MPS (NSE:MPSLTD) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Q1 FY 'twenty seven Earnings Conference Call of MPS Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation 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 so much, Abhirat, and good evening, everyone. A very warm welcome to our Q1 FY 'twenty seven earnings call. Some of you may have already caught me on CNBC earlier this afternoon. Let me now take you inside the quarter properly. Tonight, I have most of the team in one room with me at our Noida office. It says something about how we run now as one MPS.

0:48 With me are Pratna Agarwal, our CFO Sukwan Singh, our Chief Delivery Officer for Research Content Solutions Christine Miranda, Senior Vice President for Research Solutions and Sanjeet Dilwar, Senior Vice President, Business Head for Education Solutions. Soma Badri, SVP and Business Head of Liberate Global, which is a corporate learning business, joins us from Bengaluru. You will notice a fuller cast than usual, and that is deliberate. This quarter, we are splitting the voice over on research between Sukwant and Christine, so that you can hear the two halves of the business for the two people who actually run them. And Sanjeev steps in to take you through the education business. Hearing the business directly from the people building it is exactly how I want these calls to feel. Here is how the next few minutes will run. Prasanna will take you through the financial performance and reaffirm our FY twenty seven outlook that we shared last quarter.

1:39 Sukwant and Christine will then cover research solutions between them. Sanjeev will then follow on education, a segment that keeps earning a larger place in our growth story. Soma will walk you through corporate learning. Finally, I will come back at the end with a few strategic thoughts, in particular on AI and on a major shift you will hear threaded through our entire segment tonight, the move towards outcomes based revenue. Before we open the floor to questions, let's get going. Over to you, Pratman. Thank you, Rahul, and good evening, everyone. Q1 has opened the FY 2027 as the strongest first quarter in the company's history on every line that matters. Reported revenue for the quarter was INR224.24 crores, up 20.4% over the same quarter last year.

2:29 EBITDA was INR76.96 crores, up 53% with the EBITDA margins expanding to 34.3% from 27% a year ago. Profit after tax grew 43% to INR 50.39 crores and basic EPS came at INR 29.7, an all time Q1 high, up from INR 20.78. I want to pause on the shape of these numbers because that is the real headline. Revenue grew 20%, EBITDA grew 53%, headcount rose less than 3%. That is operating leverage doing exactly what it is meant to do with growth converting into margins rather than consuming it.

3:15 Ship out AJE, which is resetting by design and which Christine will speak up speak to, the underlying business grew faster still. Revenue up 28.4% to INR 198.47 crores, EBITDA up 56.5% and the margin expanding close to six points to 33.7%. A few balance sheet and housekeeping items. The total cash and cash equivalents stood at INR 138.02 crores as of June 30 against the borrowing of INR 37.63 crore relating to the facility we drew for the Unbound Medicine acquisition. Collections stayed tight with DSO improving to forty five days from fifty one at the end of March.

4:03 As there are no exceptional items in the quarter, so the results read clean. On the outlook, our position is unchanged and if anything, firmer. We continue to expect the company to comfortably cross INR 300 crores in EBITDA in FY twenty seven. I would ask you to read the numbers the way we read it internally as a floor rather than as a ceiling. It is built bottom up for from each segment's operating plan at an unchanged planning rate, and it implies a three year EBITDA CAGR of roughly 21% from FY 2024 to FY 2027. Q one has landed ahead of a straight line pass to that mark, and our second half has historically out our first. So we enter the rest of the year positioned to clear the line comfortably, not to stretch towards it. With this, I hand over to Sukwan to take you through the Research Solutions.

4:59 Thank you, Pratna, and good evening, everyone. Research Solutions did what an anchor is supposed to do this quarter. It held the portfolio steady while still growing. Segment revenue was INR123.23 crores, up 13.2% year over year, and it remained the largest part of MPS at 55% of total revenue. What I would draw your attention to is the quality of that growth. EBITDA grew 37.9%, well ahead of revenue and the segment margin widened to 45.1%. Set AJA aside and the core of research grew 26.3%. Scale and margin moving together like this is the reset of last two years turning into how we now simply operate.

5:48 I want to further describe this business the way we now run it, not as a services book, but as an AI first knowledge solution company serving the research economy built on a stack of product layers. I will share context on a few layers, and Christine will pick up author solutions and peer review. The first layer is trust and integrity. Digicore, our AI enabled production ecosystem, is now live in client deliveries across our top tier knowledge organization. And research integrity check sits on top of it, detecting paper mills, identity fraud, and image manipulation. The bottleneck in research today is no longer generating content. It is verifying it. This is precisely the control point we occupy.

6:34 The second layer is production itself, where AI has moved from pilot to core delivery. Our AI enabled composition and quality workflows are live in customer delivery and are moving clients onto a modern, higher productivity platform. On our largest programs, this is showing up as one touch workflows, automated alt text for accessibility and AI driven quality checks that catch errors even before they ever reach proofs. This is how the segment took on materially more work while holding its cost line and expanding margins to 45%. The third layer is the platform stack, which is the stickiest revenue we have. Highwire, Digicore Pro and Think three sixty five now in production form the hosting and publishing backbone for our largest clients on multiyear contracts that run mission critical workflow and are not easily replaced.

