Yes, one thing which has changed is in terms of compared to last year or at least last five, seven quarters. The larger programs which customers were deciding, those programs are getting slower.
So in terms of the tactical deals which are in the range of somewhere between INR4 crores to INR8 crore INR9 crores are getting decided. But the deals which were in 20 or INR50 crore ranges, we are seeing slight amount of slower pattern decision-making in that. So the current ratio of the license sale being lesser than last year’s licenses on account of having deals, but not at the same value as the last year.
Rahul Jain
Interesting. And also another impact that we saw was on the implementation revenue. So is this — is this a slower ramp-up that has happened in the existing deal for this was more of a current schedule, which we saw in this quarter on the implementation side.
Virender Jeet
Yeah, I think implementation is more this quarter-specific and it is on account of two things. One is also that the new deals also have some residual implementation which we typically used to get built, which has slightly been muted as the deals are much smaller. The second is also that some amount of our previous large orders, they are still in-kind of a slow going execution mode. So not much has been realized from the previous order book in that case. So we think — but on the implementation front, we think that it should balance themselves next quarter, it should become automatically better.
Rahul Jain
Okay. So we should see a stronger implementation in Q2 irrespective of our new win momentum in Q2.
Virender Jeet
You see, the new win momentum will determine the largest outcome. But in the previous — so next quarter, I think the current momentum and the previous momentum should drive slightly stronger implementation.
Rahul Jain
Like — and there was another comment that we should see a better deal momentum in H2. So are we seeing that the slower decision-making impact to sustain in Q2 and Q2 may also be seen as a weak quarter for us?
Virender Jeet
Okay. See, the way I see it is, Rahul, that predominantly the funnel is quite strong and significant — we have significant number of large deals in the funnel. What we have experienced slightly a slowdown in conversion of doors. And I think that right now the way the status is projecting a great turnaround in just next 30 days or next 60 days seems to be difficult. That’s why the commentary of the H2 seem to recover is more, you know, logical rather than saying the Q2 may see a change.
Rahul Jain
Okay. So in that light, what kind of an outlook one should see for this fiscal or you think our typical 20% kind of an outlook could still be achieved or we think for — given the macro, that should be quite lower at this point.
Virender Jeet
See, Rahul, see, we are still pegged whether in the end of March or now we are still pegging the whole year for the growth and that’s what we are investing in across all places. The number-one challenge for us right now is the deal size and that is the only difference which has happened in the business. We don’t see too much slowdown in the overall business momentum. We’ll see closures are going whether we can reach 20% higher or lower than that, it may be very difficult to project right now for us. So right now, we’ll have to hold-on to that and see how the year shapes up.
Rahul Jain
And just last bit from my side. Is let’s assume a scenario where we might be seeing this lower conversion of the smaller deals to remain more in stay you think our other expenses or SG&A side investments might go slightly lower and may drive the margin up for us in this year or you think we would retain the previous year margin on a broader basis?
Virender Jeet
See, I think right now there is enough variabilization of cost build-up to a certain extent. But I think as We have been telling that we are always a growth led company. So we do have upfront costs and then eventually we end-up making sure that we meet our targets. So if we achieve any reasonable sense of growth, we should be able to expand margins or at least retain the margins. I don’t see margins becoming a challenge as of now because we are still pegging for a growth for this year.
Rahul Jain
That’s it from my side. I’ll jump back-in the queue.
Virender Jeet
Thank you.
Operator
Thank you. The next question comes from the line of Adity Patil from ICICI Securities. Please go-ahead.
Aditi Patil
Thank you for the opportunity. My first question is on — so what has led to the smaller deal sizes. Is it more structural in nature? And also could you give color on the client behavior across Middle-East and India?
Virender Jeet
Thank you,. So then, what has led to smaller deal sizes, predominantly, I think what we have seen over the last three, four quarters is the momentum of typically the larger DLP programs from public sectors, all even enterprises is getting converted into more single journey cases now. And so we see the larger programs being lesser in terms of compared to what there was funnel one year back. Having said that, there still are at least both in trade and lending. We have a large funnel of large cases jar bound for conversion. So we’re hoping that some of them will close this.
In India, specifically, it is the public sector momentum of DLPs is slightly lesser, but it is picking on other areas like trade and other things. In Middle-East, we see overall, generally slightly, we are seeing a slightly slowdown of spend in banking for us. In that case, what happens, the tactical deals are still able to sail through as the larger deals are like slightly having elongated sales cycle. So that was the first — sorry, what was the second part of your question?
Aditi Patil
Yes. I think you have also covered the second question about client behavior in Middle-East and India. So is this specific to the banking vertical?
