MPS Limited (MPSLTD) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the MPS Limited Q4 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Arora. Thank you, and over to you, sir.

Good morning, everyone, from New York. Welcome to the MPS Q4 and FY '21 Earnings Call. I hope everyone is staying safe and exercising caution, particularly through the second surge of the pandemic in India. Our thoughts and prayers go out to everyone who have been impacted by the pandemic. At MPS, we launched our business continuity plan several weeks ago, including a daily standup that I personally run every day, 6:30 a.m. Eastern, all is well at MPS. In our opening segment today, I will discuss our consolidated performance in FY '21 and also shed light on key developments as we transition from Q3 to Q4. Then Anna Kuehl, Senior Vice President of MPS Interactive, will discuss how our eLearning business is going through a revival and focus on key developments. And then John Doherty, Senior Vice President of HighWire, will update us on the integration of HighWire into MPS. We all look forward to interacting with all of you over the next hour. MPS achieved a new scale in FY '21. The consolidated revenues on an FX-adjusted basis were recorded at INR 424 crores in the financial year. The achievement of this expansion came in a year where the COVID-19 pandemic has posed severe humanitarian challenges for the world and significantly impacted the short- and long-term economics of several industries. This tremendous achievement of establishing a new scale for MPS is a combined effort of the 2,500 plus employees that live and breathe MPS. In addition to recognition, this moment also deserves inflection. I vividly recall reporting revenues of INR 223 crores back in May of 2015. And the past 5 years then have been a tremendous build phase for MPS. So what have they gained? We've gained scale, as I described. Revenue has grown from INR 223 crores to INR 424 crores. We have gained capabilities and revenue streams. We've moved from a content alone business to content, platforms and eLearning business. We've diversified our customer base. Back in 2015, we billed 125 customers. And last financial year, we invoiced 897 customers. Our top 5 used to be 66% of our revenue but now is about 37% of our revenue. And our top 10 used to be 90% of our revenue and is now 49% of our revenue. We've enhanced our management debt, both at the senior management level but also at the next 3 levels of management. We've expanded our geographic footprint. We've added presence in the U.K., Germany and Switzerland in Europe, Mumbai and Kolkata in India and Texas and California in the U.S. The past 5 years have been really been about building a business that can withstand turbulent times as seen in 2020 and the continued pandemic, but equally important, capture the opportunity and ride the wave when it is available. For example, the acquisition of HighWire this past year as well as the growth in our education publishing practice and the Content Solution business in FY '21. The road ahead looks promising as well. I will now transition to Anna to talk about the eLearning business. Anna, over to you.

Fiscal year '21 was challenging for MPS Interactive due to attrition in key industry sectors such as energy, aviation, manufacturing and travel caused by the pandemic economy. New orders came to a standstill and movement to accrue existing order book was also significantly delayed or reversed. In some of our strongest accounts, we saw significant delays to delivery and accruals due to lack of available client personnel. However, as part of the strategic plan, we sought and gained several new logos and developed lovely client relationships. We also took steps to market several high-value, high-impact solutions. We were able to hold new orders steady as compared to the prior year. We also placed organizational focus on significantly reducing expenses. These actions, along with the reawakening in some sectors, put us on the right footing for a profitable and strong start to fiscal year 2022. And now over to J.D.

Thank you, Anna. I've been with HighWire for over 5 years. When MPS acquired HighWire on July 1, 2020, I was asked to manage the integration into MPS. It has been a positive journey as we move towards the 1-year mark. Over the last year, we have focused on customer satisfaction by listening to our customers, scaling up our operations capabilities, process improvement, cost efficiencies and product improvement initiatives. Our initiatives have shown strong results as we reported our PBT level of INR 18 crores for the period of July 1, 2020 to March 31, 2021, as against losses at the PBT level under previous ownership. In Q4 and financial year '21, we have focused on our sales and account management activities, including contract renewals and RFP responses. We've made considerable progress in streamlining our RFP submissions process, leading to better proposals and further engagement than in previous years. We are also leveraging the additional capabilities within MPS to deliver production services to some of our existing customers, which we'll continue to explore within our combined customer base going forward. Thank you.

