MPS Limited (MPSLTD.NS) Q2 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY '26 Earnings Call of MPS Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Arora, Chairman and CEO. Thank you, and over to you, sir.

Good evening from Singapore, and a warm welcome to our midyear review and earnings call. Today on the call, I have with me Prarthana Agarwal, CFO of MPS Limited; Sreenivas T.V., Chief Operating Officer of MPS Limited; David Goodman, Chief Growth Officer at MPS Limited; Archana Jayaraj, Chief Operating Officer, MPS Interactive and MPS Europa. Prarthana joins us from our corporate office in Noida, Sreeni from Bengaluru; David from Austin, Texas and Archana from Bengaluru as well. Prarthana will kick off things in her opening segment today by discussing our robust financial performance. Then Sreeni will update us on our Research Solutions business segment. Sreeni will then hand it over to Dave to help you understand the drivers of the remarkable growth in education business. Archana will then discuss the progress in our Corporate Learning business. And finally, I will provide you an update on key strategic initiatives before opening the call to questions. Let's get going. Over to you, Prarthana.

Thanks, Rahul. Q2 FY '26 demonstrated strong revenue growth with stronger profit margins. Revenue of INR 194.44 crores was up 9.42% year-on-year, driven by healthy growth across research and education verticals. EBITDA improved 13.03% year-on-year to INR 60.47 crores, reflecting continued operating leverage and cost discipline. PBT rose sharply by 43.92%, aided by operational efficiency gains and net exceptional income of INR 12.81 crores. I would like to highlight the expansion of margins across all levels with EBITDA margins at 31.10%, which is 99 basis points year-on-year increase. EPS stood at INR 32.67, up 57.3% year-on-year, underscoring strong earnings momentum and net exceptional income of INR 12.81 crores. We continue to maintain a debt-free balance sheet with total cash and cash equivalents of INR 117 crores as of September 30, 2025. I want to hand it over now to Sreeni to discuss the developments in our Research Solutions business.

Thanks, Prarthana. Our Research Solutions segment continues to drive the strong performance overall for the all, and it's currently contributing about 61.5% of our total revenue in Q2 FY '26 reaffirming its dominant position in our portfolio. We achieved an impressive 18.32% Y-o-Y organic growth in the segment, excluding AJE, which reflects deep engagement with STAR accounts and successful new customer acquisition. This growth significantly outpaced our headcount expansion, demonstrating enhanced productivity and effective AI initiatives. Despite some revenue softness related to AJE, margins at AJE continued to expand from 23.7% to 30.2% as we transition from Q1 to Q2 in FY '26. Strategically, we remain focused on consistently improving performance for existing clients, strengthening relationships and pursuing organic growth. We are actively attacking the market to acquire new logos and collaborating across the different business units within the Research Solutions business itself from AJE all the way to HighWire to amplify cross-selling opportunities. We also maintained tight control over manpower costs and are actively progressing on a comprehensive tech road map to enhance efficiency via AI. A key strategic imperative is advancing our technology focus areas to ensure nonlinear growth and to future-proof our business. This includes completely transitioning to AI-powered workflows, prioritizing AI and agentic AI models, removing any dependency on third-party production platforms and scaling of DigiCore Pro, expediting the road map for Rubriq model from AJE and implementing new measurement frameworks. These concerted efforts would ensure that we continue to deliver engaging content at scale while driving sustained profitability and operational excellence. I want to hand it over now to Dave to discuss the developments in our education business. Over to you, Dave.

Thank you, Sreeni. The Education Practice furthered the momentum from Q1 into Q2. In Q2, revenue grew by 52.4% and EBITDA margin grew from 28.8% to 35.6% year-over-year. All business units in the practice have robust yet varied drivers of growth with AI being the common recurring theme. From a market perspective, K-12, Higher Ed and Professional Development are all firing for different reasons. AI-powered workflows have led to transformational growth in accessibility, translation and digital transformation solutions. The major drivers of growth in the business include scope and volume expansion from existing customers, MPS tasting absolute success in vendor consolidation, acquisition of new customers and broadening the presence in the value chain from publishing to schools, colleges, universities and learning technology companies. The momentum is expected to carry forward into H2 as we enter the busy period of the fiscal year. The order book and opportunity pipeline are at unprecedented levels, indicating strong potential for future business. Existing customers continue to divert volume to MPS for AI enablement of their workflows. My team is actively pushing new solutions, leveraging accessibility requirements across various projects and continuously working on improving margins through efficient manpower and controlled outsourcing. I would like to now hand it over to Archana to discuss the progress made in our Corporate Learning business.

