Ladies and gentlemen, good day and welcome to the Newgen Software Q2 FY 2026 earnings call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask a question after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Aditi Patil. Thank you, and over to you ma'am.
Thank you, Saisha. Good evening and welcome to the Q2 FY 2026 earnings call of Newgen Software Technologies . It's my pleasure to introduce the senior management team of Newgen. We have with us today Mr. T. S. Varadarajan, Whole Time Director; Mr. Virender Jeet, Chief Executive Officer; Mr. Tarun Nandwani, Chief Operating Officer; Mr. Arun Gupta, Chief Financial Officer; and Ms. Deepti Mehra Chugh, Head Investor Relations. I now hand over the call to Ms. Deepti for further proceedings. Thank you, and over to you, Deepti.
Thank you, Aditi. Good afternoon everyone and welcome to the Q2 FY 2026 results of the company. Before we move on to the discussion, let me highlight that this call may contain certain forward-looking statements concerning Newgen's future business prospects and profitability, which are subject to a number of risks and uncertainties. The actual results could materially vary from the forward-looking statements. Past performance may not be indicative of future performance. The company does not undertake to make any announcements in case any of these forward-looking statements become materially incorrect in future or update any forward-looking statements made from time to time by or on behalf of the company. For further details, you may please refer to the investor relations section of our website. I would now hand over to Mr. Varadarajan for presentation of results, which will be followed by a Q and A by the management.
Good afternoon everyone and thank you very much for joining us today for the Q2 FY 2026 earnings call. I am pleased to report a strong quarter reflecting our continued focus on product innovation and customer success. Our growth momentum has been restored in Q2. This quarter we have achieved revenues of INR 401 crores, marking an 11% YoY growth. Our performance was driven by robust demand across regions, especially new and mature geographies, and increased adoption of a digital solution. Our subscription revenues reached INR 126 crores, witnessing a strong growth of 20% YoY. During the quarter, we made 15 new customer logo additions. We are happy to witness new territories opening up and large deal breakthroughs in mature markets, which is expected to help us in further scaling up in these geographies. U.S. and APAC regions witnessed strong growth of 22% each during the quarter.
India region witnessed a growth of 7% and EMEA by 3%. We are working on expanding wider in India and Middle East market. Increasing focus on Make in India initiatives is expected to give us advantage. We service international players in the Indian market. Further, we are deepening our presence in the banking vertical and working on building customer journeys in private enterprise. Moreover, we have also witnessed early success in the insurance space segment across geographies. Our key wins in Q2 include: we won a project of approximately GBP 3 million from a major life and pension consolidator in the U.K. market to provide an Enterprise Content Management and Customer Communication Management platform. Newgen signed a five-year contract worth EUR 4.2 million with a major retail group with a diverse portfolio of food and non-food segment in Europe for a modernized cloud-based enterprise records management platform.
We secured a five-year contract valued at $5.6 million from a Ghana-based conglomerate for implementing a loan management system. The company also entered a two-year U.S. deal $1.6 million deal with a bank in the Americas region for supply, installation, and implementation of the Newgen Enterprise Content Management System platform. We signed a three-year agreement valued at approximately $2.6 million with a leading U.S. healthcare company for annual software subscription, cloud hosting services, and implementation. Newgen was awarded a five-year INR 21.24 crore deal by a general insurance company in India for policy administration system. We were awarded a multi-year INR 8.9 crore deal for licenses of BPM platform and its implementation for the PAN 2.0 initiative in India. Coming to our products, we are working on creating viable use cases in AI through significant investments in AI-driven products and solutions.
By leveraging AI, we can help boost productivity, decision making, quality, and employee engagement with enterprise systems. During the quarter, we also launched the Newgen Developer Community and received an overwhelming response with over 500 registrations on day one during the quarter. The company also registered as a strong performer in The Forrester Wave Digital Process Automation software in Q3 2025. We have also been recognized in Forrester the Insurance Agency Management Systems Landscape. We have also been recognized as a representative vendor in Gartner Market Guide for Commercial Banking Cash Management and as a sample vendor in Gartner Hype Cycle for Bank Lending 2025. We are happy to share that we have been selected in the Forbes Asia Best Under a Billion issue published in August 2025 for the second time in a row.
