NIIT Learning Systems Limited (NIITMTS.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to NIIT Learning Systems Limited Q3 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vijay Thadani, Vice Chairman and Co-Founder. Thank you, and over to you, Mr. Thadani.

Thank you. Good afternoon, everyone. Thank you for joining the NIIT Learning Systems Limited Quarter 3 FY '26 Earnings Call, and thank you very much for your continued interest. We know you had other commitments today, but you decided to give your time for us. We are grateful to you. Quarter 3 is an interesting quarter, and we'll begin with some prepared remarks and the key business updates, including the inorganic activity, and then we'll follow it with Q&A. Just as a matter of record. Before we begin, some comments that we may be making may be forward-looking and subject to risks and uncertainties, and actual results may differ materially. We want you to note that. The agenda is to complete -- is to discuss the quarter 3 FY '26 results. Second, on our -- progress on our AI-first strategy and AI-enabled revenue. Third, an update on the inorganic activity, which we completed during the quarter. Fourth, we'll discuss the outlook for the rest of the year. And then the rest of the time for question and answers. I have with me the Chairman of the company, Mr. R.S. Pawar; the CEO of the company, Mr. Sapnesh Lalla; the CFO of the company, Mr. Sanjay Mal; Mr. Kapil Saurabh, who heads the M&A and Investor Relations, as well as our other senior colleagues from accounts -- finance, accounts and other governance functions. I'll now hand you over to Sapnesh Lalla for his opening comments.