Thanks, David. FY '26 has been a soft year for the Corporate Learning business segment at MPS. Our share of total MPS revenue decreased from 17.2% in Q2 FY '25 to 11.3% in Q2 FY '26. Similarly, for the first half of the fiscal year, its contributions fell from 16.8% in H1 FY '25 to 12.6% in H1 FY '26. While the numbers have been challenging in H1, H2 looks more promising considering some of the recent restructuring efforts. We have achieved a significant milestone in our corporate learning growth strategy, consolidating all business operations under MPS Interactive Systems, that is MPSi, to build a unified and globally competitive learning powerhouse. As part of this initiative, MPSi has completed the acquisition of the remaining 35% stake in the Liberate Group, making it a wholly owned subsidiary as of 28th October 2025. MPS Europa AG is in the process of being integrated under MPSi, pending regulatory approval, further strengthening MPSi's presence in Europe. To ensure strategic continuity and leadership excellence, Rodney Charles Peach, former promoter of the Liberate Group, has agreed to subscribe to a minority equity stake in MPSi through a preferential allotment of equity shares. He's also been appointed President of the Corporate Learning segment effective 9th October 2025. While Rod is unable to join us today because he is attending to a strategic managed learning services pitch, he will join us at the next earnings call to update us on the progress. This consolidation represents a pivotal milestone in MPS's journey to create an integrated innovation-led and geographically diversified corporate learning business, enhancing value creation for clients and stakeholders alike. With duplication reduced and delivery streams more integrated, we are now better positioned to handle sales without compromising on quality, especially for large multi-country deals. The new structure is also enabling greater cross-functional collaboration across geographies and sets the stage for more strategic high-impact opportunities in the quarters ahead. I would like to now hand it over to Rahul to conclude this opening section.

Mr. Rahul, do we begin with the Q&A session?

Sorry, I think I was on mute. So thanks, Archana, and thank you for the rich update team. Q2 results highlight several key achievements. Firstly, a balanced revenue mix. We've now finally arrived at a balanced and resilient portfolio. Currently, the growth is being driven by the education and the research business, while Corporate Learning is running soft, which we hope to change in the future. From a geographic diversification perspective, we're gaining traction in U.K., in Europe and Asia Pacific as we diversify revenue beyond North America. We're also seeing improved efficiency. DSO has improved materially from 45 days in Q1 FY '26 to 37 days in Q2, reflecting enhanced collection efficiency and tighter working capital management. We can now open the call to questions.

[Operator Instructions] The first question is from Rahul Jain from Dolat Capital.

Yes. So first -- firstly, the question on the business. So the rest [Technical Difficulty].

Rahul, your are breaking up.

Is this any better?

Yes, now we can hear you.

Yes. So I was saying that firstly, on the employee cost that has got reduced. And if you could highlight what could be the reason for that? There was a mention that we are using a lot of AI workflow, which is causing a lower requirement of people. So if you could elaborate that, is this run rate sustainable? And what more optimization is left? That is part one. And secondly, there was a restructuring cost, a very small restructuring cost in AJE, and there was another exceptional item related to purchase consideration. So any color on that would be helpful that how it could be treated going forward?

All right. So Prarthana, I'll hand it over to you to answer the data-specific questions, and I can maybe cover the business questions around how is AI improving margins all of that. So maybe you can answer the questions around the data?

Yes, sure. So on the restructuring in Q2, the cost is around INR 44 lakhs, as you said, we have incurred this on account of manpower rationalization for our AJE business. In terms of exceptional items, we see a net number of INR 12.81 crores in Q2. This net number is an income of INR 13.25 crores, which is a write-back of the liability that we were carrying for the purchase of the balance 35% stake that is written back. This INR 13.25 crores is netted off with INR 44 lakhs of cost of manpower rationalization, and that's how we get the INR 12.81 crore number. On a going-forward basis, this is a one-off. So I think this is treated as an exceptional item because it's a onetime entry.

Prarthana, also on the Research Solutions business, the margins have improved. If you could just give the where they've improved and I can talk about AI separately.

Yes. So on the research margins, if you look on a quarter-on-quarter basis, the margins have improved from 37% to 42%. It's a mix of both. So one is our AJE margins have improved by 6.5%. And the balance, the non-AJE business there, the margins have improved by 5% on account of the overall operational efficiencies and the revenue increase. So this blended mix is giving us an overall increase of 5%.