7:32 Behind all of it sits MPS Labs, our AI and engineering engine whose work compounds across every segment at very little marginal cost. This is not a feature. It is a structural mode. Heading into the rest of FY 2027, my priorities are simple, sustain this operating leverage as new work reaches steady state, scale Digicore and integrity adoption across the renewal base and converting the platform pipeline into revenue. The thread through all of it is the one you will hear from me every quarter. We are positioning MPS at the layer where AI cannot afford to be wrong. Let me now hand over to Christine to take you through Author Solutions and Pay Review.

8:23 Thank you, Sukwan, and good evening, everyone. Let me pick up the two layers Sukwan left me. They tell almost opposite stories that add up to the same strategy. I'll start with AJE, our Author Solutions business. You have heard us describe AJE as resetting by design, and this quarter shows what that discipline looks like. As the customer base finds its new level, the revenue is deliberately smaller, but it is also far more profitable and far higher in quality than the inflated base we carried two years ago. What is left is the high value core, premium editorial and language editing services and AI assisted author workflow.

9:11 Just as important, AJE has started inventing again. We've launched free submission peer review in April, our first genuinely new service in more than two years, and demand has run well ahead of what we planned. The pruning is behind us and from here, AJE is set up to grow on value rather than volume. The second layer is where our offense is, our pre acceptance peer review and journal editorial office business, a layer that scaled because of the acquisition of AJE. This is one of the fastest growing lines at MPS. We are now the second largest peer review provider by volume and our aim is to be the first by the end of this year.

10:02 That growth is anchored by the largest publishers in the world entrusting us with more of their submission workflow, including some of their more sensitive portfolios, which is not a decision anyone makes lightly. A stack of homegrown AI tools is how a team of our sites handles that volume at all. I want to connect both of these to a theme that people will return to. In Author Solutions, we are increasingly paid for an outcome rather than for hours or pages. A manuscript that gets accepted, an integrity decision a publisher can trust, a submission process and move forward. Our controlled work shows a manuscript acceptance rate of roughly 52% against an industry baseline near 32%.

10:54 That is a measurable result we can attach revenue to and it is where Author Solutions is heading. Premium tiers where authors pay for quality and faster turnaround, AI driven productivity gains we share partly with clients and partly keep as a margin and expansion into fast growing research ecosystems such as China, where we have already begun signing partnerships. With that, let me hand over to Sanjeev to take you through Education. Thank you, Christian, and good evening, everyone. It is a privilege to join my first MPS earnings call and to do this in a quarter like this one. Education has become MPS' second growth pillar and this quarter it delivered a scale.

11:42 Segment revenue grew 42.2% year over year to INR 73.41 crores and 22.1% over the prior quarter at a 35.1% EBITDA margin. A good part of that setup is Unbound Medicine now in the base for its first full quarter and you can see it most clearly in our client count, which rose across the company to eight forty one from four zero four a year ago. As Unbounce institutional subscribers come into our books. Rahul will pick up the strategic picture on Unbounce shortly. So let me spend my time on the rest of the education, which grew strongly in its own right. Underneath the acquisition, our content and learning business kept compounding on its own account, three things drove it. First, our AI enabled content and production work deepened with several of the largest U. S. Knowledge organization across K-twelve and higher ed, moving from pilots into multi year, multi programs.

12:44 Second, our accessibility line where we produce accessible learning media at scale with AI kept building toward a large journals rollout later this year and remains a high margin, high growth business. Business. And third, we are opening generally new lanes including work where clients now pay us to review quality check AI generated instruction content, a service that did not exist for us a year ago and they want now they now want us to grow. Heading into the rest of FY 'twenty seven, we have a healthy pipeline across our largest relationships and focus on extending into international knowledge organization. That together with the first full year of unknown to build on gives us a real conviction under the guidance prasna reaffirmed. Let me hand over to Sona for Corporate Learning. Thank you.

13:33 Thank you, Sanjeev, and good evening, everyone. Corporate learning was the segment that carried the most stress last year, and it is now the segment most clearly turning a corner. This was our second consecutive quarter of growth. Revenue grew about 6.9 year over year to INR 27.60 crores. And the story underneath is the margin. EBITDA grew 60.7% and the margin expanded to 25.3% from under 17% a year ago. We did that on a headcount roughly a third lighter than last year, which is last year's restructuring finally flowing through to returns.

14:20 Now this is not a recovery of the legacy business. It reflects a business that has fundamentally repositioned itself from learning creation to enterprise capability enablement. Today, we help clients solve workforce challenges through AI enabled and immersive solutions that embed learning and performance into the flow of work By enhancing existing LMS, LXP, SharePoint, and enterprise platforms with AI, simulations, immersive experiences, we create scalable solutions that can be reused across business units and geographies. The result is deeper client relationships, greater scalability, stronger margins, and a business built for sustainable profitable growth.

