MPS Limited (NSE: MPSLTD) Q2 2025 Earnings Call dated Oct. 30, 2024
Corporate Participants:
Rahul Arora — Chairman, Chief Executive Officer and Managing Director
Prarthana Agarwal — Chief Financial Officer
Sukhwant Singh — Chief Operating Officer-India
Tony Alves — Senior Vice President, Product Management
Archana Jayaraj — Chief Operating Officer, MPS Interactive and MPS Europa
Analysts:
Mahesh — Analyst
Rahul Jain — Analyst
Navid Virani — Analyst
Kiran — Analyst
Krushi Parekh — Analyst
Arpan Agrawal — Analyst
Gunit Singh — Analyst
Karan Kapoor — Analyst
Keshav Garg — Analyst
Pankul Sood — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY ’25 Earnings Conference Call of MPS Limited. [Operator Instructions].
I now hand the conference over to Mr. Rahul Arora, Chairman and CEO. Thank you, and over to you, sir.
Rahul Arora — Chairman, Chief Executive Officer and Managing Director
Thank you, Del. Good morning from New York and a warm welcome to our Q2 and H1 FY ’25 earnings call.
Today on the call, I have with me, Prarthana Agarwal, who is the CFO of MPS Limited; Sukhwant Singh, Chief Operating Officer-India at MPS Limited; Tony Alves, Senior Vice President and Head of Product Management at HighWire, which is our platform division; Archana Jayaraj, Chief Operating Officer of MPS Interactive and MPS Europa. Prarthana joins us from our corporate office in Noida; Sukhwant from Dehradun; Tony from the Greater Boston area; and Archana from Chennai. This global representation underscores our commitment to serving our diverse stakeholders across the world.
Prarthana will kick things off in our opening segment today by discussing our financial performance. Then, Sukhwant will update us on Content Solutions business developments. Tony will then follow up on the impressive progress in our platform business. Next, Archana will discuss the rapid transformation in our eLearning business. And finally, I will provide an update on the progress of AJE and Liberate and my perspective on the first half of FY ’25. Let’s get going.
Over to you, Prarthana.
Prarthana Agarwal — Chief Financial Officer
Thanks, Rahul. On a quarterly basis, Q2 FY ’25 showed robust revenue growth. We recorded revenues of INR177.9 crores on an FX-adjusted basis, representing 37.42% Y-on-Y growth. EBITDA margins bounced back to 30.11% in Q2 FY ’25 and overall EBITDA grew by 31.9% in Q2 FY ’25 compared to last year.
Reflecting on the quarter, I would like to highlight three vital strategic achievements: Our top 10 customers now contribute to 48% of our revenue, a much lower customer concentration than when we started this journey in 2012. Revenue quality is also improving with platforms responsible for 28% of the consolidated revenue and even more impressively 40% of the consolidated PBT. The theme of improvement in quality of revenue can also be observed through improvement in DSO days to 44.
I would now like to hand it over to Sukhwant to discuss the developments in our Content Solutions business.
Sukhwant Singh — Chief Operating Officer-India
Thanks, Prarthana. Revenue in the Content Solutions business grew by 37% in quarter two of FY ’25 compared to last year. EBITDA margins expanded to 38.36% as AJE settled well into MPS. In addition to the acquisition of AJE, at the journals component of our Content Solution business, we continued to lead the charge towards revenue growth. Volumes and revenue from our premier customer base grew because our service delivery has been among the best in the supply chain as it has consolidated. Additionally, the recently established revenue stream catering to the Journal Editorial Office has furthered the growth momentum of the Content Solution business. The new offering placed us in a more strategic position in the value chain and improved the stickiness and quality of our revenue with existing customers.
Our Global Education business, now branded as OWL, which stands for One with Learning, also saw significant growth in quarter two of FY ’25. The business unit achieved a much healthier EBITDA margin and the team recorded healthy sales during the quarter, indicating that the new momentum is here to stay. Our world language content development, accessibility solution, and production services capabilities have supported the expansion of OWL. The team’s effort to diversify the customer profile and the successful launch of the OWL brand in the higher education’s marketplace further underscore our strong performance.
I would like to now hand it over to Tony to discuss impressive progress made in our Platform business.
Tony Alves — Senior Vice President, Product Management
Thank you, Sukhwant. Primarily due to the acquisition of AJE, the platform business grew by approximately 67% in revenue in Q2 of FY ’25, compared to the same period last year. Our collaboration with MPS Labs is going exceptionally well in content hosting and AI integrations. Product roadmaps were scheduled throughout the quarter and they respond well to customer and market demands. Several clients are using our latest product, DigiCore Pro’s sandbox implementation toward its final iteration. Our focus is now shifting towards implementations, particularly for transitioning BenchPress clients.
Another highlight was the success of our business development efforts. For example, earlier this financial year, we won a new logo away from our largest Content Hosting Platforms space competitor. We are witnessing an influx of activity in new RFIs and RFPs in the platform business. There is clearly a positive perception of us in the research community, which is highly encouraging. HighWire and MPS offer the only serious independent choice in the market as others are either publisher or private equity-owned, which are not popular choices in the research community.
I would like to now hand it over to Archana to discuss the rapid transformation taking place in our eLearning business.
Archana Jayaraj — Chief Operating Officer, MPS Interactive and MPS Europa
Thanks, Tony. I’m pleased to report meaningful improvement in the eLearning business. Revenue grew by 8.8% in Q2 FY ’25 compared to the same period last year, and EBITDA margins recovered to 19% in the quarter. In the India entity MPS Interactive Systems, revenues were ahead of our internal estimates and EBITDA margin nearly touched 20% in the quarter and are expected to only improve from here. And while the business is still not back to previous levels, it is reassuring to note that we are slightly ahead of our turnaround schedule. The business acquired 15 new logos. Collections have also improved. Average DSO is now 36 days. The teams maintained an average CSAT score of 4.5, and that has also led to recovery from some of the core accounts.
The eLearning operations in Europe made steady progress. At the Swiss entity MPS Europa, EBITDA margins surpassed all other eLearning interests. Moreover, the team is now in deep collaborations with the India entity, working on impressive solutions, and recently won a few orders with MPSI’s customers. TOPSIM GmBH made steady progress towards its FY ’25 goals. This business is now one of the most diverse business interests at MPS, with the top 10 customers accounting for less than 40% of the revenue. And the business is also expected to start paying dividends to MPS Limited from FY ’25 for the first time since its acquisition in 2018.