So all the operational efficiency that is coming is coming through automation and AI. So that's the first point to Prarthana's point on the margin expansion through operational efficiency in research. With respect to education, as David pointed out, there's been a remarkable increase in the margin profile of the education business. And the AI play here is quite significant. We did some analysis and found that -- if you look at the growth that the education business is going through, more than 60% of that growth is coming from AI-powered workflows or AI-powered solutions. So that's the first point. And the second point is, historically, even at peak levels, the education business has performed more at like the 30% EBITDA margin level. So the fact that we're seeing that 35.6%, 36% EBITDA margin, it's largely related to automation and AI. So while the climb from 28% to 30%, 31% levels is more operating leverage, the climb from 31% to 36% is all automation and AI.

Pretty interesting. Just Prarthana, one clarification. Of course, I could see the note to account where we have given that breakup of INR 13.25 crores. What I was trying to understand the reversal that happened to the [Technical Difficulty] there will be some more entry that has -- that will come into other income or exceptional or we are done with?

So Rahul, you were breaking in between. If I understand you correctly, you're just asking that whether we are done with the exceptional entry for the acquisition. So the answer is yes.

And the other income part of it is what I could not understand the reversal that happened to the other income, what was that related to?

Okay. So the other income -- other income part of it is you're talking about the Q1 adjustment that we have done. So that's basically there was an other income of INR 2.48 crores, which was pertaining to the Liberate transaction because the transaction closed in the quarter, we just regrouped it to exceptional.

The next question is from Ravi Naredi from Naredi Investments.

Rahul, really appreciate this quarter 2 results and happy to know that how you expand margin, which is most important this time. You find suitable partner in Australia, it is fantastic. So you may give more attention to U.S. business. Secondly, raising of headcount is always reasonably good. We have now 3,071 raising by 11.5%. And my question is what we think that company should keep in hand sufficient money. So we do not raise equity via QIB. Raising of equity is always there. You must understand this logic. If you remove fear of raising equity, our price market cap rise substantially high, please understand this logic. Secondly, still we have INR 1,500 crore top line for financial year '27 intact.

Yes. Thank you so much for those wonderful questions, very insightful questions. So the -- especially the first one. So we've also been tussling with this. To give you some background, we are -- we always have a robust acquisition pipeline. My corporate development team at any given point in time is looking at some 25 to 35 targets actively. And we are in this very unique situation where we have 5 deals that are pretty much lined up back to back, like -- and it's more about closing one and going to the next. And 2 of them seem to be happening in close proximity. Given the months left now, I think we definitely will close this financial year if we are hyper productive and efficient, possibly even 2. So there was this thinking that we had that -- if we had to do these 5 almost back to back, what would be the amount of capital that we would require. And that math was coming close to INR 600 crores. And therefore, we had kind of armed ourselves with this enabling resolution that if we had to very quickly deploy INR 600 crores, we would need some equity financing because that would take us to the Vision 2027, FY '28 to get to INR 1,500 crores fairly quickly, even ahead of FY '28. So that was kind of the backdrop with which we had taken this resolution. Having said that, if you look at our net operating cash flow for the first 6 months, we are roughly at about INR 114 crores. So we are now -- not only have we improved the margins of the business, but our diligent finance team has now started to also improve the quality of the business in terms of working capital management. DSO is now down to 37 days. We're very happy with the 45-day mark. So the business is throwing up more cash faster than it used to as well apart from the margins increasing. We're also getting more efficient. So I think where we are at now to -- I mean I'm not giving you a very roundabout answer, but I want to give you a very complete answer as well. So where we've kind of arrived at is that we're very comfortable with, say, INR 200 crores of debt, given this neat cash flow that's coming from the operations. And to answer your question very, very exactly, I think the business at any given point of time should have INR 150 crores of cash. So if you just take the INR 200 crores of debt and the INR 150 crores of cash, we get INR 350 crores. And that also allows us to not go after the entire INR 600 crores, but rather go after INR 300 crores, INR 400 crores of amount of acquisition in the next 1, 1.5 years. So that's really what the overall thinking that we have now. I know this is a revised thinking, but based on encouragement from partners like yourself and other encouragement from other shareholders, I think this is a more mature and refined view where debt is -- debt comes first and INR 200 crores feels fairly comfortable. And we'll probably build up a corpus of INR 150 crores of internal cash before we start thinking of any equity financing. So that's kind of the setup. So what happens with equity financing, I don't see it happening in the near future to be completely blunt. It's not something that we'll possibly be doing in the near future. In terms of Vision 2027, absolutely intact. We're trying to figure out now how do we get to it faster. So the Vision 2027 is absolutely intact and the approach is now, is it possible to get there faster?

