MPS hosted a conference call on Jan 25, 2022. In the conference call, the company was represented by Rahul Arora-Chairman, Chief Executive Officer& MD, Robin Blakely-Chief Operating Officer, North America LLC and Rajesh Jumani-Chief Revenue Officer.

Q3FY2022 Revenue was modest due to the continued decline in the HighWire business as the company approaches the consolidation phase in the platform business. All the other business grew in Q3FY2022 with excellent margins.

The company's e-learning business continues to build momentum and margins continue to expand due to high operating leverage available.

The education practice continued its expansionary cycle which began in FY2021 and led the growth in content business. Education practice continue to enjoy growth cycle. It grew by 8% YoY in Q3FY2022. The growth is due to digitally driven products a higher value service. To take advantage of the surge the company is building education based digital studios as part of MPS North America.

The company continues to gain momentum by the key customers and there is significant rise in opportunities due to digital adoption and the company is witnessing record growth in content development team. The growth is reflecting in company's standard product and specialized content.

E-learning: FY2022 is turning to be a recovery year for the e-learning business and the company is confident that FY2023 will be a step up for e-learning.

All growth metrics are at unprecedented levels including order book and pipe line which is 25% above 3-year median.

The e-learning market is looking very positive and moving in the right direction. After Covid, digitization of learning and training has gained more steam and the company is witnessing more budget allocation in all streams and geographies in which it operates.

One obvious need for all company today is virtual and digital on-boarding of new hires. Employees retention will continue to be a big focus and the companies will need digital solutions for that as well.

To enhance learner engagement, experience learner formats such as gain, simulation, AR,VR and gamification are becoming more popular and the company has leveraged the strength and competitive edge by creating a new technology named XR optimics.

The company sees increased demand from education customers to create high quality structural review-based content. Revenue of education customers has grown by 200% in the current year.

In the corporate space, the company has acquired new marquee logos and has significantly increased the revenue from existing customers. In the BFSI region the company has acquired lot of new logos in APC region including one of the largest insurance companies in Australia.

Platform Business: Platform revenue decline in Q3FY2022 YoY due to expected and continued off boarding of customer of HighWire. However, the margins were better than expected and ahead of previous financial year. The company expects the trend to continue in Q4FY2022 and a more stable revenue business in Q1FY2023.

Margins are stabilizing for aggregate platform business and is at around 35% however, the company will be satisfied at 42-43%.

Acquisition steps at MPS: The company's first step is to acquire distressed businesses at distressed prices. Given that the company expects the payback period of HighWire acquisition to be less than 3 years and over 80% of the purchase prices the company will recover by end of the current financial year. Acquisition of HighWire is one of the most successful acquisitions of the company; the second step is to stop the bleeding in distressed assets as soon as possible. It used to be taken a year to 18 months however, with the HighWire the company completed this during the sue diligence phase by insisting on certain closing condition and the company was profitable from the first month itself;the third step is stabilize sales and client delivery in any acquisition which typically takes 18-24 months. With high proportion of new setup team working from home the company will be within this range for HighWire; the fourth step is to achieve previous revenue peak for the acquired assets by unlocking synergies with other verticals of MPS core customers. The typical time period is 36-48 months and several growth initiatives are under way at HighWire; the fifth step is to grow the business to unprecedented scale which happens after 5th year onward's, the company will reassess the time lines in the 3rd year of acquisition.

Going forward the company looks at acquiring companies with revenues in excess of US$ revenue 20 million going forward and which are profitable. Within that the company is looking to acquire in e-learning and platform segment. In addition to the above company is looking at acquiring companies in marketing communication space and IT services space.

The company has some real estate property in Brigade Road Bangalore and some addition square feet in residence road which the company plans to monetize and is working with professionals.

Dividend and buyback: The company plans to redistribute the profits at the best possible way to the shareholders. However, between dividends and buyback it will be decided by the board at appropriate time.

Outlook:

Content business: In Q3 it was mute due to 2 large customers on the journal side delayed the volumes and that is expected to come in Q1 and Q2 of FY2023. The content business is expected to grow in double digits for next couple of years and with the earlier said volumes moving it might grow at a higher rate in the medium term. The company expects the revenue growth to be around10-12%.

E-learning business: The company expects the e-learning business to grow at 15-20% in next couple of years due to base affect. But once the Tata Interactive reaches the peak level, the company expects e learning to grow in the range of 10-12%. The company expects the e-learning business to contribute 40% of the total revenue in next 5 years as against current contribution of 20%. The company plans to increase product based revenue when compared to existing project based revenue as it is more recurring in nature. Platform business: The growth to be flattish for FY2023 for platform business as the company plans to revive HighWire business. However, post FY2024, the growth for platform will be around 10-14%.

Education has done well in the last 2 years and the company expects to grow at the same pace till it reaches a certain level corporate business is expected to grow at 15-20% range and research side revenue is expected to grow at 7-8% however margins are expected to be higher as it has the highest operating leverage. The company plans to do business with education institutes more directly than through intermediaries.