MPS Limited (MPSLTD) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY '25 Earnings Conference 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, Dov. Good morning from New York, and a warm welcome to our Q2 and H1 FY '25 Earnings Call. Today on the call I have with me Prarthana Agarwal, who is the CFO of MPS Limited; Sukhwant Singh, Chief Operating Officer, India or MPS Limited; Tony Alves, Senior Vice President and Head of Product Management of HighWire, which is our Platform Division; Archana Jayaraj, Chief Operating Officer of MPS Interactive and MPS Development. Prarthana joins us from our corporate office in Noida, Sukhwant from Dehradun. Tony to the Greater Boston Area and Archana from Chennai. This global representation underscores our commitment to serving our diverse stakeholders across the world. Prarthana will kick things off in our opening segment today by discussing our financial performance. Then Sukhwant will update us on Content Solutions business developments. Tony will then follow-up on the impressive progress in our platform business. Next, Archana will discuss the rapid transformation in our eLearning business. And finally, I will provide an update on the progress of AJE and Liberate and my perspective on the first half of FY '25. Let's keep going. Over to you, Prarthana.

Thanks, Rahul. On a quarterly basis, Q2 FY '25 showed robust revenue growth. We recorded revenues of INR 177.9 crores on an FX adjusted basis, representing 37.42% Y-on-Y growth. EBITDA margins bounced back to 30.11% in Q2 FY '25, and overall EBITDA grew by 31.9% in Q2 FY '25 compared to last year. Reflecting on the quarter, I would like to highlight 3 vital strategic achievements. Our top 10 customers now contribute to 48% of our revenue, a much lower customer concentration than what we started this journey in 2012. Revenue quality is also improving with platforms responsible for 28% of the consolidated revenue and even more impressively, 40% of the consolidated PBT. The theme of improvement in quality of revenue can also be absorbed through improvement in DSO days to 44. I would now like to hand it over to Sukhwant to discuss the developments of our Content Solutions business.

Thanks, Prarthana. Revenue in the Content Solutions business grew by 37% in quarter 2 of FY '25 compared to last year. EBITDA margins expanded to 38.36% as AJE settled well into MPS. In addition to the acquisition of AJE, at the journal's component of our Content Solutions business, we continue to lead the charge towards revenue growth. Volumes and revenue from our premier customer base grew because our service delivery has been among the best in the supply chain as it has consolidated. Additionally, the recently established revenue stream catering to the general editorial office has furthered the growth momentum of the Content Solutions business. The new offering placed us in a more strategic position in the value chain and improve the stickiness and quality of our revenue with existing customers. Our global education business now branded as OWL that stands for One With Learning, also saw significant growth in quarter 2 of FY '25. The business unit achieved a much healthier EBITDA margin, and the team recorded healthy sales during the quarter, indicating that the new momentum is here to stay. Our world language content development, accessibility solution and production services capabilities have supported the expansion of OWL. The team's effort to diversify the customer profile and the successful launch of the OWL brand in the higher education marketplace further underscore our strong performance. I would like to now hand it over to Tony to discuss impressive progress made in our platform business.

Thank you, Sukhwant. Primarily due to the acquisition of AJE, the platform business grew by approximately 67% in revenue in Q2 of FY '25 compared to the same period last year. Our collaboration with MPS Labs is going exceptionally well in content hosting and AI integrations. [ Order flow ] gaps were scheduled throughout the quarter, and they respond well to customer and market demands. Several clients are using our latest product, DigiCore close sandbox implementation towards its final iteration. Our focus is now shifting towards implementations, particularly for transitioning for the clients. Another highlight was the success of our business development efforts. For example, earlier this financial year, we won a new logo away from our largest content hosting platform space competitor, we are witnessing an influx of activity in new RFIs and RFPs in the platform business. There is clearly a positive perception of us in the research community, which is highly encouraging. HighWire and MPS are the only serious independent choice in the market as others are either publisher or private equity owned, which are not popular choices in the research community. I would like to now hand it over to Archana to discuss the rapid transformation taking place in our eLearning business.