I would like to now hand it over to Rahul to conclude this opening section.
Rahul Arora — Chairman, Chief Executive Officer and Managing Director
Thanks, Archana. I’ll begin this section by discussing the progress of the two acquisitions. We completed the acquisition of Liberate in September of last year, a move that has significantly shaped our entry into Australia. This successful acquisition of a growing business led to a refreshing change in our modus operandi. We had an opportunity to learn much about what it takes to operate and drive a corporate learning business, which differs from our other business interests.
At Liberate Learning, the top 10 accounts now includes a large banking customer that was dormant for the past several months due to the internal corporate development. The Liberate team has also onboarded new logos that have scaled in quick time to be in the top accounts. As Archana described earlier, taking a cue from the Liberate management team, the rest of the eLearning business has also embraced gig workers. And the positive impact has started to show and we are bullish about the change in operating model and its positive impact on our business in the long run.
The integration of AJE into MPS has been rapid and successful. We are ahead of our schedule in terms of operational and financial metrics. Our formal launch in China this past quarter, followed by a customer roadshow has helped us develop momentum in the region. The presence in China is unique for MPS and helps us participate in global agreements with our customers, who have historically had to compromise on their preferred vendor strategy in the region.
We are now closer to the most critical stakeholder in the research value chain, the funders. Additionally, the AI capabilities acquired through Curie, Lewis, and other AJE tools have tremendous synergies with MPS regarding efficiency and revenue. Our new scale is opening new doors for us, and we expect to hit significantly positive financial metrics, exceptionally high ROIC, and robust organic growth, which are potent combinations for any acquisition.
After a flat EBITDA in Q1, despite a sharp increase in revenue, we have gained much ground in Q2. And we are back on track at the halfway mark, with 37% revenue growth and 15% EBITDA growth in H1, compared to the same period last year. Our Scaling Global agenda has gotten off to a robust start in the first half, and its positive impact is already being felt. North America is now merely 45% of our total revenue, while rest of the world, including APAC is 26% of total revenue.
FY ’25 is proving to be a year when we surpass many of our competitors in the markets that we serve, including research, education, and corporate learning. Markets have taken notice. We are being invited to RFPs and new opportunities that were previously unavailable to us. Scale implies resilience, business continuity, and future-proofing that have all become core pillars of supply chain decisions after the pandemic and the recent AI-driven innovations. Our global reach into additional markets, including Australia, New Zealand, China, Brazil, and South Korea, implies global agreements with our customers, further bolstering our optimism about the future.
Let’s now open the call to questions.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions]. First question is from the line of Mahesh [Phonetic], who is an Individual Investor. Please go ahead.
Mahesh
Hi, Rahul. Can you hear me?
Rahul Arora
Hi, Mahesh. Can hear you. Thank you.
Mahesh
Rahul, my first question is, how is the landscape evolving within the segments that you operate from a technology/AI perspective?
Rahul Arora
So I’ll quickly cover the overall landscape, and I’ll request Tony to talk a little bit about the AI landscape. So currently we operate, while our financials are reported as business segments, content, eLearning, and platform, our go-to-market strategy has been revised and we attack the market as research, corporate and education. We are viewing AI as an enabler for growth across these three particular markets. And I let Tony talk a little bit about how we embracing AI. Tony?
Tony Alves
Hello. Thank you for the question. So my focus has been primarily on Platforms and on Content Solutions and focusing on our research and publishing landscape, which has been really evolving very rapidly with artificial intelligence and machine learning. The major emphasis has been the balance between innovation and maintaining the integrity of trusted research. The segments which are evolving are across the entire research ecosystem, but especially in the content preparation and content analysis areas.
We are working on, MPS is working on solutions that address ensuring research integrity. We are focused on editorial services that address things like accessibility and content creation, including language polishing, translation, editorial preparation, summarizing content, and automated assessment creation. Chatbot support is also a growing area for us and we are building tools into the publishing workflow process and chatbot tools into our hosting platform. I have attended several industry meetings over the past few months and have noticed that publishers have become more and more open to adopting AI and Machine Learning technology, while also being really sensitive to the content integrity and data privacy concerns. Their particular concern is the need to protect copyright, while still letting AI organizations innovate. So there is increasing talk about licensing content to ensure that large language models and other technologies are working with certified facts.
The AI and ML security and privacy standards are constantly evolving and MPS has been adapting to those changing requirements. We have been making incremental changes while implementing artificial intelligence systems to support human-driven decision-making, particularly in the areas that I mentioned previously, and this helps mitigate the risk of relying too heavily on automated processes. I think that’s a good summary of our approach to artificial intelligence and machine learning.
Mahesh
Thanks, Tony.
Operator
Thank you. The next question is from the line of Rahul Jain from Dolat Capital. Please go ahead.
Rahul Jain
Yeah, hi. Congrats on good performance. The first question is slightly understanding the way the business should be evolving with the new transaction of AJE, a component that is still to complete its first year. So, are we getting a better flavor of how the current mix of business is seeing seasonality from the flow of business over the whole quarter across three [Phonetic] segments. I think any color on that will be of great help.
Rahul Arora
Sorry, Rahul, you’re coming across a bit muffled. Could you go again, please? I’m sorry to make you repeat, but I couldn’t hear anything, sir.
Rahul Jain
Yeah, is this any better?
Rahul Arora
Much better.
Rahul Jain
Okay. Sorry for that. So basically what I’m trying to understand is that, with this AJE, now part of the business for a couple of quarters now, have you, do you have a better color in terms of how your seasonality shapes up across business segment now? Any color on that would be of help?
Rahul Arora
Yeah. Thank you for that observation, Rahul. So I think the second half of the year has always been stronger for MPS, if you go even many years back. And whether now, whether Q3 is stronger or Q4 is stronger, ends up being a debate every year, but the second half of the year is the strongest for MPS. And the softest quarter tends to be the July, August, September quarter, which is Q2. So, typically the one, your number one, number two slot is either Q3 or Q4, the third slot is Q1 and Q4, Q2 tends to be the softest quarter. And the reason for that is across the various lines of business and markets, the summer months tend to be slow. So, July, August, September tend to be slow both from a revenue accrual standpoint, but also from an order booking standpoint. So, as a result, the quarter ends up being slow. And AJE is no different with a same, similar customer profile. So in fact anything, it’s further the same setup. So I expect the same seasonality that we’ve had over the last few years, will continue and the second half will be stronger than the first half.
