MPS Limited (MPSLTD) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the MPS Limited Q3 FY '20 Earnings Conference Call, hosted by Four-S Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nitesh Kumar. Thank you, and over to you, sir.

Thank you. Good morning, everyone, and welcome to the Q3 FY '20 Earnings Conference Call of MPS Limited. We have from MPS, Mr. Rahul Arora, Managing Director and CEO; Mr. Sunit Malhotra, CFO and Company Secretary; and Mr. A Sakthivel, Financial Controller. We'll now request Rahul to give his opening remarks. Over to you, Rahul.

Good morning, everyone, and a warm welcome to Q3 FY '20 earnings call. We'll start the call with some opening remarks and open it up to questions. FY '20 is turning out to be a difficult year for us, primarily due to a decline in our co-publishing business, and Q3 was no different. Our revenue at a consolidated level was down by 16.5% and on FX-adjusted basis compared with same period last year and was recorded at broadly INR 84 crores. EBITDA margin was suppressed at the 22%, 23% levels in Q3. Approximately, 85% of the decline in Q3 is due to a decline in the Publishing business. We expect FY '20 to be a soft year for MPS. And while we have been diligently working toward a recovery in Q3 and Q4, the trend is expected to continue well into Q4. The core Publishing business is under pressure for -- through a combination of factors, largely due to market dynamics and large customer-specific events. On the market side, education publishing, as you all know, is a cyclical market. And the average wave of expansion and contraction is 3 years. 2019 was the first year of a contraction phase, and MPS is diligently holding its position while some of our competitors have seen a massive decline in the education publishing business. On the journal side, we are amidst a price war, which has benefited some of our customers and for us in the short term. We've also seen reduced relevance of certain business units, such as Yellow Pages and digital solutions that is focused on converting backlog content to contemporary formats. On the customer side, we are seeing customer consolidation as a major event that has slowed things down. We also even in Q3 had a contractual settlement in one of our general customers. And finally, there is the relentless drive with one of our large customers to reduce spend on content production. Keeping Vision 2023 in mind, there are several developments underway to reinvent and transform the Publishing business in the form of organization development and new initiatives. Meanwhile, the acquired business of Tata Interactive continues to gather momentum, and in hindsight the decision to diversify and enter the adjacent e-learning market was well-timed and much needed in the enhancement of our mission statement, from helping make publishing smarter to helping make learning smarter. We can now open the call for questions.

[Operator Instructions] The first question is from the line of Devanshu Bansal from Emkay Global.

Rahul, our headcount has increased in the content solutions business despite a decline in the business. So is it in anticipation of some deal ramp-ups here?

No.

Okay. So what are your medium-term outlook in terms of the 3 segments we operate in?

Yes. So like I said, the year is going to continue to be rough into Q4. Next year, we expect content solutions to hold its positions from this new base. And hopefully, in the second half of next financial year to pick up. We're expecting solid growth in the learning side. If you look at the business, we've -- from what we acquired, we are about 30% down in revenue in terms of the business that we have acquired. So for us, the next milestone is, of course, going to be the recovery of that gap of 30%. We are hopeful that we'll be able to cover a substantial piece of that gap in the next financial year. On the platform side, a large component of the platform business is publishing platforms and there's a small component of TOP SIM in there as well. We expect TOP SIM to, again, grow at a better clip than the publishing platforms. And the overall platform business to get some 10%, 12% type of growth.

Okay. So in Q3 last year, we saw some seasonality related to TOP SIM -- sorry, in Q4 last year, we saw some seasonality related to TOP SIM business. Is it expected to repeat in this year's Q4 as well?

So overall the business -- so whatever we're seeing in Q3 should potentially continue into Q4 is what we're expecting for Q4.

Okay. So what was the contribution of TOP SIM in the platform side? Was it in line of INR 5 crore run rate or...

So I can't -- for competitive reasons, we can't break out product-specific revenue. It's a very competitive -- as you know, it's a highly competitive market. We don't see any value in sharing product-wide revenue.

[Operator Instructions] The next question is from the line of Vaibhav Badjatya from HNI Investment.

So Rahul, just as a matter of fact, we both are from the same ISB class. And I'm sure we must have met on the ISB campus. It is heartening to see one of the friend [indiscernible]. So I have 2 questions. One is that, can you briefly explain what is the different kinds of service or activity that you service and your competitor service and where -- which kind of services we don't provide? And what is our competitive positioning within different lines of activities within Publishing segment?

