Ladies and gentlemen, good day, and welcome to the Newgen Software Technologies Limited Q4 FY 2026 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 your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Seema Nayak from ICICI Securities Limited. Thank you, and over to you, ma'am. Hi. Good evening, and welcome to the Q4 FY 2026 earnings call of Newgen Software Technologies. It's my pleasure to introduce the senior management team of Newgen. We have with us today Mr. T.S. Varadarajan, Whole-time Director, Mr. Virender Jeet, Chief Executive Officer, Mr. Tarun Nandwani, Chief Operating Officer, Mr. Arun Gupta, Chief Financial Officer, and Ms. Dipti Mehra Chugh, Head, Investor Relations. I now hand over the call to Ms. Dipti for further proceedings. Thank you, and over to you, Dipti. Thank you so much, Seema. Good afternoon, everyone, and welcome to the Q4 FY 2026 results of the company. Before we move on to the discussion, let me highlight that this call may contain certain forward-looking statements concerning Newgen's future business prospects and profitability, which are subject to a number of risks and uncertainties, and the actual results could materially vary from the forward-looking statements. Past performance may not be indicative of future performance. The company does not undertake to make any announcement in case any of these forward-looking statements become materially incorrect or update any forward-looking statement 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 presentation of the results, which will be followed by the Q&A by the management. Thank you. Good afternoon, everyone, and thank you for joining us today. We are pleased to report our results for full year and quarter four of FY 2026. In FY 2026, we recorded a revenue growth of 6% YOY to reach INR 1,574 crores despite the uncertain market condition. The quality of our revenue mix continues to improve materially, driven by expansion in subscription-based revenues. Our subscription revenues grew by 24% YOY to reach INR 525 crores. Specifically, the SaaS component grew by 36% YOY. This provides us with significantly better visibility for future revenues in the form of increased deferred revenues. Our annuity revenues were at INR 968 crores, comprising 62% of total revenues, which is up from 56% in the FY 2025. This depicts a structurally positive transition to more predictable subscription-led revenues that improve revenue visibility. Moving to geographic specific highlights, our business model continues to be well diversified across geographies, with each geography meaningfully contributing to our growth. U.S. geography continued to grow, record healthy traction, and witnessed revenue growth of 17% YOY for the full year. In Q4 specifically, U.S. revenues were at INR 106 crores, growing at 20% YOY. Our consistent wins during the year opened the door to broader regional adoption. APAC geography witnessed revenue growth of 14% YOY for the full year. India and EMEA continue to be the largest contributors to revenues. The large deal closures continue to be slower in these regions as customers take time to evaluate their technology strategies and due to the geopolitical uncertainty. India geography revenue growth has been muted due to low license revenues and customers holding off on making decisions, particularly on large deals. In the EMEA geography, revenue growth of performance has faced headwinds by geopolitical uncertainty in West Asia, especially towards the end of the financial year. This has led to delays in large deal closures. The collection from the region have also been slower on that account, which has in turn affected the overall DSO. Over the course of the year, we added a total 47 new customer logos. At the same time, we deepened relationship with the existing clients. The number of customers with billing over INR 5 crore grew from 87 in FY 2025 to 101 in FY 2026, reflecting strong wallet share expansion. Our key wins, particularly in this quarter, include providing retail loan origination solution to a leading bank in Malaysia. The aggregate order value of RM 6.75 million. Entered into an agreement with a leading insurance company in Illinois, U.S., for policy binding solution with an order value of $1.6 million. Executed an agreement with a leading bank in Kuwait for corporate finance origination solution, retail finance origination solution, and customer communication management system. The aggregate value of this order is $2.2 million. Supply, installation, and implementation of the NewgenONE digital transformation platform for an insurance company in the Caribbean. Again, the aggregate value is $1.5 million. Building a tax compliance system for a large and reputed government organization based in UAE. The aggregate value of the agreement is AED 5.3 million. Coming to our products, the NewgenONE platform continue to unify content, processes, and communication into an orchestration layer where intelligence is embedded into how enterprises operate with the trust, governance, and control built in. Continuing with the focus on innovation, Newgen has filed 12 patents during this year and has been granted two patents in the same period. Overall, as of date, we have 67 patent filings and 25 patent grants. Our NewgenONE platform help in creating AI agents that leverage customer-approved data to deliver explainable and evidence-based models with full auditability. These agents are safeguarded by the business rules and continuous monitoring to ensure reliable performance. By embedding agentic AI directly into its low-code fabric, NewgenONE enables organizations to move beyond process execution toward autonomous policy-safe decision-making. During the year, we have continued with our focus on selling higher journey-led deals in banking and insurance. Especially in the insurance vertical, we have successfully added customers for our policy administration system offerings, especially in the mature markets. It gives us immense pride to share that for the second consecutive year, Newgen has been certified as a Great Place To Work. It reflects the strength, consistency, and shared values of the culture we have built together. Our global workforce numbers approximately 4,300 professionals. Throughout the year, we have worked on our employee AI upskilling program to build and scale a cohort AI skilled talent within