15:09 Growth is also broadening with new client additions across geographies and AI led wins increasingly acting as strategic anchors into larger enterprise transformation programs. Heading into the rest of FY twenty seven, our focus is to hold this exit margin as the run rate, make AI led delivery the dominant part of the mix, and complete the integration of our legacy entities into one unified, liberate global brand. The base is ready. With that, let me hand it back to Rahul. Thanks, Soma, and thank you to you for those rich updates. Before I close, let me pick up Unbound Medicine myself because it is one of the most strategic initiatives we are working on this financial year.

15:57 This was its first full quarter inside MPS, and the headline for me is that it proved the thesis rather than the pitch. Unbound brings exactly what we bought it for, a recurring, higher renewal subscription business anchored in medicine and nursing, sold to a broad institutional base of medical and nursing schools, hospitals and libraries. That base does two things for us. It lowers our customer concentration and gives us far more predictable forward revenue than a traditional project book. None of our anchor relationships is bidding less. We have simply added a long tail of high quality recurring accounts on top of it. It also brings the capability we care about and what we call Unbound Intelligence, a knowledge engineering layer that turns trusted medical content into AI products that do not hallucinate.

16:48 We are integrating deliberately, learning that renewals cycle before we commit to synergy timelines, and we have started early cross sell conversations with some of our customers. It's behaving exactly as we underwrote it and on the acquisition of this importance, that's the best thing I can tell you. Now let me close the opening section with three thoughts before we take your questions. First is on AI because it runs through everything you just heard. We run MPS on one principle when it comes to AI. It should show up in our revenue, not on slides. Digicore and Research Integrity Check are deployed at scale. Our AI author workflows have processed well over a million manuscripts. Bridge AI is translating at enterprise scale inside corporate learning. The common thread across all three segments is that we sit at the layer where AI cannot get it wrong, cannot afford to get it wrong, where every fact has to be sourceable and every output has to be trusted.

17:45 When the market worries that better models will commoditize everyone, my view for the work we do is opposite. As models get stronger, the constraint moves from generating content towards verifying it, validating it, toward domain context, toward the last mile inside a real workflow. That last mile is exactly where MPS sits and it's a tailwind for us, not a threat. The second thought is the one I want you to take from me tonight and heard every little touch in it. Our revenue is steadily shifting from being paid for effort to being paid for outcomes. For most of MPS' history, we were paid for pages produced, hours worked. Increasingly, we are paid for a manuscript that gets accepted, for a paper mill caught before it gets published, for accessible assets delivered at scale, for a subscription that renews every year at Unbound, for a learning program that changes how someone performs in the job.

18:42 Outcomes carry better economics than effort because the value sits in the result rather than the input, and they are far harder for anyone to commoditize. That shift is a large part of why revenue grew 20% this quarter, while EBITDA grew at 53%. As the mix keeps tilting towards outcomes, this is the engine underneath the margins, and that is deliberate, which brings me to my third thought on FY 2027. Before the guidance itself, let me give you one framing in my own words because I know some of you measure us this way. There's a simple test in the finance world called the rule of 50. Take your company's revenue growth and add it to its EBITDA margin. And if it's too clear of 50, we're looking at a business that is compounding rather than buying its own growth in margin. This quarter, our 20% revenue growth and over 34% EBITDA margin put us comfortably past the rule of 50.

19:33 But let me be measured about it. I'm not promising that we will clear 15 every quarter of this year because phasing of our business does not work that neatly. Having said that, the analysts might crunch the numbers and say, no, you will cross it every quarter. But you know us as a conservative management team at MPS when it comes to stargazing. Rule of 50 is a mark we are hopeful of hearing for the full year and opening FY 2027 on the right side of it tells you the operating model is doing exactly what we built it to do. On the guidance itself, Pratna has reaffirmed our expectation to comfortably cross INR300 crores in EBITDA. And rather than repeating the number, I won't tell you how much conviction sits behind it. This was the strongest opening quarter in the entire history of MPS. Margins expanded in all three segments, and we delivered it without leading a headcount.

20:18 The work to deliver this year is not sitting in front of us as a plan. It's already in flight in the way MPS now operates every day. Please read the guidance as a floor, not as a target we hope to reach. We enter the rest of FY 2027 with more conviction in MPS and this business than any point in the last two or three years. The portfolio is in better shape, the team is deeper and the discipline we built through last year is now simply the run rate, not the project. With that, let us open the call to your questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant.

21:10 Ladies and gentlemen, we'll wait for a moment while the question is in. The first question is from the line of from. Please go ahead. Yeah. Hi. Hi, team. Congratulations on good numbers, and it's good to actually see such a a large panel on the call as well. So my first question is actually related to that. Over the last one year, we have actually seen some movement in the people, you know, in the... At the at the management level. So first of all, what is driving some of these exits and replacements? And the second part to that is that, you know, I mean, considering we are geographically spread across the globe now, how are we ensuring that the operational and the cultural continuity is there across our acquisitions, across our business lines as well?

