Ladies and gentlemen, good day and welcome to the Newgen Software Technologies Limited Q1 FY 2026 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 touch-point phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Deepti Chugh, the Head of Investor Relations at Newgen Software Technologies Limited. Thank you, and over to you now. Thank you. Good afternoon, everyone, and welcome you to this Q1 FY 2026 Results Overview. Joining your view today on the call is our management, Mr. Diwakar Nigam, Chairman and Managing Director; Mr. T. S. Varadarajan, Founder and Whole-time Director; Mr. Virender Jeet, Chief Executive Officer; Mr. Arun Kumar Gupta, Chief Financial Officer; and Mr. [Tarun Nandwani], Chief Operating Officer. Before we move on to the discussion, let me highlight that this call may contain certain forward-looking statements concerning the future business prospects and possibilities, which are subject to a number of risks and unforeseen fees, and the actual results could materially be different from the forward-looking statements. Past performance may not be indicative of future performance. The company does not undertake to make any announcements 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 will now hand over to Mr. Varadarajan for the presentation of the results, which will be followed by a few minutes. Thank you. Good afternoon, everyone, and thank you for joining us today for this Q1 FY 2026 Earnings Call. It has been a muted quarter for us, given the uncertain economic and geopolitical environment across the globe. We've witnessed revenues of about INR 321 crores during 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 conditions. The U.S. tariffs and global conflicts 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 chasing more time and bringing cost shares in decision-making and the project starts. As a result, the panel conversion is slower than initially anticipated at the start of the quarter. These differences in 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/AM C revenues, which reached INR 121 crores. These revenues seem to have a 19% YoY growth compared to Q1 last year. We see the demand of BFSI's position 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 use sizes have been slower than in comparison to 2011. Our key wins include working with the banks in the India region on the enterprise workflow and content management. The aggregate value of the order being $2.2 million. Working with a finance company in Saudi Arabia to develop the end-to-end financing system, the aggregate order value is $1.6 million. I had an insurance and healthcare customer in Philippines for developing health claims and OCR systems. In India, working with a small finance bank for a loan origination system for custom 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 discretion 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 banks. Insurance and banking dollar segments, the journey clusters are decided on the basis of their revenue potential and product maturity, investment, and scalability across geographies. During the quarter, we were granted a patent for inventing the systems and methods for data compression. The invention enables 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 techniques. This is especially relevant in industrial handling, the volumes of sectioned documents, forms, or system-generated reports, enabling them to save storage costs and foster data handling. In total, we have 25 patents already granted under our name. During the quarter, the company was also recognized in the Gartner Market Guide for U.S. Healthcare Provider Credentialing and the Forrester 's Digital Process Automation Software Landscape. As an organization, we are adapting to the evolving environment with focus on improvements in growth trajectories and maintaining profitability. Our profit after tax for the quarter was at INR 50 crores, and net margins were at 15.5%. We expect that in order to retain good-quality employees, our wage costs 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 in 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 INR 81 crores. Our net trade receivables were at INR 504 crores as of 30th June, which resulted in net DSO of 123 days. We began FY 2026 in a challenging but transitional environment. During the year, our tactics focus would remain on AI transformation, optimization of effort, and building resilient client relationships. We believe that our funnel continues to be strong and closure would gradually improve in the quarters, in the coming quarter, leading to improvement in overall growth in the second half of the year. In addition, the annual revenues will continue to pick up growth with project closures. We remain focused on our growth path and disciplined executions. That's all. Thank you very much, and we are open to your day. Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question, you may press star and two. Participants are requested to use handsets when asking a question. Ladies and gentlemen, we will wait for a moment while the questions are handled. 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. Yes, hi. I hope my audio is fine. Firstly, if I look at the low-current data, it is still healthy at 12, but the sale of product did not do well much. Is it that we have seen a smaller size deal? Maybe in the insurance, the probability size of the deal is lower. Is there something to look into that? Thank you, Rahul, and I think I'm listening very clearly. Around your QDI, so basically, if you look at overall deals, the revenue rate has been the same, and it has been at around INR 1 crore or INR 1 crore. The deals have been both in insurance, financial services, comments, and all of the sections. We ran a considerable amount of deals. Yet one thing which has changed is in terms of compared to last year or, you know, at least last five third quarter, the larger programs which customers were deciding, those programs are getting slower. In terms of the tactical deals, we fall into the range of somewhere between INR 4 crore to INR 8-INR 9 crore are getting