MPS Limited (MPSLTD) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '25 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.

Thanks, Shivangi. Good evening from Gurugram, and a warm welcome to our Q1 FY '25 earnings call. Today on the call I have with me Sunit Malhotra, CFO of MPS Limited; Tony Alves, SVP and Head of Product Management at HighWire powered by MPS; Prarthana Agarwal, CFO MPS Interactive Systems and Deputy CFO at MPS Limited. Prarthana and Sunit join us from our corporate office in Noida, and Tony joins us from the Greater Boston area. Sunit will kick things off in our opening segment today by discussing our financial performance. Then Prarthana will update us on our Content and eLearning Solutions business developments. Tony will then follow up on the progress made in our Platform business, Finally, I will provide an update on the progress in AJE and Liberate and my individual perspective on Q1 FY '25. Let's get going. Over to you, Sunit.

Thanks, Rahul. On a quarterly basis, Q1 FY '25 shows robust revenue growth. We recorded revenue of INR 180 crores on an FX-adjusted basis, which represented 36.3% Y-o-Y growth, while there was a PBT decline in this last quarter that is expected to change quickly. Reflecting on the quarter, I would like to highlight 3 key strategic achievements. Our top 10 customers now contribute to less than 45% of our revenue, a much lower customer concentration than when we started this journey in 2010. Quality of revenue is also improving with platforms responsible for 30% of consolidated revenue; and third, the theme of improvement in quality of revenue can also be observed through improvement on DSO to 55 days. I want to hand it over now to Prarthana to discuss our developments in our CS and eLearning business.

Thanks, Sunit. Revenue in the Content Solutions business grew by 32% in Q1 FY '25 compared to last year. Margins were suppressed to 28.66%, largely due to the acquisition of AJE, which was transitioned to MPS as a loss-making assets, and that is no longer the case. In addition to the acquisition of AJE, then general component of CS business continued to lead the charge towards revenue growth. Volumes and revenue from our star customer base grew because our service delivery has been among the best in the supply chain as it has consolidated. Additionally, we expanded and grew a recently established revenue stream catering to the Journal Editorial office. The new offerings placed us in a more strategic position in the value chain and has resulted in new business from net new customers and improve the stickiness and quality of our revenue with existing customers. After the acquisition of AJE, eLearning dip to the third spot in terms of scale of revenue and profits across our three business segments. FX adjusted revenues grew by 6% in Q1 FY '25. And while we were slower than our expectations in the scale-up of this business, I'm confident about the final prospects in FY '25. This business has 4 operating entities in India, Germany, Switzerland and Australia. Liberate Learning in Australia is currently leading the charge in scale and revenues at healthy margins. Overall margins in the eLearning business was suppressed in Q1 as we navigated the shift in our operating model that now embraces gig workers. Our order book and pipeline in eLearning is robust and growing. I'm confident that starting from Q2, where we expect a major step-up in margins, our margins will only improve each quarter as we progress through FY '25. I would like to now hand it over to Tony to discuss Platform Solutions performance.

Thanks, Prarthana. Including the acquisition of AJE, the Platforms business grew by approximately 80% in revenue Q1 FY '25 compared to the same period last year. Product road maps were on schedule through the quarter and responded well to customer and market demands. The transition to THINK365 is underway as an active user group meeting this past quarter validated our optimism around THINK365. With respect to DigiCorePro, we released our sandbox environment to multiple customers, and we are expecting to onboard new customers and migrate existing customers from bench-press to DigiCorePro. We are witnessing a flurry of activity and new opportunities in the Platform business for the first time since our acquisition of HighWire in 2020. There is clearly a positive perception of us in the research community, which is highly encouraging. HighWire and MPS offer the only serious independent choice since 2 of our larger customers have been acquired -- I'm sorry, 2 of our larger competitors have been acquired by publishers. I'd like to now hand it over to Rahul to conclude this opening section.