the organization. We have also added senior leadership talent to strengthen go-to-market, corporate, and innovation capabilities. On profits and margin. Despite uncertainties, we have maintained our operational profitability through optimization in costs. Profit after tax for FY 2026 was INR 301 crore. Impacted by exceptional items, excluding one-time statutory impact of new labor codes and provision for legal claim to the extent of INR 42 crores. If these exceptional items are excluded, the adjusted profit after tax would have been INR 334 crores, reflecting a good growth of 6% YOY. Instead of negative growth as reflected in the books of account, which is incorporating exceptional items. The adjusted net margins are at 21.3%. We are accelerating AI-led engineering, automation, and operational efficiencies across our delivery and product teams. We continue to prudently invest in R&D and sales and marketing initiatives. During the year, we have invested nearly 8.5% of our revenues on R&D initiatives and around 22% 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 year at INR 302 crores. We have declared a dividend of INR 6 per share. Q4 revenue was at INR 457 crores versus INR 430 crores in Q4 FY 2025, which is up 5.3% YOY. The Q4 SaaS component grew at 44% YOY, underscoring the momentum in our cloud and subscription-based revenues. Our deal pipeline continues to remain strong. Our order bookings have scaled and deferred revenue streams have strengthened. All these are providing improved visibility into FY 2027. While we remain mindful of the broader market condition, we are confident in our ability to continue delivering value to our customers and shareholders. Thank you, and we are now open for Q&A. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchtone 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. Our first question comes from the line of Seema Nayak from ICICI Securities Limited. Please go ahead. Am I audible? Yes, ma'am. Please go ahead. Hi. Thanks for taking my question. Apart from Middle East, are you seeing any broader weakness in BFSI demand? How is NBFC demand looking in India? My second question is, employee cost is at a multi-year low. What exactly is driving that? [inaudible] Sure, Seema. Thank you. Thank you for asking that. You know, you're right. I think Middle East also we didn't see too much of weakness, but we saw disruption in terms of towards the more critical quarters of, which are very important for our business towards the end of Q4. That was a kind of a disruption. On the business or funnel or in terms of building cases, I don't see there is too much of disruption over a longer period of time. Still, we continue that. We see strong traction both in Saudi, Kuwait, UAE for our business. On the India front, you know, I think NBFCs, we have, as we said, rapidly, as we have covered a lot of public sector banks and banks. The larger segment of NBFCs, we are doing a lot of work on that segment, and that seems to be one of our growth drivers. Apart from seeing some challenges in, you know, areas of personal finance or something where there is kind of a slow movement, all other areas which are important, you know, in NBFCs, we are seeing a growth out there. Having said that, in India, we had a very strong pipeline build over two years on account of large public sector deals. We see there is still a challenge in terms of getting the larger deals out of the larger banks. On typically the momentum of business in terms of acquiring more logos or more deals in NBFCs, we are not seeing too much of a challenge. The other part of your question about the employee cost, I think there are a couple of things driving that. Overall, I think there is an operational efficiency coming in as part of the scale. Also this year, if you look at, most of the revenue streams which have grown are not, you know, service-related, so need of hiring more aggressively was not there. We also have started seeing the early advantages of getting AI-based engineering practices built in our system. We had an optimization of roughly around 7% in our manpower numbers for the year. I think that trend, I think may continue slowly for a few years. We continue to still hire aggressively from campuses because we will still need a lot of people to work on to support the growth. As of now, both, you know, in terms of, what you call a slower demand in the implementation revenue stream, as well as, what the AI advantages are bringing onto the table are helping us optimize the employee cost. Does that answer your question? Yeah, yeah. Thanks a lot, Virender. Thank you. Thank you. Our next question comes from the line of Meet Virani from MNS Investments. Please go ahead. All right. Am I audible to you? Yeah, you are. Hello. Okay. My first question on the side of large deal conversion, as we have discussed in earlier conference that, you mentioned earlier that, delay in large deal conversion, but Q4 we have seen strong revenue growth. Sir, can you help me to quantify how much of this growth was driven by conversion of earlier delayed large deals and whether deal closure timelines have normalized or not? Yeah, Meet, I'm not sure I got the. But I'll try to explain what I understood from the question is. The large deal conversion for last two years, if you look at which have helped predominantly the license sale in our part of, if you look at multiple segments of our revenue. Our licenses for previous two years have grown at a compounded rate of more than 30%-40% year-over-year. This year, since we have not been able to get the deal momentum of large deals at the same size, especially which were on the backdrop of larger deals coming in Indian public sector or some of the larger accounts in Saudi Arabia. Those things we are finding, there is a slow take in terms of decision-making processes out there. There are multiple reasons about the decision-making process. Some are to do with the, you know, the challenges which are in the economy, but also some are in terms of the uncertainty around the AI or, you know, taking more time to evaluate whether what people are buying has the right value for the enterprise. There is overall slowdown in terms of larger deal momentum across all businesses. That we are seeing broadly. I don't see, I don't know exactly has it had completely settled, but what we have in our control