Rahul Jain
Sure. And we did quite well in terms of recouping the profitability of the business. So are there meaningful scope even from this point on the near-term basis, since we are going into a better growth in the H2? Or do you think the bigger juice is already taken and we may see a small improvement in H2 on a profitability point of view?
Rahul Arora
So a lot of the efforts have already been captured, have been executed, but they are not showing up in our results because those costs have been carried forward. I think margins will continue to improve into Q3 and Q4 of this year on the AJE side. I think by Q4, we’ll have a stable margin profile and from Q4 onward, essentially revenue growth, specifically B2B revenue growth will drive the AJE margin profile, but yes, we expect further improvement in both Q3 and Q4 and settling down into a nice margin profile in Q4 for AJE.
Rahul Jain
Okay, okay. Now, moving to the eLearning part of the business, we have seen a significant reduction in the headcount. Is there anything specific that caused this decline in this quarter, or this is the base where it should continue to operate now?
Rahul Arora
Again, thank you for the observation. Yes, the headcount is stabilizing at this new level. There may be some small reduction that will carry forward as part of the same initiative. Again, the execution is done, but sometimes these things take time to show up the results. So there will be some, some further, minor optimizations that will show up in Q3, but the execution has all been done. This is by design, it’s not by accident. We are trying to follow from the Liberate model.
I’ll let Archana, who is the Chief Operating Officer of our eLearning business in India and Europe, talk a little bit about what she is doing in terms of optimizing the headcount. Archana, can you please add your comments?
Archana Jayaraj
Thanks, Rahul, and thank you for the question. The reduction in headcount is basically a reflection of the strategic shift in our operating model itself. And as Rahul mentioned earlier, we are consciously transitioning from a model that’s heavily reliant on full-time employees to a more flexible and elastic delivery structure where we leverage contractors and gig workers. Now this leaner more efficient approach is effectively to enhance our operating margins, to improve the adaptability to our client needs and also volumes, while again supporting our commitment to quality and enabling more investments in future in areas of innovation and growth.
Rahul Jain
Archana, if I just extend this thought, so, because there’s always a constant debate on this part, whether what is the best workable model given that we want to scale? So if we are moving towards more managed training kind of a model, would you see that this is a temporary fix to the problem and we will, we might go to a more in-house model gradually? Or you think from a medium to long-term perspective, this is the optimal model of operation?
Archana Jayaraj
Well, we do believe that this is going to be the strategic shift for the medium to long-term. It’s not a short-term fix at all. We will continue to have our core team of full-time employees, and we will continue to expand our contractor base, and this will enable us to have a leaner model while being able to cater to diverse clients in different parts of the world.
Rahul Jain
Understood. And last bit, if I may, Rahul or Archana, whomsoever find it, right. So basically on the eLearning side, given that we are making meaningful changes to the operating model, and we have now a much wider canvas to offer to the client, how you see the growth profile and margin profile of the business should stabilize from a medium-term perspective, I’m not asking for growth for this specific year, but maybe on a two-year, three-year basis, should it be a 15% growth, 20% margin, whatever something like that? Any color would be helpful.
Rahul Arora
Yeah. I think in the long run, we want the business to be as close to the average EBITDA margin of the company, which is 30% to 32%. Even if it doesn’t go all the way to 30% to 32%, it is close to 27%, 28% I think that will be a very strong step. In fact, this quarter itself, we’ve actually touched, we’d actually touched 22%, 23% EBITDA margin in the eLearning segment. We had some currency fluctuation, which had a one-time impact on our quarterly results. So, if the currency fluctuation had not happened in the eLearning business, we would have actually reported 22.8% EBITDA margin this past quarter. So we seem to be making very good headway from a margin perspective.
From a growth perspective, currently the eLearning business is growing at that 8%, 9%, which is not something that Archana or I are happy about. I think our goal is to start to grow this business at 12%, 14%, 15% once this operating model is underway, which is very similar to how our business in Germany is growing within MPS, with TOPSIM, how our business in Australia is growing. So even within the MPS eLearning portfolio, the German business, as well as the Australian business are growing at that 15%. So we like the rest of the business, the India entity and the Swiss entity also to grow at a similar level.
Rahul Jain
Great. I’ll jump back into the queue. Thank you.
Operator
Thank you.
Rahul Arora
Thank you.
Operator
Next question is from the line of Navid Virani from Bastion Research. Please go ahead.
Navid Virani
Hello. Am I audible?
Rahul Arora
Yes, clear.
Operator
Sir, I request you to come little close to your handset.
Navid Virani
Is it better now?
Operator
Yes, sir.
Navid Virani
Yeah. So first of all, congratulations on a strong margin recovery. So first one was on AJE, sir. Now that we have seen strong margin, including across both these segments, that is Content and Platform. So just want to understand how the business looking like at AJE from a margins perspective? I mean, what is the diagnosis between our core business and the AJE piece, which we have recently added? And now that the turnaround is taking place well, and that is what is reflected in numbers. What is the growth plan, that is something which I would want to understand a bit better from you. That’s all.
Rahul Arora
Great. Thank you for that, for that observation. I think so from the acquired business, I would like to point out that APAC as a region, and I’m ballparking here is roughly now 25%, 26% of our total revenue. Having said that from a profit perspective, the region is contributing to more than 35% of our PBT. And as you know, this expansion has happened particularly through the acquisitions of AJE and Liberate. So if anything the acquired businesses are adding to the margin profile, improving the margin profile of the business. I feel very comfortable sustaining this level of margin profile 30%, 32%. We could potentially be operating the business at a much higher margin profile.
Having said that, in order to drive organic growth, we have to reinvest back into the business, which includes innovation. So a majority of our reinvestment goes into MPS Labs, which is our R&D hub. And that allows us to future-proof ourselves, but also allows us to future-proof our customers. So as a result, we are going to continue to operate this business at 30% EBITDA margin to drive organic growth.
