MPS Limited (MPSLTD) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to MPS Limited Q1 FY '26 Earnings Conference Call. [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, Mr. Arora.

Thank you, [ Ranju ]. Good evening from Singapore, and a warm welcome to our Q1 FY '26 earnings call. Today on the call, I have with me Prarthana Agarwal, CFO of MPS Limited; Sreenivas TV, COO of MPS Limited. A warm welcome to Sreenivas to his first earnings call at MPS. Archana Jayaraj, Chief Operating Officer, MPS Interactive and MPS Europa. Prarthana joins us from our corporate office in Noida, Sreeni from Bengaluru, and Archana from Bengaluru as well. Prarthana will kick things off in our opening segment today by discussing our financial performance. Then Sreeni will update us on our Education and Research Solutions business segments. Archana will discuss the progress in our Corporate Learning business. 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. Q1 FY '26 was a soft start to what should be a remarkable year for MPS. Revenue growth was muted at 3.9% over previous year, though EBITDA grew by as much as 22.51%. Headcount has grown from 3,007 employees to 3,263 employees, reflecting the scale-up we expect as we progress through the FY. We brought DSO days back to 45 in Q1 FY '26, an achievement my team and I are proud of and are looking forward to sustain. The excellent corporate governance around redistribution of surplus capital is being followed through by tight execution from finance and operations and working capital management. I would like to highlight that we have reset our segment reporting to reflect how the management team views the business today and towards Vision 2027. Our reporting now will be on a market-based approach rather than a product-based or service-based approach. Our core business segments based on the markets we target are Research Solutions, Education Solutions and Corporate Learning. Research Solutions include Content and eLearning solutions for journals, books and MRWs inherited from Macmillan ownership of MPS. Platform Solutions from legacy Macmillan, the acquisition of THINK in 2017 from Digital River and acquisition of HighWire from AKKR and Stanford University in 2020. The acquisition of AJE from Springer Nature completed in February 2024. Education Solutions include the Content, Platform and eLearning solutions business, servicing education clientele inherited from Macmillan ownership of MPS. Acquisitions of Element in 2013, EPS in 2014, and TSI Evolve in 2015. Acquisition of Magplus from Bonnier Corporation in 2016, India operations that support the U.S. education business; acquisition of TOPSIM GmBH from Tata Industries in 2018. Corporate Learning includes acquisition of Tata Interactive Systems Limited and AG in 2018, acquisition of EI Design in 2022, acquisition of Liberate Learning in 2023. Our revised go-to-market strategy focuses on representing firm-wide capabilities to the marketplace rather than our previous product-based approach. We unlocked this strategy first in 2022 and have since then scaled its execution. The CODM has evaluated the business activities and accordingly has realigned the composition of the business segments to reflect the changes in the internal organization structure. Accordingly, the segment revenue and results have been reclassified for all the reporting segments -- reportable periods. I want to now hand it over to Sreeni to discuss the developments in our Education and Research Solutions business.

Thanks, Prarthana. The Education Solutions segment recorded remarkable growth with revenue soaring by 56.64% in Q1 of FY '26. Given the operating leverage available in the business, EBITDA more than doubled compared to previous year, and EBITDA margin was 36% in Q1 of FY '26. What was even more heartening was that this extraordinary success was entirely driven by organic growth since the last acquisition in this segment was way back in 2018. This impressive growth is driven by strategic collaborations with top-tier educational platforms, continuing education institutes and globally recognized learning companies. The infusion of new high-profile clients and a robust pipeline underscores our relentless pursuit of excellence in this business segment. Moving on to Research Solutions. The aggregate snapshot in Q1 does not do justice to the remarkable business performance underlying. What did -- we did witness a small decline in revenue over previous year in Q1 in the Research Solutions. And this decline was entirely due to intentional rightsizing of AJE, which is now operating at an annual run rate of USD 12 million in revenue at impressive margins. The growth in the rest of the portfolio, particularly Journal Editorial Office and peer review and content, platform solutions for journals, books and MRW is lost in the AJE noise. However, for the diligent analysts, it does show up in EBITDA growth, which was nearly 10% in Q1 FY '26 over previous year in Research Solutions business segment. The EBITDA growth was driven by unlocking of operational leverage due to impressive revenue growth in the non-AJE businesses in Research Solutions and the complete transformation of AJE, which though truncated in size, is much healthier in margins, quality of revenue and customer satisfaction. I would like to now hand it over to Archana to discuss impressive progress made in our eLearning business.