decided. The deals which were in INR 20, 30, or 50 crore ranges, we are seeing a slight amount of slower pattern decision-making in that. The current ratio for the license deals, again, less than the last year's licenses on account of having deals, but not at the same value as the last. Interesting. Another impact that we saw was on the implementation revenue. Is this a slower ramp-up that has been in existing deals, or was this more of a current schedule which we saw in this quarter on the implementation side? Yeah, I think implementation is more this quarter specific, and the situation on account of some things. One is also that the new deals also have some residual implementation issues. Everything needs 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 delegation mode. Not much has been realized from the previous order group in that case. We think that on the implementation front, we think that it should balance themselves. Next quarter, it should become automatically better. Okay. Let's see a stronger implementation in Q2 irrespective of our new win momentum in Q2. In case the new win momentum will represent the largest outcome. In the previous, next quarter, I think the current momentum and the previous momentum should drive a stronger implementation. There was another comment that we should see a better deal momentum in Q2. Are we seeing that the slower decision-making impact is sustained in Q2 and Q2 may also be seen as a weak quarter for us? See, the way I see it is, Rahul, that predominantly the funnel is quite strong. We have a significant number of large deals in the funnel. What we have experienced, likely, is slowdown in conversion of those. I think that, you know, right now, the various businesses projecting the great turnaround in the next 30 days or next 50 days seems to be difficult. That's why the commentary of the S2 seemed to recover is more, you know, logical rather than saying that Q2 will change seriously. Okay. In that light, what kind of an outlook one should see for this fiscal? You think, you know, our typical 20% kind of an outlook could still be achieved? You think for even the macro that should be a bit lower at this point? Rahul, we are still, whether it's the end of March or now, we are still selling the whole year for the group. That's what we are investing in across all places. The number one challenge for us right now is the deal size. That is the only difference which has happened in the business. We don't see too much slowdown in the overall business momentum. We still see closures. Whether we can reach 20% higher or lower than that, it will be very difficult to predict right now for us. Right now, we have to hold on to that and see how the year takes us. Just last bit from my side, let's assume a scenario where we might be seeing this lower conversion or the smaller deal to remain more in sale. Do you think our other expenses or resilience-tied investment might go slightly lower and may drive the margin up for us in this year? Do you think we would retain the previous year margin on a broader basis? I think right now, both is another variabilization of costs will up to a certain extent. I think, as you have been telling that we are always a growth-led company. We do have upfront costs, and then eventually, we end up making sure that we meet those targets. If we achieve any reasonable sense of growth, we should be able to expand margins or at least retain the margin. I don't see margins becoming a challenge as of now because we are still fighting for a growth for this year. That's it from my side. I'll turn back to Deepti. Thank you. Thank you. The next question comes from the line of Aditi Patil from ICICI Securities. Please go ahead. Thank you for the opportunity. My first question is on the broadcast list to the smaller deal sizes. Is this more structural in nature? Could you give color on the client behavior across the Middle East and India? Thank you, Aditi. Thank you for Aditi. What has led to smaller deal sizes predominantly is what we have seen over the last three quarters is the momentum of PPT, the larger DLP programs from public health, all of our enterprises is getting converted into more single-journey cases now. We see the larger programs really get us in terms of compared to what there was funnel one year back. Having said that, there still are at least, you know, both in trade and lending, we have a large funnel of large cases that long for conversion. We are hoping that some of them will close. In India, specifically, the public sector momentum of DLP is slightly lesser, but it is pushing on other areas like sales and other things. In the Middle East, we see overall generally slightly, we are seeing a slightly slowdown of spending banking. In that case, what happens? The tactical deals are still able to sell through, and the larger deals are slightly having an elevated sales cycle. That was the first. Your second question, please? I think you have also covered the second question about client behavior in the Middle East and India. Is this specific to the banking vertical? Yes, predominantly. If you see our larger deals, predominantly are from banking. I think the insurance market for us has been small. It's always tactical deals. Government has both. They think sometimes large, sometimes small. We don't see changing out there on that behavior. The larger behavior is in the banking is almost 60%- 65% of the business. Any impact on that does have an impact on the company. Yes. To come back off the larger deals, especially the deals in larger deals in trade finance and distributed lending, do you think that this may take some time and recovery may happen only towards the end of this year? How should we look at the four-year growth? Do you consider Q1 as a base and then model based on the Q1 run rate? See, Aditi, I think even for us, it's also a difficult question because we have always plans for growth. We think this quarter is an exception, and we will again go with full momentum to recover growth in second, third, and fourth 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. We