Good afternoon, everyone. This is Akash. A very warm welcome to all of you for this Nucleus Software Earnings Conference Call for the quarter and half-year ended on September 30, 2025. Discussions we have here from the management team: Mr. Vishnu Dusad, our Managing Director; Mr. Parag Bhise, CEO and Executive Director; Mr. Anurag Mantri, COO and Executive Director; Mr. Ashwani Arora, Chief Financial Officer; Mr. Ashwani Arora, Senior Vice President; Mr. Ashish Khanna, Chief of Staff; Mr. Mukesh Bangia, Vice President; Mr. Abhishek Pallav, Vice President; Ms. Swati Patwardhan, Chief Human Resource Officer; and Mr. Tapan Jayaswal , Financial Controller. As you all are aware, Nucleus Software does not provide any specific revenue earnings clearance.
Anything which is said during this call, which may reflect the company's outlook for the future or which may be construed as a forward-looking statement, must be reviewed in conjunction with the risk that the company faces. An audio and the transcription of this call will be shortly available on the investor section of the company's website, www.nucleussoftware.com. With this, we are now ready to begin the opening comments on the performance of the company and post that we will be available for the question-and-answer session. With this, I now pass it over to Mr. Vishnu. Thank you.
Thank you very much, and a warm welcome to this conference call for the quarter ending September 2025. We thank you for your continued interest in Nucleus Software, and I would also like to take this opportunity to introduce Ashwani Arora, our Chief Financial Officer, who has joined on October 1 with extremely rich experience of nearly a quarter century, out of which 18 years he has spent building Airtel as a brand. With those words, now I hand over to Mr. Parag.
Thank you so much, Mr. Sir, and thank you very much, everyone, for joining this investor call. I would also like to welcome Mr. Ashwani Arora to our executive team. This quarter's performance is on expected lines, but I wanted to add that we are very excited, and we are very excited to inform about our latest GA release for FinnOne Neo, which is coming out in the next few days. It is related with a lot of new features about which, if there are questions, we can answer. Of course, many AI-enabled use cases are also part of this release. With this, I will pass on further. Thank you.
I'm sorry, could you please highlight the financials for this quarter? Mr.
Swati,
can you answer?
Swati, am I audible?
Yes, you are.
Our consolidated revenue for the quarter is at INR 213.51 crore against INR 217.72 crore quarter-on-quarter and INR 202.20 crore year-on-year. Overall revenue in foreign currency, including Indian rupees, revenue is $24.47 million for the quarter against $25.46 million quarter-on-quarter and $24.12 million year-on-year. Revenue for the quarter is at INR 181.02 crore against INR 184.91 crore quarter-on-quarter and INR 171.40 crore year-on-year. Revenue from projects and services for the quarter is at INR 32.50 crore against INR 32.81 crore quarter-on-quarter and INR 30.81 crore year-on-year. As for expenses, cost of delivery, including cost of product development for the quarter, is 73.9% of revenue against 70.1% of revenue quarter-on-quarter and 71.4% of revenue year-on-year. In absolute terms, this is INR 157.7 crore against INR 152.7 crore quarter-on-quarter and INR 144.42 crore year-on-year. Marketing and sales expenses for the quarter is 7.3% of revenue against 6% of revenue quarter-on-quarter, 4.5% of revenue year-on-year.
In absolute terms, this is INR 15.67 crore against INR 13.12 crore quarter-on-quarter and INR 9.09 crore year-on-year. As for GN expenses for the quarter, it is 8% of revenue against 8.3% of revenue quarter-on-quarter and 8.5% year-on-year. In absolute terms, this is INR 17.07 crore against INR 18.15 crore quarter-on-quarter and INR 17.17 crore year-on-year. Beta for the quarter is at INR 23.09 crore against INR 33.74 crore quarter-on-quarter and INR 31.52 crore year-on-year. Other income from investments and deposits is at INR 13.50 crore against INR 16.87 crore quarter-on-quarter and INR 18.47 crore year-on-year. Total other income for the quarter is at INR 16.16 crore against INR 17.96 crore quarter-on-quarter and INR 19.02 crore year-on-year. Total taxes are at INR 9.12 crore against INR 13.10 crore quarter-on-quarter and INR 13.54 crore year-on-year. Net profit is at INR 26.29 crore against INR 35.20 crore quarter-on-quarter. It is INR 33.06 crore year-on-year. Other comprehensive income is at INR 2.77 crore for the quarter against INR 4.63 crore quarter-on-quarter and negative INR 2.71 crore year-on-year.
