Nucleus Software Exports Limited ($531209)

Good evening, everyone. This is [ Madri ]. A very warm welcome to all of you for this Nucleus Software earnings conference call for the quarter and year ended on March 31, 2026. For discussion, we have here from the management team, Mr. Vishnu R. Dusad, our Managing Director; Mr. Parag Bhise, CEO and Executive Director; Mr. Ashok Kumar Bhura, Chief Financial; Mr. Mukesh Bangia, Vice President; Mr. Abhishek Pallav, Vice President; Ms. Swati Patwardhan, Chief Human Resource Officer; Mr. Pradeep Malik, Vice President; and Mr. Tapan Jayaswal, Financial Controller. As you all are aware, Nucleus Software does not provide any specific revenue earnings guidance. Anything which is said during this call, which may reflect company's outlook for the future or which may be construed as forward-looking statements must be reviewed in conjunction with the risks that the company faces. An audio and the transcript of this call would be shortly available on the Investors section of the company's website, www.nucleussoftware.com. With this, we are now ready to begin with the opening comments on the performance of the company. And post that, we would be available for the question-and-answer session. With this, I now pass it over to Mr. Vishnu. Over to you, sir.

Good afternoon, and a warm welcome to this investor conference call for the year ending 31st March 2026. This being our years of going public. We celebrated the occasion with being ceremony last month. And we want to take this opportunity to thank all of you for your sustained support to this company with your voting in the form of your shares. And we want to reiterate our commitment to long-term growth of the company. With those words, I would like to hand over to Parag.

Thank you very much, and good afternoon, and welcome, everyone, to the Q4 and year end investor call. Our consol revenue for the quarter is at INR 224.77 crores against INR 22.03 crores quarter-on-quarter and INR 228.96 crores year-on-year. For the year, it is INR 876.03 crores against INR 832.25 crores for the previous year. Overall revenue in foreign currency, including India rupees revenue is USD 24.75 million for the quarter against USD 24.92 million quarter-on-quarter and USD 26.5 million year-on-year. For the year, it is USD 99.6 million against USD 98.5 million for the previous year. Product revenue for the quarter is at INR 189.05 crores against INR 185.5 crores quarter-on-quarter and INR 199.56 crores year-on-year. For the year, it is INR 740.56 crores against INR 713.79 crores for the previous year. Revenue from projects and services for the quarter is at INR 35.72 crores against INR 34.45 crores quarter-on-quarter and INR 29.4 crores year-on-year. For the year, it is INR 135.47 crores against INR 118.46 crores for the previous year. Moving on to expenses. Cost of delivery, including cost of product development for the quarter is 70.1% of revenue against 70.4% of revenue quarter-on-quarter and 57.3% of revenue year-on-year. In absolute terms, this is INR 157.45 crores against INR 155 crores quarter-on-quarter and INR 131.29 crores year-on-year. For the year, it is INR 622.8 crores against INR 568.69 crores for the previous year. As for marketing and sales expenses for the quarter is 7.1% of revenue against 7.8% of revenue quarter-on-quarter and 4.9% year-on-year. In absolute terms, this is INR 15.93 crores against INR 17.2 crores quarter-on-quarter and INR 11.24 crores year-on-year. For the year, it is at INR 61.93 crores against INR 36.13 crores for the previous year. As for G&A expenses for the quarter is 7.5% of revenue against 6.9% of revenue quarter-on-quarter and 5.3% year-on-year. In absolute terms, this is INR 16.77 crores against INR 15.10 crores quarter-on-quarter and INR 12.09 crores year-on-year. For the year, it is at INR 67.09 crore against INR 59.82 crores for the previous year. EBIT for the quarter is at INR 34.62 crores against INR 32.72 crores quarter-on- and INR 74.33 crores year-on-year. For the year, EBITDA is at INR 124.15 crores against INR 167.6 crores in the previous year. Other income from invest and deposit is at INR 11.27 crores against INR 14.87 crores quarter-on-quarter and INR 16.7 crores year-on-year. Total other income for the quarter is at INR 14.92 crores against INR 15.12 crores quarter-on-quarter and INR 16.62 crores year-on-year. For the year, other income from investments and deposits at INR 56.49 crores against INR 64.79 crores for the previous year. Total other income for the year is INR 64.16 crores against INR 66.26 crores for the previous year. Total taxes are at INR 6.96 crores against INR 3.96 crores quarter-on-quarter and INR 22.7 crores year-on-year. For the year, taxes are INR 33.14 crores against INR 56.05 crores in the previous year. Net profit is at INR 34.55 crores for the quarter against INR 20.7 crores for the quarter. INR 64.77 crores year-on-year. For the year, it is at INR 116.74 crores against INR 163 crores in the previous year. Other comprehensive income is at negative INR 1.5 crores for the quarter against INR 3.5 crores quarter-on-quarter and negative INR 0.20 crores year-on-year. For the year, it is INR 9.4 crores against negative INR 3.56 crores in the previous year. Total comprehensive income, which includes net profit and other comprehensive income is at INR 32.97 crores for the quarter against INR 24.2 crores quarter-on-quarter and INR 64.57 crores year-on-year. For the year, it is at INR 126.14 crores against INR 159.44 crores in the previous year. EPS for the quarter is at INR 13.12 as against INR 7.86 in the previous quarter and INR 24.6 year-on-year. For the year, it is at INR 44.35 against INR 61.40 in the previous year. In terms of foreign currency hedges, on 31st March, we had USD 2.5 million of forward contracts at an average rate of INR 91.33. There is a mark-to-market loss of INR 1.09 crores, which is taken to hedging reserve in the balance sheet. Revenue contribution from the top 5 clients of the quarter is 29.3% against 27% in the previous quarter. The order book position is INR 1,044.31 crores, including INR 899.44 crores of product business and INR 144.87 crores of project and services business. On 31st December, the order book position was INR 656.68 crores, including INR 588.74 crores of product business and INR 67.94 crores of projects and services business. Total cash and cash equivalent as of 31st March are INR 972.37 crores against INR 971.6 crores as on December 31. This includes balances in current accounts of INR 80.1 crores, various schemes of mutual funds INR 597.02 crores, fixed deposit of INR 253.22 crores, investments in tax-free bonds of INR 32.12 crores. With regards to receivables, we are at INR 121.1 crores against INR 137.41 crores the previous quarter. During the quarter, there is a gross addition of fixed assets of INR 18.35 crores, consisting primarily of INR 6.35 crores on computer and servers and INR 11.78 crores on building and plant and machinery. Now I'll hand it over to Swati.