Virender Jeet
Yes, predominantly. If you see our larger deals predominantly come from banking. And I think the insurance market for us has been small — it’s always tactical deals. Government does both. They can be sometimes large and sometimes small. We don’t see changing out there on that behavior. But the larger behavior since banking is almost 60%, 65% of the business. So any impact on that does have an impact on the company.
Aditi Patil
Yes. So this comeback of the larger deals, especially the deals in larger deals in trade finance and district lending. So do you think that this may take some time and like recovery may happen only like towards the end of this year. So like how should we look at the full-year growth? Yeah, should we consider Q1 as a base and then model-based on the Q1 run-rate?
Virender Jeet
See, Adity, I think for us, it’s also a difficult question because we are always poised for growth. So we treat this quarter as an exception. And we will — we will again go with full momentum to recover growth in second, third and 4th-quarter of that. Having said that, what I see right now there is globally also not only in India, but in other markets, we do see that customers are slightly pulling back across all major decisions. So we are still hoping that if that behavior slightly improves, our larger deals also can close apart from the smaller deals.
So I don’t think that Q1 will become the base of a lot of our existing business for which we don’t have to get any orders also is spread slightly lopsided. So Q2, Q3, Q4 are much larger than Q1. Though the dependency on large license sales is across all quarters, but still the base of the businesses is not Q1 is not the base. So Q2, Q3, Q4 have a different base than Q1, like in the previous years.
Aditi Patil
Okay. Okay, got it. And our other vertical has grown at a healthy rate since last two quarters. So which sub-segments are growing in this? And is it a focus area or it would be one-off growth?
Virender Jeet
No. So as we said, insurance and both enterprise are becoming focus areas for us. The funnel in that has been growing wide, AI is driving a lot of new cases and innovation and typically, which was very stagnant use cases. So the funnel out there is the only difference in that both insurance and enterprise, you will see the deal sizes to be a very average value. They are not substantial, right? So what we are expecting to increase the overall velocity of wins. We want to really improve our velocity of wins from 60 70 to all the way to take-up to 100 wins.
Aditi Patil
Okay. What I was referring to is, so we gave out verticals split as BFSI, healthcare, insurance, government and others. So others has done well since last two quarters. So which sub-segments are included in others?
Virender Jeet
Enterprise is coming from the other so other enterprise, yeah.
Aditi Patil
Okay. Okay. Got it. Got it. Yeah, I will join back-in the queue. Thank you.
Virender Jeet
Thank you.
Operator
The next question comes from the line of Hardik Doshi from White Wing. Please go-ahead.
Hardik Doshi
Yeah. Thanks for taking my question. On your comment on the slowdown in decision-making because of macro uncertainty. I didn’t understand — I mean because most of our business comes from India and the Middle-East and Asia and in general, I mean I mean if I understand the slowdown in US and Europe but you know why this would impact especially like countries like India and Middle-East where there’s not been that much of an impact. So what are you — what are the clients talking about and why do you expect this to come back-in the second-half?
Virender Jeet
Hardik, you are right. The larger issues which the globe is facing that these territories have more localized issue. Like in India, the issue we are facing is about slightly amount of pullback in retail lending across in terms of the risk exposures, how the market is seeing and then how do you pull-back and so. So larger segments of unstructured lending are pulling back. So — but still on secured lending side, there is still some momentum. So that’s why I said that single-product journeys are still going on in the market.
Middle-East is also — it’s — I think Middle-East has multiple issues. Middle-East does not have the same issue. So surely the oil prices stayed still, but also the geopolitical turmoil, like I think one of the challenges we faced in the Q1 of this quarter, all the results for Saudi were blocked. So there was hardly any business travel or any execution travel which could happen in Saudi. So though this problem does not — this was nothing to do with the turmoil, it was to do with Haji or something around that. So there are local issues which are affecting these. And so they don’t seem to be major largest. That’s why I’m hopeful that as slightly the temperament or move changes like in — I think we don’t have the Saudi issue now this quarter.
We were hoping that the bigger will happen this quarter, so this will get normalized on that. Similarly, in India as the retail lending or lending pushback slightly goes away, we still have a lot of cases and lot of banks to address where we can go and sell-out that. Trade is decoupled with these, but trade again is an issue which takes larger gestation cycles of closure of deals. So overall, you are right, the larger global issues have a lesser impact in India and Middle-East. But I think what we have sensed in last two quarters, there is a slightly organic slowdown in decision-making across all places.
Hardik Doshi
Got it. Got it. Also, I think in the last quarter or couple of quarters, we’ve been talking about delayed implementation of some of the large PSU bank orders that we had. So where are we with them and like, I mean, will that help in the kind of revenue recognition over the next 1/4 or so while this decision-making is low.