[Operator Instructions] The next question is from Navid Virani from Bastion Research.

Congratulations on a good result as well as a very strong commentary, which you just gave. My question pertains to the Corporate Learning segment. So since we -- I mean, since the last few quarters, we are looking at this segment is dragging the overall business down. At the same time, if I remember correctly, the initial commentary which we had was that we are looking to grow this business first or maybe scale it up first and then we will sort of go for margins. So I just wanted to understand your take on where are we on that journey of, a, first bringing in growth; and b, achieving margin later. So that is the first one.

Okay. So I'll let Archana go first more from a stand-alone corporate learning business. And then I'd just like to give a couple of points on how does that sync up with the overall MPS strategy. But yes, Archana, go ahead, please.

Thank you, Rahul. So this year was intended to be the foundational year. And as we explained in the opening remarks, we are going through an internal consolidation, combining MPSi, Liberate and MPS Europa. And the intent is very simple. It is to put together the strength of all the 3 organizations together and also eliminate any duplications and bring in further delivery streamlining, cost optimization, et cetera. And we are well past most key milestones of this restructuring phase, and the next phase is clearly the execution of the turnaround itself. And on the revenue side, we're, in fact, seeing strong conversion signals. There are several solid deals that are in late-stage discussions, positioning us well for a return to growth from FY '27 onwards. In the short run, for H2, we will see improved margin expansion. And we will see momentum in revenue expansion from FY '27. In short, our delivery model is now consolidated, cost efficient. We have integrated leadership and specialist capabilities globally, and we are also looking at tighter governance when it comes to sales and solution clarity. One case in point is that we are -- we have an imminent project for an experience center, which is now worth USD 1.1 million, up from USD 850,000 that we had talked about earlier. This is slated to come in shortly, and that reflects our ability to win and scale strategic engagement. We're also conscious that we should not be chasing growth reactively. We are targeting the right kind of high-value opportunities with repeatable models behind them, and we are focused on long-term value creation. Rahul, over to you.

Thanks, Archana. So overall, I think we've had a bit of a stutter this year in Corporate Learning. That's in complete transparency and candor, right? It's not been the greatest year. And I'd like to go back to the initial remarks that I made on the balanced and resilient business mix that we've had. If you go back to the last 7, 8 years, we've had periods in there where Corporate Learning was really the beacon of growth, right? And we've kind of got into this short-term issue where we've run into the stutter. So overall, very bullish about the business. I think with Rod now actually buying into MPS Interactive. That shows the level of confidence as the President of the business that he has, right? So he sold his stake in Liberate Learning and he's actually bought -- he's bought shares of MPS Interactive from his own money, personal money. That's how much belief a seasoned entrepreneur has in this business, where he's bought into a minority stake in a public listed company, right? So we are drawing great comfort from that. I think the team is in great hands. We are now combining -- we are in the process of combining all 3 entities. This entity is still left due to some paperwork. But basically, by the end of this year, all 3 entities would have been combined, we'll be operating as one common entity attacking the market. And in terms of the overall business mix, corporate is now less than 10%, 12% of the total revenue. And I expect over a period of time, as we get to FY '28, going back to the 20% level as the business grows. So I'd be remiss in saying I'm very inspired by Warren Buffett's farewell letter earlier this week. And if a guy like him can make mistakes, we can do. So we've had a stutter in this business, and I think we're going to bounce back very strongly in FY '27.

Perfect. Thank you for the clarity. I had one more question regarding the recent clarification. I mean, just a question back to which you gave. You said the team is in process of very advanced stages of closing, let's say, 5 deals. Now looking at the current scale of operations and the current bandwidth that we may have, this can be too much to handle. So my question is regarding the management bandwidth that we may have right now. So what are your thoughts on taking in this kind of growth from a management bandwidth point of view?

