Newgen Software Technologies Ltd. experienced a significant setback in the stock market, with its shares tumbling over 11% in just two days following the release of its Q1 financial results. The sharp decline reflects investor disappointment with the company's performance for the quarter ended June 30.

Financial Performance

Newgen Software reported mixed results for Q1:

• Revenue: The company's revenue from operations stood at ₹321.00 crore, showing a modest year-on-year (YoY) growth of 2% compared to ₹315.00 crore in the same quarter last year. However, it witnessed a substantial quarter-on-quarter (QoQ) decline of 25%.

• Net Profit: Net profit increased by 4.5% YoY to ₹50.00 crore, up from ₹48.00 crore in the same quarter last year. However, it saw a sharp 54% decrease QoQ.

• EBITDA: The company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) declined by 6% YoY, accompanied by margin contraction.

Market Performance

The disappointing results led to a negative market reaction:

• Newgen Software's shares dropped over 11% in two days following the earnings announcement.
• The sharp decline indicates investors' concerns about the company's growth trajectory and profitability.

Key Markets and Revenue Streams

The company faced challenges across its key markets:

• Revenue from major markets showed flat or declining trends.
• Annuity revenue streams, including ATS/AMC, support, and cloud/SaaS and Subscription license, amounted to ₹222.00 crores.
• Subscription revenues stood at ₹121.00 crores, witnessing a growth of 19% YoY.

Management Commentary

Despite the challenges, the management remains optimistic about the company's prospects:

Mr. Diwakar Nigam, Chairman & Managing Director, stated, "The momentum and interest across our solutions in different markets is maintained and we won 12 new logos during the quarter across geographies. Our Subscription revenue growth is also getting back on track now and witnessed a 19% YoY growth."

Mr. Virender Jeet, CEO, emphasized the company's strategic focus, saying, "Our strategic focus remains on AI-led transformations with optimization efforts and building resilient client relationships. The AI-led use cases are driving deals across all verticals."

Looking Ahead

While the Q1 results have disappointed investors, Newgen Software continues to focus on innovation and expansion:

• The company added 12 new customer logos during the quarter.
• Newgen was granted a patent for inventing the 'System and Method for Data Compression', addressing efficient data compression for large volumes of data files. This brings their total patent grants to 25.
• The company has been recognized in the Gartner® Market Guide for U.S. Healthcare Provider Credentialing and Forrester's Digital Process Automation Software Landscape.

As Newgen Software navigates through these challenging times, investors and market analysts will be closely watching the company's performance in the coming quarters to assess its ability to return to a stronger growth trajectory and improve profitability.

Newgen Software Technologies Limited , a leading provider of digital transformation platforms, has released its financial results for the first quarter, revealing a weak operating performance with notable declines in key financial metrics.

Revenue and Profit

The company reported consolidated revenue of ₹321.00 crore for Q1, marking a slight increase of 2% year-over-year. The consolidated net profit stood at ₹50.00 crore, showing a modest growth of 4% compared to the same period last year.

EBITDA and Margins

Newgen's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for Q1 was reported at ₹45.00 crore, representing a 6% decline year-over-year. The EBITDA margin also saw a contraction, falling to 14% from the previous year's figure.

Factors Impacting Performance

The company's weak operating performance can be attributed to higher employee expenses and increased finance costs. These factors have put pressure on the company's margins and overall profitability.

Stock Performance

Following the announcement of the Q1 results, Newgen Software's stock price fell by 5.4% to ₹1,032.00, reflecting investor concerns about the company's performance.

Outlook

The Q1 results indicate that Newgen Software is experiencing some headwinds in its operations. The slight increase in revenue coupled with the decline in EBITDA suggests that the company is struggling to maintain its operational efficiency.

Investors and analysts will be closely watching Newgen's ability to address the challenges posed by rising costs and its strategies to improve profitability in the upcoming quarters.

Note: All figures are based on the Q1 financial results provided for Newgen Software Technologies Limited.