Thanks, Tony. I'll begin this section by discussing the progress of the two acquisitions. We completed the acquisition of Liberate Learning in September last year. The acquisition shaped our entry into Australia. Our second acquisition of a growing business led to a refreshing change in our [ models ] of [indiscernible]. We had an opportunity to learn much about what it takes to operate and drive a corporate learning business, which largely differs from our other business interests. As Prarthana described earlier, taking a queue from the Liberate management team that is gunning to achieve margins north of 30% in FY '25. The rest of the eLearning business has also embraced gig workers. And while this has had an impact on Q1 margins, we are bullish about the change in operating model and its positive impact on our business in FY '25 and beyond. Moving on to AJE. The acquisition of AJE has been a game changer for several reasons. First, the presence in China is unique to MPS in comparison to our competitors and helps us participate in two global agreements with our customers that historically have to compromise on the preferred vendor strategy in the region. Second, we are now closer to the most important stakeholder in the research value chain, the [ funders ]. The proximity gives us a strategic edge that we will unlock in the future as the market consolidates. Third, our long-standing partnership with Springer Nature has always had tremendous potential, and now we get to maximize it. Fourth, the AI capabilities acquired to Curie, [ Lewis ] and other AJE tools have tremendous synergies with MPS, both on the efficiency side as well as the revenue side. And finally, the scale that we achieved now is opening new doors for us, and we expect to hit significantly positive financial metrics, particularly high ROIC and robust organic growth, which are a powerful combination in any acquisition. Our scaling global agenda was off to a robust start in Q1. The global agenda was in point as North America and Europe combined accounted for 74% of revenue in Q1 compared to 91% in the same period last year and almost 100% in the early days of our churn. FY '25 will be a year when we surpass several of our competitors in the market that we serve across research, education and corporate learning. Markets have taken notice. We have been invited to RFPs and new opportunities that were previously unavailable to us. Scale for them implies resilience, business continuity and future-proofing that have all become core pillars of supply chain decisions after the pandemic and the recent AI-driven innovations. Global reaching to additional markets, including Australia, New Zealand, China, Brazil and South Korea implies that we can sign two global agreements with our customers. Let's now open the call to questions.

[Operator Instructions] The Our first question is from the line of Mahesh B, an individual investor.

Can you hear me?

I can hear you fine.

Yes. Rahul, my question is on eLearning. What explains the tepid growth and weaker operating margin in eLearning? And what are white spaces in the eLearning segment as of today?

Sure. Thank you for your excellent question. So on the margin side, like I have explained in the previous earnings call, we are taking a queue from the Liberate Learning Group, which basically outsources as much as 40%, 45% of the revenue. Now of course, the balance business cannot get to that level immediately, it will take us time to ramp up to anything close to that level and I had previously explained the several benefits of embracing that model because of the changing demands in media formats, but also the different types of work that we do. So as a result, in the short term in Q1, we had a hit on [ patron ] margins in the balance part of the business. Now that this model is stabilizing, we will have to do less internal reviews and less quality checks. Also as we've reduced headcount, the head count has exited only at the end of the quarter. So we start to see benefits of a lower head count and heavier outsourcing from Q2 itself. And as Prarthana described in her opening remarks, that will only improve with each quarter through the rest of the financial year. With respect to growth, we've seen parts of our business such as Liberate and MPS Europa, the Swiss entity grow -- do really well, growing at about 12%, 15%. We've seen some softness in the India part of our business because of some customer concentration, which we have navigated through now and are now quite bullish about the prospects of this business on a going-forward basis. Our internal estimates indicate that we should achieve about 12% growth in FY '25 in the eLearning business by the end of the year. So the consolidated level, when you look at the annual numbers back, we should be at about 12% for the eLearning business. And of course, margins will continue to improve. For a perspective of white space, quite a few actually. Firstly, Today, we operate as a project-based company on the eLearning side. We service both corporates as well as customers in the education side. We are gradually trying to enter the managed services space, where rather than just supporting our customers on project-based needs, we're able to comprehensively outsource the entire learning and development function for a large corporate. So that's one white space. The second white space, of course, is on the Platform side, we have several offerings that need to be configured for the corporate learning market. And that, depending on the product that we do configure is -- could be many white spaces within that particular white space. The third piece, of course, is also -- currently, we are basically providing the content and the technology to provide the eLearning, but the actual delivery and the trading delivery is not something that we currently manage. So trading delivery would be another area where we continue to be involved in. So my top three kind of white space in eLearning business would be managed services, platforms and trading delivery.

So Rahul, on the three white spaces that you mentioned, how many will you [indiscernible] internally and how will you acquire through inorganic route?

So all these 3, we are planning to -- with the exception of platforms where we are trying to configure some of the existing platforms. So on the Platform side, it will be a blend of organic and inorganic. The other two will entirely be inorganic.

Okay. Good. So is that your next inorganic opportunity that you're pursuing?

So we're pursuing multiple opportunities. But yes, a bulk of our focus is on the education and corporate side, given that we've done quite a couple of acquisitions in the last five years already in the research side. So mostly, you're pursuing opportunities on the education and the corporate side.

One last question. Do you have any managed service contract at the moment? Or are you doing...

We have one with a large organization.

Could you quantify it? If that is...

No, that will be difficult. We're covered with nondisclosures, so that will be difficult to do.

The next question is from the line of [indiscernible] Arun Kumar Maruti from [indiscernible] Research.

