Newgen Software Technologies Limited (NEWGEN) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to NewGen Software Technologies Ltd. Q2 FY27 Earnings Conference Call, hosted by ICICI Securities Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation completes. Should you need assistance during the conference call, please signal our operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Ruchi from ICICI Securities Limited. Thank you, and over to you, ma'am. Thank you, ma'am.

Good evening, ladies and gentlemen. Thank you for joining us today on Q2-FY27 earnings call of Mugen Software Technology. It is my pleasure to introduce the senior management team of Mugen. Today, we have with us Mr. Varaz Rajan, Co-Founder and Executive Vice Chairman, Mr. Tarun Nandwani, Chief Executive Officer, Mr. Arun Kumar Gupta, Chief Financial Officer, Mr. Pramos Kumar, Chief Growth Officer, and Ms. Deepti Mehrajuk, Head Investor Relations. I will turn it over to Deepti to take the proceedings forward. Thank you and over to you, Deepti.

Thank you, Ruchi. Good afternoon, everyone. Before we move on to the discussion, let me highlight that this call may contain certain forward-looking statements concerning Nugent's future business prospects and profitability, which are subject to a number of risks and uncertainties, and 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 announcement 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 the results, which will be followed by a Q&A by Tarun and Armi.

Thank you. Thank you for joining us for the Q2 FY27 results discussion. During the quarter, we continued earnings growth momentum while strengthening the quality of our revenue base. In Q2, revenues grew by 5.4% to reach Rs. 422 crores. For the first half of the year, we achieved a growth rate of 8% to reach Rs. 779 crores. Growth during the quarter was led by our international markets. EMEA region recovered and recorded a growth of 19.4% with normalization of travel in the region and supported by demand for the enterprise automation and our industry-focused offerings. U.S. region continued its growth momentum on the back of improvement in its subscription sales and market penetration. It witnessed a growth of 17.1%. India region continued to be subdued and declined by 12.6%, and APAC region declined by about 6.4%, reflecting timing and execution variability in these markets. We expect the closures to pick up during the course of the year in these regions. Overall, Nugen made nine new logo additions during the quarter. Our recurring revenue streams continue to progress well. SaaS revenue grew by 36.4%, support by 10.3%, and ATS by 7.9%. Overall, our annuity revenues grew at a healthy rate of 15%, reflecting continued customer engagement. During the quarter, the subscription revenue surpassed the license revenue, enhancing the predictability of our business. License revenue declined by 19.2% year-on-year against a strong Q2-FI26 base. Implementation revenues have required sequentially. The key wins during the quarter include agreement with the health insurance company in the U.S. for Nujang1 complaints, appeals, and grievances solutions with a value of U.S. $5.5 million over 3 years. Working with a government body in Qatar for NewJet platform license, implementation, maintenance, and support for international regulatory reporting and compliance platform for USD 1.8 million. Project for Upgradation of Commercial Loan and Retail Loan Origination System for a leading bank in India with a booking value of 11.4 crores, providing loan management solution to a leading life insurance company in India. Let me now share how the customer environment is evolving over the past few months, because it shapes our customer conversations in business. Customers are increasingly moving from AI experimentation to production, and they are asking for explainability, traceability, and control. That is where the governed orchestration platform fits. NewGen with 34 years of regulated industry trust, a governed AI platform, vertical solution, and measurable customer value, fits in perfectly with the customer's requirements. The Nugent One platform continues to unify content, processes, and communication in an orchestration layer where intelligence is embedded into how enterprises operate, with trust, governance, and control built. This is particularly relevant for regulated industries that require audit tracking, explainability, compliance controls, and human oversight. At its core, Nugent brings together AI agent, enterprise application, human decisioning into a single execution layer. During the quarter, we released our AI component, Nugent 1 AI studio of agent studio 1.0 and agent flow 2.0.2. From a use case perspective, the platform can support industry-trained models for government banking, insurance, and healthcare. Nugent has built vertical solutions, for example, in banking, persona-specific AI solutions have been delivered across lending, onboarding, and transaction banking. In insurance, AI solutions have been created for every insurance persona across life, health, motor, and general with agent tech workspaces. Operational efficiencies have also been built for the customers through these solutions. During the quarter, Nugent received recognition for excellence in low-code and AI-led enterprise innovation at the ET Business Excellence and Leadership Summit 2026. For the first time, for the first half of the year, we had 10 AI-based deal booking across banking and financial services and government. On the profit and margin front, the business has successfully maintained margins with operational efficiencies and cost controls. EBITDA increased by 6.5% to Rs 109 crores and profit after tax grew by 6.3% to 87 crores for the quarter. Importantly, profitability remained resilient. EBITDA margin improved to 25.8% while PAT margin was 20.6%. This demonstrates our continued focus on operating discipline even as we continue to invest in our platform, marketry, and AI-led innovations. Net receivable at the end of the September quarter was 642 crores and net DSO was 144 days. To summarize Q2 FY27, as a quarter of balance earning growth, resilient margins, and stronger recurring revenue mix, we are continuing to invest in Nugent One and its AI-led orchestration capabilities to help enterprises move from fragmented automation to governed and intelligent evolution. As we enter the second half of F827, our priorities are clear. First, sustain the momentum in India and the U.S. Second, improve deal conversion and execution in India and APAC. Third, continue scaling fast and annuity revenues to strengthen predictability. 4. Maintain cost discipline while investing selectively in sales capacity, product innovation, and AI. Finally, improve collections and working capital efficiency. We remain encouraged by the long-term opportunity for intelligent enterprise orchestration. At the same time, quarterly performance can be influenced by the timing of large license transaction, implementation milestones, regional conversion cycle, currency movement, and collection. We will continue to manage these variables with a focus on profitability and sustainable growth. We remain focused on disciplined execution, customer outcomes, and product innovation. Thank you very much for your time. We are now open for questions and answers.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. 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 Rahul from Dollars Capital. Please go ahead.