Thanks, Sreeni. We entered FY '26 with a clear focus on innovation-led differentiation and a deliberate effort to further tighten our operational levers for long-term stability in a dynamically evolving landscape. In Q1, that translated into decisive progress across both our product strategy and our efficiency agenda. Structurally, we continue to drive greater agility, reflected in a leaner team with headcount reduced from 288 in Q1 FY '25 to 202 in Q1 FY '26, while maintaining delivery strength and accountability. These shifts have allowed us to optimize workflows, improve throughput and strengthen governance across projects. Innovation has been central to our agenda. We have expanded our suite of AI-powered client-facing tools, including interactive dashboards for real-time analytics and visibility, bots for operational excellence enablement and the rollout of our GenAI Studio, a growing ecosystem of curated free tools for both internal and external use. These initiatives are already opening doors to larger and more strategic conversations and are laying the groundwork for scalable differentiated revenue in the quarters ahead. On the solutions front, we launched offerings such as adaptive learning pathways and CAM simulations tailored to address diverse enterprise needs in a range of domains across FMCG, energy and the public sector. Across the various entities, we onboarded 12 new customer logos in Q1. Early strategic bets are beginning to convert into tangible outcomes, including the earlier invitation to join a prestigious conglomerate supplier panel, now resulting in work north of USD 1 million to be executed in 2025 and an experience center project valued at USD 850,000. In summary, we are moving with intent. We are innovating boldly, delivering intelligently and scaling with precision. We're building for resilient, not reaction, and that long-term discipline gives us confidence in our FY '26 trajectory. I would like to now hand it over to Rahul to conclude this opening session.

Thanks, Archana, and thank you for the rich update team. Q1 was soft for MPS, particularly in the context of what we expect to be a banner year. Though the headlines brush over some strong indicators, AJE has declined in Q1, but other things have not. Firstly, North America is growing again for us. After dipping to 45% of our total revenue same time last year, we saw a major bounce back in Q1 FY '26 with a geography accounting for 51% of our consolidated revenue. So North America is growing. With 60% type of growth in Education business was entirely organic, we now have a superior profile of customers, including top-tier educational platforms, continuing education institutes and globally recognized learning companies. Coming to our Research Solutions business. Margins in Research Solutions continue to expand despite a onetime contraction in AJE, which was well planned and very intentional. In the Corporate Learning business, order book and pipeline is moving in the right direction with some sizable orders around the corner. Our total headcount has increased, reflecting what we expect as we progress through this year. Finally, we have a robust acquisition pipeline that should result in multiple deals in FY '26. Let's now move to Board outcomes. Firstly, I'd like to talk about the scheme of amalgamation. I'm pleased to announce that the Board has approved the amalgamation of ADI BPO Services Limited with MPS Limited, subject to stock exchange, statutory and other requisite approvals. As ADI BPO is the holding and promoter company of MPS, this merger will simplify the shareholding structure, enhance operational flexibility, and strengthen direct promoter alignment, all without affecting public shareholding. The removal of the intermediate holding company eliminates structural complexity and overcomes restrictions under current lane rules, clearing the path for inorganic growth for MPS and better strategic execution. This is a key step in building a more agile, growth-focused, and efficient organization. Next, I'd like to talk about restructuring of the overseas subsidiary, transfer of shareholding in MPS Europa AG to MPS Interactive Systems. In continuation, I'm pleased to share that the Board has also granted its in-principle approval for the restructuring of our overseas subsidiary, MPS Europa AG, through the transfer of its entire shareholding to MPS Interactive Systems Limited, another material wholly owned subsidiary of MPS. This strategic realignment is a first step that will consolidate the group's eLearning business under a single focused entity, thereby enabling a unified, scalable and globally competitive eLearning solutions platform with the potential to unlock operational synergies, revenue synergies, streamlining governance and enhancing global market positioning. MPS Europa AG will now operate as a step-down subsidiary of MPS Interactive Systems, enabling a more streamlined structure and sharper execution capability within the Corporate Learning vertical. The transaction will be executed at arm's length and remains subject to valuation, due diligence and requisite regulatory and statutory approvals. Let's now open the call to questions.

