MPS Limited (MPSLTD) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to MPS Limited Q4 Financial Year 2022 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Arora, Chairman, CEO and Managing Director of the company. Thank you, and over to you, Mr. Arora.

Thank you. Good afternoon, everyone, from Noida on this sweltering summer day. I'm pleased to share that we recently moved facilities here in Noida, which is our corporate headquarters and also houses teams across the business, including the operations hub for HighWire. I would like to start today's call by making some introductions. Sunit Malhotra, who has recently been reappointed as CFO of MPS Limited. Welcome back, Sunit.

Thanks, Rahul. It has been a great and wonderful experience during my long association with MPS for over a decade now. I thank Rahul, our CMD, and the Board for giving me this opportunity. And I would like to make sure that I would like to make the best use of it. Thanks.

Thanks, Sunit. John Doherty, who has recently been promoted to Chief Operating Officer of HighWire, our Platform business.

Thanks, Rahul. Thanks, firstly, for the opportunity to continue to serve MPS in my new role as Chief Operating Officer of HighWire. I'm excited in the new capacity to help grow the HighWire business for the coming years. Thank you.

Thanks J.D. Sukhwant Singh, who has recently been promoted to Chief Delivery Officer for our India operations.

Thank you, Rahul, and I look forward to the new responsibilities and steering the team towards achieving higher operational efficiency and yet another successful financial year.

Thanks, Sukhwant. In our opening segment today, we will run things slightly differently. Sunit will kick off things by discussing our FY '22 performance. Then John will update us on the integration journey at HighWire. Next, Sukhwant will discuss the key drivers to a strong recovery in the eLearning business. And finally, I will share some outcomes of the Board meeting and also describe our new growth strategy. Let's get going. Over to you, Sunit.

Thanks, Rahul. FY '22 was our return to market-leading margins as our EBITDA grew from INR 107 crores in FY '21 to INR 126 crores in FY '22. Associated margins rose from 25.3% to 28.1%. EPS saw a whopping 52% growth from INR 31.92 per share in FY '21 to INR 48.61 per share in FY '22. And PAT grew from -- by 49% from INR 59 crores in FY '21 to INR 87 crores in FY '22. In terms of business segments, eLearning saw a phenomenal recovery with 14% growth in revenue with respect to FY '21 and segment profit grew from a loss of INR 4.58 crores to a gain of INR 11.44 crores in FY '22. Platform revenues weakened by 2% as anticipated, led by customer offboarding at HighWire. The segment profit improved from INR 39.56 crores in FY '21 to INR 40.64 crores in FY '22. We are already generating this level of profitability in the newly acquired business, and the operations team must be applauded. Our most established line of business Content Solutions revenue grew by 8% in FY '22 compared to previous year and segment profit improved from INR 72.29 crores in FY '21 to INR 76.64 crores in FY '22 with a 6% increase in segment profit margin. I would now like to hand it over to J.D. to discuss the contributions made by the Platform business that moved the needle for us on profitability.

Thanks, Sunit. The last 20-odd months have been transformative for HighWire under MPS ownership. I am proud of leading the transition of the HighWire operating model to the India delivery hub here in Noida. We have successfully created a strong product team [Technical Difficulty] with solid industry knowledge and credibility. Restructured our staffing model to leverage an optimal onshore versus offshore balance. Consolidated all the Platform's business under the HighWire brand. While it's not all been smooth and COVID-19 did impact our ability to onboard and train new staff and create an identity under the HighWire brand, the positive overwhelmingly outweigh any minor niggles. We have had success in acquiring new hosting customers on Scolaris on competitive RFPs. Cross-sell success between existing HighWire customers for order management and analytical solutions. A successful enterprise level implementation for Sigma, which is identity management, and a prestigious publisher has given us a compelling case study for other large organizations. Over to Sukhwant to discuss progress in eLearning.

Thanks, J.D. So FY '22 was a transformative year for our eLearning business. Like Sunit described in his remarks, while our revenue grew by 14% in FY '22 compared to the previous year, the segment profit grew from a loss of INR 4.58 crores to positive INR 11.44 crores in FY '22. The eLearning business has recovered and is now expected to contribute to revenue and profit growth significantly. On the revenue side, our revenue quality has improved with an increasing trend in the proportion of recurring revenue, premium solutions and deeper client relationship. Our customer diversity is much healthier across all parameters including geography, industry and customer concentration. Apart from revenue growth, the drivers of this margin expansion include cost arbitrage benefits from migration to lower-cost city centers, focused control on productivity management and a tighter discipline on expenses. In fact, at MPS Interactive India, revenue grew by 14% in FY '22 compared to the previous year. PBT grew from a loss of INR 79 lakhs in FY '21 to positive INR 10.29 crores in FY '22. And this business exited FY '22 with a whopping PBT margin of 35% in Q4 FY '22. The margin expansion was no mean achievement and resulted from an excellent strategy, great execution and super collaboration and teamwork. Thank you, and back to you, Rahul.