Our profit after tax for the quarter was at INR 82 crore and net margins were at 20.4%. We are working on various steps of enhancement of productivity of our workforce through automation and UI. We continue to prudently invest in R&D and sales and marketing initiatives. We have invested 9% of our revenues on R&D initiatives and around 21% of our revenues on the various sales and marketing activities. On the balance sheet front, we witnessed robust cash flow generation with our net cash generated from the operating margin activities at INR 90 crore during the six-month period. Our net trade receivables were at INR 521 crore as of 30th September 2025, which resulted in net DSO of 124 days. This quarter has been a testament to our resilience and agility.
Despite evolving market dynamics, we have delivered strong financial performance, expanded our global footprint, and deepened client relationships across key verticals. Our strategic wins in the U.S., APAC, and EMEA regions underscore the relevance of our solution and interest our clients place in us. Our funnels continue to be healthy and strong, and we see improvements in project closures, especially in new and mature markets. We are hopefully continuing the momentum in the second half of the year as well. Thank you very much. We are now open for Q&A.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR and one on the touchtone telephone. If you wish to remove yourself from the queue, you may press STAR and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ruchi Mukhija from ICICI Securities Limited. Please go ahead.
Many congratulations to the management on a wonderful quarter. Excellent delivery. Could you help us understand, last quarter we had commented that there has been some delay and change in the large deal momentum. How that has been during the quarter? We heard a couple of large deals, but most of them are from developed geography, Europe, U.S. Now, how is the situation in India and where does India stand? If you could comment especially regarding the large deals.
Ruchi, thank you and thanks for congratulating on the result. You're right. I think what we had indicated at the end of Q1, that while business momentum and deal win momentum was strong, typically there was a significant delay on large deal closures, especially in territories like EMEA and India. I think a large part of the challenge still remains. While we are closing a lot of deals, the EMEA and India large license deals are still fewer compared to last year's, though we have done a good significant around INR 70 crore of license this year. Out of these, significant parts come from India and Middle East. Most of the large wins this quarter have also been from mature markets. Their revenue recognitions are quite delayed, so they have not really factored in the revenue.
The deals which come from India and Middle East you are able to realize because they are license-based revenues. I would say that partly the challenge has not completely been resolved. As I said, we are focusing on more deal velocity, organically expanding our use cases, and also trying to get into newer verticals and using AI to drive some of that momentum. We should be able to also weather these tough times and still register growth. That's where we are right now.
This quarter, even the profitability was a surprise. Is it fair to associate the better profitability to the growth from the mature or the developed market, which comes with a better margin profile? If we see similar growth mix across geography, the upward bias to margin should hold on. Is that right interpretation?
Yes, because you know, I think as you previously mentioned that any our costs are typically very standard at the beginning of the year. This year I think since the market momentum was not going strong, we were slightly more cautious about spend, and some of the costs also about manpower expansion were not needed because the service deliveries are getting optimized. There is also advantage of some coming from the AI. So the manpower additions were much muted, and the better margins due to the distribution of revenue coming from [JIOS] is an organic thing. We clearly understand as the subscription revenue becomes larger part of the revenue and the mature market sales where we have better realization for the same deal, we should be able to further expand markets margins. Margins are also a function of how aggressively we want to invest.
I think our indication of we can do something between around net of 20% of margin will continue, and the business organically as it grows does expand margins. Thus we have an ability to deliver higher margins. We would prefer to invest that in growth and accelerate the growth.
Got it. The last one, this quarter we saw a significant jump in other expenses. Could you add more color to how this expense got inked up during the quarter?
I'm not very sure because significantly we did not. I think as I remember there is one sale of hardware which has an impact of a period of INR 6- INR 7 crore which could be. Maybe that is the case. I don't see. There's some consultant fees which came on this quarter, but they're not very different from what we have been doing in previous quarters. I think Deepti can send you more detail about. You can exactly tell him and share more details about. Nothing significant.
I was trying to correlate. I mean, have we increased marketing events, and given our expectation that the larger.