Sure. I think that's a very good question. The last -- so let's talk about existing bandwidth and new bandwidth. So let's break it up into 2. So in terms of existing bandwidth for the last 2 years, the Board and I have been systematically building the top 3 levels of the organization. We mobilized a Torchbearer initiative, which includes over 120 people and continues to grow and the Torchbearers are all stock options holders. So that's more at the overall managerial agility and depth perspective. And from a leadership perspective, we've had significant additions to the leadership team. We've had Prarthana, who joined us as Deputy CFO and became CFO last year. We had Sreeni joined us a couple of months ago as the Chief Operating Officer. David who is the CEO of a competitor first joined us as Managing Director of North America and is now the Chief Growth Officer of the entire company or rather Research and Education business. Archana joined us as Chief Operating Officer, and now Rod is now President of the Corporate Learning business. We have a new Chief People Officer who joined us. So overall, and I can go on and on because our senior leadership team now is now 16 people. That's the kind of the expanse we've done on the -- just the senior leadership team. In terms of my personal bandwidth, I basically have no work right now. I have delegated a bunch of -- the Corporate Learning business is Rod and Archana in a box. The Research and Education business is Sreeni and David in a box, and we've obviously got the functional leadership and then they have strengthened their teams. So my personal bandwidth is allocated entirely to these 5 deals that are coming up. So that's point number one. Point number two is, unlike the past where we acquired to operate, we are now acquiring to grow, right? So much of the new management team from these acquisitions, including promoters and senior management team are extending. A lot of the -- in fact, more than -- 4 out of the 5 deals that we are going on right now are either stage buyouts that will happen over a 3- to 5-year period or have an earn-out component. So I'm not concerned about that management piece at all. I think what we should be talking about more is the cultural alignment and how do these cross cultures will come together. That's going to be, I think, our biggest challenge. I'm not too much concerned about management depth and management agility. And with respect to that, I think a large part of our consideration set today apart from the financial levers is that cultural lever. We are spending a lot of time understanding that will these 2 teams be able to work together. So we've had situations where some of the companies that we're acquiring, their promoters want to talk to promoters of past companies we've acquired. And similarly, we are talking to their customers, their peers, et cetera. So yes, it's a very, very thoughtful process. And again, the 5 are kind of lined back to back. Now whether all of them will close in the next 12 to 18 months is also a question mark. So we're approaching this sensibly. The last time we did 2 in a year, which was Liberate and AJE, we did fairly well. So I think 2 a year seems to be fairly doable for us.

The next question is from [ Mahesh B. ] who is an individual investor.

Rahul, my first question is on AI progress and MPS Labs. There was a mention of using AI agents in research solution. Could you elaborate more on that and also the scope for use of AI agents in other segments that you operate?

Sure. I'll let Sreeni take that question. That's more his word.

All right. Thank you, Rahul. And thank you for your question. It's an interesting one, no matter which business you are in. But what we are doing is we are currently leveraging AI agents in our platforms business as part of the SaaS products development and maintenance. As you all know, we have a suite of SaaS platforms that need constant feature upgrades and constant maintenance and also client-specific upgrades and implementation. So we are leveraging AI agents heavily as part of the platforms business. We are also using Agentic AI to extend our language editing AI/ML models for use in the post-acceptance part of the research content publishing workflows, right? And while these are just a couple of examples, there are plenty that are in the works as part of the MPS Labs innovation pipeline. And our approach to AI and Agentic AI in specific is not a spray and pray one. It is more use case specific that are tied to actual customer outcomes and business value. And that way, we are very intentional in the way we go about investing in this area, and it sort of feeds into itself in terms of revenue growth and opportunities. But having said all of that, our primary focus would still be the enablement of our very strong team with deep domain expertise or the publishing industry expertise and AI wins will continue to augment them in a way so that they can amplify the impact of their expertise in service of our client outcomes.

My next question is on MPS Labs. Earlier, there was an intent on establishing MPS Labs as an independent AI solution entity. What's the update on that? And is there any scope to enter any adjacent markets based on the work done in MPS Labs?

That's a very prescient and intense question. We are actually growing the data and AI practice within MPS Labs with a focus on helping clients building the right data foundation. A lot of people are gung ho on AI and Agentic AI while forgetting the fact that for AI to be effective, whether Agentic or not, it needs a very strong underlying data foundation for the organization. So what do we mean by that? It encompasses data strategy, data platform engineering, focus on data quality and governance. All of these are services that are super critical for the data foundation because then once you have the right foundation and the right data sets into this unified data platform, it just opens up immense opportunities for our clients to build data products and AI products on top of that and go to their data road map with a product mindset, right, instead of building point solutions in each part of their organization and reinvesting and recreating the wheel over and over. For example, right now, we are helping a client with building a unified data platform to help launch new data products to their customers. We are also helping another client with redefining their data foundation strategy in service of achieving their AI ambitions. And I believe from my own background in tech services, I believe that our expertise in the publishing industry makes it easier for us to add technology depth than for a tech services provider to acquire deep industry expertise. That is just not easy at all. I mean nobody can replicate the 5 decades plus of expertise that we have accumulated if they are just a tech services provider. So we are deliberately adding depth in technology capability, not just in MPS Labs, which is continuing to be a major investment focus, but also across the rest of the organization so that all of our solutions and delivery of these solutions for our clients are infused with tech and AI and this also gives us an edge over pure tech players so that we can actually serve our clients across the end-to-end opportunity spectrum, which includes technology and digital and AI and Agentic AI-based transformation and not just in the traditional publishing services. So this is already underway, and we are seeing very early encouraging signs of this taking traction. I hope I answered your question.