Thanks, Tony. I'm pleased to report meaningful improvement in the e-learning business. Revenue grew by 8.8% in Q2 FY '25 compared to the same period last year, and EBITDA margins recovered to 19% in the quarter. In the India entity, MPS Interactive Systems, revenues were ahead of our internal estimates and EBITDA margin nearly touched 20% in the quarter and are expected to only improve from here. And while the business is still not back to previous levels, it is reassuring to note that we're slightly ahead of our turnaround schedule. The business acquired 15 new logos. Collections have also improved, average DSO is now 36 days. The teams maintained an average CSAT score of 4.5 and that has also led to recovery from some of the core accounts. The eLearning operations in Europe made steady progress. At the Swiss entity, MPS Europa, EBITDA margin surpassed all other eLearning interests. Moreover, the team is now in deep collaboration with India entities working on impressive solutions and recently won a few orders with MPS Science customers. TOPSIM GmbH made steady progress towards its FY '25 goals. This business is now one of the most diverse business interest at MPS with the top 10 customers accounting for less than 40% of the revenue. And the business is also expected to start paying dividends to MPS Limited from FY '25 for the first time, since its acquisition in 2018. I would like to now hand it over to Rahul to conclude this opening section.

Thanks, Archna. I'll begin this section by discussing the progress of the 2 acquisitions. We completed the acquisition of Liberate in September of last year, a move that has significantly shaped our entry into Australia. This successful acquisition of a growing business led to a refreshing change in our modus operandi. We had an opportunity to learn much about what it takes to operate and drive our corporate learning business, which differs from our other business interests. At Liberate Learning the top 10 accounts now includes a large banking customer that was dominant for the past 7 months due to the internal corporate development. The Liberate team has also onboarded new logos that have scaled in quick time to be in the top accounts. As Archana described earlier, taking a cue from the Liberate management team, the rest of the eLearning business has also embraced [indiscernible] workers. And the positive impact has started to show, and we are bullish about the change in operating model and its positive impact on our business in the [ online ]. The integration of AJE into MPS has been rapid and successful. We are ahead of our schedule in terms of operational and financial metrics. Our formal launch in China this past quarter, coupled by a customer road show has helped us develop momentum in the region. The presence in China is unique for MPS and helps us participate in global agreements with our customers, who have historically had to compromise on the preferred vendor strategy in the region. We're now closer to the most critical stakeholder in the research value chain, the funders. Additionally, the AI capabilities acquired through Curie, Lewis and other AJE tools have tremendous synergies with MPS regarding efficiency and revenue. Our new scale is opening new doors for us, and we expect to hit significantly positive financial metrics exceptionally high ROIC and robust organic growth, which are important combinations for any acquisition. After a flat EBITDA in Q1, despite a sharp increase in revenues, we have gained much ground in Q2 and we are back on track at the halfway mark with 37% revenue growth and 15% EBITDA growth in H1 compared to the same period last year. Our scaling global agenda has gotten off to a robust start in the first half and its positive impact has already been felt. North America is now nearly 45% of our total revenue, while Rest of the world, including APAC is 26% of total revenue. FY '25 has proven to be a year when we surpassed many of our competitors in the markets that we serve, including research, education and corporate learning. Markets have taken notice. We'll be invited to RFPs and new opportunities that were previously unavailable to us. Scale 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. Our global reach into additional markets, including Australia, New Zealand, China, Brazil and South Korea implies global agreements with our customers, further bolstering our optimism on the future. Let's now open the call to questions.

[Operator Instructions]. First question is from the line of Mahesh, who is an Individual Investor.

Rahul, my first question is how is the landscape evolving within the segment that you operate from a technology/AI perspective?

So I'll quickly cover the overall landscape, and I request Tony to talk a little bit about the AI landscape. So Currently, we operate -- while our financials are reported as business segments content, eLearning and platform. Our go-to-market strategy has been revised and we attack the market as research, corporate and education. We are viewing AI as an enabler for growth across these 3 particular markets. And I'll let Tony talk a little bit about how we're embracing AI.

