MPS Limited (MPSLTD) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q4 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.

Thank you. Good evening from Zurich, and a warm welcome to our Q4 and FY '25 Earnings Call. Today on the call I have with me Prarthana Agarwal, CFO of MPS Limited; David Goodman, Chief Growth Officer; Archana Jayaraj, Chief Operating Officer, MPS Interactive and MPS Europa; and Naren Kumar, CTO of MPS. Prarthana joins us from our corporate office in Noida, David from Austin, Texas, Archana from Chennai, India, and Naren from Bangalore, India. 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 David will update us on our Content Solutions developments. Archana will discuss the progress in our eLearning business. Next, Naren will then follow up on our platform business updates. Finally, I will provide an update on the outcome of our Board meeting held earlier today before opening the call to questions. Let's get going. Over to you, Prarthana.

Thanks, Rahul. MPS closed FY '25 with 32.7% and 24.1% year-on-year growth in FX-adjusted revenue and EBITDA terms, respectively. We achieved a new scale of INR 726.89 crores in revenue from operations and INR 210.9 crores in EBITDA. The scale-up was largely due to the acquisition of AJE supported by robust growth in the Journals business and a recovery in the OWL Learning portfolio. Q4 was a strong close to FY '25. We recorded revenue of INR 182.2 crores on an FX-adjusted basis, representing 21.69% year-on-year growth. EBITDA margins improved to 30.76% in Q4 FY '25, and overall EBITDA grew by 30.99% in Q4 FY '25 compared to the same period last year. Reflecting on the quarter, I would like to highlight 3 strategic achievements. Our top 15 customers now contribute to 58% of our revenue, a much lower customer concentration than when we started our journey in 2012. In line with our strategic interest, the geographical diversity of the business is also improving. For example, North America is now 45% of our revenue, while rest of the world, majorly APAC, is now 30% of our revenue. Revenue quality is improving, with platforms responsible for 28.56% of our consolidated revenue. I would now like to hand over to David to discuss the development of our Content Solutions business.

Thank you, Prarthana. The Content Solutions segment recorded remarkable growth. Revenue soared by 30.5% in Q4, and an impressive 34.4% for the entire fiscal year of 2025. This extraordinary success is driven by the strategic acquisition of AJE, coupled with outstanding performance from our established journal business, and a cutting-edge approach developing engaging and interactive learning products for the education market. The expansion of the Journal Editorial Office, also known as our JEO and peer review solutions in FY '25 is propelling our momentum to unprecedented heights. Our collaborations with leading academic publishers and not just exceeding growth targets, they're elevating our positioning in the research marketplace. Through pioneering efficiency projects that leverage machine learning and advanced workflow strategies, we are redefining the future of research solutions. In the rapidly evolving education business now branded as OWL Learning, the infusion of new high-profile clients and a robust pipeline underscores our relentless pursuit of excellence. This impressive growth is driven by strategic collaborations with top-tier educational platforms, continuing education institutes and globally recognized learning companies. The extraordinary turnaround of AJE showcases our unparalleled ability to transform and lead within the industry. AJE achieved an EBITDA margin of 21.7% in FY '25, far surpassing expectations. This is not merely a turnaround. It's a powerful testament to our vision and execution even in the face of initial challenges. Our trajectory is bold and inspiring, positioning us as trailblazers in the markets we dominate. I would like to now hand it over to Archana to discuss impressive progress made in our eLearning business.

Thanks, David. In FY '25, our eLearning division showcased remarkable resilience and strategic execution, culminating in a strong finish with margins significantly improving to 20.93% in Q4. Our operations division have transformed and been restructured. This bold move has enhanced our speed, efficiency and accountability, setting a new standard for operational agility. We have streamlined workflow, embedded checkpoint and conducted targeted audits with a focus on user center design, delivering exceptional quality for clients and sectors ranging from manufacturing to education. Our innovative reuse strategies, resource optimization and tech-enabled content co-creation, have revolutionized bulk development, allowing us to deliver high-volume projects at unprecedented speeds and quality. Furthermore, our personalized solution, integrating adaptive learning into presales pitches are addressing a wide spectrum of client needs from basic proficiencies to complex learner diversity, positioning us as pioneers and customized learning experiences. Our strategic initiatives are paving the way for future growth. Early signs of success are now evident including collaboration with a major Australian retailer through a strategic AI partnership and an invitation to join a prestigious conglomerate supplier panel, which is proof of growing influence. Together, these achievements create a compelling picture of resilience, innovation and strategic foresight. We are not just responding to market challenges. We are transforming them into opportunities, setting new standards and delivering value at every term. Our bold initiatives and relentless pursuit of excellence inspire confidence that we will continue to lead and thrive in the evolving landscape. I would like to now hand it over to Naren to discuss the developments in the platform business, branded as HighWire.