In terms of where we are, if I just go segment-wise, even though that’s not how we approach the market, Content Solutions has now started to grow at about 10% more reliably. And historically, there’s always been some parts of the content business that are growing, parts of the business that are not growing, parts of the business that are declining. We have always had that flavor. And as a result, the overall did 4%, 5% growth. But I think we have solved for a lot of issues within the content business. For example, our education business, that Mr. Sukhwant was talking about in the opening remarks, has made a strong comeback. So our hope is now that, now that a lot of those issues in the content business have been cured, 10%, 12% should be a reliable number for the content business to grow at.
From a platforms perspective, we again expect that there should be a premium both in the platforms vertical as well as the eLearning vertical. So platforms will continue to grow, and we expect that number to be upwards of 12%. So I think with eLearning, we will probably need another six months or two quarters for things to settle in, where we are basically raising the margin profile of the business. I have learned, I’ve humbly learned over the last decade of running MPS that typically you have to chase one of these two things, otherwise you won’t achieve anything, either you improve the margin profile, or you chase growth.
And with the eLearning business, I think for the next six months we’re going to buckle down and improve the margin profile. And then FY ’26, we’re going to take that strong leap of growth, and we have very good early signs that will play out. As Archana described, we have already onboarded 15 new logos in MPS Interactive alone in the first half of the year. So FY ’26 should be a big, big banner year for the eLearning business where we can start to get that 14%, 15% growth that we have been hoping for.
So to summarize, content 10%, 12%, platform 12%, 14%, and then eLearning 14%, 15% organic growth. In addition to that, of course, most of our inorganic activity is focused either as a platform play or an eLearning play, and that will further add to this growth.
Navid Virani
Perfect. Thank you for the elaborate answer, sir. Sir, something that mentioned at the end of your answer about the inorganic growth, and we were also targeting an acquisition maybe in the second half of this financial year. So where are we on that? Can you share some progress?
Rahul Arora
Yeah, I hope to report something in the next quarter. I have nothing to report at this time. All I can report is deal pipeline is robust, there are multiple transactions in pursuit. So we’re not dependent on one transaction. So hopefully, one of those will close and I’ll have something report to you next quarter.
Navid Virani
Perfect, perfect. And our last question, if I may. So sir, in the content business, we have witnessed a slight moderation in headcount. So just wanted to understand is this a part of normal activity related to cost optimization, or are we looking at a strategic move here something which is similar to what we have done in the eLearning business?
Rahul Arora
No, this is normal ebbs and flows of the business. There is nothing extraordinary happening. Yes, we’re growing. That is about the content business. Look, last quarter alone, I think ballparking here, but I think grew by 10%. But yeah, I think the headcount, obviously efficiencies will improve over a period of time, because MPS Labs continues to invest in automation and system-based delivery. So as that automation becomes more severe and more efficient, the reliance on humans obviously reduces. So that is just regular ebbs and flows of the business and efficiency drive.
Navid Virani
Okay. Perfect. Sir, thank you for your answers. Wishing you and team MBS a very Happy Diwali and all the best for business. Thank you.
Rahul Arora
Thank you. Happy Diwali.
Operator
Thank you. The next question is from the line of Kiran [Phonetic] from Tabletree Capital. Please go ahead.
Kiran
Thank you for the opportunity, sir. Sir, couple of questions. Of course, we watched your interview today with one of the business channels as well. So two-part question, right? One is, are we seeing any significant headwinds in the eLearning solution, because the margins don’t seem to improve at all, Q-o-Q or Y-o-Y? That is one, in spite of substantial reduction in headcount. So that is question number one.
Question number two, in today’s interview, you said Q2 is the start of something very big. So, I mean, was it just a TV channel thing, or was it something that I missed? I just joined about 10 minutes, 15 minutes ago. So, if you have said that in the opening remarks, I’d probably request you to repeat.
Rahul Arora
No, thank you, Kiran. I’ll answer the second question first, if that’s okay. No, I think what I was talking about was, on the interview was, I think they were pressing us a lot to share very tactical, forward-looking guidance and we have received lot of feedback over the past six months that there is no value in MPS, and this feedback has been received by from us, from the minority shareholders that there is no value in you sharing this quarterly short-term guidance with everybody. It helps the analysts and news channels, but it doesn’t help the company any way. And in fact one of the minority shareholders went on to quote examples of various companies that have actually suffered because they shared this type of guidance. So we discussed it at the Board meeting this quarter as well.
I think the call that we took was we have a bold, we framed a very bold vision. We seem to be tracking against our vision, and that’s really the insight that we should be providing. Of course, your questions like a couple of questions that were answered today that helped people understand the business. Of course, we should answer them and we will answer them, but we will not be giving the tactical forward-looking guidance that’s essentially just helping people run models. That’s not our goal here. Our goal is to build a strategic communication channel that helps you understand the business, but also helps the company because we get a lot of feedback from these calls and these engagements.
Coming to the comment on start of something big, I think for a couple of years now, we’ve had an overhang in our content business, because the education business has been suffering. That overhang is gone. And so now the education business is performing. On the eLearning side, while you pointed out that the margins have not improved, the margins have actually improved both at an EBITDA level. I pointed out there was some one-time, in terms of the margins at the EBITDA level were upwards of 18% this past quarter and compared to some lows we had previously. And I was pointing out, in fact they would have been upwards of 22%. We just had some currency fluctuation, one-time currency situation in us. So the margin profile there is improving.
And then on the platform side, we’re starting to acquire new logos, the business started performing. So my comment was more to do with, for the first time in a very long-time, all lines of business are doing what they supposed to do. And therefore when all of this comes together, because you always have this story where one business does really well, another one doesn’t do so well. So you basically have a mediocre outcome. And the reason I said that it’s potentially the start of something very big is because intuitively, all of us that are representing MPS in the marketplace can feel the momentum, even the market tells you. When we are at trade shows, in customer meetings and road shows, you’re getting a feeling from the market that we are being viewed very differently, specifically after the acquisition of AJE, perhaps it’s scale, perhaps it’s how diverse we are now across the various markets that we operate in.
So there is of course the numbers side we are now seeing in our financials, but there is an intuitive feeling that we’re getting when we interact with customers, interact with the marketplace of how they perceive us. And therefore, that, that comment was made that this is, we feel that this is the start of something that, Q2 is the start of something fairly significant, given that all lines of business are performing.