Comprehensive income, which includes net profit and other comprehensive income, is at INR 29.06 crore for the quarter against INR 39.83 crore quarter-on-quarter and INR 30.35 crore year-on-year. This for the quarter is at INR 9.99 as against INR 13.37 in the previous quarter and INR 12.35 year-on-year. In terms of foreign currency hedges, we had $2.5 million of forward contracts at an average rate of 87.80. There is a marked to market loss of INR 0.40 crore, which is taken to hedging reserve in the balance sheet. Revenue contribution from the top five clients for the quarter is 27.1% against 28.6% in the previous quarter. Order book position is INR 671.10 crore, including INR 579.67 crore of products business and INR 91.43 crore of projects and services business. On June 30th, the order is INR 703.16 crore, including INR 608.70 crore of product business and INR 94.46 crore of projects and services business.
Total cash and cash equivalent as on September 30th are INR 961.66 crore against INR 965.93 crore as on June 30th. This includes balance in current account of INR 42.23 crore, various schemes of mutual funds INR 628.15 crore, fixed deposit of INR 257.04 crore, investment in tax-free bonds of INR 34.24 crore. With regards to receivables, we are at INR 116.19 crore against INR 126.12 crore previous quarter. During the quarter, there is a gross addition of six assets of INR 10.01 crore, consisting primarily of INR 9.62 crore on computers and services, INR 0.04 crore on office equipment, INR 0.32 crore on plant and machinery, and INR 0.03 crore on software. Now I will pass it to Swati.
Thank you, sir. With this, now we are open for the question-and-answer session. I will hand over to [Overseeing].
Thank you, ma'am. With this, we are now open for the Q&A session. If you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press star and one again. Just wait until the question queue assembles. First question comes from Mr. [Rishab Shah] from BugleRock PMS. Please go ahead.
Thank you for the opportunity. The question was on employee cost. What we see as a percentage of sale in the last 10 years, we have made from 55% to around 65%. Am I audible now?
Yes, I can.
The question was on the employee cost. What we see as a percentage of sales, we moved from 55% to around 65% in the last 10 years. My question is, as an investor, how do we track the employee productivity as we have had so many employees in the previous years?
Question is on what we are not.
Employee cost. Employee cost, and how do we track the employee productivity as we have added so many employees in the previous years?
Yeah, employee additions, I don't know, especially if you look at over the years, may not be so much because we've been talking about it. We had a serious impact when the mass attrition was there, and essentially, we have filled those up. Of course, there are some critical hiring we've done. Employee costs certainly have gone up across the industry because of what happened during the period of the mass attrition. We are definitely not at the same level where we were earlier. As regards productivity that you talked about, yes, our endurance to increase that. We keep investing very heavily in our products. As I talked about, our latest release is coming out, and of course, with that rolling out, we'll of course expect to have more implementation upgrades and all that, which will reflect in the financial expectations.
Okay. Please get any question. What we have seen is that the global companies like FinnOne, FinnAxia, and Temenos, they have around 50%-70% of their top line as maintenance and support. All their retails does not get bifurcation. Could you help me understand how this segment for us has moved over the years and your thought process and how it will move ahead?
Okay, this, our TMC revenue or annual revenue is essentially in line with the industry, more or less in line with the industry. Going forward, with our latest releases getting rolled out with our existing customers, we do hope that our ability to continue increasing investing in releases, which would add greater value to our customers, would go higher. That is how we would like to respond to your question.