Thanks, J.D. I'm sure everyone is happy to hear that the integration process of HighWire into MPS is moving ahead of plan and that we are seeing opportunities for growth through the acquisition of HighWire not just on the platform business but also other parts of our business, which is Content Solution. And thanks, Anna, for sharing the update on the eLearning business. I'm sure everyone is happy to hear that the eLearning business is back on track, and FY '22 looks promising. I will now share an update on our Content Solutions business. Interestingly, our Content Solution business reported revenues of INR 229.22 crores on an FX-adjusted basis compared to INR 205.29 crores in the previous year, a growth of 11.6%. This growth in Content Solution is an excellent sign of the core business strengthening ahead of Vision 2023. The positive change can be attributed to the successful implementation of a robust business continuity plan and stabilizing our customers' businesses after the initial lockdown setbacks, step-up in the volume of work from several of our core customers and onboarding of new customers. On quarterly movement, we essentially held our own as we transition from Q3 to Q4. Q3 is typically our strongest quarter every year. But this year, the reason we're making the comparison with Q3 to Q4 is because last year, Q4 was not a good quarter for MPS. So while we did not hit any operational speed bumps as we transition from Q3 to Q4, our EPS was suppressed by as much as INR 3.11 because based on the Finance Act 2021, depreciation of goodwill is not deductible while computing taxable business profits, and this is true for past transactions and was made effective April 2020. This effect has then been captured in our Q4 results, though minimal cash movement is expected. Let's now open the call to some questions that can help us be better at what we do.

[Operator Instructions] The first question is from the line of [ Deepan Shankar ] from Trustline PMS.

I wanted to understand, how are we planning to invest, build and grow our HighWire stand-alone business? And what are the key revenue growth drivers for this business?

Yes. So on the HighWire side, essentially, as we do with every acquisition, our initial focus is to figure out what is the core purpose and mission of the organization, what made this business successful in the past. And what we've basically discovered is that HighWire was founded on 3 core principles: innovation, service and community. And we are essentially trying to reinvigorate those 3 principles. So on the innovation side, there's been significant investments that are being made in making sure that the products are not just -- not just at par with the market but ahead of the market. We've also recently onboarded a senior domain specialist. His name is [ Tony Alves ]. He is the Head of Product Management, to perform the role of a thought leader in the community in partnership with John Sack, who's the Founding Director. We have improved our service levels. So when we bought HighWire, we had over 450 tickets open on the support side. Today, we have less than 200 tickets open on the support side. On the community side as well, we are reinvigorating HighWire to be the organizer of the scholarly community and through a mini marketing series that we have launched this financial year. So really, what our goal really is to bring HighWire back to its roots, bring HighWire back to its identity, which is kind of lost over the last 2 or 3 years. All of our efforts have been very welcomed by our customers but also by the largest scholarly community. We're making steady progress. We've had very active renewals take place, as J.D. described. And we've also been winning new proposals, winning new RFPs as well. So from our perspective, the business that we have acquired is definitely of a much smaller scale than what HighWire used to be. So we basically acquired something like a $13 million, $15 million business. But we know that in the history of HighWire, not so long ago, 3, 4 years ago, HighWire was at $25 million in revenue. So our first milestone as in every acquisition is really going to be about moving this $13 million to $15 million of revenue back to the $25 million of revenue. And then we'll probably achieve normalcy in organic growth. In terms of efforts, really, our efforts have been more to return HighWire back to its identity based on which it is founded.

Okay. Okay. And just to understand more on this revenue growth drivers from this perspective of this business, so who are our real subscribers for this because? Is this PhD people or scientists or these publishers mainly who are the subscribers for this?

So these are publishers serving the scholarly community. So the content that is being published is research content, so PhDs creating content for other Phds. But the vehicle is the publisher, and we are then servicing the publisher.

Okay. Okay. And finally, on the platform business. So is this revenue stickiness there? Is it -- how is the revenue model? It's the annuity-based revenue model? How does that work in the platform business overall?

So typically, what we've seen is the platform business, a customer, when they sign the contract with you, they either sign a 3-year contract or a 5-year contract, sometimes also 7-year contracts, though those are rare. But we've easily seen most customers go into 3, maybe 4 terms of the contract and renew them. In terms of the revenue, really, 60% to 70% of revenue that we capture is captured through licensing and providing the access to the platform. But publishers like to also specifically customize or even sometimes just configure the platform for their own use. And then the balance, 30% of the revenue comes on top of the annuity revenue, which again is built out in collaboration between us and the customer.

[Operator Instructions] The next question is from the line of Bhavik Mehta from Roots Ventures.

My first question is around the platform business, expanding the previous caller's question, that what would be the reason for the growth specifically in this quarter sequentially and that would be the correct comparison? And the margins, do you think this is something related to this specific quarter or moving forward, that would be the trend?

Sorry, could you -- I got your second question on margins. Could you repeat the first part, please?