is we have pivoted to getting into some more mid-sized deals and are trying to accelerate that. You'll see as part of that this year, I think our deal momentum has been good. In fact, between your new logos and existing logos, we have got substantial amount of deals, and they have added to large license, but it has not been at the same rate. Does that answer your question or you have meant something else? Yes, I got it. Got it. That's enough for me. Thank you much. Thank you. A reminder to all the participants, ladies and gentlemen, you may press star and one to ask a question. Our next question comes from the line of Rahul Jain from Dolat Capital. Please go ahead. Yeah. I'm able to. Mr. Rahul, before you go ahead, may I request you to use your handset, please? I am on handset. Is this fine? Yes, sir. That's much better. Now it's better. Yeah, yeah. Thanks for the opportunity. So I know so far what I could gather is that the challenge that we are seeing is mostly on the large deal sizes. But in the perspective of how we are seeing the market today in terms of deal sizes or in general spending behavior, how we plan to Virender, trying to meet the objective on the growth side and what should be the aspiration for us with this kind of a macro that we are in for FY 2027 or maybe on a medium-term basis, what should be the growth band that we should be operating at? Yeah, Rahul. Thank you for the question. Yeah, I'll just, you know, break it into a couple of things. One is, in terms of looking at market today, I think there is an element of uncertainty in the various pockets of market. We are still not very sure about how Middle East is gonna behave in the first quarter and second quarter. We are still unsure about some of the larger deals which have got pushed out, whether they're gonna be decided. Having said that, you know, the applicability of what we have in terms of product solutions technology is quite wide. We are continuously expanding new solution areas in existing verticals. We are also expanding into newer geos and new markets which we were not. We are slightly focusing on going wide. This year, while you know we had challenges in India and Middle East on the revenue front, but we still had very substantial deals coming in those markets, but they didn't match the license revenue of the last year. Overall, if you look at deals, we almost did the same number of deals out there. In the meantime, we have also added lot of customer bases in the newer markets. I think APAC has shown strong momentum. We have also opened markets in Australia and U.K., where more deals have come in. Most of these deals are subscription deals, so the revenues will start figuring in future quarters. For us, we think we are very strongly believe with the kind of product innovation and the vertical journeys we have. We have a very, very wide market. Though we may have, you know, momentary challenges in one market, that does not change overall growth story of the country, our company. We are very hopeful that we should be able to push back our growth very fast. In the intermediate time, we may have a region or some other regions, you know, having challenges for a moment. Overall applicability of our products to wider market, total, the growth of total addressable markets. We are also thinking that, the whole AI is gonna give us, a next generation of push for enterprise content management, our customer communication products. Our insurance PAS systems have got early successes we have got in that area. We are, you know, if you ask, we are completely, you know, optimistic and hopeful. In this kind of environment, projecting a number for next year may not be advisable. I think we'll just wait for one or two quarters till we are getting a much more better insight of what's happening in the market. Yeah, Jeet, thanks for the color, and I can understand that we are in a very uncertain scenario, so it is very difficult. We've been facing this challenge for a couple of quarters. We have been working on this aspect that, you know, where the problems are, what could be the potential mitigation step and all that. With that things keeping in mind, is it like at least a double-digit growth is something we should be ensuring? Or you think it is so tough right now to give any ballpark number would be difficult? Anytime we do any growth which is lesser than our historical growth, we are quite disappointed. Our plans never factor, you know, single-digit growths or, you know, muted revenue. The other problem is, as you're rightly pointing out, last three, four quarters, the way we see the problem is, we had a very high license lumpy revenue base in our, revenue streams. Some of that has been already rationalized. The business in control, the deferred revenue, and what you call the subscription base has grown up. Inherently, the business has some amount of compounding of growth. With even, you know, lesser, challenges this year, we should be able to probably put up a growth number. I would right now hold my horses to claim what is that number, especially depending on what has happened just in the last quarter. We were even thinking of doing much better numbers even last year. I think the last one month surprised us, depending on what, you know, major markets we could not just even move any, anything. I think just give us one more quarter. I think by the end of the next quarter, we should be able to have a much more clear picture. Yeah. Thank you so much. Just last bit on margin, if I could ask. Since we are of the view that the growth could be a bit tricky and, you know, we'll keep watching out on that front. Do you think this year we could see a little bit of optimization on margin, or you think last year margin are the best indicator to see for this year? Yeah. You, you're right. I think last year you would see that there's a lot of work which has happened on the margin front. Since the growth did not sustain, but the margins were quite optimized, and with even muted growth, we are able to maintain margins. Generally, we are always in the upfront investment zone. I think this year we are already at roughly around 21% net margins. I think these are quite healthy. I think we would like to still, as a business, focus on the top line and grow, while being conscious about not going overboard on spend this year so that the margins don't get