The growth of our platform business has been nothing short of extraordinary, driven by the transformative acquisition of AJE. This strategic move has propelled revenue growth by an impressive 39.3% in Q4 and a staggering 67.4% for the full fiscal year 2025 compared to the previous year. Such remarkable figures underscore our relentless pursuit of innovation and market leadership. Elevated interest in our flagship HighWire platform has generated a surge in request for information and proposals particularly fueled by the buzz around DigiCore Pro positioning us as an industry front runner and a prime contender for critical digital initiatives. Our Research Solutions division is now functioning more cohesively than ever, fostering a collaborative environment that provides a comprehensive understanding of how our platforms integrate into the broader research and publishing ecosystem. This synergy is especially evident within MPS Labs, where cross-divisional collaboration enhances our strategic insights and client delivery. Furthermore, our strategic relationships are flourishing, trusted partnerships with key accounts remain strong and are expanding fueling a cycle of success and mutual growth. HighWire has established itself as a go-to organization for industry initiatives, offering unparalleled visibility insider access and unwavering client advocacy. These achievements not only reinforce our position as a top tier player in the digital publishing and research technology landscape, but also excite confidence in our future trajectory as we continue to innovate, expand and lead the market with boldness and purpose. I would now like to hand it over to Rahul to conclude this opening section.

Thanks, Naren, and thank you for the comprehensive update, team. Scaling and digitally executing our well-thought-through-and-tested Gestalt growth strategy continues to deliver strong business results. Our 5-pronged approach has powered the recent momentum which includes a revised GTM strategy, a stronger emphasis on STAR Accounts, including cross-selling and upselling, the addition of new customers across business segments, the launch of new capabilities such as DigiCore Pro, and unprecedented pace of integration of AJE into MPS. Now to go over Board outcomes, I'm pleased to share that on the robust earnings growth in FY '25, the Board of Directors has recommended a final dividend of INR 50 per equity share of INR 10 each of the company. On capital allocation, our priority is always to redistribute surplus funds to the shareholders of MPS provided there's no imminent use of those funds over the next 6 to 12 months. This approach has allowed us to stay focused, disciplined and responsible. Our acquisition approach continues and is now focused on acquiring healthy and growing assets, albeit at compelling valuations and significantly enhance shareholder value. Let us now open the call to questions.

[Operator Instructions] Our first question comes from the line of Mahesh, who is an investor. Please go ahead.

Rahul, I have 2 questions. My first question is regarding funding acquisitions. In the past, management had articulated that the acquisitions will be funded by internal resources, debt and equity in that order. How should shareholders read into the recent resolution for fund raising through QIP? That's my first question.

Thank you, Mahesh. Thank you for your thoughtful question. Yes, I would not over analyze the -- so firstly, nothing has changed, as you rightly pointed out, that is the correct sequence and equity is going to be the last resort. So I would not delve too deep and worry about the enabling resolution that we've gathered. Essentially, what we've done is simply armed ourselves with an enabling resolution. Only if an extraordinary opportunity presents itself, what would that extra opportunity look like? Number one, if in one shot, we can scale MPS to Vision 2027, and be a year or 2 ahead of the schedule through an acquisition which is of unprecedented scales, strategic fit and capability expansion, of course, acquired at a compelling price. What this would mean is that, that type of an acquisition would require a check size anything between INR 300 crores to INR 700 crores, which means that the internal accruals, existing cash reserves and the debt we're comfortable with is not enough. So at this point, we're not seeing this kind of an opportunity play out for us. But we've armed ourselves because the market is seeing a lot of consolidation. If we see something, we don't -- we want to be able to jump at that opportunity and not have to struggle to find financing in that particular course. So why -- if it's so extraordinary why arm ourselves with this resolution? First, in the past, we've been periodically and repeatedly been approached by some very high-quality institutional investors who express a desire to enter MPS, but can't seem to find any liquidity. So to solve for that, QIP could be a potential solve. We also know that the promoter group is extremely bullish in MPS and has no desire to dilute its position anyway before FY '28 because there's a very strong vision out there. So the promoter group will not dilute. So a possible win-win option is that if MPS finds a massive opportunity where we have to write a check size, for example, of INR 500 crores, then we are able to conclude the opportunity and a pool of high-quality institutional investors can also enter our cap table. Finally, the resolution, while may not be used unless there's an extraordinary event, it does allow us to set at a different kind of tables where we can pursue large deals and opportunities because at that table, you need to show your source of financing and source of funds. So essentially, we've opened up a new world of scaled acquisitions to MPS. We don't have any bites to take on right now. But at least we now have a seat at the table with this resolution.

This is very helpful. My second question is on margins. What could be the impact on margins in any of the verticals that you operate in the medium to long-term because of AI? And have you experienced any changes in the conversations with your clients so far?