Yes. The first part is extending the previous question's -- previous caller's question, that what would be the key reason for the degrowth in this specific quarter? Is it related to a specific platform amongst various host of platforms? Or is this more to do with activity as you mentioned?

Okay. So I'll cover revenue first. As I described -- as I described previously, we've acquired HighWire back in July. And as you've seen in the past acquisitions as well, that revenue tends to drop because of the nature of assets we acquire. We typically acquire assets that were #1 or #2 in the space, lost their way for some idiosyncratic reason, and then we help them find their way. So HighWire is no different. HighWire was -- while HighWire was the first independent scholarly platform provider, HighWire did lose its way in the last 3 or 4 years. And since we've acquired HighWire, we've reinvigorated the business. Having said that, there was a lot of revenue that was already lost by HighWire prior to the acquisition. So some of that is now playing out where customers are exiting their agreements. And this will play out now for the next 2 or 3 quarters even as you will see the stable movement over the next 2 or 3 quarters. On the margin side, we expect margins to be our highest in the platform business, and we will see improvements quarter-on-quarter sequentially speaking until we settle on a high margin for the platform business.

In the previous calls, I think 40% is a possibility that was mentioned. Is that still a possibility moving forward?

Yes, absolutely. That's what we're shooting for.

Okay. My second question is around the kind of companies that you -- so in the past quarter and today, you mentioned that the kind of companies you acquire are a bit different of companies who have lost their way. And given from 2015 to '18, the company was a little bit muted, and so that position [ is not there ]. So going forward, is there any inherent limitation as to the kind of companies we acquire and the growth it brings to the table? Should it continue to be more recently? Or is there a possibility -- is there a possibility that you could acquire a B2C company here?

So we definitely have a -- to answer your last question, we definitely have a focus on B2B. I don't think we are large enough yet. There's so much opportunity available in our current landscape that we don't see any reason to make those kind of pivots because we only scratched the surface in terms of our size. We have only $60 million in revenue, very small. And some of our competitors are much larger. And our goal really then is to -- if you look at the period that you described, I think a few things happened. Our Content Solution business kind of took a beating during that period. And some of the businesses that we acquired did not do as well as we expected. Having said that, our content business is now -- is now reviving. We've already seen double-digit growth this past year. We expect that to continue going forward as well. And content business is a high-margin business. And any addition to revenue is mostly margin accretive because we already have a lot of the fixed cost deployed. In terms of acquisitions, our strategy is fairly straightforward and simple. We do not acquire businesses for scale. We acquire businesses for scope. So we acquire businesses that can provide us meaningful value, enhance our competitive advantage and really allow us to then grow within this space. So each of the acquisitions, for example, that you've seen in the past that 7, 8 years, all the acquisitions have added new capabilities to MPS, which we open to our existing customer base, but also we've unlocked synergies between groups. So for example, if you look at the first 3 acquisitions we did on the U.S. side, a lot of the growth actually didn't come in those businesses. It came in our India books business, which was kind of a -- which is a higher-margin business. And again, on the HighWire side as well, we're seeing similar things like, as J.D. was describing at the beginning of the call, that yes, we are looking at growing HighWire stand-alone, but we're also seeing some very happy positive consequences on our content business. For example, we recently onboarded a new customer in the U.K. where the -- we're providing access to our hosting platform Scolaris. But what we are finding is that while Scolaris is a great growth avenue for HighWire, we've actually landed on conversion revenue, which is 2x or 3x of the Scolaris revenue for the first year. So we're seeing some very nice ancillary kind of positive consequences on other parts of our business as well. So really, that's the perspective in which we acquire a business, that we should be able to grow that business, but then also there should be synergies with the other businesses to make sure that the pie is growing -- the pie is going.

Okay. And then last question, what would be the current cash balance on the balance sheet as of March 31?

Sure. Ratish, could you answer that question? You be better situated to answer that.

Yes. So on fund side we have -- yes. On fund side, we have INR 181 crores on cash and mutual funds combined.

INR 181 crores.

Yes.

Next question is from the line of Abhay Jain (sic) [ Rahul Jain ] from Dolat Capital.

Yes. Is it audible?

Yes, we can hear you.

Not as clear. May I request you to please speak a bit loud?

Yes. Any better now?

Yes, better. Please go ahead.

This is Rahul Jain. Congrats on the good execution in the U.S., especially on the content side. So announcing the kind of things...

Rahul, we cannot hear you.

If you have connected on your phone, can you please take your phone off and speak, sir?