are still hoping that if that behavior slightly improves, our larger deals also can grow far from the smaller deals. I don't think that Q1 will become the base. A lot of our existing business for which we don't have to get any orders also is slightly locked by this. Q2, Q3, Q4 are much larger than Q1. Though the dependency on large license sales is across all quarters, the base of the business in Q1 is not the base. Q2, Q3, Q4 have a different base than Q1, like in the previous years. Okay. Got it. Our other vertical has grown at a healthy rate since last two quarters. Which sub-segments are growing in this? Is it a focus area or will it be one-off growth? No, no. As I said, insurance and both enterprise are different focus areas for us. The funnel in that has been growing wide. AI is driving a lot of new cases and innovation. CPGs were really stagnant use cases. The funnel out there is the only difference in that both insurance and enterprise, you will see the deal sizes to be at very average value. They are not substantial deal sizes. We are expecting to increase the overall velocity of business. We want to really improve our velocity of business from 60, 70 to all the way to take up to 100. Okay. What I was referring to is we give out verticals such as BFSI, healthcare insurance, government, and others. Others have done well since last three quarters. Which sub-segments are included in others? Enterprise is coming second. Yeah. Other OEMs, enterprise, yeah. Okay. Got it. I will drive back in the queue. Thank you. The next question comes from the line of Hardik Doshi from White Whale. Please go ahead. Yeah, for taking my question, on, you know, the comment on the slowdown in decision-making and the physical macro uncertainties, I just want to understand, you know, because most of our business comes from India and the Pacific and Asia. In general, I'm not able to understand the slowdown in Northern Europe. You know, why this would impact especially like in our countries like India and the Middle East, where there's not been that much of an impact. What are you, what are the clients talking about, and why do you expect this to come back in the second half? As you hear, we are doing the larger issues. The global facing the deal territories are more localized issues. Like in India, the issue we are facing is a more slightly amount of pullback in resale lending as well, you know, in terms of the risk exposure, how the market is seeing, and then how do you pull back into. A larger segment of unstructured lending are pulling back. On secure lending side, there is still some momentum. As a part of the single product journey, that's still going on in the market. With Middle East, I think Middle East has multiple issues. Middle East does not have the same issues. Certainly, oil prices stay still, but also the geopolitical turmoil. I think one of the challenges we faced in the Q1 of this quarter, all the legal portfolios are blocked. There was hardly any business travel or any execution travel which could happen in Saudi. Though this problem does not, this was nothing to do with the turmoil. It was to do with hardware or something around that. There are local issues which are affecting, and they don't seem to be major larger pressure. I'm hopeful that as slightly the temperamental mood changes, like in, I think we don't have the Saudi issue now this quarter. We are hoping that the legal exposure will happen this quarter. This will get normalized on that. Similarly, in India, the retail lending or lending pushback slightly goes away. We still have a lot of cases and a lot of rents where we can go and sell now. Trade is decoupled with these, but trade, again, is an issue. It takes longer decisions by closer of deals. Overall, you're right. The larger global issues have a lesser impact in India and Middle East. I think what we have sensed in the last two quarters, there is a slightly organic slowdown in decision-making across all places. Got it. Also, I think in the last quarter, a couple of quarters which Rahul had delayed implementation of some of the last DLP bank orders that we had. Where are we with them, and does that help in the kind of revenue definition over the next one quarter as to why this decision-making is slow? Yeah, I think you'll see that. As I said, we need to do three quarters. I think the progress is happening on that. Both on ATS, which is typically the revenue that starts after the implementation, you will see there's a substantial growth this quarter. In fact, the revenue is less, but on the basic side, we have even a much higher growth rate on ATS. A consistent part of the business, which was supposed to be the compounding part, has started growing. I think it will continue growing in Q2 and Q3 this year. It will provide some cushion, but it will not provide enough cushion if we don't do large license sales. Okay. Got it. Just one last question. As you know, I think in one of the slides, you talk about the AI engine that we looked at you at the Bloomberg Hopper and Martin. Can you just talk a bit about how have you kind of embedded the use into your products and, you know, how this has enhanced the application? See, Hardik, what we realized, especially with the traditional AI, is the ML model, as well as the GPU, which you can use. A lot of use cases where customers get stagnant in the area of Enterprise Content Management or the Customer Communication Management, they are not really connected. Customers have started looking at even the last mileage of automation, which was left out of that. All, you know, what we call the intelligent document processing use cases are getting into both in enterprise, as well as in segments like insurance and banking. What we have done is the other products have anywhere slightly ready. They're getting ready for some time out there. In terms of our vision, are getting more stronger about that, getting in minds there about our ability to remote sales and issues we've produced. That's what we are building right now on that. One thing is CLU. Most of the use cases we are