Thanks, Vijay, and good afternoon to all of you, and thank you for joining the call. In my prepared comments, I will review our performance in Q3 and share our view on the path ahead. Let me first set the context. The global environment, as you might be aware, remains uncertain, client decisions -- decision-making cycles are still elongated and discretionary spending continues to be closely scrutinized. At the same time, we continue to see sustained demand for outsourcing and operating model transformation as clients focus on cost agility and productivity. We continue to see wallet share expansion across a wide range of our clients, though the overall environment continues to remain dynamic. AI is continuing its rapid march to becoming mainstream with significant investments by early movers across different segments, which represents a once in a lifetime opportunity for us as we have often stated. In this context, we delivered another quarter of strong execution in line with our guidance. The revenue for the quarter was INR 4,997 million, it was up 5% quarter-on-quarter and 19% year-on-year. In constant currency terms, the revenue grew 2.5% quarter-on-quarter and 11% year-on-year. Excluding the real estate contract that came to an end as of June 30, 2025, the growth was 9% quarter-on-quarter and 28% year-on-year. The organic revenue growth was 14% year-on-year. Growth was driven by customer ramp-ups and wallet share expansion along with stronger contribution from [ MST ] as we moved past the seasonally soft vacation period in Europe. Robust growth underscores the strength of a go-to-market engine as well as the trust and faith our clients have in our delivery and execution capability, especially for their critical needs. Importantly, our growth continues to be broad-based across services, supported by a healthy flow of new wins as well as renewals. Our ability to expand wallet share with existing clients remains a key growth lever supported by deepening relationships and demonstrated delivery excellence. While spend from existing clients improved modestly, the recovery remains gradual and overall spend is still below pre slowdown levels. We remain cautiously optimistic on the environment and the business impact that we can cause. Notably, the business continues to outperform its peers, demonstrating resilience through industry-leading growth and profitability. Our customer momentum and revenue visibility remains strong. During the quarter, we signed 4 new MTS clients, 1 in life sciences, 2 across BFSI and 1 in the energy sector. We also completed 4 renewals, and we delivered 1 significant scope expansion. As a result, our MTS customer tally increased to 107 at the end of the quarter. The revenue visibility improved to $415 million, up from $409 million previous quarter, and USD 391 million same period last year. Our profitability remained resilient with margins in the guided range. The EBITDA for the quarter was INR 1,038 million. It was up 10% year-on-year, with EBITDA margin at 20.8%, which was within the range that we guided. Margins benefited from improved utilization as well as MST's stronger contribution. This was partially offset by seasonality in the St. Charles business and absence of the real estate contract -- contribution from the real estate contract this quarter. We remain disciplined on delivery and productivity while continuing targeted investments to support our growth across improvements in capability or investments in capability building as well as go-to-market. We made significant progress in building our AI capability. We now have a full position in the L&D market as acknowledged by our customers as well as industry analysts. NIIT has always been at the cutting edge of technology and learning. Our AI-first strategy and learning has evolved into a considerable point of differentiation for us. We have gone live with a number of enterprise deployment of our AI solutions. Notably, the total AI-enabled revenue grew to about 11% for the business -- of the business this quarter. Spending another couple of minutes on financials, our depreciation and amortization was at INR 194 million. Net other income was INR 104 million compared to INR 26 million last year and negative INR 89 million in the previous quarter. It's important to note that the key components included INR 87 million of treasury income, the net exceptional gains of INR 109 million, comprising of a gain of INR 298 million due to fair value adjustment and the future acquisition liability with respect to St. Charles, transaction expenses of INR 54 million on account of acquisition of SweetRush, onetime impact due to increase in employee liabilities due to the New Wage Code of INR 135 million. The net other expense on -- of INR 92 million, and this included ForEx loss of INR 61 million. It also included interest cost of INR 23 million. Tax was at INR 205 million. The effective tax rate was 22% versus 32% last quarter, primarily due to no tax on the gain from adjustment in future acquisition liability. The PAT was INR 743 million and EPS was at INR 5.42. The balance sheet and cash flow metrics remain strong. The DSOs stood at 74 days as compared to 66 days last quarter and 62 days last year, reflecting business mix seasonality and exchange rate movement. Cash and cash equivalents were at INR 9,046 million. CapEx quarter -- for the quarter was INR 126 million versus INR 99 million in last quarter on account of ongoing investments in AI as well as some of the infrastructure refresh that was accomplished during last quarter. The operating cash flow was INR 1,038 million as compared to INR 777 million in the previous quarter with free cash flow of INR 920 million for Q3. Net cash was at INR 6,927 million, was up from INR 5,917 million last quarter. Our headcount was at INR 2,433 at the end of quarter 3, up 77% year-on-year and down 38% quarter-on-quarter. Let me spend a minute on the overall market. Like I pointed out in my opening comments, market volatility continues to heighten the emphasis on cost optimization, prompting increased client engagements on large-scale cost takeout as well as transformation initiatives, although the decision cycles are elongated. AI and its profound impact on the practice of L&D is real and starting to become visible. Early adopters are starting to take advantage of AI with our assistance. We think this has the potential to be a multiyear growth opportunity, especially for an NIIT Learning Systems Limited. We believe NLSL is well positioned to capture a disproportionate share of these opportunities underpinned by continued investments in AI, consulting and advisory services and sales and marketing and go-to-market activities. A strong brand as a trusted and reliable market leader as well as an organization that its clients trust with some of the most critical L&D tasks. Our deal pipeline continues to remain robust with active opportunities across large outsourcing deals, spanning technology, automotive, life sciences, BFSI and other sectors. We would, however, like to point out that due to the significant market uncertainty that decision making cycles are starting to stretch beyond what we would consider typically. We continue to see accelerating structural transformation across industries we serve, driven by digitization, decarbonization, biopharma innovation and AI, AI being mother of all key innovations at this time. Many organizations are actively restructuring to improve cost agility, fueling increased demand for outsourcing. This environment is triggering an uptick in outsourcing activity and NLSL is uniquely positioned to capitalize, especially as select competitors face strategic or operational distractions. A minute on the investments we've made this past quarter and continue to make going forward. NLSL continues to make disproportionate investments in new capabilities and go-to-market spend. Generative AI is becoming increasingly central in client discussions though broader adoption at enterprise scale for L&D remains cautious. Nonetheless, we are rapidly expanding our use of AI across multiple work streams, where deployed, we are becoming more ambitious in delivering measurable learning outcomes for clients while also realizing notable efficiency gains. We, as mentioned earlier, continue to invest disproportionately in our go-to-market capability, as you saw recently with the acquisition of MST Group. We invested significantly to implement go-to market capability in the DACH region. We announced on January 9, NIIT Learning Systems acquired 100% of SweetRush, which is an award-winning provider of human-centered AI-enabled learning experiences, strategic training interventions, XR immersive learning programs, certification programs and talent solutions for Fortune 1000 corporations, along with professional associations and not-for-profit organizations. Founded in 2001, SweetRush headquartered in San Francisco, California. The purchase price for this acquisition was up to USD 26 million, including EBITDA based earn-outs over a 5-year period, creating strong alignment with outcomes expected from the business. This moves us up the value chain, it strengthens our proposition in outcomes-led performance, critical learning and complements NIIT's scaled managed services -- managed learning services engine. Our quality client base with high stickiness, long-standing enterprise relationships, strong repeat business and certification led revenue streams and attractive adjacencies beyond our current [indiscernible]. The company has annualized revenue of approximately [ $22 million ] double-digit margin. Q3 is typically the strongest quarter for the company, contributing about 35% to 38% of the revenue. Clear synergy road map and opportunity to convert projects led work into longer duration managed engagements across and cross-sell of NIIT's global MLS platform into SweetRush's client base makes the acquisition attractive to NIIT clients as well as its contribution to NIIT's bottom line. Margin, like I pointed out, is in early double digits with near-term expected improvements through delivery mix, optimization and operating leverage. We think that the company will become margin accretive over the next 6 to 8 quarters. It is EPS attractive starting at FY '27. The leadership continuity and integration plans to preserve SweetRush's creative edge has been preserved and integration plans to bring both the companies together so that they can leverage each other's key capabilities have been implemented. A minute on our guidance for Q4. We expect revenues to grow -- revenue growth to be 10% to 12% quarter-on-quarter or 25% to 26% year-on-year in constant currency terms. The growth is aided by a robust contract pipeline, continued ramp-up in new clients and impact of acquisition from -- of SweetRush. For the full year FY '26, we expect revenue growth to be 14.5% to 15% in constant currency terms. Margins are expected to be in the 20% to 21% range for the full year and for Q4. With that, I'll hand back the meeting to Vijay for any comments and then for Q&A.