I’ll let Prarthana now, who is the CFO also come in to explain to you, because what you’ve seen this past quarter in the eLearning business, you’ve seen a recovery in EBITDA, but our PBT margins have been suppressed and she just draw a bridge for you and explain to you what’s really going on, why the EBITDA is going, margins going up, but the PBT hasn’t gone up that significantly. So, Prarthana could you explain that, please?
Prarthana Agarwal
Yeah, thanks, Rahul. So sticking, I mean, starting with eLearning business, as Rahul explained, we have a deferred liability for our acquisition of Liberate. And because of that, the exchange fluctuation we had a 4.3% impact, which in value terms is almost INR1.5 crores. So this impact was there in Q2, where our EBITDA margins of 18.6% otherwise would have been upwards of 22%. This was on the eLearning piece.
On an overall piece, if we look at the conversion from EBITDA to PBT is impacted largely on account of two factors. One is the amortization expense on the intangible assets, which are largely because of the acquisitions that we have done in the past one year. So on a quarter-on-quarter basis, that impact is roughly INR2 crores. And also the other impact is the reduced other income, which is INR3.36 crore. On a half-year basis, if we look at the conversion of EBITDA to PBT, the depreciation impact of intangibles is roughly INR4.3 crores, and the reduction in the other income is INR4.46 crore. So because of these two factors, the overall EBITDA in PBT conversions are impacted other than the exchange fluctuation where we see an impact both in EBITDA and PBT.
Rahul Arora
Yeah. So to summarize the operating margins have significantly improved in the eLearning business, and a lot of the noise that Prarthana describing will start to that kind of move out in the next six months to 18 months. So you will start to see every quarter, one in the operating margin itself and the business continue to improve, plus a lot of the noise that she is describing will start to keep it out.
Kiran
Thanks, Rahul. Thank you so much. I have a strategy question. So in terms of the goal, right, FY ’28, we said INR1,500 crore, today in the interview we said we will reach half that number by the end of this year. So we have three years, right, typically for to double our revenues. Standing where you are, right, in terms of your three platforms or you look at education, research and training, irrespective of how you cut the cake. Are you still confident of reaching that INR1,500 crores mark with a 30% plus EBITDA? Is that still achievable given there’s only three years left so that, that would involve 25% CAGR including acquisitions?
Rahul Arora
Yeah, it’s interesting how different people look at data differently, right. You’re saying, is it achievable? And I’m thinking three years a lot of time. So I think from our perspective as a management team, we are very comfortable in terms of the vision that we’ve shared. Again, it’s an aspiration. It is a vision. I think, my team and I would be deeply disappointed if we didn’t get there. But having said that, we are doing our best to get there. So yeah, I think it’s perspective, right. You’re saying three years, how are you going to do it? And I’m thinking three years, oh, that’s comfortable. So at this point, feel very comfortable with the vision that we shared.
Kiran
Got it, Rahul. Many congratulations. Awesome. Thank you so much.
Rahul Arora
Thank you.
Operator
Thank you. The next question is from the line of Krushi Parekh from Pentacle Family Office. Please go ahead.
Krushi Parekh
Yeah. Hi, Rahul. [Indecipherable]. So I want to understand one thing. When we have the aim of having 30% to 32% EBITDA margin for eLearning business as well, is it largely as a result of cost optimization, first, or also as a result of growth that we envisaged over a period of time?
Rahul Arora
Yeah, I think good question. I think that, in fact, there’s three legs. One is the quality of revenue. The second is the growth. And third is cost optimization. So, I think, so the cost optimization will pretty much be done this year, this financial year. So, but that’s more tactical. As you rightly pointed out, the major appreciation is going to come from the other two.
So in terms of quality of revenue, immersive learning and just for everyone’s knowledge, immersive learning is an education method where you are basically recreating real-life scenarios through technology, such as simulation, gamification, AR, VR, et cetera. So, immersive learning, increasingly as a proportion of our total eLearning business is increasing. And given the premium positioning that we have within immersive learning, it tends to be a higher margin business for us. So as immersive learning continues to become a higher proportion, the quality of revenue improves, and therefore the margins will improve. So that is one factor that the quality of revenue within the eLearning space is improving and is expected to improve.
The second perspective, of course, is the significant operating leverage available in our business. So, as long as the business can grow at 10%, 8%, 10%, we will always see margin expansion. So between quality of revenue and revenue growth, I think that will be the leap that will take us from 25% to 30%.
Krushi Parekh
Okay. Got it. And taking to this corporate eLearning, how is the funnel and the budget shaping up, considering we are all reading about the layoffs and the corporate slowdown, especially in the developed market? So are we witnessing any impact on the budget of our customer base or our clientele?
Rahul Arora
Yeah. So I want sugar coated. I think, we’re definitely working, having to work much harder for the same level of order book. So I think decision-making is slower. Having said that, having lived through ’08, ’09, and other experiences like this, typically education and training actually gets a boost when there is a slowdown. So we’re expecting that, yes, we’re having to justify a lot on the, on how we price things, but we are finally bidding the deal. So one is, typically in a situation like this, you invest more in education and training as a large corporate.
And the second is, when you do reduce internal headcount, the work needs to be done, right? So, typically you would outsource more. And that’s where a company like MPS Interactive comes in, where training is outsourced, and that creates an opportunity for us. So yes, I think between, between a small base that is not as effective as well as the larger pie that’s now been created, we feel comfortable. Having said that, of course, we’re having to work much harder to own our launch.
Krushi Parekh
All right. Got it. Thanks a lot team and happy Diwali to all of you. Thank you.
Operator
Thank you.
Rahul Arora
Thank you. Happy Diwali.
Operator
The next question is from the line of Arpan Agrawal [Phonetic], who is an Individual Investor. Please go ahead.
Arpan Agrawal
Hi, good evening. I’m a new shareholder of the company. So some of my questions might be nice, so I’m sorry about that. My first question is on the internal team structure. So there are two ways to understand the company. So one is through capability, which is platforms, content and eLearning. The other is end market, which is research, corporate and education. And third is where the acquisitions that we have done over the last 10 years or so. So my question is how, how is the internal, how are the teams internally structured?
Rahul Arora
Sure. So overall, I think we are more structured functionally and geographically. So for example, on my executive leadership team, I have David, who is the Managing Director of our Education business, but also heads the North America region. I have Tony, who is the head of our Product Management and Product, for the overall business. And we have Naren, who is the CTO and heads all of our technology. We have Sukhwant, who is the Chief Operating Officer for our India business across content and platforms. We have Archana, who is the Chief Operating Officer of the eLearning business. And then we have a new Chief People Officer joining shortly. And of course, Prarthana, who is our CFO.