Am I audible?

Yes, you are.

Sir, now it is many entrepreneurs talk about the AI and we see everyone want to use the AI for the efficiency and the better experience. So how we will be leveraging AI sustainably in our solutions, if you can throw some light on that? It will be quite helpful, sir.

Thank you. So we've been working with AI for a while now, even before some of these -- all this momentum -- positive momentum has traveled around AI. As I shared in previous calls, we have an R&D hub called MPS Labs in which all our initiatives of around AI are housed. I think currently, we're basically a large majority of our initiatives are focused on driving efficiency. We are seeing these in the areas of Content Solutions, eLearning and Platforms. On the Content side, we're doing things around translation, around accessibility, around content generation, content development. On the Platform side, things around discoverability and searchability. And similarly, on the eLearning side, when you are building courses, we're leveraging on AI. So far, a lot of this has been around operational efficiency and really driving speed. And in exchange, we've gotten significant volume increases as well as some short-term projects for some of our customers. We do have also -- with the Curie and a couple of other platforms, an AI-driven platform approach, which adds directed to the revenue. But that's really the play that we're ultimately looking at that how can we move beyond operational efficiency with AI and actually create AI as a revenue stream. Currently, most of it is service based. We're typically collaborating with our customers to figure it out with them. And what our view on this is over the course of the next 12 to 18 months, some of these explorations will convert into deep commitments because these commitments require investments on both sides, investments of time, effort and money. And finally, once these go into the deep commitment space, we expect in order for all parties to have a good return on investment, we expect there to be some supply chain consolidation. And that's, again, a moment in time where we will see an increase in revenue more directly as well.

Okay. And one question is on the eLearning solutions side, so that we are seeing that so many quarter has gone that business is showing some volatility that we started from the employee current account of around [ 250 then we reached 2,500 now 300 ] and the revenue is showing some linear, but the bottom line is always volatile. So do we have some plans to make it linear? And also would like to know the hiring target for this year.

Excellent observation, and thank you for your question. As you rightly pointed out, there's been volatility in the margins. And after the acquisition of Liberate Learning, we've realized that really the way to deal with this is to have an operating model where you have a fixed headcount, but you are able to flex above that head count through independent contractors, vendor partners and freelancers, so that you can adapt to this volatility. And basically, what's happening is eLearning is a very big market segment. So when demand does come in, it can be different in nature. So you see, for example, for a period of time, you get a lot of demand around video-based learning and suddenly from there, you go to immersive learning and so because eLearning is so diverse and comprehensive, projects that we get, a, can also be equally diverse; and b, you see these surges where a certain type of work will be the largest proportion of work that we have. So then when you have that kind of a situation to have a workforce that -- to start the delivery in the workforce for that kind of demand, it gets tricky. So what we've done basically after the acquisition of Liberate is we understood their model because they have always been a very high-margin business. And the way they manage it is they outsource 40% of the revenue, when we keep only 60% of the revenue in-house and even what they outsource, it's not traditional outsourcing. They have deep connections with the people that they outsource with. They've been outsourcing to them for over two decades. So it's not transactional outsourcing, it's very, very deep connected outsourcing. So that's really what we've done over the last couple of quarters. We've had to take a hit in margins because essentially, when you're onboarding external resources, you want to make sure that the quality and the delivery doesn't suffer. So you end up doing lots of additional checks and quality control activities in-house. And as a result, we have obviously seen that kind of dip that we've seen. But yes, going forward, our model as the revenue grows will be to keep the head count at this level that you see at. We're not planning to increase head count even as the revenue grows. And over a period of time, why we don't think we can get to the level Liberate is at, at 40% of revenue. We think we can at least get to 20%, 25% over the next couple of years in terms of outsourcing. So yes, I absolutely agree with you that the margins happened to be a bit volatile quality, and that's largely because the type of work that we're getting is different every week, every month. And now we figured out a good way to manage that internally.

And sir, the hiring target for the year, if you can share for the total MPS Group.

Outside of the acquisitions that have been planned, we are not looking to increase the headcount. We're pretty comfortable over the headcount that we have today.

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

Am i audible?

Yes.

Firstly, my question was around the employee cost and employ strength. If I look at the employee strength in Q1 FY '25 versus Q1 FY '24, the headcount has gone up just by 10%, whereas the employee cost, which we see in the current quarter and compare it year-on-year, employee cost has gone up by 55%. Sir, can you throw some light on why is there such a such a situation or am I missing something here. Can you please help me understand this?