Hi, Rahul. Yeah, hi. Just a couple of questions from my side. Firstly, if I look at the sale of product in the quarter, this looks weak even if I compare to the data in the previous fiscal beyond even in FI25. So, is there a trend that we are seeing that we are seeing more incremental demand on the SaaS and cloud side, and that's why the pure license signing data looks weaker? That is question number one. Question number two is on the implementation side. What we are seeing is that QoQ, there was a massive jump, almost doubling of revenue. Is it led by some milestone events that would have led to this increase, or there was a short-term execution deal that led to this kind of a jump? Thank you.

Thank you, Rahul. License revenue grew from quarter 1 to quarter 2, but year on year, it was a decline. You are right. This is not because of the weaker demand. This is mostly because of the closure cycle or that happens in the quarter. And India and EMEA and some part of APAC are strong growth drivers on the license for NewGen. EMEA performed well. There was some closure delays which happened in India, which we are expecting in coming quarters, which led to this decline. The base of license last year was higher, but I think the demand has not weakened, what we are seeing in the pipeline. In the implementation, there was a special focus, quarter on quarter, on closure of the milestones for the revenue recognition and billing, which has led to the improvement from quarter one to quarter two. Also, there was some milestone slippages in Q1, which we could complete in Q2, which has led to this good growth in Q2.

Got it. Just one follow-up on the remark you made. One aspect of it is what you probably missed answering, which I was saying. So, are you saying that there are enough on-premise deals, it's just that the closure didn't happen? And the separate question is that, is this a trend that we are seeing more fast, or do you think there are a good number of deals both on the on-prem side as well as on the subscription side?

So, Rahul, the pipeline is strong both on the subscription side and mature market and on the license side in India and APAC. It is related to the closure which has led to lesser numbers by or by. But the license pipeline is heavy.

Got it. Thanks for that, Kalar. One more question on the employee cost side. We are seeing that this cost has been pretty stable. I understand we have seen a relatively weaker performance in the last couple of quarters. So, is it like currently we are well invested into this, or do you think with now growth prospect improving, we might invest into the resources from this point?