Thank you for the question. So my focus has been primarily on platforms and on content solutions and focusing on our research and publishing landscape, which has been really evolving very rapidly with artificial intelligence and machine learning. The major emphasis has been the balance between innovation and maintaining the integrity of trusted research. The segments which are evolving are across the entire research ecosystem, but especially in the content preparation and content analysis areas. We are working on MPS is working on solutions that address ensuring research integrity. We're focused on editorial services that address the things like accessibility in content creation, including language polishing, translation, editorial preparation, summarizing content and automated assessment creation. Chatbot support is also a growing area for us in their building tools into the publishing workflow process and Chatbot tools into our hosting platform. I understand in several industry meetings over the past few months, you may have noticed that publishers have become more and more open to adopting AI and machine learning technology, while also being really sensitive to the content integrity and data privacy concerns. Their particular concern is the need to protect copyrights, while still letting AI organizations innovate, so there's increasing talk about licensing content to ensure that large language model and other technologies are working with certified facts. The AI and ML security and privacy standards are constantly evolving and MPS isn't adapting to the changing requirements. We've been making incremental changes, while implementing artificial intelligence systems to support human-driven decision model particularly in the areas that I mentioned previously, and this helps mitigate the risk of relying too heavily on automated processes. I think that's a good summary of our approach to artificial intelligence and machine learning.

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

Congrats on the performance. First question is slightly understanding the way the business is evolving with the new transaction of AJE some quarter back. It's still to complete its first year so, are we getting a better flavor of how the current mix of business you're seeing seasonality from that layoff of business so that the whole quarter in across business segments, I think any color on that would be of help...

Sorry, you're coming across a bit muffled. Could you go again please, I'm sorry, to make you repeat, but can't hear everything you said.

Okay. Sorry for that. So basically, what I'm trying to understand is that with this AJE now part of the business for a couple of quarters now, have you -- do you have a better color in terms of how your seasonality shapes up across business segments now? Any color on that would be of help.

Yes. I think the second half of the year has always been stronger for MPS, if you go even many years back. And whether now whether Q3 is stronger or Q4 is stronger, ends up being a debate every year, but the second half of the year is the strongest for MPS. And the softest quarter tends to be the July, August, September quarter, which is Q2. So typically, your #1, #2 slot is either Q3 or Q4. The third slot is Q1 and -- Q2 tends to be the softest quarter. And the reason for that is across the various lines of business and markets the summer months tend to be slow. So July, August, September tend to be slow both from a revenue accrual standpoint, but also from an order booking standpoint. So as a result, the quarter ends up being slow. And AJE is no different for the same customer, the customer profile. So in fact, anything it's further the same setup. So I expect the same seasonality that we've had over the last few years will continue and the second half will be stronger than the first half.

Sure. And we did quite well in terms of recouping the profitability of the business. So are there meaningful scope even from this point on a near-term basis, since they are going into a better growth in the H2, or you think the bigger juice is already taken and we may see a small improvement in H2 on a profitability point of view.

So a lot of the efforts have already been captured. Haven't executed, but they're not showing up in our results because this cost has carried forward. I think margins will continue to improve into Q3 and Q4 of this year on the AJE side. I think by Q4, we'll have a stable margin profile and from Q4 onwards, essentially revenue growth, specifically B2B revenue growth is the highest, the AJE margin profile. But we to expect further improvement in both Q3 and Q4 and settling down into a nice margin profile in Q4 for AJE.

Okay. Okay. Now moving to the eLearning part of the business. You have seen a significant reduction in the headcount. Is there anything specific that caused this decline in this quarter? Or this is the base were it should continue to operate now?

Again, thank you for the observation. Yes, the headcount is stabilizing at this new level, there may be some small reduction that will carry forward as part of the same initiatives. Again, the execution is done, but sometimes these things take time to show up as the results. So there will be some further minor optimization that will show up in Q3, but the execution has all been done. This is by design. It's not by accident. We are trying to follow from the Liberate model. I let Archana, who is the Chief Operating Officer of our eLearning business in India and in Europe talk a little bit about what she's doing in terms of optimizing the headcount. Archana, can you please add your comments?

The reduction in headcount is basically a reflection of the strategic shift in our operating model itself. And as Rahul mentioned earlier, we are consciously transitioning from a model that's heavily reliant on full-time employees to a more flexible and elastic delivery structure where we leverage contractors and gig workers. Now this leaner, more efficient approach is effectively to enhance our operating margins to improve the adaptability to our client needs and also volumes, while again supporting our commitment to quality and enabling more investments in future in areas of innovation and growth.

Archana, if I just extend this thought. So because there's always a constant debate on this part, whether what is your best workable model given that we want to scale. So if we are moving towards more managed training kind of a model. Would you see that this is a temporary fix to the problem and we will -- we might go to a more in-house model gradually? Or you think from a medium to long-term perspective, this is an optimal model of operation.