Sure. So I'll talk a little bit about the conversations we're having with the customers as well as the impact of AI on margins. And then specifically for eLearning, I'd like to bring Archana into talk about, because in that space, we're actually seeing some very significant gains in the coming months and quarters. So I like her to specifically speak about eLearning. Overall, we've seen AI be an enabler of margin expansion. Already in the research business for many years now through machine learning, we have been seeing significant improvements, and we always share those benefits with our customers. So typically, what happens is you can't implement AI or ML in isolation. You need to collaborate with your customer, which means that they have to do certain things on their end for the technology to make sense, and we have to then, of course, unlock that for them and configure the technology for them. So typically, it ends up happening in deep collaboration, it starts with the conversation of a pitch and benefits are communicated. And usually benefits are shared fairly equally between the customer and us. Like I said, within the scientific world and the research world, we've done this time and time again, which has meant vendor consolidation, increased volumes, higher share of wallet for MPS. So we end up producing more volumes and margins have also expanded. Most conversations that we have around volume expansion and business expansion today are around AI. So I can't think of a single customer meeting where we don't talk about AI anymore. That's how focused it has become. Having said that, the highest impact that we see potentially from an incremental standpoint is probably going to be in the education business and the eLearning business. And the reason I say that is the penetration right now has been fairly low. So on the education side, I'll call on David in a minute to talk about some of the opportunities he's seeing with AI from a revenue standpoint. But from a margin expansion standpoint, I think it will be useful, Archana, if you could describe what's happening in the eLearning world and how you're seeing margin expansion.

Thanks, Rahul. So in continuation to the point on AI, we are in fact seeing a lot of productivity gains because be it content development, or even the delivery process itself. So we have started incorporating AI in terms of intelligent automation, or adaptive design, and even reuse strategies for that matter. So we're able to pass on these benefits and compress time lines for our customers and reduce manual efforts, manual work and also maintain consistent quality. And all of this put together has resulted in improved margin overall.

David, could you talk about some of the -- I know you spoke about the margin benefits. Could you also talk about the revenue opportunities with AI?

Yes, sure thing, Rahul. So I think we're leaders in AI and we see that unlocking a lot of new revenue streams, positioning us at the forefront of industry transformation. With our advanced AI capabilities, we're expanding into high-growth areas such as accessibility, real-time translation, intelligent language editing, content generation. Just a couple of examples. We were selected as the primary translation vendor for one of the world's largest education publishers, thanks to our ability to dramatically improve turnaround times, reduce cost through AI-powered workflows. We've also secured major contracts with several high-profile scholarly and education publishers seeking to rapidly meet the upcoming accessibility requirements. Again, our AI-driven solutions allowed us to deliver faster, more cost-effective services than traditional providers. These wins are validating our technology leadership and also demonstrating the growing demand for these AI-enabled solutions positioning us to capture new customers, deepen client relationships and drive sustainable top line growth.

Rahul, if I can ask a follow-up question. Since you mentioned so many changes in eLearning because of AI. Have you made any changes to the acquisition playbook, especially for eLearning?

Yes. Not just eLearning in general, we have modified our acquisition playbook. We are looking at targets where they are at least at some point in the journey towards adoption of AI and technical innovation, making sure that we do get some strategic AI expertise. We're looking at -- from a diligence standpoint, our diligence is very data-driven now. We're using advanced AI and analytics to perform comprehensive market and financial evaluations to mitigate risk. We also are disciplined. So if you find a deal where an acquisition is not even thinking of AI, or we find that they are not evolving and they'll get disruptive -- will get disrupted. We just pull out from those type of conversations. So the -- we want to make sure that whatever we're adding to our portfolio is innovative, it's future-proof and aligned with our overall growth strategy. Finally, we are prioritizing acquisitions that are aligned with our vision of AI-enabled transformation. So again, if a target business lacks AI integration or shows signs of being vulnerable, we identify them as noncore. So overall, we're embedding AI at the core of our acquisition process and reinforcing our commitment to being the pioneer and leader in our space, not just in terms of innovation, but in terms of sustainable value creation for our customers.

Our next question comes from the line of Vikas Mistry from Moonshot Ventures. Please go ahead.

I have a couple of questions. First, on organic growth. We are doing good at least from acquisition standpoint, but our organic growth is still quite low. So what are the reasons? And when we see the Vision 2028, the 10% organic growth would be needed for that. So how we are looking at that?

Yes. Good question. So I think overall, we -- like I said, we've redefined our go-to-market strategy. We look at our research business as a market, our education business as a market and our corporate business as a market. And I'll call in Archana to talk about the corporate business because that's where the softness really has been in the past couple of quarters. Having said that, research has been growing ever since the acquisition of HighWire. In fact, while our platform business did not take off after HighWire, as a result, our content business, which is -- which on the research side started to significantly grow after the acquisition. The market is obviously viewing us differently. So on the research side, our content business has taken off. Similarly, on the education side, we had a very strong FY '25, as David described in his opening remarks, which includes not just growth with existing customers, but the addition of very high-profile net new customers. So that business also has delivered strong organic growth. We've had softness in the corporate side of our business in terms of organic growth, but we've seen significant margin expansion. But maybe Archana can weigh in on what she's expecting in terms of revenue growth and also how that will play out over the course of the next few months.