No. I think, Sapnesh, you covered it all. We'll open it up for Q&A so that everybody gets time to ask their questions.

[Operator Instructions] The first question comes from the line of Bharat Gulati with Dalal & Broacha Stock Broking.

Yes. I just wanted to understand our EBITDA margins going forward given that SweetRush is at a lower EBITDA than our traditional business, what would the outlook be for, let's say, the next 1 year, if you can throw some light on that?

It would be in the 20% range.

So would that mean that we would be -- or we would see EBITDA margins coming up for SweetRush immediately as the quarters go on by?

No. Like I pointed out, it would take about 6 to 8 quarters for SweetRush's margins to become accretive. We would have every endeavor to get them to become accretive sooner. However, through other initiatives, we will -- plan to ensure that the margins stay above the threshold.

Okay. Got it. And sir, on our cross-sell opportunity that has come with both the acquisitions, the SweetRush as well as the MST one. How do we see that transpiring toward traditional revenue growth? How much will that aid our organic growth in terms of MST clients -- MTS clients and how would that look like?

We expect that both the acquisitions will result into acceleration in managed learning services clients. It's still a little early to provide concrete information, but we think that each year, we might be able to add one additional MTS client or convert one MTS clients out of the set of clients that -- set of project clients that SweetRush and MST have.

And sir, how would it work on the other side in terms of how SweetRush and how would we leverage their services and in turn, how would we see growth in those 2 companies and come in leveraging our client base? So can we quantify that in certain ways? How will -- how much will that aid our revenues going forward? And if you can put a number to it or maybe give a broad understanding.

Set up workshops, where NIIT is participating in workshops with SweetRush clients, and SweetRush is participating in workshops with NIIT clients such that we are able to introduce each other's services to our key clients.

Okay, okay. Got it. And just one last question, sir. Barring our [ RECO ] contract fall off this quarter, what would have been growth for us? What kind of growth would have we seen if we adjust that?

Like I pointed out, our growth without the [ RECO ] contract would have been 28% year-on-year and 9% quarter-on-quarter.

And a substantial improvement in margin.

Next question comes from the line of Ganesh Shetty, an individual investor.

So congratulations for a strong quarter in a traditionally weak quarter and the macro challenges. Sir, my first question is regarding the embracing of AI-related services by our clients and also our -- convincing them, new clients, to have L&D activities in MTS area. So can you please throw some light on this, sir?

See, like I pointed out, AI is going to be the game changer for learning and development. We're investing in AI over the last 3 years, and we are starting to see AI take foot at least across the key early adopters in our clients. We have a handful of significant -- a handful of significant enterprise grade implementations. And we think that these implementations will accelerate over a period of time.

Sir, my second question is regarding the life science segment. As life science segment is one of the major consumption of AI-related L&D services. Is there any early indication that our AI-based learning systems are providing a synergy for a lot of life science companies? Can you throw some light on this, sir?

