Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Newgen Software Technologies Limited (NSE: NEWGEN) Q3 2026 Earnings Call dated Jan. 20, 2026
Corporate Participants:
Unidentified Speaker
Deepti Mehra Chugh — Head Investor Relations
T. S. Varadarajan — Founder and Whole-time Director
Analysts:
Seema Naik — Analyst
Ruchi Mukhija — Analyst
Mihir Manohar — Analyst
Meet Virani — Analyst
Rahul Jain — Analyst
Aditi Patil — Analyst
Diya Brijwani — Analyst
Ritvik Reddy — Analyst
Vinay Adkarni — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Nugent Software Technologies Limited Q3FY26 earnings conference call hosted by ICICI Securities Limited. 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 a Touchstone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Ms.
Seema Naik from ICICI Securities Limited. Thank you. And over to you ma’. Am.
Seema Naik — Analyst
Thank you, Rudra. Good evening and welcome to the Q3FY26 earnings call of Nugen Software Technology. It’s my pleasure to introduce the senior management team of Nugent. We have with us today Mr. T.S. Varad Rajan, Co Founder and Home Director, Mr. Rajeev, Chief Executive Officer, Mr. Chief Financial Officer, Mr. Chief Operating Officer
Operator
And Miss.
Seema Naik — Analyst
Am
Unidentified Speaker
I audible?
Operator
Yes you are. Now.
Unidentified Speaker
Welcome to the q3ff6 earnings call.
Operator
Hi Seema. Come in a better reception area please.
Seema Naik — Analyst
Is it better now?
Operator
Yeah, it’s better now.
Seema Naik — Analyst
Hi everyone. Welcome to the Q3FY26 earnings call of Nugent Software Technologies. It’s my pleasure to introduce the senior management team of Nugen. We have with us today Mr. T.S. Varadarajan, Co Founder and Full Time Director. Mr. Virender Jeet, Chief Executive Officer. Mr. Arun Gupta, Chief Financial Officer. Mr. Tarun Nandwani, Chief Operating Officer, Head Investor Research. I now hand over the call to Ms. Thank you. And go.
Deepti Mehra Chugh — Head Investor Relations
Thank you, Seema. Good afternoon everyone and welcome to the Q3FY26 results of the company. Before we move on to the discussion, let me highlight that this call may contain certain forward looking statements concerning Nugent’s future business prospects and profitability. These 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 the future performance. The company does not undertake to make any announcements in case any of these forward looking statements become materially incorrect in the future 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. Vadaj Rajan for presentation of the results which will be followed by a Q and A by the management.
T. S. Varadarajan — Founder and Whole-time Director
Good afternoon everyone and thank you for joining us today for the Q3 FY26 earnings call. As we reflect over the first nine months of the year it showcases our strong business momentum. We achieved a revenue of 1122 crores during the period, witnessing a 7% YoY growth overall. In the nine month period we onboarded 34 new logos reinforcing the trust and preference of global enterprises placed on our platform. Subscription led growth remain robust with strong contribution from US, UK and Australia validating our geographic expansion strategy.
Q3 was a quarter of balanced performance in a still selective market environment. During the quarter we achieved revenues of 400 crores, witnessing a growth of 5% y o wide. Last year’s Q3 and Q4 were among our highest license revenue quarters, creating a naturally high base and making year on year comparisons challenging under current market conditions. However, we remain confident of a license recovery in the quarters to come supported by active near closure deal pipeline. However, we acknowledge that the larger enterprise deals are facing elongated decision cycle and traditional people based support engagements are more difficult to scale in today’s tight market.
Despite these macro factors, underlying demand remains healthy. Order bookings continue to scale sharply particularly across deferred revenue streams, enhancing revenue visibility and long term stickiness. Our annuity revenues continue to grow steadily. Annuity revenues were at rupees 250 crores during the quarter witnessing a 20% YUI growth. Within this subscription revenue reached 134 crores witnessing a strong growth of 29% YUI. We witnessed a significant growth contribution from the US geography during the quarter at 21% YUI revenue growth while the APAC region witnessed a growth of 7% during the quarter.
India and EMEA regions were weaker in terms of growth during the quarter. During the quarter we made seven new customer logo additions. Our key wins in Q3 include an order from a public sector bank in Saudi Arabia for designing and developing a loan origination system with an order value of 38.6 crores over the next two years. Agreement with a leading financial institution in the US for Enterprise Content Platform with an aggregate value of $5.3 million over two year period providing contract management platform for a specialist insurance company in Europe, Helping users across the enterprise to create and manage policy documents.
The agreed order value is 1.5 million. Working with a leading bank in Malaysia to provide end to end project management services for enterprise content management system implementation with an order value of approximately rupees 14 crores an order from a large blank in India for supply, installation, customization and maintenance of digital lending platform with an order value of rupees 16.5 crores an order from a captive finance unit of a leading car manufacturer in India for a loan management system with an order value of Rupees fourteen crore.
