Good afternoon, everyone. This is Madhuri.

A very warm welcome to all of you for this Nucleus Software earnings conference call for the quarter and nine months ended on December 31st, 2025. For discussion, we have here from the management team: Mr.

Vishnu R. Dusad, our Managing Director; Mr.

Parag Bhise, CEO and Executive Director; Mr. Anurag Mantri, COO; Mr.

Ashoke Kumar Bura, Chief Financial Officer; Mr. Apurva Chamaria, Chief Business Officer; Mr.

Mukesh Bhangiya, 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 a forward-looking statement 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 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.

A warm welcome to our investor call for quarter ending 31st December, 2025. We continue to be grateful to you for your continued interest in Nucleus Software.

This quarter, we are delighted to welcome Apurva Chamaria, our Chief Business Officer, who brings more than two decades of very rich experience with companies like HCL, RateGain, Tech Mahindra, and Google. We look forward to his contributing to the betterment of the company.

With those words, I pass it on to Parag.

Thank you so much, sir. A warm welcome to everyone who has joined this call.

I would also like to welcome Apurva to the Nucleus family, and looking forward to learn from his experience and his contributions. This quarter also has been a quarter of steady performance for us, I would say, both on the order booking side and on the implementation side.

Otherwise, we continue to work on our long-term strategy as we've been talking about. Thank you.

Madhuri, now we can start the question-and-answer. Now over to you.

Thank you.

With this, we are now open for the question-and-answer-- Yes,

we can start with Mr. Tapan's financial comments.

Tapan sir, over to you.

Swati, am I audible?

Yes, sir, you are audible. Please go ahead.

Our consolidated revenue for the quarter is at ₹220.03 crore against ₹213.51 crore quarter-on-quarter and ₹205.7 crore year-on-year. Overall revenue in foreign currency including India rupee revenue is US$24.92 million for the quarter against US$24.47 million quarter-on-quarter and US$24.41 million year-on-year.

Product revenue for the quarter is at ₹185.58 crore against ₹181.02 crore quarter-on-quarter and ₹174.83 crore year-on-year. Revenue from projects and services for the quarter is at ₹34.45 crore against ₹32.49 crore quarter-on-quarter and ₹30.87 crore year-on-year.

Moving on to expenses. Cost of delivery including cost of product development for the quarter is 70.4% of revenue against 73.9% of revenue quarter-on-quarter and 70.7% of revenue year-on-year.

In absolute terms, this is ₹155 crore against ₹157.7 crore quarter-on-quarter and ₹145.49 crore year-on-year. Marketing and sales expenses for the quarter is 7.8% of revenue against 7.3% of revenue quarter-on-quarter and 5.6% year-on-year.

In absolute terms, this is ₹17.2 crore against ₹15.67 crore quarter-on-quarter and ₹11.55 crore year-on-year. G&A expenses for the quarter is 6.9% of revenue against 8% of revenue quarter-on-quarter and 7.6% year-on-year.

In absolute terms, this is ₹15.10 crore against ₹17.07 crore quarter-on-quarter and ₹15.64 crore year-on-year. EBITDA for the quarter is at ₹32.72 crore against ₹23.08 crore quarter-on-quarter and ₹33.02 crore year-on-year.

Other income from investments and deposits is at ₹14.87 crore against ₹13.50 crore quarter-on-quarter and ₹14.78 crore year-on-year. Total other income for the quarter is at ₹15.12 crore against ₹16.16 crore quarter-on-quarter and ₹15.57 crore year-on-year.

Total taxes is ₹9.96 crore against ₹9.12 crore quarter-on-quarter and ₹10 crore year-on-year. Net profit is at ₹20.7 crore for the quarter against ₹26.29 crore quarter-on-quarter and ₹34.97 crore year-on-year.

Other comprehensive income is at ₹3.58 crore for the quarter against ₹2.77 crore quarter-on-quarter and -₹1.69 crore year-on-year. Total comprehensive income, which includes net profit and other comprehensive income, is at ₹24.28 crore for the quarter against ₹29.06 crore quarter-on-quarter and ₹33.28 crore year-on-year.

EPS for the quarter is at ₹7.86 as against ₹9.99 in the previous quarter and ₹13.28 year-on-year. In terms of foreign currency hedges, on December 31st, we had US$3 million of forward contracts at an average rate of 89.38.