From the course point of view, we have sufficient staff strength, and with AI engineering operational efficiencies getting added on to the whole engineering process, we feel that we can deliver growth with similar kind of manpower.

Interesting.

We are not seeing a demand for increased manpower growth.

Right. And just last one from my side, if you could see, you know, last year the H2 was not that great, you know, so the base has kind of normalized after very strong FY25, FY26. So, do you think we might see acceleration in the second half? Are there enough signs, both in terms of pipeline and progress into those pipelines, where we can think that the YOY performance in H2 could be sharper than what we have delivered?

I think we are targeting our double-digit growth that we have projected for this year. The better part of the business is that the SaaS large deals that we have closed in H1 will give us confidence in the subscription revenues going forward into Q3 and Q2. And the pipeline closures for the license and other lines of business will help us accelerate Q3 and Q4, total revenue.

Sure. So basically you're saying the macros are relatively better versus what we were witnessing in the past, and you're more confident for second half?

Yeah, we are confident of meeting our double-digit growth.

Great, great. Thanks for those inputs.

Thank you. The next question is from the line of Ms. Rushi from ICICI Securities Limited. Please go ahead.

We have questions. First, on AI, the Ds that we have announced, Tenghi, in H1. Let us ask you, we are converting more AI Ds outside India. Could you help us understand, do you see this as a client behavior, that India clients are conservative, taking more time for AI Ds, Why is the acceptance to work on AR project is much higher outside India?

So Ruchi, outside India we are coming out with RFPs which have more RFPs with AI embedded in all four sectors. The government we are seeing in banking, we are seeing in insurance. In India also we have closed few deals like Annapurna is one deal. We have one or two more deals which are coming. So, AI offerings embedded as part of the journey built on Nugen's Nugen1 AI-governed platform is the pitch which is getting resonated with the customers as a complete offering. So, the new RFPs and demand which is coming is from both the refresh cycle as well as from the existing customers. Like, for example, our trade implementations in India, the Aura AI which we sold in Middle East market, the pipeline has cases in India market also. So, it's a matter of closure and timing. But the interest is there. RBI was a last-year deal which was onboarding and AI.

Okay. Not yet.

And with AI deal, do we see some economics around the deal being different than what we used to do traditionally or in the non-mode AI dealings, be it on the size,

The deal size has grown by 20 to 40% on the AI which have AI components in it and the deal implementation, the program implementation cycles are part of the operational efficiency. From your time to life, we are targeting efficiencies for our customers.

Okay. The AID sizes are progressively increasing, if I paraphrase what you said. Is that correct?

Yes.

I was asking, is there any noticeable difference between an AID and a non-AID when it comes to the size and execution timeline?

The sizes will grow. See, for us, the AI offerings are, again, available as perpetual licenses or subscription licenses. The token costs and other costs are directly on customer. So, we are not bundling that operational cost into our deal sizes. So, we will sell our products and solutions both in subscription and perpetual license model. That is why I said the deal sizes will grow depending on the AI components in the offering from 20, 40 and that kind of upsides. And on the time, as we said, the time will get optimized by 15 to 20 percent.

Sir, Ruchi, we are adding on components on the AI side into the deal. So definitely the deal size would increase. That's what Tarun is referring to.

Okay. Moving on, on margin side, we see remarkable cost management. Our employee cost has been very resilient. Now, going forward, as you have to make choices between investments, especially on the R&D and using AI in the product, versus efficiencies that you would derive from using AI for execution. So, how should we think about the margin trajectory as you balance between the two? Should we think that we have upside to the margin of the price, or you would want to deploy the efficiency back in the business with a higher, I don't see, intensity or increased spend on technology?

So, Ruchi, Mugen has been spending on product innovation consistently through the years, and we have redeployed our capital, our people, up-skilled our people on AI, both for platform as well as vertical offerings. So, around 15-20% of the total revenue goes into the product development, as you will be knowing.