Our leadership in insurance is deepening steadily with our policy administration system offering helping us secure a strong foothold in this high value vertical. Meanwhile, our AI driven solutions are gaining global traction most notably through impactful early deployment establishing us a credible player in applied AI for mission critical use cases. We are also strengthening our offerings in our core vertical organically. Our global customer base remains extremely strong sticky and we are expanding our footprint both within existing account and across new markets.
Looking ahead, we are particularly excited about next generation AI lit products which will significantly enhance customer productivity, design, intelligence and automation. Examples include AI Powered Document Understanding, Generative Process Design, Intelligent Communication, Automation, AI first vertical solutions and these innovations will not only strengthen our competitive differentiation but also elevate customer value across industries. AI is increasingly embedded in our deal and we continue to work on creating viable use cases in AI through significant investment in AI driven product and solutions.
We have also launched our employee AI Upskilling program to build and scale a cohort of AI skilled talent within the organization. During the quarter the company was recognized as a niche player in Gartner Magic Godman for business orchestration, orchestration and automation technologies. We have also been added as a representative vendor for Gartner and Forrester in various market guides. Coming to Cost and profit while Q3 registered a muted 5% growth rate, we maintained margin strength through improved productivity initiatives.
We are accelerating AI led engineering, automation and operational efficiency across our delivery and product team. Our adjusted profit after track for the quarter without considering the impact of the new Indian Labor Code changes was at rupees 90 crores and net margins were at 22.5% during the quarter. We have considered a one time impact of new Indian Labor Code to the extent of rupees 35 crores in the nine month period. The profit after tax before considering the impact of the Labor Code changes was at rupees 222 crores.
The profit after tax after considering the impact was at 194 crores. We continue to prudently invest in R and D and sales and marketing initiatives. In the nine month period we have invested 9% of our revenues on R and D initiative. We are also investing around 23% of revenues on the various sales and marketing initiatives. On the balance sheet front we witnessed robust cash flow generation with our net cash generated from operating activity at Rupees 154 crores during the nine month period. Our net trade receivables were at Rupees 530 crores as of 31st December 2025, which resulted in net DSO of 125 days.
In summary, with strong deal momentum, expanding subscription revenues, a sticky global customer base, deepening vertical leadership, and the transformative potential of our next gen AIs product, we remain confident in driving long term sustainable and profitable growth. We we anticipate a healthy recovery in the traditional market and are all well positioned to capitalize on emerging opportunities. Thank you very much. We are now open for Q and A.
Questions and Answers:
Operator
Thank you very much. We’ll now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their Touchstone telephone. If you wish to remove yourself from the question queue you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ruthie Mukhija from ICICI Securities Ltd. Please go ahead.
Ruchi Mukhija
Hi yeah, this quarter growth in our core market was soft. As you look into your pipeline, how do we see the health of business in the core markets of India and India?
Mihir Manohar
Thank you for your question and first of all New Year and wishing everybody a Happy New Year. You’re absolutely right. I think while we had strong deal Momentum, almost getting 24 new logos which is typical to what we did also last year with a healthy growth markets like India and Middle east, the numbers did not add up because though we won the deal we did not get the substantial large license deals in these two markets. And I think if you look at globally the pipeline is looking very strong and I think we’ll see some amount of what we are waiting for is the larger deals conversions.
So I think we are seeing slightly more deferment in large deals decision making and so cases are there but the conversion of cases are typically slightly larger. It’s much more slower at this moment of time. So in the near term I think for the next quarter we may find some conversions out of the pipeline which have got slightly pushed out. But I think next year we think this thing should shape up much better. Some amount of recovery and confidence in the market is expected. Some amount of uncertainty around AI has to settle down and this is a challenge we are seeing across all markets.
When we at the beginning of year realized this challenge we had really pushed for deal exploration and increasing the funnel velocity. We have been able to successfully do that, get our both new deals and existing logo deals, but the larger ones are a challenge and I’m not very sure how soon that challenge will get resolved. We hope that some part should get addressed in Q4 and then next year we should, you know, get into a better shape. Does that answer your question?
Ruchi Mukhija
Yeah, you did mention that. I mean AI is a kind of leading to some kind of uncertainty. But when we look at India vs USA we see different vectors of growth or different growth momentum. So are we trying to suggest that in domestic market there is more reconsideration and maybe the catch up how enterprise clients think about AI will need some maturity or some catch up before we see similar momentum as we see in the US or the developed market?
Mihir Manohar
Yeah, I think what is happening in, you know, at least this is what I feel what is happening in emerging markets people are keen about venturing into AI led, AI led solutions. But also on the traditional solutions trends they are looking at more AI led services and solutions to solve their market which is creating a bit of more debate and more of deferment rather than anything else right now. I think as soon as it’s also about business confidence and overall business activity, once the business confidence is there, the decision making cycle starts becoming better.
So Indian customers are also very keen and they’re as long and the Middle east also they’re very keen to go up with AI projects. But also we see also on the downside that any large initiative there is a slowdown in decision making. So it is difficult to clearly estimate what is leading, what is the cause and what is the effect. But this is what we have seen at least in at least four, five or four large deals where people are just waiting and holding onto decisions, seeing what else is happening across the world and in their own enterprise
Ruchi Mukhija
Are smaller. Ticket size, AI deal easy in the domestic market and India.