So we are more designed at an intersection of function and geography rather than segments. That allows us to be more efficient in our approach. So for example, when Sukhwant is running the Content and Platform business together in India, he is able to unlock synergies between those two divisions. And that’s why we chose this approach, otherwise we’d be too siloed.
Arpan Agrawal
Got it. Sir, a quick follow-up question. So if we do an acquisition, the acquired company is not operated independently like it’s merged with the existing entities, wherever it is logically fits?
Rahul Arora
Again, it depends on the specific acquisition. We are now following two routes. One is acquire and operate, which is the established route. When it’s acquired and operate, typically, even during the business phase, I would have the business head, the CFO, and the HR Head to join me in the evaluation and the pursuit of the acquisition. And there is a second route, which is what we did with Liberate, where we are acquiring to invest and support. So, in that case, we are acquiring a majority share of the company. We’re making sure that the promoter group has a stub left and essentially is contributing to the overall growth of the company.
So it depends on the specific acquisition. If it’s acquired to operate, it’s integrated from day one, like we did with AJE. If it’s acquired to invest and support, we follow a more passive position where only Prarthana, the CFO and me will be supporting that setup, potentially HR and legal as well, because you centralize the function, but other than that they don’t get fully integrated into the business.
Arpan Agrawal
Okay. Got it. My second question is on platform. So, platform segment serves all the three end markets, which is research, corporate, and education. But I also read that we are rolling up all of the platforms under the umbrella brand of HighWire. So my question is, but the HighWire’s website says that it serves the scholarly community. So my question is what would happen to the offering for the education and corporate end markets, if all of platforms is being rolled up to, into HighWire?
Rahul Arora
Good question. So the platform vertical, the way it is structured today, bulk of it actually caters to the research market. So, while we have offerings in education and corporate, the majority of the platform business is space for the research market and that is branded as HighWire. Within education, we of course have education offerings that are more product-centric. Our education brand is OWL, One With Learning. And then we have individual products like DigiRMS [Phonetic], we have learning planning. So we have individual education products. So there we are following a product strategy under the OWL brand.
Similarly, on the corporate side, we have XR Optimus and couple of other small offerings, which are then also a sub-brand of the EI [Phonetic] vertical. But as of today, a large part of our platform business is focused on the research marketplace. Having said that, a lot of the acquisitions that I’m working on are either in, are a platform play either for education corporate. So, we are looking to bridge that gap and that will probably be bridged through an acquisition.
Arpan Agrawal
Okay. Got it. One question I have around —
Operator
Sorry to interrupt, sir, please fall back in the queue for further questions. Thank you. The next question is from the line of Gunit Singh from Counter Cyclical PMS. Please go ahead.
Gunit Singh
Hi, sir. Thank you for this opportunity. Sir, my first question would be regarding AJE. So, I mean, I would like to understand, if AJE is PAT positive right now, and also I would like to understand the scope of margin improvement that we have in AJE currently. So, I mean, in this quarter, we did about 28% EBITDA margins consolidated. So by, I mean, with the kind of cost optimization or improvement efficiency in AJE, what kind of EBITDA margins can be reached by the end of FY ’25? And also sir, even though our revenues have increased by about 38% in this quarter Y-on-Y, I see that the headcount has only increased by about 4.5%. So, I mean, is this also related to some layouts in AJE? Can you please throw some light on that?
Rahul Arora
Hi, Gunit. So yeah, I think from AJE perspective, we are already PAT-positive. In fact, the business is performing really well, in double-digit EBITDA margin already, quite high double-digit EBITDA margin. And yes, it will improve incrementally, as I shared with some on the previous call, between Q3 and Q4. So we’ll have a good sense of the AJE margin profile by the end of this financial year. Our goal, of course is to, the AJE business is a split between content and platform. So our goal would be to run the AJE business at an average EBITDA of those two businesses, which you already have. So the margin profile will continue to improve into Q3 and Q4. And yes, not only are we PAT positive, we are actually running a very healthy business in AJE already.
From a headcount perspective, I think there are few things happening both in AJE and in the eLearning business, we are relying more on outside workers, contractors and freelancers. So some of that headcount is reducing as a result of driving efficiency and margins. And secondly, with MPS Labs’ intervention in the content business, based on the automation that’s getting unlocked, we are seeing a steady decline in the content solutions space in terms of, the revenue per FTE is increasing. So yeah, I think this will continue to go on further as the year progresses.
Gunit Singh
All right, sir. Got it. And sir, previously you had guided of about 25% increase in PAT in FY ’25. So if we look at right now, we are at INR61 cr, PAT was at INR60 cr in H1 of FY ’24. So, I mean, do you, are you confident of still achieving that or would you like to revise the guidance?
Rahul Arora
We are not revising any guidance. And I think we gave an EBITDA and revenue guidance.
Gunit Singh
All right. 25% during EBITDA.
Rahul Arora
Yes. And we’re not revising any guidance. [Speech Overlap]. To someone else that the second half of the year usually, and again I’m not sharing anything that’s not known. But second half of the year is always stronger for MPS than the first half of the year.
Gunit Singh
Got it, sir. Makes sense. Sir, my last question would be regarding the acquisition target. So, I mean, we aspire to achieve INR1,500 cr by FY ’28. So, I mean, in the past, we have acquired companies, which were probably loss-making or not operating at very high margins. So going forward, would we be making any acquisitions of those kind? Or do we want to maintain the 30% kind of margins while achieving the INR1,500 cr target by FY ’28?
Rahul Arora
So from a margin profile perspective, if you look at acquisitions, we want to look at companies that have a, if we do look back for three years, have at least a three-year, over three-year period, 10% revenue CAGR, but an EBITDA margin of at least 15%, and then we come in and we improve the 15% to 30%. That’s a pure fit. But if something like MPS comes our way where we have an obvious win in six months, I would be opportunistic and take that bite, similarly like we did with AJE, right? AJE was MPS 2.0. So, but again, those type of things are something that happen once in a decade. As of right now, we’re focused on businesses that have at least a 15% EBITDA margin that we can then come in and improve from a margin perspective. But again, if something like AJE or MPS comes in, we will take that bite. But I don’t have anything like that right on our plate.