What I'll do is I'll explain -- so thank you for your comments. What I'll do is I'll explain what we serve and within those markets, what are our offerings and business segments. So MPS, if you look at our overall market, we service the global publishing market, and we service the global corporate learning market. Within Publishing, our focus is largely academic and STM publishers. That is basically research content being published. That's one segment. And the other big segment is educational publishing, so that includes K to 12, higher-ed and professional education. So it's more focused on the research and learning side when it comes to publishing. On the corporate learning side, we -- on the learning side, we work with large corporates across the globe, including North America, Europe, Middle East, India and APAC. But -- and we also work with continuing education, universities and other educational institutions that are focused on professional education. Now those are the markets that we serve. In terms of our offerings, we provide content services that basically includes content offering, content development, content assembly, transformation and delivery of content. So essentially, taking an idea to execution and, of course, participating in a turnkey way, but also participating in all the intermediate steps, from an idea to delivery on the content side. On the Platform side of our business, we essentially have platform ecosystem. One of which is on [indiscernible] and [indiscernible]. Another one is focused on content distribution and delivery, which is THINK360. And then we have mag+, which is on the same activities, but optimized for the mobile world. And finally, we have some learning platforms that help better focus on the corporate learning market. So that's broadly our market focus and how we service those markets with our offerings.

But in the Publishing services business, is there any difference in terms of offerings -- in terms of the market reach of offerings between you and competitors or it's exactly same? You also cater to the all market and your competitors also cater to all segments of the market within publishing segments.

So on the Publishing services side, there is probably 4 to 5 players who are significant in scale and similar in scale. Most of them are India and U.S. based, and one of them is -- one of them also has presence in the Philippines. And in terms of differentiation, I think a lot of differentiation is on how clients perceive us. So they -- between the 4, 5, they have an identity for each of us in their minds. Additionally, I think all -- each of the 4 vendor partners has a specific edge. I would say the MPS edge on the Publishing services side is more linked to automation and system-based delivery. And of course, some of our competitors are more focused, for example, on customer intimacy and those type of things. So our value proposition on publishing side is more linked to operational excellence, which is derived from automation and system-based delivery. So that's how we're -- our identity is on the publishing services side. And of course, then outside these 4 to 5 players, there's this huge middle layer of companies in the $5 million to $15 million range, there's about 20, 25 companies operating in that range. And then following that is another tail of sub-$7 billion, $8 billion of revenue. And that tail could be well in the hundreds in terms of number of players. It's a highly fragmented market.

Right. Okay. I think, secondly, we have seen historically -- so historically, we have -- the whole industry, publishing services industry, has seen good growth somewhere between FY '12 to FY '14, '15. I was just hoping to understand, what has happened during that time frame and what can trigger growth going forward? What kind of changes can happen which can trigger growth for the whole industry as such?

So I think vendor consolidation has been a primary driver of growth during that time frame and...

So for the industry? I'm just talking about the industry, not for the individual players.

Yes. I'm talking about industry as well. That's a bit better. When I say vendor consolidation, I mean, if a publisher is working with 9 vendors, then they first start to work with 6, then 5, then 4, then 3, to that level of -- so that type of consolidation, where customers are consolidating the supplier base. That has been the predominant driver of growth of individual players, firstly. From a macro perspective, I think as publishers are finding that the juice that they can derive from consolidation is saturating, and they start to identify new areas of outsourcing, because in any publisher's world, if you look at their overall spend, 50% to 60%, in terms of the spend with -- on the content development and production side, 50% to 60% of their spend is organized, where they're working as part of a procurement program. And the balance is highly disorganized, spread across freelancers, friends of friends, mom-and-pop stores and small shops. So one is, of course, does that -- is there an opportunity for the balance, disorganized spend to get organized? And so we're having those types of conversations with them. But it's a slow and gradual process. And fundamentally, then, does this pie increase as publishers come under even more pressure, because we're seeing, especially on the educational publishing side, for example, they're moving from a product, in selling individual products, to selling subscriptions. This is a Netflix model. So previously, an education publisher would sell a textbook for $120, and now they're selling a subscription, all-access subscription, for $9.99, that gives the student complete access to everything that they have. So as that business model shift, their ability to deliver to that business model will also have to change. So that would be a significant driver in -- for the industry. Another driver, of course, is publishing, in general, is ripe for disintermediation. We're already seeing that on the continuing education and professional education side where small community colleges and professional institutions are basically taking a call and saying that do we really need to work with a commercial publisher or can we actually go upstream and work with partners that are actually powering the publisher operations? So there's -- so I think 3 things: one, of course, continued vendor consolidation that should be opportunity for players; second, organizing the disorganized spend and increasing the pie of spend by doing new type of outsourcing; and then finally, some disintermediation play where we start working with our customers' customers.