Mihir Manohar
Yeah, yeah. I think smaller ticket size which are typically tactical in nature. See all deals have an AI component nowadays I think that’s, that’s given so those things out there we don’t see the same amount of challenges and that’s also you will see that acceleration in our deals. I think we have not gone in terms of number of logo wins or number of mining orders. We continue to cite that the only difference is the large license deals which were there for last at least Q3, Q4 last year. We don’t, we are not getting the same number of LAL licensees.
Ruchi Mukhija
Our AMC revenue has caught up a healthy pace of growth. Now do we see this pace of growth or momentum continue in the near term quarters?
Mihir Manohar
Yes, I think surely this is also because AMC growth is led with also the previous performance of years of your license revenues and and completion of projects which are going live. More and more projects are going live. So the AMC keeps on cumulating. So at least in near few quarters we’ll see that momentum, that growth momentum continue.
Ruchi Mukhija
Thank you and all the best.
Mihir Manohar
Thank you.
Operator
Thank you. Participants are requested to press star N1 to ask a question. Next question comes from the line of Meet Virani from MNS Investment. Please go ahead.
Meet Virani
All right, so thank you for giving me this opportunity. Given the strong and recent buildings, can you specify the expected timeline for revenue conversion and indicate in which quarter we should start seeing a meaningful improvement in reported revenue? Hello, I hope I’m audible.
Deepti Mehra Chugh
Hi, can we move to the next question?
Operator
Sure. Next question comes from the line of Rahul Jain from Capital. Please go ahead.
Rahul Jain
Yeah, yeah. Hi. Thanks for the opportunity. Basically my questions to is is around deep. We have seen that our order announcement even in Q2 and Q3 were pretty strong. But that translating into growth has not been the case in terms of the actual revenue. So is it that there are some nature of deal where we are not able to recognize as much as we have been doing in the past because of the SaaS nature or any other factor? And even from QQ perspective I thought the implementation tailwind of Q2 strong deal win should have supported Q3 and there are further Q3 wins but that part of the revenue stream has also fallen.
So is there a challenge around companies ramping up on the decision that they have taken or they are ramping on the schedule? Thank you.
Mihir Manohar
Thanks Rahul. I think you’re absolutely right. I think on the announcement trend there are two things as the companies the materiality limit of announcements is also very low in terms of it’s almost becoming equal to many of the orders which we win. So as the as the logo acquisition and the deal win rate is same so the announcements will be there. Having said that, you are absolutely right. Lot of orders of Q2 Q3 you would have seen have come from regions like US, UK, Australia which are typically subscription led sales where the upfront realization is almost nothing or there is a ramp up period before the revenue gets realized.
So there is a lesser correlation directly with order booking and the revenue realized in immediate quarters. While traditionally on our traditional market since licenses are realized, there is a more upfront realization of those revenues on the account of order wins which have happened in Q2 and the the impact on the implementation revenue. I think you are right in a way. What is happening the larger order deals the ramp up periods are slightly slower in terms of when the revenue will start coming in.
Also on the subscription orders which we have got also it takes slightly little more amount of time to ramp up for the implementation streams. Eventually they should ramp up because as the order deals have a significant part of implementation, we should be able to service them. But so I don’t see, I don’t see the short term challenge. But implementation will start reflecting the size of typically the number of deals we win orders. Significantly it should downstream impact the implementation revenue.
It is not showing in numbers because we are almost for nine months almost you know, 7, 8% of implementation growth or more flattish on that. But yes, I think in coming quarters as the more and more orders start rolling out, we’ll have higher implementation rep.
Rahul Jain
Sure, sure. Just one clarification. You said the implementation is lower even in the SAS or subscription deal. Can you elaborate why you say that?
Mihir Manohar
So in subscription also, you know, I think before the order post order since you know the revenue realized in all orders is typically you have to ramp up, you have to set up the cloud infrastructure, you have to eventually start the engagement and only after that you can start realization. So it lacks almost by a quarter to start realizing the implementation revenue. And then also initially you will start realizing very little implementation revenues because it’s going to be milestone led or some of those things.
So between second to fourth quarter that’s where you will get the maximum implementation revenue for engagement.
Rahul Jain
Okay. Okay. So we recharge implementation after going live.
Mihir Manohar
No, no. It’s typically, it’s a, it’s typically milestone based but revenue is realized in terms of, in terms of your efforts, how you realize. But the starting date, the lag between the order and the start date of implementation, there is a lag and that lag can be almost a quarter.
Rahul Jain
Got it, got it. And one bit more on this large deal holding up in terms of getting signed and decisioning. So how you think this would shape up from a calendar 26 perspective? What are you know, puts and take that could add to the confidence in terms of how the year should pan out?