Gunit Singh
All right. So, sir basically we are open to both kind of opportunities. Got it, sir. Thank you very much.
Operator
Thank you. Our next question is from the line of Karan Kapoor, who is an Individual Investor. Please go ahead.
Karan Kapoor
Can you hear me? Hello?
Rahul Arora
Hi, we can hear you.
Karan Kapoor
Yeah, sorry. Actually I’m facing some network issues here. So Rahul, I have two questions, okay. One is regarding the currency fluctuation side. So as our revenue is coming from different, different countries, right? So can we do something on the hedging side, so that we can mitigate this risk going ahead? What are your thoughts on that?
Rahul Arora
No, absolutely. I think, earlier our coverage was US dollar and GBP, and we mostly were covering US dollar, because that was the bulk of our receivables. As that is changing, we now have exposure to both the Australian dollar and Chinese Yuan, and we actively, my CFO and I are actively working to create some protection around that, and we start to see from next calendar year onwards. Yes, we probably should have been more prudent in getting our act together, but like this growth just came so quick and sometimes we are growing in the business. This is one of our growing business and there are very, very active plans. We have been talking to bankers already. And hopefully, we will be able to book forward starting as early as January 2025, the first calendar year quarter.
Karan Kapoor
January 2025, you’re right?
Rahul Arora
Correct, correct. [Speech Overlap]
Karan Kapoor
I have one more question. So since you mentioned in the previous calls, right, the market, sorry, the industry is in consolidation phase right now, right? So we are trying to gain the market share through acquisitions. So the question is our competitors are also following the same strategy, right? So I want to ask one thing, if an opportunity comes, so if they want to acquire a majority stake in our company in future, right? So what will be your plans? Would you be still keeping the majority of the stake or like how do you see that?
Rahul Arora
Yeah, I think so interesting question. So I think from an MPS perspective, I can answer both questions both ways, from a promoter perspective and an MPS perspective. We are at the start with the ground floor or something very big. I think the someone asked me on a different earnings call that what beyond FY ’28, and I think FY ’28 is a milestone, right? The first milestone is you get to INR1,500 crores in revenue at similar margins. Next milestone is you get to a $1 billion valuation. Third milestone is you get to $1 billion in revenue. So I, you know, that there is, there’s a long way to go before we start contemplating any of the things that you’re describing, simply because there’s so much opportunity and so much optimism at the table. So, we want to be on the right side of the consolidation that where we are consolidated in the marketplace, but there is no thought or consideration of the promoter group doing anything differently, because I am the only person representing the promoter group in the business. I just turned 40, so I have a long way to go.
So from my perspective, the next decade is about first getting to Vision 2027, then getting to a $1 billion valuation and then getting to $1 billion in revenue. So I think till those three, until those three milestones are achieved, we were going to be at it. And then once those milestones achieved, then we reassess. And from my perspective, the market typically, the competitors that are consolidating are the people where there is some ownership friction. Like as I pointed on previous calls where some partners don’t get along or first generation doesn’t have a second generation or a large company divesting a non-core asset, we have none of that going on in our promoter group. So there’s no reason for us to consider any of that.
Karan Kapoor
So it means we will be keeping, so you will be keeping the majority stake, right, going forward ahead? [Speech Overlap].
Rahul Arora
Absolutely.
Karan Kapoor
Okay. All right. Thanks, sir. So that’s all from my side. Thanks.
Operator
Thank you. The next question is from the line of Keshav Garg from Counter Cyclical PMS. Please go ahead.
Keshav Garg
Sir, I’m trying to understand that, if we see our goodwill and intangible, goodwill and other intangible assets have reduced from 31st March 2024 by INR37 crores, but the depreciation during the half year is only INR14 crore, less than INR14 crores. So sir, basically what, I mean, where is the difference of the reduction in goodwill and other intangible assets?
Rahul Arora
Keshav, it’s a technical question, okay, I’ll let my CFO answer that question.
Keshav Garg
Yeah, sure.
Rahul Arora
Prarthana, can you answer the question, please?
Prarthana Agarwal
Yeah. Thank you, Rahul. So basically as you pointed out, the goodwill and intangible assets have reduced. While there is no major significant movement in the intangible assets other than depreciation, the major reduction that you see in Q2 is on account of the goodwill reduction. So the goodwill has reduced because there is a corresponding increase in the deferred tax asset. What we have done is, we, when we acquired AJE, we got our tax benefit for the next 15 years as per the US laws. While this was under finalization in Q1, this was finalized in Q2. And once all the filings were done, we have created a deferred tax asset of INR29 crores. And correspondingly goodwill has reduced by that amount and our DTA is there in the balance sheet. Hence, you see the reduction. Other than that, intangible the reduction is only on account of depreciation.
Keshav Garg
Okay. Got it. Sir, now the other question is that you mentioned previously about the cross-selling opportunity in AJE, and also the increase in the wallet shares with Springer Nature. So sir, are we on track for both of these counts?
Rahul Arora
Very good question, Keshav. So I think that depends on how you define on track. Are we getting good body language? Yes. Are we very busy with lots of presentations, follow-ups, demos? Yes. Do I have a PO? No. But having said that, we know this research business. It takes time to build. As we have seen in our journals business, teams have been at it, at it, at it, and now suddenly we are seeing some 20% growth in our journal business after work for many, many years. So, I think a similar approach is what’s probably going to happen. We are going to land this revenue and then once we land it, it will keep growing.
So, I am the executive sponsored MPS for Springer Nature. So, I personally managing that mandate. My counterpart is the Chief Operating Officer of Springer Nature. So that relationship is super strong. But yeah, like I said, lots of good conversations on the B2B side for AJE, lots of good conversations on the Springer Nature side. Now, how that will converge in 2025, time will tell, and we look forward to your best wishes.
Keshav Garg
Sir. And lastly, sir, any update on the exhibition project business mainly business that the orders got deferred, so any clarity on that?
Rahul Arora
So we landed a new order, which is, so, we are currently in Phase 1 of the order. So, typically what happens is, you have a Phase 1 where you’re conceptualizing the experience center, and you bring up Phase 2 where you’re executing on the experience center. So our assessment is this calendar year, we will submit our report, consulting report on what that experience center should look like. And then calendar year 2025, we will be executing on the experience center. So, it’s a very large undertaking. I can’t, I don’t think we have permission to disclose the customer’s name, but once we do, we will disclose the name as well. It’s a big marquee name in India.