Okay. My last question was, sir, was one of the challenges we faced in the recent years is that the customer had an upper hand on us by asking for customization for every small thing. We accepted it, put manpower behind it, and in return, we could not get that much of revenue as it was costing for us. Since the customization was done for the customer, we were very happy with the customization, and surely he would not switch to a newer product. He held he was not able to command the premium or otherwise have a pricing power on that product. Is my assessment right? Just wanted to have views on it.
I'm not sure I understood the entire question, but I will respond in any way. Yes, we've been saying that in the past, like pre-Sinvani era or pre-FinnAxia era, we would very happily do customizations because that was the only way we were working. That is the reason when we created these new age products that were with open architecture that were highly configurable. The approach was that we will do less and less customizations, which is what we are continuing. However, I would want to add this that especially with the Fintechs coming in and on the customer acquisition part of our product line, which we call as Customer Acquisition System or CAS, there we do feel a pushback on making customizations because that is an area where all our customers are wanting to build a niche for themselves. Everyone wants to do things their own way.
That's where we get a lot of demands for customization, even in the new product. However, as I said, the products are highly configurable. We are making it even more configurable so that we are able to provide such flexibilities to the end customers, such personalization to the end customers without doing too much of a code change. That is the journey which we are already on, and we will continue to work on that. I hope I'm being able to answer what you asked.
Yes, thank you, sir. I will get back in the queue.
Okay, thank you.
Thank you so much, sir. The next question comes from Mr. [Mayur Patel] from GCR. Please go ahead.
Yeah.
Can I audible? Yeah. Hello, sir. Over the last four quarters, our revenue growth has been kind of modest. Due to the increase in operating expenses, majorly due to our product enhancing, it has took to a return margin. In last con call, you mentioned that our main focus is to drive the top line growth. What I want to understand from your side, what are the key execution drivers that need to play out to reaccelerate the growth, the top line growth, which there was two years ago?
Two parts to it. One, we have been talking about upgrading our existing customers from old platform to the new platform. That journey is not as fast as you would have expected it to be. The second, of course, is acquiring new customers. I have been talking about two things.
One is that we're getting good traction from the market. At the same time, the conversions are taking time. The situation continues. We are overall hopeful of conversion, India market, Greece market. We have been talking about expansion, building the consolidating in the markets where we are already present. We talked about our background work in the US market for the last couple of years. It's a tough market to get in, but we continue to work on that and gaining traction there. With all these, yeah, what we are expecting to grow, we should be doing that in quarters to come.
Yeah, sure. Thanks. I'll get back in the queue.
Yeah, just wanted to add that in this context, we put in a sales structure in place. Our sales over the past couple of years, the structure had kind of depleted. Today, as we speak, we have six regional sales heads in different positions already. We are especially looking to onboard a global sales head, so that will help us further in getting more orders and transfer growth in that supply.
Yeah, thank you, sir. That's all from my side.
Thank you, sir. The next question comes from Mr. Rahul Jain from Dolat Capital. Please go ahead.
Yeah, hi. Thanks for providing me the opportunity. I was just trying to understand how the market is looking. You also said there is a traction, but conversion is weaker. What could be the top two or three reasons that are driving the momentum, and what could make this pipeline or a potential pipeline into a revenue that we are expecting to happen in the next three quarters?
One is that, of course, the consumer lending market is giving, I would say, government regulator, everyone is wanting that the finance, retail finance, finance to the lowest end of the society should increase and the stock of that every year. A lot of new industries are coming up, which you would know, of course, and many of them are talking to us. That is the traction part of it. I'll repeat what we've been saying, that conversions are taking time because thanks to the regulatory tightening of regulatory norm, if I were to say, decisions are taking time. We're talking about even in smaller NBFCss, the decisions happening at board level. There is a lot of focus on IT governance, regulatory technology architecture. Also, people are wanting to know. All that can take time. The situation is continuing like that.
Right. I think some of the input which you mentioned were more pertaining to India as an end market. Is there anything you could add to make us understand how some of your other markets outside of India is doing? What is the incremental thing that we are able to do with empowering of our sales organization, which we have announced in the past? Any color on that part will also be helpful.