There is a marked-to-market loss of ₹0.37 crore, which is taken to hedges reserve in the balance sheet. Revenue contribution from top five clients for the quarter is 27.02% against 27.12% in the previous quarter.

The order book position is ₹656.68 crore, including ₹588.74 crore of the product business and ₹67.94 crore of projects and services business. On September 30th, the order book position was ₹671.1 crore, including ₹579.67 crore of product business and ₹91.43 crore of projects and services business.

Total cash and cash equivalent as on December 31st are ₹971.6 crore against ₹961.66 crore as on September 30th. This includes balances in current accounts of ₹41.15 crore, various schemes of mutual fund ₹634.30 crore, fixed deposits of ₹263.17 crore, investments in tax-free bonds of ₹32.98 crore.

With regards to receivables, we are at ₹117.44 crore against ₹116.19 crore in the previous quarter. During the quarter, there is gross addition of fixed assets of ₹2.94 crore, consisting primarily of ₹0.18 crore on computer and servers, ₹0.01 crore on office equipment, ₹0.17 crore on plant and machinery, ₹0.15 crore on furniture and fixtures, and ₹2.43 crore on software.

Now I'll hand it over to Swati.

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

Over to you, Madhuri.

Thank you, ma'am. With this, we are now open for the question-and-answer session.

If you wish to ask a question, please press * and 1 on your telephone keypad and wait for your name to be pronounced. If you wish to cancel your request, please press * and 1 again.

First question comes from Raghav Maheshwari from Kamayakya Wealth Management. Please go ahead.

Hello, each and everyone. We have been following this company and there was a doubt about migration of the legacy customer base from FinnOne to FinnOne Neo.

Last time the management had mentioned that the migration is going on, sir. Could you give us a qualitative sense of where we are in this journey, in terms of your total install base?

Are we 30% through the migration or 50% or just starting? What is the target by this upcoming year end?

Thank you for your question. This is Parag here.

Difficult to quantify. I would only say that the migration process is on.

We are getting customers moved to the new platform. I had also mentioned earlier that it is a time-taking journey.

Our customers are comfortable with our existing product, though technology obsolescence is a challenge, and of course, any change is difficult. We have migrated some large customers, some are in progress, both in India and other geographies.

We are encouraging everyone to upgrade. At this time, difficult to give any definitive response on timelines or numbers.

Sir, by when are we planning to complete this migration?

We would want to do it at the earliest possible, but yeah, difficult. As such, if the customers on older platforms, we're not facing any challenges.

We are serving them also. We are having maintenance contracts with them.

We would want them to migrate at the earliest, at the same time, but if we have to talk about some timeline, then maybe I think next 3 to 4 years.

Understood, sir. Sir, my next question would be around cost of delivery.

I think from last quarter, our cost of delivery has come down to 70% something. I think this is a contribution given by less employee cost because of this all migration and all happening.

Sir, just to get an idea, is this cost of delivery sustainable for the coming time, or can we see some uptick in this as well?

We should see a little jump because of this new labor code getting enacted. I think that impact will definitely impact the P&L going forward as well.

No, I'm particularly talking about cost of delivery, sir.

The cost of delivery includes the manpower cost as well, so that definitely is going to increase based on the recent labor code changes. So--

The hit which you have taken as I think somewhere around ₹18 crore, that is not a one-time thing?

No, so that is definitely a one-time impact, but that has not got factored in EBITDA. That has got recorded as an exceptional item below EBITDA.

However, going forward, it will start impacting EBITDA because then it will become business as usual.

Understood, sir. This 70% can go a little bit higher from this, right, in the coming quarters?

Certainly. While I can't quote a percentage because there are a lot of initiatives we would take to contain that.

Maybe in a longer term if you see, adoption of AI may help reducing some cost, but that might get offsetted by some, I would say, marketing-related expenses where we set our foot in a different geographical territory. We keep on getting impacted by these things.

While we will keep a close watch on they should not increase exponentially. We will definitely figure out some way to contain it, but, yes, these are the factors which will keep impacting us in form of cost.

Understood, sir. Lastly, sir, have you added any new logos in this quarter?

We do have added logos. If you talk about this full year, we have added around seven logos this year.