Mihir Manohar
See what happens. Right now the funnel does not show any weakness of large deals. The funnel has substantial amount of large deals. The only behavior in India and Middle east of, you know, not fortifying those deals is what we have seen. We are quite hopeful about Q4 and we will see early signs in Q4 in case we are able to create significant amount of those deals. If that starts happening, we will have a confidence and the next year can also continue to have the last. But you know, we Are again like we have to discover.
So that’s one strategy. The other is about increasing the overall deal velocity. That’s what we are working on. We are working on getting the number of wins both in mining and new logos at much higher rate which can compensate for that. And then there are also new solutions both in AI or in PASS or in insurance, what we are trying to do, which are higher ticket items and they should also add to larger deal accounts for it. So multiple efforts are being done on that. But right now, as of now, what we have seen the challenge in at least this part of the year is in India and Middle east, the large deals.
It’s not that no large deals have happened, but the number of large deals we traditionally used to win one lesser amount of division. And also one thing we should look at when we look at numbers, it’s clear just to if you look at last year, Q3, Q4, where our largest ever license sale quarters, we almost reach from an ever regular run rate of 30, 40 crores of license to 90 crores. So you know, the bases are much higher. So this year also I think we have maintained a 70 crore run rate of license and which we have to improve to like 100 or 120 crores.
That’s the target.
Rahul Jain
Yeah. And just last bit if I could, we have seen two, three years of back to back pretty strong performance. And this is not a business where you, I mean this is a business where you have to replenish a lot of your revenue because they are one time in nature. So is it fair to have, you know, fair to expect this kind of a year once every, you know, three, four years? Because that is how you know it would steam out at some point of time. And also, you know, does this kind of a year also make you think from a 2, 3 year perspective a more realistic growth that we would see from a rolling basis should be more like 15% rather than 20% plus that we were conveying, let’s say beginning of the year.
Mihir Manohar
See, I think mathematically what you are saying does make sense because typically since there’s lot of revenue which has to be repeated and has to be replenished. So you know, typically if you have high velocity growth, then you have to continue to maintain higher velocity growth. So that’s one way of looking at it. But I think for us the way we look at is we also look at it compensating with our foray into mature markets and compensating more from the subscription growth which will give a more strong Base right now last three years our us, Australia, UK have not grown at the same size as India and Middle East.
The way I look at is that we will have license growth coming from our traditional territories but higher subscription value and higher size of business coming from mature markets. We should even it out over a period of time. The second thing, the way we look at is overall broadly the addressable market for us is pretty wide. So it does not matter if you have grown by 20% or 30%. The potential for the business to continue that growth is quite there out there. But yes, you are absolutely right sir.
If the license of part of the business alone keeps on going for few years, then again you have a risk every few years that hey, you may have a slightly slower because the license does not repeat. But we think in the next phase of our growth for next 3, 4 years our subscription mature market and cloud revenues will also grow at a thing so that there is going to be lesser impact in terms of slightly drop on license.
Rahul Jain
Thanks a lot for that elaborate answer. Just one small suggestion. We could possibly start giving an RPO data or an executed book data because now if the business Keep shifting towards SaaS, I think that would be one more data to monitor the traction because recognized revenue could be not justifying the traction that the business might have because of the defilement.
Mihir Manohar
Yeah, that’s a good idea. I think we’ll just consider it and we can work with the team to bring it as part of the data point.
Rahul Jain
Thank you and all the best.
Operator
Thank you. Our next question is from the line of Ashish Sriram Thougar from JM Mutual Funds. Please go ahead.
Meet Virani
Opportunity. So at least in terms of growth. So follow up to the earlier participant question. Last two to three years we did really well. But the nine month growth revenue growth number is just 6%. How do you look at. Am I audible?
Mihir Manohar
We can move to the next question.
Operator
Okay. Hello, Our next question is from the line of Venkat from Mirabilis Investment. Please go ahead.
Meet Virani
Hi, thanks for taking my question. My question seems to be a bit repetitive but in the last 3 or like 12 years DLP lending platforms drove bulk of our growth in India. Now that.
Deepti Mehra Chugh
I believe people are not able to. Yes
Operator
Ma’, am, you are audible.
Deepti Mehra Chugh
Yeah, but we are not able to hear.
Operator
Hello, let me reconnect. Sa. Ladies and gentlemen, we have the management lines reconnected. Venkat, Venkat, can you please repeat your question?
Meet Virani
Hi, I hope I’m audible now. I wanted to understand what is the opportunity size in India and How will the growth come? Like for last two, three years lending. Platforms drove bulk of the growth so. Hello?
Mihir Manohar
Hello?
Operator
So you’re audible. Can you hear yours?
Mihir Manohar
Yeah, we can’t hear the question. Our question. Our line is fine so you don’t have to discuss. We will check question queue line.
Operator
Venkat, can you come back?
Meet Virani
Hello? Am I audible now? Can you please confirm that?
Operator
Can you hear Venkat?
Deepti Mehra Chugh
No, we can’t.