Sales structure, of course, has come in place. If we talk about empowering, there is more enablement. One is there are new people who are joining here, enabling them with understanding our products better. We, of course, are providing all the support from head office for geographies outside. We have also participated in various industry events that you might be there. Whether they are in India, whether they are outside, there is a very significant partnership which we have done with GFTN, which is through which we are participating in various events. GFTN is the organization, I think, driven originally by MAS. They were the ones who were doing SFF, the Singapore FinTech Festival. They are spread across various geographies. We have partnered with them and through which we are participating in a lot, many events. Apart from that, two more significant exo-level hirings.
Our CMO had joined a few months ago about whom we had informed. Very recently, a global alliance head with also very experienced professionals has joined us. All these things put together, we are hoping that we will get to see good traction and conversions.
Right. Just one bit more. If I see your non-India revenue, they have been in that same zone for the last two, three years now. We have been consistently investing on S&M side. If you could help us understand what is causing this much longer conversion of investment into revenue in these markets, is it like that is the kind of a cycle we were expecting? Is it taking longer? What could have caused this? Incremental role of this gentleman joining as a global alliance partner, what could be the role? Is it related to system integration, or is there any other aspect to it? Thank you.
I think a combination of three things. Even outside the combination of two-three things. When I said that our sales structure really had got depleted, which we have kind of put in place again, except for the global sales head, for whom we are aggressively trying to get them on board. The second, I think the slowing down of conversion is experienced all across. It's not only in India. It could be because of one is, of course, regulatory changes are happening everywhere, plus the global factors may be playing a role. We don't know specifically. The last thing, of course, the alliance head, the global alliance head, partnerships with the big fours, whoever, one of them, other partners who can help us sell our products and also subsequently help in implementation and support. These are the partnerships we are expecting to develop, either global, regional.
Yeah, this is where the alliance head is expected to help us, even with technology providers, platform providers like AWS, lights of AWS, with whom also we partner. There is a promote of incoming. All these things, global alliance head is expected to help it.
Just last one from my side, we have seen this other expense line item for us going up pretty significantly. Is it that the number of events in this quarter were higher for this kind of event to happen, or do you think this is the run rate for us now?
Partly because of recruitment that we talked about from a senior executive. Yes, marketing, we are consciously investing more in marketing activities. A lot of events we are participating in. It's definitely due to these other two things. Travel related to that, of course.
Right. Any medium-term profitability band we would like to operate? Is that something that we have internally assigned?
You know very well that we do not give any guidance in part of so many calls. On that, we will certainly not comment.
Sure. Thanks, Faraz, and welcome, Ashwani Arora. Thank you.
Thank you, sir. The next question comes from Mr. Modit from M3. Please go ahead.
Hello. Yes, thanks for the opportunity. My question is, what is the go-to-market strategy for customer acquisition in FinnAxia? What is the traction there?
I would say traction is there, but FinnAxia, typically, unlike FinnOne Neo, where almost all banks and a lot of NBFCss, they get into the lending, specifically retail lending market, FinnAxia is niche. It is done only by big large corporate banks. Of course, the number of prospects and hence number of deals are expected to be less as compared to FinnOne Neo. There we expect larger deals there. Since you're talking FinnAxia, very recently, we also participated in SIBOS, which is an annual event by Swift, which is a global event, annual event. We typically participate every alternate year, if not every year. From there, we try to generate more leads. That is the traction on FinnAxia.
On the conversions from FinnOne to FinnOne Neo, where do we stand there? Could you give us some light on how many of it is actually from the old customer itself, like 80%-90%? What is stopping others from upgrading to FinnOne Neo? It has been there for the last eight years, nine years. The new generation Fintechs are all microservices-based architecture. Why is this conversion not happening?