Sure. So just to clarify, so that you -- again, thank you for your question, excellent observation. Q1 of last year, we did not have AJE and Liberate. As you would appreciate, both these organizations are largely staffed by employees onshore, so in local regions, so they carry dollar cost. With respect to Liberate, they are operating north of 30% EBITDA margin, so that those employee costs will continue. Having said that, we have offshore a large chunk of AJE. In fact, upwards of $5 million annually has already left the system, and therefore, you start to see some of that change from Q2 onward. So again, as you rightly observed that the number of employees has not gone up, but the cost has gone up and largely because these are dollar costs. And as I described, north of $5 million annualized has now exited the system and should start showing up from Q2.

Understood. That's helpful. Sir, secondly was on the extra cost which you alluded to in the answer to your previous [indiscernible] in the industry segment. So if I want to -- I mean, just to understand the nature of this cost, was it related to some severance packages that we paid to outgoing employees because we are in a transition phase. So is my understanding correct on that front?

Yes. So twofold. One is because the model has not settled in, we carried extra head count for a longer period than was required for the actual execution. So we had some duplicate head count between internal and external. And second would be, of course, the people leaving, there's additional costs in this period. And again, from Q2 onward, that will not show up. It's a combination of two factors.

Sure. Thirdly, I wanted to understand, if I look at the revenue from the revenue mix, the revenue from the rest of the world part has increased significantly. And Sir, just wanted to clarify, is it contributing to any extent in the margin which we saw? Or is it only the AJE plus some costs because of the learning transition?

Again, great observation. Yes. Nothing to do with margins. It's basically geographic diversity. Our pricing is pretty similar across the board, the value that we provide is very equal across geographies. So here are no -- we haven't seen any differential pricing in these regions. It's mostly been the extra costs of that side of the system, as you rightly pointed out.

The margin drop, which we are seeing on a year-on-year basis is majorly because of AJE as well as some additional costs which we had to take on the [indiscernible]?

Correct. Because Liberate is not at 30%. So I would not put Liberate into this, but definitely AJE and eLearning business without [ liquid ].

Understood. Sir, last one from my side is on -- so last time around in the conference call, we guided that we are confident of achieving a 25% bottom line growth for FY '25. So if I just do some numbers, I get to -- I get an understanding that we will have to grow by 36% at the bottom line level for the 9 months by '25 compared to 9 months on 2024. So I would -- so question is twofold. One, does that guidance paint that? And secondly, if it impacts, what give us the confidence that we will be able to achieve that given the turning around [indiscernible]?

Yes, absolutely. Again, good question. And your math is correct. We stay committed to the guidance that we provided in the last quarter that we will comfortably achieve over 25% growth in earnings. We are sitting already halfway through Q2. So we know what Q2 looks like, for example, that gives us much confidence. With respect to AJE, as Prarthana pointed out at the beginning of the call, it is no longer loss-making. It is now already profitable. Just employee costs alone, we have eliminated over $5 million annually. So you can understand what the level of reduction is that that's coming forward. Similarly, on the eLearning side, margins are expected to more than double from [indiscernible] transition from Q1 into Q2. So there's lots of things that are underway that do not show up yet to the market. Of course, being halfway into Q2, we are heavy into the financial year. We feel very comfortable confirming that our guidance stated in the last quarter [indiscernible].

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

I hope my line is clear.

Yes, Rahul. Your line is clear.

So I mean -- just wanted to understand in terms of AJE how we are trending in terms of the growth that we have and the time of growth process that we had at the time of [ integrated ] and how it's shaped up in the 4, 5 months that has happened since it has been done. Is it still achieving the kind of the numbers that we expect out of it? Or should we think we have little more pull-up in the later part of the year to achieve the run rate that we were anticipating out.