driving now, I think 70%-80% of the use cases, AI is either a very central part of that or is a very substantial part of that. Even our lending use cases, we are having AI as a substantial part of those cases. We have data also ready for that, and we are hoping that would lead us to getting even a larger number of deals on the table. Okay. Got it. Thanks so much. Thank you. A reminder to all participants, please press star and one to ask a question. The next question comes from the line of Shaleen Kumar from UBS Investments. Please go ahead. Yeah, hi sir. I'm available. Yes, please go ahead. The growth is a bit on the supply side. Are there any cancellations that have happened? No, we have not got any cancellations. There's no impact in this quarter. Because you've impacted the decision to go ahead, doesn't seem like that it would have some surprise to you at all. However, this doesn't happen. As I said, you know, we have a very long history of growing consistently, and I think this is a quarter for us. I think what has happened also is, broadly, if you understand the conclusion for business for us, we are still dependent on a large amount of license deals for the growth. It is definitely a key part of that. There is actually a lot of decisions on that. We showed for the implementation is a result of that license. There is quite some impact on that. The impact on implementation is not only an account of that. It's also an account of some delayed administrations in our existing projects and other things. We said in this slightly starting recovery, we could also recover in the next quarter on that. Yeah, which is a surprise, but the surprise is predominantly based on our ability to go and get new orders. Yeah, I mean, I was just saying that customers are getting longer, but the growth is growing. I'm sorry to interrupt, Shaleen. You are not quite available. Could you, if you know, move to an area where the cellular network is better? Thank you. In one people, can I go there? Is it better? Yes, go for it. Sir, I was asking, some of the deals which were not able to close in June, were you able to close them in July? You saw them have globally coming back in July of this quarter? You see, it's another thing. Every quarter, some deals, some of them do come in July and some of them vanish. What I'm worried about is about the larger deals coming in. I have not seen any in July. We have not got any of those larger deals yet in. They're still projecting some of them to close this quarter. If we can close those two deals or three deals this quarter, I think we can do a better quarter compared to Q1. Right. I got dropped off in between. Did you talk about any guidance for this year? No, sorry. I didn't really ever talk about guidance. The only guidance I can give you is internal. We still are still projecting for the growth here. We are going to still go and invest more in sales, marketing, our ability to rack up vendor products. We've always seen some of these quarters as some intermediate jobs which we can either springboard on or at least recover fast. You have a very strong history of growth close to 20%, sir. You've been 20%, right? From that perspective, how should we think about, like, can we still think of making kind of a growth despite the effects? We have never given any guidance. We have only assumed. It's true, how much it is proven wrong is how you can make mistakes. I think, as I said, rightly, I can only tell you what we exactly. Internally, we are planning for a growth here. We are not planning to manage at a flat or a mutual growth here. We are still planning. Right now, the way the environment is unfolding for us, we see slightly there's a huge uncertainty. Right now, commenting on guidance may not be the right thing to do. I think give us a few more months. I think we should be able to give you exactly we'll get the whole of our situation and try to move forward from there. Gotcha. Is there anything else, like an external factor, that could be affecting our growth, like a competition or, you know, change in customer behavior towards our product? Right now, I think from looking at my funnel and my opportunities on the table, we don't see any head or any loss in either way. We are not loss in any cases. That is what would occur. We are not seeing the funnel changing. Right now, we have a healthy funnel growth compared to last year. Also, the conversations on closure, there are a lot of conversations on closure. I don't see any big change in external factors. What has really happened is only two contributing: large deals and lesser conversion of large deals, and typically slightly amount of slow decision-making. That's all what we are looking at right now. What could be possible? Is there a standard case where these large deals, you know, customer decides not to go ahead? Is there an alternate for them, or is it that they can keep on delaying it and they have to come? See, I think in enterprise mode, B2B software, we have realized that the competition to any deals are multiple percentage. I think one of those competitions is always status quo in case of uncertainty. It's also what happens when the overall momentum is more positive, more customers are deciding, more deals happen. When less customers are deciding or slightly reluctant, less deals happen. Those deals don't go anywhere for us, but they may change, you know, from one quarter to they get backwards for three quarters or four quarters sometimes if you meet with the customer. I don't see, you know, broadly any customer behavior which is very different. We have seen this always in uncertain times. We scale it to either more exploration and sales, more better deal conversion, and getting a more number of logos. That's how we cycle out. Got it. All right, sir. That was us. Thank you so much. That's it from my side. Thank you. Thank you. The next question comes from the line of Grishna Shah from Envision Capital. Please go ahead. Good evening to the management team, and thanks for taking my question. I'm curious to know how the U.S. market has done in particular and what