Newgen Software Technologies Limited: Q2 FY26 Sees Restored Growth and Strategic AI Push

Newgen Software Technologies Limited has reported a strong performance for the second quarter of fiscal year 2026, demonstrating restored growth momentum and a continued focus on product innovation and customer success. The company's consolidated revenues reached INR 400.8 crore, marking an 11% year-on-year increase. Profit after tax (PAT) also saw a healthy rise of 16% year-on-year, totaling INR 81.7 crore, with a PAT margin of 20.4%. This robust financial outcome reflects Newgen's strategic efforts across its diverse product offerings and geographical markets.

The company's performance was significantly bolstered by strong subscription revenues, which grew by 20% year-on-year to INR 126 crore. This growth in recurring revenue streams, including ATS/AMC and Cloud/Subscription License, underscores the resilience of Newgen's business model. From a segment perspective, the revenue split for Q2 FY26 highlights the importance of various offerings: Implementation & other services contributed 23%, Sale of Products 18%, SaaS 12%, Support 27%, and ATS/AMC 20%. Geographically, the US and APAC (Ex-India) regions were key drivers, each witnessing a strong growth of 22% during the quarter. India and EMEA also contributed to the overall revenue, growing by 7% and 3% respectively.

Strategic Initiatives and Market Traction

Newgen is actively pursuing several strategic initiatives, with a significant emphasis on Artificial Intelligence (AI). The company is making substantial investments in AI-driven products and solutions, aiming to create viable use cases that boost productivity, decision-making, quality, and employee engagement. Management believes that AI-led productivity will enable them to lower service delivery, execution, and product costs by 20-30% over the next 2-3 years. This strategic focus is also reflected in their go-to-market (GTM) strategies, which are built around five distinct AI product areas, including credit decisioning, trade document processing, and insurance-specific cases.

During the quarter, Newgen launched the Newgen Developer Community, which received an overwhelming response with over 500 registrations on day one. This initiative is expected to foster a robust ecosystem around Newgen's platforms, driving further innovation and adoption. The company is also organically expanding its use cases and venturing into newer verticals, leveraging AI to drive this momentum and navigate challenging market conditions. Notably, Newgen is also keen on capitalizing on the Indian government's push for homegrown software companies, seeing a significant opportunity in the Indian market, particularly in enterprise content management and records management.

Management Commentary and Outlook

Management expressed confidence in maintaining a net margin of around 20% and expects marketing events to increase in the coming quarters. The order book growth for H1 FY26 is strong, exceeding 20%. Despite some delays in large deal closures, particularly in EMEA and India, the company is focused on accelerating license sales in these markets, with an expectation to achieve at least 30% growth in license revenues. The company's robust cash flow generation, with INR 90 crore from operating activities in the first six months, further strengthens its financial position.

Newgen's efforts have not gone unnoticed, as the company was recognized as a 'Strong Performer' in the Forrester Wave Digital Process Automation Software Q3 2025. It was also selected by Forbes Asia as one of the 'Best Under a Billion' software and services organizations for the second consecutive time. These recognitions underscore Newgen's leadership and innovation in the digital transformation space. The company's disciplined execution, strategic investments in AI, and focus on expanding its customer base and recurring revenue streams position it well for sustained growth in the future.

Segmental Revenue Split (Q2 FY26)

Concluding Thoughts

Newgen Software Technologies Limited's Q2 FY26 results highlight a period of strategic clarity and sustained growth. The company's ability to restore growth momentum, coupled with robust subscription revenue performance and significant investments in AI, demonstrates a forward-looking approach. Despite challenges in large deal closures in certain regions, Newgen's diversified revenue streams, strong cash flow, and industry recognition reinforce investor trust and set a confident tone for its future trajectory in the digital transformation landscape.