Newgen Software shifting focus from licensing to subscription-based model

Newgen Software reported its earnings for the second quarter of the ongoing financial year (FY23) on Tuesday with revenue seeing a 20 percent sequential rise and margin also expanding 635 bps this quarter. The company's full-year revenue growth guidance is at 20 percent.

Speaking to CNBC-TV18, after the earnings, Virender Jeet, CEO at Newgen Software, said that he expects subscriptions to keep rising in the ongoing quarter.

This is because the company is trying to shift from its licensed business to more of a subscription business which has a slightly more long tail in terms of better control or lesser seasonality.

The company is in the process of resetting its US business which has shown improvement this quarter albeit still in a loss.

“We will give the US a couple of more quarters and then next year onwards it is going to be one of the primary growth engines for us,” said Jeet.

The management also mentioned that the company is trying to slightly change track from its typical tier-II, tier-III market.

“We are going into slightly larger accounts and resetting the structure to support that out there, so it is going to take a bit more time for the higher growth to return there,” he said.

On the growth side, quarter two has been much better than the previous quarter. The company is aiming to maintain a growth rate of around 20 percent.

The management does see cost pressure this year but is confident of holding onto its margin targets.