was the outlook, given that quarter four we have seen very good deal wins in the U.S. market. That's the first question. Grishna, thank you for the question. I think the U.S. market, we have seen invested. I think we have the market also has not really been very different on growth compared to this last year. Though Q4 of that, we were able to close 10 deals coming existing and 6 deals in June. In Q1, we had just, I think, two major deals coming from existing accounts, one in insurance and one in one more segment of things. We have a good funnel both in the U.S. and around the U.S. market in both insurance, health, as well as banking. Out there, we are also running off with some very large deals, and we hope they're actually closed and will close in this year. Yes, right now, we'll have to slightly wait for some more times for the market to really change for us. It is not right now, it is not helping the growth. It is staying at the same rate as other markets are. Yeah. The other question that I had was the ongoing margin outlook, given that we would also have a raise hike, and you know the growth slowing down, the operating levels in the business also get impacted. What's the range that you know one should look at in terms of operating margin? If you could give some color on the raise-hike impact, either way. See, right now, on the operating margin, you know we have historically maintained that our net margin should remain at around 20%. I think there's one important thing here, since we are already pivoting for growth every year. Our costs are slightly translated in terms of our manpower. Though we are also depending on sales performance, we have a lot of variabilization on that. That should kick in. I would still go and hope that in this year, we should still be able to maintain our margins as we have seen. If the growth rate for custom fees, then the margin would get affected. It has to grow, what we do. That's because internal users are much lesser on a slower growth rate for us. We are not quite that we can maintain margins at 1% or 2% growth. That's not really the company's scenario right now. On the raise-hike, I think we have not taken a final call there. There will be surely wages increasing for our campus sequel and certain level up to a certain level. We will define that exactly in the next one month or so. I think next quarter, we can give you a more clear picture about that. Okay. Okay. Any color or more color on the competition? You've been seeing more competition emerging in certain geographies, you know, like the Middle East or the African region. I mean, is there some new competition emerging? Would you put some light on that? See, nothing material. What happens is we have the global players who are competing all the time and seeing the regional players and the PTM players. On the market, it is your local competition in every country depending on what vertical use cases are there. There is always a third competition, which is about the startup ecosystem, AI-led companies which have. I think that's a really good thing. I don't think there's any way. Right now, competition is not determining any type of any challenges where we are losing too many cases to competition. I wouldn't say there is sales too much. The only what is structured, the larger platform players are entering our traditional market areas, like more and more players coming to India, more and more players coming to the Middle East. There is a general market out there. What 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 practical market areas that I've covered. Okay. There hasn't been any pressure on pricing at first, right? Nothing more than something usual. I don't think. Okay. Okay. Can you also just, you know, tell us about the tax rate that we would have for the next two to three years? I think around 23%. Okay. Fine. Thank you and good luck. Thank you. The next question comes from the line of Mihir Manohar from Canelian Asset Management. Please go ahead. Yeah, hi, thanks for giving me the opportunity. When am I available? Yeah, sure. Yes, sure. As Yes, sure. As you mentioned about last year's pipeline, I think a lot of things have to. Let me see the India business. Also, I'm going to India type of solution before I have to make the whole platform, which is the community of the system. I'll come to you later. We can try to repeat your question. Yes, but it was not audible. Can you just repeat it? I think we talked of. Nir, please go ahead with your question and unmute your line in case you're on mute. Since the participant has dropped, we will move to the next participant. The next question comes from the line of Ruchi Mukhija from ICICI Securities. Please go ahead. Thank you. Thank you for the opportunity. I've asked this question. I've heard some losses through decision-making throughout the quarter. Yeah, Ruchi, I think we have seen this not only this quarter. We saw it also last quarter. I think last quarter, some of our deals did hurt, and we're just getting to that slow decision-making process. We have seen this slightly creeping in from Q3 to Q4, and now slightly more prominent because Q1 is also a smaller quarter for us. It becomes a little more prominent in Q1. I don't think it is, if you're saying it has been consistent for the quarter, yes, it has been consistent for the quarter. Could you help us? What are the signals that we are watching to monitor in terms of line decisions? What should we be taking, especially to ensure it's not getting worse? Ruchi, sorry, I couldn't get your question. Could you just repeat it? What are the signals or signs we are assisting to watch to monitor this type of applying decision-making, especially any indication to keep a tab that it's not a worst case? Yeah, so I think this is typically part of the sales process. We are looking at our conversion rates. We are looking at, I think, sales movements of cases. Finally, also the contract sales and the type of cases. You can see there are two ways to look at it. One, we look at it holistically across the enterprise type of city because that is where