Slightly, not substantially, slightly not. I think in next couple of quarters we will start again increasing them, but nothing significant. I think there will be more incremental as the business moves.
Okay, got it. Thank you for patiently answering and all the best for your time.
Thank you very much. The next question is from the line of Aditi Patil from ICICI Securities Limited. Please go ahead.
Thank you for the opportunity. My first question is on the order book growth. Can you give some qualitative sense on how our order book has grown in H1?
Thank you. We have, you know, last year we said that, you know, the order book at the end of the year is a better reflection. Right now in the middle of the year it is looking quite strong. I think the numbers are above 20% on the order book growth, in fact mid-20s or even higher than that. I would say not take that data in the context of looking at, because some of the order flow between H1 and H2 can be also to do with where the ATS has got renewed, where the subscriptions got renewed. It is, you know, surely better than last year clearly for the same period by a significant number. I do think over next few quarters that should reflect in the conversion of that business.
I would say the order book numbers at the end of the year are better indicators than in between at a quarter level or at a half year level.
Okay, got it. Last quarter, towards the end of the quarter we had signed a couple of large deals. Did they get converted to a license revenue in Q2? We see a QoQ strong jump in a license revenue.
No, not really. What happens in any license deal is whenever, whichever quarter it is closed and it is billed and revenue is realized. I don't think the orders of last quarter of license would have reflected. These are typically all the orders which would have been closed this quarter. You could have some amount of service delivery revenue or some coming from those orders. Generally, slightly all orders take a bit of lead time beyond license values. They all take at least a quarter or sometimes 2/4 to ramp up and start execution and some revenue starts coming in. I would say that most of the non-license revenues from Q1 and Q2 orders have yet to be realized. They are not in the system.
Okay. My last question would be on the globally we have seen large software companies seeing strong growth in their AI features. What are our plans on growing AI-driven product revenues and what traction have we seen so far? You mentioned about AI-driven productivity helping lower employee costs or the increase in the employee cost is lower. Can you share how our employee head has grown on a year-on-year basis?
Yeah, Aditi, I think two parts of this question. First of all, you know for global companies, typically most of the conversation, at least in the context of India, is around service companies and their challenges. Their problems and opportunities are very, very different than ours. We are, so as a product company, generally we have to pre-invest in AI to be relevant in our products. Most of our use cases are AI-led and AI-delivered, so product capabilities are getting enhanced or they've been done for the last three years. We have also clearly have GTMs around five different AI product areas like credit decisioning, the trade document or IDP-based cases, or there are cases in insurance. These are our GTMs which we are trying to drive sales. We got some successes in Q1 as well and some in Q2.
I think our strategy is still about leveraging interest in AI which transforms use cases and enhances the digitalization of businesses. That is where our products fit in. We are not into looking at overall AI demand and then servicing that demand because I only service the demand through my products and my use case. I think we are hopeful that this, over a period of time, product companies end up being net benefiters of any large digital movement. We will have to fight for the space because again in that space I have to compete against the rest of the product companies, not against the service opportunity. For the AI-led productivity, I think clearly with generative AI, one of the biggest advantages of use cases is what gets deployed in the whole software engineering and drug development.
I think so far the data is that people can expect between 20%- 30% productivity once they deploy all the tools. It may take time to reach that. We have taken internally a target, ambitious target, to make sure that we optimize and there are some pockets of zones where AI is being deployed. Clearly, I think in the next two to three years we think for the same revenue we should be able to lower our service delivery, execution, and product cost by 20%- 30%, which some of them will get also translated to the client. We have not added manpower compared to last year. In fact, we are roughly around 100 people less than last year right now. So Aditi, does that answer?
Yes, that answers my question. Thank you for patiently answering.
Thank you very much. The next question is from the line of Rahul Jain from Dolat Capital. Please go ahead.
Yeah, hi. Thanks for the opportunity and congrats on very strong execution. Basically, my question.
Hello,
go ahead Rahul, I can hear you.
Yeah, hi. I was asking about the deal win data. If we just go by the calendar period during this quarter that we have announced the wins. Look. Hello. I can hear some background.
We can hear you clearly. You can go ahead. We have no noise.