Virender Jeet
Yeah, I think you will see that. I think as I said, that may take two, 3/4, but I think the progress is happening on that, both on ATS, which is typically the revenues which starts after the implementation, you will see there is a subscriptional growth this quarter. In fact, I think the revenue is less, but on the billing side, we have given a much higher-growth rate on ATS. So the subscription part of the business, which was supposed to — the compounding part has started growing and I think it will continue growing in Q2 and Q3 this year. So it will provide some cushion, but it will not provide enough cushion if we don’t do large licenses.
Hardik Doshi
Okay. Okay. Got it. Just one last question. As you know, I think in one of the slide, we talk about the AI agents that you’ve introduced, I think Lumen, Harper and Marvin. Can you just talk a bit about how have you kind of embedded these into your products and you know-how this has enhanced the application.
Virender Jeet
The, what we realized, especially with the traditional AI, the ML models as well as the Gen AI, which induces it. So lot of use cases where customers were stagnant in the area of ECM or the customer communication management, they have got reignited. Customers have started looking at even the last mileage Of automation, which was left out of that. So all what we call the intelligent document processing use cases are getting induced both in enterprise as well as in segments like insurance and banking. What we have done is our products have anywhere slightly ready. They have been ready for some time-out that. But in terms of our GDMs are getting more stronger about that, getting mind share our ability to demonstrate, execute these projects, that’s what we are building right now on that. One thing is clearly, most of the use cases we are driving now, I think 70%, 80% of use cases, AI is either a very central part of that or is a very substantial part of that. Even on lending use cases, we are having AI as a substantial part of those cases. So we have been — we have made ourselves ready for that and we are hoping that should lead us to getting even larger number of deals on the table.
Hardik Doshi
Okay. Got it. Thanks so much.
Operator
Thank you. A reminder to all participants, please press star and want to ask a question. The next question comes from the line of Shaline Kumar from UBS Investments. Please go-ahead.
Shaleen Kumar
Yeah. Hi, sir. Am I audible?
Virender Jeet
Yes. Please go-ahead.
Shaleen Kumar
So sir, this — the growth has been a little bit on the supply-side. Are there any cancellations that have happened?
Virender Jeet
No, we have not got any cancellation based any impact in this quarter.
Shaleen Kumar
Because we’ve impacted you know even during the quarter, it doesn’t feel like that it does. I would like some surprise to you as well. So it is just doesn’t happen. Yeah.
Virender Jeet
So as I said, we have been — we have a very long history of growing consistently and I think that has been a surprising quarter for us. I think what it has happened also there is — I think broadly, if you understand the contour of the business for us, I think we are still dependent on large amount of license sale for the growth every quarter, which is the jerky part of that. So there has been some amount of mutedness on that and which also the implementation, which is a result of that license, there has got some impact on that. But the impact on implementation is only not only on account of that, it’s also on account of some delayed executions in our existing projects and other things, which I think has slightly started recovering, which also recover next quarter on that.
Yeah, it is a surprise, but the surprise is predominantly based on our ability to go and get new orders.
Shaleen Kumar
One is saying that customers are taking longer, but then you know, which you can close-in June are you able to close the services
Operator
I’m sorry to interrupt, you’re not quite audible. Could you please move to an area where the cellular network is better? Thank you.
Shaleen Kumar
Give me one second. Am I better? Is it better?
Operator
Yes, better. Please go-ahead.
Shaleen Kumar
Sir, I was asking, yeah. So some of the deals which you were not able to close-in June, were you able to close them in July? You saw — you were able to saw them that those will be coming back-in July or this quarter?
Virender Jeet
Yes, it’s a natural thing. Every quarter if some deals slip, some of them do come in July and some of them vanish. But what I’m worried about is still about the larger deals coming in. So I have not still got any — in July, we have not got any of those larger deals yet in. We are still projecting some of them to close this quarter. So if we can close those two deals or three deals this quarter, I think we can do a better quarter compared to-Q1.
Shaleen Kumar
Right. Sir, I got dropped off in-between. What — did you talk about any guidance for this year?
Virender Jeet
No, sorry. I think we never talked about guidance, we — this is the only guidance I can tell, which is internal. We still are projecting for a growth year. We are going to still go in investment mode in sales, marketing, our ability to ramp-up, build our products. And we will always treat some of these quarters as some intermediate jugs which we can either springboard on or at least recover fast.
Shaleen Kumar
I mean, you have a very strong history of growing close to 20%, sir, 18% 20%, right? So from that perspective, how should we think about like can we still think of like mid-teen kind of a growth despite muted?