Thank you, sir. With this, we are now open for the question-answer session. Over to you, Madri.

[Operator Instructions] The first question is from [indiscernible]

[indiscernible]

[indiscernible]

So Bajaj Finance is not because of any other reason, but it is more of, I would say, they have on their own invested in a company which is a competitor to us. So that was a strategic reason with which this decision was taken.

Okay. So Bajaj Finance itself invested in the company where the company is a competitor, correct?

Yes.

Question was the customers we had this problem that customers are not migrating from [indiscernible] software they are using because it fulfills the requirement. So what incentives do we provide them so that they shift to the newer platforms and pay higher? And if you could also give me some numbers and how many customers have shifted to the new [indiscernible]

So very recently, one of the leading public bank in India, we witnessed a large transformation that has happened, and that was as smooth as a walk. So I'm sure you must have got to know through the news. On the transformation project, now the good part is that we are using various tools and tech like AI to detect map and initiate the transformation journey. One of the challenge is that since some of these implementations are 2 decades and more than that older, so a lot of customization has gone by and then exercise that is being done. At the same time, we are also in talks with the customer to be ready to come up to the new platform. So all these discussions are happening. And road map is being prepared. So it is very much in our focus and on our cards.

Just a follow-up on this one, you said the road map is ready and the [indiscernible]

No, I did not mention that implementation takes lots of time. I'm saying that the erstwhile version, which is called [indiscernible] is there in some products for more than 2 decades or beyond or even older. So in such cases, these implementations have taken their own path through different customs at various times. We have created our in-house transformation toolkit, which is AI enabled, and we are making AI to detect the changes and mapping to the product capability and features that [indiscernible] offers. And so to ensure that the onboarding or transformation from old version to the new version is seamless and that is the way forward. So that is the strategy we are taking...

Question is that some years ago, you had mentioned that Japan as a market is a tough market to track because of the language or acceptance of technology. So it's a good challenge to have to Japan as a market?

Yes. So as we know that Japan market is -- runs on relationship because it takes time for Japanese culture to take up and adopt new product lines. So we have been there in the market from past 25 years and we have built a lot of credibility and our customers actually has been there from past 25 years. So we have been making a conscious effort to tap some of the top Japanese banks. And there are some active discussions which are currently on, and we might see some results in upcoming quarter because it takes time actually to get the required level of confidence on the new product. I hope that answers your query.