The next question is from [ Arjun Balakrishnan ] who is an individual investor.

I wanted -- in the last call, you said you may give a guidance for this year. Is there a chance to give a guidance?

Yes, we talked about it at the Board today morning, and we decided not to.

[indiscernible] as a policy going...

I think we're -- the numbers look good. We're doing well. We don't see the value in terms of -- it doesn't add to the revenue or to the profit of the company to give guidance. So yes, we're abstaining from giving guidance.

No worries. So I guess you will not be giving guidance -- I mean, going forward, right? I think...

No, I think we've shared a fairly bold -- we've shared a fairly bold vision around FY '28. And I think earlier in the call, I suggested that we're trying to figure out how to race to it rather than limp to it, right? So we're sticking with that FY '28 guidance.

That's okay, I mean -- I agree with that. But once in a while, you say you give guidance and then I just wanted to make it clear that we will not be giving quarterly guidance, so that makes it clear and my question doesn't come out. The second question I had was, I mean, looking at MPS over the last few years, right, business has been good, I completely agree. But since, say, last 5 years or so, the institution holding has come down. I mean it's nothing to do with the business, I'm sure, but it's just that the institutional holding, especially government of Singapore, for instance, has gone down on the stake gradually. Is there something that we can do to -- I mean, we cannot control that, but then are we doing enough to bring our business in front of larger institutions and help stabilize the holdings so that it is good for our overall company, right?

Yes, Arjun, I agree with you. So I think the -- as managers, we can basically control the revenue and the EPS, and that's the focus. But in terms of visibility and presence, I think we were thinking of the QIP as a method to attract -- to get an institutional investment. But then we also realized that, that doesn't seem to be a way to -- that would dilute the value of the company. So if institutional investors want to enter, I'm sure that there is ways for them to enter beyond just a QIP. So we're not looking at the QIP process to get institutional investment anymore. And in terms of visibility, my CFO and I and -- I mean my Head of Corp Dev, we are attending more events. We are available. We've been attending events organized by vendors in Singapore. We attended a Motilal event in Mumbai. So I'm in Mumbai like 3 to 4 times a year. So we're definitely out and about. But like you said, as business -- operators of our business, our focus is entirely on the revenue and the EPS.

The next question is from [ Abhilasha Satke ] from Quantum Asset Management.

Congratulations for the good set of numbers and hope to continue the improvement. So my question is mainly on the acquisitions, what we are targeting. As you said that in the past, our focus was on operate and now we are -- the focus has shifted to growth. So similarly, in the past, we have seen some integration challenges. The gestation period for integration has been longer than what we would have thought initially when we acquired the company. Some things have happened at AJE as well. When we are -- with our team and everything now put in place, how do you strategically position to handle those kind of challenges and therefore, integrate whatever acquisitions are coming for the future with a smaller gestation period. So can you just throw some light on that?