Thank you, Rahul, for that question. Yes, I think -- so we've been pleasantly surprised. As you know, previously, when we've acquired businesses that were running losses, whenever we've cut cost, we've seen a massive decline in revenue. But again, those were more distressed assets. This one is not, this one was slightly mismanaged, but the core business still fundamentally has tremendous strength. This one actually is more similar to when AJE acquired MPS. It's of that pedigree. So from my perspective, I think what's been pleasantly surprising is that the revenue has kind of been range bound between $1.7 million a month and $1.9 million a month depending on the month, because it's got this component of B2B2C so there is some choppiness every month in revenue, but it's in range bound. Second, a lot of the growth opportunities that we are working on are B2B, which basically means that the ramp-up is slower, and therefore, we have not seen any of the benefits of the B2B element, which, in my view, over the next couple of years will be the -- and I said B2B, I'm differentiating between B2B2C and B2B. In my view, in the next couple of years, B2B is going to be the strongest driver for growth for AJE. As of today, none of those opportunities have been realized in terms of revenue. Yes, we have some sales. Yes, we have some conversations and near final situations, but it's not shown up in the revenue right now. So we are trending north of $20 million annualized. We will range bound between 1.7% and 1.9% per month, feeling very good about that. Of course, fingers crossed, and hopefully, this holds up as we progress through FY '25. In terms of the growth prospects on the B2B side, I expect that to, again, travel more in the second half of the year. Having said that, I feel very comfortable that the existing run rate will continue through that period as the B2B side starts to build up. To give you a statistic today, AJE is 95% B2B2C. And again, I'm ballparking those numbers could be 1 or 2 percentage points off and the rest is B2B. A lot of AJE competitors, the situation is that 60% to 70% of the revenue is B2B2C and the balance is entirely B2B. So clearly, even if we benchmark ourselves with some of AJE's competitors, there's a lot of potential, even if AJE had to go alone at this B2B attack. But of course, with MPS support and opening up AJE to all of MPS' customers, we feel that we can achieve it in a more refined way. So again, to summarize, feeling very good about AJE on the revenue side as well as the margin side and the B2B revenue should pick up in the second half of the year.

So just a couple of follow-ups on that part. So I think from a purely revenue runway point of view I think we are on track on what we have initially talked about. And similarly, if you could chart the path in terms of what is the annualized profitability that you need [ see ], I think in the coming [indiscernible] we have done for in this quarter. Is it on quarter basis or a [ bid ] basis? What should be the number looking like under some -- FY '25 and FY '26 bases. I think that color would be of great help. And just to ponder further on that B2B2C kind of [indiscernible] the B2B kind of [indiscernible] that you spoke about in the H2. Just trying to address is this something which you highlighted earlier, which was like the current solution is not -- it was internally consumed within the client and environment and now since it's kind of a third-party asset, it could be showcased to a much larger audience. Is that the opportunity that you're talking about? And if yes, then how you plan to go about this in terms of year-to-market [indiscernible]?

Sure. Again, a good question. So on the margin side, from my perspective, we're going to see a sharp increase in Q2 itself because of some of the expenses that we've weeded out. This business is somewhat of an equal split between Content and Platforms. By the end of FY '25, we expect the business to be an average margin somewhere between our Content and Platform business. So that's the aim as we head into FY '26 where we'll have a high-margin business in FY '26 that is growing similarly to the Content business. And then for this particular year, we start -- we have a sharp increase in Q2, and it will suddenly continue to increase as we get to that level. So our goal is that by the end of FY '25, we really get this business to be similar to our overall Content plus Platform margin level. So closer -- by the end of the year closer to 40%. With respect to the B2B2C perspective, before AJE was acquired by Springer Nature, who was one of the world's largest publishers, they actually possessed a lot of B2B audience and customer base. They lost a lot of that under Springer Nature ownership, and this was, in fact, one of the investment rationale that were provided to us by the investment bankers when the deal is presented to us as well. Was that -- because AJE was housed in the Springer Nature, it was thought to be competitive by some of the other B2B potential customers. And therefore, they lost out a lot of the opportunities and some of the customers even exited. And we are seeing that. When we had the conversations with old customers who -- pretty much our MPS customers as well. We're finding out that they really like the AJE service. The NPS scores were always excellent for AJE with them, they were quite concerned that part -- a very important part of the value chain is sitting with the competitor. And now in terms of reviving go-to-market strategy, the revival is essentially announcing AJE and likely with HighWire as an independent choice, a choice not owned by a publisher, but rather than an independent provider like MPS backed by MPS's, which we are showcasing at industry events, associations. We're doing many road shows at the end of this month. Tony and I are doing a road show in China next month. The teams are in the U.K. at ALPSP. In October, we are at Frankfurt Book Fair. In December, we are at STM week in London. So there's a lot of -- almost every month, we are pushing the message both online and offline. And the account managers that own these relationships have also been educated on what AJE is all about and to land the message with the customer. So as you rightly pointed out, it was captive within Springer Nature. They had acquired this for their own -- self consumption, which kind of turned off the marketplace because they thought of it as competitive given that we're sitting inside of Springer Nature. So this opens up this huge opportunity for us going forward.

Sure, sure. That's pretty helpful. And -- so I'm just clarifying, you said by Q4, exit run rate, you should be able to achieve similar to average of Content plus Platform for the AJE portfolio, and in FY '26 on an annualized basis.

Correct.

[Operator Instructions] The next question is from the line of Sumangal Pugalia from Snap Securities LLP.

