NUCLEUS - Nucleus Software Exports Ltd Share Price

Q1: Can you explain how to track employee productivity, given that employee costs have increased from 55% to around 65% of sales over the past ten years?

A1: Our employee additions were mainly due to filling positions lost during a period of high attrition. While costs rose across the industry, we aim to increase productivity through heavy investments in our products. Our latest release will likely drive more implementations and upgrades, positively impacting our financials.

Q2: What has been the trend for your annual maintenance revenue, and how do you envision it moving ahead?

A2: Our annual maintenance revenue closely aligns with industry standards. With the rollout of our latest releases, which add greater value for our customers, we anticipate a positive trajectory for this revenue stream moving forward.

Q3: Given the customization issue faced in the past, is your assessment correct that clients now favor custom solutions that limit your pricing power?

A3: Your assessment holds some truth. Previously, we accommodated extensive customization requests. With new products like FinnOne Neo, we are reducing customizations and enhancing configurability to offer flexibility without extensive code changes, which is essential for meeting customer demands while maintaining pricing power.

Q4: What key drivers are necessary for reaccelerating top-line growth?

A4: We recognize that upgrading existing customers to newer platforms has taken longer than expected. Additionally, we are focused on acquiring new customers, which is showing some market traction. We also continue building our presence in targeted markets, including the U.S., where we expect steady growth.

Q5: What challenges have you faced regarding slower customer conversions, particularly in regulated markets?

A5: The consumer lending market is evolving with significant regulatory changes, which slow down decision-making processes at all levels, including smaller NBFCs. This tightening has impacted our conversion timelines, as firms must ensure compliance and governance before moving ahead.

Q6: How is your global sales organization structured to drive future growth, especially in markets outside India?

A6: We have revamped our sales structure by onboarding six regional heads and are actively hiring global sales representatives. Participation in industry events has also increased to boost visibility and generate traction in international markets.

Q7: Can you comment on the proportion of revenue from new customer acquisition versus existing maintenance?

A7: Approximately 80-90% of our revenue comes from our existing customer base. Annuity revenue from ongoing relationships, including upgrades and cross-selling, contributes significantly more than new logo sales.

Q8: How many new client logos did you add this quarter and the first half of the year?

A8: We added one new logo this quarter and two in the first half of the year, indicating a cautious expansion strategy amid broader market conditions.

Q9: What are your current and planned innovations regarding your product portfolio?

A9: We are enhancing our product offerings by adding features like co-lending and integrating AI for deeper insights, which are crucial for meeting evolving customer demands and market trends.

Q10: Having faced challenges with transitioning clients to FinnOne Neo, what steps are being taken to improve this process?

A10: We've learned from previous transitions, focusing on optimizing data migration and establishing governance checkpoints. These improvements, paired with increased program management capabilities, will expedite custom migrations in future projects.