any seriously impacted. I would think our net picture at the end of the year may be similar, but it will entirely. If we hit a growth which is in higher teens, we may have expansion of margin for that year. If it is on a lower teen, we should be maintaining similar margins. I would just request management to consider maybe a buyback kind of an option, given that the pricing has been very attractive. Generally, the capital in the business requirement and the capital beyond working capital is very minimal. A meaningful allocation there could be a good opportunity for company to reduce the equity base and help the investor to you know boost up the earnings. Thank you. Thank you. Thank you for the suggestion. We'll surely take it to all things and we'll be considering. Thank you. Our next question comes from the line of Aditi from ICICI Securities Limited. Please go ahead. Thank you for taking my question. Congratulations on good execution. My first question is on the Middle East geography. Are we seeing any delays in new deal closures due to ongoing conflict in Middle East? Yeah, Aditi, thank you. Yeah, absolutely. I think we had a serious impact last quarter. We hope. What has happened is, you know, in all turmoils, after some time the business starts. Like in COVID, people work around that. We are seeing already that happening. Some amount of decision making moving, movement is going to, you know, progress. Some amount of travel has still opened up, though there are still a lot of challenges. There is an improvement. If it does not deteriorate, we should be able to, you know, solve some of those problems in Q1 and Q2. If it deteriorates further, then it is very uncertain to say what happens right now. Okay. Got that. Can you give a color on how the order book has shaped up, the growth in order book for FY 2026? See, our overall order book at the end of the year compared to last year has grown by around 13%. One three. Okay. Out of this, some part must have already been converted to revenue. Yeah, yeah. So- We are comparing apples to apples. Last year also, some part would have been- Okay converted to revenue. This is the residual at the end of the day. Whatever we book for the whole year vis-à-vis whatever we booked for this whole year last year. Okay, got it. Thank you. My last question is on we have seen a healthy growth momentum in APAC and U.S. Do you expect that momentum to continue based on how your pipeline is shaping up? Yeah, I think we are optimistic about it. Though I think APAC is a smaller territory, so it switches between high growth periods and lesser growth periods. U.S., the growth is based on a lot of subscription deals acquired over multiple years, so there's not too much of jerkiness. Yes, I think both the geos have performed well for us in this uncertain time. We think that next year most of the geos should perform for us. Okay. What is working well for us in the U.S.? I think what we are seeing in the U.S., there are two areas which we invested in. One is typically going to the larger accounts over last two, three years. Insurance has opened well in that space for us, and we are doing a lot of journey-led cases in insurance. Also we got some very good wins in our ECM-led banking cases. These are two things which have shown more positive results. I think also, some of that has translated in the revenue in last twp quarters, which were even, you know, previously booked. If we continue to book strong this year, we should be able to maintain the growth momentum. Okay. Got it. Thank you. Thank you. Our next question comes from the line of Shweta Jain from ANS Wealth. Ma'am, before you go ahead, a reminder to all the participants, you may press star and one to ask a question. Go ahead, please. Hi, sir. Yeah, thanks for giving this opportunity. My first question was around the annuity revenue. Would you be able to give the breakup between SaaS, ATS, AMC, and support revenue for FY 2026? You said a- Yeah 62%, if you could break that down for me. Okay, I won't have that. Okay. ... difficult mathematically. Okay. Dipti can and, you know, Dipti would send the data to you. Yeah. Just check what the result- Sure, sure. Okay. Okay. For Q4. So then Just hold on and Dipti is gonna let you know. Okay. Also, sir, in Q4, you know what I understand, this was 58% in Q4 FY 2026. In Q3 this was 62%. You know, this has come off little bit this quarter. Just wanted some sense on you, how do you see this annuity revenue moving ahead, in, you know, next three, four quarters? Do you think this can again come up? Like, just your guidance over the annuity revenue. How do you see this going ahead? Shweta, usually, we tell investors to look at the annual numbers rather than look at. Okay ... the quarterly numbers because it could be distorted. Understood. Okay. Okay. The annuity was 60% of overall revenues compared to 56% last year. Mm-hmm. There are licenses in certain quarters which could, you know, lead to lowering the% of annuity. I request that if you look at the overall annual numbers, that will. Okay be more meaningful. Okay. Out of the overall 62%, about 12% is SaaS for us, 21% is ATS, AMC, and about 28% is support. Okay, understood. Also with respect to the India growth, you know, we've de-grown in past two quarters. How do you see this growth coming back, you know? By when do we see this growth kind of, you know, or maybe the de-growth stabilizing in India, and how do we see the Indian market for us, sir? Sure, I think if you look at overall, the reason for degrowth is the shortfall in the large license revenue. Right. In India, we have more like more than 20%, 30% fall in the license revenue. If you look at all other streams are growing. Yeah. Organically for this year, we're on a much smaller base of license revenue compared to last year. In fact, just maintaining the performance of last year will still reflect in the growth this year. Okay. We do have that I think the worst in India is over in terms of numbers, and we should be able to bring in a growth year this year. Okay. Understood, sir. Just one bookkeeping question. Sir, our trade receivables have increased compared to last year. Just wanted some sense from you know, how do we see this, you know? Yeah. We have this problem in two dimensions. One is typically our ability to collect in EMEA over last one month has drastically affected