Yes, I was saying that from a signing perspective it's meaningfully higher even if I have to compare about whatever we have announced in the previous fiscal overall basis. I want to understand this from your perspective from a demand confidence point of view because I think I heard that you mentioned somewhere, Jeet, that the challenges still exist. How are we comparing these two elements and how are we seeing market in general?
Thank you for the question. You're absolutely right. I think we had a significant quarter of new deal wins. One of the things you can realize is that this time a lot of deals were outside India; they were more in mature markets. We had deals coming from Australia, U.K., and some from the U.S., and compared to other quarters these were significantly more for the same period. Now these deal wins are generally, most of them, subscription-based deals, so they don't have any immediate effect on the revenue for that quarter. Previously, our deal acceleration was happening in markets like India and the Middle East, which had upfront license revenue realizations. While I said that our overall business momentum is looking good, our products are having more relevance, we are winning more.
In that deep moment, what is missing is the India and Middle East market; the large license deals are still lesser compared to last year or almost the same as last year. We generally have an expectation that we should grow at least 30% in license revenues in these markets. That is the challenge. The challenge is also in the area where there are typically larger deals getting signed, where there is a slight amount of delay or, you know, there is not faster decision making. Both the realities are true. Our deal momentums are great. We are winning more and more deals in mature markets. The other part is that in India and the Middle East, our license sales are not as per the expectation we want. We want to accelerate that over something next.
Sure, sure. Now one more question. Basically, what I'm trying to infer is that we might see a better traction in SaaS kind of a deal, SaaS kind of a segment momentum, while license of course will grow. Given the mix, SaaS could see a better traction. We also observed that there were a couple of deals that came from the system integrator channel and they were from a size perspective also relatively more compared to what we typically announce. Any color in terms of how you are seeing this channel driving momentum to us and the deal value that we announced? Do the system integrators include some part of their revenue also as a subset of this deal value? This is just value that gets into our books and there is no pass-through element for system integrators in this piece.
Yeah, I'll handle the second part first. I think all of our deal ways head to Newgen. There is no other component of system integrator or anything. System integrator may have a different order or maybe having the similar order. We have nothing to do with this. This is an order which is placed by customer or through system integrator to Newgen for the Newgen value. That is around the size of the deal. In terms of better traction on SaaS, it is a function of where we are selling. For us, typically all sales outside India and Middle East and some in APAC are in SaaS model. If we have a higher acceleration of growth and order book in those markets, it will lead to better SaaS revenues. Translation from deals to revenue will take a few quarters at least because initially they are not upfront loaded.
They will be proportionately realized over 12 months and then they will go over a few years. Some of the momentum which comes into the business, if it comes from the SaaS side, is slightly lagged into revenue. That way, yes, it is better because it is more even. It increases the subscription and the annuity side of the business, which is more predictable but also has a challenge that it does not give you immediate returns in that quarter, does not give you the advocate. For us, we have to focus on license to look at our quarterly P&L. India and Middle East market, since they have a more habitual purchasing licenses, it works in our favor and all other markets. Subscriptions are 90% of the cases, but also some are licenses. I think that is the case. Rahul, does that answer your question?
Yeah, it does. Just one last follow up on that in light of, you know, if you think the mix of license versus SaaS might change in favor of SaaS, let's assume that is how the, you know, the western market would behave for us. In that light, the 20% revenue alignment that we aim for and the margin that we have delivered last year, let's say 25.3% EBITDA margin and we have done similar in Q2. You see that number. These numbers should also be seen in a different lens if that mix changes or it's too early to comment on that.
Rahul, we have always maintained that this issue of moderating our growth targets on the account of subscription is a trap. Sometimes if you get into that, you make a habit of lower growth. We don't want to do that. We are clearly saying that whatever the subscription business, though it is back ended, I think we should be compensated either by acceleration in the business momentum or looking at higher license deals. Our focus is very clear that we still want to continue on a healthy growth momentum, and the subscription switch can happen organically over a period of time. If our business comes in subscription, then the only answer for us is that we have to do more business.