Thanks, Sukhwant. We are all elated with the progress in the eLearning business and are looking forward to a full year and seamless expansion in FY '23 for all our eLearning business interests. Thanks, John, for sharing your valuable insights on how our Platform business has shaped into its new operating model and more importantly, is transitioning from consolidation to growth. And thank you, Sunit, for neatly summarizing our financial performance. I'm pleased to share that based on the unprecedented earnings growth in FY '22, an EPS of INR 48.61, the directors have recommended a final dividend of INR 30 per equity share of INR 10 each of the company. MPS has come a long way. We are very close to beating INR 100 crores in PAT and I'm told that tends to open new doors for companies like ours. MPS has gathered substantial momentum over the last couple of years. To put things into perspective, our revenue CAGR between FY '12 and FY '13 was 7% right after acquiring MPS from Macmillan. This phase is what I call a drive towards speed and efficiency. Our revenue and PBT CAGR between FY '13 and FY '20 were 11% and 8%, respectively. This is what I call a significant diversification play. We completed 7 acquisitions over 8 years, all acquisitions of scope to enhance strategic competitive advantage, reduce revenue concentration from 10 customers at 75% in FY '14 to 53% in FY '20. We diversified our business mix from 100% Content in FY '14 to 60% Content, 28% Platform and 12% eLearning in FY '20. And finally, we expanded our total addressable market from $2 billion to $310 billion. The last 2 years then have been about unlocking synergies, revenue and PBT CAGR between FY '20 and '22 are 17% and 18%, respectively. We've had robust growth in the business through revamp and integrating global delivery model that combines diverse capabilities. We've had a profitable transformation of corporate eLearning business by leveraging wage arbitrage levers. And we've expanded our Platform business through acquiring HighWire, advancing our positioning in the research end market as a thought leader. And we also made significant investments in key executive and management hires. The next phase for us is then about building serious scale. We will achieve this by redefining our sales and marketing strategy to a market-oriented approach to drive organic growth, shift the focus of the inorganic strategy to focusing on acquiring growing assets instead of distressed assets, explore opportunities for further consolidation to improve efficiencies further and drive margin expansion and significant opportunities to enhance cross-selling and increase wallet share across a large customer base. We look forward to your continued support in this exciting new growth phase that we call building scale. I would now like to open the call to your questions. Thank you.

[Operator Instructions] The first question is from the line of Sachin Motwani (sic) [ Sachit Motwani ] from Param Capital Research.

Rahul, my first question is, we had seen that HighWire business was ramping down, which you had articulated at the time of acquisition. So if I strip that off, then overall on a consol basis would have -- would MPS have grown at 10% plus CAGR? Because if I look at Content has grown at 8%, eLearning at 14%. So if I were to strip off the rundown that we've seen, so would it be fair to say it would be a 10% to 12% kind of a growth for FY '22?

Yes, that would be correct, on the revenue side. Profit would be higher growth.

Okay. Okay. Now harping on this growth again, you've delivered an amazing like 14% eLearning growth. So can we expect this to -- can we start clocking 20% growth run rate from next year onwards?

Yes. So we've -- our budgets have been created. So every year we create revenue budget for across the various lines of business. Our budgets have been created at 17% growth, and we tend to beat our budget. So let's -- hopefully, we can hit 20%, let's see.

Okay. Okay. And again, on this, there was a recent research report by Technavio, which mentioned about like growing opportunity in the digital education publishing market, and they were talking about a $10 billion opportunity over the next 5 years across various geographies. And it also mentioned some of the clients that you're already working with. So just wanted to understand like, if at all that's a trigger for you? And would it push your Content Solution business? Or would it have an impact on your Platform business in terms of growth?

So great question, Sachit. I think for us, we've obviously been sensing this opportunity for a while now. And we basically tried to look at what we have in our content business through our U.S. entity called MPS North America and our eLearning business through our India entity called MPS Interactive. We've created a cross-functional team across these 2 groups to pursue the opportunity that you're describing. So this is going to be a combination of our Content business and our eLearning business. We're calling it Digital Studio. We already have onboarded 2 large customers in this space, one university and another organization that's U.S.-based that's involved in the education space. Both these customers together for us are already upwards of $2 million revenue, and we're very optimistic about building serious scale in the market that you described over the next couple of years. So this is going to be a brand-new business unit for us.

Okay. Great. Great. And when you had articulated about your vision '23 -- vision 2023, so like we'd be looking at -- looking at it on a CY '23 basis or FY '23? And is it possible for you to quantitatively now give some guidance on your vision?

Yes. So we will be looking at it on a FY '23 basis. And at this stage, I will not be able to share that. But definitely on the next call I will articulate the numbers.

Okay. Great. And in terms of your diversification mix, we see a declining proportion of North America and increasing proportion of U.K., Europe. So anything to read into that? And even in terms of the client contribution, we've seen a bit of a decline. So how do we read that?