22:08 Yes. Thank you for that thoughtful question. So as an organization, we of course while we discuss Vision 2027 and FY 'twenty eight, we are building for 2032. That's the overarching kind of long term planning that we're doing. And as we're building towards that, the talent machine is growing both internally as well externally. Now as the talent machine expands in a very quick span of time, Sometimes you make mistakes, sometimes things go well. I think overall, as a management team and as a Board, we're very pleased that more often than not we get it right. Sometimes we don't get it right. But just looking at if we benchmark ourselves to markets in general, MPS is performing better than markets when it comes to external talent acquisition in terms of success rate. In terms of internal rates, we are seeing far we saw far more promotions this financial year than previous year and in the previous couple of years, in fact.

23:16 So the internal talent machine is also throwing up good managers from the system. In addition to that, your question was on how do we maintain culture. So I think kind of going bottom up, we are grounded in our core values of what we call the EEE, excellence, efficiency and empathy. Those values have kind of stood the test of time and get translated to every asset, every business that we acquire. And these values are then kind of executed through one singular cultural principle, which is an ownership mindset. So between the cultural principle and the triple E values is how we integrate acquisitions across the globe, not just in India.

24:04 Okay. Great. On on the second side, we have seen actually reduction in our employee base. Now I believe, you know, some of it may be because of our acquisitions having some redundancy in terms of employees. We were also looking to outsource or, you know, use the gig workers as part of our process. And I'm sure there is, you know, a productivity also involved over last one odd year. So, you know, from that... You know, when we specifically look at productivity part of this reduction, how are we actually looking and ensuring that we are not diluting the quality of the offerings that we have with our customers. You have highlighted, you know, mean, how you are using AI, and I think even Sukwan has touched upon it as well a little bit in your opening remarks.

24:57 But if you can just ensure that, you know, how are we looking to ensure that the quality remains at, you know, what we are out to deliver? Thank you for that question. I'll I'll ask Soma to specifically answer this from a corporate learning perspective. You know, how Yeah. What, you know, what has been the impact there in terms of... Because the whole gig worker approach of having a network, etcetera, is more kind of consistent with the corporate learning business. Once Suma is done, I'll come back and talk a little bit about this from a stand alone MPS perspective that does not include the corporate learning business. Go ahead, Suma. Sure. Thank you. So the corporate learning headcount, like, we saw has...

25:44 Is down about 33% year on year, and it breaks into three parts. Largest is really the structural redundancy. Now after last year's restructuring, we consolidated duplicated roles, and we delayered the delivery model, which is more like a onetime reset rather than a recurring part. The second, if I may, is the move from fixed to variable capacity. With that, we're shifting a share of delivery to a gig and associate model. And this is really so that we flex cost with project demand instead of carrying it throughout, you know, the year out. The third and the smallest today, but growing as I can see, is productivity.

26:29 Because as AI enabled authoring content and quality workflows are, you know, coming into the picture, that lets a smaller 14 deliver the same or more. And on quality, which is which is the right thing to prove, and thank you for, you know, touching upon that. We did not touch the senior... If I talk about corporate learning, we did not touch the senior instructional design or the client facing bench, to be honest. And the reductions were concentrated in redundant and non billable layers, and our delivery quality and client retention has held through this transition very well. We watched that quality at the engagement level, and the margin has expanded without any corresponding rise in rework or client escalations, which is kind of a proof that we got structure, but really not capability.

27:28 And, also, I mean, to this entire, you know, aspect, I would also like to add that the improvement that we have seen has come from the mix and the operating leverage. Where in q one, we've been able to show both of them working. Our revenue has grown. I mean, I'm specifically talking about corporate learning at 6.9% to INR 27.6 crores, but EBITDA grew 60.7%, and the margin moved from 16.9% to 25.3% because we rebuild the cost base rather than, you know, chasing volumes or --. So, yeah, that that would be my answer. Rahul, if you may please Sure.

28:15 Thanks, Soma. So the reason I pointed to Soma first is because the question was more about headcount. But I also want to double click on expense because that's where the rest of the story played out with the business. So if you see on the research side, headcount grew from 2,262 or two thousand two and two over last year. And then on the education side, headcount went down from seven ninety nine to seven sixty five. So the headcount was fairly stable. The reason why the increase was nominal is because all the increases that we saw, whether it was from the increments or the addition of Unbound, were kind of nullified by A, AJE entirely offshoring.

29:07 So all The U. S. Roles were brought to India in by the end of Q4 last financial year. So Q1, we had very little U. S. Headcount. And our NPS scores, in fact, Net Promoter Scores during this period actually went up, not down. So it was I've never seen a transition like this where quality actually improves. But while this might sound counterintuitive, we now we suddenly now have more control of the operations and therefore the quality has gone up. And so overall, we've been able to play this dance where the as certain costs are going up on certain parts of the business, we've also been able to pull them down in other parts of the business.