Yes. Is this better?

Yes, much better, sir.

Much better.

Sorry for that. So 2 perspective on the content side. One, you said that, of course, we have seen better momentum. And then you gave example of this opportunity that is coming from the HighWire side also, which is boosting landscape for content. So with these kind of things, do we expect the 3-year, 5-year CAGR opportunity for this business improving to a higher number than what we used to envisage earlier? Or it's too early to call that?

No, I think we can definitely make a 2-year call in the sense that this business, if you look at the -- this business is to be much larger even. So our first goal would be -- we are [ better ] like the $30 million mark, if I could just speak dollars. On the content side, we used to be at $38 million, right? So I think the path from $30 million to $38 million -- when it used to be at $30 million, we hit $37 million, $38 million in 1 year several years ago. So our first milestone here would be to get to the $38 million, $40 million level. I think we can definitely -- until we get to $40 million on the content business, I think we can definitely expect the similar type of growth that we've seen this past year. That's definitely expected. And the reason for that, Rahul, really is an expanded customer base. We used to be working with 125 customers. We now work with almost 900 customers. So just if you step back, if you are able to capture a higher share of the newly added customers, that's what's really helping us be -- giving us the confidence that this line of business will grow. And then we'll have to see. After the $40 million mark, we'll have to see whether growth from thereon continues at the same double-digit level or does it taper down a little bit. It will be very difficult to speculate beyond that level. But yes, absolutely, as we raise from $30 million to $40 million on the content side, we definitely expect the same level of growth that we've seen this past year.

Right. And either Anna or you, if you could share what could be the expected road map in the Interactive business from 2- to 3-year perspective.

So I'll allow -- I'll get Anna to chip in, in a minute. Of course, Rahul, we don't provide forward-looking guidance. But we can, of course, share some qualitative information. Just from a numbers perspective, I can talk on the numbers for a second and maybe Anna can chip in as well. This past year, we've seen a significant drop in revenue. And again, the -- we expect the revival to be faster than the drop. So this FY 2022 is looking strong. We're expecting good double-digit growth. And again, our goal would then be to scale the Interactive as the India piece -- I'm not adding the other entities here, but the India Interactive business, our goal over the next 2 or 3 years would be to get this back to the INR 90 crore, INR 95 crore level, which should be possible again because that was the level that we started and Interactive was operating at for many years. So that's really going to be our goal over the next 2- to 3-year period, to get this business entity back to INR 90 crores, INR 95 crores. Anna, if you'd like to share anything on the business side, please chip in.

Sure. I think one of the key elements contributing to growth again is the reawakening of some of our core business sectors. So we're seeing significant opportunities there. And additionally, as mentioned, we've acquired some new logos. Those are already in place. Plus we have a number of new logos, and we're diversifying to seek out additional industry customers. Those things, plus our higher-impact, higher-value options are going to really help us meet some of our growth targets.

Okay. But will this be good enough to take us back to where we started and eventually grow -- I mean, how the market is perceiving us from our offering standpoint?

Yes. Just mentioning how the market is perceiving us?

Yes. Yes.

We're getting very positive responses. And particularly from customers that are new to us, they are giving us feedback that they have not seen the type of service and solutions from any other folks in the market or other competitors in the market. So that's giving us good insight that we're on the right track with what we're offering and how we're delivering.

Okay. Just to add to that Rahul, I know you like data. Just from a data perspective, I think -- I want to make sure that you caught what Anna said in the opening remarks. While our accruals and revenue execution was really slow in this past financial year, Anna and her team were able to ensure that the orders -- or the order book did not fall. So they've been able to maintain the orders. It's just that the execution of the orders have been slower because of the pandemic. And that's what Anna is describing that the new order book looks different because it's a different set of customers, it's new logos. And the execution of the order book really is giving us the confidence. The second piece, just to add, again, more data to what Anna described. In terms of how the market is perceiving us, so we -- every year, we apply to this entity called Brandon Hall, which is known as the Oscars of learning. This past year, we won 34 Brandon Hall awards in April of 2020, and we're expecting to continue the same trend in 2021 as well. So from a perception positioning market acceptance standpoint, I think we are definitely in a position to be at a much higher scale. When we say over 30 awards, there are possibly only 2, maybe 3 companies in the world that got those number of awards. I hope that answers your question, Rahul.

So we'll move on to our next question, which is from the line of Manan Shah from Moneybee Investments.

I wanted to understand how is the platform business growing ex of HighWire because being in the range of INR 12 crores to INR 15 crores on a quarterly basis for the past many quarters. So -- and how do we plan to grow that forward? So if you can just throw some light on that.