Around 10-11% goes into product and development, and around 22% goes into sales and masters. But, yeah, I think just to extend that point, I think actually, there is something we are, one is optimization of the cost through the AI initiatives and other things, and I think we are slightly also careful about the stationary cost where we are slowly doing investments wherever required, but at the same time, we are slightly more careful with the current things we are doing. So, I think we, if you see, I think our finances are, basically costs are stabilized for last four to six quarters, even with the single digit or double digit, that kind of growth also, we have kind of managed the cost in a very efficient way. It is both efficiency as well as the slightly more careful about the investments we have to make because that is very important. And that's where I think we believe that even in coming quarters also, we will surely maintain the margin and possibly expand the margin also.

So, Richie, to your answer, we are investing in developing our vertical AI offerings for our four key verticals, which is banking, insurance, healthcare, and government.

So, we are largely aiming for steady margin, balancing our investment as well as redeploying savings from AI to keep steady margin kind of output. Is that paraphrasing or is that understanding correct?

See, the guideline for 20-22% net margin remains for the year, and efficiencies we bring in innovation.

So, you can see, I think, even in this kind of growth also, we are still maintaining or improving only our market percentage, whether it is the EBITDA as well as the FAT, and we will continue doing that with the kind of optimization and efficiency we are working on. If you see our even manpower numbers also, we have kind of reduced and we are still holding, with the growth also we are holding that kind of number. So I think we believe that with the kind of manpower we have and the scaling we have done, we will be able to manage with this kind of manpower. With not much of substantial growth on the manpower, we will be still able to maintain the growth in coming quarters.

Got it.

Now, reconfirming, you mentioned we are confident of meeting our double-digit growth target for full fiscal. For first half, we have done at least 8% supply by INAT growth. That implies that the second half, our growth will accelerate for full-year growth to be double-digit. Is that the correct understanding?

So, I think if you see it, I think last year, second quarter, the base was very high. We had achieved around 11% growth, and we had a very bumper license growth also of around 70 plus odd crores on the license revenue. So, as Sarun has rightly said, that we have still maintained the license win rate, if you see from the previous quarter, but obviously, I think with that kind of growth, what we are talking about here is basically, if you see, currently we are at around 7.8% growth on H1, but I think because the Q2 was a bigger quarter as a base, So, the way we see it, in coming quarters, we will again recover as far as the growth rate is concerned in coming quarter. It should be far better. And that is how we will maintain that double-digit growth of the full year. So, Q3 base, especially the license was weak. So, we are expecting definitely improvements upon that. So, one is no doubt, I think, strong funnel pipeline and real velocity. But most importantly, yes, as you said, that because Q3 and Q4 were slightly lesser on the growth rate, even with the reasonable momentum, also, we will be able to excel as far as the growth rate.

Thank you. Thank you for patiently answering that question. All the best.

Thank you. The next question is from the line of Vinay Menon from Monarch. Please go ahead.

Hi, thank you for the opportunity. A couple of questions. On the, you know, segmented geographic revenue which have been given, India revenue has declined. Any reason, and this has been the trend for a couple of quarters, are we seeing any RFPs being delayed in the home country? Any color on that?

Yeah, Vinay, you are right. I think we have seen three or four large RFPs coming out again in Q2, which were running earlier.

Okay, and the size of these deals also look like they are a little smaller versus there used to be any update on that and any sign of recovery seen here?

As I said, the RFPs are again out, and these are large license deal-size RFPs, and the other deals of NBFCs also are under closure, which got skipped from Q2, which we are expecting in Q3 anytime now. So that is why I think India has seen this impact.

Okay. Okay. Okay. And in US, last two, three quarters, you've done quite well. Any reasons, like what is helping us grow there? And is it the, you know, AI proposition, which is kind of helping us with win deals over other competitors?

Yes, the healthcare line of business and product lines, provider lifecycle, contract management, complaints and grievances have seen good traction in the U.S. market. And as it is a subscription-based, cloud-based offering, SaaS offering market, the growth and the closure and the deal sizes are bigger, both in US and Europe. And we are seeing good attraction in the insurance and healthcare market, other than the banking, which is growing at its speed.

And this, like, last few weeks, you know, the kind of cybersecurity incidents which are happening, how do we see that playing from our perspective? Do you see banks will show up, you know, like, you know, kind of upgrade to better products, which give them, you know, like, overall better cover? Is there an opportunity for us within all this? How do you see that playing in our favor?

