“The slowdown in the US and Europe has not affected us much since our exposure to the US is small, and we plan to build some momentum in that market,” says Virender Jeet, CEO, Newgen Software. Edited excerpts from a chat on the company’s growth plans:
After recording a remarkable 33% YoY growth in Q1 revenue,what does the outlook look for the rest of FY24?
Our Q1 performance has been strong on account of all markets performing. 60% of our business is license-driven. Generally, Q1 is lean, but with the increase in license generation, we saw 30% growth in this quarter.
Traditionally our growth rate has been around 20%, but we are keen to push it much higher. However, it is too early to give a number. For the rest of the year, we expect our growth to remain strong in digital lending and new trade finance solutions. We are confident of a strong Q2 as well, and then Q3 and Q4 will depend on how the market unfolds. Our investments primarily happen in research & development, and sales, and we will continue that momentum. We are not looking at holding back any investments this year.
In the last quarter, your annuity revenue comprised 67%. What is the roadmap to increase it, and what is the ideal annuity and non-annuity revenue you would like to have in the future?
Our annuity revenues have increased to nearly 56%, but this number will look more significant because our overall first quarter is small. As we continue to sell more software licenses, the nature of the business is that annuity keeps getting compounded, so our goal for the next few years is to have our subscription reach 70 to 75% of the business, and in that, annuity should reach around 40% of our business.
About 67% of your revenue comes from the banking vertical. Amid the stress on regional banks in the US and Europe, did you see any hit on the revenue front?
We saw little impact since 60% of our revenue comes from the India, APAC, and Middle East markets that continue to perform well. The slowdown in the US and Europe has not affected us much since our exposure to the US is small, and we plan to build some momentum in that market.
Our primary focus is on emerging markets which offer several opportunities for our business to grow as they are underserviced and eager to strengthen their digital presence. Business is good for our new products like Trade Finance and Digital Lending – which have substantially bolstered our capabilities to acquire large deals. For instance, we recently closed a large trade finance deal worth Rs 35 crore in India.
What are your hiring plans for FY24?
Last year, we fulfilled our commitment to campus onboarding recruits on time. We expect to hire about 400 to 500 people from campuses to meet our business requirements this time.