29:55 All right. Thank you so much. I'll get back in the queue. Thank you. Thank you. The next question is from the line of Kashish Mehta from Dollar Capital. Please go ahead. Hi. Congratulations on a very good quarter and thank you for taking my question as well. I just wanted some color on the number of clients build during the quarter. So if I look at it q on q, you know, it has gone down from nine zero six to eight forty one. So is there some, you know, client rationalization or account pruning that is going on? So just want some insights on that aspect. Yes. The only space that there's been pruning in the business is AJE, which Christine already described. That's the only pruning that's taken place in the business. Right, right. Okay. Okay. That's pretty much it.

30:45 Thank you. Thank you. Thank you. The next question is from the line of Ravi Kumar Naredi from Naredi Investment. Please go ahead. Rahul, you are doing really fantastic. In last year, you have changed the company totally. Sir, you had given 300 crore EBITDA for this financial year '27, while our target for top line was 5 thou... 1,500 crore. So you changed the top line to EBITDA? No sir. Thank you for your kind words. It's encouragement always feels good. So the INR 1,500 crore is for FY '28 next year and that probably will translate to more like INR $4.50 crores EBITDA.

31:39 This year's guidance, FY twenty seven guidance is that we will cross comfortably cross INR 300 crores. This is financial year. So for next year, 100 crores and more like $4.50 crores EBITDA. Okay. Okay. Rahul, you are really doing good. Please keep balance between cash and whatever acquisition we are going to do because I... Again, you raise of equity is very costlier to shareholder, including you. So I hope you will abide by this system and not raise any equity. I completely agree with you. I think we've learned we've learned that today itself. Right? So from my perspective, like I shared with you previously, first strike is cash accruals. I think Pratna pointed out that's INR138 crores. The business is throwing out INR15 crores to INR18 crores of cash every month.

32:41 So that's the first area of attack. Second area of attack is, again, let's assume PAT of INR 200 crores, similar cash flow. Cash flow is normally fairly similar to PAT. So corresponding to that, debt of INR200 crores feels very comfortable. So doing an acquisition in the INR300 crores, INR500 crores range seems fairly doable between internal cash accruals as well as debt. So yes, I don't see an equity play here unless again, never say never, right? So but most likely, in terms of likelihood, I think this is a cashless debt financing kind of story. Thank you. It is nice. Any new acquisition in pipeline?

33:30 Yes. So like I've shared previously, there's something always in the works. We have an active pipeline. We're trying our best to not look at assets lower than $15,000,000 in revenue. We modified that one amount simply because of how good the asset was in terms of strategic synergies. But really, don't want to be looking at businesses that are below $15,000,000 in revenue. In terms of what are the types of acquisitions that we're looking at, I think education is the area that has been growing for us. We want to acquire more in education. In terms of domain, science is the core of MPS.

34:16 As I shared previously, are now 25% of our revenue is now coming from outcome based partnerships. 45% of our revenue is coming from recurring themes. So overall, we want to keep that going. So that's again something that we will look in the asset as well. And third, we want to look at subject matter where AI is a tailwind, not a subtractor. And what we've learned is that when the subject matter is high stakes, think of whether where the cost of getting it wrong is so high that you will never go to 100% AI. For example, in the nursing world or the medical world, if AI hallucinates, the cost is a patient dying.

35:06 In cybersecurity, if AI hallucinates, there's a cost of an enterprise dying. So those are the kind of assets that we're looking at where the content itself is such high stakes that AI, instead of being a subtractor, actually becomes a huge multiplier and tailwind, and that's what we're looking at. So between these broad themes, there's an active pipeline. Now of course, the invisible theme is we also need a motivated seller, and that will allow us to acquire the asset in a competitive way, and that then determines the close. Thank you. Thank you. Very good answer.

35:52 We wish all the best. Thank you so much. Thank you. The next question is from the line of Mahesh VP, an individual investor. Please go ahead. Hi, Rahul. My first question is on Unbound Medicine. It's been five months since you took over Unbound Medicine. What new things and challenges have you learned about this sector and the company? Thank you for that question. I think the biggest learning the new so I'm not going to talk about things we already learned in diligence, things that we shared with you previously. I think your question was what new. Think this past quarter, the new learning was the synergy between Liberate and Soma, I'd like to bring you in a minute. Please don't name the customers when you speak. Just talk about what those experiences were in your roadshow.

36:50 So Soma recently did a roadshow in The U. S. Where she and the unbound sales team met with the unbound customers to talk a little bit about liberate. Yes, had an inclination that there could be some synergy, and that's why we kind of went on to this roadshow. But we saw some massive opportunity between Liberate and Unbound where there is a need for experiential learning, learning by doing, and that's an area in the digital world Liberate is really strong at. So that's one new area that we tapped into this past quarter. I think the second thing we learned was how a strong culture can help you punch above your weight.