Virender Jeet
Yeah. We have never given any guidance. We have only a history — history unless it is proven wrong, it’s always becomes a history. But as I said rightly, I can only tell you what we exactly. Internally, we are planning for a growth year. We are not planning to manage at a flat or a muted growth year. So we are still planning. I think right now the way the environment has unfolded for us, we think slightly there is a huge uncertainty. So right now, commenting on guidance may not be the right thing to do. And give us few more months, I think we should be able to give you much exactly. We get the hold of whole situation and try to move forward from that.
Shaleen Kumar
Right, sir. Sir, anything else like an external factor that could be affecting our growth like a competition or change in customer behavior towards our product?
Virender Jeet
See, right now, I think from looking at my funnel and my opportunities on the table, we don’t see any threat or any losses which have been. So we have not lost to many cases. That is what could have — or we have not seen the funnel shrinking. So right now, we have a healthy funnel growth compared to last year. And also the conversations on closure, there are lot of conversations on closures. And so I don’t see any big change external factor. What has really happened only to contributing large deals, a lesser conversion of large deals and typically slightly amount of slower decision-making. That’s all what we are looking at right.
Shaleen Kumar
So what could be potential possible like is there — can there be a case where these large deal customer decide not to go-ahead? I mean, is there an alternate for them like — or it’s just that they can keep on delaying it and they have to come.
Virender Jeet
See, I think in enterprise B2B software, we have realized that the competition to any deals are multiple front. And I think one of the competitions is always status quo in case of uncertainty. So it’s also what happens is when the overall momentum is more positive, more customers are deciding more deals happen. And when less customers are deciding are slightly reluctant, less deals happen. Those deals don’t go anywhere for us, but they may change from 1/4 to — they get deferred for 3/4 or four quarters sometime if you lose to the customer. So I don’t see broadly any customer behavior, which is very different. We have seen this always in uncertain times. So we scale it through either more acceleration in sales, more better deal conversions and getting more number of logos. That’s how we fight it out.
Shaleen Kumar
Got you. Perfect, sir. Best of luck. Thank you so much. That’s it from my side.
Virender Jeet
Thank you.
Operator
Thank. The next question comes from the line of Grishma Shah from Envision Capital. Please go-ahead.
Grishma Shah
Yeah. Good evening to the management team and thanks for taking my question. I’m curious to know-how the US market has done in particular and what is the outlook given that quarter-four we had seen very good deal wins in the US market? That’s first — that’s the first question.,
Virender Jeet
Thank you for the question. I think US market, we are staying invested. I think we have — the — that market also has not been very different on growth compared to this last year. Though Q4 of that, we were able to close 10 deals, some in existing and six deals in new. In Q1, we had just, I think two major deals coming from existing accounts, one in insurance and one in one more segment, I think. We have a good funnel both in US and around US market in both insurance, health as well as banking. Out there, we are also running after some very large deals and we hope that at least two of them will close-in this year.
But yes, right now, we’ll have to slightly wait for some more time for the market to really kick-in for us. It is not — right now, it is not helping the growth. It is staying at the same rate as other markets, sir.
Grishma Shah
Yeah. The other question that I had was on the margin outlook, given that we would also have wage hikes, and the growth slowing down, so the operating leverage in the business also gets impacted. So what’s the range that one should look at in terms of operating margin or if you could give some color on the wage hike impact either way.
Virender Jeet
See, right now on the operating margin, we have — we have historically maintained that our net margin should remain at around 20%, but also I think there is one important thing where since we are already pivoting for growth every year. So our costs are slightly front-loaded in terms of our manpower. Though we have a lot of — depending on-sales performance, we have a lot of variabilization on that. So that should kick-in. So I would still go and hope that in this year, we should still be able to maintain our margins as we are saying. But with the — if the growth rates fall substantially, then the margin will get affected irrespective of what we do in that because internal levers are much less on a slower-growth rate for us.
So we are not poised that we can maintain margins at 1% or 2% growth. That’s not the way the company can handle right now. So on the wage hike, so I think we have not taken a final call on that. There is going to be surely wages increase for our campus people at certain level — up to certain Level. We will decide that exactly in next one month or so. And I think in next quarter we can give you a more clear picture about that.
Grishma Shah
Okay. Okay. I mean, any color or more color on the competition, do you see more competition emerging in certain geographies which you know like the Middle-East or the African region of — I mean, is there some new competition emerging, if you could throw some light on that?
Virender Jeet
Okay. See, nothing material. So what happens is we have a — we have this global players who are competing all-the-time in like the ECM players and the BPM players. And then on a local basis, you have local competition in every country depending on what vertical use cases are getting. And then there is always a third competition, which is about the startup ecosystem, AI-led companies which are — so I think that remains the same. I don’t think there’s any big. And right now, competition is not determining any thread to us or any challenge which is where we are losing too many cases to competition.
