Humansoft Holding Company K.S.C.P. (HUMANSOFT) Earnings Call Transcript & Summary

Hello, everyone. This is Abdullah Kandeel from EFG Hermes. I would like to welcome you all to Humansoft Q3 2025 Earnings Call. As usual, we will start with a short presentation from management, and then we'll open the floor for the Q&A session. [Operator Instructions] Management, you now have the floor. Please go ahead.

Thank you. Hello, everybody. Welcome to the Humansoft Q3 2025 Results Conference Call. I hope you and your loved ones are keeping safe. Thank you team at EFG for facilitating this call. I am Mayank Baxi, Vice Chairman at Humansoft; and along with our CFO, Mr. Anup Dhand. Together, we would like to briefly mention some of the key highlights and then run through the Q3 2025 financial highlights. And at the end, we will leave the floor open for questions and answers. At the outset, I would like to mention that any forward-looking statements or views discussed during this call are subject to risks and uncertainties that may cause the actual results to differ. Humansoft does not assume any obligation to update such views or statements nor make any announcements regarding any revised circumstances. Both our institutions, AUM and ACM continue to focus on enhancing students' overall development, preserving its academic achievements and leadership in the market. Subsequent to our Q2 2025 results call, several key events and achievements were made. September 2025 marked the beginning of new academic year in AUM and ACM. AUM began with a total enrolled students of 10,637 and likewise, ACM began with 2,287 students. AUM and ACM combined total enrolled students at the beginning of fall 2025 is 12,924. In the QS Arab Region Rankings, AUM sustains its rank as #1 in Kuwait and advances from #23 to #19, reflecting its unwavering commitment to excellence in education, research and innovation. Nine of our faculty were included in the Stanford University list of world's top scientists, reflecting the university's growing global visibility and research influence. Several events and activities were held on campus such as A Moonmoment to Remember in Kuwait organized by the Chinese Cultural Center in collaboration with AUM. Coursera Career Academy orientation sessions were conducted for the students. International Training Camp for AUM Sports team. And also, we collaborated with annual First Aid & CPR Essentials. Such diverse range of cultural, athletic and professional initiatives enable community bonding and holistic development of students. AUM and ACM continue to remain as the institutions of first choice in the measures offered by them and the top rankings enable them to attract dedicated students and strengthen its leadership position in the higher education sector. Now I would like to invite Mr. Anup Dhand, CFO of Humansoft to give a brief about Q3 2025 financial highlights. Over to you, Mr. Anup.

Thank you, Mr. Baxi, and a good afternoon to all the attendees. I am Anup Dhand, CFO of Humansoft, and I would like to present the financial highlights for 9 months of 2025. Humansoft's 9-month 2025 revenue was KWD 57.2 million as compared with 9-month 2024 revenue of KWD 58.1 million, mainly due to the change in the number of enrolled students. Nine-month 2025 EBITDA was KWD 28 million in comparison with 9-month 2024 EBITDA of KWD 31.2 million. Nine-month 2025 net profit was KWD 25.5 million in comparison with 9-month 2024 net profit of KWD 29.1 million. Net profit margin for 9-month 2025 was 45% and EBITDA margin for 9-month 2025 was 49%. The earnings per share was 190 fils during 9-month 2025 as compared to 217 fils during 9-month 2024. Humansoft had a net cash position of KWD 65.7 million as at 30th September 2025. Total equity was KWD 100.7 million as at 30th September 2025 and the annualized return on average equity for 9-month 2025 amounted to 31%. Total assets were KWD 143.6 million as at 30th September 2025 and the annualized return on average assets for 9-month 2025 amounted to 24%. Humansoft’s fortress balance sheet, high return on average assets and high return on average equity provides protection and resilience and enables Humansoft to remain robust. With this, we now open the floor for questions and answers. [Operator Instructions] Thank you. Over to you, EFG.

[Operator Instructions] We'll be taking the first question from Ankur.

Hello. Am I audible?

Little louder, please.

So I think 2 questions from my side, right? So firstly, how should we think about -- I mean I think we know the number of students who got into Humansoft. How should we think about future enrollments, market share in the context of a lot of changes in the global education preferences, right? Do you expect the number of private -- I mean, university enrollment to pick up in Kuwait versus what's -- versus the scholarships that are given in Kuwait? That's my first question. And my second question is your advertising expense went up in this quarter. Was it seasonal? Was it -- is it something structural that we should think about because margins were a bit lower because of that? Those 2 questions from my end.