Thanks, Rahul. So we have been seeing this period as a strategic transition that deliberately pace to drive long-term value. So our focus was on margin expansion, and we have, in fact, made strong headway because of the operational efficiencies and productivity enhancements that we have incorporated. We also see the strength continuing and improving in Q1. And we have also made, I would say, significant progress in terms of our product road map and AI leadership capabilities, and we also see this translating into revenue expansion in the subsequent quarters. So there are some encouraging commercial signals that we have witnessed. For instance, we've had like a 16% increase in new logo wins in FY '25, which speaks to the market's confidence in our solutions. We have similarly seen a 41% increase in the average new deal size from the start of the year from H1 to H2. And this again, reflects our ability to move up the value chain and sell more strategic offerings. So all in all, the top line will reflect the tail end of the transition in Q1. The trajectory is very clear. We are building a leaner, smarter, future-ready business, and we are confident that Q2 will see a 20% revenue expansion.

So I think -- so research is already been growing at double digit. Education was growing at -- grew at double digit for the first time in FY '25. And then corporate now takes off from Q2 onward, as Archana described. So I think at the core of this also is the structure of the business. The research business has significantly been strengthened between the acquisitions of HighWire and AJE. So the value proposition has been elevated to a new level where while we may not be #1 in terms of size today in the research segment, we're definitely #1 when it comes to value prop and capabilities. Similarly in education, again, not #1 in size, but from a capability and value prop getting there. And then on the corporate side, there's -- obviously this phase of getting our act together on operational excellence. But there's also been a lot of investment in products and new capabilities. And that unlocks begins in terms of those capabilities translating into revenue that unlock begins from Q2 onward in terms of new products being delivered to the market, as customers for those products and so on and so forth. So 2 out of the 3 are already performing in terms of organic growth and the third one will get unlocked in Q2 FY '26.

Kudos to the team for a very good margin expansion, but at least we want to see opening growth also jumping in -- from Q2 onwards. Rahul, my second question is on AI. So as we are -- I think all the management team has shared that we have a very leadership position in AI and all that. So I want to go in depth of it. So are we using multi-AI agentic orchestrations or what we are doing? And we have seen that in AI, if you build the capabilities, then revenue growth can be really not exponential. It will be impulse like function because we have seen in other AI companies also. So are we somewhere near to that? Or it will be too much far for the situation that we are hoping from you? And can you elaborate something more on whatever the segment-specific AI capabilities that we have incorporated and how we are ensuring that agility of team will be such high that will adopt everything at very rapid impulse space?

Sure. So I'll let Naren talk about the technical aspects as the CTO of the technical aspects of MPS Labs and AI in a minute. I'll talk more about the business aspects. So to begin when this whole journey started, MPS Labs, in fact, was founded as central technology, and the brief was enhance productivity and make sure that we are future-proofed as a business. A few years ago, we rebranded as MPS Labs. We -- but where the mission kind of pivoted from -- don't just be a productivity driver but also be a revenue driver for the business. And that pivot has been very successful. As David pointed out, it's opened up a bunch of new revenue opportunities. We are now launching in FY '26 a data and AI practice which is going to be a profit center housed within MPS lab. So far, MPS Labs has pretty much been kind of a support function. So we've allocated budgets and people towards this data and AI practice where instead of just supporting the business passively, the data and AI practice actually goes to market as an independent practice selling data and AI solutions. We are expecting that in the first year, the business will kind of breakeven on its own on a stand-alone basis. Of course, we'll continue to provide services to the rest of the business, but we are planning to launch this year. The other impact that we've seen around MPS Labs, data and AI in general is also the capability of the people that are working at MPS is also increasing. So one is we -- the level of engineering has grown. But also the level of subject matter expertise has grown because now the people on the content side that are employed by MPS, that profile is also changing from BPO to KPO. So today, for example, we employ over 100 PhDs in the U.S. These are subject matter experts and academic editors who are essentially sitting in the content, helping improve the scientific integrity of the content and getting it ready to be published. We also have ballparking here, but about 150 PhDs in India that are doing the same activity, of course, at lower cost for the customer, and a pipeline to grow that by 30%, 40% over the course of the year. So the quality of workforce and the capability of the workforce is also transforming between the engineering piece, but also the scientific expertise within the company. So that's the other knock-on effect that's happening. So yes, so very, very bullish about this. In terms of is it an exponential function or a pulse function, those are things that time will tell us, but definitely hoping that this new independent data and AI practice house in the MPS Labs sets a new revenue stream for the entire company. Naren, it would be useful to kind of describe MPS Labs in terms of the type of people you employ? What's the technical level of expertise and how are we structured?