Well, we do believe that this is going to be the strategic shift for the medium to long term. It's not short term fix at all. We will continue to have our core team of full-time employees, and we will continue to expand our contractor base, and this will enable us to have a leaner model, while being able to cater to diverse clients in different parts of the world.

Understood. And last bit, if I may, Rahul or Archana, whomsoever find it right. So basically, on the eLearning side, given that we are making meaningful changes to the operating model, and we have now a much wider canvas to offer to the clients. How you see the growth profile and margin profile of the business should stabilize from a medium-term perspective, I'm not asking for growth for this specific year, but maybe on a 2-, 3-year basis, should it would be a 15% growth, 20% margin, whatever, something like that. [indiscernible] level would be helpful.

Yes, I think in the long run, we wanted our business to be as close to the average EBITDA margin of the company, which is 30% to 32%. Even if it doesn't go all the way to 30%, 32%. I think close to 27%, 28%. As in that will be a very strong step. In fact, this quarter itself, we actually touched 22%, 23% EBITDA margin. In the eLearning segment, we had some currency fluctuations, which had a onetime impact on our quarterly results. So back to where currency fluctuation had not happened in the eLearning business, we would have actually reported 22.8% EBITDA margin this past quarter. So we seem to be making very good headway from a margin perspective. From a growth perspective, currently, the eLearning business is growing at that 8%, 9%, which is not something that Archana or I are happy about. I think our goal is to start to grow this business at 12%, 14%, 15% once this operating model is underway, which is very similar to how our business in Germany is growing within MPS with TOPSIM, how our business in Australia is growing. So even within the MPS' eLearning portfolio, the German business as well as the Australian business are growing at that 15%. So we like the rest of the business, the India Entertain also [indiscernible] also to grow at a similar level.

Next question is from the line of Navid Virani from Bastion Research.

Yes. So first of all, congratulation on a more strong margin recovery. So first one was on [indiscernible]. Now that we have changed loan margin, it would be across this segment that is content and platform. So I just want to understand how your business looking like at regaining from a margin perspective only. What is the database between our core business and the variable fees, which we have basically added. And now that the turnaround is more technical as well, and that is what is your eLearning numbers, what is the growth plan. That is something which I would want to understand a bit better from you.

Thank you for the observation. I think -- so from the acquired business, I'd like to point out that APAC as a region and ballparking it as roughly now 25%, 26% of our record total revenue. Having said that, from a profit perspective, the reason is contributing to more than 35% of our PPT. And as you know, this expansion has happened particularly from acquisitions of AJE and Liberate. So is there anything the acquired businesses are adding to the margin profile improving the margin profile of the business. I feel very comfortable sustaining this level of margin profile 30%, 32%. We could potentially be operating this business at a much higher margin profile. Having said that, in order to drive organic growth, we have to reinvest back into the business, which includes innovation. So a majority of our reinvestment goes into MPS Labs, which is our R&D hub. And that allows us to feature to ourselves, but also allows us to feature to our customers. So as a result, we're going to continue to operate this business at 30% EBITDA margin to drive organic growth. In terms of where we are, if I just go segment-wise, even though that's not how we approaching the market. Content Solutions has now started to grow at about 10% more reliably. And historically, there's always been some parts of the content business that are growing parts of the business that are not growing parts of the business that are declining. We've always had that flavor. And as a result, the overall 4%, 5% growth. But I think we have solved for a lot of issues within the Content business. For example, our education business that Sukhwant was talking about in the opening remarks, has made a strong comeback. So our hope is now that a lot of the issues in the Content business have been cured, the 10%, 12% should be a reliable number for the content business to grow at. From a platform perspective, we again expect that there should be a premium both in the platform's vertical as well as the eLearning vertical. So platforms will continue to grow, and we expect that number to be upwards of 12%. I think with eLearning, we'll probably need another 6 months or 2 quarters for things to settle in, where we are basically raising the margin part of the business. I've learned -- I'm humbly learned over the last decades of running MPS, but typically, you have to chase 1 of these 2 things. Otherwise, you don't achieve anything. Either you improve the margin profile or you change growth? And with the eLearning business, I think for the next 6 months, they're going to buckle down and improve the margin profile. And then FY '26, we going to take that strong leap of growth and we have very good early signs that doesn't play out. As Archana described, we've already onboarded 15 new logos in MPS Interactive alone in the first half of the year. So FY '26 should be a big banner year for the EMA business, where we can start to get that 14%, 15% growth that we've been hoping for. So to summarize, content, 10%, 12%, platform, 12%, 14% and then eLearning 14%, 15% organically. In addition to that, of course, most of our inorganic activity is focused either as a platform play or a eLearning play, and that can further add to the growth.