Operator
Okay,
Meet Virani
I guess there’s a line problem. From this time come
Operator
Back,
Deepti Mehra Chugh
You can. Move to the next. Till then,
Operator
Next question is from the line of Aditi Patil from ICICI securities limited. Please go ahead.
Aditi Patil
Yeah, thank you for the opportunity. Can you hear me?
Mihir Manohar
Yeah, yeah we can hear you clearly.
Aditi Patil
Okay. Yeah, my question was on margins. So our margins have held up like 9 month FY25 EBITDA growth has been in line with revenue growth. So can you help us understand how we are managing this? Because earlier we used to guide that our cost will at the start of the year we budget for a 20%. Y. Increase in cost and revenue growth above that directly flows to margins. So this year have we recalibrated our sales and marketing expenses and like how should we think about this going forward?
Mihir Manohar
So thank you for the question. I think you’re right. So what happens in on the margin front there are three, four things which have really helped on the margin front. One is about there is a great operating leverage coming out of using AIs in the general engineering and tooling. So the need for the number of resources typically for the same job has gone down. And since we are still talking of our growth rates which are like not very significant. So we didn’t have a lot of need of people in terms of our number of people is almost flat has got even optimized by a bit of now.
So overall the manpower cost has come down. The second amount of variabilization has also kicked in because we are typically running on very extremely high sales performance numbers. So typically there is a variabilization of salary builder because of that. So that has optimized and you know broadly beyond that. If you look at our investment in R D and sales and marketing it’s held to the same 9% and 20 to 23% that has not gone down. But overall we have been able to manage the cost because of you know these two operating levers.
We have got in this, the other, other things things also you will look at the, the high gross margin part of the revenue. The A, this license subscriptions have grown which are not direct cost related. So typically the operating margin overall has improved for us. So though at the beginning of year we had planned for much more higher cost investments, but we could variableize them looking at the business performance, we do feel that what is happening over next 2, 3/4 also there is an opportunity to also still have better operating margins.
And as you optimize and do more AI based enabling of various functions. So we should be able to increase our acceleration of engineering, increase our velocity of product development and as well as other functions. So there is some margin which is a good thing which has been able to help. We have been able to hold on.
Aditi Patil
Okay. And this quarter did we roll out wage hike?
Mihir Manohar
Yes, I think I said that for up to. For roughly around 3,000 people or something like that. Yes. More than 3,000 out of 4,500 people. Almost 3,500 people. We had rolled out wage hikes in October.
Diya Brijwani
Yeah.
Aditi Patil
Okay. And so our sales and marketing investments as a percentage of revenue remain constant. But as the revenue has come down, the absolute amount has also come down. So do you think you may need to increase this to like mine for or I mean to get newer areas to go for newer areas of growth.
Mihir Manohar
So we are so Aditi where when we look at sales and marketing product investment, they don’t take very quarterly lenses or yearly lenses. They are more long term. They are independent on opportunity in the market where we are able to also where we are able to find right talent. So we’ll keep on investing. It’s not that we will not investing. So we have. So what happens is the cycle of we’ve been investing very aggressively for three, four years. Then the cycle of optimization and look back and again I think in next this quarter and next quarter.
So we’ll keep on investing. So they are slightly more long term views of things. They are not short term.
Aditi Patil
Okay, I got it. And the wage hikes were in line with the previous years or like what was the quantum of wage hike?
Mihir Manohar
Slightly less. Since what we covered up to. We have not covered all four. Specifically up to GM and above. We have not gone ahead with wage highs this year. So it is lesser in total value compared to last year.
Aditi Patil
Okay, got it. Okay, thank you.
Mihir Manohar
Thank you.
Operator
Thank you. Our next question is from the line of Ashish Sriram Thoukar from JM Mutual Funds. Please go ahead.
Meet Virani
Am I audible now? Hello. Hello.
Operator
Please go ahead.
Meet Virani
Yes. So I had this question last two to three years. Sorry, we can’t hear Ashish. Hello.
Mihir Manohar
We are able to hear every alternate question we have We. We can’t hear all the questions.
Meet Virani
I am able to hear the management but it seems there’s some problem. Either
Mihir Manohar
Ashish can drop in and again come again and.
Operator
Yeah, requesting Ashish, please come back. Participants, you are requested to press star and one to ask a question. Our next question comes from the line of Srinivasu K from tia. Please go ahead.
Meet Virani
Hi sir, thanks for the opportunity. Am I audible?
Deepti Mehra Chugh
I think Rudra, you can connect at the alternate line somehow. We are not able to. Yes,
Operator
Ma’.
Meet Virani
Am. Hello. Am I audible? Now. Close
Mihir Manohar
This.
Deepti Mehra Chugh
Let’s wait.
Operator
Sa. Sam. Ladies and gentlemen, we have the management line reconnected. Our next question is from the line of. Meet Virani from Ms. Investments. Please go ahead.
Meet Virani
Hello. Am I audible? Hello.
Operator
Yes.
Meet Virani
All right. So my question is around good customer.
Mihir Manohar
It’s a problem from your end. It has nothing to with our line. So we can’t hear the question.