Yeah, that's even better. It's good that if you then it creates more visibility as well, and just on the margin side of it because yes, you could compensate with more wins to generate equivalent revenue. From a profitability point of view also, there would be more SG&A involved for more deal per revenue basis. This 25% margin that we did last year, should that hold as a medium term objective for us, or you think we could be improving or going down?
Whatever we do,
I think we are right now not at our desired levels of top line. On our desired levels of top line, we said the margin would expand, and I think we will keep on reinvesting in the business. Right now, the costs are on the lower base. Luckily, also the people movement is lesser in the industry. We are able to maintain some costs out there, so we should be, even at a lower number, able to be very close to that margin. In the natural course of business, I think the margins would expand. We would be more aggressive in investing that in sales and market.
Fair enough, that's quite helpful. Thank you and I'll go back in the queue.
Thank you very much. Participants who wish to ask a question may press star and one at this time. The next question is from the line of Sachin Jain from Prahas Capital. Please go ahead.
Yes, I think go ahead, please.
Mr. Sachin Jain, please go ahead.
I think we can move to the next question.
Hello.
Am I audible?
Yes.
Yeah. Jeet, congratulations on a good set of numbers after a long time. Heartening to see the traction by system integrator channel. How do you see from here, do you see a meaningful traction going forward from here? After two, three years lag we are now seeing started seeing some good deal wins, particularly in mature market. The strategy which you articulated three, four years back through this channel looks started now giving you the desired results. How do you see going forward this channel particularly contributing to Newgen,
Sachin.
I think, you know when we started I think we talked a lot about it and we were slightly over optimistic about this whole channel and we did not realize how much effort and time it takes to build it. I think the hard work has happened over last four years, but we clearly realized that at the product level company we are still at a size where the product sales has to be done by us and still we need to manage all the system integrators, their competencies and collaborate them to win large deals. I think that's what's happening. I would give a large credit to our own sales efforts in the regions and then also our partnership and alliance teams, what they have worked over next last few years to build these alliances strongly.
It is, I would not say that we have reached kind of a breakout point where we should expect lot of deals coming through system integrators. We are still relying on our direct sales efforts and along with partners to go and win those deals. It is, I am also hopeful like you are. I would still today rely on that. You know we have to organically go and sell more. It will gather momentum surely. When does that threshold or a breakout happen? It is difficult to predict, but we have extended excellent relationships in now different markets with different GSI and multiple GSI orders have come in single regions and then across continents and countries and there are fewer coming every quarter. I think this quarter we have had more than few. That's the only difference. Let's hope that the deal momentum continues.
I would not take that data and draw a conclusion. We are all, I think we can be together hopeful about.
Understood. On the second, the way AI is also seen, one is enabling your products, particularly adding a lot of features. You can agent AI and all you're adding to your product.
On the other side, how do.
You see AI as a risk. Can it disrupt the product itself? What are the risks you envisage, particularly taking AI into account?
Yeah, I think you see for product companies, any major technology disruption always poses these challenges. It happened at the time of mobility, it happened at the time when the large SaaS players started coming in or the cloud aggregators came in. For us generally, people who invest in R&D, they're able to convert changes into opportunities. That's a broadly 30,000 ft answer. Now for us, what we have seen with AI, there's a renewed interest in some use cases which was very ideal, like in content management system use cases, the intelligent document processing systems, the records management, governance, how to capture information, how to organize information. The AI is transforming those use cases. More interest is getting generated in our traditional use cases. Similarly, the product roadmaps can become wider, they can cover larger cases. At the same time, as you rightly said, there will be diverse competition.
Use cases traditionally which we are operating in may get disrupted by a newcomer or can get disrupted by deploying AI. Customer on his own can deploy AI. Those challenges, do they exist? We are pretty good in terms of investing upfront in using AI to leverage. With the strength of roughly around 500 customers we have across the places and on the top of at least three verticals and use cases, we rely on that to drive our next momentum of growth. In terms of using AI as a tool and an enabler for us on the risk side, I don't see typically a direct risk, but the risks are typically around where this whole promise and flux is there.