Yes. So again, we learnt from the pandemic that diversity is super important. In fact, our eLearning business was seriously affected because of lack of diversity. So there's been a conscious effort to expand our business in markets where we're not -- do not have the same type of market share that we do have in North America. So this will only continue. The trend will only continue simply because there's a very active effort to acquire market share in some of these markets where we have a very small market share.

Okay. Okay. Got it. And the last question is on margins. Like you delivered a very good margin, but do you see possibility of squeezing margins further in your -- especially in Platforms and eLearning business?

Yes, absolutely. So if you look at our -- so overall consolidated, like we described in the opening remarks, there is still a lot of headroom. It's -- we're on a journey. We're not where we need to be yet. We're at least 2 years away from where we need to be. And on the eLearning side, what you're seeing on a 12-month basis includes maybe at least 1, possibly 2 rough quarters. So we've definitely exited the financial year at a much healthy -- much healthier margin. In fact, Sukhwant described that our India entity in Q4 was actually exited -- our India eLearning entity actually exited at 35% PBT margin. So definitely, there's a lot more room on -- specifically on the eLearning side. On the Platform side, while there is room, it's not as significant as what we see on the eLearning side. And similarly, on the Content side, we still have to get back to our old margins, which -- and which we continue to pursue.

And what would be the outlook in terms of growth for Content and Platform? With the decline that we've seen in Platforms, can we say now this is the end of that decline?

So on the Content side, we expect the same sort of trend to continue, possibly even pick up a little bit because the -- we were supposed to have some volumes transferred to us on the journal side of our business that only got transferred to us in February and March. And you basically -- when -- in the journal business when volumes get transferred, you start accruing revenues only 3, 4 months in. So there was a delay in some transitions. So on the Content side, because of the lift in the journals business, we'll definitely see a higher growth on the Content side. On the Platform side, I think we will do -- it will be an achievement for us if we are able to sustain the same amount of revenue this financial year, that's what we're trying to achieve. And on the eLearning side, we're very bullish. Like I said, our budget is 17%. We always beat our budget. So hopefully, eLearning -- it's going to be a big year for us in eLearning.

Okay. Okay. And any update on acquisitions?

So like I always say, Sachit, we're always having at least a dozen conversations on average. And we do obviously have a very healthy pipeline. We also have at least 3 conversations that are super active. So yes, can't really share anything more concrete than that. But when things do fructify, we'll be first to share.

[Operator Instructions] The next question is from the line of Keshav Garg from CCIPL.

All time high...

Keshav, sorry to interrupt you. We missed out on your question. May I request you to repeat your question from the beginning?

Yes, yes. Sir, so I'm saying that, first of all, I wanted to congratulate you on behalf of all the shareholders for achieving all-time high profit, all-time high operating cash flow and all-time high reward to the shareholders in terms of buyback plus a very generous dividend. Sir, I never thought I'll say this, but sir, I hope that you will reduce the dividend going forward so that we can do a larger share buyback in future, sir, so that our number of shares can reduce permanently and our earnings per share can increase faster than the profit going forward. And sir, as far as my question is concerned, since the past 6 quarters, our consolidated EBITDA is close to around INR 30 crores, INR 31 crores. Sir, so do you think that going forward from first quarter or second quarter of this financial year, we can break out of this range of around INR 32 crores EBITDA that we have been clocking?

Yes. So thank you for your comment and the question as well. Just on the comment, I'll quickly react. The buybacks have to be spaced out by 12 months. Our last buyback was in -- so the next buyback can only possibly be in January. We were sitting on some excess cash, which we thought was better to distribute because we're in the learning business, not in the treasury business. So from that perspective, that was the thinking there. And absolutely, the Board will discuss and -- on the buyback whenever it becomes available to us as an option. On the EBITDA, absolutely, the focus is to break the barrier that you described. From my perspective, we are, like I described to Sachin (sic) [ Sachit ] on the previous question, we are expecting revenue growth. This business has tremendous operating leverage. So as revenues grow, margins improve as well. So we're expecting from organically the business to register stronger EBITDA in the coming couple of years. But also we -- acquisitions are part and parcel of our business. They're not an event for us. We do want to get back to acquiring 1 business a year as we used to prior to the pandemic. So we want to start hitting that run rate again. And there's been a small edit in our acquisition playbook, which is that instead of looking at distressed assets, we are looking at growing assets that have some inherent financial strength. So they will be EPS accretive, EBITDA accretive. So yes, you can definitely expect us to break the barrier. And if we're also able to complete an acquisition, of course, that will further advance the goal of getting to a higher level of EBITDA.

Sir, and also, I remember that in the past con call, you had mentioned that apart from our 3 divisions, we are maybe looking out to set up a IT division. Sir, so what has been the progress on that? And is that contingent on our acquisition?