Yes. Basically, see, MPS Labs, which is a very strong team of domain specialists, engineers, and we have a dedicated team of AI/ML also. So in fact, the AI/ML team has been further expanded by adding in ML engineers and further data centers, as we have seen a huge strategy in all the use cases which I've been working on. So just to let you know, we have been working on various AI/ML use cases across the end-to-end workflows. So these are in various areas related to, for example, content creation, image processing, accessibility diversity and equity inclusion, content editing and copywriting. So these are some of the various areas that we have been working on. And we are seeing efficiencies for some of these projects which have gone live. We are seeing efficiencies anywhere between 30% to 50% in certain areas of the implementations from a productivity perspective. And these teams, the MPS Labs team, the AI/ML team is supported by a dedicated team of SMEs, like Rahul mentioned, which is called the Digital Quality Specialist team, which are working on various models for training the models, validating the data sets and fine-tuning for further performance improvements. And also, we have been developing various tools, automation tools around AI/ML, basically for monitoring the model iterations, the training and tracking the productivity and performance dashboards. So these are also developed, and we are also constantly using this where we showcase not only to our customers in terms of where we stand in terms of the performance and productivity improvements, but also internally, we use this widely for tracking the entire progress of the AI/ML use cases.

Yes, that's great to hear, Naren. And Rahul, we hope that you continue to scale that well, and we hope that AI revenue stream should scale quite meaningfully. My last request with you Rahul -- that's the last question. Last request from at least my side, Rahul. On capital allocation -- so my last request on capital allocation is that you mentioned that if there is a INR 700 -- INR 400 crores to INR 700 crore acquisition, so we have already have some cash and then INR 200 crores will be the free cash we'll be receiving almost every year. Then please try to make sure that the equity portions would be as minimal as possible and that would be a request from our side.

No, absolutely. I couldn't agree with you more. Please remember, I also represent the promoter group. So our interests are completely aligned, right? So equity is always very, very expensive, like I was explaining earlier, it's giving us a seat at a different kind of table. So think of it, we got a resolution that give us an entry ticket. We will only cash that ticket if accruals than INR 150 crores to INR 200 crores of debt. So you're looking at some -- up to INR 300 crores pretty much on our own. Over that, then we start to think about what do we do to close this transaction. And again, that's a very extraordinary event. But at least now we have that entry ticket. Please be rest assured, we -- over the last decade, I think what we've done really well operationally is run a business that is grounded in the realities of operational excellence. But I think the invisible hand has been our ability to allocate capital. I think capital allocation has been the strongest kind of a differentiator for MPS as we scale the business. So be rest assured, in our thinking, we are completely aligned.

[Operator Instructions] Our next question comes from the line of Darshit Surti from Girik Capital. Please go ahead.

Congratulations for the great set of numbers. I just wanted to know if there are any acquisition -- prospective acquisition targets that you might have in mind? Or is there any visibility over that side since we've already taken the approval? That's my first question.

So like I said, those large ticket sizes that I described, those are not in play right now. Having said that, the standard deals that we've been doing over the last 12-odd years, we've done 10 acquisitions in the last 12 years, always eminent. So we do -- we tend to do 1 or 2 acquisitions every year. So you can expect that kind of run rate in FY '26 as well, very much part of the overall growth plan. So we look forward to making some of those announcements through the course of the year.

Okay. So these acquisitions won't require equity fundraising?

Correct.

Our next question comes from the line of Krushi Parekh from BugleRock PMS.

So my first question is that on the sales growth trajectory for the eLearning business, we have seen a degrowth over here. So on a good side, the margins have been improving on this. But can you help us understand that we have been having a good pipeline on the eLearning side. Last call, I recall that we were piloting with about 15-odd customers over here. So how is this trajectory likely to shape up going forward? And also, the reason for how -- why the trajectory has been like this for this quarter?

Yes. So I'll let Archana describe why it's been slower. But I think like you rightly pointed out, the trajectory has been margin expansion, margin expansion, margin expansion, and you've seen that through the quarters. The trajectory plays out from -- as we move from Q4 FY '25 to Q1 FY '26, it continues to play out, so we'll see more margin expansion. And as Archana described, there's a lift off, takeoff on the revenue side from Q2 onwards, so Q2 FY '26, a couple of months away. So that takeoff is imminent. They obviously have formal commitments. They can see it. But maybe Archana, you can describe why it has been slower than what you expected?

Thanks, Rahul. So we were looking at -- as you rightly pointed out, I mean, we had new logos come in last year. In fact, the number of new logos increased, which I did mention earlier in the call as well. We had, in fact, a 16% increase in the total number of new logos in FY '25. And also, we saw the average deal size go up. And these, to me, are strong indicators that we see a strong pipeline going forward as well. But we have been deliberately focusing on operational efficiency because we do believe that this would be a key contributor, not just in terms of reducing the time lines, but also in enabling higher client satisfaction. And the fact that we have a long list of global enterprise clients who are trusting us, I think, stands testament to this. But we are, I would say, at the final consolidation stage and therefore, the trend of margin expansion would also continue well into Q1. And from there on, from Q2, we would be seeing the 20% revenue expansion.