Thank you, Mr. Ankur. See, as far as we understand, the education sector will always remain recession-proof because whatever changes that are happening globally in various fields and particularly with related to AI or any other developments, one thing should be clear that the requirements on manpower will not go down. But yes, the quality of manpower and the skill sets required may undergo changes. In this context, our relationship with the American universities like Purdue, UC Berkeley and the others make us remain ahead of the curve. And we feel that we will be able to adopt any of such changes quickly and implement them so that our students who graduate at AUM or ACM remain relevant in the market. Future for education should be looked at from this perspective. As far as the scholarship students are concerned, we haven't seen any reduction in the scholarships for the private sector. One noticeable fact also came to know around this year was the students who otherwise are eligible to go abroad on foreign scholarships are opting to study in Kuwait. And I think AUM is able to attract such students as well. And this is visible from the fact that although the K-12 graduate numbers are going up, but the students enrolling for foreign scholarships has stagnated or even come down. So that is something which is important, and it is really a matter of pride for AUM. Regarding your reference to the advertisement expenses, let me explain you that the advertisement expenses that are grouped in the financials consists of several elements where we also announced or communicate with the society about the achievements of our students. Students at AUM and ACM both have been participating in various competitions. They have been getting medals. They have been getting well-placed jobs in Kuwait. So it is very important to build the brand image from this perspective. And therefore, if we have achieved something more and we are in a position to communicate to the society, it is in the overall interest of the institution going forward. And I think the advertisement expense should be looked at from a perspective of an investment in building the future rather than purely an annual expense for the purpose of your net profit margins. We feel that it is a good investment for us because this is the way you will ensure and communicate with the society and community on a regular basis.

All right. So yes, I think my question really was about this only, right? So are the students -- do the students prefer to stay in Kuwait or more students are opting to stay in Kuwait over going overseas. And I think you answered that the scholarship numbers have stagnated or even come down and you are able to attract some students. So that's helpful.

So we will be taking the next question from the line of Ahmed Aldoseri.

Hello. Am I audible?

Yes.

This is Ahmed Aldoseri from SICO. I have 2 questions from my end. First, if you could elaborate on the key factors behind the increase in staff costs during the period. And second question, last -- on the last call, you were talking about the large amounts of graduates expected this year. So in the coming year, do you expect the number of graduates to decline? Or is it going to remain the same?

See, as far as the staff cost is concerned, if you look at quarter-on-quarter, the absolute KWD amount increase has been consistent based on the say, Q4 of '24 and then subsequent quarters also. Yes, when you compare absolute number with the last year, there will be substantial increase notice there. The reason being twofold. One, there is an addition of staff, both in the teaching side and the nonteaching side. And also in order to give proper facilities and retain the staff, there will be some salary increases as well. This is consistent with what we have been saying in the past that as we get into normalcy, our cost structure will go back to 2019 level. So I think when you follow that same pattern, it is, I think, consistent. Going forward, we will try to ensure and maintain similar levels. Regarding the graduation in the coming year, it's too early at this point to mention or give you an indication of how many graduates we expect during the current academic year because the semester has just begun. And the graduation is very much driven by the study plan of each individual students. So as we progress and we finish 1 semester, we get a feel of what kind of students who will continue in this next semester and what is the remaining credits for the graduation. But all in all, as we had mentioned earlier that the enrollments, which were higher in the past years. And as a result of that, the graduation number was also high should start now tapering down.

Okay. One more question, if I may. Given like the company's solid free cash flow from your perspective, do you believe you can sustain the current dividend payout? I know now this is back to the Board approval. But from a management's perspective, how sustainable is this dividend payout given your current free cash flow?

See, our -- as you rightly said, the business cash flow are quite predictable. And since we do not have any debt commitments remaining, the decision for dividend payout will depend on the requirements for working capital and requirements for any big major CapEx or any major investments that the Board may plan. As of now, we do not have much to discuss on this because still we have whole quarter remaining and Board will take an appropriate decision. We have cash, which is invested safely in fixed deposits only. So we do not try to divert this cash in any unproductive use. So let's wait until the year-end.

Okay. So we have received a question in the chat from [ Ahmad Al Awodi ]. It says, is there any news regarding the new majors? What about the plan to open a school? And what is your plan regarding the land you own in Sharq, how big it is?

The land that we own in Sharq is about 2,500 square meters, and it is held right now for any future requirement. If at all later we feel that there is a city campus needed, then this might be handy for certain kind of programs. But as of now, there is no other plan. It is kept as it is. The plans for diversification into schools or any such similar things, as we have mentioned earlier that we will be always open to look at opportunities. And if some good opportunity where we feel that we play -- we can play a good role and it might be a win-win situation for all the stakeholders, then definitely, that is something that we will look at. And if you mentioned to me about -- your first question was regarding new majors. As of now, we haven't added any new majors in the current year. But as we mentioned earlier, that a lot of subjects that are going in for preparing the students for the new requirements like AI and robotics, et cetera, are being added. And these will make sure that the graduates who, even if they are from the existing majors, they are well-versed with latest subjects and curriculum, which will be applied as they get into the job market.

[Operator Instructions] We're now waiting for more questions to come in. So as of now, I see no further questions in the Q&A. So I would like to pass the floor back to management for any concluding remarks.

Yes, sure. Thank you all the participants. We are once again thanking you for sparing your time and taking interest in our company and participation in these regular calls. Thank you very much.

Thank you, management. Thanks, everyone. This concludes today's call.