Sir, something that you mentioned at the end of your answer about the inorganic growth, and we were also targeting an acquisition maybe in the second half of this financial year. So where are we on that? Can you share some progress.

Yes, I hope to report something in the next quarter, and nothing to report at this time. All I can report is the deal pipeline is robust. There are multiple transactions in pursuit. So we're not dependent on 1 transaction. So hopefully, one of those would close, and I'll have something to report to you next quarter.

Last question, if I may. So sir, in the Content business, we have witnessed a slight moderation in headcount. So just wanted to understand, is this a part of normal activity related to cost optimization? Or are we looking at a strategic move, where something which is similar to what we have done in the eLearning business?

No. This is normal ebbs and flows of the business. There's nothing extraordinary happening, yes, we're growing. But you know the Content business this last quarter alone, I think ballparking here, I think grow 10%. But I think the headcount, obviously, efficiencies will improve over a period of time because MPS Labs continues to invest in automation and system-based delivery. So as that automation becomes more familiar and more efficient, the reliance on human will obviously reduce, so that is just regular ebbs and flows of the business and efficiency guidance.

The next question is from the line of Kiran from Table Tree Capital.

Couple of questions. Of course, I watched your interview today with one of the business channels as well. So 2 part question, 1 is are we seeing any significant headwinds in the eLearning solution because the margins don't seem to improve at all Q-on-Q or Y-o-Y that is 1. In spite of substantial reduction in headcount. So that is question #1. Question #2, in today's interview you said Q2 is the start of something very big. So -- I mean, was it just a TV kind of thing? Or was it something that unless I just joined at about 10, 15 minutes ago, as you have said that in the opening remarks, I'd probably request it a little.

I'll answer the first -- the second question first, if that's okay. No, I think what I was talking about was on the interview world, I think they were pressing us a lot to share very tactical forward-looking guidance. And we've received a lot of feedback over the past 6 months that there is no value in MPS and the feedback has been received by from the minority shareholders that there is no value in you sharing this quarterly short-term guidance with everybody. It helps the analyst and new channels, but it doesn't help the company anyway. And in fact, one of the minority shareholders led on to quote examples of various companies that have actually suffered because they shared the type of guidance. So we discussed it at the Board meeting this quarter as well. I think the call that we took was we have a bold, we had send a very bold vision. We seem to be tracking against that vision. And that's really the insight that we should be providing. Of course, your question like a couple of questions that were answered today that help people understand the business. Of course, we should answer them, as -- we will answer them. But we will not be giving the tactical forward-looking guidance that's essentially just helping people run models, but that's not our goal here. Our goal is to build strategic communication channel that helps you understand the business, but also helps the company because we get a lot of feedback from these calls in recent days. Coming to the comment on start of something big. I think the for a couple of years now, we've had an overhang in our content business because the education business has been suffering, that overhang is gone. And so now the education business is performing. On the eLearning side, while you pointed out that the margins have not improved, the margins have actually improved, both at an EBITDA level. I pointed out there were some onetime in terms of the margins at EBITDA level were upwards of 18% this past quarter. And compared to some loans we had previously. And I was pointing out, in fact, they would have been upwards of 22%. We just had some currency fluctuation -- one-time currency fluctuation with us. So the margin profile there is improving. And then on the platform side, that they're starting to acquire new logos, the business side performance. So my comment was more to do with for the first time in a very long time, all lines of business are doing what they're supposed to do. And therefore, when all of this comes together because you always have the story, where one business does really well, another one doesn't do so well. So you basically have a mediocre outcome. And the reason I said that is potentially started something very big is because intuitively, all of us that are representing MPS in the marketplace can feel the momentum. The market tells you, I mean, the trade shows, in customer meeting, in road shows, you're getting a feeling from the market that we are being viewed very differently specifically after the acquisition of AJE, perhaps its scale, perhaps it's how diverse we are now across the various markets that we operate in. So there's, of course, the number side that we are now seeing in our financial year, but there's an intuitive feeling that we're getting, when we interact with customers and interact with the marketplace of how they perceive us and therefore, that the comment was made that this is -- we feel the business will start up something like Q2 is start of something very significant, given that all lines of business are performing. I'll let Prarthana now, also is the CFO also come in to explain to you because what you've seen this past quarter in the eLearning business, you've seen a recovery in EBITDA, but our PBT margins have been suppressed. And she [ just ] drop, which would you explain to you, what's really going on? Why EBITDA going margin going up, but the PBT hasn't gone up back significantly. So Prarthana, could you explain that, please?

