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Nucleus Software, which provides software solutions for banks and financial organisations, has reported about 16 per cent drop in net profit for December quarter citing higher sales and marketing expenses. Nucleus said that its costs were also higher on account of local hiring at senior levels in markets such as Japan and Europe.
The company’s consolidated revenue was almost flat on year-on-year basis but it remains optimistic about the demand for banking products in markets such as Latin America, Europe and Japan.
The net profit stood at Rs 7.7 crore against Rs 9.2 crore in the same period previous year. The consolidated revenue was pegged at Rs 68.6 crore compared to Rs 68.4 crore in the year ago period.
“The services part of our business that comes from a few customers is declining because there is some vendor consolidation that clients have initiated. But in order to offset that impact, we have started approaching product customers with services offerings. So despite the environment, we have been able to maintain our topline,” Vishnu R Dusad, CEO and Managing Director of Nucleus Software told Business Line.
For the quarter ended December 2010, the product business yielded revenue to the tune of Rs 51.1 crore against Rs 39.7 crore in the same period previous year.
The EBITDA margins declined to 14.73 per cent in December quarter against 16.6 per cent in the previous sequential quarter (September quarter). “We expect the margins to improve going forward…With expenses at the similar levels, we will get going after higher revenues,” he said.
Nucleus has been able to get a 5-10 per cent increase in pricing with regard to the product business, Mr Dusad said.
The company added eight new customers and bagged 10 new orders for implementing 34 product modules during the third quarter, from financial institutions in Middle East, Africa, South East Asia and Latin America.
“The region has immense potential in terms of growth in the banking sector and institutions, both large and small, are increasingly realising the importance of technology in enhancing businesses,” a statement by Nucleus said.
The Nucleus scrip closed almost three per cent lower on BSE on Monday at Rs 114.5 a share.
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