You're right, they are early adopters. In fact, one of our large life sciences customers has been an early adopter and they've seen benefits, and they are moving from -- to enterprise-level adoption as we speak.

Next question comes to the line [ Rajkumar Vaidyanathan ] with RK Investments.

Yes. Can you hear me?

Yes.

Yes. Actually, I have 3 questions. So I just want to understand the -- you're saying that you're already deploying these AI services and they are seeing good traction. So broadly, if I split this AI training, generally, it will come under 3 categories, right? One is training on random. [Technical Difficulty] I was having an echo. Can you hear me now?

Yes, please go ahead.

So in short, basically training, there is fine-tuning and there is entrants, right? Do you actually train corporates and customers, enterprises on all the 3 categories? And if you do, what would be nice is if you could give some examples of how that has played out, that will be nice to hear.

So I think your question was focused on, do we do a lot of training for our clients on how to use AI? I think the majority of work for our clients in using AI for delivery of training rather than delivering training on AI. We have a few clients for whom we deliver training that features their associates on how to use AI, but that's a minority of what we do. The majority of what we do is build AI-enabled learning solutions for our clients such that AI is helping run the learning and development for a client rather than teaching them on how to use AI.

Okay. So is it possible to give an example?

Sure. One of the areas where we use a lot of AI is in personalizing learning experiences, building simulations of real-life scenarios that are delivered through AI impersonators or avatars and provide coaching based on how a person did in that simulation. These simulations could be of scenarios with respect to sales, customer service, more complex scenarios such as financial reporting, consulting and so on and so forth. So we use AI to help simulate use cases that our clients often confront, help them confront those use cases as training use cases in a safe environment and provide them feedback on how they did so that when they go into real life, they are able to perform better.

Okay. I think this I explained -- at least answers my question. So just one follow-up. So I assume you also use open source models like Llama large language models. Do you also have some in-house models in addition to this when you do this?

We built a fairly complex structure that allows us to use AI, both large language models as well as models that we have built in a secure environment. It would take me and some of my colleagues a little bit longer to explain how we do this. But we set up our infrastructure in such a way that it is safe and is able to work with the right LLM for the right question.

Okay. And I guess it's the same for the Generative AI use cases as well, right?

That's true.

[Operator Instructions] Next question comes from the line of Gaurav Nigam from Tunga Investments.

Sir, my first question is, if you look at in the last few years, we have done multiple acquisitions. I just wanted to check, how do you internally check whether the acquisition has gone in line with your expectation or not? I mean, typically, we [ believes ] revenue expansion, the synergy and cross-sell that has happened. I mean can you give me a sense of what are the metrics that you use? And if it is revenue expansion, how do the previous acquisitions have fared in the last few years, including the most recent MST Group acquisition?

So we typically do not use revenue expansion as the criteria. We use 3 key criterias. The first one being market segment that could be attractive for us, however, hard to penetrate. A geography that could be attractive to us, where we have not been able to create a lot of penetration. And then the last one is a key capability. So if you look at the acquisition of St. Charles that we did in November '22, the thesis was we needed to create a capability in consulting and advisory services. We also found professional services firms as a key market segment that we wanted to penetrate, and St. Charles enabled us to achieve both scale in our consulting and advisory services as well as market penetration with the likes of Big 4 as well as management consulting firms. So our criteria is typically not to focus on revenue expansion, but to create days in which we are able to penetrate market segments that are attractive, geographical markets that are attractive as well as key capabilities. The acquisition of MST enabled us to penetrate the DACH region in a more complete way.

Got it. Sir, my question was slightly different. What I was saying that, let's say, you -- when you acquired, let's say, St. Charles, you acquired with the thesis that you wanted to get into the consulting segment. But since the acquisition, it has been multiple years. Has it fared as per your expectation or not? Like what are the metrics that you use? One is at the time of acquisition, but over a period of time, how do you evaluate whether that has gone as per the expectation or not?

So other than what I mentioned, we don't disclose the exact metrics that we look at. But what I would say is that while St. Charles is in final year of measurement, it has met the base criteria that we use to make the acquisition so far.

Got it, got it. Sir, one more related question on the acquisition. If I look at the acquisition frequency, it seems to have increased in the last 1 year or so. I mean, with maybe smaller acquisition comparatively. But has anything changed in the external environment or internally, which is driving this change of going for a higher number of acquisitions?

I would say, I mean our ambition has been to become a more complete provider of managed learning services for our clients. The acceleration does not have a lot to do with market environment, but our desire to grow faster.

