Newgen Software Technologies is a completely debt free and cash rich 28 years old software company. With huge, mission-critical systems implemented at the world’s largest banks, governments, BPOs & IT Companies, insurance firms, and healthcare organisations, it delivers Business Process Management, Enterprise Content Management, and Customer Communication Management platforms.

Newgen Software Technologies

Introduction

Current Market Price at the time of Publishing this report-: 448 Rs

Incorporated as a private limited company in 1992 it became public limited company in 1997. During the same year Newgen Software Inc., USA was incorporated as a wholly owned subsidiary of the company.

Newgen Software Technologies Limited is a provider of Business Process Management, Enterprise Content Management, and Customer Communication Management platforms, with large, mission-critical solutions deployed at the world’s leading banks, governments, BPO and IT companies, insurance companies, and healthcare organisations.

Newgen Software Technologies Limited is also another software product company that offers a platform that enables organisations to quickly construct strong apps that fulfil their strategic business goals. Organizations may use the apps built on its platform to foster digital transformation and competitive differentiation. This might involve automating typical business operations to make them faster, simpler, and more accurate, as well as expanding the channels or devices via which these functions can be carried out.

Customers utilise the company’s platform to quickly design, construct, and launch enterprise-grade bespoke apps using its easy, visual interface and minimum code. Enterprise Content Management (ECM), Business Process Management (BPM), and Customer Communication Management are all part of the Platform (CCM). These suites are well-integrated and provide its clients simplicity of setup and usage because they are based on the same technological architecture. These suites may be implemented both on-premises and in the cloud. Customers are increasingly opting to utilise its product suites in the cloud on a subscription basis.

Company is certified for successfully certified/assessed for: ISO 9001:2015, ISO 27001:2013, CMMi 2.0 for Dev Level 3.

As of latest data available on companies website company has 530 active customers spread across 73 countries and total staff of 3300 employees.

Besides that company has filed 44 Patent till date of which 23 Patents have been Granted.

Business Products

Newgen is an Enterprise-wide unified digital transformation platform provider which includes

• Contextual Content Services (ECM) OmniDocs
• Low Code Process Automation (BPM) iBPS
• Omnichannel Customer Engagement (CCM) OmniOMS
• Artificial Intelligence/ Machine Learning

NewgenONE Low Code Digital Transformation Platform

Newgen’s digital transformation platform, now known as NewgenONE, combines existing process automation, content services, and communication management capabilities. The platform enables enterprises to leverage low code to develop and deploy complex, content-driven, and customer-engaging business applications on the cloud. NewgenONE provides users with information, while empowering professional IT developers with speed and agility. Furthermore, it enables seamless integration of business applications with back-end and third-party systems.

What is Low Code and why Newgen?

It is necessary to transform business requirements into applications, which is a time-consuming and challenging procedure. As a result, despite IT teams’ best efforts, a wide range of important, even vital, business requests routinely go unmet. The resistance originates from enterprises’ typical practise of converting business needs into code-based solutions. A high-level of abstraction low-code platform reduces the labour necessary to transform a business demand into a business application. This is done using modeling-driven point-and-click application development, which is accessible to both amateur and professional code developers.

Thus modern enterprise is all about speed.

What does low code bring on table?

A low code platform enables speed in not just one but multiple ways:

Enable citizen development that is by offering quick solutions for personal or departmental business need with no prior coding experience.

• Reduces IT dependency
• Support a variety of business and technological needs:
• Support application lifecycle management and DevOps
• Enables easy scaling up based on the needs of an organisation and much more.

Newgen’s low code digital automation platform integrates various capabilities needed to build a connected enterprise – through its flagship products in intelligent process automation (BPM), contextual content services (ECM), and omnichannel customer engagement (CCM). On one hand, platform helps transform experiences by bridging (process, content, and communication) silos in organization. On the other hand, it offers the agility for sustainable and continuous improvement, thereby future-proofing enterprise. What’s more, is its architectural support for integration and innovation enables to leverage cutting-edge capabilities to stay ahead of the curve. Such capabilities include mobility, social, analytics, cloud, machine learning, robotic process automation, blockchain, and artificial intelligence.

Contextual Content Services (ECM) OmniDocs

Process flow / Work flow of Newgen’s Contextual Content Services (ECM)

Contextual Content Services from Newgen enable businesses to manage the whole lifecycle of enterprise information, from creation to disposal, while also giving the freedom to access and deliver digital content across all channels and devices. It leads to the development of a connected and digital workplace in order to provide customers with contextual information to enable informed interactions with internal and external customers.

iBPS a low-code process automation platform

iBPS is a low-code process automation platform aimed at the BPM industry. The applications and the workflow for the same can be seen from the image below.