the larger data comes from the sales management system. Also, for our core cases, which are projected for closure, we look at the accuracy of that projection in terms of comment accuracy. That is where we get exactly, like, you know, in terms of are we at 70% of comment accuracy, 80% or 40% of comment accuracy. That gives us that indication of how the market is going because when we are talking about slowdown, we are talking about cases which are urgent decision-making, which are at the closure stage, which we call the evolution stage or a closure stage. We are tracking on both ways. I think we do get a fair amount of indication about when things start changing there, you know, either momentum either way. If the closures persist, do you think some strategies change in terms of what kind of work you seek out in the market? If the priority is what we are getting in the market, do we try to reach out to more customers who have to make up the revenue level? Yeah, Ruchi, absolutely. I think, you know, 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 just hitting that pitch far. Rather than looking at just 50 deals, we think that we should target more like 100 deals and try to compensate for either the slowdown in the larger deals segment. Also, you know, as last year, we got a spike in change for a new open in that vertical. Enterprise is also seeing some flashing. We're expanding the addressable market as well as looking at more velocity. The plan will be very specific to every deal and every account, how we want to solve. You have a document. When compared to large deals, typically, the large dealing is more deals. Could you talk about how does it change the profitability economics for the company? See, I think the large deals have large license components. They've got much better margins. Typically, however we reach our license target, I think we have the same impact. Whether we do the revenue from three large deals or 30 small deals, if the license amount is the same, then it does not change the profitability of the company. It is the same thing. As long as we reach the high broad margin revenue to reduce the license, ATS/A MC, and subscription, the percentage of that revenue to the percentage of the overall revenue does not shift significantly. Our broad margin position is not changing. I see. Thank you, a lot of it. Thank you. Thank you. The next question comes from the line of Mridul Goenka from CLSA Capital. Please go ahead. Yeah, hi. This is Sumeet from CLSA. That's two questions within the lead. First is, sir, I wanted to understand if there are any structural impacts of AI agents or agentic AI on low-code, no-code industry altogether. 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? I think this is a very important question. What you're asking is, the agentic AI space or the GenAI space in general is also disrupting a lot of code generation initiatives. Of course, since it also, in a way, proposes a very different way of low-code or no-code, in terms of reducing the overall development cost, there is an overlap. In our use cases, if you understand our GTM, it's predominantly determined on verticalization of offerings using low-code or no-code of the technology. What we write down is similar. Basically, now we are saying that you can bring your long automation system through a low-code platform, which also uses agentic AI or GenAI to augment the full building part of it. We don't see a challenge on that. There's no direct competition between agentic AI, GenAI, and low-code. I think what low-code plus augmented low-code with GenAI is, is a new offering in what other people will be proposing, including us in our offering. I don't see a concern. I also see it may also accelerate low-code in terms of GenAI may add one more capability to the whole low-code, just accelerating the whole low-code initiative in the market. On the overall, I think you're absolutely right. We think the total time is very, very large. Also, our expectations to go deeper into the U.S., Europe, and other things. We don't think there's going to be any kind of a muting down our overall expectation. Our overall expectation is to even accelerate the growth rate above our historical growth rate. It's higher. I don't think there's any challenge. We may have one or two quarters, a few quarters in every five, seven years like this, but that will not change the overall outlook of the company. Do you think this is more like a phenomenon where certain deals and projects are being sold out rather than being canceled? Over a 3-5 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? Absolutely. I don't think the revenue is back or not, but I think yes, over the long-term outlook, we will not see any change in the long-term outlook. Whether the deals get pushed out or there's an overall delay in deals, I think as a sales company, we'll find ways to really overcome that and start selling more. Because, as you rightly said, the overall addressability of what we have, it's very, very wide. We 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. Right. I think the only problem, if you be social, I mean, like if you look at the Indian banks or Middle East banks of the economy, they have been still humming well. The earnings growth has been resilient, not that bad. The performance for you guys from Middle East and India and the banking sector is a bit of a, I would say, an outlier in that context where we don't know what's happening with the competition or on the product side. I think the main concern from the investor community from this is us. No, I can understand that detail. Therefore, I think you know what happens is we have seen two quarters because of various reasons. As you rightly said, we don't see the overall picture of all that. We still don't have any larger challenges in the market. We're seeing these two markets. We are the player where everybody has to fight. That picture is not seen. I think we have to just get some of the large deals in this market and play a safe better. On the larger side, we'll have to get the U.S. story going, Europe