I think that in business there is kind of a slowdown of all contemporary cases or decision making because people are evaluating can they deploy AI, can they use AI in a different way? Do they really need that much of people, should they approach? Those are the things which are happening right now in the market. We have to go and win our own battles and take the market forward. Typically thinking for product companies, all disruptions turn up being advantages where you are able to. If you don't invest and if you sleep over it and say that we'll keep on doing what we are doing, then you may end up losing the market share.
In last two, three years, whatever investment you made in AI, particularly enriching a product from Marvin or LumYn, and whatever investment you made from AI related investment, how clients are perceiving, are there initial, what are the initial feedback?
I think this is exactly what I was saying. First of all, for me it is not a choice. For me, all my customer use cases, when I compare as a product company, are driven by AI these days because my competition has done it over the last three years. The global companies have done it by that. Customers do perceive that AI is fundamental to all their use cases. I said that part of our funnel, there is a renewed interest in certain areas of AI where I have started generating a better funnel. We also converted some major orders in AI, which were typically the early movers in AI. We had the Indian regulators coming, getting, and that was an AI case. We have Singapore regulator. Some central bank cases are with the AI. We are also pursuing a lot of cases in banking on AI right now.
I would see the investments of the last three years, 90% of that is to sustain you as a company, as a product company, because if you don't do it, then you are out of the game. 10% provide you an advantage in new use cases and other tactical places you can go.
Understood. Thank you and all the best.
Thank you.
Thank you very much. The next question is from the line of Param Vora from Trinetra Asset Managers. Please go ahead.
Hello. Thank you for taking a question.
Congratulations for a great set of numbers.
Can you describe which industries or geographies you are seeing fastest growth in?
Thank you for the question. This quarter we have done better in the U.S. and APAC, which also includes some amount of U.K. revenue and Australia revenue. Generally, the verticals, which is banking, have been very strong for us. It continues to do the larger part of the business. The growth has come from government and other verticals where, you know, the AI-driven or the document-centric cases are coming up. Growth is more in other verticals rather than banking for this quarter. Overall, the size of the business, banking and insurance still are the major, major businesses.
Okay, my follow up question is regarding the patent. With new patent grants, how are you monetizing the patents? Like are there licensing models in place?
Patents are of two things. One is about, you know, developing a culture of innovation and making sure that you are ahead of the market. Second is about protecting yourself in certain key areas. They are not directly monetized patents. Eventually those technologies get into your products over the period of time. Sometimes you have to also defend your territory in terms of doing the right thing or you are the first mover advantage. We don't have a separate strategy to monetize an individual patent because between the issuance of a patent or working on that idea to monetizing, sometimes we are a very quick cycle and sometimes a late cycle. We don't have any direct aims that the patents would be monetized. That's a culture of innovation by which you want to make sure that we protect our IPR and we also stay ahead.
Okay. Okay.
Thank you.
Thank you.
Thank you very much. Before we take the next question, we would like to remind participants that you may press Star one to ask a question. The next question is from the line of Mihir Manohar from Trust Mutual Fund. Please go ahead.
Yeah. Hi. Thanks for giving the opportunity and congratulations on a great set of numbers. Wanted to understand, sir, on the U.S. side, I mean U.S. macroeconomic situations improving, banking numbers also reporting good numbers, corporate profits also doing well. Should we expect acceleration of growth particularly for us, for us from here on? Also, when we see the order booking numbers that you shared, that also GSI order booking is doing well. Should we see further acceleration of growth, especially U.S. geography from here on?
Thank you for your question. Yes, we are hopeful. With the early moves we have pivoted around two years back into larger cases by walking out from smaller accounts, that transition is almost complete. Now it's more about growing the business in other markets. What we have achieved so far is we have got the marquee customers in health, we have got the marquee customers in insurance and in banking. Now it's the point of using these examples to replicate. I am hopeful, but I would say that we have not reached a threshold that we could predict a number and be very certain about it. We are very hopeful that the efforts of both of GSI as well as pivoting to the large accounts should start showing results. It showed results last quarter.
I am very sure in this quarter also we should be able to record some good wins in the U.S. and then we take it from there.