[Operator Instructions] The first question comes from the line of Navid Virani, Bastion Research.

So first one, I just wanted to understand regarding the overall growth in the last few years. If I look at the overall top line growth, it looks like it is mostly driven by acquisitions. And additionally, as an outsider, what I'm able to see is that this growth is mostly onetime in nature. And so my understanding was that once we acquire an entity, there will also be some part of organic growth which will come with that entity. But that is not something which I'm able to see right now. I can be completely wrong. So can you just throw some light here and improve my understand here?

Sure. So let's take Q1 FY '26 itself. So if you look at this quarter, essentially, what's taken place is with AJE, and I'm ballparking here, there's been a year-on-year decline of about INR 20 crores in revenue, and that has been highly intentional. We have exited things that were not profitable and the focus has been entirely on making an unprofitable asset highly profitable. We have now hit EBITDA margins of 23% stand-alone at AJE. So if you take AJE out, the business would have grown organically at -- if you take the decline of AJE out, the business would have grown organically at 10% for the Research Solutions business and at 15% for the overall business. So the business is growing organically with the exception of AJE. This AJE hang will continue through FY '26. But fundamentally, the rest of the business is growing. And this does not -- this growth does not include any acquisitions. So this is pure organic growth.

So if I understood your answer correctly, what you're saying is that we are still taking some measures in terms of [indiscernible] as far as AJE is concerned, but the profitability will continue to improve if I look at AJE at a stand-alone basis. Is that understanding correct?

Correct. So like I said, keeping AJE aside, the business is growing organically at 10%, 15%. With AJE, as a result, the growth is fairly flat for this particular quarter. AJE stand-alone, like I said, is about 23% EBITDA margin in Q1. This will continue to improve as we progress through the year, north of 30%. The Research Solutions business, where AJE is currently situated without AJE is operating at 40% EBITDA margin. So again, just to give the margin numbers, AJE stand-alone today is 23%, heading to north of 30% very soon. And without AJE, the Research Solutions business has an EBITDA margin of 40%.

Next question comes from the line of Krushi Parekh with BugleRock PMS.

So maybe if I can stick to AJE right now. So when you said INR 20 crores was the impact on a quarter-on-quarter basis. So on a yearly basis, this would be around INR 80 crores?

So the run rate for AJE that we expect for FY '26 is USD 12 million. And the impact that I was giving you was Q1 FY '26 versus Q1 FY '25, INR 20 crores. And again, the INR 20 crores is the ballpark. And the run rate for FY '26, we're expecting about USD 12 million.

Sure. And on the same line, what is the rationale for -- you mentioned that this was planned and intentional. So what was the rationale for -- so I understand the margins part, but was it that the client to whom we were catering to was not ready to help us with more margins? Or was it something else?

Yes. Like I said, the MPS, overall, we've always been very disciplined with capital allocation. And margins, given that we are in an industry where you can grow organically at 10%, 15%, you can't grow more than that organically. And in order to grow at a higher clip you need inorganic growth. And to fund that inorganic growth, you need unit cash flow. So we've always had the discipline to run high-margin businesses and reinvest surplus cash into acquisitions to drive 20%, 25% overall growth. So any time a business is operating at a low margin, we try and solve for the issues in the business that are leading to a low margin. That's what we've done with AJE. There were clear definitive measures taken, which meant that the revenue has declined, but we’re constantly are looking to improve the margins.

Next question comes from the line of Grishma Shah with Envision Capital.

Curious to know what is this entire amalgamation leading to in terms of dilution and any other outgo from MPS at the moment?

There is no change in shareholding. There is no tax impact or any commercial impact to MPS. This is simply a corporate restructuring at the Holdco level. So currently, the way it was structured was that between the ultimate promoter group and the MPS, there was an intermediary called ADI BPO. That intermediary is getting eliminated and collapsing into MPS. So commercially, financially, even in terms of shareholding, there is no change. But yes, there will be one less entity between the promoter group and MPS.

And the promoter shareholding in terms of percentage will also remain the same in the company?

Remain the same. Exactly the same. Yes, exactly the same.

And AJE, when we acquired, what was the revenue? And now what is the fall that we are -- I mean, currently, it is USD 12 million, but when we acquired, what was the revenue?

Last year, it was USD 18 million, USD 1-8 million. And this year, we're doing USD 12 million, is what we expect on a conservative basis.