I wouldn’t say that there is too much. The only what is the structured, the larger platform players are entering our traditional market areas like you have more-and-more players coming to India, more-and-more players coming to Middle-East. So there is some amount of slightly crowded market out there. But then both our platforms and our vertical focus is helping us win those cases because we are still very specialized for banking, very specialized for insurance. Those things give us that strategic advantage against that competition.
Grishma Shah
Okay. And there hasn’t been any pressure on pricing as such, right?
Virender Jeet
Nothing more than which has been usual. I don’t think any.
Grishma Shah
Yeah, anything. Okay. Okay. And can you also just you know, tell us about the tax-rate that we would have for the next two to three years?
Virender Jeet
I think around 23% 24 tax range
Unidentified Speaker
22%.
Virender Jeet
22.5%.
Grishma Shah
Okay, fine. Thank you and good luck.
Virender Jeet
Thank you
Operator
Thank you. Thank you. The next question comes from the line of Mihir Manhar from Kalian Asset Management. Please go-ahead.
Mihir Manohar
Yeah, hi, thanks for giving the opportunity. Am I audible?
Virender Jeet
Yeah.
Mihir Manohar
Yes, sure. You mentioned about large deals pipeline. I think has been there. When we see the India business, okay, I mean on the India side, there was, which was — I mean there was rationalization coming on the PSU side, some situation
Deepti Chug
Can you repeat your question?
Virender Jeet
Sorry, it was not audible. Can you just repeat it? I think we dropped her
Operator
Mir, please go-ahead with your question and unmute your line in case if you are on-mute. Since the participant has dropped, we will move to the next participant. And the next question comes from the line of Ruthi from ICICI Securities. Please go-ahead.
Unidentified Participant
Thank you. Thank you for the opportunity. I have two questions. First, what’s the slow decision-making persistent throughout the quarter?
Virender Jeet
Yeah,, I think we have seen this not only this quarter, we saw it also last quarter. I think last quarter, I think some of our deals did work into that slow decision-making process. So we have seen this slightly creeping in from Q3, Q4 and now slightly more prominent because the Q1 is also a smaller quarter for us and the results become more prominent in Q1. But I don’t think it is — if you’re saying it hasn’t been consistent for the quarter, yes, it has been consistent for the quarter.
Unidentified Participant
And could you help us what are the signals that we are watching to monitor this needs of is what she is speaking, especially to ensure it’s not getting worse.
Virender Jeet
So Ruji, sorry I couldn’t get your question. Could you just repeat it?
Unidentified Participant
What are the signals or signs we are speaking of watch to monitor this health of client decision-making, especially any indication to keep a tap that it’s not worsening.
Virender Jeet
Yes, so you know, I think what this is typically a part of the sales process. We are looking at our conversion rates, we are looking at, I think, stage movements of cases. Finally, also the contract phases and the time span of cases. So you can — so see there are two-ways, two-way look at it. One, we look at it holistically across the enterprise statistically because that is where the larger data comes from the sales management system. But also on an — for our core cases which are projection for projected for closures, we look at accuracy of that projection in terms of commit accuracy.
And that is where we get exactly like in terms of are we at 70% of commit accuracy, 80% or 40% of commit accuracy. That gives us that indication how the market is moving because — because when we are talking of slowdown, we are talking of in cases which are at the decision-making, which are at the closure stage, which is called negotiation stage or a closure stage. Those are tracking on both ways. I think we do get a fair amount of indication about when things start changing their either momentum either way.
Unidentified Participant
Okay. And if the slowness persists, do you think we need some strategic change in terms of what kind of work we seek out in the market or maybe if the small deal is what we are getting in the market, we try to reach-out to more customers who have to make-up good revenue numbers?
Virender Jeet
Yeah, see, absolutely. I think we can’t — we can’t just hope for things to change. We change them ourselves. I think right now, the core focus is slightly expansion of our target market and increasing the velocity of the deals which are typically in that sweet-spot. So rather than look targeting 60 deals, we think that we should target more like 100 deals and try to compensate for if there is a slowdown in the larger deal segments.
And also, as last year we diversified into insurance, we opened that vertical. Enterprise is also showing some traction. So we are expanding the addressable market as well as looking at more velocity. So — and also the plans will be very specific to every GU and every account how we want to solve it?
Unidentified Participant
Last question. Now when compared to large deals, now between the large team and a small dealer, could you talk about how does it change the profitability economics for the company?
Virender Jeet
See, I think large deals have large license components, which are much — absolute better margin. So typically however we meet our license targets, I think will have the same impact, whether we do the revenue from three large deals or 20 small deals, if the license amount is same, then it does not change the profitability of the company, it is at the same thing. So as long as we meet the high gross margin revenue streams, which is the license, LTS AMC and subscription. The percentage of that revenue to the percentage of the overall revenue does not shift significantly, our gross margin positions don’t change.