story going, and the offseller story going. Got it. That's very helpful and all the best. Thank you. Thank you. The next question comes from the line of Mihir Manohar from Canelian Asset Management. Please go ahead. Mihir, you are not quite audible. Could you please come closer to your microphone? Is it audible? Yes, please go ahead. Yes, sure. I think the guys are breaking up again. You're breaking up again. You're audible now? Yes. Yeah, sure. We wanted to understand the large deal pipeline. You mentioned that from India side specifically, there was some saturation, which is fair on the PSU. Why is the large deal pipeline getting shrunk, specifically, Middle East as well as Middle East, U.S., and Europe? Some colors that will be difficult. I think in the commenting of the second half, we expect the numbers to come around on a better side. From an external perspective, let's say how to get the confidence around that, some colors will be useful. Yes, thank you. I think the two things you are rightly saying. When I said large deal, I think the bigger concern is not the pipeline, but it's about the closure. What we have seen is that our large deals have not closed. What I was saying is that I think what last year and two years, we had a huge momentum of public sector orders which were decided to really large in spans. I think overall, the addressable market of the public sector also has closed. We are almost instrumenting most of that. I think there are three, four left, which we are probably going to get in next quarter or next quarter, next quarter. Something like that would happen. It is that whole addressable market itself. While that has closed, we have opened opportunities in payments and sales, again in those things. I think, again, the pipeline in payment and sales is not as strong as the DLP program was pipeline. I think there are just two issues in large deal. One is about, you know, overall pipeline in India of large deal. The second is also the closure rate across market in large deals. Both of these are said as it is to the problems of this quarter. Of course, it's two things. It's some two things. It's some tangents. Yes, sure. There is this DLP program which was completed, which is true. What the reason for large deal pipeline getting lowered on any methods or issues? See, if you look at really large deal pipeline, which is seen only in India and Middle East, those are the ones which have been market. There are large deals, but they're similar to them in INR 6 crores, INR 7 crores, INR 8 crores, INR 9 crores only. In Middle East, as I said, I think this quarter, we had one strong turnaround, 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 proceeds. We think we should be able to recover from that going forward in next quarter or next next quarter. You know, come to the second part of your question. I think why we are confident is because you know we are still generating more cases and we are still generating more new deals for large deals. Overall demand situation, we have not seen very different. The only difference we are seeing right now is our ability to close the large deals. We are hopeful that things could change for us going forward in the next quarter or in the next half of the year. I think we'll have to wait and see how the market goes. As we get more into, you know, two more months, we'll get more insight into exactly what's happening and how we look at the services. On the quick question, are we not seeing customers which have dropped 20 accounts or from the sales team? Is there any churn which has happened that could be a point of undercontrol? I don't think we have any churns in the tracking revenue, but if you're not, it's really trending the revenue contribution from top 20 accounts last year versus this year. Does it keep changing? The names keep on changing. There's no big account churn which can make a material difference for our business in such a large way. Before that, Rohan, another question here? Yeah, I just have one question, which was, have you lost any customer in 2020? We have some churn of customers, at least smaller-sized customers, and they're typically internal partner customers every year. I think with priority, we have two to six customers we end up losing every year through contracts or through cancellations or sometimes through mergers and acquisitions, change of priority. Nothing which is very different from last year. In 2020, we don't lose anything. Does that answer your question here? Mihir, are you there? You're not audible. I think flying is not fine. We have vendors and communication. Thank you very much. Excuse me for disturbing my line. I'm sorry for that. Thank you. The next question comes from the line of Debashish Mazumdar from Svan Investment. Please go ahead. Good evening to the management team, and thank you so much for taking my question. Sir, I have three questions, three on the macro level and one on the company level. The first question I have is there is a conflict because of AI coming in and the implementation cycle to cost benefits of our enterprise software business will change significantly for a client. 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? That's my first question. I will come back to two more questions. Sir, I think you're absolutely right. One of the biggest advantages of GenAI is, in terms of the speed by which the software development cycle can be affected, both in the coding and other stages of software development. 