Next question comes from the line of Saurabh Surendra Shah with AUM Fund Advisors.

Again, first focusing on AJE. When do you expect to start seeing some growth in AJE, which means your kind of lower-end clients are completely taken off and you're either able to increase business with existing clients or add more clients? Do you expect to see any of that in FY '26? And if not, then when do we start seeing the kind of growth that you are normally delivering?

A lot of activity is taking place -- has taken place last year and is taking place in FY '26. That is activities of 3 forms. One is, we are entering into – today -- as of today, the only B2B partnership that we have in AJE is the Springer Nature. We're looking to expand that partnership to multiple publishers. So a lot of conversations, a lot of discussions and negotiations are happening. So we expect more B2B revenue. Today, B2B revenue is less than 10% at AJE. A most of it is B2B2C. So we expect that to grow. Secondly, our product Rubriq, which is a DIY AI platform, we expect that to scale as well and contribute to the overall revenue of AJE. And finally, on the B2B2C side, we are now looking to expand beyond China, given that China is the predominant market for B2B2C for AJE right now. So these are the 3 levers that we are unlocking. We expect results primarily to show up from Q1 of FY '27. So April 2026 is when we start to see the results. This year, on a conservative basis, we are forecasting USD 12 million for AJE.

So you said from USD 18 million down to about USD 12 million, so you expect this to be about 33% down on a full year basis. And FY '27, any order of magnitude if you consider, if you just could go to USD 20 million from the 3 acquisitions or...

I think pretty -- if you look at the Research Solutions business without AJE, it's growing at 10%, 11% right now, so we would expect similar growth from AJE once this transformation settles. So back to 10%, 11% from Q1.

Next question comes from the line of [ Vikas Mistry with Moonshot Ventures ].

A couple of questions. Last time when we did the AJE acquisition, we have clear criteria to just increase the revenues. Earlier, the revenue of AJE was USD 20 million, so we didn't take some part of the business -- we didn't acquire some part of the business. Then we -- revenue was USD 18 million, now it dropped down to USD 12 million. And before 1 year, we are doing acquisition, we have discussions that we'll continue to cross our EBITDA and continue to have clients to give further services of AJE to other clients, but it is not happening. What has been happening there? And do you think that, that sharp downturn is because that some new competition has arrived and that are giving services at slightly lower rate and your margins are getting...

Yes. So just so that everyone understands the question. So when we acquired AJE, there were 2 parts. One was Research Square, which was a preprints platform and the other was AJE. We did not acquire the preprints platform because it was not a profitable venture. We only acquired the AJE piece of the total company. The revenue has dropped from USD 18 million to USD 12 million, primarily because of cost-cutting measures and making the operations more efficient. So that was the first exercise. So the revenue has dropped to USD 12 million. Financially, this has been a pretty remarkable acquisition. We are expecting a payback of 2 years, so within 2 years MPS would have recovered whatever amount has been invested in AJE. So that's a pretty significant financial upside when you think of it either from an IRR perspective or an ROCE perspective. And in terms of what's the revenue driver here, essentially, if you look at our competition in this market, B2B tends to be a pretty healthy, stable revenue stream for our competition. For us, at AJE today, B2B is less than 10% of our revenue. And as a result, most of our revenue is coming from B2B2C, which has been volatile based on the cost cutting and things that we've done. The path for us really is going to be to -- the strongest lever for us is really going to be to enhance the B2B arrangements. Like I had earlier shared, today, we are entirely dependent on one publisher. Within Research Solutions, we have 20 star accounts that we are knocking on to get into revenue share agreements with them. Unlike other parts of our business where we essentially supply services and solutions and in return get compensated, this is a different type of arrangement that requires more time and strategic discussion because we're essentially entering into a partnership with our customers where they divert inbound inquiries about content services to us at AJE. So the lead time essentially is around a combination of leadership blessing it, contracts blessing it, once they bless it, the IT teams firing up the micro sites and the website to which this demand will be generated to. So there's a lot of setup and groundwork that needs to be done in order to get these B2B partnerships on the way. So like I was commenting on the previous question, we expect to use this financial year to form those partnerships, but really start to execute on the demand from these partnerships from next financial year.