Yes. So in our scale -- and I think we've described this earlier as well that on the platform business, you need a certain scale to really have inflection point for growth. And we -- basically, our big problem on our platform business stand-alone minus HighWire has always been that we haven't had the scale. And we are seeing the HighWire business is also giving us opportunities to grow our stand-alone platform business. So in fact, one of the things that we're doing going forward is we will be marketing our entire platform business, particularly on the scholarly side under the HighWire umbrella brand. So for example, we've rebranded MPSTrak, which is our workflow solution, into Ampere. And Ampere is going to be a sub-brand of the HighWire umbrella brand. So the -- we're going to be leveraging on the HighWire brand to really push some of our existing products into the marketplace as well. And the HighWire team has also been, on the sales side and on the account side, been oriented and inducted on these offerings. And we're already starting to see interesting synergies where some of the -- particularly some of the larger HighWire customers have shown a lot of interest on the MPS product side, and there's over 100 customers there. So really, we are seeing this combination is what will -- this combined entity HighWire plus MPS platforms, we're expecting this pie to grow. Now in terms of which products grow faster than the others, it's going to be a combination of market externalities, right place, right time and those kind of things. So there is definitely a plan for each product. Every product has a product owner. And we're actively pushing these products into the marketplace.

Okay. And if you can just throw some light a little bit more on these platform solutions that we have, whether -- what is the revenue model over there? Like is it like a subscription-based revenue? Or is it an annual revenue? And if you can just throw some light of the stickiness and the competitive scenario for those solutions that you offer.

So in terms of the revenue, it's fairly straightforward. Like I was describing at the top of the call, agreements tend to be minimum 3 years, can go up to as much as 7 years in some cases. Most customers, once they're on your platform, they tend to renew for 3, maybe 4 terms is what we've seen. And the only reason that they would exit is, for some reason, the technology is not moving at the same place as the market. But we've seen -- we have customers in our platform business that have been with us for over 2 decades. So that's the level of stickiness that we're seeing. In terms of revenue model, really, what we have is the recurring revenue, which includes license fees, support fees, maintenance fees, which is about 70% of the revenue. On top of that, there are some -- and I'm talking -- I'm purely talking platform revenue there. Of course, you could have other forms of revenue where you're converting content to make it ready for the platform. So I'm not adding that kind of revenue into this. I'm only talking pure platform revenue. So the platform revenue is about -- recurring is about 70%. Then we build out new tech services on top of the platform, which could be, for example, from a customer, I might want certain special search and discoverability features on the platform. I might want my analytic dashboard to look in a different way. So I might do certain different things with how I consume the platform, and then we would -- those tend to average -- add 30% of the value of the customer in that year. And then, of course, we also have migration, setup and implementation fees, but that's only for the first year, where we migrate the customer onto our platform. And that's typically equal to equal to or a little bit less than the recurring fees.

Okay. And on the competitive scenario on the kind of solutions we offer?

So yes, so that's a very good question. I think just to give you some insight there, pre-acquisition, HighWire was considered to be prohibitively expensive. In fact, as much as 20% to 25% of some of the competitors. Post acquisition, of course, we've made some corrections. Again, we're not in the platform business. We are not looking to be a price warrior unlike the content business where we're happy to be price warriors to pull business. But we are looking to be fair and competitive to get market share. So we have made certain changes to the operating model, which is allowing us to be far more competitive as HighWire post-acquisition by MPS than we were prior to the acquisition. And so yes, that's also -- that's one of the reasons why we've seen some very good results on RFPs recently.

Okay. And just one last question from my side. I believe we are looking to do one more acquisition, if I'm not wrong. So any updates on that front?

I'm sorry, I didn't get your question.

I believe we were looking to do one more acquisition probably on the eLearning side with the cash that we have...

So we have always -- so acquisitions are part and parcel of our business. It's something that we do every day, every week. So it's not something -- for us, it's not a special event. It's just something that we do. From our perspective, we have certain factors that we look at. We want to make sure that the business that we're acquiring has had some premier status at some point in the journey. So #1, #2 at some point in this space. Second, the business adds meaningful capabilities to MPS. So it's not just more of the same. And thirdly, there's a motivated seller. You might have seen our track record. We're pretty sort of competitive on the way we allocate our capital. So it has to check all the boxes. And only once target checks those boxes that we proceed. So we've always been opportunistic. We never panic. We never rush. And when the opportunity presents itself, we convert it very quickly. Typically, we close an acquisition in 3 to 4 months. That's how quick we go. And it's usually the seller setting the pace, not us. So as and when opportunities present themselves, we engage. And we are -- as we speak, we are engaging with many parties. And if it plays out, it plays out.

