MPS Limited (MPSLTD) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '24 Earnings Call of MPS Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Arora, Chairman and CEO. Thank you, and over to you, sir.

Thank you. Hello from Melbourne, Australia, and welcome to our Q1 FY '24 earnings call. Today on the call I have with me Sunit Malhotra, CFO of MPS Limited, who joins us from Noida, India; Sukhwant Singh, Chief Operating Officer of our eLearning and Content operations in India at MPS Limited, who also joins us from Noida; Rajesh Jumani, Chief Revenue Officer of our eLearning practice, who is currently visiting India and joins us from Mumbai. Today, Sunit will kick things off in our opening segment by discussing our financial performance. Then, Sukhwant will update us on the continued momentum in our content solutions business. Rajesh will then discuss our growth in the eLearning business. Finally, I will provide an update on progress regarding the platform business, AI/ML progress, acquisitions, capital allocation and also an update on the QIP process. So, let's get going. Over to you, Sunit.

Thanks, Rahul. MPS delivered robust growth in Q1, FY '24, well ahead of the previous year. Revenue grew to INR 133 crores on an FX-adjusted basis and EPS was at INR 17.84 per share, reflecting 16.61% and 47.8% growth, respectively. With underlying organic growth in the business preceding the planned acquisitions, the expectation now is that the acquisitions can genuinely be accretive to business performance. Reflecting on Q1 FY '24, here are top 3 favorite themes. All business segments and lines of business are performing. We have returned to our roots as a high-margin business. Our top 15 customers now contribute towards 56% of our revenue, a much lower customer concentration than we started this journey in 2012. I want to hand it over now to Sukhwant to discuss content solution performance in Q1 FY '24.

Thank you, Sunit. So, revenue in the content solutions business grew at almost 10% in Q1 of FY '24 compared to last year. Given the significant operating leverage in the business, our PBT grew faster at around 28% in Q1 of FY '24 compared to the same period in the previous year. The emphasis on STAR accounts was a core lever that was unlocked to drive growth in Q1 of FY '24. 7 of our top 10 accounts in the content solutions business grew at double digits. Unlike FY '23, where most of the growth in this segment was driven by the scholarly business unit, which are primarily our journals and scholarly books -- business units, the growth in Q1 of FY '24 was more balanced as the revenue in the scholarly business units grew at around 15% in Q1 of FY '24, the educational business units have started to find their way back with around 11.5% growth in Q1 of FY '24. Also, the smaller businesses -- business units like digital solutions saw a decent margin expansion. I want to hand it over now to Rajesh to discuss the eLearning solution performance in Q1 of FY '24. Over to you, Rajesh.

Thank you, Sukhwant. eLearning continued as the second largest business segment. Revenues were at INR 32.35 crores in Q1 of FY '24, amounting to 25% of our total revenue. Our eLearning business is also the fastest growing business segment and revenue grew by 31% in Q1 of FY '24 compared to the same period in the previous year. We also added 2 new customer logos to a top 10 accounts. The eLearning operations in Europe are doing much better than expected. Top 2 revenue grew by 26.4% in Q1 of FY '24. MPS Europa has now completely recovered. Revenue grew by 23.6% in Q1 of FY '24 compared to the same period last year. And we went from a loss-making position in the previous year to a PBT margin of 28.4% in Q1 of FY '24. The acquisition of E.I. Design confirmed the validity of a new acquisition playbook, wherein we acquire growing assets at compelling valuations. In addition to substantial financial indicators, including significant margin improvement, operational indicators also showed highly positive results. We are now market-leading in service delivery and quality in the eLearning practice, reflected in the high CSAT scores across our portfolio. Growth operations in the eLearning practice have matured and now are setting the benchmark for the other business units. The continued advancement of Magineu, our experienced renter and marketing communications business has been highly successful with new project wins and growth in existing projects. My team and I are committing to scaling Magineu to a sizable fourth business segment for marketing communications by FY '25. Back to you, Rahul.