So yes, I think that we were definitely talking about 2 possible new segments. One was IT services and the other one was marketing communications. We in the last -- since we last met on the earnings call, we've had -- while those continue to be longer-term plans, we are seeing tremendous opportunity in 3 segments that we operate in, both organic opportunities where we expect good revenue growth and margin expansion. But also, we're seeing many inorganic options play out now. We are seeing M&A activity reduce in the space. We tend to be opportunistic buyers, so we are now seeing a window of opportunity to build scale because these seem to be the only active ones in at least our marketplace. So we believe that we haven't exhausted these segments just yet. So at least for the next year or a couple of years, we want to stay focused, continue to build out these segments, and then we'll reevaluate if we want to build a fourth and a fifth segment. But there's enough opportunity, enough low-hanging fruit right now for us to stay focused.

And sir, lastly, sir, just wanted to understand that we know that in the general IT sector, the wages are going up drastically and the attrition also levels are very high. And whereas if we see in our fourth quarter, our employees cost as a percentage of revenue is the lowest in many, many quarters. Sir, so is this trend sustainable? Or do we intend to take some wage hikes in the coming near future?

Yes. So definitely sustainable. So we are -- we have a few levers at play with us. We, of course, have -- when we benchmark ourselves to our competition, we definitely have a higher proportion of workforce located in lower-cost city centers. And that's not just in India, but also in Europe and North America as well. We tend to be in cities that have a lower cost of living. So that is just a one cost arbitrage lever that we do possess that we continue to use. So the diversity of our presence allows us to navigate these local challenges. We expect our manpower efficiency, which is manpower cost divided by net revenue to only continue to improve as a result of this lever, even though if we are hit in certain areas because of some local changes like you described. And the second, of course, is this business has tremendous operating leverage. So as revenue grows, margins only expand. That's another very unique aspect of our business. So we're not exactly in the IT, ITES space. We are kind of in that space, but not exactly in that space. So we possibly have more operating leverage. And the third part of it is that we've been in the content space for over 5 decades. The amount of domain expertise that we possess is far more significant than anybody else in the marketplace. So we are constantly trying to drive automation, process and workflow efficiency to try and reduce the amount of manual touch points in any client workflow. And that, again, gives us a lift in margins. So that's something we've done on the Content side, and now we're trying to also bring that culture and perspective into the eLearning and Platform side of our business.

[Operator Instructions] The next question is from the line of [ Umang Shah from Saad Capital ].

Sir, am I audible?

Yes, you're audible.

Sir, first question was a bunch of platforms like Atypon, ScienceDirect, SSRN, they're all owned by large publishers. You being an independent platform owner in terms of HighWire, does it accrue any advantage to us?

Absolutely, tremendous advantage, and I can explain why. So in the beginning, when publishers were acquiring these assets, there was a lot of concern on data protection and privacy because suddenly, if you are a public -- if you're publisher X, suddenly you have access to publishers -- publisher Y's author data, you have access to the subscriber data, you have access to all the customer data. So that was a huge concern in the beginning when this trend was taking place. That created some short-term advantage. But what we've seen subsequently is a longer-term advantage, which is 2 things. One, we've seen customers not able to have influence on the product road maps because if you are owned by a publisher, your -- as a technology company, your road map is going to be governed by that publisher's requirements versus the requirements of a small, medium-sized publisher or a competing publisher. And if you're an independent platform, you obviously take into account all your customers and marketplace requirements when you design a product road map and therefore, you're able to be more compelling to the marketplace. So that was obviously the one aspect that has given us serious long-term advantage in our Platform business across the product suite. And the second piece, of course, is publishers, of course -- we've been working with -- in publishing for many years now, and most of our customers are extremely large. And when you're a large organization, the speed and agility with which you can deliver innovation is not at par with what an organization of our size can pull off. So both in terms of just having a more, if I can call it, a democratic road map, but also being able to deliver a road map more actively and with speed and efficiency. Both of these give us some serious long-term advantages in the Platform business.

Right, sir. This is very helpful, sir. Sir, so if you could talk a bit about your pricing when you're pricing for HighWire. Is it dependent on the existing base of articles that you have for a particular publisher? Or is it based on the inflow that is going to come? Or is it standardized across the industry?

So I'll give -- I'll hand it over to John to answer that question.

So we look at -- no, not sorry -- we look at the volume of articles and materials that the publishers are producing. We're also looking at volume of interactions that they have on their site as metrics in order to help with pricing. That helps to sort of identify the infrastructure that we need to have on the back end in order to support that business. We also project about 10% growth in that volume year-over-year. And we've certainly seen that even higher than that during the COVID season. So we are -- the pricing is very much flexible in terms of the size of the customer and the volume of content and the activity through their sites as well.

Got it. And sir you don't see open source being a risk to -- like Academia -- open source in Academia being a risk to this platform's revenue?

In fact, if anything, it's a huge opportunity. And on the last call, I think someone asked the question, where do you see this whole business going? Where do you see the whole Content business going and this business going. My -- I asked a question back, which was in 5 years, do you think there'll be more content or less content? And the answer obviously is more content. So as long as there's more content out there, there's more value to be unlocked by us.