The next question is from the line of [ Yogan Jeswani ] from [ Mittal & Co. ]

Sir, I just wanted some more clarity on the Platform solutions business and the degrowth that we are seeing. Because in past, if I'm not wrong, the margin commentary wasn't so weak and we -- but whereas when we look at the current quarter's number, it's very weak. So did we lose any client? Or is there a one-off also included in this?

No. So on the Platform side of the business, it's not -- it's more to do with commercial than clients. So we have not been able to successfully add customers as we hope to. Previously, you've heard us being more optimistic about adding customers every quarter, every year, on a continual basis. Things have been very, very slow and gradual. So the addition has been minimal. And even within the existing -- given that our existing customers are not doing well in their business, we've had some squeeze on pricing and promotions on the Platform side.

Okay. And would you be able to quantify the squeeze on price? Like, was it 10%, 15%. How much was the pricing...

That's competitive information and wouldn't be able to share that.

Sure. Similarly, on the content side of the business, if you could throw some more light on why this degrowth?

Like I explained earlier in the opening remarks, it's a combination of market and combination of large customer-specific events. On the market, education publishing is going through its cyclical drop, which it does every few years. We've seen, in general, on the journal side, a huge price war takes place where publishers continue to squeeze the pricing. And unfortunately, MPS has not always succeeded, and hopefully that will change in the coming months and coming quarters. And on the customer side, as we know, we have a large customer concentration where, what, 80% of our revenue comes from 10 accounts and 90% of revenue comes from top 15 accounts, especially on the content side. We've seen some of our customers are consolidating their businesses, and as they do that, they are looking at product overlaps between the consolidation. So they're reducing the amount of product they produce, and we're also seeing a relentless drive by one of our -- in fact, 2 of our large customers in terms of how much they spend every year. So that hurt us because we're not that diversified. And then finally, with one of our customers, we've had a contractual settlement linked to volume-based discounts, which has been ongoing negotiation for a few years now. And that took place in Q3, and that's showing in the results. And that would be approximately about somewhere between INR 1.5 crores to INR 2 crores, which is a one-time event.

Okay. Understood. So basically, if I understand correctly, it's more to do with the pricing pressure and customers cutting down on this expenses rather than losing the customer, right? [indiscernible] We have lost business from [indiscernible] because of the pressure.

Yes. Plus, because they're producing less product.

Right. Fair enough.

The next question is from the line of Keshav Garg from Counter Cyclical Investments Private Limited.

Sir, I wanted to understand that our turnover on stand-alone basis of last 12 months has gone down to FY '15 level and, sir, our operating profit has gone back to 6 years back what we were doing. Sir, so what's the reason for this? And how long is it going to continue, whatever you are seeing in pricing pressure and so on?

Yes. So on the revenue side, we expect this to continue into Q4. We expect then that to be the new base that we hold for the first half of next financial year. And hopefully, from there on, things should pick up. In terms of profitability and margins, because a lot of this decline has come in a very short period of time, we've had little opportunity to adapt. But from Q1 of next financial year, we'll start to see that change and margins will again start to pick up once we adapt to this situation because at the end of the day, our largest contributor expense is in manpower costs, and it takes time to adjust, which is almost like a fixed input. So it takes time to adjust when you have these large events.

And sir, also, are there any plans to do a share buyback, considering the fall that our share price has seen? And sir, maybe in the future, if you are expecting growth, then if we can buy back shares at this cheap price so then the future whatever growth will come will get divided on a smaller base of shares. So what are your thoughts on that?

I can't share any forward-looking statements. All I can say is that the management and the Board are always evaluating opportunities that are in the best interest of all stakeholders for the company, but I can't share any forward-looking statements yet.

Okay. So please consider it, that record.

Yes, yes. So I'll give it -- I'll definitely take your point into consideration.

The next question is from the line of [ Anand Segal ] from [ Magnus Capital ].