Understood? Sure, sure. On the GSI side, Sir, let's say one HF 2026. How many number of deals have we won from GSI or let's, on a broadcast basis, the last 12 months versus, let's say, the 12 months or 24 months before that? Just to understand from a broader comparison, is the GSI retraction improvements for or how to understand that.
I'm sorry, I really don't have the data off my mind. I think on the revenue coming from partners, I clearly, though, there's a growth in that number compared to last year. Deepti, do you have the number, how many deals can GSI compare to the same financial year?
I'll get back to you on that. I don't think there'll be a significant change in the number. There are some large, interesting deals that we won.
I think we can come back with a number to you in terms of what's the exact number.
Sure, understood. Third question was on the Middle East and India side. India, there was a situation that you were mentioning in banking side. Yes, we banking a lot of situation and we were trying to make endorse via the NBFCs and other private banks. How to understand the trade-off here as to is the private banks at certain point in time will become larger enough for us for the growth to compensate. Also, the Middle East, I mean as far as I recollect, the Middle East, the lower growth last quarter was because of tensions and not because of any fundamental reasons per se. How to understand the reversal for these two particular geographies?
Yeah, so I think. Let me take India first. I think India, you clearly said that, you know, large deal momentums in the public sector, there was some saturation and then we focused on NBFCs and on some of the new banks which typically will end up becoming the larger banks. I think that's going on. If you see also in India, we have sold roughly around a sizable, like, licenses to all these accounts and we have got lot of wins in that. What we are missing in India is still the larger deals coming from some of the large accounts which are large license deals which can be realized in that quarter. We think that momentum will start shifting. We have got entries into now private segments.
More deals are coming from the private segment where we can get the larger licenses and that should follow up because that market is even wider than the public sector market for us, we should be able to build. I'm hopeful that in couple of quarters Indian banking can come back to its growth momentum. EMEA, I think the challenge beyond the turmoil also was, you know, our largest growth market has been Saudi and slightly that was shut for couple of quarters for us. I think that has started opening up again. I think it was on account of certain things out there. Now it has started to open up, I think, and as the deal movements in Saudi starts picking up, we should be able to. We have opened more markets like Kuwait, Saudi and other markets around that where we have got significant deals.
Both these markets are very important. We have a kind of a leadership position in the areas and verticals we process. Sometimes, you know, there is in preceding quarters and years we end up doing phenomenally well. We are growing at 40% with license growing. Now to match that growth rate and also to repeat that sometimes becomes a challenge on the license because license is a jerky value. We are in that period where we need to settle the base slightly for a quarter or so and then the growth momentum can repeat.
Understood. Sure. Last question was on the employee expenses. When I say employee expenses, they are flattish on a QoQ as well as YoY basis. Is there any deferment of wage hike which has happened, or is it largely because of lower employees giving a higher revenue?
We see employee costs are in three buckets for us. One is around overall addition. We don't have any addition of employees this year, but last year's base cost itself increases the cost this year because last year we had a lot of people. We have a lot of people in capacity in that sense. In the second half of the year, we will keep on expanding. The second is the campus. Campus is one thing which we rely heavily on. We have never in all these years of 20 years, 25 years, declined campus offers. We have taken all our campus people. This year also we have not gone back. We will be again hiring more people in January as well as March. Third is in the employee wages cost improvement, the salary. For us, predominantly the wage revision is due in July.
This time onwards, it is from 1st of October . We have gone ahead and done the wage revision of roughly around 80%- 85% of the people in the organization. Depending on how the further quarters look, we will be looking at how to take care of other people.
Okay, understood. That's it for myself. Thank you.
Thank you very much. The next question is from the line of Sanjay Gupta from SKS Securities Limited. Please go ahead. Mr. Sanjay.
Audible.
Yes, sir. You're audible.
We can hear you.
Congratulations Jeet and your team. Nice results this quarter. I have a question about the, I think on the 30th of September there was an announcement that there was some order passed by Qatar Investment and Trade Court where the company needs to make a payment to the customer around $1.4 million, plus some compensation. Is that something sorted out already and the provision for that already done in Q2 or it will be done in Q3?