Thanks, team. I'll start with an update on the platform business before giving other updates. Revenue in the platform business grew in double digits for the first time since the acquisition of HighWire back in 2020. Since the operating leverage is a maximum in the platform business, PBT grew even faster at over 58% in Q1 of FY '24 compared to last year. The execution of product road maps proceeded on schedule for the entire platform suite in Q1 of FY '24. The marketplace has well received the new features and functionalities, presenting numerous monetization opportunities from implementation projects and migration programs. To further enhance our offerings, we have 3 product launches planned in this business segment, one each quarter through the rest of the financial year. And we are hopeful that these will create new revenue streams for us in the long term. Our engagement in the platform business with our core customers has significantly improved with various discussions underway on cross-selling. We also have a robust pipeline of RFPs in the platform business with new customers for the very first time in a long time. Overall, the platform business is gradually progressing from a consolidation phase to a growth phase. To conclude my remarks on the platform business, I would like to highlight, first, that our mission has now transitioned from being a support delivery organization to bring a product development and innovation organization. This includes new product launches, active product road maps and upgrades. Second, our new customer acquisition strategy that involves product service bundling and price warrior shift is gaining traction in the platform business and helping us develop a new customer base. And finally, the feedback from the industry and the scholarly community is highly encouraging. HighWire and MPS now stands as the only serious independent choice since 2 of our larger competitors have been acquired by publishers. Now, let's shift the focus to our progress on AI/ML, acquisitions, capital allocation and the QIP process. The advances in AI/ML have a proportionate impact on the entire ecosystem, affecting our customers, competitors, industry and the economic environment alike. There is no unique risk to MPS on its own. Instead of perceiving AI/ML as a threat, we view it as an opportunity to once again differentiate ourselves in a fragmented market, which is right for consolidation. To spearhead this transformation, we have launched a new initiative called MPS Labs, a pioneering initiative headquartered in Bangalore, consisting of a team of over 100 professionals with relevant expertise. Our progress here can be classified into 3 categories; established, emerging and pilot initiatives. MPS Labs has played a pivotal role in scaling up AI/ML application in content profiling, workflow routing and the composition of standard [ VL ] products. Our teams are running pilots in collaboration with our customers leveraging AI/ML as a creation of all text, content development for abstracts, summaries, assessment and learning objectives as well as for image creation and image forensics. Interestingly, some of these pilots have now transitioned to emerging trends, including content structuring, content tagging, automated language assessment and also a cognitive quality model, which first of its kind in the industry. With MPS Labs as our innovation hub, we are driven to continuously push the boundaries of AI/ML capabilities, ultimately enhancing our offerings and cementing our leadership equation in the market. Moving on to acquisition, QIP and capital allocation. We are now pursuing acquisitions of healthy companies at least with 15% EBITDA that are growing at least 10% over a 3-year period. The qualifying criteria for us now as a potential buyer for these type of assets has become even more important and the deal sizes are also increasing. In this context, we have taken the conservative approach and armed ourselves with enabling approval for the QIP. The approval was never meant to imply a definitive raise and perhaps we could have been better in our communication. At this point, we are actually pursuing a couple of acquisitions that will be funded from internal accruals. We intend to utilize a QIP as an instrument of last resort only when pursuing a relatively higher deal size that cannot be funded from internal accruals and debt. As I've shared previously, we are comfortable raising debt in the range of INR 100 crores to INR 130 crores. But I don't think it's appropriate for me to comment on the likelihood of a QIP. I can confirm that based on the current visibility, internal accruals will be the first lever for us to unlock the next couple of acquisitions. Debt would be the next. And finally, if additional funds are required to pursue a large deal, then a QIP would be a last option, our last resort. On capital allocation, our priority has always been to redistribute surplus funds to the shareholders of MPS, provided there is no imminent use for those funds over the next 6 to 12 months. This approach allows us to keep stay focused, disciplined and responsible, and we will continue the same policy. Let us now open the call to questions.

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] First question is from the line of Namit Arora from IndGrowth Capital.