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 a large magnitude, which would, for use cases, lead comfort in the execution cycle and will provide material advantage to the customer. What it triggers is also a faster innovation cycle. You know they end up opening up more projects and more executions. You end up, customers end up automating or digitalizing or using AI for more and more cases. Overall, from my outlook, I think the overall spend on IT or service would keep on increasing. Yes, for the same project, the cost may substantially increase. Are you kind of seeing this kind of trend then because of this thing that substantially going up, or it is still early phase? I think right now, at the top levels, there's a communication. People expect optimization. People expect use of AI. I don't see right now that tangible it has drafted even an amount of expectation of value and numbers. We are not very far from that. I'm very sure in the next two quarters, you will see this conversation happening on all existing projects and all existing contracts about the optimizer. Understood. The second question is, and probably Mitch will have already answered this question. I'm going a little late. If I see my product or license growth description, there is a sudden drop. I understand there's a point of seasonality here. Is it more to do with the macro challenge, especially with the BFSI segment and common weather segment client, or there is some letter acceptance of our products of moving? Right now, we see the fashion for our product overall can be determined from the funnel and the funnel size. We don't see any challenge. We also don't see any challenge in terms of the number of opportunities which are coming to closure. I think our license sale and dependent on two things. One is about the number of new deals and the number of mining cases we face next quarter. That also is going to depend on the size of those cases. While you see on the numbers, we are very close to what we did last year, but on the time we are shortened, and that is a reason because we didn't get any substantial large license orders this quarter. Which we think will not stay the same going down this quarter. We should be, because the funnel and a lot of cases have large license deals. I think in Q2 or H2 of this year, we should be able to recover that. Of course. One last question is, if I see no support to revenue, which is more for which I'm not sure, it is kind of stagnant from last year quarters. If I understand correctly, until last quarter, my license growth was significantly higher. Why is it not getting percolated into higher percentage and why is the percentage the growth in last quarter and very minimal growth this quarter? Yeah, I think we had exchanged this. I think this was one of the concerns last two quarters in our revenue, both support and ATS. Since we said a lot of large projects have not seen the closest change, this revenue stream has not resolved. This is still an opportunity for this year for both our AMC support and subscription to grow much more faster than last year. I think some of these projects are coming in the same project. The first thing you will see is that the AMC will go out of that book. The second subscription in the next few quarters, you will see that the whole revenue goes out of that. Would this delay in closure be partly to do with the longer execution cycle because of the general uncertainty in the market? No, sorry. There are two parts. One is about the license deals. The value of license is impacted. Yes, yes. That part is understood. Why is there a delay in execution in existing license implementation or the service revenue? Yeah, I think that's what I was saying. Last year, we had, over the last three years, got very substantial large orders. We had a substantial part of execution. Some of these executions have got delayed. You know, there's a plan for nine months. They'll take one year, some of it in two years. We had effective downstream revenue, which is the ATS. As soon as the customers go live, then only they start talking about ATS, and subsequently, they start talking about extended support. These two streams, if you see last year, also have not grown substantially for us. I think right next 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 fruitification, and some of these customers are getting to negotiate the quarter. That's what I would say. This year, you will see if you expect that both ATS and support to grow. Okay. One last question, if I may, is that talking in the initial part of the call about increasing competition for global deals. Can you just help us to understand who are those players and what kind of competition you are seeing there in which areas of the business? See, generally, what is happening at the GP, we are seeing the markets where we are strong, like India and the Middle East, multiple countries, also in APAC. We are seeing almost substantial investment done by all Asian global players who are either in the ECM quadrant or the BPM quadrant to enter the market. The overall competition dynamic of every account is changing. 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 vertical companies. This phenomenon has been there consistently for some time, I think. What we see is that in our strong markets, we still have a very strong sense in terms of both reference popularity, rule, traffic, and our products are much more recognized because of our vertical knowledge and expertise in that. Overall, yes, the competition in general is increasing in all cases. Are you saying that this new competition is basically the traditional Business Process Management players, you are trying to productize their services? Not really. Not really traditional. It can be platform players like Salesforce is also entering stages like digital lending. You can have a company like ServiceNow that's entering the operation, which was not prevalent very much in India, and now it's more prevalent. You have companies like Mendix, OutSystems also entering the market, which was not here two years. The market in the worst case of low-code is also getting very cluttered and not defined. That's why we have almost pivoted in terms of our strategy going with a vertical-based approach and using low-code platforms as a way to accelerate the engineering cycle. Thank you very much, sir. Thank you very much. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Ms. Deepti Chugh for the closing remarks. 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. Thank you, ma'am. Ladies and gentlemen, on behalf of Newgen Software Technologies Limited, that concludes this conference. Thank you for joining us, and we will now disconnect the mic.