Meet Virani
Am I audible? Hello. Yes sir, you’re audible all right.
Unidentified Participant
No, we can’t. We can’t hear the questions.
Deepti Mehra Chugh
We can’t hear anybody.
Meet Virani
I think we are facing frequent problem.
Operator
Ma’, am, can
Unidentified Participant
You hear
Meet Virani
Me now? Hello,
Unidentified Participant
We can hear you but we can’t hear the questions.
Meet Virani
I think it’s getting a problem from your end.
Operator
Next question is from the line of Meer Manohar from Trust Mutual Funds. Please go ahead.
Meet Virani
Yeah, hi. Thanks for giving the opportunity. Am I audible?
Mihir Manohar
Yeah, me. Right, we can hear you now. Sorry to keep you waiting. Yeah,
Meet Virani
Sure, sure. No issues or. No issues. Yeah, thanks for giving the opportunity. So at the start you made a. Comment that there is a land uncertainty. Which is recurrent being an impediment for the making a decision. Can you throw some more light over here? When we say AI LED uncertainty, is it the case that the customers want more better products, more better offerings across the AI LED space? Or is it just a deferment happening because of the uncertainty which is there?
Mihir Manohar
Yeah, Neil. So I think. Let me explain what I feel like which is real at uncertainty. So one thing is typically you know, whether it’s a business environment or internal landscape of it, what we are seeing the largest orders across for us across jios, at least in India, meals are taking more time and some of these orders. What we have discovered since there’s a huge interest in enterprises around AI, generative AI and all other tools and technologies which are emerging around that customers are also having a re evaluation in terms of how is the AI going to impact that area of the business.
So while they may have worked on the RFPs, they may have built business cases. They are slightly unsure about taking large order bets for us. This is our impression on the business now in the ground. I am not sure whether that is the real exactly what’s happening, but clearly what we have seen at least in few of our projects, even at the late stage of decision making, customers are slightly reluctant in terms of their looking. Are there alternate ways to doing it? Are they getting the right technology stack?
Should they wait for a few months and see what things are happening, how the AI settles down or the tooling settles down. So that is what I meant by in terms of AI uncertainty. The degree of interest on AI AI LED use cases POC is high. So that’s not the case, the issues. But on all other traditional cases, AI is disrupting it in a way that customers are reevaluating whether that’s the right way to proceed. Does that answer your question?
Meet Virani
Yeah. Second question was on the Middle east side, I mean Middle East Last 4 Quarters the Y numbers are I mean the muted side. The expectation earlier was that you know. As travel restrictions will get eased, we. Will see growth coming back on the Middle East. So is there a challenge on the demand side or I mean is it a challenge pertaining to the supply of services?
Mihir Manohar
No. Yeah. So the challenge remains, as I said, the challenge remains the same. I think what we are winning deals I think in the Middle east but we have not significantly won large license deals in Middle East. Compared to our license revenue for first nine months in Middle east has declined by at least 2015 to 20%. If I’m not wrong, the in spite of number of deal ones being the same as last year. So the larger deals of licenses we are not getting. So that is impacting our business. So we do expect things to start improving and slightly shaping up more in terms of both our getting larger more number of deals on our table, but also some of the larger deals getting puttified, getting the orders getting sorted out.
That as I said also because the uncertainty which the whole AI environment is creating is also creating also after the orders have got initiated. Sometimes our orders are put on hold in execution stage because of people want to reconsider or the board is reconsidering things. So this is some amount of uncertainty we are clearly seeing in at least Middle east and India.
Unidentified Participant
Okay. That’S information. Thank
Mihir Manohar
You. Thank you.
Operator
From the line of. Meet Virani from Ms. Investments. Please go ahead.
Meet Virani
Hello. Now I’m audible. Can anyone ensure. Yes. All right. So my next question would be on. A round of growth visibility. Despite a strong Order move and pipeline. We have seen revenue growth has remained over the last few quarters. But what specific changes should investors track that would signal a clear inflection growth? I mean, in which part of FY20. Or in part of FY28 do you. Realistically expect this inflection to materialize?
Mihir Manohar
Sorry, I got half of your question, but I’ll try to answer. So I think yes, one of the things is typically since we have very lumpy revenues of licenses, so predicting in future about immediate growth in that quarter becomes difficult because it is based on at least the last year the same quarter completely high on license. So unless a large significant of light license is recovered in the same, you will not be able to predict. See, there are three, four pillars of prediction. The growth and annuity models are quite predictable because they don’t go down or up so so soon they are more consistent.
But the license jerkiness will be and. But if you are looking at to predict it for 3, 4/4, I think new logo acquisition and growth in order book are two indicators of that. The growth in order book what can have this bias that whether there are subscription orders or license orders. So it’s a combination of growth in order book, the new logo acquisition and the jerkiness of license revenue needed to be realized in the same quarters. So these three factors are important to look at what’s going to happen in next quarter or that’s going to happen.