Thank you for the very helpful opening remarks. I had 2 questions. One was around the theme of Supercharging Scale. Now I'm conscious that you've done 8 acquisitions in the last 10 years. Is it fair to say that irrespective of your ability to conclude more acquisitions in the future, given there is always some amount of deal risk, you would continue to pursue a very robust organic strategy to deliver scale. That is one question. And the second question was around acquisitions. Give us some thought process [Technical Difficulty].

Is it just me or did we lose Namit? Hello?

Yes, sir. I'm sorry, it seems we have lost line of the current participant, sir. Just a moment. Sorry, Namit, can you please repeat your question? You are unmuted now.

Okay. Okay. So I guess I was not unmuted so far. So anyway, let me repeat my question.

Namit, we heard you. Just that we make missed you in the last minute.

Okay. So maybe, I'll just turn it towards the management. Yes, yes, maybe you can respond to -- yes.

Yes. We got your first question on Supercharging Scale. Your next question was on acquisitions, if you could repeat that, then I'll answer both together.

So, my second question was, I am cognizant you've done 8 acquisitions in the last 10 years. Go forward, since you maybe pursuing larger acquisitions, your thought process in terms of criteria and some thought process around derisking maybe through earnouts or trying to retain management team for 3 to 5 years. Some color around that because some of the larger Indian companies have struggled with larger acquisitions. So, just some thought process to derisk that.

Great question. So, on Supercharging Scale, like I shared before, the goal is to get to INR 500 crores to INR 900 crores organically and then INR 900 crores to INR 1,500 crores, the gap.

[Operator Instructions]

[Technical Difficulty] 12%, 13% type of organic growth. Our expectation is that the content business will continue to grow at 10%, 12%. The platform business will grow at 10%, 15% and then the eLearning business will grow at -- in the range of 15% to 25%. And then within eLearning, the Magineu business will potentially grow at a higher clip on potentially 20% to 30% because there's a small base effect. And there's a full-blown strategy that you can read about in annual report of how we're pursuing this organic growth. And we're starting to see already results from that as both Sukhwant talked about the content side. Jums talked about the eLearning side and I summarize it for the platform side. So, you're already seeing early signs of that in FY '23 as well as Q1 of FY '24 Coming to acquisitions, [Technical Difficulty].

[Operator Instructions]

[Technical Difficulty] 10% minimum over a sustainable 3-year period and also have a strong outlook going forward. And as you rightly said, when you look at businesses like this, typically you have a competent management team, and we go -- our role then changes from being an operator to being someone that supports the management team. So that's a big, big change on the execution side of the strategy. We have done this at a small scale last year with E.I. Design, which is giving us confidence. So, one of the things that we are doing, which is unique in our approach to acquisitions is for us, cultural fit has become a very significant variable as we're selecting companies beyond the financial parameters that I described. So, cultural fit and just trying to figure out if the alignment between us and the acquired management team is there and can we actually get along and work together. That's something that we've started to really study and also for the very first time, we have our HR teams also as part of the deal process. And yes, we are looking -- in most cases, we are looking either at stage buyouts, where we step up our shareholding over a period of time or we're also looking at an earn-out approach as well depending on the objectives of the founders. And we -- so those two are definitely the dominant use case for us and we are looking at these type of deals. And then finally, there are a couple where we are looking at a combination of both or earnout as well as stake buy of it, but mostly, it's either of these 2 things. And the goal, of course, is for us to extend the management team going forward. And for us to kind of play more of a support advisory role rather than an operating role. So yes, that's a big change in our strategy.

The next question is from the line of Arun Maroti from Subh Labh Research.

Am I audible?

Yes, Arun. Can you please speak up a bit and go ahead.

Sir, my question is on the Magineu part that in AGM also you said that we are growing by 30% year-on-year. So, if you can share some more detail on it, it will be quite helpful.