Okay. That was helpful. Just one bookkeeping question. What can be the tax rate for us going forward?

Ratish, you want to answer the question?

Yes. And I think the -- yes.

I think we can share the -- yes, Ratish, sorry. I think we can share information on the past tax. It will be difficult for us to talk about what it is going to be in the future. But if you can talk -- if you could share what it was this past year.

Okay. So what I can say is our tax rate as per the tax laws, the bucket in which we fall is close to 26%.

Right. So I think fairly on the higher side for this year. So just -- that was the reason for this question.

So that is for -- one of the reasons which I think Rahul spoke about that in Q4, we had one specific onetime hit. Should I -- do you want me to elaborate that?

Yes, go ahead. Yes, please go ahead, Ratish.

Yes. So just to let you know, there is an amendment in the Income Tax Act introduced by the Finance Bill 2021 earlier in February this year, which has taken out goodwill from the purview of tax depreciation with retrospective effect from 1 April 2020. This has resulted in a onetime hit of INR 5.61 crores and has impacted one of our subsidiaries, which is called MPS Interactive Systems Limited. This is in respect of the business we acquired from Tata Interactive Systems in financial year '18/'19. So consequent to that particular enactment, we have recognized a deferred tax expense of INR 5.61 crores in Q4 this year. Having said that, this is more of a book entry. This has not resulted in any direct cash outflow because the MPS Interactive System is having carried forward losses to the tune of INR 9 crores. And the other point which we should like to let you know is that because we can't book the tax depreciation anymore and the resulting losses, we'll not be getting the benefit of carrying forward of such losses and setting those off against the future taxable income, which would have been otherwise allowed has there been no change in the law. So in a nutshell, this was the -- these were the details in short that this was onetime sort of expense, which is in this particular quarter.

Next question is from the line of Piyush Mehta from in InCred Capital.

So my question is not more related to the numbers. So I've been tracking the company since 2014. And there has always been a lot of promise with MPS, but [ more so since 2014 when you ended ] the QIP. There actually has been just one trajectory to earnings growth and shareholder returns, which has been close to 0. And we have, of course, made some really good acquisitions over the period and have always showed that growth could be promising. But when you look at the overall performance in terms of earnings growth over time, it is always a leader. So all these awards are good for the company. But as a shareholder, the performance, of course, has been disappointing. Having said that, of course, it essentially implies that running a business is difficult and it is easier than done. So a question to Rahul is, so as you look back in the past 5 years, what has been the mistakes or the reasons for us to be where we are? And as we look ahead, as Anna and John are there on the team, where do you see the largest opportunity for our business?

Piyush, I think -- thank you for your critique. And it's a free world. You're not supposed to be a shareholder of MPS. And from our perspective, we're looking to grow the business. We see the -- we're seeing all lines of business have lots of opportunity. We're not -- while we are reflective -- and by the way, while we respect and are reflective of the past, our eyes are on the future. And from our perspective, the future is very promising. MPS has really done a great job of diversifying itself over the past 5 years. That allows it to grow over the next 5 years. And from my perspective, we have a committed team. We're putting -- we have all the right strategies in play. And we also have fortunately many, many supportive institutional investors and shareholders that have seen this right through us in the good days and the bad days. And some have been supportive. Some have been not so supportive. And our role then really is to steer the business in the right direction, and that's what we're focused on.

Just to add, actually, what is the largest opportunity for our business over the next 3 years? The HighWire has come in. Where do you see it in terms of the overall percentage of revenues? Because that is something that all of us are excited about. So when you look at HighWire, how big a percentage of revenues could that be? Considering we will make more acquisition, and that is how we always grow...

So yes, like I described on the HighWire side, it's a $13 million to $15 million business, what we ended up acquiring. In the past, they have like $25 million. So our first milestone to hit as a team is really hitting -- getting HighWire from $13 million to $15 million to $25 million. That's going to be our first milestone.

Next question is from the line of Anup Kulkarni from PineBridge Investments.

Rahul, am I audible?

Yes, Anup, we can hear you.

Yes. So I have 2 questions. One is regarding Content Solution business. So 3, 4 years ago, we used to have about 35% to 37% EBIT margin. Now as you said that you see double-digit growth potential in this business in the medium term, so assuming that kind of growth, what is a sustainable margin level for this business? That is my first question.