Sure. So I'll just quickly take the AJE one. So AJE was meant to be a richer acquisition. We were supposed to buy the company for USD 12.1 million. We ended up acquiring them for USD 8.5 million. And the haircut that took place on purchase price was the understanding with one of our strategic customers who was going for an IPO that it was probably better for us to rightsize the organization rather than them because they were in an IPO year, which, by the way, has been a very successful IPO for them. So while we've gone through this period of integration, which has been bumpy, as you described it, it was always known that we were basically, a, doing it for a reduced purchase price; and b, we've had massive spillover effects in terms of improvement of our relationship with one of the world's largest research publishers. Their spend with us is growing at 20%, 25% now. And their overall spend is also up for grabs as they consolidate vendors. So from a strategic objective, it has delivered. From a financial perspective as well, we are looking at a payback period of 2 years. So essentially, we knew what we were getting into with AJE. And while it's not the typical distressed acquisition playbook that takes 5 years, we're looking at with AJE buckling down for a 3-year period before we start to see some remarkable growth. So it was not in sync with our overarching strategy, but an adjustment to it because of the outsized benefits that came from it, both at an AJE level, but also at the overall MPS level. In terms of the next phase of acquisitions, the next 2 that we are currently evaluating are both in the education space. And in both cases, the integration is going to be a loose integration. What that means essentially is things, common functions like finance, HR, IT, et cetera, would integrate fairly quickly in the first 90 to 120 days. But the business itself, the integration would really be more at the sales and marketing level as we try to cross-sell. Other than that, these will be independent business units that roll up into the education practice. So we are not looking to tightly integrate these. We are looking to enter these, take over the nonbusiness tasks from the founders and the management team so that they can focus on the business and help them cross-sell into the MPS customer base as we sell our solutions into their customer base. So we are not looking at tight integration. So I'm not expecting anything beyond 3 to 4 months with these new entities.

Next question is from [ Santosh Kondapuram ] from [ Fund Veda. ]

Congratulations, Rahul to you and your team, a great set of numbers, especially in margins. I wanted to understand the big picture macro environment, how -- from the business perspective, like with the geopolitical tensions or from the tariff perspective, how are we -- how is the business environment there? Are we looking at any slowdown in terms of the orders or the services that we offer? Are we -- like I wanted to understand your point of view.

Yes. I think overall, very bullish about the FY '28 vision, and we're not seeing anything yet that suggests that there is a slow slowdown. In fact, education business, as David was describing, has actually started to grow very rapidly because of the current environment. Typically, when you have a Republican party in the U.S., the education spends increase because states, every state starts to develop its own curriculum. So we've seen some of that play out into the K-12 revenue on the education side. So we're not seeing any signs of a slowdown. From a -- having said that, there can always be a shock. Going back to my earlier comment in the opening remarks, I'm very satisfied that we've built a balanced and resilient business mix across research, education and corporate. And also from a geographic spread standpoint, North America is around 50% now. So we are blessed in that sense that from a diversification perspective, if there is a shock to the system, that affects everyone equally, we are properly better proofed and we'll probably use that as an opportunity to rise above like we did in the pandemic. So you saw in the pandemic, MPS used that as an opportunity to show how we were different. And we've seen a 22% PBT CAGR since FY '21. So if there's indeed a shock to the system, I think we -- our track record shows that we will rise above and use that as an opportunity to scale, not to let it affect our business.

Next question is from Keshav Garg from Counter Cyclical PMS.

So Rahul, I'm just trying to understand that is the juice out of the AJE or there is some more cost cutting left that we can expect in the subsequent quarters?

I think there is some left. I'll bring in Christine, who's Senior Vice President of Research Solutions and is the Head of the AJE business to respond to, is there some margin expansion possible in the second half of the year? I think we pointed out that I think we've gone from like 23% in Q1 to 30%, 31% in Q2. So while Christine, we don't want to give any forward-looking margin guidance, but is there some juice left in AJE for margin expansion?

Yes. Thanks, Rahul. So the short answer is yes. We're still continuing to optimize in terms of the team structure and moving to a contractor-based model. So we're expecting to see further improvement in margin expansion for Q3 and Q4.

Okay. Great. And also, you mentioned a few con calls back that we were looking to cross-sell with the AJE customers, our current offerings and vice versa. So any progress on that front?

Sure. So Christine, maybe you can talk about AJE and then David, if you want to talk about Rubriq specifically?

Yes, sure. So we -- yes, sure. We are in conversation with actually multiple publishers to sell office services through white label partnerships. Several of these are existing customers for MPS with strong relationships from -- with the other business units. So that's definitely part of the plan and currently in conversation with multiple publishers.

Yes. And on the Rubriq side, I think we've seen a huge amount of interest across all of the MPS sectors. Rubriq was established as an academic AI copy editing tool, but we're now seeing how it can be adapted to our education clients and broader scholarly publishers. So we're getting -- Rubriq is -- it was originally a B2C solution, but we're seeing significant B2B opportunities. They're substantial and continuing to grow.

Next question is from Krushi Parekh from BugleRock PMS.

So I think some great insights on the organization structure and how we are organizing ourselves in this time. So I think those things are covered for me. But just one thing on the MPS Labs. So how large is our team? What kind of growth that team has seen? What kind of mandate it is currently running? And I think a year back or so, it was mentioned that the team was focusing more on improving the internal processes, improving efficiencies, helping the clients to develop products better. But are we now in a stage whereby we can even monetize that particular part of the team?