So last year -- I'll speak the numbers and maybe Jums can give more color on what's happening behind the scenes. So last year, I think if I get it, I can share some ballpark numbers. Our Magineu numbers were in the range of INR 12 crores, INR 13 crores. Our expectation in FY '24 is that at the minimum, we'll grow at 30%, possibly even more. And what's giving us that confidence is that we are winning new projects. We are also doing better with some of our existing customers and building out existing centers. But Jums, if you'd like to just back me up here and weigh in on and give some more color on the Magineu business.

So, the big difference in the Magineu business versus our existing eLearning business is that in the eLearning business, we are focusing purely on the -- for the training and the learning fraternity, whereas the Magineu business is catering to the marketing fraternity, which means the budgets are much larger, the value sizes are much larger. In some sense, even in a small -- bad year, the marketing budgets are fairly large. So, what the difference is that we are able to augment a fair amount of the same staff that we currently have and cater to a new line of business that's much larger in scale.

And one question on the employee side that despite having a decrease in the number of employees, our employee costs have increased a little bit. So, what is the reason behind that?

I'm sorry, could you repeat that?

Despite the employee numbers have gone down in this quarter, our employee cost has increased a little bit. So, what was the reason behind -- for that increase, sir?

Sunit, you want to talk about that. Is it ESOPs or...

So, can you quantify the impact of ESOPs on it because it is one-time?

Yes, there are 2 things which have impacted. One is that in the last financial same quarter, E.I. Design was there for a month and now it is there for the 3 months. So basically, that's 2-month impact has also come. The second is there is an impact of ESOP charges, which have come for the first time in this quarter, and that amount is closer to INR 32 lakhs. And the third is the normal increment.

Next question is from the line of Rahul Jain from Dolat Capital.

Am I audible?

Rahul, your voice is muffled. Can I request you use the handset mode, please.

Hello? Is this any better?

Yes, please go ahead.

Sorry for that. So firstly, how do you see the seasonality of the business now, Rahul the way some of these businesses have settled and you have a certain growth in your mind. So, what are the puts and takes in the different quarter for different business units? And what is the right seasonality that you have in your mind?

Yes. I think Q3 and Q4 tend to be our biggest quarters. It's a combination of a lot of our customers closing out their respective financial year. Some of them close it out December 31, some of them close it out on March 31. So as a result, there's a push at the end. So typically, we see Q3 and Q4 tend to be our biggest quarters. Historically, Q1 has been our softest. So, we'll have to see how that plays out. But definitely, Q3 and Q4 tend to be our strongest quarters.

So this Q1, are you slightly positively surprised by this performance in content platform?

I'm happy. I'm not surprised. I'm happy with the performance. I'm not surprised. We expected this. We also had a weak Q1 last year, which was uncharacteristic as well. So, there's that aspect as well.

And on the eLearning side, same pattern or...

Yes. I think for the pattern is pretty similar for both content and eLearning. Platform, it's slightly different. Platform tends to be more uniform because a large chunk of the platform business is recurring. So content and eLearning, Q3, Q4, biggest. Q1, Q2 similar, possibly Q1 softer. And then on the platform side, fairly uniform. Having said that, Q1 of this year, we had some interesting project revenue, which is outside of recurring revenue. So yes, I would say Q3, Q4 content eLearning to be strong and platform will be more kind of balanced throughout the year.

You just mentioned that there was an increment kind of an impact. So, is this the annual cycle that we have gone through in this quarter? Or there is some more to come during the year in different geography or something?

No, no. All our increments are done in the same cycle. So, it's done with. So, it was -- Q1 is our increment cycle. And then, of course, we also had the -- first time we've introduced an ESOP program. So, it's a combination of increments and ESOPs.

And if you could say that how many people are covered into this program as of now?

The ESOP program?

Yes.

I wouldn't -- I think it's 50, 55, I'm not sure the exact number. Maybe Sunit, you can share the exact number, how many people have been covered.

As of now, 60 people have been covered.

And last question from my side is related to the comment and explanation that you gave around your acquisition strategy. So, is it safer to assume that you -- or maybe you could clarify this. Would you be open to do a 51% stake kind of a transaction or you will only go for the one where you would have a clear part to 100% because now you want that operator more support model rather than an operator model?