Last question on previous calls you have mentioned that it was a mistake that we didn't focus much on the marketing of our product. [indiscernible] expense, it is still around 1% of the revenue. So are we seriously looking at marketing our products? And since you have said that focusing -- you are focusing on sales and marketing part. So how many new sales people have you hired in the last, let's say, 4 to 5 years?

So I think in last 2 years, our focus was to strengthen our sales and account management function. This has led to a growth of about a headcount of anywhere between 40 to 50 sales executives in the team. And this is across all sales domains. So hunting, which is for new sales, account management for existing customers, generating business to existing customers. We also have a team onboarded for partnerships and alliances. And to lead this team, we have recently onboarded Dr. [indiscernible], who has joined us as Chief Business Officer and all these sales and partnership and account management functions roll up to him.

[Operator Instructions] The next question comes from Samarth Singh from TPF Capital.

Could you just tell me what was the total number of logos that we added this year? And if you could repeat the order book?

So we have added 7 new logos this year in financial year '25, '26 versus 3 logos in '24, '25. So trajectory is promising and moving in the right direction. If we talk about order book, we are sitting at the close of March '26 in the upwards of INR 1,000 crores as compared to last financial year of around INR 600 crores.

[indiscernible]

Sorry?

Did you say INR 1,000 crores?

INR 1,000 crores.

Okay. So we're actually seeing finally seeing the benefit of the marketing spend that we've been spending over the last couple of years?

Absolutely.

It is a combined effort of multiple things. So marketing expenses, our investment in improving our capacities, our investment in terms of upskilling our teams, our efforts in terms of spend in AI and everything. So collectively, it is finally showing the [indiscernible]

You had mentioned in the earlier question that Bajaj Finance invested and went with a competitor. I believe that competitor also has now got a product at least a product line, I'm not sure from HDFC Bank as well, which is I think one of our oldest clients. So if you could talk about that, like are we losing market share with HDFC what's happening?

So we can't really comment on our competitors and their ways of working and they approaching any client or not, we can't really comment on it.

But are we -- what can you comment on our relationship with HDFC given it's one of our oldest clients, and I would assume a large part of our -- a decent amount of revenue?

Yes. The relationship is nearly 30 years now, and it continues to go strong.

The next question comes from Rahul Jain from [indiscernible] Wealth Management.

So my question was that we have a very strong order signing that has happened during the quarter. So I would appreciate if management could share some color in terms of which market this came from and some of the offices -- local offices that we have set up in different regions as some of these efforts have fructified causing this book to jump? And also, is this coming from SaaS side of revenue because we don't see much momentum happening in the Q4 revenue? Or we expect this order book to actually fructify in the next couple of quarters and it came much more closer to the end of the quarter?

Rahul, most of our contracts spread contract across a few years. And if we talk about -- and that is why the revenue impact that might not be seen in the first quarter or maybe 1 or 2 quarters coming quarters. But however, this robust order book is going to definitely positively impact in positive terms for quite a few quarters. And if we talk about areas from where or geographies from where we have got this order, happy to share that one of the orders which we have booked is from U.S. and other orders, most of the orders are from India. There are a few orders from other geographies as well, but majorly it is from India and U.S.

Sorry, I could not -- Ashok, I could not follow the part, which you said it should flow out in the next few quarters or because we got it towards the later part of the thing? Or you're saying generally, it takes time for us to recognize the revenues?

Yes. So in general, it takes time. So while we have received the order, there is the implementation cycle as well, which goes before we recognize the revenue. And that cycle depends on the complexity of the order which we have received and the size of the order which we have got and the integration with the customers. So that is why you are saying it might not be immediately reflected in revenue maybe in immediate 1 or 2 quarters. But definitely, once the implementation is done, we should see that revenue flowing in our books.

Sure. And if I could ask one more. In general, if you could talk about how the deal wins are trending? Are this more happening towards the subscription model or the traditional long-term model is one thing. And one data point question is if you could share what was the headcount at the end of the quarter? That's it from my side.

So headcount at the end of the quarter was 2,025. in the range of 2,000 and which is pretty much same as maintained across last few quarters, if you see, plus/minus 100 accounts, which you can think of. And if we talk about this -- another question was with revenue, right?

I was trying to understand deals coming on the SaaS model or mostly coming on the on-prem model?

So we are a product company and our deals are with respect to product. Yes, a part of the revenue definitely is subscription-b fees as well. But it is a hybrid model on which we work. And most of the deals are long-term deals. So there is fair, I would say, reasonably assured revenue which is going to come for future.