Yes. Thanks, Rahul. So sticking -- I mean, starting with e-learning business, as Rahul explained, we have a deferred liability for our acquisition of Liberate, and because of that, the exchange fluctuation, we had a 4.3% impact, which in value terms is almost INR 1.5 crores. So this impact was there in Q2, where our EBITDA margins of 18.6% otherwise would have been upwards of 22%. This was on the eLearning piece. On an overall piece, if you look at the conversion from EBITDA to PBT is impacted largely on account of 2 factors. One is the amortization expense on the intangible assets, which are largely because of the acquisitions that we have done in the past one year. So on a quarter-on-quarter basis, that impact is roughly INR 2 crores. And also the other impact is the reduced other income, which is INR 3.36 crores. On a half year basis, if we look at the conversion of EBITDA to PBT, the depreciation impact of intangibles is roughly INR 4.3 crores and the reduction in other income is INR 4.46 crores. So because of these 2 factors, the overall EBITDA and PBT conversions are impacted other than the exchange fluctuation, where we see an impact both in EBITDA and PBT.

To summarize, the operating margins have significantly improved the eLearning business. And a lot of the noise that Prarthana is describing will start to kind of move out in the next 6 to 18 months. You'll start to see every quarter, one is the operating margin itself, but the business continue to improve, plus a lot of noise that she is describing will start to tape it out.

Got it. I have a strategic question. So in terms of the goal, right? FY '28, we said INR 1,500 crores. Today, in the interview, you said we'll reach half that number by end of this year. So we have 3 years, right, typically for -- to double our revenues. Standing where you are, right, in terms of your 3 platforms or if you look at education research and training in respect of how you cut the cake. Are you still confident of reaching that INR 1,500 crore mark with a 30% plus EBITDA? Is that still achievable given, if there's only 3 years left so that would involve a 25% CAGR, including acquisitions.

Yes, it's interesting how different people look at data differently, right? You're saying is it achievable? And I'm thinking 3 years is a lot of time. So I think from our perspective, as a management team, we are very comfortable in terms of the vision that we shared. Again, it's an aspiration, it is a vision I think my team and I will be delighted at the point if we can get there. But having said that, we're doing our best to get there. So yes, I think it's a perspective just think 3 years, how are you going to do it? And I'm taking 3 years or that's comfortable. So at this point, feel very comfortable with the vision that we share.

The next question is from the line of Krushi Parekh from Pentacle Family Office.

Yes. So I want to understand one thing. When we have aim of having 30% to 32% EBITDA margin for eLearning business as well, is it largely as a result of cost optimization first or also as a result of growth that we envisage over a period of time?

Yes, I think good question. I think in fact, there's 3 legs. One is the quality of revenue. The second is the growth and third is cost optimization. So I think -- so the cost optimization, since pretty much we be done this year, this financial year. So -- but that's more the tactical. As you rightly pointed out, the major appreciation is going to come from the other 2. So in terms of quality of revenue, immersive learning and just for everyone's knowledge about, immersive learning is an education method, where we are basically recreating real-life scenarios through technologies such as simulations, gamification, AR, VR, et cetera. So eLearning increasingly as a proportion of our total eLearning business is increasing. And given the premium of positioning that we have with an immersive learning, it tends to be a higher margin business for us. So as immersive learning continues to become a higher proportion. The quality of revenue improves and therefore the margin will improve. So that is one factor that the quality of revenue within the eLearning states is improving and is expected to improve. The second the factor we got is their significant operating leverage of [indiscernible] business, so as long as the business can grow at 10%, 8% to 10% we will always see margin expansion. So between quality of revenue and revenue growth I think, that will be the lead that will take us from 25% to 30%.