Let me answer that first so I can stay focused. So a very good question. Thank you for making that observation. So 2 things. So definitely, we want to be able to bring the Content Solutions business back to the 37%, 38%. And as long as we continue to grow this at the level we're growing, that seems very achievable. Just to give you some insight into what happened, why the margin fell down. Essentially, we've seen some churn over the last 3 to 4 years in our Journals business, which I think we described before that on certain RFPs, we did not play the price warrior that we would typically play, and we kind of learned that long-term lesson. But really, our Journals business, for example, if you look at every INR 100 of profit that we make today, our Journals business contributes INR 21 to the total profit. So it's a very high contribution even though the Journals business is not 21% of the business. So that was the reason for the decline. But also, the reason we are feeling positive about the future is because the Journals business is also growing. Research in 2020, so every year, the volume of research grows by about 4% to 5%. In 2020, because of the COVID-19 pandemic, that number on average was as much as 15%. So just -- there's so much more research being published. And what the market and industry experts are telling us that, that is expected to continue for the next several years because of not just COVID-related research but also other scientific research being published. So definitely, we expect -- if you're able to sustain the level of double-digit growth, we'll get back to the 37%, 38%. And also, Journals is going to be an active contributor towards that growth.

Okay. My second question is about eLearning business. So currently, we are about breaking even. So correct me if I'm wrong, but will this -- I mean, incremental revenue that flows in, will that involve any variable cost or it will directly flow through PBT?

Yes. So there's -- again, Anup, great question. So we had -- there's always a temptation to reduce cost. I mean you see a drop in revenue like this, but we kind of maintain a certain level of fixed cost because we knew this was like a one-off event that 2020, some of our revenues slowed down. So we kind of maintained a very critical core base on the cost side. So any revenue could -- should pretty much go to the margin. Having said that, the MPS Interactive business has an outsourcing ratio of 7% to 8% of revenue. So that outsourcing ratio is the only piece that will probably not be margin accretive.

Okay. Okay. Okay. Rahul, just one suggestion. These SFDR regulations that have come up from Europe and these regulations will apply to all investors who have European money, so our suggestion would be to -- we already track a lot of things about all our CSR, all our analysts, whatever data we have. My only request is to -- if we can disclose as much as possible, that would be very helpful not just for us but also for attracting new investors.

No, definitely, Anup. Thank you so much for that feedback. We'll definitely take your input. In fact, as you know, 2 of our largest customers are based out of Netherlands and Germany on the content side. They contribute a very large amount. They've also approached us with the same thought process. So we are absolutely taking the feedback, and we'll be taking it forward in the coming financial year. Thank you so much.

Next question is from the line of [ Aman Jain ], an individual investor.

Just wanted to understand if you could emphasize more on your Vision 2023. And are we on track to achieve that route?

Yes, definitely. So Vision 2023 for us was really about getting to a certain scale. I know we've not shared what that scale is publicly. We were concerned at the beginning of 2020 that is 2023 Vision going to be -- will be shifted out by a year or 2. But seeing how the last financial year has played out, we're very happy to report that we are on track. And the acquisition of HighWire in the past year and the revival of the Content Solution business is what is really giving us the confidence that we are on track.

Okay. And just now, so that you're already in FY '22, if you could share what the specifics were of that vision.

No, we don't -- we've done that before. We've done that before, and it has not served us well. So just as a strategy, we like to keep that information internal. But of course, when we do achieve it, we will celebrate with you.

Next question is from the line of Bhavin Vakil from New Age StratFin.

Rahul, Bhavin, here. Can you hear me?

Yes, we can hear you, Bhavin.

Yes. So for each of the segment, if you could just help me with maybe name of the clients or what kind of revenue model is there for which platform is already mentioned. But if could you just throw some light on content in India.