And just to add to that, some of the solutions that we are pitching now, they are more complex compared to the kind of work that we used to do. So as a result, there's a lot more iterative testing, piloting customers that tend to be risk averse. So yes, I think that could potentially explain that the -- as much as saying the average deal size has gone up. The reason the average deal size has gone up is because the solution is also more complex. So yes, that could potentially be just to kind of a more academic answer, potentially be one of the reasons why it's been slower than what we expected. But having said that, Q2 is like 6 weeks away, so.

So basically, we can expect the delivery of these projects Q2 onwards, largely speaking?

Correct. Correct.

Okay. And my second question is that we have been mentioning about the market size of about $600 billion across our capabilities. I want to understand, given our capabilities currently, how much of this is tappable by us at the moment? And how is the competitive scenario in this arena shaping up, how strong or weak are the competitors over here?

Yes. So the -- when we started this journey, our largest competitor was about $150 million in revenue, right? So now they're closer to $400 million, I think they're gunning for $500 million. And -- it's difficult to answer of $600 billion, how much can we get hold off, right? That's just a very difficult question to answer. What we can answer is we're chasing the other larger competitors. So our first goal would be to at least get to that INR 1,500 crores revenue by FY '28. And then I think there's another reset because getting that competitor would have also grown to a much larger size, because they're also growing. So from my perspective, I think it's difficult -- when you have a blue ocean of $600 billion, I think there's enough for everybody so you focus on what can you be your level up. Making sure that as we level up and scale up, we are not doing anything silly. We continue to allocate capital efficiently. We don't do any lazy acquisitions. We continue to invest in the business, which is also equally important. So really we're looking at our lane, and we feel comfortable saying that INR 1,500 crores FY '28 feels very achievable. So we're in that lane right now.

Okay. Sorry, just a follow-up on this. So when we are talking about this -- the size of the market, this includes the captive teams of the publisher than others?

Yes. It includes the captive as well, absolutely.

And how much of this would be something that would be either outsourced or provided by the outside organization?

No. So captive is also outsourced, right? So it's -- again, there's no -- unfortunately, there's not much research. You and I are dealing with the same challenge that this is not a space that has a bunch of industry reports and things like that. So we're dealing equally thin information. I think the key takeaway, again, we are not modeling that's probably the way you're modeling it. The key takeaway for us is that there's a lot of runway. And as operators of business, that's all we need, we don't need a definition of whether -- what does the CAGR look like? What is the terminal growth rate look like. For us, as operators, do we have runway and the answer is yes. So -- and in terms of capabilities, I feel that we -- I believe that we have broadly much of it already. Having said that, there's always room for improvement and those fringe requirements continue to attack.

Our next question comes from the line of Navid Virani from Bastion Research.

Congratulations on a good set of numbers as well as a successful turnaround of AJE. So I have a couple of bookkeeping questions. First one, if I look at the operating cash flow for the year, I can see that a lot of cash is being stuck in working capital, which has obviously impacted cash conversion. So can you give us some sense of where exactly is this getting stuck? And is this a one-off in nature? Or this is something which is steady state?

So I'll let -- give Prarthana a second to compute that and walk you through why there's a mismatch in the operating cash flow. Having said that, overall, if you look at our DSO, our DSO has been improving for quite some period of time. And I think last quarter, we were at 51. And we had even touched 45 in the middle. I think this quarter, our DSO is 53. So from that standpoint, it's improving. Historically, we were always in the 60s. So now that we have a B2C business as well which is largely advances that we feel comfortable that DSO should be somewhere in the 45, 46, 47 range. We've had a one-off in Q4 in terms of DSO, but maybe I'll let Prarthana create the bridge around why is the working capital where it is at as well as how the DSO has behaved in Q4.

Yes. Thanks, Rahul. I think broadly, Rahul you have covered. Just to add, as Rahul mentioned, if you look at the last year, the DSO was around 67 days. So with the change in the revenue mix, we have brought the DSO down to around 53 days as of today, as of the March end. And this DSO, we had seen the good days of September 44, the DSO was 44, and now this has come slightly increased to 53. When you say that the cash is stuck in working capital, if I look at the last year trend, the cash stuck in working capital was anywhere between INR 60 crores to INR 70 crores. Right now, if you see 52, I think there are certain efficiencies which can be built in, in terms of a better DSO because of the change in revenue mix, which is roughly a 10 to 12 days. Balance considering a B2B business, I think that's the kind of working capital requirement that we would have on an ongoing basis. And whatever streamlining can be done in terms of efficiencies, we will do that. But to answer your question, I think the only inefficiency that we have is a 10 to 12 days higher debtor days, which we will work upon and we believe that this can be brought down.