Correct. Correct. Sir, you had mentioned a couple of years back that you want to open DigiCore and THINK360 to similar client also. Are -- is there any success there?

So we've had interest on the eLearning side. We have had some interest on our workflow engine called Ampere. And we've also had -- so there's been a lot of interest, not too much conversion. Although what we've seen -- where we have seen conversion is when the corporate eLearning customers are trying to convert old legacy content to new content standards. So there, we've been able to take a module of DigiCore called DigiXML and use that as a conversion engine and basically use that as a way to help large corporates convert their old content into new standards. The commercials, of course, have been different, though, instead of being subscription-based we've gone more with transaction-based pricing, which is more beneficial for us than the shorter-term projects. So yes, there's been a lot of effort to unlock that synergy, but the short-term sort of outcomes of that has been more on the conversion side of our business.

Sir, I had a couple of more questions. Should I get back in the queue? Or can I ask them right away?

Yes, I think that will be more appropriate if that's okay with you.

[Operator Instructions] The next question is from the line of [ Himanshu Upadhyay from O3 Capital ].

Congratulations on a good set of results. See, I had 2 questions. One on capital allocation, okay? One was you stated that you are going to change the playbook what historically we have played, okay, from distressed companies to more sustainable profitable companies which are already in profit. What would be the rationale for that? And secondly, will not it mean we'll have to shell out also much higher values? So -- means just some of your thoughts. And the size of deals also would be much bigger, smaller you are thinking?

Sure. Great question. So I think the -- what we basically looked at our phase that I call the diversification phase between 2014 and 2020. When we started this journey, we had very finite capabilities. And we knew in order to grow, we had to kind of expand the portfolio and create new meaningful capabilities for ourselves as a company. And that's why we were in a hunch to acquire new capabilities in the cheapest way possible, and we did that over a 6-, 7-year period. What we noticed during that phase was every time we took 2 steps forward, we took 1 step back because when you acquire distressed assets, it takes about 5 years for the asset to start becoming a nondistressed asset or at least to start becoming a growing asset. You tend to get to a nondistressed stage about the third year mark. And the fifth year mark is to start to grow the business, which kind of -- to a certain point, there's 2 things. One, it distracts the management team from growing the existing business. And second, it kind of slows you down, which was the whole purpose of going out and completing the acquisition. Now that we are at the scale, this INR 450 crore type of scale, and as we look to 2x or 3x of scale over the next several years, we believe that the strategy now is for us to look at businesses that will not only add capabilities, but also be EBITDA positive, EBITDA -- at least EBITDA positive and at least has some financial strength that then we can shape for them to be better versus kind of consistently trying to take loss-making companies and turn them around. In terms of how do these companies get value because MPS today for whatever reason...

Sir, sorry to interrupt you, but your voice is breaking.

Can you hear me now?

Slightly better.

Yes. So MPS today for whatever reason is valued at in single times when it comes to an EBITDA multiple. That gives us a very clear case of what the feeling is for any acquisition that we would...

Sir, sorry to interrupt you again, but once again your voice is getting distorted.

[Technical Difficulty]

Sir, I'd request you to call back one moment. [Operator Instructions] Ladies and gentlemen, thank you for your patience. We have the line for the management being connected. Sir, you may go ahead.

Yes. Sorry about the connection issue. Yes, so what I was saying was we want to make sure that we're acquiring businesses that have some inherent financial strength. In terms of valuations, we have a very good case study in MPS, which is for whatever reason, valued at less than 10x of EBITDA. So that is like our super sealing to acquire any business with some inherent financial strength. We also know what the multiples are in our space. Yes, the outflow will be higher. We expect that and we are planning for that. In terms of revenue, we're looking at businesses that are at least $15 million in revenue to $30 million in revenue in this space, and we want them to be EBITDA positive.

And one more thing, sir, when you said about the dividend payout and buybacks, okay, and you want to give excess cash, but if there are so many number of deals, okay, why do we want to give such a high dividend? Because the one thing which happened in the history of the company which left a bad taste was we raised capital and then we were not having those deals, okay, 3 or 4 we were evaluating. So if we are very sure that the M&A is the path for growth for us, why not have less dividends or -- buy back I understand because the value of company itself is [ so cheap ] we want to have to a higher stake, or else shareholders also, which I understand. But in case of dividends, why is it so important? Just some thoughts on that.

So like I said, we examined our -- what we have in terms of how we could possibly deploy this capital over the next 6 to 12 months we've examined that and we felt that there was excess cash available. And in terms of financing, MPS has a very strong balance sheet. I don't think there's any issue with financing for MPS. From my perspective, we continue to look at deals and we do not want to sit on excess cash if something is not available tomorrow. So like you said, we have done a QIP several years ago. We raised capital and then we just had to sit around, waiting for an acquisition to happen because the 1 big transaction that we were chasing didn't fructify because it wasn't on our terms. So we had to wait almost 2 years to complete a decent sized acquisition. So we don't repeat what we did back in 2015, and I think that's what we're trying to do here.