the EMEA trade receivables with that. Also we have some challenges in APAC, which are more operational. I think they should get stabilized. Again, I think this year we'll take an aggressive target to reduce the trade receivables- Okay. Aggressively and try to come back to the normal track. Okay. Do we see any provisioning coming on account of these in coming quarters or, like we are okay with it? No, I think this is automatically factored in the ECL norms on that. Trade receivables, you know, will not have any direct correlation with provisioning. Provisioning will be built as per the ECL norms on that. Right now, whatever has been is only a delay in payments. There is nothing, n othing to have payments at risk. Yeah. Basically, I think when we are talking about ECL, basically it is an estimated credit loss model, basically, based on last 12 quarters, collection trend. Accordingly, we provide as per the accounting standard, and we are continuously doing that. That risk is kind of taken care in the books. Okay. As far as provisioning is concerned. Okay. Just one last question. It's more to do with the industry and then maybe, you know, even to us. With the whole AI thing is what I understand, you know, as the companies shift from effort-based billing to the outcome-based billing, you know. That's where the shift is going to happen. Interim period, there will be impact somewhere in the revenues, in the margins and, you know, where the companies. That shift will happen. You know, the margin somewhere will stabilize, say, over a certain period of time, say, eight or 12 quarters. That's where the industries will shift, the companies will shift. How do we see that happening for us with the whole AI thing and, you know, how does that shift happen for us and where do we, you know, see us as the company and just wanted some sense, from you around this? I think the challenge is, I think the conversation right now is going on two fronts. One is about what is happening to the service industry and service pricing models. Right. How they're changing. Our business is still decoupled from that. Okay. We're still in solution and product-based. Yeah. Product-based. Yes. There are already multiple models of product pricing already factored in. Right. Right from consumption to usage to any other model which is linked to the business. There is gonna be an evolution and also on product pricing. That's one, another challenge. Because if, when AI becomes central to the use cases, then AI-based consumption has to be factored in the product-based pricing. This is which all product companies are grappling with right now. We are also coming with more models, working along with customers, which are the more acceptable pricing, which is more transparent to them. Our challenges will be more lying in the product pricing models, which are different than service pricing models. Okay. Your point is well taken, and I think already a lot of work is happening along with. What we work on this generally, you know, as we are operating out of multiple countries, and I think customers also tend to define what are the most suitable pricing models in those geos for those segments and verticals. Right. Slightly we have a tendency to lag on pricing, so that first is to solve the customer's problem, then also to work out the right pricing model with him so that it can be used out there. I don't have a really great technical answer for that, but I think I would go with my customers and work out a pricing model which will suit both us as well as the customers. Right. Okay, sir. Thank you. Thank you so much. I appreciate this. Thank you. Thank you. Our next question comes from the line of Dixit Doshi with Whitestone Financial Advisors Private Limited. Please go ahead. Yeah. Thanks for the opportunity. Couple of questions. I'm slightly new to the company. One of the basic question I wanted to understand was, in annuity revenue, we have a SaaS, ATS, AMC, and a support. Where do you record this subscription revenue in this three segment? Yeah. Dixit, it is part of the SaaS where we recognize the subscription. You know, as you're rightly saying that some of the customers take the whole SaaS service, which we are, you know, providing as part of almost consumption. Some only realize the license is part of SaaS, which is typically subscription-based licensing. Today's SaaS has both subscription-based licensing and the cloud revenue. Okay. Some of the subscription revenue also recorded in any other segment? Because the ATS is typically the annuity fee on the license. It is a subscription-based, but we call it typically AT. The industry calls it ATS, so we call it ATS. Okay. It is typically having the same margin profile as license, because there's no service attached to it. But, you know. The support is typically more about extended ATSs where people are deployed for the customer, and that's how it's treated as annuity. Okay. Just correct me if I'm wrong. Basically, let's say when we do a license deal, when we sold the license, the revenue is in the sale of product. During the implementation, it is in the implementation segment. Then it is linked, and then over the years we'll get the AMC and support charges. If somebody is not taking the license and going for a cloud or a SaaS-based revenue, then everything comes to the SaaS revenue. Is it right? Perfect. He explained it better than I could. Okay. AMC support and implementation is basically linked with the growth in the one-time license and, let's say over last one year, our sale of license revenue slightly slowed down. Do you expect the AMC support and implementation also to slow down over medium term? Dixit, what the issue is, sale of license has got a subsequent sales of implementation. More deals we do, more implementation we do. There is a direct correlation between both sale of license or sale of subscription to implementation. ATS has a more compounding effect, which is a multi-year effect. ATS is not only about what you did that year, you also did last to last year. Mm-hmm. Either way, it does not slow down, it grows. It can grow at a more accelerated pace or lesser pace. Okay. Because it's always compounded. It is not, I mean. Yes, yes. Your observation about the two factors, which is about the implementation partially linked to license, because if you don't make more deals, you won't have