Rahul, just wanted to understand how you really talked about the disruption and the disintermediation in the publishing business with respect to consolidation and people going the Netflix model in terms of subscriptions and all the other changes. So how do you think -- so in the past, MPS was a beneficiary of the consolidation of the vendor base. But how do you see MPS place now with this new disruption and disintermediation, which is taking place in the content solutions business? And then secondly, on the e-learning business, you mentioned about the 30% gap down in the revenues, so what is your time line for it to sort of get back to the levels that it used to do in the past? And then lastly, there have been some Board changes at the Board of Directors level. Can you highlight as to what is causing that change?

Sure, sure. So I'll take that one by one. So the first question on MPS. So let's step back because MPS has to play the role of, if I can call it, a price warrior. And all this chaos taking place in the market would benefit MPS. So nothing has changed. I think what's happened is, in terms of our ability to do that, I think what's happened is that, unfortunately, we've had that take place with our existing customers. So when you have an existing customer tell you that we need this heavy shave, it takes time to react to that, in some instances that hurt us. What -- traditionally, what we have not been successful at is when we get those price warrior type of opportunities with new customers, I think it's not that we're not able to do that. I think, as a team, we've been not as aggressive as we need to be, and that's been definitely something that we've reflected upon and going forward are correcting that strategy, because we had a lot of success being the price warrior. And always in hindsight, we thought that did we leave some money on the table by doing that. And you were trying to sort of correct that strategy. And so what's basically taking place is that in our large accounts, we've seen some revenue loss because of price cuts. And on the new accounts, we have not been able to add much. That should change as things settle down on this new base. We do have some upcoming RFPs and tenders coming our way. And we will -- we definitely plan to significantly sharpen our pencils around that. So that should benefit us. On the learning side, I'm hopeful that we will be able to capture most of that shave -- 30% shave next year. It all depends on a few large deals that we're working on. We will know more in Q4 and Q1. We will basically know in the next 6 months. And we should be able to share that with you in the coming 6 months, whether we won those deals or not. There's lots of big deals that we're working on the learning side. But again, things could go either way. So we have to wait and watch. But regardless, we are confident that most of that 30% shave should get captured next financial year, and if we're lucky in a couple of cases, we could even surpass that. But again, this completely depends on those very specific deals that we're working on. There's enough volume of deals and there's enough depth in each of those deals to help us get there. And then on the Board side, basically, we've had kind of a -- we've introspected, we had a -- almost a reconstitution of the Board, we've had 2 new Board members. We've had 2 new Board members, which we announced joined last time, and 2 new Board members joined this time. And essentially, the way we've structured our Board now is -- and again, we've reacted to events rather than proactively doing this. We had one of the senior board members, who's been with the company for almost 8 years, he decided to move on, and he was the Chairman of our Audit Committee. And similarly, one the board members who had joined through his network also decided to move on. So we've reacted to those events. But I think our reaction has been strong. With those 2 board members moving on, what we've essentially done is we've ended up in a very diversified structure where we've had 2 new board members who have joined the NRC, which is the nomination and remuneration committee. And each of them have a very strong HR/OB type of background. One of them is Achal Khanna, who's the Managing Director of SHRM India and Middle East, so she's very strong in HR, and should benefit us also on the interactive side of our business that actually targets the HR community as a market. And then we've had Jayantika Dave, who's again been a senior and seasoned HR professional. So this really strengthens our NRC committee that really is focused on building the next wave of talent and management pipeline for the future. And then we've had 2 specialists being added to our audit committee. Dr. Piyush Rastogi, who has a very strong accounting background and audit background, which would again significantly help us. And then Mr. Ajay Mankotia, who has been a seasoned tax professional, both on the -- as part of the department, but also on the corporate side as part of NDTV. So yes, there has been churn at the Board level. It's been more related to longevity. And I think as MPS, we've done very well to react positively to that and end up building something that is, a, a diversified Board from a competency perspective. So we have focused on HR, audit, accounting, tax. But also, secondly, we now have a 7-member Board, and 3 out of the 7 are women. So we've also been more forward-looking in that sense. So we're very satisfied with the new composition of the Board, and I'm planning to lean on them heavily in the growth of the business.

Okay. And just one clarification, so on the e-learning side, while you expect the business to sort of come back in FY '21, are you still hopeful that you could get back to the 30%-plus margins that you've talked about in that business once you get back to the levels in FY '21?

Yes. So we're already operating at about 20%. And I think, immediately, the jump to 25% to 27% level is going to be fairly straightforward. Now from the 25%, 27% jump to 30% is going to be the one that's going to be a bit of a stretch. The last 3% -- about 3%, 4%. But we're fairly confident that the jump from 20% to 25%, 27% should be straightforward.