So, we definitely want majority control. The conversations that we've been having are 60%, 65%, 75%, type of percent, not 51%. But yes, definitely trying to get majority control in the beginning. And of course, I'm only sharing with you based on the conversations we've had so far and having today. That could change in the next 6, 12 months. But based on the visibility as of today, we're looking at majority control in some conversations with 65% and some conversation with 75%.

And just clarification on the QIP comment you mentioned. Are you trying to say that the -- for now, you are not pursuing it? Only if you have those size of transactions available to you, then only you may go ahead with the plan?

Again, based on the visibility today, the thinking as well as the approach is that we feel comfortable that the next 2, we will probably just fund from internal accruals. After which, of course, the internal accrual will also go up because these are EPS accretive acquisitions and cash flow positive acquisitions. So, the overall cash in addition to the business will also go up post these couple of acquisitions. So, the next goal will be try to fund it from accruals, maybe take on some debt, INR 100 crores, INR 130 crores at the most. And only if all those funds are insufficient and we've got some really compelling case for executing Vision 2027, one shot, for example, only then we would proceed with something like if we like it. And the background of why we've done this is, you need a right to sit at the table. And with 200 -- there are certain type of transactions where you cannot sit at the table till you can prove that you have a certain amount of financial strength.

The next question is from the line of Pulkit Chawla from Emkay Global.

So, Rahul, first on the platform, I think good to see double-digit growth finally coming in. I just wanted to understand the near-term future for this segment. I mean, how are you planning to grow? And if you could throw some color around the 3 products that you mentioned in your -- as part of your initial remarks? Second, some things about your eLearning segment, are you seeing any short-term pain given that the macroeconomic environment is not the strongest? And just a small clarification, eLearning segment margins are a tag bit weaker this third quarter. So, some clarification on that.

Sorry, I'm just noting down all the points, so I don't forget something. Yes. So, overall platform business, like I was sharing, we expect 10%, 15% growth towards Vision 2027 by FY '28 as we charted out. Near term, we expect it to be more closer to 10%. As we head closer towards FY '28, it will probably be closer to 15%. But broadly, that's what we're expecting in the short term. In terms of new product launches, we are not expecting any revenue from these product launches this year because they're going to be fresh launches. Even if we sign up customers, by the time we set them up, they would have probably been in the next financial year. What are the 3 launches. The first one is THINK Web, which is basically a new -- a next-generation version of our THINK platform, which manages the order to cash cycle for our subscription customers, customers that have subscription revenue. So, this is a next-generation platform that's entirely cloud-based and web-based, which is unprecedented in this industry. So, we're expecting to launch that in the next quarter and rather this quarter now. And we do already have existing customers who are planning to migrate to this next-generation platform. The second one is a product that basically unifies our Ampere workflow product, which is focused on production and our BenchPress product, which is focused on manuscript submission peer review. So, it's unifying both products in a new use case where we're learning that on the publishing side, the line between editorial and production are blurring. So, we're creating a unified platform that helps in the execution of that type of deal. So basically, it takes a manuscript from submission and review to all the way to the platform. So, when I say unifying, I don't mean we are taking 2 products and integrating them. We're actually creating a brand new product with fresh modular architecture based on microservices. So, it's a brand new product. And the goal for that one is to launch it at Frankfurt Book Fair in October. And finally, we are launching a new SaaS product in the last quarter of this year, which is focused on the author office side. So it basically, helps manage the author payments, as we're learning that there's a new revenue stream that's getting created through the author community. So, it provides -- basically, it's an author-centric platform that allows an offer to publish -- self-publish, but also provides support services to the author such as editorial, layout, those kind of services. So, it's an author-centric platform. So, those are 3 planned for this year. Your next question was on eLearning. We are not seeing any -- and potentially maybe because we are much smaller and also more diversified than some of our competitors. We are not seeing any slowdown. In fact, we're growing, as you can see from the numbers. In terms of -- and we also, as Jums mentioned, Magineu is part of this business segment, and that's actually growing even faster. In terms of margins on the eLearning side, good observation. As we -- we are basically, setting ourselves up for an expansion this year. So, we are sitting on some excess capacity in Q1, because we're expecting some disproportionate growth in the second half of this year. Because of which, Q1 margins are soft, but we anticipate as the year closes out, at an annual level, our margin will be where they need to be. So, we are basically sitting on excess capacity because we have orders that are getting unlocked in the second half of the year.