more implementation. The ATS is bit decoupled. Similarly, support also is to do more with more customers go live, they end up consuming higher ATS and support. And generally- I would call for more direct correlation is with implementation and much lesser correlation with ATS and support. Okay. ATS, AMC, and support is usually for how much tenure? Generally lifetime. For ATS is kind of an insurance over the license because in enterprises you don't use unsupported versions. Okay. Yes. Support varies. Okay. It can start small and grow bigger or sometimes also it could have a fluctuation of lesser continuation or more, adding more people. Okay. Got it. Second question is, usually, in our previous calls we have mentioned that due to the closure of deals, typically our Q3 and Q4 more particularly is seasonally better in terms of revenue. Let's say, in future, over next two, three years, when your SaaS revenue and AMC revenues become the more bigger part of the revenue, does this seasonality will come down or even those segments have a seasonality? Naturally it should come down irrespective of what we do because as the annuity keeps on compounding, the seasonality falls. Last three years, it has still come down, but has not come down at the pace we expected because lot of last three-year growth was based on the license growth, sale of license growth. Yes. The compounding which happened in terms of annuities and downstream revenues, they were not at the same pace as the license growth. If the license growth is muted compared to subscription growth, then this will happen faster, otherwise it will happen at a slower rate. Either way it's happening because, you know, we are now reached a 62% kind of annuity. It can reach all the way up to 75%-80% of the, you know, annual revenues. Okay. One last question. I do understand IT slightly less, but this, you know, there are a lot of talks about the Claude Mythos, and it's mainly for the banks, and we do a large business with the banks. If you can help us understand whether it will impact us or it can benefit us. Because it's, we'll have to check the, you know, the vulnerabilities of all our softwares and all. If you can just help us understand something over there. See, the impact of Mythos in terms of vulnerabilities and, you know, when it's gonna be available to the rest of the world for really solving those vulnerabilities is a different question. But what's happening clearly there is a huge interest across all our existing customer implementations to invest more aggressively in securing the systems. All these initiatives right now are not being talked in the business language in terms of orders. This is more about supporting each other and making sure that things don't go wrong. But you are right. I do anticipate that downstream, it will, you know, accelerate the process of upgrading systems. It will accelerate the process of modernizing applications so that the risks do eliminate, which should impact in terms of our downstream revenues coming from accounts. Right now it is more about, you know, in a firefighting mode, helping our customers and making sure that the maximum number of risks are eliminated. Okay. Understood. Thank you. That's it from my side. Thank you. Thank you. Thank you. Ladies and gentlemen, a reminder to all the participants. You may press star and one to ask a question. The next question comes from Meet Virani with MNS Investments. Please go ahead. All right. Coming back, sir. Sir, am I audible? Yeah, yeah. Meet, you're audible. Hello. All right. Yes, sir. You're audible. Sir, the company have a strong, you know, cash generation. How are you planning to use this for business expansion or especially in areas like SaaS, AI, or new markets, sir? Can you elaborate on it? Meet, I think the purpose of the company so far is to make sure that we are able to accelerate growth. All the cash expansion or whatever is needed typically will help us either to organically grow or inorganically grow. The whole aim right now is to make sure that the growth acceleration happens out there. All right. Sir, any plans we have for inorganic growth apart from our business? Yes. We are looking at multiple options and typically to make sure that our go-to-markets can be accelerated in mature markets and also in certain areas of product complementary technologies in various areas. I think nothing is at the stage which is more final and concrete. Once we have things like that, we'll surely come and communicate back. All right. Thank you. Thank you. A reminder to all the participants, you may press star and one to ask a question. Ladies and gentlemen, if you wish to ask a question, please press star and one. Our next question comes from the line of Jalaj from Prescient. Please go ahead. Hello. Hope I'm audible. Yeah. Hello? Yeah. Yeah. Go ahead. Thanks for the opportunity. Sir, I had a few sets of questions. My first question was with regards to the license. As we see the discussions with the clients and the pipeline and the order book, should we believe that we have reached to a trough in terms of the bottom in terms of the license revenue and incrementally we should have growth from here? Or we still believe that because the Middle East and then the demand in India is still to pick up or the newer NBFCs and banks have to come up with new deals, so it will take longer time. What I will say, Jalaj, what is gonna happen is that if the business starts behaving better in India and Middle East, we have reached, we can agree that we have reached the bottom of the license, and we should be able to do better. If the business momentum or growth starts coming more from more mature markets, then we'll still sell more licenses, but they may be in the form of subscription or SaaS-based revenues. It depends on what geos start performing. Overall, if you look at addition of the SaaS and license, in all years we'll end up growing. That's the whole idea, because we'll, we always end up making more deals than what we did last year. Some of the composition of those deals change, and they may not reflect in the same year. I'm hoping this year also, looking at both what we sell in license and what we'll sell as subscription-based licenses, we should be able to do better than any previous year. Got it. As we see the discussions with clients, has there been any sensible change in the