NUCLEUS - Nucleus Software Exports Ltd Share Price

In the August 2025 earnings call, Nucleus Software management provided a cautious but optimistic outlook, emphasizing ongoing growth in implementations and their focus on improving operational fundamentals. Key highlights include:

• Revenue Insights: Consolidated revenue for Q1 FY2026 was reported at Rs. 217.72 crore compared to Rs. 228.96 crore QoQ, and Rs. 195.39 crore YoY. Product revenue was Rs. 184.91 crore, down from Rs. 199.56 crore QoQ, and up from Rs. 168.01 crore YoY. Revenue from projects and services increased to Rs. 32.81 crore from Rs. 29.40 crore QoQ.

• Order Book Position: As of June 30, 2025, the order book stood at Rs. 703.16 crore, a notable increase from Rs. 612.40 crore recorded on March 31, 2025. This includes Rs. 608.70 crore in product business and Rs. 94.46 crore in projects and services.

• Customer Base and Go-live: Management announced successful implementations, including a major project that engaged 20,000 users at one of India's largest financial institutions, highlighting the significance of these milestones for future growth.

• Focus on AI and Product Development: The company is integrating AI capabilities in their products, with aims to increase revenue from these enhancements moving forward.

• Financial Guidance: While specific revenue guidance was not provided, management indicated a positive trajectory and expressed confidence in achieving double-digit growth this year, based on improved pipelines and successful sales initiatives.

Overall, the management's remarks underscore a commitment to long-term value creation through operational excellence and strategic product enhancements, although they remain cautious in the face of market dynamics and client decision-making processes.

Here are the major questions and detailed answers from the Q&A section of the earnings transcript:

1. Question: "In one of the calls, you mentioned that you have very strong basis for selecting your customer. Could you let us know what are those bases you look out for and why those bases are so important for you?"
   Answer: "We carefully evaluate prospective customers, focusing on their status as politically exposed persons and their financial health before entering relationships. These factors are crucial as they help us mitigate risks and ensure we collaborate with financially stable and reputable organizations."

2. Question: "Why are we focusing more on domestic business and less on international business?"
   Answer: "We have deliberately worked on evolving our products to be globally implementable. I'm pleased to say we've achieved clarity and are actively implementing our products in multiple geographies. I'm confident that in the coming years, we'll regain the overseas revenue share we enjoyed 15 years ago."

3. Question: "Are those 10 crores related to Ujjivan Small Finance Bank, some payments left from the bank?"
   Answer: "We invested in Ujjivan Financial Services when it was being established, maintaining a strong relationship with its founder. When Ujjivan Financial Services merged into Ujjivan Small Finance Bank, we retained our stake. The amount is a reflection of our initial investment in their business."

4. Question: "Which AI modules of your FinnAxia or FinnOne Neo are generating revenue for Q1 and how are you pricing them?"
   Answer: "The AI capabilities are embedded within our existing product offerings. Currently, we are not billing AI as a standalone business model; instead, we enhance our customers' operations through these capabilities, with plans to monetize them in the future."

5. Question: "How much of the employee cost increase is for AI ML talent hiring or upskilling?"
   Answer: "The increase in employee costs this quarter is mainly due to salary increments. Last quarter's figures were atypically low due to some provisions being written back, which contributes to the perceptible increase this quarter."

6. Question: "Can you repeat the order book number for this quarter?"
   Answer: "The order book position is Rs. 703.16 crore, which encompasses Rs. 608.70 crore from the product business and Rs. 94.46 crore from projects and services. As of March 31, 2025, it was Rs. 612.40 crore."

7. Question: "Can you provide the total employee count for March and June 2025?"
   Answer: "As of June 30, 2025, our total headcount stands at 1,939. It was slightly higher at 1,945 as of March 31, 2025."

8. Question: "Regarding your Hoshin Kanri initiative, why haven't you listed key performance indicators to track its progress?"
   Answer: "Hoshin Kanri is about long-term cultural change focused on customer satisfaction and employee development. It's not intended for immediate cost optimization but aims for sustainability and will show its impact over the years."

9. Question: "Are you counting all logos at the end of this quarter?"
   Answer: "We will provide that total next quarter."

10. Question: "Is your CFO resignation a matter of concern?"
    Answer: "The resignation was unexpected but we did not have a choice in the matter once he made the decision."

These responses summarize the key themes and specific numbers discussed during the earnings call, providing clarity on the company's current strategy and performance.