[Operator Instructions] The next question is from the line of Suraj Subramaniam from Airavat Capital.

My question is, there are 2 parts of the commentary that I'm trying to sort of align. On education publishing, for example, you [indiscernible] 2- or 3-year cycle and there being some little bit of cyclicality. And then there are other parts of the business where it sounds like there's some structural disruption-led events happening, with your clients changing their -- the way they do business. So my 2 questions are, how are you confident that there's still -- the revenue that you lose as part of these structural events will come back? Because, for example, if an education publisher who was selling a textbook for $120 now starts doing a $9.99 log-in, then obviously that has ripple effects on how their vendors need to be serving them, et cetera. And second is, how are you going to reshape the organization to be able to adapt to that new world? Because like you said, there'll be sweeping changes required in terms of how your manpower is organized for that.

Yes. So I'll answer the first question on the -- as the publisher business model changes, why are we -- how are we confident that our business will have a positive effect. And I think the biggest reason, of course, is if you look at the subscription and all-access model, what makes that model successful is when you have great content, and when you have lots of content. If you look at, there is Netflix or Prime Video, it's the content that differentiates them, which fundamentally means that the people that are assembling the content, the people that are offering the content then have to have -- there has to be some increase in spend or, at least, some more organized way of delivering on that. So that's what gives us the confidence. Plus, I think, qualitatively, our conversations with some of the existing customers where we've seen the shape on commercials, qualitatively, what they're sharing with us gives us more confidence. And also, there's some upcoming RFPs and tenders coming our way, which, again, we need to go back to our old roots of just being brutal on price and not worrying about leaving money on the table. I think once we return to that strategy, we're fairly confident that we'll be able to capture some part of that market. So that gives us the confidence. On the organizational side, I think the base -- the fundamentals are strong. We have a captive -- a critical mass of folks in Dehradun, we have critical mass of team in Chennai, which are our most competitive centers when it comes to content solutions. In terms of getting that organized, we're fairly organized already. And why we feel confident about delivering to that is because it is always easier to transition new projects into locations versus existing projects between locations. And we've pulled off some very significant transitions between Bangalore and Dehradun, Delhi and Dehradun, between Bangalore and Chennai. And those have been far heavier because those have been established setups for 20, 30 years versus onboarding an entirely new process or a project into these locations. So that gives us the confidence that from the delivery side, we are fairly competent in being able to onboard new projects and new process from a structural standpoint. In addition to that, I think I shared this on the last earnings call that we've strengthened our core management team. We've brought on a new Chief Operating Officer, who's helping me on the specifics, especially on the Publishing side. We've brought on a VP of Corporate Strategy that is currently owning one of the business units where we are anticipating growth in the future. And similarly, we've gotten a VP of growth to help us unlock some of the growth on the learning side. So there has been an upgrade to the management depth of the organization that further gives us confidence. Of course, the more important part, of course, is that structurally, we have the delivery capabilities to be able to deliver it through some of these lower cost centers for newer projects. But we also have the leadership to help, guide and direct once these projects come in.

Great. And as you look ahead to the medium term, you don't see a need to -- you're still hoping to get back to those earlier margins that you were shooting for over the medium term, right? I mean this is just more a blip. The fundamental unit economics hasn't changed in your opinion.

Yes. In fact, if anything, the way the rupee has depreciated, we should have been -- we should have done better. So I don't see any reason why that would not happen. Of course, because we've had some large events, we had a very tough year this year, we are trying very hard to stay in the same place, but we've seen a slide, a significant slide. And we'll adapt. We've done this before. It's not something we've not done before. It's the same setup. So we're fairly confident we'll get back to where we needed to be. And in terms of new revenue, as it comes in, like I said, transition of new revenue into existing centers is far easier than taking a 20-year setup and trying to transition between centers.

The next question is from the line of Vaibhav Badjatya from HNI Investment.

So I have 2 questions. Again, one on acquisition and one on the Platform business. So on acquisition, I would like to bring one of the earlier comments made by [indiscernible] on one of the earlier con calls, which is that the question we need to answer in acquisition is how many years we will get our money back post-acq basis? Now I was just trying to understand that what is our achievement in [indiscernible] for acquisitions. And because -- but the different parts of the business sits in different companies within the group. I just wanted to understand as to how many years have we have been able to recover our money, which we have invested in acquisitions?