momentum or discussions, as we stand today, if you were to compare it a quarter back or two quarters back? Not much. I wouldn't say like that. I see. I think the industries we are working in are always very hungry for modernization or transformation of their businesses. It's only that when the, you know, what you call when the more work about taking decisions about those deals, those we think that is getting more impacted. The conversations are always in the market. The interest is always in the market. Sometimes just that final go-ahead takes more time or there's a, you know, more challenge within the enterprise to go ahead with at that time. So those are more challenges. I don't see any difference in the client conversation happening as of today about change in priorities or reducing their spend on IT or something. Got it. That explains well. Sir, my second question was on with regards to the margins and specifically on the people costs. We see that on a year-on-year basis, the people cost has been flattish. Is it largely explained by the productivity, AI-related productivity, or partially as you alluded to the lower license leading to a lower implementation headcount or implementation requirement? Is that being driven by that? Maybe a headcount comparison on YOY would help us to substantiate that. Yeah. We have roughly around 6% reduction in headcount YOY, and that's an organic reduction. While we have in all our years added around 400 campus people, even this year we are going ahead with adding 300-400 campus people. Most, as I rightly said, you know, we have a transformation happening in the engineering processes and there are benefits about AI which are coming and creeping into the system. That should help us to keep on improving margins and delivering faster. You will see some amount of efficiency on that front also coming in this year. You know, we have invested very aggressively on the AI. Today, almost around 80% of all our people have access to all kind of technologies and AI, you know, agents so that they can work on that. The whole process of engineering is getting transformed slowly. I do think those benefits will keep on continuing for few more years as the full transformation and full advantage of that transformation comes in. Got it. Sir, my last and a quick question would be, the client discussions which you are having for, let's assume, a relatively matured client in banking, because of AI disruption as such, are the decision-making getting delayed per se because they are not themselves sure of the what sort of architecture would it be? Because every now and then new models are coming and some of the new introduction is happening. Is it partially or you are seeing the discussions getting postponed because of that? You see, we deal still a lot with businesses across all places in our customer segments. Businesses are still focused on their business outcomes, and they are expecting AI as one of the enablers to provide better value in that. All the use cases which we are selling today have a strong component of AI helping the customer in achieving their business goals. The problems we are talking about cases which have started in isolation, AI projects and AI POCs which have been completed over two years but don't know what next to do on that. Those are some of the things which are creating disruptions about such AI-led cases. Typically, if you look at core business cases about modernization, digital lending, account origination, PAS systems, the problem is not about AI out there. The problem is how can you use AI to provide better advantage, better behavior in those systems. Those are still being considered and AI evaluations are becoming important part and integral part of evaluating those systems. Understood. That makes sense. Thank you, Mr. Virender. Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from Rajakumar Vaidyanathan from RK Investments. Please go ahead. Yeah. Good evening. Can you hear me? Yes, sir. We can hear you, sir. But may I request that you use your handset, sir. Your audio is slightly muffled, sir. Yeah. Can you hear me now? Yes, sir. This is better. Thank you. Yeah. Thanks for the opportunity. The first question is on the license model. You know, as we know that the GenAI agents are now kind of performing some discrete business tasks autonomously in many of the businesses. I just want to know, is Newgen moving out from per-seat license to the agentic work unit pricing model? Raj, I think, you know, this is what there's a discourse happening globally that all SaaS companies are facing a challenge and all software licenses have to have a consumption-based pricing. We are working. I think if you were in the call previously, we spoke it in detail about this. What's happening in enterprises, we are keeping our pricing models close to the business outcomes which we deliver. Now what's happening, a lot of. There's an agentic or what you call the token cost coming to all business use cases, and we are trying to price that as part of that. This we are working closely with customers to evolve what is the right pricing model. It's not. We assume that the company determines pricing model. It's also the buyer who is buying them. It should be transparent to them. Right now, this is a conversation going on. I think you will get better answers about this maybe in six, seven, eight months down the line when more transformation would have happened. Till that time, we are working with our clients to come up with the most right pricing, which is AI agents plus tokens plus our business value, and then how we package it together. Okay. As of now, it's in a headwind for us? No, no. I think pricing is the least amount of headwind. I think the headwinds are around more about decision-making, what's happening in markets about economic turmoil. Those are price. Pricing is not. Okay. Got it. Yeah. The next question is a housekeeping question. I see your deferred revenue has gone up from almost INR 220 crore to almost INR 300 crore this quarter. What is driving that? Because generally deferred revenue will be your subscription or AMC revenue. That should be backed up by license as well, right? Just want to know- No. I think, No. I think, We are not seeing a spike in licenses. No. Exactly. Basically, the more of the spike which has come in has come in the revenue streams which are