Two last questions, one small. Would we be comfortable with debt to acquire a company? And what type of maximum leverage we like to take on our balance sheet because we're $30 million type of revenue company. So if we have to shelve out something like $250 million or $300 million -- INR 250 crores or INR 300 crores.

I'll give a very short answer. We're open to it, depending on the specific situation, drawing hypothetical doesn't make it -- it has to be based on a specific situation. Currently, we're not facing any such situation, but we are open to the idea.

Okay. And when we started this journey of M&A, the major focus was adding more places or adding more capabilities, okay? But how big are the blank spaces currently? Means in the end market where we are targeting or doing business, mainly on the publishing this question is, so what -- how big are the blank spaces where we do not have currently the capabilities?

So there's a lot of white spaces in the market, like I was sharing in the opening of the call. When we started this journey, our total addressable market was $2 billion. Today, our total addressable market is $310 billion, and we are a INR 450 crore company. So there's a lot of white space available.

[Operator Instructions] The next question is from the line of [ Umang Shah from Saad Capital ].

Sir, in our journal business, there are 4 parts if I'm not wrong, XML, type setting, issue makeup and cover. Sir, so over the years, because of digitization, have we lost on any one part of business and have we actually increased our portion in one part? And how do you think about the journals business for next 5 to 10 years?

Yes. So just to correct that, those are stages of journal production. So it's very rare that a publisher will engage with you on one stage. Increasingly, the trend is to work end-to-end with a supplier. So you described 4 stages, there's probably 12. And we are one of the few vendor partners that are present across all the stages of journal production. In fact, we've moved very upstream where we are actually working with the authors directly once the manuscript is accepted. And in some cases, we also involved even prior to the acceptance of the manuscript, right at submission stage, where we manage the entire peer review process. So from our perspective, we see this as an end-to-end opportunity. Increasingly, we are seeing, as a result of the pandemic, many of our customers and prospects who are large journal publishers, optimizing their supply chain where they want to work with fewer vendor partners that have strong business continuity plans and are able to continue during an event such as the pandemic that we have just went through. So we are seeing a lot more opportunity than we have in the past in from -- on the journal side of our business. So that's one macro event that's taking place. Another event that's taking place is through the acquisition of HighWire, we've acquired relationships with over 100 journal publishers, which we also believe that through a cross-selling initiative, we should be able to sell content services to these 100-odd journal publishers. So because of these 2 reasons, we are, again, very bullish about our journals business and expect FY '23 to kind of be the milestone year where we build a new scale for the journals business. So shorter term, this business will, obviously, go through a higher clip in revenue growth. But then going forward, we'll get back to the 10% to 15% revenue growth that we did see in the journal business between 2010 and 2015.

Right. And sir, any numbers on what the potential revenue pool could be from those 100 publishers on a ballpark basis?

It's difficult. It depends on the size of the publisher. The smallest would be $250,000 and the largest could be $3 million. So it's a huge range. It depends on the size of publishers, how many articles and how many journals they're publishing.

Correct, correct, correct. Understand, understand. And sir, like you mentioned you're one of the few players who have the end-to-end capabilities in journal business. How many competitors would be there who have that kind of capabilities?

A handful.

Any number, 5 to 6, 7 to 8 or you cannot answer that also?

A handful. I answered the question.

Sure. Sure. And sir, one more [Technical Difficulty]

[ Umang ], sorry to interrupt you, your voice is breaking. May I request you to come to a better reception area?

Am I audible now?

Yes, I can hear you. It's fine.

[Technical Difficulty]

Sorry [ Umang ], sorry, it got worse. I couldn't hear you.

I don't know what the issue is [Technical Difficulty]

[ Umang ], may I request you to rejoin the queue? [Operator Instructions] The next question is from the line of Rahul Jain from Dolat Capital Markets.

Am I audible?

Yes. Rahul, we can hear you.

Yes. My -- Rahul, congratulation for a very strong year. I have just a couple of questions, more in terms of trying to understand where the business can go. Of course, there is more stated kind of an outlook except for one division. But for the eLearning business, given that the opportunity size is huge and we can -- we just want to understand how you plan to scale up this business to the next level? You think most of the challenges that you had related to mix or kind of the client composition, are those behind you and now we can see a continued growth path for this kind of a business? And do you see any challenge from the macro turning bad at this point to come as a challenge for this segment in the coming quarters?