So in that we have some amount of prediction about based on the order book of previous quarters, the subscription growth. But on the license front we’ll have to rely on the performance of that quarter and closure of some deals on that quarter.
Meet Virani
All right. Okay, thank you.
Operator
Participants are requested to press star N1 to ask a question. Our next question comes from the line of ritvik reddy from R5 Investment. Please go ahead.
Ritvik Reddy
Hi, good evening. Can you hear me?
Mihir Manohar
Yes, we can hear you. Thank you.
Ritvik Reddy
Can you comment how US and Australia are doing?
Mihir Manohar
Yeah, ridiculous. I think Australia is a nascent territory for us. What we have done is, you know, we have reached in few years we reached a stage that it’s a self sustaining territory and regular orders are flowing in if not every quarter, but every alternate quarter some orders are flowing in. We do expect few closures and that so this territory right now our initial target was to build it to 5 to 10 million dollar territory so that the base referability of customers get established. We are on a, you know, very close to that number.
I think this year we may cross more than 5 million or something like that. And the potential to cross next 10 million next year is quite high. US is shaping well on account of couple of things. I think we are finding some foothold in the insurance space which we invested heavily on that both in horizontal cases and journey cases. We got some great deals on the health insurance side. And then our, you know, the ECM led large banking cases are also showing some SO US because the revenue is slightly more smoothened out because of subscription sales.
The performance of previous quarters is now reflecting in the numbers and we hope to continue that going forward. It.
Ritvik Reddy
Okay, in general, how effective the. AI in our business segment and within next two, three years, how do we expect? Like how much more ATT is it going to be?
Mihir Manohar
Sorry, could you, could you repeat? Is it about how AI’s effect on business?
Ritvik Reddy
Yeah, how effective AI in our current business segment and in two, three years. How much more effective it is going to be?
Mihir Manohar
See, right now AI is, I think everybody is excited about AI. All technology areas are getting impacted and influenced. But there is huge interest on the enterprise side to start deploying the technology for all use cases. So for us, I think what we are seeking, we are excited about our AI roadmap, our AI LED products which are coming into market. We are very first. We are lucky to get our initial orders of AI both in India and Singapore and some of those are live now we are excited about replication of those use cases.
So I think in next two, three years you will see AI central to all use cases which are sold across all verticals or across all solution areas. So for companies like us, which are product companies getting ready for that change and preparing products to compete in that is what we have been investing for last two, three years. And so we’re excited that as the customer patterns and buying behaviors start getting settled and the business certainly starts coming back, we should see far more explanation of AI LNB happening in the market.
Ritvik Reddy
Okay, what I meant is are companies looking more effectual? Is this the uncertainty? Is this because the companies are looking for much more effective? That’s why there is a differ.
Mihir Manohar
No, I think companies are right now looking at to setting up their roadmaps of AI in terms of what are they going to do with it, what toolset, what technology, which areas. So basically we are right now in this whole great area of experimentation. From now I think experimentation is typically has to be converted into real benefits. So that’s where customers are trying to now make the final choices about their AI products, which projects to prioritize how to start leveraging what benefits to get So I think you know this.
You will see more acceleration now in spending in the whole digital area, whether it’s AI, LED or around AI. Okay, thank you.
Operator
Thank you. Our next question comes from the line of Diya Brijwani from White Whale Partners. Please go ahead.
Diya Brijwani
Hi. Am I audible?
Meet Virani
Yeah, dia, please
Ritvik Reddy
Go
Meet Virani
Ahead.
Diya Brijwani
Yeah, so my question was more on the annuity part of the business. It’s 50% plus of revenues now. So any metric that we track, like gross retention, net retention, the concern comes from that, are we facing any pricing pressure from our legacy customers because of the AI thing? And like, at least the core verticals that we’ve got, like ECN and bpm, is there any threat, like currently, is there any threat to the product or our pricing on the annuity part of. The business per se?
Mihir Manohar
So I think broadly the answer is, you know, at least no, we have not realized any threat to the product pricing or in terms of product categories we have. So predominantly products in product businesses, people end up assuming, typically, especially the partner, the products which are at the top of Magic Quadrants or Gartner Wave reports, sorry, Forester Wave reports and Gartner Magic Quadrants, you expect those products will be always ready with whatever has happened in the technology. So it is given that overall products are AI ready or they’re helping customers use those AI use cases.
So we don’t see that the pressure on annuity side of the revenue is going to come on typically, which is where we have seen, which is typically people led revenues streams where you are deploying people for further enhancement and upgradation and rolling out more journeys with the product. In the current environment, very few enterprises are looking to augment people aggressively. So we have seen some amount of challenges in those cases in terms of some optimizations happening here and there, but nothing very significant.
But as we roll out more and more use cases, we’ll have some amount of teams getting added at all classes. So I would say this, this concerns a bit of concerns around support part of our revenue, but not our ATS subscriptions, which are more committed and there’s always a room to really increase the prices out there.
Ritvik Reddy
Got it. That’s helpful. Thanks.
Operator
Thank you. Our next question is from Srinivasu K from tia. Please go ahead.