slightly in terms of back-ended. They are not realized upfront. Any orders which have come as part of subscription license sale add to the deferred revenue. Any large ATS renewal contracts which have come in of licenses sold over previous years have added to the deferred revenue. Which gives us a better insight going into the next year. All deferred revenue is not an outcome of a license revenue. Deferred revenues are also coming as part of renewal agreements and ATSs and from sale of subscription or cloud-based licenses. Okay. No, there is a substantial jump. What is causing the jump? That is the question. It is the growth in business. In growth in business in Australia, growth in business in U.K. and U.S. Because out there the growth is also reflected in the deferred revenue, more of growth in deferred revenue. Okay. Got it. Like India and Middle East don't contribute. India and Middle East are predominantly license-based businesses, so they don't contribute to the deferred revenue. All other markets contribute to the deferred revenue. Okay. Got it. Just continuing on that agentic model. Just want to know what kind of moat Newgen has. Because now with all these open source AI agents, you know, the companies can build their own basic workflows, right? What do you think is the moat Newgen has in the new AI world? Raj, I think you can go to our website also, you'll get. What basically, if you look at what at the core what Newgen does is we have got, you know, broadly three platforms, but predominantly two are the most relevant ones. We are an enterprise software for content. One, we are looking at the whole interest in AI and using enterprise knowledge along with agents and LLMs. You need a very strong records management, content management, governance process, and also an extension of this content management into getting the RAG implemented, getting knowledge graphs implemented. This is our product out there, which really helps customers to go and implement LLMs. The second part of our product is where we do the journeys, journey orchestration. We are today orchestrating between current core systems, business services and enterprise workflows. What's happening with agentic? Agentic is helping customers to automate further workflows or automate human activities. We are still looking at ourselves as an orchestration platform which orchestrates between systems of records, agents, non-human entities, and existing business processes. A lot of industry, which we are dealing with, are regulated industries. You can't let an agent loose to reject a loan or approve a loan. You still need traceability, you need in terms of transparency in decision-making. You need to still tie up with the core system. You need to talk to hundreds of government services. We are the ones who do that, even for the digital journeys. We are excited. We are coming with a product roadmap about really where a customer does not have to really go out, right? From agent builders to orchestration of agentic workflow, whether it's deterministic or non-deterministic, we are having products for that. In short, this AI is not a kind of a headwind for Newgen, right? No, no. At least I think a lot is being talked about that AI is the only tool now which the industry will boot. That's not the challenge. We are looking at AI as an opportunity to accelerate growth. Okay. Got it, sir. Thank you so much. All the best. Thank you. Thank you. Ladies and gentlemen, our last question for the day comes from the line of Sumukh from Koormang Capital. Please go ahead. hi, team. Am I audible? Yeah, Sumukh. Please go ahead. Yeah. I'm not sure if this question is already answered, but my question is, sir, do you see any revenue deflationary impact of from AI, like clients asking you to pass on the productivity that you're getting from AI? Like, what part of your business is coming from the discretionary IT spends, if you want to categorize it that way? I'm just trying to understand, like, if the budgets tighten, right, at the client end, so what part of your revenue is at risk from that point of view? Yeah. I think what's gonna happen, since globally enterprises have to invest in aggressively in AI, some amount of budget has to come from run the business or business as usual. There is gonna be some pressure across the globe in terms of optimizing some services which are running as is. We are still into a product solution business, our streams like license sale, subscription sale, ATSs have very little impact. Similarly, implementations are negotiated for a short period of time, they have impact. Our streams like renew, you know, the what are typically renewals in support or ATS. Since we are not really into large projects, like we don't have hundreds of people working anywhere. We have very tactical teams to solve critical business problems. We may see some amount of pressure coming in those areas. As of now, we are not estimating more than 2%-3% impact on these two revenue streams for this year in that area. Okay. These streams contribute how much to your revenue, sir? Where do you see. These two streams contribute roughly around 40% of our revenue. This 40%, sorry, 2%-3% deflation is on this 40%. Yeah. Is that correct? Yeah. I think, yeah. It's difficult to estimate, but this is what we are factoring right now, depending on what conversation is going on. At the end of the day, yeah, you may see that these streams have grown further because we are still selling to newer customers and doing new projects. Okay. Where don't you see AI impact at all in your service? No, I think AI impact is in all areas of businesses. I'm saying some impacts are positive, some impacts are about change of how we are doing job, and some impacts are optimization of costs, which in some areas which were sold at cost X, may be on a now a delta reduced cost of that X. Collectively, we look it as a net positive for the company. Oh, okay. Sure. Got it. Yeah, and, yeah, that's all my questions, sir. Thank you. Thank you very much. Thank you. That was the last question for the day. I now hand the conference over to Ms. Dipti, Head of Investor Relations, for closing comments. Thank you so much for your participation, everyone. For any further queries, you can connect with me or go to the website of the company. Thank you. Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you, everyone.