That makes around two-- In this quarter,

we have added two logos.

Two logos, right. These are all coming for the Neo one, right?

The 8.5 version or 8.4 version?

Yes, absolutely. Absolutely.

Any new customer acquisition doesn't make sense to acquire at any older version. While we are chasing for upgrading them to the newer version, obviously that is the thought process behind acquisition of each and every new customer.

Sir. I have more questions, I'll join back in the queue, sir.

Sure.

The next question comes from Rushabh Shah from Baglanwala PMS. Please go ahead.

Hi, sir. Thank you.

Am I audible?

Yes, sir, but you can be a little louder.

Am I audible now?

Yes, yes, you are.

Yeah. Sir, I had a question.

We had entered the Australian market in 2015 and then again in 2021 when the Bank of Sydney appointed Nucleus to lead its digital lending transaction. Sir, in that market, we are not able to scale up.

What challenges are we facing in that market?

No challenge, I think the market is high-yield market, but at the same time, the number of players are not as many as it's not as such a dense market as India or Middle East. That's one.

No challenge as such, it's just that things are moving slowly. Of course, I would want to say that we are still there.

We have sales presence there. We have a few people positioned there.

We are also taking inputs from that market and continuously working on aligning our products to what would sell in that market. That work is continuously on.

Sir, as you said there it is not as dense market, let's say, there are less number of players in that market, do we have an upper hand in Australian market?

Upper hand? Upper hand.

Yes, because it's not that we are coming across a lot of competition. Wherever we pitch, we are able to make an impression.

We're able to impress people with what we have. That way if you say yes, we are very reasonably placed there.

Okay. Sir, my second question is that when we launch a new product, let's say it's an upgradation of an existing software, how difficult is it for an existing customer to convince him to upgrade to a newer version?

Because historically, we have had problems with conversion of customers to a newer version of the software.

I'll explain it in two parts. One is what I spoke in response to an earlier question, the first question.

From old platform to new platform, that conversion is a bit difficult because, as I said, customers are, one, very comfortable with the old product. That journey is still, I would say, even for customer a heavy investment because over time, they have some old product, we come out with a completely new product.

When it comes to upgrading our existing FinnOne Neo or FinnAxia customers to a higher version of same product, that journey is relatively easy. There've been instances where we've been able to upgrade customers over a weekend, and there's a continuous effort to make that journey very smooth.

Once they are on the new technology stack, new product suite, then it's a relatively very easy journey, I would say. From old stack to the new stack is where we need to do more convincing and the efforts also there are more.

Okay. Okay.

Sir, my next question is, since we work in multiple geographies, is working of banking industry similar in all the geographies or is it that the different geographies require different types of software? We have to make a customized software for our customers.

If we make the customized software for them, do the complexities of the software increase? Are we able to command pricing in our software?

My product specialist will answer this question.

Good afternoon. This is where the product capability and configuration comes in.

The value that this platform brings is the regional and the geographical nuance and capability that can be taken care by configurations. Of course, platform is built on layered architecture, there is a dedicated layer for that.

That takes care of the geographical aspects and bootstrapping.

Yeah. The last question is, in a couple of quarters back on the conference call, you had said that in that quarter, we had lost two two customers.

I wanted to know what were the reasons of losing those customers, and was it that they got a better software somewhere, or they were not comfortable with the price of the Nucleus Software? Also were they huge customers, did they contribute significantly towards our revenue?

We need to check because I don't recollect any such. I don't recollect talking about specific customers, but look, some customers do move out because their mergers happen, acquisitions happen.

There are smaller customers who have closed down their businesses. Those situations have happened.

That is happened specifically during COVID, some after that also. Those instances are there.

Otherwise, we don't recollect talking about any significant movements out.

Okay. Thank you, sir.

Thank you. The

next question comes from Rahul Jain from Dolat Capital. Please go ahead.

Hello. Hello.

Is my line audible?

Hello.

Yeah. Thanks for the opportunity.

Couple of questions. Firstly, on the investment that we've been doing for some time in terms of adding the manpower or the senior leadership to strengthen our business, we have done that job, we've been doing that for some time.

However, in terms of the order booking, we have not seen any meaningful delta coming out yet. Is it right now setting into an expanded pipeline and may come into order book eventually over next 6 to 12 months, or any other comment you want to share on that?