Meet Virani
Thanks for the opportunity. Am I audible now? Yeah, please, please go ahead. Yeah. Again, my question is follow up to. The previous two questions on AI side. Basically, I just want to understand that there’s a lot of discussion that AI is fundamentally disrupting the traditional workflows with the agentic workflows which actually lowering the entry barriers. So from nuance perspective, does this disruption put pressure on our traditional BPM workflows or does it actually expanding your opportunity because of the new initiatives that you have taken?
Mihir Manohar
Yeah, I think Srinath is a very important question and I think yes you will see lot of conversation happening around agency workflows and in terms of ease of as you rightly said the barrier to enter into those spaces in terms of. So there is a segment of market which is typically what we call more ad hoc or departmental or user centric workflows which is typically most seasoned developer. That is an area which is getting slightly more transformed. But again in that transformation the traditional BPM or low code companies are the ones who are going to win that area.
But what we what NewGen predominant forte is our 90% of market share is very intense rule driven business centric integration heavy systems where Agentix would augment to that workflow. So we would, we would still use our products to deliver more and more value to the customer in those complex workflows. But on the other hand you’re absolutely right. Some amount of disruption you will see in typically the companies which are working on typically what you call Stevens development or departmental workforce because clearly there are multiple ways to solve that same problem through agenting workflows to tools which are coming from Google.
But in serious enterprise workforce like if you’re trying to implement trade or you’re doing claims or underwriting or retail loan or gold loan, these are much more structured processes where AI is going to augment the process. It’s going to augment human in the loop. It is going to take some amount of decision making and make it intelligent. But the core process infrastructure will be used by products like what Nugent delivers.
Meet Virani
Thanks for answering that. Just follow up on that over the next couple of years. Do you see a for new gen. Is basically a margin lever like because it reduces the implementation effort or do you see as a pricing lever because identic workflows improves the. STP and reduce. The tag or do you see like it’s like a staying competitive because you know everyone is offering AI so it’s like protecting your moat.
Mihir Manohar
So I think very good question. Again I think the answer cannot be one. I think it is, it’s a combination because two things. One is more and more value will be delivered out of the product and platform will say so we’ll have there, we’ll have some pricing power out there to get slightly higher value for all that our downstream revenues which are typically implementation support may have reduced what you call the time to market, time to implement or overall effort. But you will be charging higher premiums to deliver that.
So cost for the customer will come down slightly. But also you will get substantial benefits into speed and velocity of go to market as our instances grow. So there may be a time period where you will see that the larger, higher basically margin revenue streams may grow faster than the other revenue streams.
Meet Virani
Thank you and best of luck.
Mihir Manohar
Thank you.
Operator
Thank you. Participants are requested to press star N1 to ask a question. Our next question is from the line of Vinay Adkarni from Hathaway Investment Private Limited. Please go ahead.
Mihir Manohar
Yeah Vinay, you are audible.
Vinay Adkarni
Yeah, just two questions so your voice
Operator
Is echoing. Can you please speak with the answer?
Mihir Manohar
Yeah Vinay, go ahead.
Vinay Adkarni
Can you hear me now?
Mihir Manohar
Hello.
Vinay Adkarni
Yeah, just wanted. This new H1B visa rule of hundred thousand dollars, is it going to impact our U.S. Revenue streams or your ability to service your customers there?
Mihir Manohar
No, no Vinay, we are not in the business of sending people or having manpower based assignments. We don’t need any people movement between countries. We sell products and products don’t need. So most of the staff we can hire locally and in fact even most of the staff in our sales, marketing and other service areas are locally hired. So we can continue maintaining expansion of our business. We don’t do any H1BS anyway. There are very few. Most of the companies will be intercompany transfers if and when they are needed.
So for product based businesses H1B is not a criteria.
Vinay Adkarni
Secondly, if I see the India revenue for last nine months, I mean nine months FY26 to nine months FY25 is absolutely flat. Is there no opportunity for. SaaS based revenue or subscription based revenue in India or is it not something that Indians prefer?
Mihir Manohar
No, it’s not. It’s not either or I think traditionally what has happened, Indian based companies are more license based companies and that’s why I think last three, four years they’ve gone significantly on those license sales. Lot of deals have come in. There are also subscription deals and cloud deals in India but they are smaller part of the business because it’s a very large territory. We’ve been here for 20 years so they are not a significant part of our revenue. So I think over the next few years you will see more and more things coming on subscription even in India.
But for, you know, for many more quarters we will still be dependent on license based business.
Vinay Adkarni
Okay, thank you. Thank you. The rest of my questions have been answered. Thanks a lot. All the best.
Operator
Thank you. This is the last question. And now hand the conference over to Ms. Dipti Mehrachuk for closing comments.
Deepti Mehra Chugh
Thank you so much, everyone, for joining in on the call. For any remaining questions, you can connect with me or you can go to our website for details. Thank you.
Operator
Thank you. On behalf of ICICI securities limited that concludes this conference. Thank you for joining us. And you may now disconnect your line. Thank you.