37:40 So for example, if you look at the ownership culture at Unbound, it's 35 people delivering $9,000,000 of revenue and actively growing. And that softer piece is something that has been heartening to learn from. The third thing, and even though this is competitive information, I like to share it because it's available in the public domain. When your solution or your offering has a value... Has significant value, you hold pricing power, and Unbound possesses exactly that. So while Unbound is the most competitive in their supply chain, so they compete with much larger companies, every renewal with a customer, whether it's a ten year old customer or a three year old customer, has a price increase.

38:41 Every year within a term of a contract, there is a price increase. And as MPS, we've learned that within our portfolio of solutions, there's tremendous there are many areas where there's disproportionate value being created by MPS and there's potential opportunity to do price increases. So that's been the third surprise learning. But again, I'll go back to Soma to talk about the synergies between Liberate and Anman. Thank you. So one of the things we realized, Rahul touched upon that, a lot of the nursing and the the medical or the the paramedical, the pharmacy related world that Unbound caters to, and it it is a huge advanced market with some of the...

39:29 Who who of, I would say, the industry there. And our capability, as in when I say our deliberate or the corporate learning side of the business, our experience and capability in having worked with the medical and a similar kind of world, the synergies we saw were immense. One of the discoveries we had were everything is more physical, tactical even now. While there is a beautiful and a... And the wonderful platform with a lot of content that Unbound already has and shared, there is little to the learning while doing or learning as you do, which is so critical in the medical and especially the nursing world.

40:16 The continuity and so on. So this is where we see us coming in. It is a huge cross selling opportunity. A lot of the AI enabled, immersive, and enterprise platform solution segment that we can partner with Unbound, building on what is existing, increasing, you know, the the value, the the margins for the customers. And the the other very good part is we're increasingly seeing opportunities where we've been able to speak or, you know, very kindly get audience with the highest ranking, the chairs of different institutes or universities that we visited.

41:07 And there was extremely open thought process about how instructional value clubbed with tech and AI enablement can create wonders, continuing... Continuous education and the digital world opening up for that side, which is still pretty much untapped. So the synergies and possibilities are... I would say it is more like, you know, of working into the recurring and more... The renewal and recurring model that Unbound has. This is more of, I would say, a top up that we can do on top of that. Yeah. The synergies are Unbound. Yes. If I can ask a follow-up question on unbound medicines, Rahul. What's the monthly run rate and the margins? And where do you see those two metrics in a year or two from now?

42:07 So I'll get Prasanth to talk about where we are today, and then I can talk a little bit about where we're headed. The monthly run rate is around 800 k per month in dollars. Then Rahul, we can go The margins currently, we are in the range of... We are in the late twenties. We are in the we are between 18% to 20%, and then we increased from here. Yes. So I think the unbound so at MPS, we are we've, over the last few years, kind of embraced the rule of 40, where the sum the arithmetic sum of your EBITDA margin and your growth rate should be over 40. In fact, Q1, like I was pointing out, we are now a rule of 50 company.

43:03 So the same principles will apply to Unbound where the expectation is first Unbound climbs to rule of 40, which is hopefully an EBITDA margin in the mid-20s to late 20s and balance of it flows through revenue growth. And ultimately as the business settles in into MPS, fingers crossed, knock on wood, it crosses the rule of 50 as well. Thanks, Rahul. Thank you. The next question is from the line of Najiket Kalia from N. K. Please go ahead. Yes. Hi. Congratulations on a great set of business, and thank you so much for update so far.

43:49 One small question on the segmental breakup. So I noticed that the corporate learning segment, the revenue has gone up around 7% by a while. The CVT is almost two way. So is that the which... And is there any forex component to it, or could you give further insights on this? Sure. So, ma'am, you wanna talk about the operating leverage if, you know you know, don't worry about repeating yourself. You know, talk a little about the operating leverage in the corporate learning business. Yeah. Sure. In a in a steady state, the business should operate at a 30% EBITDA margin and organic growth should be compared to 12%.

44:40 Like I had mentioned earlier, our improvement from here would come from the mix, the operating leverage. And we've been able to show that already, you know, taking shape in q one or with the results, where our revenue has grown about six... Almost 6.9 or 7% to an INR of INR 27.6 crores, but our EBITDA has grown 60.7% with the margins moving from a 16.9, 17% to 25.3%. Now all of this was because, like we had mentioned earlier or, you know, I mentioned that we rebuild on the cost base rather than chasing this volume.

45:31 How? I would say two engines would take it further from here if we look at it. The first is the shift towards AI enabled, immersive, and performance focused solutions. And this should raise the value of each engagement and carry way better margins. The second is, of course, the depth we see inside the accounts we already have through cross selling, managed learning services, AI platform enablement, and enterprise wide rollouts. The the the capability just increases from here. And we have multiple with, you know, multiple enterprise engagements approaching the million dollar mark for us and the healthy pipeline of new logos.

46:19 We are confident that corporate learning will continue converting growth into profitability while it will still be building a stronger base for recurring and sticky revenue. I hope that answers. Yeah. Thanks, Omar. And by... I know I don't have an... A quick number to answer on that dollar question. What I do know is, you know, North America is not as big for corporate as it is for research and education. So there's a less of a dollar improvement in the corporate learning business compared to the rest of the business. Can go to the next question. Thank you.