See, Nugen products are certain compliant, and we are offering perpetual licenses to most of the clients in India, and the deployment happens in their infrastructure. We are part of their VP, VAPT, security cycles. So, I think our enterprise solutions are built for security and reliability as we have shared earlier also. So, I think in the whole ecosystem, when the journey runs on Nugen platform, there are multiple components orchestrated on Nugen, and Nugen platform per se and Nugen delivery process per se are secure and reliable. So from that point of view, I think we see good traction because most of the customers ask for certain compliant products. And we ensure that all our released products get through the certain compliance for India market.

Okay. And one last question on the bookkeeping part, like the receivers have shot up. So any reason or is it that collections are expected to improve in the second half?

So, I think one reason which is obviously making an impact is basically mid-list where we have delay as far as the collections are concerned and there are certain side of customers where I think we are witnessing delay as far as we are hopeful that we come in quarter to approve and we are taking several other steps also to create that access to the customer at least in the mid-list region. But that is one reason where I think our DSOs are very high currently, and we are taking steps. So I think we are hopeful that in coming quarters, it will come down as far as the list is concerned. Because of the geopolitical, things also should improve, hopefully. And as well as whatever initiative we can take from the customer access, we are doing that also.

Okay. Thank you for answering my question. Thank you. All the best. Thank you.

Thank you. The next question is from the line of Jalaj Manocha from Preciate. Please go ahead.

Yes. Thanks for the opportunity. So, my first question was around the AI deals. So, have you observed that because of AI product ready or the readiness of the product we have, have you been able to open a new certain set of customers or let's assume those were higher of the, Yes,

the enterprise content market has moved from ECM platform to knowledge management being asked in RFPs now, Which means that the content should be classified, identified, indexed, separated, stored for easy search, natural language search, and here we see natural growth for our ECM market. And we are seeing good growth in the horizontal platform play with AI becoming a key deliverable for ECM to become a knowledge management use case.

Okay, so by that logic, it means that a new set of customers is totally opening up for us. Yes.

So, we are seeing a lot of new customers doing refresh of the old ECM platforms with the new knowledge management platforms.

Okay. So, and just closing that loop, if I were to say what percentage of revenue would be from the AI enabled product right now we have?

I think it's too early. We internally are working on the AI revenues being identified within the organization and being incorporated. But until then, what we are looking at is the overall deal sizes. So, we do have deals which are AI-led deals that we are separately highlighting within the organization and marking that across. Within due course, we'll start sharing across and working on the revenue numbers as well.

Fair enough. That closes up that question. And my second question was specifically on the banking. So it will be almost the second year where the vertical is growing slower or has been in a single digit or even less than that. What exactly is the pain point here? But is it specifically the AI inhibition of the banks to implement it yet, or is there something more to it?

We are getting refreshed deals from banking, but on a general way, I think banks are large enterprises and they adopt technology, they do POCs with the technology. So, I think most of the banks are looking for what they can do with AI, with AI actually being rolled out only in the call center and the service request platform because that is where the regulatory compliances for the banks are not too harsh. But on all other core business side, be it CASA, be it lending, be it trade finance, be it payments, the regulatory compliances are harsh and people are going on in a BAU mode doing POCs with AI, what they can do with AI. So, some of the decision-making of incorporating AI into existing journeys or rewriting those journeys have started to come out. One of our last customers has recently said that for new business, they want to totally rewrite the onboarding journey to an AI-led onboarding journey. Okay. So, these are all, a lot of POCs have gone in, so I think things will mature fast into conversions. And that is why maybe some of the deal closures are taking time.

Okay. Okay, so you mean to say there is enough interest in the market, but still it is yet to convert to a proper revenue or a deal flow right now?

Yeah, so AI-led refresh is POC to closure, but refresh RFPs in banking are available in the market. Few got delayed from Q4, Q1 to Q2 because they came out again with the RFP and stuff. So that is why I think some of the banking overall pickup we are expecting in Q3 and Q4.