Yes, that's totally [ understand ] at least from the lead time side. But we are surprised that you are saying the recovery will take at least 1 more year. So either we have not done any work on the first year of acquisition or we are moving slow, because 2 years in a world where everything is moving so fast its totally...

Yes, I think there is a need to understand the domain and the overall construct of the market. Like I described already, the -- without AJE, the business is growing -- the Research Solutions business is growing at 10% to 15%. I don't think MPS has ever been slow at anything. I think we have a very strong track record over the last decade. I don't think we are slow movers at all. It is a function of developing capability, a function of the customer entering into a partnership. Remember, these are not client vendor relationships. These are partnership agreements, and they take time to set up and require sometimes even Board approval from the customer side. So yes, it requires an understanding of the nuance of the setup.

Next question comes from the line of [ Darshit Surti with Girik Capital ].

So in your P&L, in the other expense line item, it has grown by 3% on a Q-on-Q basis. Can you elaborate on, like, which line item that has impacted and what has caused it?

Sure. I'll just bring Prarthana our CFO in to answer the question about why other expenses have gone up.

Thanks, Rahul. Yes, that's correct. The other expenses have grown by INR 3.76 crores on a Q-on-Q basis. The increase largely is on account of the outsourcing cost by INR 2.8 crores, which is in line with business and another INR 1.8 crores on account of hosting costs, which is largely our cloud and hosting costs for our Platform and Journals business. This overall increase was compensated by a decrease in marketing costs and overall translation cost. So there's a net increase of about INR 3.76 crores.

So this cost will stay in this range going ahead?

Sorry there is lot of background noise. I'm not being able to hear you clearly.

So cost will stay in this range going ahead. Hello, am I audible now?

Sir, we can't hear you.

Sorry. Is it better?

Yes, much better now. Go ahead.

Yes. So this cost will stay in this range going Yes.

Yes. So as Prarthana was explaining, this cost is -- so if you look at the side of the business that has grown, the Education business has grown significantly. As a result, outsourcing related to the Education business as well as the stand-alone Research business has grown. So this is in line with the revenue growth minus AJE. So yes, so this will continue in terms of this particular level.

Next question comes from the line of [ Jai Chauhan with Trinetra Asset Managers ].

So my question was around like how are the conversations around AI impacting client budgets? And is AI being viewed as a tool for cost savings leading to pressure on pricing or as a value-added service that commands a premium? Can you give more insight on the same, please?

Sure. So we are seeing AI in terms of engagements in 2 ways. One is the more dominant way is to drive operational efficiency. So that is the more dominant way where essentially turnaround times and throughput times of processes earlier managed by MPS, there's a lot of pressure to produce things faster as -- specifically on the Research business. where our customers essentially are subscription businesses. So the more content they push, the more they can monetize. So there's a lot of pressure on the supply chain to produce faster and AI is an enabler that is driving that operational efficiency. So, so far, MPS through MPS Labs and its deep domain expertise has been on the right side of capturing market share and growth in the business. So like I was pointing out earlier, if you look at Research Solutions alone, there's good solid growth there without AJE and a lot of that growth is coming from volume growth from existing customers, which is largely to do with not just AI, but also automation and leaner workflows. So that's on the Research side. On the Education side, the focus is more around product development and how AI can be unlocked in the development of products. And so there its less about efficiency and more about differentiation, and that's being embedded into the workflows. Finally, as Archana described on the Corporate Learning side as well, where our teams are using AI towards driving operational efficiency, which is basically showing up in the margin expansion that you see across the board. In terms of revenue streams, we are getting consulting projects where customers are asking us to advise and advise them on how AI can be used in their workflows. We are getting good eLearning projects around helping the organization prepare for the implementation of AI as well as gauging the organizations towards AI. So majority today is to drive operational efficiency, which is helping us acquire market share, but also margin expansion. And some of it is lot to do with new revenue streams that we have developed. But currently, these revenue streams are fairly small.

Next question comes from the line of Ravi Naredi with Naredi.

Rahul, you -- I am a shareholder since last 15 years. And in last 10 years, you have so much confidence now you were having previously. Thank you very much for this nice pickup. Sir, this Corporate Learning volume down 32%, so any specific reason?

Yes. So I'll let Archana to come in to talk about the turnaround she is orchestrating on the Corporate Learning side. But essentially, we have very intentionally started to turn around the Corporate Learning division. Our plan was to turn the whole thing around by Q1 and start to see some revenue growth through Q2. We are possibly trending 1 quarter behind. But overall, margins have started to look better. Q2 margins look pretty good, too, and things are operating fairly to plan. So I'll let Archana come in and talk more about the Corporate Learning business.