Great performance on the acquisition also. So I had a couple of questions. Firstly, on the research vertical itself. I mean, with the AJE acquisition and the entire portfolio that you've built over the years, if you can give a sense about our market share in pre-acceptance post acceptance. I mean, I remember you were talking about it being only 1%. So big picture, how do you see that going forward? Or you're seeing headway and in particular, some verticals where you are even seeing much stronger growth in gaming market share from competition. How do you see that broader landscape?

Yes. So the research market, I think we got three legs, right? We've got the Author Solutions leg or -- the solution is pre-acceptance, the pre-acceptance leg. The second leg we've got is post-acceptance related to Content and eLearning; and the third leg we've got is Software like HighWire. Each of these markets is growing. Within each of these markets, we have different competitors. I would say that on each of these markets, we tend to be in the top 5, but not always in the top 3, which -- and the market itself is growing. So for us, it's going to be a combination of just capturing the tailwinds of the market but also because we are comprehensive, there are three -- like I said, the three legs that our business sits on. There is no other vendor partner that has more than one leg. And as a result, we are also expecting that given the comprehensive nature of our business, we should be able to create -- and the global nature of our business now, we should be able to create new agreements that go end-to-end from pre-acceptance to post acceptance for delivery of the platform rather than just participate in each of the individual plays. We are already starting to have many of these conversations. In fact, we have revenue already sitting in our workflow, which obviously is not very large today, but as proof of concepts, and that will be our ultimate goal where rather than thinking of this as three submarkets, we think of this as one market that we own. So we go from being someone that was in one market, #3 in one market #4, in one market number #2 and suddenly, we cleared an entirely new market where we dominate. And that's really the transition that we're looking to achieve in the research side over the course of the next 12 to 18 months. So from -- I'm very bullish about this particular part of our business. Yes, it's a conservative customer base, and that has always been the challenge. But to simply put the value to be unlocked here is so tremendous for us as well as for our customers that at the most, what we could expect is they will take time to take the decision, but finally, they will make the right decision.

Sure. That's helpful. And just going back to the point you were discussing in the last question. On the AJE B2B part, can you just elaborate quickly like what are the actual services that are not being provided to these B2B customers or exactly what the vertical line services that would be provided to these B2B customers?

So on the B2B side, just to help you understand the customer. The customer is essentially has become, over a period of time, a subscription business, a business that essentially is a 2-sided network. On one side of the network, you have the authors creating research content. And on the other side of the network, you have researchers researching content. What an AJE or one of its competitors provides is making sure that the supply side of this network is organized and is delivering in such a way that the demand side of the network is able to capture its needs. So that's really what we are providing through AJE. We are basically providing a comprehensive approach to organize the supply side of a 2-sided network owned by sufficient companies. So what we are doing, for example, is we are helping a researcher write a grant for an institution. Once the researcher gets the grant, we're helping them structure their paper in such a way that the paper is actually is in a position to be submitted to an institution or to a publisher. Once they have submitted, there's this massive iterative review process through which we help them guide them, think of it like a college application. Once the review process is completed, we then enable them to get accepted. Once they are accepted, we then help them get truly published and once they published, we help them get recognized and push how they are viewed on the platform and help them get the name out there. So it's a pretty significant undertaking. But the value that we're really providing is we're helping the subscription business, consolidate the supply side of a 2-sided network.

Understood. Very helpful. Last question is under education vertical. So the cyclicality in the school segment is something you've spoken of. So where do you think we are in the cycle and the write-down. What's the outlook for that?

So we are in the free cycle now just by the nature of the cycle. Typically, irrespective of the type of government in the U.S., the first year after election, when the new government comes into place, education tends to have a significant boost. Now how that money is spent may change depending on the government, but typically, post elections, you see a massive uptake in education spending because that's one area where the government can quickly show progress. And I'm talking more about the U.S. government right now. So we've we entered the free stage which then gets magnified in 2025 because of a new government or extent of the existing part depending on what happens. So again, we are very bullish. Similarly, on the higher ed side as well, the drive towards going digital and building cost related revenue has continued. MPS continues to win mix strides and win proposals and RFPs on that front. So yes, we're feeling very bullish about this business, which has been under pressure for a couple of years, but it's now looking good.

[Operator Instructions] The next question is from the line of Parimal Mithani from Credential Investments.

Can you hear me?

Yes, we can.

Yes. I was just wondering between your Content and the [indiscernible] MPS and between the new platform, which is the -- is there a -- will it grow stronger now or it will grow from [indiscernible]?