And Prarthana, there were some holdbacks for acquisitions and all that, right? Do you want to talk about that as well?

Yes. So if I look that -- yes. So that impact has happened on a year-on-year basis. So if we see last year, we were carrying a lot of liabilities, which were holdbacks for our last acquisition of AJE, which completed on 28th February '24. So there was a payment of around close to INR 40-odd crores, which was on this account, which has now been completely settled. So that movement has happened from the liability side. So probably now assets increasing to that extent it's -- that's why the number is looking huge. Otherwise, other than the DSO improvement, I don't see any other movement there that one-off from last year to this year, that one-off movement in the liability is on account of the holdback of the AJE acquisition, which was a cash-neutral transaction as far as NPS is concerned.

Yes. Okay. Very clear, very clear. Another bookkeeping question that I have is pertaining to other expenses. If I look at the other expenses, both in Q4 as well as FY '25, I can see a steep rise in this number. So can you just give us a sense as to what are the items which are driving this rise? And can we expect operating leverage benefits because of this going forward? I mean as the business scales up?

Yes. I think so the parts of our business where we are -- we are trying to reduce the fixed cost, fixed cost in our business is mostly employee expenses because the nature of the demand in terms of input that we're getting is a wide variety. So to house all that talent internally is -- we've learned from Liberate and AJE, and competitors of AJE that is not the right method to drive margin expansion. So our overall margins, as you will see continue to expand. And one of the reasons we're continuing to expand is because we're embracing outsourcing, using contractors and those kind of things as a tool to drive margin expansion. So yes, so there is a structural change happening in the company, which is -- we're trying to do -- trying to have to embrace outsourcing and contractors in the business. That's my overall understanding. Prarthana, would there be anything else in other expenses that I'm missing besides outsourcing?

Yes. If you're really comparing -- just to add on, I think that's largely it. But yes, if you're comparing the other expenses with last year, I think the major increases on account of the acquisition of AJE and the Liberate which is a full year impact this year. Otherwise, if we see the other expenses, excluding that, those are in line with the increase in revenue.

Okay. And last one, if I may. In the initial remarks for the eLearning in our Solutions segment, you mentioned some collaboration in Australia as well as, I think, somewhere else. Can you just give some more details around that? That's my last question.

So yes, so it was -- I can't mention the name because they cover it by NDA. But essentially, what I can mention is that it is a strategic AI partnership. And then the other one is -- we've been invited to join a supplier panel for a large conglomerate. Again, I can't talk about who they are because the customer doesn't want us to share. So yes, it's empanelment on the conglomerate supplier panel.

Our next question comes from the line of Kashish Mehta from Dolat Capital. Please go ahead. Ms. Mehta your line has been unmuted, please go ahead with your question. As there is no response, we move to the next participant. Our next question comes from the line of Kiran from Table Tree Capital.

Congratulations on a good set of results, Rahul. A very basic question, sorry, I might have gotten my numbers mixed up. So AJE acquisition, we did on 29th Feb, 2024. AJE had revenues of about $35 million -- around $35 million, $33 million, $35 million, which is worth at around INR 250 crores, INR 300 crores. Now given AJE's effective for the full year for FY '25, the difference in revenue between FY '25 and FY '24 on a consol basis that I'm seeing I'm seeing INR 725 crores minus INR 546 crores is INR 179 crores. So I'm just not able to kind of place because we had only 1 month of AJE revenues to be recognized in FY '24. So we have...

Yes, yes. So that's how AJE was presented. Remember, AJE was a loss-making company. Typically, as you do in loss-making companies, we exited from a variety of customer contracts. That's why you also see our other income has significantly increased this year. And the reason is that we -- with some of the contracts we had to walk away, some of the contracts we had to renegotiate in modified terms. So AJE overall is now a USD 20 million business. It's not the size that it was sold to us at, and that has been a very conscious strategy when you presented with a turnaround type of situation. The first thing you do is you figure out what is profitable and what's not and what unprofitable, you exit, you get out of there. And that's what we've done, we've kind of gotten out of this whole -- the loss-making part of the business. So that's not what we -- and it was never $35 million. It was, I think in the mid- to late 20s. But yes, we've exited some of the unprofitable aspects of the business. It was never in our run rate.

So, let's say $20 million also, $20 million is about INR 160 crore to INR 170 crore...

No, I'm ballparking there. I'm ballparking there. It's not an exact number. I'm ballparking there. And again, I'm unable to give the exact number for AJE because of the competitive nature of that market.

Of course, of course. No, no. So my general broad question, Rahul, was not to get into exact numbers to be very honest. My broad question was, let's say, AJE is somewhere in that range. We have just grown INR 179 crores of revenues from FY '24 to FY '25. AJE is most of it. So have we actually grown organically?

Yes, we have. Like I was explaining, the part of the business that's not grown in the corporate business, which has been a weight on the business. But the other part, the research piece and the education business has grown.