Yes. So a couple of things. So on the overall size of the company, we definitely want to double or triple MPS over the next few years. That is our goal in terms of the scale of the business. Now where do we land between those 2 end of the spectrum, time will tell, but that is definitely the goal. We want to be in that range. In terms of our eLearning business, we expect that till we get to $30 million in revenue, we have a very clear line of sight on delivery, on client profile, on market share, what capabilities do we need, et cetera. So we're pretty comfortable till there. Our next planning would be how do we get -- and we've already started to do that already because it's going to take us some time to build that capability, which is we want to start to get into managed services, which is where a company like NIIT Limited, for example, is sitting at where, you outsourced the entire learning and development function to a company like MPS Interactive. We want to get to the managed service play. We feel that currently we want to focus on building this business on the organic side through the capabilities we currently possess. We are examining inorganic plays to build that capability. And if we're not able to build that capability till we get to $30 million revenue, we'll also start to pursue organic initiatives. But that's definitely a play that we want to make. In terms of all the challenges we had, we did have many challenges in the acquisition that we made back in 2018. We've turned a corner this past year, and we'll -- the order book looks strong, the pipeline looks strong. So we are feeling very confident in terms of us being able to not only sustain the momentum, but accelerate the momentum in the eLearning business. In terms of the macro, what we've seen from the history, whether it was the '08-'09 recession or the dot-com bubble, at least internationally, companies tend to invest in learning and development during downward cycle. So there's almost an inverse relationship between learning and development and how the economy is doing whether it's higher ed or it's just learning and development in large corporates, there tends to be a lot of investment that tends to take place. So we are not concerned about the macro indicators. In fact, if anything, it could be an upside for us. So again, time will tell.

Right. And the next question is related to Content side. Of course, you said in one of the response that the content over time is only going to increase. But from a pure publication, I think you were alluding in one of our earlier call that because of COVID, there is a far more research, which is happening right now. So is there that kind of a tailwind, which we may not see in the immediate future or as of now you think there is no such a risk?

So there are 2 parts of our Content business, there's research and there's education. On the research side, what we've seen is 2 things happen. One, there's just more research being published organically, and it's got nothing to do with COVID because it's continued into 2022 and it's projected to continue in 2023 as well. So it just seems to be the new normal where research is going to grow at this clip. All of the industry experts have confirmed that. So we expect that tailwind to continue over the next 2 or 3 years because that's what has had been confirmed to us by our customers and by the marketplace. And the second piece, of course, is as an outcome of the pandemic is consolidation of the supply chain and vendor consolidation, so more work and more volumes are being parked with fewer vendors. So that's making us bullish about the research space. On the education space, as the first question was from Sachit on a question about digital education and how the market is supposed to significantly grow, we are trying to unlock that synergy through the combination of capabilities between our education business as well as our eLearning business and trying to build out a new business unit to pursue that growth. Our education practice has delivered strong growth over the last 3 years. We expect that level of growth to continue, but just in a different way. And hopefully margin accretive because digital revenue tends to be always at higher margin than print revenue.

Just last one clarification. I think you said somewhere that in Platform you plan to stay where you are. So this was more from a Q4 run rate point of view or FY '22 full year basis?

Q4 run rate.

[Operator Instructions] The next question is from the line of Manjeet from Solidarity Investments.

I wanted to understand after a long time we have seen lot of confidence from the management team on the eLearning side and the growth aspect. What's driving this confidence? And if you could also share some insights into whether it's a short-term thing coming on the back of a lean 2 years? Or do you think it's more structural if we take more 3, 5 years?

So I think there's a macro element to this, which is the market size is increasing. COVID has made digital learning kind of the norm, classroom training and that kind of training has almost disappeared. And as a result of that, any business that is in the eLearning space is seeing this type of growth. And it's not just us, everyone is growing. So there's a macro element to this, which is that the market has tailwinds. In terms of is it sustainable, all the industry reports, all the experts, at least all the [ Fiverr ] reports point out that this CAGR is only going to increase. So we are feeling very confident about the macro. And with respect to us as an organization, I guess, our big goal is how do we arrive at a premium growth rate compared to the 10%, 15% growth that the market is growing at. And yes, there is a small base effect here, which is giving us, in the short term, a pretty significant lift. Having said that, I think we've solved for many challenges during 2020 that is now giving us a dividend in the current financial and the next financial year, which is we've been able to reduce our customer concentration risk. Prior to the pandemic, 75% of revenue in this segment was coming from our top 10 customers. Today, we're closer to 60% and heading towards 50% in terms of our customer concentration in the eLearning business. So that's one big, big change that's happened because of acquisition of new logos essentially, that have now become large accounts. The second piece of it is we've sorted out -- this is a -- a large part of this business is project based. We have sorted out our issues -- any issues with delivery or quality or operations in a very meaningful way, allowing for reliable and predictable delivery in such a way where a lot of our customers are now moving from project-based engagements to more recurring base engagements where they're committing to a volume of spend over a 2 -- 3-year period versus looking at things project by project. So that's been a big shift project-based revenue to recurring base revenue. And the third, of course, has been that on the inorganic side, there are a lot more opportunities available than they were 2 years ago. Why that is? I'm not the expert on M&A, but I definitely see many more IMs in deck than I used to 2 years ago. So there's a lot more opportunity available. And there doesn't seem to be too many buyers out there either. So these 3 factors are giving us a lot of confidence, and we're very bullish about the eLearning space.