Keshav Garg
Great, sir. Thank you very much and best of luck.
Operator
Thank you.
Rahul Arora
Thank you.
Operator
The next question is from the line of Pankul Sood from Satya Wealth Advisors. Please go ahead.
Pankul Sood
Yeah. Hi, Rahul.
Rahul Arora
Hi.
Pankul Sood
Yeah. So, sorry if this question is repetitive. I just wanted to know like when do we expect our margins to go back to our previous levels?
Rahul Arora
Yeah, I think margins have already, EBITDA margins are already at 30% just in Q2, and will only continue to improve from here. I think we’ll be at a stable margin profile in Q4, when the AJE business is even more settled, and the eLearning business has gone through all the changes that they’re making. So yeah, I think Q2 we hit consolidated EBITDA margin of 30-odd percent and that will improve by another few percentage points by the end of this financial year.
Pankul Sood
Okay. And our previous guidance is index, right? For FY ’28, INR1,500 crores revenue and for FY ’25 roughly INR750 crores [Phonetic] right?
Rahul Arora
Correct. Yeah, so there is no revision to any guidance that we shared previously.
Pankul Sood
Yeah, okay. That it from me. Thanks, Rahul.
Rahul Arora
Thank you.
Operator
Thank you. The next question is from the line of Mahesh, who is an Individual Investor. Please go ahead.
Mahesh
Rahul, just a while ago, you mentioned an order from a large banking customer within the corporate lending segment. Can you share more details on that? Is that a managed training services contract?
Rahul Arora
Yes. So, thank you for the question, Mahesh. So that is a contract within, it’s not a contract, it’s a Liberate Learning, which is the Australian company that we acquired last year. One of their customers had gone quiet because they were going through some corporate development activity. That customer has now woken up and is now part of the top 10 customers again. Again, it hasn’t gone back to the previous levels, but we’re hoping that through the course of this financial year, they will get back to previous levels. So there are large Australian banks. And yes, it’s a managed services play. So we are hoping that we can use that as a case study for expansion into other regions, not with the a specific bank, but with other customers.
Mahesh
Okay. Great. One more question. So you mentioned 15 new logos in eLearning. Can you share any more details on the logos or the size of the contracts or something like that?
Rahul Arora
Yeah. So all I can share is that currently each of these is very small. When I say small, I mean the work that they do with us. We typically only track new logos that do one or three things, either they employ at least 10,000 people, or they have their revenue is upward of $3 billion, or they’re in a sector that where we’re absent from. So each of these 15 new logos is, has one of these elements. Our current engagement with all of these logos is very small. So that, I think that was the point that Archana was trying to make that we’ve onboarded them and now it’s about how do we grow these logos within the MPS ecosystem.
Mahesh
Okay. If I can ask one last question. You mentioned in the last quarter about using AI as a revenue stream. And what kind of progress have you made on that front?
Rahul Arora
Yeah. So I think we again while the scale of projects aren’t as significant, we have been doing a few types of projects. So we are doing some AI consulting arrangements. We’ve done workshops where for corporates, we are doing workshops around the impact of AI specifically for that corporate. So while these have been smaller projects, we’ve been doing consulting assignments as well as workshops around AI, so far. So those are on the, more on the learning part of our business.
On the platform part of the business or rather the MPS Labs part of the business, we are now, a lot of the growth that’s coming in the education space is coming from AI-powered workflows. So for example, the world languages content development that I was talking about, or rather Sukhwant was talking about, and the accessibility solutions that Sukhwant was talking about, while we are not selling these as software-as-a-service, we are using AI to power the service. So, again these are good revenue indicators.
So in the content side of the business and platform side of the business, this is now a mainstream, and a part of our core offering. On the learning side of our business, we are doing more consulting assignments and workshops.
Mahesh
Okay. Thanks, Rahul.
Rahul Arora
Thank you. Thank you. The next question is from the line of Kiran from Tabletree Capital. Please go ahead.
Kiran
Hi, Rahul. It’s just a follow-up question, but a completely left-field question. So given the advancements, I mean, given we are primarily in research, both on the content journal side and as well as HighWire. Is there a step increase in research publications and research journalism because of the significant advancements in technology and biology because of LLM, GenAI and so on and so forth. Is, do you really care or you don’t really care as long as the volume is coming in?
Rahul Arora
Yeah. I think from our perspective the more content that is there in the marketplace we see as a big enabler for our business. Whenever someone says, what do you think of the content business, my answer to that is what do you think that in five years will there be more content or less content? And the answer always is more content. So as long as there’s more content out there, we will find a way to monetize that aspect of enablement and delivery of content.
Kiran
Got it, got it, got it. And then the other —
Rahul Arora
Sorry, sorry to interrupt, but another nuance is as that is happening, another nuance is as that is happening, we’ve actually built a whole new business around research integrity. So this has both a platform offering as well as a content offering where we around helping some of our customers and making sure that the research that they receiving does not lack integrity. So we’re kind of helping them enable that. So, yes, it has had some short-term positive gains where we are supporting the research integrity process.
Kiran
Got it, sir. Makes sense, make sense. Thanks. So the other question I had was, so the INR1,500 crores-to-INR750 crores [Phonetic], the data that we currently have from ’25 to ’28, what percentage do you think is via acquisitions and what percentage is organic roughly? Again, things can change very rapidly. But as of today, as you stand on the post today, how do you look at the split in terms of how much acquisition, how much organic?
Rahul Arora
60-40, 60 in favor of inorganic [Phonetic].
Kiran
60 is organic, 40 is acquisition?
Rahul Arora
Other way around.
Kiran
Okay, 60 is acquisition, 40 is organic. Got it, got it. Okay, cool. Thanks so much, Rahul.
Rahul Arora
Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Rahul Arora for closing comments.
Rahul Arora
Thank you for your active participation in our earnings call. We appreciate all your thoughtful questions. Your unique, outside-in perspective helps us to learn and improve. I want to thank all our stakeholders for their continued support and respect. Our journey together has been truly remarkable. Wish you a Happy Diwali and look forward to your continued support, feedback, and partnership mindset.
Operator
[Operator Closing Remarks]