Yes. This case is about in Qatar Central Bank. I think some years back we had sold licenses and there were issues in implementation. The claim from them is about which we don't think can be substantiated. They have got a judgment in the lower court. We are appealing that. That's the opinion of the lawyer to appeal it in the higher court. We are hopeful that we can get better favorable judgments in those cases. I think any provisioning can be done only after the final judgment of that case is done. In the transient we don't have any option to either provision or part provision or do it. It's a contingent liability which will be reflecting in the books at the same level. We put the contingent liability in the books.
If whatever the judgment finally comes, whether we win the case or we lose the case in the same quarter, wherever legal recourse is not there anymore available, then we'll be provisioning it.
Sure. One more question about during Q3 and Q4 of last financial year, there was this big projects were won, but the implementation was delayed or deferred. At that time, you mentioned that most of the revenue for those implementation will be considered in Q, I think after Q2 probably or Q3. On that, those implementations are going well, going okay, and then those revenues will be coming in Q3 and Q4.
Yes. I think the challenge we had reflected that some of the cases which we have won, which were large deals, had not come to the stage where we could take the subsequent revenues which are about ATS, AMC, and Support. Now you should see that the ATS AMC growth this year is substantial. We have not only recovered on those projects, we have also grown ATS and AMC, and I think that momentum will come. A lot of these projects are coming to a stage where they are live with the customer and customer is paying ATS. We still have not increased support revenues because I think that will take maybe a couple of quarters more to do that. They are going on.
I don't think the challenge we had last year in terms of what you call downstream revenue lines not kicking in, I think part of that challenge has been solved. The opportunity part in terms of generating more business, adding more support resources out there, that is still going to be happening in the next two quarters.
Oh, that's great. Wishing you all the best. Thank you.
Thank you, Sanjay.
Thank you very much. The next question is from the line of Ashish Soni from Family Office. Please go ahead.
The Indian government is promoting own grown software companies like Zoho, and even Tata Motors signed a deal with Genesys. Are you seeing any uptake or interest in your bid pipelines from Indian private?
Ashish, this is a music player to all product companies and I think we are one of the most, you know, prominent globally enterprise software product company which we play in enterprise space. You know, so far I think unfortunately or fortunately, I think a lot of our Indian enterprise has been dependent on global software. There is clearly an interest and a direction coming in many enterprises about looking at Indian software. I think we should be very cautious that they want to run their business. They want to get the best software for their enterprise. That is their first priority. The products and companies which can deliver that. In that we stand a very good chance. We have credible products which are best in the world, recognized globally, sold in around 70 countries and, you know, there are no compromises.
If there's an interest in Indian enterprises where they could consider Indian products more favorably, it should give us an advantage over a period of time. I think, you know, between a lot of noise and action on the ground, it takes time. I do expect that if this trend continues and the direction continues, we have product categories in the area of like enterprise content management, record management which we implement globally. India has not ever implemented any records management or enterprise content management strategies. We can get a huge opportunity in Indian market. For that many things have to fruitify on the ground. We will be working on this opportunity. We'll be making more people more aware about the overall product portfolio we have. Yes, we want to compete on merit and also we don't want only win in India, we want to win globally.
Regarding there is a news about sort of recession in the U.S. and maybe slow down in other geographies. Is your developed market deals coming because of that, or do you see there will be acceleration because of that condition, micro condition?
No, I don't think anything right now. I think there is, there is an overall, if you look at last one and a half years, there's been turmoil in decision making. Banking and some services are recovering across the globe. We think that being our primary segment, we should be able to ride on that. Europe is opening up a bit. I think not as much as you want, but it's opening, so some traction is coming up. Australia market is opening for us, so it's a very organic process. We are still small, and most of our outcomes depend on our own efforts, and though market conditions do play, we would still like to rely on our own efforts to go and drive the business. Hello Ashish, yeah, go ahead, thanks. Did you hear me? That's all I have to say.
If there's any follow up question, you can ask.
Yeah, that's all good.
Thank you.
Thank you very much, ladies and gentlemen. That was the last question. I would now like to hand the conference over to management for closing comments.
Thank.
you so much everyone for joining us on the call. For further queries, you may reach out.
can connect with me or you can go to our website. Thank you.
On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.