The next question is from the line of Akash Shevde from Vivog Commercial Ltd.

Congratulations. It was a good quarter this year. I just wanted to know the platform's growth that you are looking at, roughly 10% for the near term. Are you expecting this to come from new projects or from the recurring revenue?

I think short term, we're getting it mostly from projects and the reason for that is that -- so, let me explain maybe the nuance a little bit. So, what's happening is that we are basically doing 2 things. One, we are upgrading many of our customers into the next generation of technologies. As a result, as we migrate them into the next generation, there's a cost and a project associated with it. Now obviously, because it is a next-generation technology, they also end up paying more over a period of time. So, in the short term, we are getting this bump because we are migrating them, so that's the first aspect. And the second aspect is we've onboarded new customers. And currently, we're in the set up phase. So, in the short term, we will see more project revenue, which is associated with set up. But once the set up is complete and they go live, we will see a lift in the recurring revenue as well. So, the short answer is that short term, it's more project-based. But from next year onwards, it will probably be more recurring and less project base. So, it's sort of a short-term anomaly that's happening because we're scaling up.

So, this is due to HighWire, your existing pre-HighWire...

All our -- yes, we -- all our SaaS products are now marketed under the umbrella brand called HighWire. So, this includes everything from -- what we got from Macmillan back in 2012 that we've improved upon. Macmillan, THINK and what we got from the HighWire product. So, it's all of our products are now marketed under one brand, and we have the same team that's working across this as one business.

So HighWire, would you say has the 5-year plan, you were right for that acquisition and it's currently at the third year, would you say it going according to plan as of now? Or is it better?

I would say it was going as per plan and I'm very happy. It's better now, but I think we've gotten a bit lucky. It's more luck than anything else. And we've gotten a few lucky breaks, we won a RFPs. We had customers who were totally unwilling to go to the next generation and suddenly out of the blue, they decided to go to the net generation. So, I would say going as per plan and even better because of a couple of lucky breaks.

And follow-up for acquisition was, the 2 acquisitions that you are looking at, can you give a range of the deal size, on the probable deal size and which vertical they would be for?

Yes. So, we're pretty much looking mostly at eLearning and platform. In terms of -- it's difficult to give you a forward-looking estimate like that. But like I shared previously, we are no longer looking at distressed acquisitions. So, we're looking at a multiple of EBITDA now. This could range anything from 4% to 8% depending on what is the level of growth as a track record, but also what is the growth potential of the business. So, it's a very broad range. In terms of size, I think we're looking at -- we're trying to look at anything that's north of $10 million in revenue at the minimum, so -- and at least 15% EBITDA margin. So, you can do your math.

So, the content growth was great this quarter, especially. Do you expect this to continue?

Yes. I think content is now -- so, last year, as Sukhwant was describing in his opening remarks, last year, we had this unique -- so our content business basically has 3 major buckets. One bucket is our scholarly business, which is focused on scientific and research publishing. The second bucket is education, which is focused more on the education universities, publishers and so on. And the third one is more -- some of our smaller business units that perform a certain function like our digital solutions business, which basically is a conversion business. So, those are much smaller businesses. What was happening last year was that out of these 3, only the scholarly business was growing. So, it was giving us a nice lift, but it was -- everything was not performing. What's different this year is that the 2 largest, which are like 95% of the revenue of content, scholarly plus education, they both are growing. So Q1, scholarly grew at 15% and education grew at 11.5%. And as a result, we're seeing this big lift and we expect it to continue through the course of the year. And as I had shared in the previous question, our strongest quarter for content quarters are normally Q3 and Q4. So, we haven't seen the best just yet for this year.