Yes. On the acquisition side, so you're picking up a quote from 6 or 7 years ago. Having said that, the actions of the -- that the -- exchange remains the same. And typically, I think with smaller acquisitions like Element, [ EPS ], [ GSI ], they were acquisitions we've seen payback period range from 2 years to 4 years. For example, THINK, in fact, the THINK payback period was less than even 2 years. But again, depending on the size of the acquisition, so the larger acquisition you've seen, the payback periods have been higher. But 2 to 4 years is what we're comfortable with. And 5 years is like our cutoff.

Okay. Got it. And on the platform business, given that there all the consolidation that is happening in the publishing industry, which will obviously lead to a few players within the industry, and we've also seen that the platform -- our Platform business is -- basically, the large players actually prefer their own platform. So isn't that the target market for our Platform business will shrink due to the consolidation, or I will not be able to understand the business the correct way.

The consolidation is taking place between the large publishers. Our target market for our platform business is the medium-size publisher or the university press or society, where there's very limited consolidation taking place. What's been [indiscernible], of course, is the speed of the decision-making process because we were to be slightly more empathetic. The reason that's happening is because when you're seeing sweeping changes take place around you, you tend to become more risk-averse as a professional. And I think that's what has played out in the short term that a lot of these publishers that have not made these decisions to switch platforms, if you look at some of their business systems and also some of their -- if you look at their tech stack, they're dealing with a technology that was -- that the code was written in the mid-90s, right? But it's definitely irrelevant for them. And they really need to get their act together. From our perspective, we have available system and we'll keep at it till the opportunity converts to the reality.

[Operator Instructions] The next question is from the line of Vaibhav Badjatya from HNI Investment.

So on the -- on our e-learning side of the market, how much of our business is regulatory driven? For example, in the U.S., there's a lot of regulations there which require companies to do training. And how much is the discretionary, like, [indiscernible] of the market and for our revenue?

So I would say, in terms of -- you're talking about compliance, training and those [indiscernible]?

Yes. Yes.

I would say, and ballparking here, about 1/3 of our business would be compliance related. Where we would be differentiated is that we take the boring compliance training and make it very engaging and interactive. But a bulk of our business will be linked to learning and development, which is -- while you're calling it discretionary, is a very important part of business.

Yes, yes. Okay, interesting. And lastly, it's an observation, not a question. You have been focusing on acquisitions. And there [indiscernible] acquisitions in [indiscernible] moving from there. But another [indiscernible] -- whatever other [indiscernible], nothing exactly a publishing unit. [indiscernible] They've also been quite [indiscernible] successful in terms of [indiscernible] acquisitions. So I would [indiscernible] have a look at what they're trying to do and why they are so successful at that and probably you might also adopt some of the things from their book.

Could you repeat, please? Sorry, I couldn't hear anything, your voice was cracking. If you can just repeat what you have said.

Yes. From an acquisition point of view, you have been making acquisitions, and your strategy has been to do revenue rationalization and then growing the business from there. Another Indian company, which has been quite successful in doing acquisition kind of a strategy is Saksoft, and probably you might also look at their strategy and how they are trying to -- how they have been successful, and probably you can also adopt some parts from there. It's just a suggestion. I'm sure you might already be looking at it.

Could you spell that, please?

S-A-K-S-O-F-T.

Yes. So just to clarify your summary of our acquisition strategy, I think what we've done is, we've basically been acquiring assets that have, at some point, been premier assets in their lifetime and lost their way. And our focus is then being able to take those assets, turn them around quickly from a profitability standpoint and then bring them back to their old glory. It's not that we look to rationalize the revenue, it's not our goal. It's just that the nature of the asset that we're acquiring is already sliding. And then we start to change the operating model, the revenue ends up sliding further, so -- at a faster pace. So it's not something that we look to do, it's just a more consequence of the nature of the asset that we're acquiring and the level of activity in the first 6 months. So -- and we'll definitely look into that what you're describing. We're always willing to learn and do better. But having said that, it's not that we look to rationalize the revenue. It's just we're acquiring assets that are already sliding. And that's -- and we also then end up acquiring them for a very competitive purchase price, which is a definite significant variable in the success of any post-acquisition intervention. When you're acquiring something super competitive the pressure on terms of payback period, et cetera, everything starts to fall in place.

Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments.

Thank you, everyone, for all your insights and also comments and recommendations on how we can better shape our business. Like I stated in my opening remarks, we expect to continue to see the sluggishness into Q4. We thank everyone who's been patient with us through this journey, and look forward to FY '21 where things start to pick up again. Thanks, again.

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