Hi Rahul. While, yes, these changes has been done in the organization, and as it takes a little time to settle and start reflecting into the results.

I hope you will also appreciate the fact that whatever deals we do are long-drawn deals. These deals do take time to come up, fructify, because there are a lot of steps which are discussed and debated before a deal is signed off or the order also comes.

There are a lot of steps which are involved. It may go on for months, and few may even change your financial year as well.

Having said that, you will be happy to know that in this financial year, we have added seven new logos. I think, yes, we are moving in the right direction, we are on the right trajectory, and we are on the right path.

Given the kind of leadership we have got now and with the team below us, I think we are on the right path.

Thanks for that color. Now specific to the most buzzword, which is AI.

What is our strategy right now in terms of embedding that into some underwriting tool like we hear in the market? Where are we on that journey?

Secondly, from a demand side of it, are the customers seeking incrementally AI-powered solution from company like us, and where are we on that path?

AI strategy is part of our product roadmap and the organization's long-term and immediate strategy. We have a strategy that is being built, and there is a draft version that has already taken a shape.

As far as AI baking into the product, that is embedded AI, yes, that is part of our product offering. Even assisted credit decisioning has come up as part of our GA 8.5.

More and more similar AI capabilities around the product capabilities are being built, and some of them already exist. As far as the customers' demands are concerned or expectations on AI is concerned, yes, we are getting inputs and guidance from our customers on what they are looking for, and be it on the GenAI side or the deep learning or machine learning models or expectations, so that is already on.

We are in touch with our customers and leaders, thought leaders, and we are aligning our strategy towards that accordingly.

Are we expected to have a AI-branded offering also, something like FinnOne AI or something, or we would just embed those technology into the existing brand or product offering?

Embedded. We will embed it as part of our product offerings.

Rahul, we are not seeing that as a separate revenue line item coming up. It will always be an embedded because we want our customer to be able to serve their customers in a better way.

Okay. I hope that answers.

While some good capabilities around financial literacy, which is interactive statement of account, 360-degree sentiment analysis on collection sites, and there are others key capabilities has already come up, and there are several others which are under pipeline being built, and that will be released as part of GA, the upcoming view. Sure.

Sure, that's good to know. One last question from my side is on the capital allocation side.

This question keep coming once in a while. We've been accumulating cash, we've been generating a lot of cash.

Is there any roadmap in terms of giving out a special dividend or doing a large buyback as a way of deploying this capital? Because as our business does not require huge sum of capital, but we keep generating every year and getting accumulated.

Rahul, as of now, we would like to sit with some cash because, as this AI thing has heated up, lot of stuff is happening. It might require lot of investment at our end also.

We are treading that path steadily. We will look into that maybe once a clear picture emerges in next one or two, three quarters.

That is when we will be in a position to decide which way we want to go. Sure.

That's it from my side. Thank you.

Thank you.

The next question comes from Sanjyot Khare, an individual investor. Please go ahead.

Hello. Good afternoon.

Am I audible?

Yes.

Yeah. Yes, sir.

I just want to understand the quarter gone by, Q3,

I think we have closed couple of deals, and last call you also mentioned that there was delay in closure of the deals, customers were taking longer time. Just to understand your view, with the quarter gone by, how was the performance as per your expectation or was it below expectation?

How are we seeing that the deals closure will be happening in Q4? Some deals couldn't close in Q3, whether those will be closed in Q4?

Definitely better than earlier quarters. We've been saying that we are getting traction from the market.

Now we are seeing that conversions have also started to happen. Few that has happened, which Ashok talked about.

Yes, there is a significant pipeline that we have, which we hope to convert in coming quarters.

Sure. This recent updates happened on a tariff deal with EU and USA, are you seeing that will be positive for the business going forward?

We are a product company, and as such, those arrangements are not going to impact much in any way. We don't have too much of traction anyway in Europe.

If you talk about US, we have minimal interest as of now there while we are trying to get our foothold there and gradually succeeding on that path. Deal per se is not going to have any significant impact on us.

Thank you, sir. The next question comes from Chinmay Nema from Prescient Capital.

Please go ahead.

Hi, sir. Hope I'm audible.

Yes.