Thank you, Rahul. So continuing on to what Rahul mentioned, in Q1, we, in fact, had like, I would say, threefold priority. So the first was, of course, to continue strengthening our operational foundation so that we could continue expanding margins as planned. And in parallel, we also accelerated our innovation, especially around AI. So we have built a suite of AI-powered learning tools that could also be offered to our customers in addition to enhancing our own in-house operational efficiency. And the third is, of course, we're also focused on a strategic growth opportunity, and we believe that this will have a significant upside in the quarters to come. Given all of this, I mean, yes, we...

Okay. Second, whatever target you give for 2028, '29, 5 years ago, it is intact?

Yes, absolutely intact and hoping to give a very strong guidance next quarter for FY '26 as well. I understand everyone or the entire -- all the shareholder base and everyone who follows MPS has now seen 6, 8 quarters of phenomenal growth, and this appears to be a stutter. So I actually came prepared to share a very strong guidance for FY '26. My CFO said no, we'll share next quarter. So next quarter, we'll also give you a guidance for FY '26. But overall, we are very confident about this financial year. Like I said, the troubles in Q1 -- I won't call it troubles are fairly -- the muted growth in Q1 is fairly limited to the decline as a result of AJE and the softness in the Corporate Learning business. But overall, very, very bullish about Vision 2027 and extremely confident about FY '26, and we'll share guidance on the next earnings call.

Next question comes from the line of Rahul Jain with Dolat Capital.

So I have a 2-part question. Firstly, of course, you partially mentioned that you would like to come out with an official guidance probably in quarter 2. But you also said in some other interaction, some other answer that ex of AJE, the business has already grown 10%. So -- and you expect the AJE business also to post normalization into this growth trajectory. So is it safer to assume that 10%, 12% growth should not be a problem ex of AJE this year, and that should be the going forward run rate for the growth irrespective of the macro that we are facing?

Correct. In fact, the macros, if you see our Education business segment -- so absolutely correct, Rahul, on the on the observation. And with respect to the macros, macros for us actually have been more favorable. So if you look at our Education business segment, which has no acquisitions, the last acquisition that we did in the Education vertical was back in 2018 of TOPSIM GmBH. That business has almost grown at 60%. So -- and a lot of that has to do with the macroenvironment. But because typically, in such environments, there's a lot of emphasis on education, particularly higher education in the U.S.

Right, right. And one clarity what Prarthana said on the other expenses side, given that the nature of those costs are usual, so it's safer to assume that, that remains the cost of run rate?

Yes, correct. So those are in line with revenue growth. So a large part of that was outsourcing and cloud costs, both have to do with the underlying revenue growth, so they have moved in the same proportion.

And this outsourcing cost would be more pertaining to the Corporate Learning business or is this others?

Education and Corporate. Actually, all 3. Education would be the highest, highest of the outsourcing. And then there's outsourcing in Research, there is outsourcing in Corporate also. But Education will be the highest in terms of outsourcing.

Right. And in general outlook, if you could share in terms of what are the trends right now to drive the Research part of our business, which you see could trigger the momentum in this offering that we have?