Okay. Got it. And again to this corporate eLearning, how is the funnel and the budget shaping up considering we are all reading about the layoffs and the corporate slowdown, especially in the developed market. So are we witnessing any impact on the budgets of our customer base or our clientele?

Yes. So I won't sugarcoat it so I think we are definitely working -- having to work much harder for the same level of order book. So I think decision-making is slower. Having said that, having lived through '08, '09 and other experiences like this. Typically, education and training actually gets a boost when there's a slowdown. So we are expecting that, yes, we're having to justify a lot on the -- on how we price things, but we are finally within the deal. So one is typically in a situation like this you invest more in education training at a large corporate and the second is when you do reduce internal headcount, the work needs to be done, right? So typically, you would outsource more. And that's where wherever where a company like MPS, which actually comes in there, training is outsourced, and that creates an opportunity for us. So yes, I think between -- between a small base that is not as effective as well as the larger pie that's now being created, we feel comfortable. Having said that, of course, we have to work much harder to own a lunch.

The next question is from the line of Arpan Agrawal, who is an individual investor.

I'm a new shareholder of the company. So some of my questions might be naive, I'm sorry about that. The first question is on the internal team structure. So there are 2 ways to understand the company. So one is through capability, which is platforms, content and eLearning. The other is end market, which is research, corporate and education and third is where the acquisitions that we have done. Over the last 10 years or so. So my question is how is the internal -- how are the teams internally structured?

Sure. So overall, I think we have more structured functionally and geographically. So for example, on my executive leadership team, I have David, who is the Managing Director of our Education business, but also heads the North America region; and Tony, who is the head of our product management and product for the overall business; and Narendra, who is the CTO and heads all of our technology. We have Sukhwant who is the Chief Officer for our India business across content and platforms. We have Archana, who is the Chief Operating Officer of the eLearning business when we have a new Chief Legal Officer, joining shortly, and of course, Prarthana who is our CFO. so we are more designed at an intersection of function and geography rather than segments. That allows us to be more efficient in approach. So for example, when Sukhwant is running the content and platform business together in India, he is able to unlock synergies between those 2 divisions. And that's why we chose this approach otherwise we will be too siloed.

Got it. Sir, a follow-up question. So if we do an acquisition like why company is not operated independently like it's merged with the existing entities, wherever it logically fits.

Again, it depends on the specific acquisition is we are now following 2 routes. One is acquire and operate, which is the established route. When you acquire and operate typically even during the business phase, I would have the business head, the CFO and the [ HR ] had joined in the valuation and the pursuit of the acquisition. And then there's a second route, which is what we do to Liberate, where we are acquiring to invest and support. So in that case, we have been acquiring a majority share of the company. We're making sure that the promoter group has some luck and essentially is contributing to the overall growth of the company. So it depends on the strategic acquisition we required to operate it's integrated from day 1, likely we did with AJE. If it's required to invest in support, we follow more passive position, where only Prarthana, who is the CFO needed be supporting that set up, potentially HR and business head as well because we centralize the function, but other than that is carefully integrated it.

Okay. Got it. My second question is on platform. So platform segment serves all the 3 end markets, which is research, corporate and education. But I also read that we are rolling up all of the platforms under the umbrella brand of HighWire . So my question is asked, but the HighWire website says that it serves as scholarly community. So my question is, what would happen to the offering for the education and corporate end markets, if all of platforms is being rolled up into a HighWire.

Good question. So the platform vertical, the way it is structured today, the bulk of it actually caters to the research market. So while we have offerings in Education and Corporate, majority of the platform business is space for the research market and that is general in HighWire. Within education, we of course, have education offerings that are product-centric, our education brand is OWL, One With Learning. And then we have individual products like the [indiscernible] we have learning plan. So we have individual education products. So where we are following a product strategy under the -- our brand. Similarly on the corporate side, we have extra optimist and a couple of other small offerings, which are then also a sub brand of the EI vertical. But as of today, a large part of our platform business is focused on the research marketplace. Having said that, a lot of the acquisitions that I'm working on are even a platform play either for education corporate. So we are looking to drill that gap, and that will probably will be a sure acquisition.

The next question is from the line of Gunit Singh from Counter Cyclical PMS.