And last question from my side. Are you seeing any order book for Experience Center, any new orders?

Imminent, imminent. we'll definitely share with you. We won some orders in Q1. But yes, imminent. And obviously, if it's something that's material, we will share with you.

The next question is from the line of [ Mohammed Hassan from Fairdeal. ]

Hello? Am I audible?

Yes, you're audible.

I just had the question regarding the margin side. Since the -- for the past few quarters, we have seen a very good margin past the 40% plus levels. So do we expect the same? Or can you throw some light on it?

I think with content, we want the margins to be in the 40s. Historically, we've even been in the mid-40s. So -- and a large part of that is now going to come from revenue growth. So, as long as the revenue keeps growing, margins will continue to expand and stable level for content is the 40% to 45% range. With respect to platforms, I think we've hit a very good level. We like to sustain it from here, so again, 40% to 45%. With eLearning, I think, like I was explaining earlier, we slipped a little bit in Q1 of FY '24. And the reason for that was that we are ramping up towards a significant scale up for the second half of the year. And sometimes you have to invest in the ramp up and that's what we're doing. So overall, I think this year, eLearning, our goal will be to sustain the 25%, 27% type of margin? And hopefully, in the longer term, break the 30% barrier on the eLearning side as well. So overall, I think 35% is something that we'd be happy with at a consolidated level. Now that 35% could be 37%, that's something that we'll definitely flex towards.

Next question is from the line of from [ Rishikesh Kale ] from -- as an Individual Investor.

So last year, you had given a target of INR 100 crore PAT. Would you be in a position to give a similar guidance this year?

Thank you for holding us responsible, Rishikesh. So if you remember, last year, I had given that number in Q2, and I promise you I will give you something in Q2.

The next question is from the line of [ Mahesh ], as an Individual Investor.

Rahul, sometime back, you had expressed desire to get into managed services within eLearning. What's the progress on that front?

So, thank you for the question. Yes, I think from our perspective, that's definitely as we climb up on the eLearning value chain, that's definitely a goal for us. We are pursuing that through an acquisition -- acquisitive strategy because it's a new capability area. We've had some conversations with strategic customers of trying to build it out organically. But it seems that it is most likely something that we will have to develop through an acquisition and that's something we're actively working on.

My second question is, have you managed to increase [ valet ] share of your top 5 or top 10 eLearning customers after your acquisition of E.I. Design?

So, a couple of things. I think one is within the top 10, we have now have 2 new logos that we did have before E.I. and it was basically because of the combination. Even for E.I., they were not top 10. So, as a result of the synergies that we've unlocked, we've been able to land a couple of very large customers that were smaller earlier. So, we have 2 new customers featuring in our eLearning top 10. And the second, because of -- as Jums described in his opening remarks, we are getting a lot more reliable. We were always very creative in the type of work that we -- they type of work that we do. We've always known to be different in our approach, different in the experiences that we created. But I think we've become -- after the acquisition of E.I. Design, we've become more reliable in our delivery and our quality. And as a result of being at the intersection of reliability and creativity, we are gaining more wallet share with our top 10 accounts. And yes, we're seeing a lot of traction with our customer base.

Rahul, can you give some more information on the 2 new logos, name geography, something more?

Names, I may not be able to give. One is just more out of respect for the customer but also for competitive reasons. In terms of geography, interestingly, both customers are customers from India.

[Operator Instructions] The next question is from the line of Jyoti Singh from Arihant Capital Markets. Your voice is breaking. We are unable to hear you clearly.

Yes. So, now it's better?

Yes. It's better, but still we are losing your audience in-between. Okay. Please, carry on. We'll let you know if the audio breaks.

Congratulations on the good set of numbers. So sir, my question is more on the margin front. So, like we did a good margin in this quarter. So, what are your expectations going forward?