Yes. So the headcount, I think, somewhere between 250 and 300 for the MPS Labs team specifically. This is different from our platforms team, which is another 300 people. So just to clarify, so MPS Labs is somewhere between 250, 300 and platforms around 300. Sreeni, could you talk a little bit about the strategic objectives and focus of MPS Labs and how the monetization part is moving?

Yes. So as I had covered some of that in the earlier answer too, the MPS Labs team is actually integral to how we are solutioning and delivering for our clients across all of our business units, even in the recent past, right, and it continues into the present. What I mean by that is that the solutions developed by MPS Labs and even some of the members from the MPS Labs teams are actually part of the extended client organization that works towards these outcomes. So in a sense, the monetization is already happening, and it is reflecting in our results in the way the nonlinear profitable growth has been happening, and you can see that. What we are going to do and in the process of getting there is also doubling down on the technology depth, especially in the data and AI domains as part of the MPS Labs organization. So that way, in addition to helping with internal productivity tools, this team would also actually step up and help clients make progress and drive outcomes towards their data and AI ambitions. And that by itself will also become part of our GTM offerings. And there is already traction on that. There is already early traction on that, as I had confirmed in my earlier answer.

The next question is from [ Yash ] who is an individual investor.

Yes. Thank you all. Great results this quarter. It was slightly surprising. So it was -- and also wish we continue in this territory going forward as well. So most of the questions the other participants have covered. And also, I received the physical copy of the annual report. It was very, very beautiful and very good. I think it is one of the best annual reports I have seen in some time, okay? And keep up the good work, all the best for the team. Thank you.

Thank you, Yash, for your kind comments. We are in the publishing business, so we better produce a good annual report. So I'm glad you appreciated it. A lot of work went behind it. So your print is still a thing. So happy to hear that.

Yes, exactly speaking, 20 years back, there used to be a company called [ iFLEX ]. So they used to produce great annual reports, but after almost like 20 years, so I really -- but also, I think we need to reduce the quality of the annual reports actually after the presentation is done because I think that doesn't require that much of a quality actually, that's on a lighter note.

[indiscernible] is automated, just FYI.

Next question is from [ Hemant ] who's an individual investor.

Congratulations on a very good set of numbers. Sir, I have one question. I had attended last con call where you had said that we'll not be giving the annual guidance, and we'll be looking at our post Q2 numbers. And Q2 numbers have really been good. So I mean, can you throw some light on H2?

Yes. So I think a previous question was brought up earlier. And on a serious note, I think the Board -- and we discussed this at length as well. We don't see how this adds value to the MPS journey in terms of guidance. I think we've shared that the FY '28 guidance, and we also shared that we are trying to figure out how to raise to it rather limit to it. And overall, we are doing -- the business is doing well. So yes, I don't -- we don't see how it adds value. And on a lighter note, if the numbers are so good, getting them as a surprise is also nice.

So that is fine. But sir, I mean, will it be better than H1? This is what you can say, right? You can guide us.

So that's exactly what guidance is. You're asking me for guidance, which I think the [indiscernible].

I'm not giving specific numbers actually. So I mean, we used to share specific number.

No, we won't be giving any guidance. No thumbs up, thumbs down, no guidance at all.

The next question is from [ Nachiket Kale ] from NK Properties.

The answer for the Q&A so far was very insightful. I appreciate the management's bandwidth spent on this. Most of my queries have been answered.

The next question is from [ Anil Kataria ] who is an individual investor. We seem to have lost the line for Mr. Kataria. That was the last question. I would now like to hand the conference over to Mr. Rahul Arora for closing comments.

Great. Thank you for your active participation in our earnings call. This one was highly engaging and interactive. So I really enjoyed it. And a few of us got to participate this time as well, which hopefully shows you how the management team and has been deep -- the depth has been fairly stepped up over the last couple of years. We appreciate all your thoughtful questions. Your unique outside-in perspective helps us to learn and improve. I thought the question on, for example, what should be the minimum cash that the business should hold so that you don't have to do a QIP was -- I thought that was a fabulous question. I think at least made me very introspect. So I want to thank you for all the stakeholders for their continued support and respect. Our journey together has indeed been remarkable, and we have a tremendous opportunity to scale MPS to a whole new level. So look forward to your continued support, feedback and your partnership mindset most importantly. Thank you.

Thank you very much. On behalf of MPS Limited, that concludes this conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.