So I think 3 major drivers really. The first driver with what I'd like to call more of the same, where essentially we are seeing volume growth in the core -- what we used to call the core production business, where we are producing content for journals and books and MRWs. Because there's a lot of pressure on our customers to produce more content, they're looking at scale organizations like MPS that can deliver that content through a technology approach rather than a human approach. And therefore, because we're able to execute on that philosophy and deliver to the turnaround time and the quality levels that they require, which you cannot deliver through a human approach. So for example, you cannot produce an article that you get as a manuscript in 4 hours if you're not -- if you're using a human approach. Now customers are talking about producing articles in 30 minutes. So that's the kind of level of transformation we've seen in turnaround times. Turnaround times that used to be 30 days, first came down to 2 weeks, then they came down to days. Now we're talking about -- then they came down to hours, now we're talking about minutes. So as a result, volume is growing significantly and therefore, we are seeing more market share expansion for MPS because our proprietary DigiCore platform enables most of that. The second type of growth that we're seeing is a brand-new revenue stream, what they call Journal Editorial Office and peer review. This part of the value chain was never outsourced. It was kept in-house. This has gotten unlocked over the last couple of years in a fairly significant way. Initially, this was outsourced to very small companies and then our customers realize that mom-and-pop stores can't deliver to the scale that they require and now this outsourcing is traveling more to organizations like MPS. So as of today, this is the fastest-growing part of our Research Solutions business. We have 2 customers that we are billing over USD 1.5 million for this work. We've added a third customer already, and gradually, we'll get to 20 customers through the course of the next couple of years. So the second lever is Journal Editorial Office and peer review, which is a brand new high-growth revenue stream for MPS. And here, the solution offering is subject matter expertise. So we're actually employing pretty seasoned research professionals including -- today, we have employed almost 200 PhDs that provide this kind of service to the publisher. And the third lever around the growth, of course, is through the acquisition of AJE, we now are also participating to service the needs of the research -- individual researcher. Historically, this market was simply about solving a very small problem of improving the language of a researchers' paper. We are trying to step up the -- based on all our expertise over the last 55 years in scientific publishing, we are trying to step up the value proposition where the value proposition is not about improving the language of the paper, but improving the chances of the researchers' paper getting published, which includes not just improving the quality of the paper, but improving the quality of the entire submission, which is beyond just the paper itself. So those are kind of the levers within Research, which give us tremendous confidence that once AJE stabilizes that 10%, 15% growth that we're seeing will continue to power forward.

That's quite helpful. And last bit, if I could ask, and I know it's not a very relevant question to you. But maybe given your closer association, if you could help us understand that. We have seen this McGraw filing for IPO a few days back. We have earlier seen one of your largest customers going for an IPO. So what explains the trend in this space? And does it directly, indirectly help our business because these are very mature businesses but going for public much later in their journey. Is there any development happening at their end, which would directly, directly impact us?

So both the customers that you mentioned are in our top 5 customers. Both events have significantly benefited MPS. In one case, there was a strong push -- given that they're a scientific organization, there was a strong push on margin expansion, which we helped deliver to them through transforming workflows, through automation. So as a result, our business has done exceptionally well as our maturity as a supplier has improved for them. So revenue with them has grown over 20% between them filing for the IPO and actually the IPO actually happening. So we saw pretty remarkable growth. With the other customer that you mentioned, unlike the first customer where the focus is on margin improvement, for them, the focus is on product development. And if you see our Education business grew at 60%, a large reason for that is extensive product development in the United States in Education. So because our customers are producing more products ahead of -- this particular customer is producing more product ahead of the IPO, it's resulting in larger spends with us. In fact, one of them has signed a 3-year agreement with us -- volume agreement, which is leading to a lot of revenue growth for us. In terms of why IPO, I think historically, many of these companies were family-owned for many, many years. They then went to private equity ownership. And now after having exchange 2, sometimes 3 private equity ownership, they are finally doing an IPO. So it's kind of been an evolution where family-owned businesses went to private equity or family offices, then they went to another private equity/family office. And then finally, the second or the third group has now listed the company for their exit. Most of these companies, if you look at their -- how they're performing, are actually performing very well. Margins are pretty similar to MPS. Valuations, of course, are higher given that they're listed on exchanges in Germany and London. But yes, that's kind of been the evolution from our standpoint.

Next question comes from the line of [ Deepak Agarwal with Param Capital. ]

Sir, my first question was on geographical concentration. So obviously, North America now is 51%. Where do you see this settling? So is this a fair number or it could still go further for North America specifically?

Yes. So the business segment that has the highest kind of exposure -- biggest exposure in North America is the Education business. And as a result, as the proportion of the Education business is increasing, North America is becoming a more important geography again. Corporate Learning as well, we're expecting the next wave of growth to come from North America. My guess is that we'll probably settle closer to 60% as -- 60%, 65% even as growth continues to kick in. And do remember that North American revenue tends to be the highest margin revenue in the overall portfolio. So yes, we had a bit of a change when we acquired AJE where a large proportion was Asia-Pac, particularly China. But I think finally, this settles at North America being 60%, 65%.

Got it. And sir, my second question was on the number of clients billed. So we do see a substantial dip. So is it that -- you have mentioned that clients billed excluding B2C customers, so is it we are looking like-on-like? Or is it, say, 514 in Q1 FY '25 had those customers and now we don't have?