Newgen’s minimal code process automation platform is a tried-and-true framework for building sophisticated, context-aware, and customer-centric business applications. It offers quick application development, end-to-end business process automation, and contextual client involvement across various touchpoints, all while driving continuous process improvement.

Omnichannel Customer Engagement (CCM) OmniOMS, aimed at the CCM sector, for personalised customer communication.

Newgen CCM improves the customer experience by providing tailored, content-rich, and consistent communication across channels, while also using numerous cross- and up-sell possibilities across touchpoints such as e-mail, SMS, online, and print.

Utilize Business Data to Manage Communication Output – Personalized and Scalable

Newgen AI Cloud

Newgen AI Cloud is an unified platform for all data science needs. It combines following operations.

Applications

Acquisition of Number Theory

During the year, Newgen acquired Number Theory which is present in the Artificial Intelligence/ Machine Learning (AI/ML) space.

With this purchase, Newgen will strengthen its low-code digital transformation platform, NewgenONE, positioning it to provide cloud-native AI/ML capabilities to any organisation. Number Theory’s user-friendly AI Studio will provide AI/ML capabilities to Newgen’s products and industry-specific solutions.

About Number Theory

Number Theory, an Indian company, has created a sophisticated and user-friendly AI/ML data science platform for business analysts, data engineers, citizen data, and expert data scientists. For organisations wishing to accelerate or expand their AI/ML deployments quickly, this cloud-native modern platform provides an AI/ML modelling studio.

Key Recognitions

Newgen Recognized in 2023 Gartner® Magic Quadrant™ for Enterprise Low-Code Application Platforms for Third Year in a Row

Clientele

Trust Company of America, Mercantil Bank, ICICI Bank, Trafigura, Bajaj Electricals, United Arab Bank, National Commercial Bank Jamaica, Axis Bank, Yes Bank, Kotak Mahindra Bank, Bank Islam Brunei Darussalam, Philippines Resource Saving Bank, ICICI Prudential Life Insurance, Reliance General Insurance, Max Life Insurance, Strides Shasun, and Shriram Transport Finance are among its key active customers. The company’s enterprise-wide, mission-critical solutions have been employed by some of the world’s biggest companies in a variety of industries, including banking, government/PSUs, BPO/IT, insurance, and healthcare.

Financials

For Q3FY23

• This is was the first quarter where revenues exceeded Rs 250 crores.
• Net Sales stood at Rs 254.92 crore in December 2022 up 25.88% from Rs. 202.51 crore in December 2021.
• Quarterly Net Profit stood at Rs. 48.20 crore in December 2022 up 0.82% from Rs. 47.81 crore in December 2021.
• EBITDA stood at Rs. 68.30 crore in December 2022 up 4.9% from Rs. 65.11 crore in December 2021.
• Company witnessed a broad-based growth across all geographies, with overall Q3 revenue growth of 26% YoY. India and EMEA geographies continued to be major growth drivers with revenue growth of 40% and 27% respectively.
• Subscription revenues had been growing steadily at a healthy pace of 38% YoY. Subscription revenues (ATS/AMC and cloud) stood at Rs 84 crore.
• Annuity revenue streams (ATS/AMC, support, and cloud/SaaS) were at Rs 154 crore, up 38% YoY.
• Revenue from the sale of products/licenses was at Rs 58 crore.
• Profit after tax stood at Rs 48 crore in Q3 FY’23.

For 9MFY23

• Revenue from operations (consolidated) witnessed a strong growth at Rs 669 crore as compared to Rs 548 crore in 9M FY’22 (up 22% YoY).
• Profit after tax stood at Rs 98 crore in the first nine months of the year.
• Company Entered major cloud/ subscription license deals during the quarter. The cloud/ subscription license revenues witnessed 59% growth to reach Rs 70 crores for 9M FY’23.
• Net cash generated from the operations activity was INR 100 crores for the nine months.
• Net trade receivables were INR 283 crores at the end of December, which resulted in a net DSO of 115 days

For year ended March 22

• On a consolidated basis, the Company’s revenue from operations stood at Rs 778.96 crs reflecting an increase of 16% in the financial year 2021-22 as against Rs 672.62 crs in the financial year 2020-21.
• The Company reported the EBITDA (adjusted for other income) of Rs 194.66 crs in the financial year 2021-22, stable as against Rs 191.90 crs in the financial year 2020-21.
• Consolidated Profit after Tax for the year stood at Rs 163.49 crs compared to Rs 126.48 crs reflecting an increase of 30% in the financial year 2021-22.
• As of March 22 company is completely debt free.
• Company has cash and equivalents of 226 crores as of March 2022.
• Company has stellar compounded profit growth of 17% what 3 years period and 29% of 5 years period.
• Company also has and solid return on capital employed of about 25% average over 5 years period.