47:10 The next question is from the line of Vikas Mathuray from Moonshot Ventures. Please go ahead. Rahul. Thanks for the very good steps. But actually, if you just strip off the inbound revenue, we have found that the growth is in early teens. And we are also agreeing with the fact that AI will enable you people to just give more reliable and more very kind of solutions. So why can't we think about a much higher higher organic growth than we have reported now? And let's let's postpone my check. Thank you for that observation and thank you for pushing us. We are not settling for achieved organic growth. Of course, the aspirations are much higher.

47:58 The quarter that you see is in the rearview mirror, not ahead of us. So our expectation is that in all the three markets, MPS outperforms those markets on organic growth. Now the markets themselves, research grows at 89%. We tend to grow at 15%, so tend to outperform. Education is more like a 15% growth market. We've been growing much higher than that. On the corporate side, I think the market is growing at 1213%, and we've grown 6%, 7%. So that's the area where a lot of the catch up has to happen. But I absolutely agree with you, given the type of business and platform that MPS is, we should be growing at a premium to the market rates and industry rates. And that is the goal here. We're not settling for where we are today.

48:48 Yes. Thanks for that. Because if we look at the management and your commentary from all perspective, you tick all the boxes. The only thing that is missing is the organic growth. If you can push it to maybe higher teams and then some, you know, the negotiation comes through, then that will tick all the boxes for us. So my second caution on, you know, the acquisition. So earlier, we used to be acquiring smaller acquisitions, and now we have to plan for larger ones because that will only move the needle for us. So how does the strategy changes in this direction that we maintain culture and also make sure that no acquisition we do will totally fit into our product portfolio and integration will be much smoother. How both strategies earlier and now will be different?

49:37 Yeah. I think... Thank you for the question. I think first, let's zoom out, right? So why did the strategy change? And what was the reasoning behind the old strategy? I think I'll start with the first one. The reasoning behind the old strategy was to do with the scale of the business. At the end of the day, when we started this journey back in 2012, revenue was INR 125 crores, it was a loss in company. There was no cash. As the business kept growing, we kept deploying internal cash towards acquisitions. And there was this period where as a business, we could not afford anything except distressed assets. The pandemic gave us time to pause and reflect, and we realized that while distressed assets as a standalone investment are highly accretive financially, our typical if you look at ROC, for example, it tends to be north of 30%, sometimes not even north of 50%.

50:33 So as a standalone investment, all of these have been phenomenal. But what an acquisition of a distressed asset does is it distracts you from the very organic growth you're pointing us toward because the entire management team is rescuing a new asset every year. So that's why we decided to pivot and focus more on assets that have some inherent strength rather than a totally collapsed asset that we have to turn around. And so we've seen organic growth return to MPS as we've used this strategy. In terms of the filters that we apply to the acquisition targets, I think I answered that question a little bit earlier around scale and domain. I think in terms of other financial parameters, we make sure that the asset for the over a three year period has been growing at a CAGR of at least 10% on a revenue basis.

51:28 And EBITDA is somewhere between 515%. So where we come in is we improve the organic growth profile, take EBITDA from 5%, 15% to 30% and kind of unlock the Rule of 40% for each of these assets. So that's the strategic value that we add. In terms of how do we make sure that there's continuity, typically during the business phase, we'll identify the teams that will continue with the company. We'll work with the owners to extend them. Is done both financially through stock options, but also more operationally as well by giving people larger roles on the MPS platform rather than working on the stand alone business. As well as I think the many of the deals that we have walked away from during DDA have been because of cultural misalignment.

52:20 We're looking at a very interesting asset on the education side recently where we simply did not agree with some of the shortcuts the management team had taken with some of the customers. And at a very advanced stage, even though it would have been a great financial deal, we decided to walk away from it because we were concerned how it would impact our existing customers. So yeah, think a lot of work is being done around mindset and alignment on thinking, and that's typically done on the BD stage. The next question is from the line of Kaushik Jawar from AK Investments. Firstly, great set of execution from the team. Really appreciate by delivering the number.

53:18 My... I have a very basic question, Rahul. So now we see AI. We... I mean, it is advancing to a very high level with the new models, etcetera. Right? And the quarterly numbers basically showcase that MPS is basically... It's not a threat for the AI. But can you also... Just from an investor perspective, just to get more confident, can you share basically your use cases for each and every segment where AI or as an MPS, we have a real moat in the business, and we can really benefit and get superior margins going forward? Okay. So if you let me assemble my team to answer some of these questions, so we'll go across research, education, and corporate education.

54:12 I want... Would wanna talk a little bit about Unbound, and maybe I'll kick it off with Unbound. And maybe then Sukwan can come in and talk about how he's using AI in in research, and and then Somag can come in at the end to talk about corporate. So on the education side with Unbound, so for example, we use we have within the Unbound platform, we have something called Unbound Intelligence, which essentially is using OpenLLM kind of models that are scraping a walled garden of content and working with the consumer of the content to provide them information real time.

