💰 Financial Performance

Revenue Growth by Segment

Total consolidated revenue for Q2 FY26 was INR 213.51 Cr, representing a 5.59% YoY growth from INR 202.20 Cr, but a 1.93% QoQ decline from INR 217.72 Cr. The Product business segment contributed INR 181.02 Cr (84.8% of total), growing 5.61% YoY. The Projects and Services segment contributed INR 32.50 Cr (15.2% of total), growing 5.49% YoY.

Geographic Revenue Split

Not specifically disclosed by region, but the company operates in 50+ countries. Total revenue in foreign currency (including India Rupee revenue) was US$ 24.47 million for Q2 FY26, compared to US$ 24.12 million YoY, a marginal increase of 1.45%.

Profitability Margins

Net Profit for Q2 FY26 stood at INR 26.29 Cr, a decline of 20.48% YoY from INR 33.06 Cr and a 25.31% decline QoQ from INR 35.20 Cr. Net Profit margin compressed to 12.3% from 16.4% YoY. This was driven by a rise in delivery costs which reached 73.9% of revenue compared to 71.4% YoY.

EBITDA Margin

EBITDA for Q2 FY26 was INR 23.09 Cr, a significant decline of 26.74% YoY from INR 31.52 Cr. The EBITDA margin dropped to 10.8% in Q2 FY26 from 15.6% YoY. The compression is attributed to increased investments in product development and a 72.39% YoY surge in marketing and sales expenses.

Capital Expenditure

Not specifically disclosed in INR Cr for the current period; however, the company is investing heavily in product enhancements and the rollout of latest releases to drive future implementations and upgrades.

Credit Rating & Borrowing

Not disclosed in available documents. The company maintains a strong cash position with other income from investments and deposits contributing INR 13.50 Cr in Q2 FY26.

⚙️ Operational Drivers

Raw Materials

As a software company, the primary 'raw material' is human capital. Cost of delivery, including product development, represents the largest expense at 73.9% of total revenue (INR 157.70 Cr).

Import Sources

Not applicable for software services; however, the company is aggressively onboarding global sales representatives to expand its international footprint.

Key Suppliers

Not applicable. The company relies on its internal workforce of 'Nucleites' for product engineering and innovation.

Capacity Expansion

The company does not have physical MT/MW capacity. Instead, it expanded its sales capacity by appointing 6 regional sales heads and is actively recruiting global sales representatives to scale the top line.

Raw Material Costs

Delivery and product development costs were INR 157.70 Cr in Q2 FY26, up 9.2% YoY from INR 144.42 Cr. This increase is due to heavy investment in the latest product releases and efforts to improve product configurability.

Manufacturing Efficiency

Not applicable. Efficiency is measured by product implementation speed. The recent go-live at Tamilnad Mercantile Bank (TMB) with FinnOne Neo® aims for significantly faster loan processing and rule-based automation.

Logistics & Distribution

Marketing and sales expenses, which cover global distribution and sales efforts, were INR 15.67 Cr in Q2 FY26, representing 7.3% of revenue, up from 4.5% YoY.

📈 Strategic Growth

Expected Growth Rate

Not disclosed

Growth Strategy

Growth will be achieved through a revamped sales structure with 6 regional heads and global sales reps to capture the 'booming' consumer lending market. The strategy focuses on transitioning existing customers to latest releases (FinnOne Neo) and increasing annuity revenue through upgrades and new lines of business.

Products & Services

FinnOne Neo (digital lending), FinnAxia (transaction banking), LeaseWare, and Nucleus Software Digital Services (transformation and infrastructure maintenance).

Brand Portfolio

FinnOne Neo, FinnAxia, FinnOne, LeaseWare.

New Products/Services

Latest releases of FinnOne Neo and FinnAxia are being rolled out. These are designed to be more configurable to reduce implementation timelines and improve client agility.

Market Expansion

Targeting global markets with a focus on 50+ countries. The company is specifically gaining traction in tough-to-enter global markets by investing in marketing events and senior executive recruitment.

Market Share & Ranking

Not disclosed, but the company powers 200+ banks across 50 countries, positioning it as a global leader in lending and transaction banking technology.

Strategic Alliances

Recent successful go-live with Tamilnad Mercantile Bank (TMB) to power their digital lending era. The company also maintains partnerships with 200+ financial institutions globally.

🌍 External Factors

Industry Trends

The industry is shifting toward 'digital agility' and 'intelligent credit experiences.' There is a strong trend of financial inclusion and retail finance growth, particularly in India, which the company is positioning for with its FinnOne Neo platform.

Competitive Landscape

Competitors include global firms like Silver Lake, Access, and Temenos (referenced as Theranos in transcript). These competitors typically have 60-70% of revenue from maintenance, while Nucleus sees 80-90% from existing clients.

Competitive Moat

The company has a strong moat based on high switching costs; 80-90% of revenue is annuity-based from existing customers. This long-term partnership model is sustained by continuous product upgrades and a 'Great Place to Work' certified workforce.

Macro Economic Sensitivity

Highly sensitive to the consumer lending market and regulatory environment. Growth in retail finance and the emergence of new NBFCs directly drive demand for the company's lending platforms.

Consumer Behavior

Shift toward mobile and internet banking is driving banks to modernize legacy systems, benefiting Nucleus's digital-first product suite.

Geopolitical Risks

Operating in 50+ countries exposes the company to diverse regulatory shifts and trade environments, though specific barrier impacts were not detailed.

⚖️ Regulatory & Governance

Industry Regulations

The company must comply with global financial technology standards and local banking regulations in 50 countries. It also adheres to SEBI (Prohibition of Insider Trading) Regulations, 2015.

Taxation Policy Impact

Total taxes for Q2 FY26 were INR 9.12 Cr, representing an effective tax rate of approximately 25.7% on profit before tax.

Legal Contingencies

The company terminated a Project Manager (Nitin Kumar Garg) for insider trading violations following an Audit Committee investigation. His gratuity was forfeited as part of the disciplinary action approved on Nov 8, 2025.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the conversion of the potential sales pipeline into actual revenue, which management noted has been 'weaker' despite good traction. This could impact top-line growth by 5-10% if delays persist.

Geographic Concentration Risk

While global, the company has a significant presence in India. The top 5 clients represent 27.1% of revenue, indicating moderate concentration risk.

Third Party Dependencies

Low dependency on physical suppliers, but high dependency on specialized engineering talent for product innovation.

Technology Obsolescence Risk

Risk of products becoming outdated is mitigated by heavy investment in 'FinnOne Neo' and 'FinnAxia' and a focus on AI, cloud, and digital transformation.

Credit & Counterparty Risk

The order book of INR 671.10 Cr is with 200+ established banks and financial institutions, suggesting high-quality receivables and low counterparty risk.