Thank you. The next question is from the line of Mahesh, an individual investor. Please go ahead.

Hi, am I audible?

Yes, sir, you are audible.

Good evening and very good. Congratulations on the steady growth. My question is regarding the growth. So, do a company have an internal plan when you see a 5x increase in revenue, or what is the company's trajectory? This is specifically targeted to Mr. Pramod, sir, for the question, and that is the first question from me. And the second question on returning on the value for the shareholders, the company has good amount of cash in the books. Instead of ramping up the dividends, so will it be prudent to do an open market buyback? Those are my questions. Thank you.

The decrease constant, one is, yes, I think, one is we are targeting about this year's growth of double digit. Secondly, whenever we have spoken, I think we have potential to, we have, as you can see, I think in the last 5-7 years, we have,

I think there is some background noise.

Oh, sorry. Am I not here?

Yeah, you are here. So, I think, you see, I think in last 7-8 years, we have achieved 20% CAGR in the revenue growth, and we believe very strongly that in coming years, we will again come back to that 20% growth, and that is where the management team and the complete company is aligned to, but that is a mid-term and long-term goal as far as growth parameters are concerned, but as far as this year is concerned, as we have talked about, that we are solely targeting And I'll see you in the next question. Buyback versus dividend. So I think one is, as far as dividend is concerned, we have consistently improved. If you see in last five years, you will see every year we are improving our dividend distribution, at least by 15-20% compared to earlier years. So, we will continue to maintain that, and we will slightly improve only as far as the current distribution is concerned in coming years also. And on buybacks, yes, I think we have time to time, we have worked on it, and we have given those input to the board also. And board is considering that, and I think any consideration happens, obviously.

Thank you for answering that. I was just of the opinion that buybacks are quite tax-efficient in the hands of an individual investor. So, that was my kind suggestion, and thank you for the opportunity.

Thank you. Anyone who wishes to ask a question, may press star 1. The next question is from the line of Akshay Shetty, a private investor. Please go ahead.

Hello. I am Mahuribal.

Yes, sir.

Yeah. Good evening, sir, and congratulations on the performance this quarter, And also thank you for the opportunity to ask questions. My first question is about the long-term impact of AI agent on the Nugent's business model. So basically, I see that in FY26, around 780 crores of revenue came from implementation and support services, which involved significant employee efforts. Also, the software licenses are often priced by the number of users, if I am right. And as AI automates more tasks, customers may need fewer individual licenses and implementing software may require fewer employer hours. So, how is Nugent adopting its business model and pricing strategy to ensure that the AI adoption creates a sustainable revenue opportunity rather than putting pressure on revenue per customer? And also, I see in the latest presentation, it mentioned that 10 AI-led deals in the first half. Could you share how these deals are structured commercially and whether they represent additional revenue opportunity or any primary upgrades to the existing customer contracts? That was my first question, yeah.

Okay. So, see, Nugen AI offerings are deep domain offerings. So, consider a product, Aura AI, which is sold to a bank in Middle East. Now, this product takes trade documents of bank guarantee, import, export, LCs, and it will look at the docket. It will classify the documents. It will extract data from the documents. It will check against the India trade compliances. It will check against the limits of the customer. It will do various validations, which is called trade intelligence. And then it will give the output to the human to process the transaction. See, Nugen and most of the customers of Nugen are regulated industries. They are not consumer industries. So, in regulated industries, whether you are running an agent or whether you are running a human in the loop, it has to be an auditable process where who has done what and taken decision based on what data and what logic should be auditable. So, when we, our products are, as you know, about orchestrating journeys and offerings. So, when you orchestrate a journey, it will, it is a 10, 20, 50 step process orchestrating as many as 10, 20, 30 systems together to complete that journey. Now, this is the business that you are in, and the AI offering brings operational efficiency to our customers, which is the ROI for them for investing into the technology. Now, the license model for an agent or AI offering is available both in subscription and perpetual licensing model, which is true for our ECM and orchestrating products also. I hope I could answer your question.