Okay. So on the content side, we largely work with publishers. So we work with educational publishers, which includes K-12, college as well as continuing education and professional. We work with academic and STM publishers. So just to back up, on the education side, publishers produce content, both digital, but also they have print product. And on the academics, we also work with academic and STM publishers, which is essentially content lead to research. There, the format tends to be where there seems to be a bigger bias towards journals. And so 60-40 journals. It's about 60% of the ratio and the balance is books and digital products. We also work with some trade publishers, so fictional/nonfictional type of publishers. We also work with databases and directories as well. In terms of what are the services we're providing these customers, we're providing them content offering and content development services. If it's an educational publisher, it's mostly delivered in the U.S. For some other publishers -- type of publishers, we also do this activity in India. Then we have what we call content production, which is basically once the content is finalized, the entire journey from the manuscript to the delivery of the content -- and the delivery could be digital. It could be print. It could be multiple formats. That entire activity is called content production. And all of the activity is delivered through our India operations. And our largest operations in India for content production are in Dehradun. So in terms of the revenue patterns, while our pricing tends to be per page, per screen, per project, much of our revenue has a recurring nature to it in the sense that there are certain customers with which we are in as vendor partners. So most publishers work with a certain select vendor pool. So while we do not know whether -- what the type of revenue will be at the beginning of the year, we are able to predict the volume of revenue on the content side. So that's the nature of the -- on the content business. On the eLearning business, more than 90% -- yes, go ahead. Yes, there was a question?

Yes. Yes. On that, on the Content Solution, what is our revenue model? So per -- you mentioned...

It could be -- we could pay per page. We could have it per screen. It could be per project. It varies. It depends from customer to customer.

But you said there are various pools of companies who are providing such solutions, right? So from what I heard, there is RFP which is quoted. Is that for the Content Solution or for...

So on the Content Solution side, most publishers work with a panel of vendors, and they panel vendors every 3 to 5 years. So that's how the flow works. And once you become a panel vendor, you get a certain volume of work depending on your delivery and quality. So the paneling process is very important on the content side. If it's okay, just for the interest of time and everyone else, I'll just move to eLearning now. On the eLearning side, we mostly work with corporates. Much of our revenue is in North America. We also have revenue coming in from Europe, Australia, the Middle East and some in India as well. But the eLearning, much of our -- much of our focus -- majority of our business is focused on corporate. So we work with companies in the energy space, in the financial services space, in the hospitality space, essentially Fortune 500 type of companies. And there, what we're really doing is we're providing them with solutions that are consumed by the learning and development vertical. So if you look at a Fortune 500 company, they have a learning objective to drive empathy, for example, in the organization. They would work with us, and then we would come up with a solution, which would be an entire program of how to drive empathy within the organization. It could be a combination of just straightforward web-based training. It could be simulations, games. It could even be extended reality, so AR/VR type of work. And on the eLearning side, it's essentially project-based revenue. Every year, there's a certain sales-level activity that has to be done to build up the order book. So it's a project-based business. Having said that, we do have customers that have been working with us for over a decade. So we have -- our top 10, for example, would account for 50%, 60% of our revenue. And they would tend to give us a certain volume of work every year. And that would be priced per project. So you would basically calculate the number of hours and then apply the rate per hour and then do that at a project level.

Thank you. I now hand the conference over to Mr. Rahul Arora for closing remarks. Over to you, sir.

Thank you. As I described in the beginning, the past 5 years have really been about building a business that's diversified, that can withstand turbulent times but also ride the wave when opportunities become available.

Mr. Arora, we are not able to hear you, sir.

Can you hear me now?

Yes, sir, we can hear you now.

We -- as I explained on the last call, the 5-year business case is what I'd like to describe as diversify to survive. And we now want to transition into a phase that we call time to thrive. My personal mission for FY 2022 is to lead the return of organic growth into MPS. In terms of how we expect to achieve that, sticking to the time -- to thrive, acronym T stands for transform, where we're looking to see businesses that have lagged over the past couple of years such as the eLearning business we discussed, supporting those businesses to helping them finding their true north. I stands for innovate. We're launching -- in addition to our core business, we are also launching this year new business streams. For example, we are now establishing a digital studio that's focused on online education as a business unit. We're launching an experience center business unit called [ Imagine You ] later on in the year. We are also exploring new applications for existing products and services. So for example, can HighWire products be used by the corporate market and vice versa? We are also moving on the time spectrum. M stands for maximize. We are helping -- we're making sure that the businesses that have been performing well continue to perform well and capture new highs. We're empowering our teams to connect the dots between business streams. And finally, E stands for elevate. We want to position MPS as a platform business across our business lines. So on the content side as well, we are looking to provide all of our content solutions over the platform, same on the eLearning side, and finally, establish the identity of being a value creator rather than a cost -- just a cost arbitrage business. So really, our goal for FY 2022 is to return organic growth to MPS as we've seen in the past. And we look forward to all your support in the coming months and coming quarters to make it a successful financial year. Thank you so much.

Thank you very much, Mr. Arora and members of management. Ladies and gentlemen, on behalf of MPS Limited, that concludes today's conference call. Thank you all for joining us, and you may now disconnect your lines.