Yes, as I was sharing previously from here on margin expansion is largely a function of revenue growth. At a consolidated level, we'll be happy at 35%. We want content to be between 40%, 45%, platform to be between 40%, 45%. This year, eLearning to be at 25%, 27% and hopefully break the 30% barrier at some point. Also, it's important to note that Q3 and Q4 tend to be our strongest quarter in terms of revenue. So, like I pointed out, margins expand as revenue grows.

And sir, this platform business that we have seen consolidation and now we are expecting the 10% in near term and 10% to 15% by FY '28. So, which other segment, we are seeing more traction?

So our fastest-growing segment, as Jums pointed out in his opening remarks, continues to be eLearning in terms of growth, revenue growth, eLearning is definitely our fastest growing segment. And there we work mostly with large corporates.

Recent development of more on generative AI front. So, how we are benefiting from that?

Yes, I think so, again, in terms of -- like I was explaining in my opening remarks, there's a lot of activity that we are pursuing as an organization. We set up a dedicated unit called MPS Labs, which is headquartered at Bangalore and has over 100 people that have the relevant expertise and are producing projects that are either established projects where we've been able to execute them for a decent customer base, emerging which -- where we've done it for a small set of the customer base and pilot where we are collaborating with customers, but we haven't gone live in production. So, we are viewing it as an opportunity to get again consolidate the supply chain on behalf of our customer base. As we saw in the pandemic and coming out of the pandemic, there was a significant consolidation that took place in the supply chain and every round of shock that the supply chain gets the market consolidates and scale players like MPS tend to benefit. So, we are seeing it as a positive. We're investing in a meaningful way. We're adapting as well. So, it's more a medium-term type of situation where we are hoping to have the market consolidate and gain more market share as a result. More near term, we are mostly investing to future proof ourselves and also to future proof our customers.

We'll take the follow-up question from the line of [ Mahesh ] as an Industrial Investor.

Rahul, how many inorganic opportunities have you let go in the last 12 months that you looked at?

About 6. Again, I'm giving you a ballpark estimate, don't hold me to it, but around 6.

Any qualitative reasons?

Yes. I think a few of them, we -- the numbers, we didn't have confidence around the future growth potential of the business. A couple of them were more B2C focus. We're very sensitive to not breaking this momentum. So, we are conservative on the type of acquisitions that we do. So, we're not going to do anything that is totally dissimilar from us. We want to do things that are closer to our business model. So, a couple of them were more B2C focus. And a couple of them we didn't see a culture fit. We didn't see a management fit, we felt that we will not be able to work with the founder team. So, it's a combination of a variety of reasons. But I would say about 6 that we walked away.

My last question, what is your own assessment of the existing run rate of MPS eLearning against the context of the total addressable market?

Yes, I think we are very small fish in like this massive ocean. eLearning is valued from based on -- depending on what the report you look at, it's upwards of [ $200 billion ] in total addressable market. So, we have a very, very small fish. The largest player is in the $300 million to $400 million range. We are nowhere close to that. So having said that, let's call it a $300 billion market. In a $300 billion market, if your largest player is $300 million, $400 million, that shows you how fragmented the market is and how ripe it is for consolidation. So, we are viewing it as a positive and also as an opportunity to go ahead and play the role of a consolidator. And to sum up that comment, we feel managed services is potentially going to be the play here, where there'll be a few vendors that will acquire a lot of near-shore expertise that will allow them to truly execute and perform managed services at a global level. So, that's the forward-looking play.

Ladies and gentlemen, that would be our last question for today. I now hand the conference back to Mr. Rahul Arora for closing remarks. Thank you, and over to you, sir.

Thank you, everyone. Thank you for your active participation at our Q1 FY '24 earnings call. We appreciate, as always, your thoughtful questions, your unique outside-in perspective helped us to learn and improve. I want to express my gratitude to each of you for all your deep questions, also for some of those questions where you held us accountable. So, thank you for that. Our journey together has been remarkable and we see a tremendous opportunity here for MPS to Supercharge Scale and we look forward to your continued support, feedback and partnership mindset. Thank you so much.

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