A follow-up question, so how will the implementation and support service segment of the revenue will get impacted because it's a significant employer's efforts involved in this line of business. So, do you see that because of AI, the revenue from these two segments will come down, and I think these two are the recurring revenue of the business.

See, as you know, we are requiring around 40 to 50 new customers. Every quarter, the implementation of a large number of customers goes into production, and our support revenue and our support headcount is distributed across 600 customers. So, we do not have large number of support people in any one or two clients, and they work on, see, these are called business as usual support teams, which help users in training, in resolving their queries, in doing changes that they want to do on the system, whether they are regulatory changes or functional changes. Or technology changes. So, we don't see much impact of AI in the revenue side of the support. It is all for efficiencies for us and our customers, for time to value.

One point is that at the end of the day, we are a product company. The support and the implementation is what helps us in terms of delivering that product to the client. We believe that with AI and our offerings on the content management and on the orchestration side, there are ample opportunities that would arise out of it. So, I think at the end of the day, we also would like that the product revenues increase. The implementation and the support are what, you know, it's part of the overall deal, it's part of delivering that product. So, I think you should see it from that perspective.

Okay, got it, got it. So, okay, fine. Thank you for answering my first question. My second question is related to customer growth and partner channel. I see the active customer base has remained around 500 for several years, and the annual new customer addition has fallen from around 120 in FY18 to 47 in FY26. And in this quarter, you added like 9 new customers compared to 15 in the same quarter of the last year. And on the partner front, you mentioned that last year, the system integrator channel has taken longer to build than expected. But that these were starting to come through in nature market. So what is the partner lead share on revenue today? And what concrete changes are being made to improve the channel contribution? And more broadly, what needs to change for new gen to acquire new customer at scale, particularly in the U.S. and the European market? And how should the investor measure progress in the customer acquisition over the next coming years?

So, we focus with large GSI and Big Four as partners on one side for our growth in mature markets and across the globe. And we have a channel partner process and teams focusing on small to mid-size kind of deals, which are segregated from large value deals. So we are focusing on our direct sales efforts on increasing the deal value and large value deals with our global SI, GSI partners and Big Force partners and on the channel side. So, the number that you spoke about, 40, 50, and the number that you spoke about, 15 to 9, they are all large value deals where we are targeting and focusing on increasing our deal size year on year, where we are seeing steady growth on the deal size growth. And partners, see from the number point of view, I think Dipti can come in with more details, but there are large number of small size clients which operate through channel partners, and they are being supported by them only.

So I think overall, on an average, we get about 20% business from partners all across. That number has remained more or less similar, and that continues to be so. We do have engagements, whether that's GSI, whether that's our local partners, whether those are channel partners. We do have regular engagements as well as, you know, relationship strengthening exercises that we do with them. So that is an ongoing part of the business as usual.

Thank you. The next question is from the line of Sanjay K from SKS Capital. Please go ahead.

Hi, good evening. Good evening. My query is about the new logo. So, we have won, I think, nine new logos this quarter, or last quarter. And our average winning for a quarter is generally 13 to 14 new logos, as well as the revenue from the license revenue also has reduced. So my question is, was there a delay in closure of the deals, and that's why this number got impacted? And the second thing is about the implementation revenue, which has increased compared to last few years' quarter. And you already mentioned because of certain milestones completion happened. So, this strong growth in implementation revenue, will it continue in Q3 and Q4?

Yeah, so the number of logos, as you know, is a factor of closure in that quarter, where we have seen delay in few opportunities, and that is why I think this has dropped to 9. On the implementation side, yes, for the build-up of quarter 3, we see similar growth in the implementation for coming quarters.

So, if I understand correctly, there was a delay in closure, but the deals are there. The deals will get closed in Q3. That's what we are seeing. Is that correct?

Yes, you are right.

All right. Thank you very much. We'll have all the rest. Thank you.

Thank you. Ladies and gentlemen, we will take this as the last question for today. I now hand over to Ms. Deepti for closing comments. Over to you, ma'am.

Thank you so much for attending the call. For any further questions, you may connect with me or you can go to our website. Thank you. Thank you.

Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.