Okay. One follow-up on this. Do you build inorganic acquisitions?

Sorry, we lost you.

I wanted to say, do we build inorganic acquisitions when we do our revenue budgeting for the year?

No, we don't. We don't.

Okay. Another question, Rahul, was this current management team obviously took over MPS and has obviously scaled it up well since 2012, '13, post that. I just wanted to get some idea on history of recessionary environment in the U.S. and Europe and their impact on this industry and this business line, if you could share some insights because the management team has not really seen a recessionary environment. So -- and I'm not sure whether there is a strong correlation between that and our line of business, but some insights there would help us.

The management team has definitely seen a recessionary environment. We may not have been reporting it as MPS, but all of us have been through that hell in '08-'09 in different capacities. I was -- 2 of us were on the publishing side, and we saw what that meant for the business. Some of us were on financial services, some of us were in the energy sector. So everyone has seen it. I think what's different here is learning tends to -- learning is one of the few markets like health care. I wouldn't call it recession proof, but I would definitely say that we don't see the same type of impact that some of the other sectors see. In fact, if anything, learning tends to pick up more because corporates tend to invest more in learning and downturns. And many people return back to higher education in recession as well. So this management team has definitely seen, felt and we've lived in the '08-'09 recession and the dot-com bubble. So -- but in a different context. And in the learning context, we don't feel that it's going to be that significant an issue for us. But of course, if something does take place, it will be a highly adaptable management team, and we will manage the business accordingly.

Got that. That was helpful. I have some follow-ups, but I'll take those offline. One final question, Rahul, from my end is, from your perspective, obviously, you're leading this company now from a few years. But just to get the sense longer run, is your motive to scale this up as far as possible. If there was an offer on table tomorrow for someone to acquire MPS, would you be willing to consider that? Just from aligning with the promoters' perspective is where this question is coming from.

I think we're too small right now to think about anything like that because we are interested in building serious scale for this business. And like I said, there's a lot of low-hanging fruit and MPS has not unlocked itself to its true potential. I think till we get to $200 million, $300 million, we're not there yet. I think there's -- $200 million, $300 million is we actually have a competitor of that scale. We at least have 2 competitors of that scale, and they are only in one of our business segments. So we are operating in 3 business segments, and we have 2 competitors in 1 business segment and then similarly in the Platform segment and the other segments as well. So there's a massive opportunity available here, and we want to make sure we unlock that opportunity. Having said that, of course, we understand that we also have inorganic aspirations. And we don't feel that this is going to be a pure organic story. It's going to be a blend of inorganic and organic. And we are, at some point, going to also be looking at financing options if the right acquisition opportunity presents itself or a series of acquisition opportunity present themselves. So financing is definitely something that -- whether it's equity or debt, it's something that has to be -- will potentially be worked out, but it's definitely something that we will entertain.

The next question is from the line of Rahul Jain from Dolat Capital.

Yes. Just one quick one. Since you have changed your acquisition mindset from distressed to growth kind of companies, even from an organic point of view, would you even consider going for a far more aggressive pricing kind of a methodology wherein you could get far more volume, given that you are making huge margin on your business. So will that be also a strategy to drive growth?

Rahul, we're trading at less than 10x. Any acquisition less than 10x, it's not really aggressive, right? So there is no case for us to value a company more than MPS in terms of a multiple with breadth of capability that we possess and the margin profile that we have and the predictable revenue that we possess. So from my perspective at this current juncture, we should be able to also acquire businesses in our space. And I wouldn't call it aggressive pricing, I would say it's compelling pricing from kind of a win-win for both sides.

So, Rahul, I was more asking this from a business volume perspective, where like in the content kind of a business, will you be open to far more aggressive pricing to get more volume from your peers?

You're talking about organic, okay. So -- absolutely. So we are pursuing in specific lines of our business. We are pursuing a price warrior strategy, which is in our -- especially in our research business, whether it is the research content business because we've got lower cost than most of our competitors, in fact, all our competitors, we've got a lower cost base. We are using that to our advantage. We've also got, fortunately, a significantly depreciating rupee that is also giving us an additional advantage. So we plan to use that to build market share in our research content business, specifically the journals business -- journal production business. And that's one of the reasons why we are seeing the growth that we're seeing in that business. The second place that we're planning to also introduce this strategy is our HighWire/Platform business, where we're not looking to perform the role of a price warrior necessarily, but we're definitely looking to undercut some of our competition that has a higher cost structure because they're entirely U.S. or European based. We have had some success already. We have won at least 3 logos through this approach over the last 6 months where we've used this approach for the platform business and acquired new customers using this approach. So yes, absolutely, we're using that approach.

As there are no further questions, I will now hand the conference over to Mr. Rahul Arora for closing comments.

Thank you, everyone, and I look forward to all your wonderful support and patience that you have given -- extended in the past for the next phase of our journey, which is about building serious scale. Thank you.

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