Management Comments
Our revenues in Q3 witnessed a growth of 15% to reach Rs 185 Crores and as expected business is picking up in the second half of the financial year. EMEA region has performed very well during the quarter. For US, we have been able to maintain the revenue base in spite of a strong Q3 last year where we got some big license deals. However, growth in India continued to be muted on account of macro uncertainties and market headwinds. During the quarter EBITDA was at Rs.36 Crores witnessing a growth of 34% YOY.
Profit after tax was Rs 24 Crores witnessing a growth of 33% YOY. Revenue growth and cost rationalisation led to improvement in margins. EBITDA margins improved to 19.4% from 16.7% in Q3 last year. PAT margins improved to 12.7% from 11% in Q3 last year. As we mentioned last quarter, the organization continues to work on its long-term focus of investing in building capabilities in the mature markets, while continuing to strengthen operations in emerging markets.
We are happy to share that we are very in the new version of our product iBPS, a low code BPM platform for rapid application development. By adapting low code development platforms, organizations respond faster to the needs of their digital business. With this release we expect to extend our solutions stack for digital initiatives across all verticals. This would get us deeper and wider market presence. With low code capabilities of our platform, our customers expect to gain from significant reduction in the deployment cycle, effort and costs. As a part of our focus on sales and marketing beyond our new territory expansion, we are investing in building the sales channel for global system integrator network. We hope to achieve a significant part of our revenues in the next five years through this channel. In US, we have some early wins through this strategy and hope to get inroads in Fortune 1000 clients, which is expected to lead to higher deal sizes. We have rolled our aggressive plans to replicate the GSI strategy across all our mature markets. Our effort on new logos has resulted in us adding 12 new logos in Q3. Notable deals include Cloud deal with a full service commercial bank in Massachusetts, a project with a government agency in the Caribbean, a large project with East Africa’s largest commercial Bank, a project with a reputed organization for all financial solutions in the Kingdom of Saudi Arabia, selection by a leading energy and environment solutions provider from India. In terms of verticals we saw a robust growth across our banking and financial services and BPO/IT vertical. Last quarter we had completed our annual increment process across organization as well as continued with the employer hiring program keeping in mind the growth requirements. In the current quarter, we see optimisation of the employee cost by about 2.4% compared to last quarter.
Further our new release of the low code capabilities of iBPS platform would ensure significant reduction in deployment cycles and thus optimization of effort and cost. We hope to optimise future requirements of implementation work force. This should help us improve our implementation margins further. Overall our annuity revenues comprised 55% of the total revenues and witnessed a growth of 28% YOY. Of this Cloud revenue grew by 61% YOY. In mature markets, we are finding strong traction for our Cloud business. The Cloud business revenue recognition is back ended but it brings more predictable revenue streams with better long-term margins. We continue to invest in deepening our products capabilities, talent development, and new market expansion and brand initiatives. We are happy to share that Newgen has been positioned a “Challenger” in Gartner Magic Quadrant for Content Services Platforms, 2019. Newgen also received Special Recognition at Dun & Bradstreet – RBL Bank SME Business Excellence Awards 2019. Our trade receivable as on December 31, 2019 are Rs 215 Crores which resulted in reduction of net DSO to 116 days compared to 132 days in Q3 FY2019. Now about nine months FY2020 results. For nine months FY2020 consolidated position, revenues were at Rs 470 Crores, 13% higher as compared to similar period last year, but PAT was at Rs 31 Crores, 21% lower as compared to similar period last year. This is also due to considerably lower other income and reduced PAT in previous quarters. However, we continue to make strong investments in R&D at 9% of the revenue and sales and marketing effort at 19% of the revenue, keeping our long-term plans in mind. Our net cash from operating activities was Rs.45 Crores in nine months witnessing a 24% increase YOY. We continue to witness strong improvement in our collections. We acquired a total of 50 new logos in the first nine months of financial year. The overall demand environment is stable in the global market and our sales pipeline continues to be strong and we are hopeful that we should be able to close certain large sized deals and recover our growth rates.
We hope that our investment in US, Europe and Australia would start yielding results and help build up growth momentum in the coming quarters.
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