Unidentified Participant
Understood. Thank you and all the best.
Virender Jeet
Thank you.
Operator
Thank you. The next question comes from the line of Bridul Goeika from CLSA Capital. Please go-ahead. Your line is open.
Mridul Goenka
Yeah, hi. This is Sumit from CLSA. Just two questions,. First, first is, sir, wanted to understand, is there any structural impact of AI agents or AI on low-code, low-code industry altogether? And the second question is, I mean, are you still holding on to longer-term growth potential of 20% for your business given that the overall TAM is pretty big and you have a very small market-share.
Virender Jeet
Sumit, thank you for this question. I think this is a very important question. So what you’re absolutely right, the agentic AI space or the Gen AI space in general is also disrupting lot of code generation initiatives. And of course, since it also in a way proposes a very different way of low-code or no code. So in terms of reducing the overall development cost, there is an overlap. But in our use cases, if you understand, our GTM is predominantly determined on verticalization of offerings using low-code or as a technology. So what we ride-on is similar. So basically now we are saying that you can build our loan origination system through a low-code platform, which also uses Agentix AI or Gen AI to augment the code building part of it.
So we don’t see a challenge on that. So there is no direct competition between AI, Gen AI and low-code. I think both low-code plus augmented low-code with Gen AI is new offering, which most of the people will be proposing, including us in our offering. So I don’t see a concern. I also see it — it may also accelerate low-code in terms of Gen AI may add one more capability, the whole low-code that’s accelerating the whole low-code initiative in the market.
On the overall, I think you’re absolutely right. We still — since the total TAM is very, very large and also our aspirations to go deeper into US, Europe and other things, we don’t think there is going to be any kind of a muting down our overall aspirations. Our overall aspiration is to even excellate the growth rate above our historical growth rates to reach higher. So I don’t see there’s any challenge. We may — we may have one or two quarters, few quarters in every five, seven years like this, but that does not change Change the overall outlook of the company.
Unidentified Participant
So do you think this is more like a phenomena where certain deals and projects are being pushed out rather than being canceled? So your over a three to five-year period, the growth will still be in high-teens or low 20%, similar to what you have been delivering for the last several years?
Virender Jeet
Absolutely. I don’t think whether the reason is that or not, but I think, yes, over the long-term outlook, we don’t see any change in the long-term outlook, whether these deals are pushed out or there is an overall delay in deals, I think what as a sales company will find ways to really overcome that and start selling more. And because as you rightly said, the overall addressability of what we have is very, very wide. We’ll have to really find the market is not a bottleneck. We have to prepare for more markets, more use cases and go and sell them.
Unidentified Participant
That’s right, right, because I think the only problem the issue we face is, I mean like if you look at the Indian banks or Middle-East banks or the economy, they have been still humming well. The earnings growth has been resilient, not that bad. So that performance for you guys from Middle-East and India and the banking sector is a bit of a, I would say, say an outlier in that context where we don’t know what’s happening with the competition or on the product side. So that is, I think the main concern from the investor community from this results.
Virender Jeet
No, I can understand, appreciate that, but I think what happens is we have seen few quarters because of various reasons. But as you rightly said, they don’t change the overall picture about that. We still don’t have any larger challenges in the market. At least in these two markets, we are the player where everybody has to fight. That picture has not changed. So I think we’ll have to just get some of the large deals in this market in-place, which we’ll address. But on the larger time, we’ll have to get the US story going, Europe story going and the Australia story one.
Unidentified Participant
Got it. That’s very helpful and all the best.
Virender Jeet
Thank you
Operator
Thank you. The next question comes from the line of Mihir Manohar from Asset Management. Please go-ahead. Mir, you’re not quite audible. Could you please come closer to your microphone?
Mihir Manohar
Is this audible?
Operator
Yes. Please go-ahead.
Mihir Manohar
Yes, sure.. Why is that the
Operator
Breaking up again you’re breaking up again.
Mihir Manohar
Audible now?
Operator
Yes.
Mihir Manohar
Yeah, sure. So really wanted to understand the large deal — large deal pipeline. I mean, you mentioned that for India side, specifically, there was some situation which is there on the PSU. But why is the large deal pipeline getting shrink specifically, I mean, Middle-East as well as Middle-East, US and Europe. Some color on that will be helpful. Also, you made a commentary that second-half you expect the numbers to turn-around on a better side. I mean, from an external perspective, let’s say, how to get confidence around that? Some color will be helpful.