55:00 So for example, if a nurse has a question regarding a specific disease in the flow of work, through a mobile app, she's able to ask a question and through a chat interface, the question is answered. What differentiates us from generic models is that we are not scraping the web to answer this question. We are, in fact, scraping things that are behind paywalls from publishers, content assets that are behind paywalls from publishers as well as content assets that we built over the years. These assets are peer reviewed, sound science assets. So the unborn evidence tool or chat cannot get it wrong because it's not coming from someone's opinion.

55:56 It's coming from science. So that's a very big differentiator for us. So for example, if the same nurse went to chat GPT, there's no guarantee whether that ChartGPT would script the web, what they would script and what information ChartGPT would provide. So that's kind of the defensible moat that is on the unbound side. Let's go to research, Sukwant, and you want to come in and talk a little bit about that. Sure. Thanks, Al. So as I mentioned while I was speaking earlier that for us AI has become embedded in our in our delivery, in our production ecosystem.

56:42 So we talked about three layers. So in terms of our production, we are actually using AI live in our workflows to ensure that speed and quality of the work that we are doing is improved. And also, in particular, the platform side, I mentioned that we have AI support. Our our... Every part of our workflow, you know, right from hosting to publishing. So all our specific parts of our workflows are now being aided and enabled by AI. And on top of that, we have this continuous R and D happening in MPS Labs, which is our AI and engineering engine.

57:35 So overall, AI is actually compounding our deliveries across every segment. So that is the structural mode that I talked about earlier. I'll hand it over to now Sanjeev to Soma, go ahead. Talk about corporate learning. Yeah. So I could say, for us, we are looking at us as an AI transformation partner for our customers. And if if I may just say three, you know, areas that we are really pouring into is AI across the entire learning value chain, not just content or content creation. If a client has... A lot of our clients have thousands of legacy learning assets on their LMSs, on their LXCs, on SharePoints, and we are enabling them to use AI and modernize, repurpose that same content or, you know, add value to it into role based learning, something that will enable performance.

58:40 We we have chatbots that can help you with immediate operational sort of queries, responses, problem solving, reducing downtime. We have our Bridge AI, which we spoke about earlier, and that has multilingual experiences and capabilities. So we're not rebuilding things from scratch, and I think for our internal processes, for clients, there is an evident, you know, value. AI is also enabling us in our basic, you know, our core from instructional design as a process in the assessment evaluation, I would say, rubrics that we create, of course, translation, localization, the quality assurance process we are building in AI models that can give us better results, media production, and significantly, of course, trying to reduce the delivery timeline while maintaining quality for our customers.

59:37 It does, and I would say, finally, AI is is is becoming a growth engine as I see because we are increasingly winning enterprise engagements to build AI enabled learning platforms for pilots, simulation based experiences for our customers, and this is allowing us to solve broader workforce performance challenges as I see. So we were talking about outcomes. Right? How our organization MPS is a whole. We are becoming that AI first sort of a knowledge solutions partner, a partner that enables performance. And rather than simply develop learning or courses, or twice any learning company or a corporate learning or elearning side would do, we're increasing both the customer lifetime value and our margin profile. That's how I would put it.

1:00:32 Understood. Thank you. Thank you for the detailed explanation. Yeah. Thank you. Thank you. Ladies and gentlemen, we will take that as the last question of the day. And I now hand the conference over to Mr. Rahul Arora for closing comments. Thank you, everyone, for a truly engaged hour and for questions that has always been sharp and came from you looking outside in. Your outside in perspective, as I shared previously, is worth more to us than you might think. This always allows us to step back, see our own business from different angles that we can miss sometimes from the inside. And we saw some of those themes today, both in terms of questions as well as remarks. There's a question on what are the new things you've learned about Unbound. I think that was a very valuable question.

1:01:21 There was an encouragement to understand that debt will always be cheaper than equity and to live that principle. So again, very well received. And finally, there was a challenge that we must aspire to drive organic growth in the late teens and not settle for anything less. So again, thank you for that encouragement and challenge. But let me leave you with one thought. If FY 2026 was the year we proved that this operating system works, FY 2027 is the year we let it compound. Q1 is the first quarter and the first evidence that we're doing exactly that. The two ideas I want to say with us today are the ones that run through every voice on this call tonight. AI is showing up in our revenue, not merely on PowerPoint slides, and more and more of the revenue is being paid for outcomes rather than effort.

1:02:10 These are not slogans. This is how a 34% EBITDA margin quarter actually gets built, and they are the reason the conviction behind our FY 'twenty seven guidance is as high as it is. You've heard me say tonight that we are a conservative lodge here at MPS, so I will not oversell the year. I will simply say that the work to deliver is already in flight. To our customers, our employees, our partners and our long term shareholders, thank you for the steadiness you give MPS through every phase of its journey. We have a great deal of work ahead of us. And if I'm honest, we're going to enjoy every minute of it. We look forward to staying close to the year and to updating you again next quarter. Thank you. Thank you. On behalf of MPS Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.