Yes. I think -- so a good question. We report our business as Content, eLearning and platforms, but the markets don't view us like that, the market views us a company that has presence in 3 market, research education and corporate. We expect all -- growth in all these three markets. There may be a bit of a small base effect with corporate because we have a low base of growth, maybe faster there in the short term. But yes, it'll be very difficult to differentiate what will grow faster simply because a lot of this today is now being bundled. They are not being sold in isolation based on our market-based approach. So a couple of years, we refined our growth strategy where we said instead of going to a customer in the market as you're a Content Solutions and Platform Solutions, eLearning Solutions. We'd go to the market. We'll understand what -- their problems and use these as tools to unlock those problems to the IP and the tools that we have. So yes, it's difficult to say what proportion will look like going forward. What I can say is today, our business in terms of split is probably 60% research, 30% education and 10% corporate that, over a period of time, will somewhat get balanced given that we expect growth in both education and corporate as well as the fact that we planned some acquisitions in education, corporate as well.

Okay. So now [indiscernible] down the line, how do you see being deferred, corporate and education? If you can get your [indiscernible] and the overall growth rate you can [indiscernible].

Yes. I think looking ahead, I think research will continue to be a very strong part of the business. So I would say 50, 25, 25 would possibly be the split, again, totally guessing because it's hard to predict how each of these components will move. I think what we are confident and have our eyes set on is more just consolidated number, which is revenue is north of INR 1,500 crores at similar margins. That's really what we're focused on. But yes, I think if I had to stargaze and take an educated guess, I'll probably say 50, 25, 25.

Okay. And going forward, is it fair to assume that our margin will grow on a yearly basis? Since all the different acquisitions and most of those things have been sorted out.

Yes. So as we look towards FY 2028, we're -- in order to get the growth that looking to sustain margins, yes, there will be periods where our margin has increased and margins will contract, but really, we are trying to be at similar margins because we also understand that in order to chase growth, we can't simply milk the margin. So even today, this business can easily be run at 40%, 45% EBITDA margin, which we have previously, if you go back 5 years, this business used to be 40%, 50% EBITDA margin business. We are sacrificing some of that in order to chase growth. So we feel comfortable that we can chase the growth and achieve similar margins, which is around 30%, 32%.

The next question is from the line of [ Shekar Mundra ] from [ Revo ] Commercial Limited.

Sir, for the target of INR 1,500 crores, which you are setting for FY '27. So what would be the split between the three divisions? What are we targeting for each?

Thanks for the question. Again, like I answered on the last call, not really targeting a split because some of this is organic, some of this is inorganic. It's not entirely one or the other. But yes, like I pointed out, between research, education and corporate, but possibly, I mean, this is a very big guess is 50, 25, 25, but really, the focus is to get to 1,500. We're not -- less concerned about what that looks like in terms of a split.

And what would you say like how much of it would be on organic growth and how much would be the inorganic going ahead from now?

Yes. So when we gave this guidance a couple of years ago, we said from -- at that time, you were trending at INR 500 crores in revenue annually. We said that from INR 500 crores to INR 900 crores, so INR 400 crores of organic growth, which represented about roughly a 12% CAGR and the balance INR 600 coming from inorganic growth.

And -- so in the last couple of...

You may return to the question for your follow-up questions. The next question is from the line of Rahul from Dolat Capital.

Just had one question. I was trying to understand the growth path for our Content and Platform business, [indiscernible] part because that seems like last 3 quarter [indiscernible]. So what's the [indiscernible]?

Rahul, sorry coming across slightly muffled, do you mind repeating that? Sorry about that.

Is it any better now?

Yes, better.

Yes. What I was saying is that if you could share the prospect of Content and Platform business [indiscernible] part, it seems kind of flat to small growth for last 3 quarter year.

Yes. So on the Content side, we had -- this quarterly part of our business has been growing pretty impressive. It had some software in the education aspect that has corrected this FY. So both FY '25 and FY '26, we expect content to start surging independent of AJE. Similarly on the Platform side, we had some modest growth last year. That is also picking up. We've had, like Tony was describing in his opening remarks, we had a flurry of RFPs. We've had also had many renewals take place at higher prices. And we are starting to chip away at our competition. So we're winning deals of the Platform business from competitors that are larger than us. There are two competitors that are much bigger than us. And we've won at least, I think, two or three deals in the last 6 months from them. So again, feeling confident about that business as well. So last year was modest, this year on the Platform side will probably be double of what we saw last year. And then from FY '26 onwards, we get to the 10%, 12% on the Platform side. So Content will already pick up in FY '25. Platform, there will be a big gap that we'll bridge this year and FY '26 will be similar to Content and Platform. And our overall plan, really, we have not built -- just to make sure that we hit these targets that we're talking about, we have not made some crazy plan. Our organic growth aspiration is 12% a year, and we're looking to achieve that across these three lines of the business.

The next question is from the line of Navid Virani from Bastion Research.