Okay, okay, okay, more internally driven. Okay. I get it, sir. And then, sir, last question from my side -- sorry?

I just want to say, as we gain more [indiscernible] in terms of acquisitions, that also will be reflected in our pace of acquisition as well.

Understood. Understood, sir. Just a final question. When we look at revenue visibility, I think 2 years back, it was largely driven by addition of new clients. I mean I wanted to check, when we look at revenue visibility now, how does it -- the spread between the acquisition of new clients versus expansion of scope in the existing clients? And how do you see going forward?

I think it's a healthy mix of both. We -- as I mentioned earlier, our growth drivers are a healthy mix of wallet share expansion in our existing clients as well as new client acquisition.

Next question comes from the line of Yohan Khinvasara with Asian Broking.

Congrats on a great set of numbers. Could you provide any details as to like what the average ticket prices for contract which you saw when you onboard a new customer?

Our contracts tend to be between -- typical contracts tend to be between $1 million and $5 million, a small percentage of contracts tend to in the $10 million range per year.

[Operator Instructions] Next question comes from the line of Manav Medewala with Mirae Asset Sharekhan.

Sir, my question is more towards the vertical mix. The industrial vertical has demonstrated impressive momentum over the last 2 quarters. I believe this will be majorly due to the acquisition of MST Group. So do you see this trajectory sustaining in FY '27?? And on the flip side, the others vertical seems to be consistently losing share. Is this a part of a conscious pivot or specific headwinds you are facing in that vertical? That was my first question.

So you're right, the acquisition of MST and specifically the fact that most of their presence is in the German DACH region, which is dominated by industrials, that has given us a head start into industrials. We think that as we grow wallet share across the clients that MST currently has as well as gain momentum and acquire new clients in the DACH region, we should see expansion in the industrials vertical. Whether it will grow is proportionately vis-a-vis others is hard to tell because we are focusing across all the key verticals that we focus on. With respect to your question on others, one of the key clients in the others segment was the real estate contract that we had, which ended on June 30, 2025. And consequently, you are seeing a decline in that segment.

Okay, okay, sir. And another question is more towards the bookkeeping. I wanted to ask on the finance cost part. Is there any seasonality affecting our interest rate cycle because in the last 3 years, including FY '26, third quarter has seen a decline and then it inches up in quarter 4.

So this is Sanjay Mal. This has to do with the seasonality in terms of interest rate movements, and to that extent, you will see the MTM variations, which happened quarter-on-quarter. So in the first quarter this year, we have seen a bump up [ related to ] quarter 2, and that has come back basically.

Next question comes from the line of Bharat Gulati with Dalal & Broacha Stock Broking.

I just wanted to understand, sir, what -- how do we look at our verticals, which are -- I mean I see that our tech and telecom has been growing extremely strong and life sciences as well and BFSI. So is there something that is playing out correctly in those verticals that we are trying to replicate or are not able to replicate currently in our rest of the verticals that will come out, that will start happening as time progresses?

So the way we pick verticals of interest is as follows: Like you pointed out, tech and telecom, that's been a key vertical and that's worked well for us predominantly because the rate of change of technology is so high that it automatically creates a need for training, not just employees as well as customers and partners of large technology companies. So it is an inherent annuity cycle for training given the rate of change of technology. Other market segments that we have chosen, we used 2 key criteria. One is the -- are the market segments high on regulatory trading? So that creates an impedance or sort of a flywheel because regulatory or mandatory training programs need to be conducted year-on-year, and that creates a -- sort of a predictability in a line item that is mostly discretional in nature. So we look for market segments that have high regulatory content. BFSI, life sciences, industrials are examples of market segments that are highly regulated. So in industrial, if you look at heavy manufacturing or automotive or energy or mining or aerospace, these are all market segments, which are highly regulated and therefore consume a lot of mandatory training on a year-on-year basis and fit well with the annuity business model that we have. We try not to focus on market segments that are -- that have traditionally shown a low spend on training. On the contrary, we look for market segments that have high spend on training. Professional services and management consulting firms are an example of a market segment where the employee investment in training is very significant because as you might imagine, a Big 4 is highly regulated. And on top of that, their product is the employee or the consultant. So they wanted to make sure that the consultant is highly trained, and consequently, in the professional services and management consulting segment, they spend 2x to 3x of the average spend across Fortune 1000 companies. So those are some of the criteria that we use to pick the segment that makes most sense for us.