Sir, in the last quarter, you talked about growing through partnerships. Could you talk about how that initiative has been going on, how have you been able to make any inroads in the quarter, some color around that?

Of course, partnerships with partners like AWS, Oracle, that is steadily progressing. I think we have updated about a global head of partnership joining in.

Groundwork has started, and we are in I think exploratory stage as of now. These things take time, of course.

On other side, one area where we are progressing more is on establishing partnerships with various FinTechs because the ecosystem today has become very, very highly integrated. That part is moving faster.

Of course, bigger player partnership, that will take some time, but we are making progress on that.

Got it. Secondly, with the new hiring that has happened in the sales team and as well as the increase in the senior leadership, could you talk about what should be some of the key monitorables or milestones that you want to achieve over the next one year?

As we've been saying, we are focused on long term, and we've been talking about various initiatives at fundamental level we are taking. One of the core parameter that we have set for ourselves is improving customer NPS.

The entire leadership team, entire organization is actually focused on that. This is by way of lean initiatives.

Of course, the strengthening the sales team and leadership joining in that, we expect to have more sales, more implementations, but focus on existing customers and fundamentals is what is the key focus.

Sir. Thank you.

Dear participants, if you have any questions, please press * and 1 on your telephone keypad. The follow-up question comes from Raghav Maheshwari from Kamayakya Wealth Management.

Please go ahead.

Hi. Thanks.

Sir, my follow-up question is basically on this client additions that we have done for this year, like seven client additions. Can you tell us, what is the bifurcation of that into FinnOne Neo and so basically the lending management system and the transaction banking part of it?

These seven are all lending.

Lending. Sir, what part of our current revenue, let's say H1, is lending, sir, in terms of percentage?

Two-thirds. No, I think Tapan talked about high-level bifurcation.

Beyond that, we track it at that level.

Understood, sir. Sir, next thing I wanted a clarification around that, we had introduced FinnOne Neo, it's been quite a while now.

Whatever clients, like you mentioned, we are adding, we are adding in the basically new version. Sir, as of now, let's say if you have 100 clients, what percentage of those clients are into this new platform and what percentage are in just a FinnOne?

If you can just give a approx range.

In terms of broad bifurcation, that would be 50-50 in terms of number of customers, roughly.

50-50. By the end of next year, sir, are we targeting it somewhere around 60-40 or 70-30?

Definitely, as you've been saying, the approach is that, whether it will be 60-40, 70-30, that's difficult to say.

Understood, sir. Sir, my next question is, sir, as of now, what is your focus?

Is it to get new client additions each quarter, or to focus more on migration of existing ones into the GA?

Both, I would say, because these are different focus areas. Definitely there's focus on new customer acquisition, there's focus on giving new capabilities to existing customers, as well as migration.

These are separate focus areas.

Understood, sir. Sir, lastly, I wanted to talk about industry tailwind a bit, sir, because we are seeing good credit growth on the retail sector coming in.

All the banks are posting good numbers. I think there is some sort of a industry tailwind, if you can give some light upon that.

Also, for that matter, sir, for the next coming year, like FY '27, can you tell us, sir, I'm not asking for any guidance here, sir, just from qualitative factors as in where can the growth come from?

Yes, we've been talking about growth of the MSME sector. I think the entire industry, government, regulators, everyone is talking about it.

That's definitely a growth area. The other business lines that we are seeing traction is gold loan, finance against securities, co-lending.

These are the three areas from where we are getting a lot of traction.

Sir, what exactly are we doing in gold loan?

We have, as you call it, line of business. Gold loan is also a line of business that is available with us.

Is finance against securities. Is co-lending, which is the newest one.

Of course, all others that we already have.

Understood, sir. All right, sir.

Thank you, and hope to interact with you in the next quarter.

Thank you so much. Thank you.

Thank you, sir. As there are no questions, now I hand over the floor to Ms.

Swati for closing comments.

Now we would like to thank all the investors for joining us today on this call. Now I would pass over to Vishnu sir for his closing comments.

Over to you, sir.

We thank you very much for your continued interest in Nucleus Software, and would like to reassure you of our commitment to deliver value to all our stakeholders in decades to come. Thank you very much.

That concludes our conference for today. Thank you for your participation.

You may all disconnect your lines now.