Virender Jeet
Yeah, Mir, thank you. I think two things you’re rightly saying. So when I said large deal, I think the bigger concern is not the pipeline, but it’s about the closure. So what we have seen that our large deals have not closed. And what I was saying that I think what last year and two years, we had a huge momentum of public sector orders which were decided, which were very large in size. I think overall, the addressable market of that public sector also has closed. We have almost implemented most of them. I think there are three, four left, which we are probably going to get-in next quarter or next quarter or next quarter, something like that would happen.
But it is that whole addressable market itself. While that has closed, we have opened opportunities in payments and trades again in those things. But I think again the pipeline in payment and trade is not as strong as the DLP program was pipeline. So I think there is the two issues in large deals. One is about overall pipeline in India of large deals. The second is also the closure rates across market in large deals. So both of these are added to the problems of this quarter.
Mihir Manohar
Sorry, can I interrupt?
Virender Jeet
Yes, good.
Mihir Manohar
So India, there is this DLP, this program which got completed, which is true. But what’s the reason for large deal pipeline getting lower all-in other geographies?
Virender Jeet
See, if you look at very large deal pipeline is happening only in India and Middle-East, those are the big markets. Rest, there are large deals, but they are similar. They will be in INR6, INR, INR, cron crorely. In Middle-East, as I said, I think this quarter, we had one strong phenomena and that in Saudi, we were not able to even travel for sales or for service delivery. That did impact our ability to close or ability to move on to the deals. So we think we should be able to recover from that going-forward in next quarter or next quarter.
So come to the second part of your question. I think why we are confident because we are still generating more cases and we’re still generating more new deals which are large deals. So overall demand situation, we have not seen very difference. The only difference we are seeing right now our ability to close the large deals. So we are hopeful that things should change for us going-forward in the next quarter or in the next half of the year. But I think we’ll have to wait-and-see how the market behaves. And as we get more into a few more months, we’ll get more insight into exactly what’s happening and how do we mitigate the current situation.
Mihir Manohar
Understood. Sure, sure. And just last two questions. I mean, have we lost any customers in the top-20 accounts or on the sales team side or sales team, is there any churn which has happened which could be a point of — point of concern?
Virender Jeet
I don’t think we have any churn which is impacting revenue, but I think I can ask to send you the top revenue contribution from top-20 accounts last year versus this year. They keep changing. They keep — the names keep on changing. So there is no big account churn which can make a material difference to our business in such a large way
Operator
Does that answer your question?
Mihir Manohar
Yeah, yes. I had just one question which was there. Have we lost any customer top-20?
Virender Jeet
See, we have some churn of customer at least smaller-sized customers, which are typically the channel partner customers every year, I think historically, we have two, three customers we end-up losing every year through contracts or through cancellations or sometimes through mergers and acquisitions, change of priorities. But none of — of nothing which is very different from last year. In top-20 we don’t lose anything.
Operator
Does that answer your question Mihir Mir, are you there? You’re not audible.
Mihir Manohar
That does answer my question. Thank you very much. Actually, there is some disturbance in my line. I’m sorry for that.
Operator
Thank you. The next question comes from the line of Majumdar from Swan Investment. Please go-ahead.
Debashish Mazumdar
And good evening to the management team and thank you so much for taking my question. So, sir, I have three questions. Two at the macro-level and one at the company-level. So the first question I have is there is a concept that because of AI coming in and the implementation to implementation cycle to cost-benefit of our enterprise software business will change significantly for a client. So do you see that happening at the ground level or is there any change happening that your cost — your period of implementation is coming down so that your cost to a customer comes down and that’s why the acceptance goes up. So that’s my first question. I will come back with two more questions.
Virender Jeet
Yeah,. I think you’re absolutely right. See, one of the — one of the biggest advantages of Gen AI is about in terms of the speed by which the software development cycle can get affected both in the coding and other stages of software development. So what we see happening is that with AI, overall, what people can execute with the same amount of time and resources will substantially change. It will change by large magnitude. Which would — which would for use cases make compressed execution cycles and will provide material advantage to the customers. But what it triggers is also is a faster innovation cycle.
So you have to-end up opening up more projects and more execution. And you end-up customer kind of automating or digitization or using AI for more-and-more cases. So overall, from my outlook, I think the overall spend on ID or projects would keep on increasing. But yes, for the same project, the cost may substantially improve.
Debashish Mazumdar
And do you — are you kind of seeing this kind of trend that because of this thing, the acceptance is going up or it is still early for?
Virender Jeet
No, I think right now, I think at the top-level, there is a communication, people expect optimization, people expect use of AI. But I don’t see right now the tangible it has translated in some amount of expectation of value and numbers. But we are not very far from that. I’m very sure in next two quarters, you will see this conversation happening on all existing projects and all existing contracts of how to optimize them.