Just had two questions. First one was on the acquisition part. So last time around, we had that, we will be completing one more acquisition by the end of FY '25. Just wanted to clarify, are we on track to complete that?

Yes. Thank you for the question. Yes, we're still gunning to complete the acquisition. Of course, it's in the work. So it's not done until it is done. But yes, we have things in the pipeline and there's one that we're actively working on.

Perfect. And the size of this acquisition will be as large as AJE [indiscernible]?

Yes. Similar in revenue, that's what I'll comment on -- it's too premature to comment on anything more than that, but similar in revenue.

Last one was if you can just give me a sense on the revenue growth, excluding AJE for this quarter. I mean Q1 FY '24 versus FY '25, excluding AJE, what would be the top line growth. Can you update me that number?

I'd be happy to share that at the end of the year, sharing that on a quarterly basis will be tricky for us for competitive reasons, by the end of the year, we'll be happy to share that.

The next question is from the line of Yash, an individual investor.

Can you hear me?

Yes.

first of all, I want to share the great work you and your team is doing from the last several years. So we are part of this family films last several years. Also also, I mean, so probably most of the callers have covered a lot of the questions I want to ask. But I just want to ask regarding some nonoperational things like probably in the last call, you have hinted about the stock split or something like that? And also, I just want to ask about the status of the Bangalore office, which you mentioned that it's in process of sale. Just want to understand that. Yes, that's it.

Sure. Thank you sp much. Yes, just to clarify, we have not discussed any stock split at the Board level. Again, my academic perspective on this is no matter how much you slice the pie, the size of the pie remains the same. So at some point, if the community feels that is something we should consider, we will consider it. But at this point, we have not considered it. But again, that was -- what I said was my individual highly textbook academic perspective, that's something that we will, of course, have to have a more thoughtful discussion than at the Board level. As of today, we have not had this discussion. And if you get a sufficient feedback from the community, we will engage in a discussion. And we have not, as of today, received a sufficient feedback, neither at the AGM nor in any of the forums. With respect to the Bangalore property, we do have some prospects for [indiscernible], which is one of the properties, which, as you know, is up for sale, but nothing that is mature that I can discuss. But also open invitation, if you know someone that is looking to purchase anything, now that you said you are part of the family, please do send them over our way. We're actively looking to divest those properties because we're not in the real estate business. And we own two prestigious buildings in the heart of Bangalore, and we love to divest those assets.

And also a follow-up, Rahul. So probably you mentioned [indiscernible], what might be the price of those buildings. So any valuation is done?

I would not know that off the cuff. Sunit, you want to -- if you're on the call, could you please answer? Or if you need more time, you can answer separately.

I would suggest if we can discuss this offline.

The next question is from the line of [ Krish Parikh ] from [indiscernible] Family Office.

I just wanted one clarity. So the business metrics, projections that you have given in your presentation for FY '25, does that include any inorganic acquisitions or doesn't include?

No, it does not include. We haven't done -- we haven't signed an agreement, so it wouldn't be right to [indiscernible]. So it does not include any additional -- it includes AJE and Liberate but do not include anything that we've not done yet.

The next question is from the line of Mahesh B, an Individual Investor.

What is the percentage of AJE related revenue from non-Springer customers in Q1 or going forward also?

Yes. So Springer would be -- Springer Nature revenue would be about 20% to 25%, again, giving you a ballpark estimate for competitive reasons, but about 20%, 25% will be related to Springer Nature. So we can't share more than that because it's a highly competitive market.

No. But AJE add 100% of revenue from Springer.

No, that's incorrect. AJE's revenue is in the range I described.

Okay. So have you been successful in cross-selling AJE services to customers of MPS?

Yes. So like I said in the previous question -- again, very good question. We're having very good conversations. We've had some success, but it's not -- it's only been 3, 4 months. We're very confident that we will land this. But we don't have -- we have one, maybe two customers where we actually have the revenue that you're seeing in the Q1 results, but it's tiny. I would not make a big deal about it. So Yes. So that's more things that are underway, but it has not showed up in the revenue yet. But that is the most efficient part towards AJE's growth beyond the current level.

So given that you are tracking $200 million run rate, what is the organic growth for AJE related services that you see in FY '26 and beyond?

Similar, 10%, 12% compared to the rest of -- like our other business, 10%, 12%.

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

Thank you, everyone for your active participation as every time in earnings call. We appreciate all your questions. They help us to learn and improve. I also want to thank all the stakeholders for their continued support and respect. Please do keep making your suggestions and recommendations, they help us. Our journey together has been remarkable, and we look forward to taking this forward as well. Again, I look forward to your continued support, your wonderful feedback and partnership mindset. Thank you so much.

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