Newgen Software Technologies Q4 Review - Client Conversions Will Be Key: ICICI Securities
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ICICI Securities Report
Newgen Software Technologies Ltd. has reported robust revenue growth of ~16% YoY in Q4 FY22 backed by strong performance in the Europe, Middle East, Africa (up 41% YoY).
For the full year, revenue was Rs 7,790 million, growing 15.8% over FY21. Overall annuity revenue (~59% of revenue) grew 18% YoY. It reported an impressive 16 new logo wins during the quarter.
Newgen continues to invest aggressively across research and development and sales and marketing with expenses aggregating ~30% of revenue in FY22.
Management commentary hinted at robust demand environment and increasing order backlog for FY23.
Given that typical projects are shorter and smaller, building new client relationships is key for companies like Newgen, which is inherently dependent on travel opening up.
With travel resuming, we believe Newgen should be the key beneficiary, and client additions in FY23 would be key to watch out.
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