The next question comes from [indiscernible]

I have just one question, sir. A couple of quarters, we had talked about new features in the co-lending and the gold loan. So any update on that front?

Yes. I think both co-lending and gold loan is going to be the focus area. And we have been trying to understand more on both these capabilities that we have built across. And even in this current GA, which is getting released, both this line of businesses are being strengthened, be it co-lending, be it gold loan, and we have also strengthened the finance against security as going to be the potential line of business as we have understood the market. So these are going to be the key LOBs where we are going to invest.

Okay. Sir, just a small question. In general terms when customer is in our pipeline, how long does it take to convert the customer into what could be the possible reason from the customers like the process get delayed?

So while there is no right or wrong answer to it, but it can typically take anywhere between 6 weeks to maybe, I would say, 3 months or 3 years also. There are customers who we have been engaging for almost 2 years, and we have closed contract after 2 years of discussion. So if we see if it is a greenfield kind of project, it might be done in 6 months. If it is already established, I would say, company or something of that sort, which is doing a migration, it may take a lot of time.

So technically, it depends upon from where a big transformation is happening, if it is a different system altogether. And the customers struggle, sometimes we also see that the team itself struggles to give us enough information about the implementation. So that discovering the unknown takes at times. But usually, if it is a vanilla implementation, it is a matter of our business is a matter of days. Otherwise, as Ashok talked about, sometimes it takes 3 months also.

The next question comes from Samarth Singh from TPF Capital.

Just wanted to follow up on the previous question that I had. So is it fair to say that none of our existing customers have shifted either away from us either completely or any of the product lines over the last 3 years?

Sorry, I couldn't follow the question. Can you please repeat again? I'm so sorry.

Yes. I just wanted to confirm over the last 3 years, have any of our customers either shifted away from us completely or even any of the product lines away from us?

None of the customer away from us. That is what he is trying to...

Nothing significant -- if we talk about other than this, there is no...

I'm sorry, I didn't get that. I didn't get your previous answer.

I'm saying there is no significant loss or movement from any of our customers in terms of either module or moving out from [indiscernible]

Okay. Got you. And would you be able to share what our win rate is in these RFPs over the last few years?

There is a detail we may not be able to provide.

And last question was, so in Japan, we mentioned we are making some inroads. Can you share what the -- which software the Japanese banks currently use?

Most of their software is homegrown.

The next question comes from [indiscernible] from Vision Finance.

So my question is about Q4 of 2025, company has grown almost 10% in revenue. And compared to this quarter or Q4 '26, it's almost flat. So what is the reason? I mean is it something like -- is it because of the problems happening [indiscernible] problems or we couldn't close or couldn't start any project or any of the projects have moved from Q4 to Q1 -- so any reason that there [indiscernible]

You are comparing last year -- year-on-year quarter or you are talking about sequential?

Year-on-year. [indiscernible] Q4, we grew almost 10% last year.

So that was on the back of one account where we tracked the deal and we were able to book the revenue in the last year in the quarter itself. So that has the revenue last year. And that is why you are able to see that flat growth. But otherwise, if you normalize it, it has grown revenue per se.

And additionally, there were a few orders, at least a couple of them, which got postponed from the Middle East because of the war situation.

I just want to understand any impact of this geopolitical issue causing the company -- and even the employee cost has gone up by almost 25% compared to last year. So the revenue is flat. I mean is it something expected [indiscernible]

Yes. So we continue to invest in our team because they are the ones who deliver value. And we realize that the revenue may or may not match the investment in our people, and that's how we look at it.

There is a significant impact because of the new labor code changes that would have added to the employee cost going up.

Okay. And my last question is about where are you seeing demand? Is it more from India, Middle East or Southeast Asia? I mean where are we seeing the demand now where we get more work?

Well, India remains our foothold and our strong, I would say, growth center, but we are focusing also on other countries as well and to cultivate that market. We have recently opened our subsidiary in Vietnam. So we are looking forward to explore those areas from a growth [indiscernible]

The next question comes from [indiscernible] an individual investor. That would be the last question for the day. Now I hand over the floor to Ms. Swati for closing comments.

Thank you, Madri. Now we would like to thank all the investors for joining us today. Now I pass it over to Vishnu sir for his closing comments. Over to you, sir.

I would like to take this opportunity for -- to thank you for your continued interest in Nucleus Software and would like to reiterate our commitment to deliver long-term value to all our stakeholders.

Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using [indiscernible] conference call service. You may disconnect your lines now. Thank you, and have a pleasant evening.

Thank you.