Got it, sir. Got it. And sir, just to understand, so in the SweetRush or in the SweetRush clientele, what is the major -- or which segment would majorly contribute to SweetRush's revenue? And do we add any new verticals with that acquisition?

So one of the things that we found very interesting about SweetRush is a large part of their revenue comes from creating learning materials that are used to train an organization's extended enterprise, be it their customers or be it partners. So for example, some of their clients are the largest chains in hospitality, where the training that SweetRush creates for them is used to train their franchisees which, in turn, contributes positively to the business outcomes for the franchisee or the organization that's carrying or paying for the brand and customer service promise. Likewise, they have a number of clients that have large extended enterprises, some of them, including professional associations offer training as a membership benefit as well as not-for-profits to have extended enterprises. So that's an area of training where SweetRush is able to create training, not as an activity that an organization consumes, but as a product that the organization sells to create business outcome. So that's something that we found very interesting about SweetRush and it creates a new opportunity for us from a growth perspective.

Okay. Got it, sir. And just one last thing, sir. Our utilization gains that we are seeing, which is helping inch up our margins. Is that primarily due to the use of AI? And if so, then where can we see that further -- can we see that going up further?

I think utilization -- I mean we are seeing gains because of AI. But the question that you asked about, utilization gains are more focused on improve operational excellence.

[Operator Instructions] The next participant is Mr. Deepak from Sundaram Mutual Funds.

Sir, my first question is on SweetRush. So if I look at SweetRush calendar year dollar revenue growth, it was minus 10%. And if I compare that with what we clocked in, let's say, our fiscal year FY '25, it was in mid-single digits. So just wanted to understand, I mean, what is the reason for this 10% decline and how much growth are we expecting, let's say, in calendar year '26 from SweetRush. And at an overall company level, what is our guidance in CC term for FY '27 for the whole company also? That is my first question.

Yes. I think as you pointed out, SweetRush saw a challenging environment in 2024 and they were not alone. We saw a challenging environment as well, and it affected a large fleet of training industries. I think that's really what caused them to see negative growth, what caused us to see single-digit growth. I think as we look ahead, the -- and as I pointed out, starting to see modest but certain improvements in consumption. We've seen that across our clients. Given the fact that most of SweetRush's clients tend to be organizations that serve an extended enterprise and use training as a product, they are likely to see or they're likely to be the first to see an uptick in their business because their business. So their business is directly linked to the performance of their clients.

Okay. And sir, for FY '27, then at an overall company level, including SweetRush, what is our revenue and margin guidance?

For FY '26? Is that your question for FY '26?

No, '26 is kind of over, right? I'm asking for the next fiscal year.

We will be preparing our budgets and our guidance for the next year over the next couple of months, and we will be publishing that in our next quarterly call.

Okay. And sir, one question on the cost front. So if I look at our head count this quarter, so there was a reduction of 38 people. But despite that, our employee cost has gone up 5% Q-on-Q. And if I recall correctly, in your previous couple of calls, you highlighted that when things are uncertain, you would rather want your P&L to be more flexible. That's why you would want to execute more of the work to that professional and technical outsourcing route rather than taking fixed costs on your P&L, but you had to break down this quarter's analysis and it is like, there is a reduction in headcount but increase in employee cost, and our professional technical outsourcing also is flat Q-o-Q. So is there any change in strategy of how we deploy or execute the project?

There isn't a change in strategy. I think we make hiring choices across a multiple of different criteria. In this past quarter, we saw a reduction in offshore staffing. However, an increase in staffing onshore, both through increased go-to-market investments as well as some direct cost investments where our employees need to be much closer to our clients.

Okay. And sir, one bookkeeping question. So if I look at your interest cost, this has come down this quarter. I'm presuming that it has something to do with your announced payment as well, which is linked to St. Charles. And you have already highlighted in the quarterly results that due to some adjustment, we have recorded a fair value gain. So that means in future liability, it would go down to that extent. So would it be fair to assume that on a quarterly run rate, our interest expenses would be either at the current run rate or it would be lower?

So the other income, as we -- you have observed that it has multiple components. One of the components, of course, is related to this, and you're right that the future acquisition liability has come down, but it will depend and it is linked to the performance as we go forward. And to that extent, there could year-on -- the impact in the other item as it would be [indiscernible].

He's asking whether in future interest will reduce. Our answer will be, no. [indiscernible].