Managements comments

Cost of switching from the company’s platform to any other platform as per the management is almost nil. Despite the cost being negligible there have been very few switches from the company’s existing client base.

As per to management the customer retention for the company currently is more than 90% which range is between 92-95% were all the existing clients are retained by the company.

As per the management if clients switch to any other company it would not be because there might be a better deal or an offer but only if the technology stack becomes obsolete or the company is not able to meet its customer requirement. However the company is well ahead of the curve in technology.

Management is trying to establish a strong food hold in mature market and among the Fortune 2000 clients. Further more APAC is also becoming very strong business market for the company which has grown from around 4% of its business to currently more than 15% of the companies business

The other thing that company has started his increasing its investment in mature markets. Company has recently opened up the Australian subsidiary, it is also strengthening the UK subsidiary and it is also expanding the enterprise sales team in USA among .

Newgen is also extending its portfolio of products by getting into newer verticals. Like in banking, company started with digital onboarding and lending origination. Now it has gone more-and-more into these. It is also doing complete digital lending journeys from major banks and those projects are substantially different sizes.

Thus now company’s platforms are well equipped for handling large varieties of complex processes and use cases, helping customers in meeting their end-to-end digital journeys. NewgenONE platform has capabilities for automating complex processes and content services at scale. Company also has The AI/ML capabilities of Number Theory now fully integrated with its product platform as well as its trade finance platform is also receiving a good response from customers.

Going forward

Considering the current quarter as the base company already has a profit after tax margin which is around 19% so ideally going forward that management expects profit after tax margin to be around 22 to 25% per year down the line.

If the revenues grows at 25% the cost is expected to be growing at only 13 to 14%

Management management expects the revenue of around 500 million in the next 5 to 6 years which transform and effective compounded annual growth rate of around 30%+ over next 6+ years.

Company plans to more towards annuity based payments as well as recurring subscriptions from current one time licence revenues.

Sectorial Outlook

The Company’s core addressable market can be broadly classified across low code, hyperautomation, global ECM, BPM and CCM market.

India we have been traditionally very strong in all the banks, insurance companies and most of the shared services. So almost all enterprises end up using Newgen in one way or the other. Therefore what has happened basically over the last few years, especially in financial services, there’s a lot of money being spent on digitization, automation and also transforming their business models to digital. Newgen has been one of their prominent players and getting its share.

“ By 2024, low code application development will be responsible for more than 65% of application development activity.”

Gartner Research

According to Gartner Market Estimates, the global content services platform market is estimated at $7.4 billion in 2021. (*1) The business process management suits market is estimated at $2.6 billion in 2021. (*2) The all-encompassing Hyperautomation market is estimated at $ 25.1 billion in 2021.

Low Code is a significant focus area right now internationally, and it’s not so much a commercial opportunity as it is the approach, strategy, or product competency that most digital efforts want from their vendors. As a result, technologies and platforms with great Low Code capabilities are more likely to win such digital efforts. As a result, it is a very-very enormous worldwide market, but it also has a lot of rivalry. With Newgen’s strengths in process-centric and content-centric applications, as well as Low Code capabilities, clients receive significant, distinctive value.

Newgen software was previously suggested on 23rd January 2022 when the stock was trading at 590 rupees post suggestion in the past 1 year the stock has been underperformed and has been down around 25% since suggested price.

Conclusion

Newgen a completely debt free, cash rich company as well as the leading provider of a holistic digital transformation platform that includes native process automation, content services, and communication management. Successful businesses throughout the world rely on Newgen’s industry-recognized minimal code application platform to design and deploy sophisticated, content-driven, and customer-engaging cloud business apps. From onboarding to service requests, loans to underwriting, and many other industry-specific use cases. Based on the strong demand for digital transformation and the multiple transitions underway at the company as well as foraying into developed markets can be lead to consist performance over the coming period. With increasing margins and various cost optimisation steps taken by the company it would add additionally to the financials.

Anybody who wants to develop a digital process, which is process-centric and content-centric, Newgen Software Technologies is one of the best companies in the world to do because of the inherent capabilities that it has. And that’s where Newgen Software Technologies is very strong and is able to differentiate. And then with certain verticals in banking, insurance, government, company has history of servicing customers and the use cases makes it very compelling for customers in these segments. Additionally with stong fundamentals supported by sales growth and managements vision to be a $500 million revenue company 5-6 years, transforming into cagr of + 30% makes Newgen worth exploring for long term.