Debashish Mazumdar
Understood. The second question is and pardon me if you have already answered this question, I have little late. If I see my product or license growth this quarter, there is a sudden drop. I understand there is a kind of seasonality here. So is it more to do with the macro challenge with — especially with the BFS segment and some of the other segment clients or there is some lesser acceptance of our product of moving into more Updated stuff like that, which is more transitive in nature.
Virender Jeet
So see, right now, we see the traction for our products overall can be determined from the funnel and the funnel side. We don’t see any challenge. We also don’t see any challenges in terms of number of opportunities which are coming to closures. That’s why I think our license sale is dependent on two things. One is about number of new deals and number of mining cases we create in existing accounts, but also it also depends on the size of those cases. While you see on the number, we are very close to what we did last year, but on the size, we have shortened and that is a result because we didn’t get any substantial large license order this quarter, which we think will not stay same going down the quarter.
We should be — because the funnel has lot of cases which have large license deals. I think in Q2 or H2 of this year, we should be able to recover that.
Debashish Mazumdar
And one last question is, if I see my support revenue, which is more service in nature, it is kind of stagnant for last four quarters. Now if I understand correctly, until last quarter, my licensee growth was significantly higher. So why it is not getting percolated into higher support revenue and why specific degrowth in last quarter and where the NMA growth this quarter?
Virender Jeet
Yeah. So I think we had explained this. I think this was one of the concerns last few quarters in our revenue was support and ATS. Since we said a lot of large projects have not reached the closure stage, this revenue stream has not riggered. So this is still an opportunity for this year for both our AMC support and subscription to grow much more faster than last year. And I think some of these projects are coming in the stage of closure. So the first thing you will see that the AMC will grow-out of that and the second subsequent in next few quarters, you will see the support revenue growing on that.
Debashish Mazumdar
And third is this delay in closure is largely to do with the longer execution cycle because of the general uncertainty in the market.
Virender Jeet
No, no. Sorry, there are two-parts. One is about license deals. The value of license is impacting
Debashish Mazumdar
Yes, yes. That part is understood. While there is a delay in execution in existing the license implementation or the service revenues?
Virender Jeet
Yeah. So I think that’s what I’m saying. Last year, we had we had over last two years got very substantial large orders which had substantial part of executions. So some of these executions have got delayed. They were planned for nine months, they have taken one year, some have taken two years. So which has affected this downstream revenue, which is the ATS because as soon as things that customers go-live, then only they start talking of ATS and subsequently they start talking of extended support. So these two streams, if you see last year also had not grown substantially for us.
Now we are advised that from this quarter and next quarter, you will see that these two streams will start substantially growing because these projects are now coming more to frutification and some of these customers are getting to next-stage of orders. So that’s what I was saying. This year you will see you should expect that both ATS and support to grow?
Debashish Mazumdar
Okay. And one last question, if I may. You were talking at the initial part of the call about increasing competition from global peers. So can you just help us to understand who are these peers and what kind of competition you are seeing there in which areas of the business?
Virender Jeet
So generally, what has happened that typically you know we are seeing the markets where we are strong like India and Middle-East in multiple countries also in APAC, we are seeing there is a substantial investment done by all major global players like who are either in the ECM quadrant or the BPM quadrant to enter the market. And so that the overall competition dynamics of every account is changing. So there are two things. One is there are more global players coming to the market. And second is also the local competition is emerging in terms of new startups, local, local vertical companies.
So this is — but this phenomena has been there for constantly some time and I think. So what we see is that in our strong markets, we still have a very strong strength in terms of both referenceability, proven track-record and our products are much more recognized because of our vertical knowledge and expert in that. But overall, yes, the competition in general is increasing in all cases.
Debashish Mazumdar
So sir, are you saying that this new competition is basically the traditional BPM players who are trying to productize their services?
Virender Jeet
No, that is not totally traditional. It can be platform players like Salesforce is also entering spaces like in digital lending or you can have companies like ServiceNow entering the operation, which was not prevalent very much in India. Now it’s more prevalent. You have companies like, South Systems also entering the market, which were not there two years back. So these are — so the market in the whole space of low-code is also getting very cluttered and not defined. That’s why we have always pivoted in terms of our strategy going with vertical-based approach and using platform as a way to accelerate the engineering cycles.
Debashish Mazumdar
Sure, sir. Thank you very much, sir. Thank you very much. Understanding my question and wish you all the best.
Virender Jeet
You’re welcome.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Ms Dipti Chuk for the closing remarks.
Deepti Chug
Thank you. Thank you so much, everyone, for joining in. For any further questions, you can go to our website or you can connect with me. Thank you.
Operator
Thank you, ma’am. Ladies and gentlemen, on behalf of NuGen Software Technologies, that concludes this conference. Thank you for joining us and you may now disconnect your lines