Newgen Software Tech Q3 Review - Wait For Growth From GSIs Elongated: ICICI Securities
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ICICI Securities Report
Newgen Software Technologies Ltd. has reported robust growth of ~9% YoY in Q3 FY22 backed by strong performance in the Europe, Middle East and Africa (up 20% YoY) / Asia Pacific (up 26% YoY) region. It reported an impressive 17 new logo wins during the quarter.
Strong growth of up 20% YoY in subscription revenue was a key positive while software-as-a-system revenue posted muted growth due to client-related adjustments.
Newgen Software Tech continues to invest aggressively across research and development and sales and marketing with expenses aggregating ~30% of revenues in Q3 FY22.
Management commentary hinted at robust demand environment and healthy pipeline, but some delay in generating revenues from its GSI partnerships. We believe mid-teen growth for FY22E is contingent upon continued performance in key markets and travel opening up.
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