Yeah, I agree because that's what I said in my initial comments also, that it is not at a pace where we expect it to be. Except there's one typical challenge that we face is, of course, in FinnOne Neo, as I've mentioned, we would do the customization the way the customers wanted it. Now, a lot of things in FinnOne Neo, though they are available, but the deliberations we get into is that customers want features as exactly they are developed in FinnOne. That is one area. I think FinnOne is a very solid product. Though the technology is old, but at inertia, definitely customers have the wanting to know if something is there very, very comfortable. These are a couple of factors.
Is pricing also a big factor? Is there a large delta because of which people hesitant to move to the FinnOne Neo?
It is not because of pricing, certainly.
It's the complexity of implementation and inertia.
Yeah.
And.
Consideration, all those things. Change management.
Understood. If I can take one or two more, what percentage of sales do this system integrator and the likes of this Bigfoot contribute to at the moment? Is there any discussion at board level where do you want to take it eventually in two, three, five years?
Currently, it's very, very less. We don't have very big partners. Yeah, we have partners through which we are getting them, but it would be very less. There's no limit where we want to go. We want as many sales to come from these. There's no % we define for ourselves.
Again, I understand you do not give guidance. Still, I'll try it in my way. How do you see growth in five, seven, ten years? Where do you want us as analysts to peg it to? Do you want it to peg it to credit growth? How do you internally aspire to grow with respect to industry? The follow-on question on the same is, in the last three years, the growth, the delta of the growth from long-term average with what we saw was large contributed from the career hack you have taken. Does that mean your long-term growth will revert to the mean of 8%, 10%, 12% that was there for the last two decades?
Sorry, won't be able to comment on this.
Absolutely.
I was just trying my luck. No, thank you so much. Thanks for giving all the answers. Thanks.
Thank you, sir.
The next question comes from Mr. Vinay Nadkarni from Harper Investment Private Limited. Please go ahead.
Thank you. Yes. How many new logos have we added in this quarter and in this half year?
One logo we have added.
In this quarter or in this half year?
This quarter.
Half year also, it's more or less the same, or was there anything else in the past quarter?
Fun, would you want to comment?
In half year, how many new logos have you added?
Actually, we have added two.
Two?
Probably.
Okay. Just wanted to check out of the revenue in this quarter, how much is the revenue from the new logos and is there any percentage that you can get to see how it is moving?
No.
Okay. Let me reframe my question. Basically, what I wanted to check out was how much of your revenues come from annuity kind of a business and how much of it comes from fresh sale of logos, fresh sale of products?
I think 80-90.
80%-90% would be from existing customers. That 80%-90% is coming from fresh sale of products or is it annuity revenue that you collect as a subscription?
Annuity and existing customers. We keep just some upgrades, some change requests, some new lines of businesses. This is existing, all existing customers.
Okay. Any new development are you looking at in terms of expanding your product portfolio to include anything new which your customers might be using some other software for and which you could do better?
Let my product experts talk about it. I think in terms of enhancing the features or adding co-lending as an offering to our customers. You must know the kind of potential co-lending is coming to the market. We are going to offer that as part of our product offering as part of GA7.5. Further to that, we are also working to add a new line of businesses as part of our offering like gold loan, finance, and security. Actually, we are thinking how we can add value to our customers through line of business additions.
Of course, yes, we could see everything. In addition to this, on the technology front, we have already implemented and are in the process of implementing more AI use cases. It is the concept of embedded AI that we are using with the product offering. A lot of AI can definitely be used with the product offering.
Okay. Thanks a lot. Thank you very much.
In addition to this, we are also investing on.
Okay. Thank you.
Thank you, sir.
The next question is from Mr. Himanshu Padhe from State Fort Investment Managers. Please go ahead.
Hi, good afternoon. My first question was, we have been not tracking the company for some time now. Some of the challenges which were there in FY 2021-2022, which was on the client movement from FinnOne Neo, okay, we are still around the same challenges, okay? We have stated that we want to change our sales and marketing or bring improvement, okay? What could we have done better that this whole transition, which has taken so much time, could have been done better? Some thoughts on that so that we know what we are trying to target with the improvement in our sales and marketing structure and with bringing new people on the organization?