Yes, it's apples-to-apples, yes. And wherever we have unprofitable partnerships, we tend to exit them. So we're very disciplined in terms of making sure that whatever customers we are serving, those relationships are profitable. So -- and then that's why you also see -- as you compare number of clients bill dropping, you also see margin expansion, and that's the reason for that.

Next question comes from the line of Abhilasha Satale with Quantum AMC.

So I have a question on the inorganic expansion. So if you can just discuss your pipeline in brief. And lastly, as you have paid 95% of the dividend, then how are you expecting if any inorganic acquisition to fund through?

Yes. So first, I think the pipeline is very robust. Any given point of time, we're always evaluating multiple deals. And at this point, we have 3 deals that are at a very advanced stage, so we're hopeful that some of them or most of them will conclude this financial year. So looking forward, to that. In terms of the type of acquisitions, we are primarily looking at education as the market, which is -- these are the intersection of education and technology. So these are the markets that we're looking at. And we're looking at companies that have at least USD 10 million of revenue and at least 15% EBITDA margin and that have some tailwinds. So that's the kind of assets that we're looking at. In terms of financing these acquisitions, unlike previously where we -- our philosophy was to acquire and operate, in these cases, we're looking to invest and support the management teams and the promoters. So because we will most likely be acquiring a majority stake and not the entire company, the outlay will be lower, so it could be anything from 51% to 60% kind of range in the first kind of tranche. And in terms of cash -- in terms of how we're going to fund this, obviously, there's cash accruals, but there's also -- we are open to raising debt if that is something that we need to do. And we've stated before that up to INR 150 crores of debt, we are fairly comfortable taking on.

Okay. And the payback, whatever payback you would be looking for the acquisition, that will be in the range of that 2% to 3%, what you have been maintaining?

No. So I think with the distressed acquisition, you see a rapid payback. You see a 2-year, 2.5-year payback. And while I would not call AJE a distressed acquisition, I would call it an acquisition that had financial and strategic upside, and that's why we pursued it. So AJE is trending towards 2. We think that these growth assets would be more like 3 to 5 years because essentially, we are acquiring a vehicle for future growth. So I don't expect these growth assets to have these 2-year type of paybacks because those are massive turnaround and essentially, you're getting paid back to take that pain on. So there is no pain here that we're taking on. So I don't think we'll be getting those 2-year payback type of assets anymore.

Next question comes from the line of , [ Arjun Balkrishnan ] an individual investor.

Continuing on the acquisition pipeline, can you give any idea about -- is it going to be in the first half or the second half?

No, that's very, very like forward-looking price sensitive information. I can't share that. We are trying our best to close whatever we can this financial year.

Okay. Second question I had was the stock, I mean, is very liquid in the market. I don't know how much, I mean, you care about the market, but I'm not sure how much you care about the liquidity. But it's highly liquid. I normally don't -- I don't normally think about stock. But this is -- today, you can see the reaction has been quite -- I mean, the results have not been so bad for an adverse reaction. It's all down to liquidity. Is there a possibility to consider a split to increase liquidity? Otherwise, it's very hard to acquire more shares without being cash [ rich ].

Yes. We have discussed this earlier at the Board level as well. And the thought thinking is fairly clear that how many slices the pie has doesn't really affect the size of the pie, right? MRF is a great example of stock that was very expensive.

I agree.

Again, the management team and the Board are -- yes, so the management team and the Board are -- entirely focused on improving the quality of the business and focusing on the earnings and the revenue. What the stock price is and those kind of things are really what market determine. We don't think of that as something in our control. Our focus is essentially on building a compelling learning company of meaningful scale. Yes, we don't really look at stock price and that kind of thing. Our focus is entirely on building a resilient business.

Ladies and gentlemen, due to time constraints, we have reached the end of question-and-answer session. I would now like to hand the conference over to Mr. Rahul Arora for closing comments.

Thank you so much for a wonderful earnings call. We look forward to your active participation subsequently as well. We appreciate all your thoughtful questions. Your outside-in perspective always helps us to learn and improve. I want to thank all our stakeholders for all their continued support and respect. Our journey together has been quite remarkable and looking forward to taking your confidence forward and supercharging the scale of this company. I look forward to your continued support, feedback and partnership mindset. Thank you so much.

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