Okay. Okay. Because the delta is only INR 179 crores. So maybe I'm not able to make sense of numbers. So that's fine. So that is one part of the question, Rahul. The second part of the question is over FY '26 and FY '27, what is the organic growth that you're targeting? Is it about 15% year-on-year kind of thing? Or will we see a lower or higher number? Again, I'm not looking for exact numbers, but just your ballpark in terms of organic growth?

Yes. So we're chasing 10%, 12% type of growth organically. And of course, Archana pointed out that the corporate business may have some higher level of growth in the short-term. But overall, I think 10%, 12% organic growth is what we look to do in the business. And over and above that, we get inorganic growth, which gives us that other -- the lift off to the larger size.

Our next question comes from the line of Kashish Mehta from Dolat Capital.

This is Rahul Jain. Congrats management on chasing a strong year. Just wanted to understand for the next year perspective, is there any demand scenario kind of challenges in some manner that we are seeing given the research specific or education specific changes that has been announced in the U.S. market. And we also have good China business. So anything related to that given the challenges we are facing on the trade side?

Rahul, thank you for the question. We are on high alert. As of now, I have nothing to report in terms of any negativity on the demand side. Now if that changes, of course, subsequently we'll be the first one to report it. But as of today, we don't see anything negative.

Right, right. And also any incremental trend towards cost savings side of initiatives, because what we are hearing from the management is a combination where either people are going for the pause, or they're doing a very, very large projects to bring in cost down significantly. So is there any unusual trend that we are seeing in the last few months?

Sorry, could you repeat that unusual trend internally? I didn't understand the question. Could you say...

So what you think there's some diverse running is that there is pause that some of these vendors are seeing on the outsourcing side, while some of the clients are doing mega transformation in a very, very large deals. So we're hearing very large deals also. So there are -- our understanding is that some people are completely pausing to save budget while some other are accelerating it because they want to bring the real cost savings. So is there any usual trend you are seeing in some of the size of deals, either pause or acceleration in terms of sizing?

Yes, size of deals, as Archana pointed out, size of deals are growing. Also, transformation programs are being launched, and we tend to be in the top 1 or 2 companies that participate in these type of programs. But yes, size of deals is also growing. And in terms of transitions are becoming more rapid and transformation programs are being discussed.

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

Congratulations on the turnaround of AJE. I just have a -- most of the questions have been answered. I have a couple of questions. So do you have any guidance, conservative guidance for revenue impact for FY '26? My second question would be, we had an exhibition which got deferred a couple of quarters back, which had significant revenues. So can you please give any updates on that? Thirdly, I would just like to understand the perspective of the promoters. So promoters are getting a lion's share of the dividend, which is about INR 140 crore. So I would like to understand, do they -- would they be investing their money in MPS itself? Or do they find any better opportunities to place their payout that they're getting from these dividends? So that's all from my side.

Sure. So I think on the first question, yes, we don't share forward-looking guidance. We've articulated a vision for FY '28. And we are on track to meet that vision. On the question around the Experience Center business, we've completed the Phase 1 of that business, which is kind of designing the consulting phase and designing the Experience Center. We're looking forward to learning more on the execution of that Experience Center. It's not just one Experience Center, it's multiple Experience Centers. So we're looking forward to learning from that from the customer in the coming weeks and months. In terms of the promoter group, yes, I'm unable to answer that question because it is a diverse set up. It's not some -- it's not an office I hold. I hold the office of MPS, and I am unable to answer the question around how the diverse promoter group plans to allocate the capital. That's not the question I can answer.

All right. So can you share some more details about the Experience Center? How much have we invested in that? I mean, what kind of capabilities does it have. How many exhibitions can we expect from it in...

That's a competitive -- that question is competitive -- you're asking a competitive information. It's part of the bid process. So it's hard for me to disclose individual proposal in bid details.

I would now like to hand the conference over to Mr. Rahul Arora for closing comments.

Yes. Thank you again. At MPS, as I was saying earlier, we have demonstrated a strong track record of high capital efficiency and disciplined capital allocation over the last decade. Our growth has mostly been funded through internal accruals. And historically, the only time we raised primary capital was back in 2015 when we raised INR 150 crores through QIP. So I would urge everyone to look at our track record. So the QIP resolution, as I described, is only for an extraordinary event. If we do end up proceeding in the next 6 to 12 months, we are very confident that we will allocate that capital efficiently, and we will not return to the market for many years. So that was kind of my final comment on the QIP. Thank you for your active participation. We appreciate all your thoughtful questions. Your perspective helps us learn and improve, and we want to thank you for your continued support and respect. As I shared previously, our journey together has indeed been remarkable. And there's a long road ahead to FY 2028. And we have a tremendous opportunity to supercharge scale as we head there. I look forward to your continued support, feedback and partnership mindset as we march towards 2028. 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.