Thanks for asking this question. We have done one mega transformation project from FinnOne to FinnOne Neo. There are more to follow up after this, one already in pipeline. What this kind of mega transformation does is that it brings extreme confidence into the new platform offering, which customer has already started realizing value of it. We want to sail through on this momentum that we have. Okay, Bhise, have anything to add?
Yeah, yeah. I'm so thrilled to talk about that. There has been quite a few learnings from FinnOne to FinnOne Neo transformation, which we have already done. We are going to use this learning going forward. Certainly, with the established sales organization structure, we are going to leverage this learning and communicate to our customers so that we would be able to use this further.
Can you elaborate on what were the important learnings which we can transfer? Whenever some new project transformation or a new product is going to come up with us, the scale-up of that could have been faster than what it has been historically for us. That is what I am trying to understand.
Okay. So I think if you talk about top three learnings, one certainly is on the data migration side, wherein we learned how to make the cutovers timing more optimized. It happens to be a more performance-oriented thought process which has gone into making migration more seamless. That's one learning which we are now embedding as part of our product offering as well in terms of data migration tooltips. Second, certainly on certain governance part, we are trying to bring more checkpoints while we are moving from FinnOne to FinnOne Neo, how we can bring these checkpoints more streamlined. Third, we are also bringing more aspects of how to manage the scope. So scope is also something where more effective tools in place so that we can have better control on the scope part. These are top learnings we're trying to incorporate further.
Let's say for next two years, what would be the top three priorities for us? Just for an organization.
Of course, first is enabling teachers on the technology and the product. Since we have added a sizable number of new associates, we are enabling them on product and product capabilities so that we are able to communicate the value of product to our customers. The second one is, as Mukesh mentioned, there is a lot that we have learned as part of the transformation project. Our program management capability is something that we are strengthening. The third part is, of course, the control and governance on the scope.
Okay. Thank you so much.
This is in addition to as part of organization practices on technology and product lines that we are working with.
Okay.
Thank you so much.
Thank you, sir. We have a follow-up question from Mr. [Modit] from [Kantri]. Please go ahead.
Thanks for the opportunity for follow-up. I want to understand what exactly at the moment is the role of Ritika in the organization. Is she eventually going to take a larger management role in the organization? What's the guidance strategy like?
Yeah. As of now, Dr. Ritika is still on her sabbatical. As she comes back from sabbatical, her role will be decided.
The other follow-up is on, is there any other product line that you are tinkering with? Even the cost of new development with AI has gone down substantially. Are you thinking to, given you have large cash reserves, are you also putting R&D monies to come up in new product lines? The follow-on on that would be, is there a lot of competition in pipeline coming because the product development cycles with AI have gone shorter?
Okay. The way I would like to respond to this very interesting question is, thanks to AI, the product lines certainly have reduced. However, domain knowledge or industry knowledge is a very integral part of whatever offering that you want to bring to the market. That is where we have tremendous strength. We are continuing to build on that strength. Any related offering, we would certainly be, we continue to look at and we would be working on them.
Right. So just a quick understanding from you. In the US, there is something called a sidecar approach where the likes of Thought Machine and other companies, Mambu of the world, they try and sell a small part of their entire offering to a company to get a foot in a door and then slowly move and mine that customer. Is there something similar to that that you have some very unique small software which can help you to get inroads to get eventually a much bigger piece of the business for the clients?
Absolutely. Package business components are something that we have been working on for some time now. While we roll them out with our existing customers, the next step would be to take them to non-customers also.
Right. Right. Understood. Thank you for being patient and answering my question. Thanks. Thank you, sir.
That was the last question. I will pass over to Mr. Vishnu for his closing comments.
I'd like to take this opportunity to thank all of you for your continued interest. I would also like to convey our sense of gratitude to two of our colleagues, Ashwani Arora and Ashish Khanna, who have dedicated three decades and two decades, respectively, of their professional career in building this organization. As they sign off to take on the world with some new exciting ventures, we wish them all the success and put our sense of gratitude to them. Thank you. Thank you very much.
Thank you, sir. That concludes our conference for today. Thank you for participating. You may all disconnect now.